As filed with the Securities and Exchange Commission on May 22, 1997
Registration No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BANKUNITED FINANCIAL CORPORATION BANKUNITED CAPITAL II
- --------------------------------------- ---------------------------------------
(Exact name of registrant as specified (Exact name of registrant as specified
in its charter) in its charter)
FLORIDA 65-0377773 DELAWARE APPLIED FOR
- --------------- ------------------- ---------------- --------------------
(State or other (I.R.S. Employer (State or other (I.R.S. Employer
jurisdiction of Identification No.) jurisdiction of Identification No.)
incorporation or incorporation or
organization) organization)
Alfred R. Camner
Chairman of the Board
BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
(305) 569-2000
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(Name, address, including ZIP Code, and telephone number,
including area code, of agent for service)
Copies to:
Marsha D. Bilzin, Esq. Gary M. Epstein, Esq.
Stuzin and Camner, Greenberg, Traurig, Hoffman,
Professional Association Lipoff, Rosen & Quentel, P.A.
550 Biltmore Way, Suite 700 1221 Brickell Avenue
Coral Gables, Florida 33134 Miami, Florida 33131
(305) 442-4994 (305) 579-0500
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box [ ].
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this Form, check the following box [ ].
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering [ ].
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering [ ].
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box [ ].
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CALCULATION OF REGISTRATION FEE
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PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
OF SECURITY TO BE REGISTERED REGISTERED PER SHARE PRICE FEE
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__% Trust Preferred Securities, of BankUnited Capital II 1,840,000(1) $25.00 $46,000,000 $13,939.39
__% Junior Subordinated Deferrable Interest Debentures of
BankUnited Financial Corporation (2) N/A
BankUnited Financial Corporation Guarantee with respect to
Trust Preferred Securities, (3) N/A
Total................................................ 1,840,000(1) $46,000,000
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<FN>
(1) Includes up to 240,000 additional Trust Preferred Securities which may be acquired by the Underwriters to cover
over-allotments, if any.
(2) The __% Junior Subordinated Deferrable Interest Debentures (the "Junior Subordinated Debentures") will be purchased by
BankUnited Capital II with the proceeds of the sale of the Trust Preferred Securities, (the "Preferred Securities"). No
separate consideration will be received for the Junior Subordinated Debentures distributed upon any liquidation of
BankUnited Capital II.
(3) No separate consideration will be received for the BankUnited Financial Corporation Guarantee (the "Guarantee").
(4) This Registration Statement is deemed to cover the Junior Subordinated Debentures of BankUnited Financial Corporation
under the Indenture, the rights of holders of Preferred Securities of BankUnited Capital II under a trust agreement, the
rights of holders of the Preferred Securities under the Guarantee, the Expense Agreement entered into by
BankUnited Financial Corporation and certain backup undertakings as described herein.
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The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the Registration Statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION
PROSPECTUS DATED MAY 22, 1997
$40,000,000
BANKUNITED CAPITAL II
____% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
1,600,000 PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED, AS DESCRIBED HEREIN, BY
[BankUnited Financial Corporation Logo]
BANKUNITED FINANCIAL CORPORATION
The ____% Cumulative Trust Preferred Securities (the "Preferred
Securities") offered hereby represent beneficial interests in BankUnited
Capital II, a trust created under the laws of the State of Delaware (the "Trust
Issuer"). BankUnited Financial Corporation, a Florida corporation (the "Company"
or "BankUnited"), will be the owner of all of the beneficial interests
represented by common securities of the Trust Issuer (the "Common Securities"
and, collectively with the Preferred Securities, the "Trust Securities"). The
Bank of New York is the Property Trustee of the Trust Issuer. The Trust Issuer
exists for the sole purpose of issuing the Trust Securities and investing the
proceeds from the sale thereof in ___% Junior Subordinated Deferrable Interest
Debentures (the "Junior Subordinated Debentures") to be issued by the Company.
The Junior Subordinated Debentures will mature on _______, 2027 (the "Stated
Maturity"). The 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 the
Preferred Securities--Subordination of the Common Securities."
(CONTINUED ON THE FOLLOWING PAGES)
Application has been made to list the Preferred Securities on the
NASDAQ Stock Market's National Market under the symbol "BKUNZ." See "Risk
Factors--Absence of Prior Public Market for the Preferred Securities; Trading
Price and Tax Considerations."
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SEE "RISK FACTORS" BEGINNING ON PAGE 11 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
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THE SECURITIES OFFERED HEREBY ARE NOT SAVINGS OR DEPOSIT ACCOUNTS
AND ARE NOT INSURED BY THE SAVINGS ASSOCIATION INSURANCE FUND OR THE
BANK INSURANCE FUND OF THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
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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.
<PAGE>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC COMMISSION(1) ISSUER(2)(3)
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Per Preferred Security $25.00 (2) $_____
Total(4) $40,000,000 (2) $__________
(1) The Trust Issuer and the Company have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended. See "Underwriting."
(2) In view of the fact that the proceeds of the sale of the Preferred
Securities will be invested in the Junior Subordinated Debentures of
the Company, the Company has agreed to pay the Underwriters, as
compensation for their arranging the investment of such proceeds in the
Junior Subordinated Debentures, $ per Preferred Security, or $
in the aggregate ($ in the aggregate if the over-allotment option
is exercised in full). See "Underwriting."
(3) Before deducting expenses payable by the Company, estimated to be
approximately $ .
(4) The Trust Issuer and the Company have granted the Underwriters a 30-day
option to purchase up to 240,000 additional 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 and Proceeds to Issuer will be $__________. See
"Underwriting."
The Securities are offered by the Underwriters subject to receipt and
acceptance by them, prior sale and the Underwriters' right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the Preferred Securities will be made in
book-entry form through the book-entry facilities of The Depository Trust
Company on or about _________, 1997 against payment therefor in immediately
available funds.
RAYMOND JAMES & ASSOCIATES, INC.
RYAN, BECK & CO.
The date of this Prospectus is June ___, 1997
<PAGE>
(continued from the previous page)
The Preferred Securities will be represented by one or more global
securities registered in the name of a nominee of The Depository Trust Company,
as depository ("DTC"). Beneficial interests in the global securities will be
shown on, and transfer thereof will be effected only through, records maintained
by DTC and its participants. Except as described under "Description of Preferred
Securities," Preferred Securities in definitive form will not be issued and
owners of beneficial interests in the global securities will not be considered
holders of the Preferred Securities. Settlement for the Preferred Securities
will be made in immediately available funds. The Preferred Securities will trade
in DTC's Same-Day Funds Settlement System, and secondary market trading activity
for the Preferred Securities will therefore settle in immediately available
funds.
Holders of the Preferred Securities will be entitled to receive
preferential cumulative cash distributions accumulating from the date of
original issuance and payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year, commencing _______, 1997, at the
annual rate of ___% of the Liquidation Amount (as defined herein) of $25 per
Preferred Security ("Distributions"). Subject to certain exceptions, the Company
has the right to defer payment of interest on the Junior Subordinated Debentures
at any time or from time to time for a period not exceeding 20 consecutive
quarters with respect to each deferral period (each, an "Extension Period"),
provided that no Extension Period may extend beyond the Stated Maturity of the
Junior Subordinated Debentures. Upon the termination of any such Extension
Period and the payment of all interest then accrued and unpaid (together with
interest thereon at the rate of ___%, compounded quarterly, to the extent
permitted by applicable law), the Company may elect to begin a new Extension
Period subject to the requirements set forth herein. If interest payments on the
Junior Subordinated Debentures are so deferred, Distributions on the Preferred
Securities will also be deferred, and the Company will not be permitted, subject
to certain exceptions described herein, to declare or pay any cash distributions
with respect to the capital stock of the Company or 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 would continue to accrue (and the amount of Distributions to which
holders of the Preferred Securities are entitled would accumulate) at the rate
of ___% per annum, compounded quarterly, and holders of the Preferred Securities
would be required to include interest income in their gross income for United
States federal income tax purposes in advance of receipt of the cash
distributions with respect to such deferred interest payments. The Company
believes that the mere existence of its right to defer interest payments should
not cause the Preferred Securities to be issued with original issue discount for
federal income tax purposes. However, it is possible that the Internal Revenue
Service could take the position that the likelihood of deferral was not a remote
contingency within the meaning of applicable Treasury Regulations. See
"Description of the Junior Subordinated Debentures-Right to Defer Interest
Payment Obligation" and "Certain Federal Income Tax Consequences--Interest
Income and Original Issue Discount."
The Company and the Trust Issuer believe that, taken together, the
obligations of the Company under the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures, the Indenture and the Expense Agreement (each as
defined herein), constitute in the aggregate, a full, irrevocable and
unconditional guarantee, on a subordinated basis, of all of the Trust Issuer's
obligations under the Preferred Securities. See "Relationship Among the
Preferred Securities, the Junior Subordinated Debentures, the Expense Agreement
and the Guarantee--Full and Unconditional Guarantee." The Guarantee of the
Company (the "Guarantee") guarantees the payment of Distributions and payments
on liquidation or redemption of the Preferred Securities, but only in each case
to the extent of funds held by the Trust Issuer, as described herein. See
"Description of the Guarantee." If the Company does not make interest payments
on the Junior Subordinated Debentures
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held by the Trust Issuer, the Trust Issuer will have insufficient funds to pay
Distributions on the Preferred Securities. The Guarantee does not cover payment
of Distributions when the Trust Issuer does not have sufficient funds to pay
such Distributions. In such event, a holder of the Preferred Securities may
institute a legal proceeding directly against the Company to enforce payment of
amounts equal to such Distributions to such holder. See "Description of the
Junior Subordinated Debentures-Enforcement of Certain Rights by Holders of the
Preferred Securities." The obligations of the Company under the Guarantee and
the Junior Subordinated Debentures are subordinate and junior in right of
payment to all Senior Debt (as defined in "Description of the Junior
Subordinated Debentures--Subordination") of the Company.
The Preferred Securities are subject to mandatory redemption, in whole
or in part, upon repayment of the Junior Subordinated Debentures at their Stated
Maturity or their earlier redemption. Subject to regulatory approval, if then
required under applicable capital guidelines or regulatory policies, the Junior
Subordinated Debentures are redeemable prior to their Stated 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 continuation of a Tax Event, an Investment Company Event
or a Capital Treatment Event (each as defined herein) at a redemption price (the
"Redemption Price") equal to the accrued and unpaid interest on the Junior
Subordinated Debentures so redeemed to the date fixed for redemption plus 100%
of the principal amount thereof. See "Description of the Junior Subordinated
Debentures- Redemption or Exchange."
The Junior Subordinated Debentures will be unsecured and subordinated
to all Senior Debt of the Company. At March 31, 1997, the Company had no
outstanding Senior Debt, but did have outstanding $72.8 million of 10 1/4%
Junior Subordinated Deferrable Interest Debentures which rank PARI PASSU with
the Junior Subordinated Debentures. There is no limitation on the amount of
Senior Debt, or additional subordinated debt which is PARI PASSU with the Junior
Subordinated Debentures, which the Company may issue. The Company expects from
time to time to incur additional indebtedness constituting Senior Debt. See
"Description of the Junior Subordinated Debentures--Subordination."
The Company, as the holder of the Common Securities, will have the
right at any time to terminate the Trust Issuer. The ability of the Company to
do so may be subject to the Company's prior receipt of regulatory approval. In
the event of the termination of the Trust Issuer, after satisfaction of
liabilities to creditors of the Trust Issuer as required by applicable law, the
holders of the Preferred Securities will be entitled to receive a Liquidation
Amount of $25 per Preferred Security plus accumulated and unpaid Distributions
thereon to the date of payment, which may be in the form of a distribution of
such amount in Junior Subordinated Debentures, subject to certain exceptions.
See "Description of the Preferred Securities--Liquidation Distribution upon
Termination."
- --------------------------------------------------------------------------------
The Company will provide to the holders of the Preferred Securities
annual reports containing financial statements audited by the Company's
independent auditors. The Company will also furnish annual reports on Form 10-K
free of charge to holders of the Preferred Securities who so request in writing
addressed to the Secretary of the Company.
- --------------------------------------------------------------------------------
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE
PREFERRED SECURITIES OFFERED HEREBY, INCLUDING OVER-ALLOTMENT, STABILIZING
TRANSACTIONS, SYNDICATE SHORT COVERING TRANSACTIONS AND PENALTY BIDS. ANY OF THE
FOREGOING TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME WITHOUT
NOTICE. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
iii
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[MAP OF FLORIDA INDICATING BANKUNITED BRANCH OFFICES]
iv
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SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND NOTES THERETO APPEARING ELSEWHERE IN
THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, THE INFORMATION IN THIS PROSPECTUS
ASSUMES THAT THE UNDERWRITERS' OVER-ALLOTMENT OPTION WILL NOT BE EXERCISED.
BANKUNITED FINANCIAL CORPORATION
GENERAL
The Company is a Florida corporation organized in December 1992 for the
purpose of becoming the savings and loan holding company for BankUnited, FSB
(the "Bank"). This holding company reorganization, together with BankUnited's
conversion from a Florida-chartered stock savings bank to a federally chartered
stock savings bank, became effective on March 5, 1993. At March 31, 1997, the
Company had $1.0 billion in deposits and $98.9 million in stockholders' equity.
With over $1.4 billion in assets, the Company is the fourth largest publicly
held depository institution headquartered in South Florida.
The Company currently has fourteen branch offices in Dade, Broward and
Palm Beach Counties, Florida ("South Florida") and anticipates opening six or
more additional branches by June 30, 1998. The Company's business has
traditionally consisted of attracting deposits from the general public and using
those deposits, together with borrowings and other funds, to purchase nationwide
and to originate in its market area single-family residential mortgage loans,
and to a lesser extent, to purchase and originate commercial real estate,
commercial business and consumer loans. The Company's revenues are derived
principally from interest earned on loans, mortgage-backed securities and
investments. The Company's primary expenses arise from interest paid on savings
deposits and borrowings and non-interest overhead expenses incurred in
operations.
The Bank is a member of the Federal Home Loan Bank system and is
subject to comprehensive regulation, examination and supervision by the Office
of Thrift Supervision (the "OTS") and the Federal Deposit Insurance Corporation
(the "FDIC"). Deposits at the Bank are insured by the Savings Association
Insurance Fund of the FDIC (the "SAIF") to the maximum extent permitted by law.
The Company's executive offices are located at 255 Alhambra Circle,
Coral Gables, Florida 33134, and its telephone number is (305) 569-2000.
OPERATING AND EXPANSION STRATEGY
In 1995, the Company redefined its strategy to increase its emphasis on
strategic product niches which management believes are being underserved as
South Florida's banking market consolidates. These products include commercial
business and commercial real estate lending and deposit services for small to
midsized businesses. The Company has also focused on attracting depositors by
stressing convenience,
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competitive rates and personalized service. In order to accomplish this
strategy, the Company has retained management with expertise in developing and
managing these product lines.
The Company's operating plan emphasizes (i) concentrating lending
activities on originating single-family residential mortgage loans and
purchasing such loans as favorable market opportunities arise; (ii) expanding
the Company's deposit base by providing convenience, competitive rates and
personalized service in its market area; (iii) continuing expansion of the
Company's branch network through de novo branching or the acquisition of
branches of, and mergers with, existing financial institutions; (iv) expanding
the Company's commercial and multi-family real estate, commercial business, and
real estate construction lending; and (v) managing exposure to interest rate
risk, while optimizing operating results through effective asset/liability
management and investment policies.
The Company intends to continue to establish or acquire branches in
South Florida. In 1995, the Company sold its three branches on the west coast of
Florida, including their deposits, which totaled $130 million at the date of
sale, as part of its strategy to focus on South Florida and take advantage of
consolidation trends in banking there. As part of this strategy, the Company
also opened branches in Boca Raton, Florida in December 1995, Delray Beach,
Florida in June 1996 and West Palm Beach, Florida in September 1996. On March
29, 1996, the Company acquired the Bank of Florida with total assets of $28.1
million which was merged into the Company's South Miami branch. On November 15,
1996, the Company acquired Suncoast Savings and Loan Association, FSA
("Suncoast"), a federally chartered savings association with assets of $409
million at September 30, 1996 and merged Suncoast into the Bank. The merger has
increased the Company's market share, particularly in Broward County, has
allowed the Company to achieve economies associated with an in-market merger,
and should enable the Company to compete more effectively with larger financial
institutions in South Florida. Of Suncoast's six branch offices in South
Florida, five continue to operate and one has been consolidated with an existing
Bank branch office.
As part of the Suncoast acquisition, the Company acquired approximately
$95.8 million in commercial real estate loans and $14.1 million in real estate
construction loans. See "Business of BankUnited Financial Corporation-Commercial
Real Estate Lending," "--Real Estate Construction Lending," and "Commercial
Business Lending" contained in Appendix A to this Prospectus.
The implementation of the Company's business strategy has produced the
following results:
/bullet/ CAPITAL. The Bank exceeds all applicable minimum regulatory
capital requirements. At March 31, 1997, the Bank had tangible
capital, core capital and risk-based capital ratios of 8.4%,
8.4% and 13.3%, respectively. The Company's total
stockholders' equity was $98.9 million at March 31, 1997 and
its equity to assets ratio at that date was 6.8%.
/bullet/ PROFITABILITY. The Company had net income before preferred
stock dividends of $3.4 million and $1.6 million for the six
months ended March 31, 1997 and March 31, 1996, respectively.
The annualized return on average assets was .58% and .50% for
the six months ended March 31, 1997 and 1996, respectively.
Net income before preferred stock dividends was $2.6 million
in fiscal 1996 compared to $6.2 million in fiscal 1995. The
decrease in net income was primarily attributable to the
pretax gain recorded in the fourth quarter of fiscal 1995 of
$9.3 million ($5.8 million after tax) from the sale of the
Company's three branches on the west coast of Florida and the
expense of a one-time
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special assessment by the SAIF of $2.6 million ($1.6 million
after tax) in the fourth quarter of fiscal 1996.
/bullet/ ASSET QUALITY. The Company seeks to maintain asset quality and
control credit risk. While the loan portfolio has grown
substantially in recent years, the Company's ratio of
non-performing assets to total assets has decreased from 1.10%
at September 30, 1995 to .95% at September 30, 1996 and .79%
at March 31, 1997. The ratio of the loan loss allowance to
total loans was .24% at March 31, 1997.
/bullet/ GROWTH WITHIN THE SOUTH FLORIDA MARKET AREA. As part of the
Company's plan to expand within South Florida, the Company
acquired Suncoast on November 15, 1996. Through internal
growth and as a result of that acquisition, the Company's
total assets increased from $824 million at September 30, 1996
to $1.45 billion at March 31, 1997. BankUnited currently has
14 branch offices in South Florida and anticipates opening six
or more additional branches by June 30, 1998. Based on total
assets, the Company is the fourth largest publicly held
depository institution headquartered in South Florida.
THE TRUST ISSUER
The Trust Issuer is a statutory business trust created under Delaware
law pursuant to (i) the Trust Agreement executed by the Company, as depositor,
The Bank of New York, as Property Trustee, The Bank of New York (Delaware), as
Delaware Trustee, and the Administrative Trustees named therein and (ii) the
filing of a certificate of trust with the Delaware Secretary of State on May 19,
1997. The trust agreement will be amended and restated in its entirety (as so
amended and restated, the "Trust Agreement"). All of the Common Securities will
be owned by the Company. The Company will acquire Common Securities in an
aggregate Liquidation Amount equal to 4% of the total capital of the Trust
Issuer. The Trust Issuer 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 Junior Subordinated Debentures issued by the Company and
(iii) engaging in only those other activities necessary, advisable or incidental
thereto (such as registering the transfer of the Trust Securities). Accordingly,
the Junior Subordinated Debentures will be the sole assets of the Trust Issuer,
and payments under the Junior Subordinated Debentures will be the sole revenue
of the Trust Issuer. The principal executive office of the Trust Issuer is 255
Alhambra Circle, Coral Gables, Florida 33134 and its telephone number is (305)
569-2000.
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THE OFFERING
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THE TRUST ISSUER................................ BankUnited Capital II, a Delaware statutory business trust
(the "Trust Issuer"). The sole assets of the Trust Issuer
will be the Junior Subordinated Debentures.
SECURITIES OFFERED.............................. 1,600,000 shares of ___% Cumulative Trust Preferred Securities
(the "Preferred Securities"), evidencing preferred undivided
beneficial interests in the assets of the Trust Issuer, which will
consist only of the Junior Subordinated Debentures.
OFFERING PRICE.................................. $25 per Preferred Security (Liquidation Amount $25).
DISTRIBUTIONS................................... Holders of the Preferred Securities will be entitled to
receive cumulative cash Distributions at an annual rate of
___% of the Liquidation Amount of $25 per Preferred
Security, accumulating from the date of original issuance
and payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year, commencing on
___________, 1997. The distribution rate and the distribution
and other payment dates for the Preferred Securities will
correspond to the interest rate and interest and other payment
dates on the Junior Subordinated Debentures. See "Description
of the Preferred Securities."
JUNIOR SUBORDINATED DEBENTURES.................. The Trust Issuer will invest the proceeds from the
issuance of the Trust Securities in an equivalent amount
of the Junior Subordinated Debentures. The Junior
Subordinated Debentures will mature on ___________,
2027. The Junior Subordinated Debentures will rank
subordinate and junior in right of payment to all Senior
Debt of the Company. At March 31, 1997, the Company
had no outstanding Senior Debt, but did have outstanding
$72.8 million of 10 1/4% Junior Subordinated Deferrable
Interest Debentures which rank PARI PASSU with the Junior
Subordinated Debentures. There is no limitation on the amount of
Senior Debt, or subordinated debt which is PARI PASSU
with the Junior Subordinated Debentures, which the
Company may issue. The Company expects from time to
time to incur additional indebtedness constituting Senior
Debt. In addition, because the Company is a holding
company, the Company's obligations under the Junior
Subordinated Debentures will effectively be subordinated
to all existing and future liabilities and obligations of its
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subsidiaries, including the Bank. See "Risk Factors-
Ranking of Subordinated Obligations Under the
Guarantee and the Junior Subordinated Debentures,"
"Risk Factors--Source of Payments to Holders of
Preferred Securities" and "Description of the Junior
Subordinated Debentures-Subordination."
GUARANTEE....................................... Payments of Distributions out of funds held by the Trust
Issuer, and payments on liquidation of the Trust Issuer or
the redemption of the Preferred Securities, are guaranteed
by the Company to the extent the Trust Issuer has funds
available therefor. The Company and the Trust Issuer
believe that, taken together, the obligations of the Company under the
Guarantee, the Trust Agreement, the Junior Subordinated Debentures,
the Indenture and the Expense Agreement, constitute, in
the aggregate, a full and unconditional guarantee, on a
subordinated basis, of all of the Trust Issuer's obligations
under the Preferred Securities. See "Description of the Guarantee"
and "Relationship Among the Preferred Securities, the Junior Subordinated
Debentures, the Expense Agreement and the Guarantee."
The obligations of the Company under the Guarantee are
subordinate and junior in right of payment to all Senior
Debt of the Company. See "Risk Factors-Ranking of
Subordinated Obligations Under the Guarantee and the
Junior Subordinated Debentures" and "Description of the
Guarantee."
RIGHT TO DEFER INTEREST PAYMENTS................ So long as no event of default under the Indenture has
occurred and is continuing, the Company has the right
under the Indenture at any time during the term of the
Junior Subordinated Debentures to defer the payment of
interest at any time or from time to time for a period not
exceeding 20 consecutive quarters with respect to each
Extension Period, PROVIDED that no Extension Period may
extend beyond the Stated Maturity of the Junior
Subordinated Debentures. At the end of such Extension
Period, the Company must pay all interest then accrued
and unpaid (together with interest thereon at the annual
rate of ___%, compounded quarterly, to the extent
permitted by applicable law). During an Extension
Period, interest will continue to accrue and holders of the
Junior Subordinated Debentures (or holders of the
Preferred Securities, while outstanding) will be required
to accrue interest income for United States federal income
tax purposes in advance of receipt of payment of such
5
<PAGE>
deferred interest. See "Certain Federal Income
Tax Consequences-Interest Income and Original Issue Discount").
During any such Extension Period, the Company may not,
and may not permit any subsidiary of the Company to,
(i) declare or pay any dividends or distributions on,
or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Company's capital stock or
(ii) make any payment of principal, interest or
premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank PARI PASSU with or junior
in right of payment to the Junior Subordinated Debentures
or make any guarantee payments with respect to any guarantee
by the Company of the debt securities of any subsidiary
of the Company if such guarantee ranks PARI PASSU
with or junior in right of payment to the Junior Subordinated
Debentures (other than (a) the reclassification of any class
of the Company's capital stock into another class of capital
stock, (b) dividends or distributions payable in common stock
of the Company, (c) any declaration of a dividend in connection
with the implementation of a stockholders' rights plan, the
issuance of stock under any such plan in the future or the
redemption or repurchase of any such rights pursuant
thereto, (d) payments under the Guarantee 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). Prior
to the termination of any such Extension Period, the Company
may further defer the payment of interest on the Junior
Subordinated Debentures, PROVIDED that no Extension
Period may exceed 20 consecutive quarters or extend
beyond the Stated Maturity of the Junior Subordinated
Debentures. There is no limitation on the number of
times that the Company may elect to begin an Extension
Period. See "Description of the Junior Subordinated
Debentures-Right to Defer Interest Payment Obligation"
and "Certain Federal Income Tax Consequences-Interest
Income and Original Issue Discount."
The Company has no current intention of exercising its
right to defer payments of interest by extending the
interest payment period on the Junior Subordinated
Debentures. However, should the Company elect to
6
<PAGE>
exercise such right in the future, the market price of
the Preferred Securities is likely to be adversely
affected. As a result of the existence of the Company's
right to defer interest payments, the market price of
the Preferred Securities may be more volatile than the
market prices of other similar securities that do not
provide for such optional deferrals.
REDEMPTION...................................... The Junior Subordinated Debentures are subject to
redemption prior to their Stated 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), within 180 days
following the occurrence and continuation of a Tax
Event, an Investment Company Event or a Capital
Treatment Event (each as defined herein) in each case at
a redemption price equal to 100% of the principal amount
of the Junior Subordinated Debentures so redeemed,
together with any accrued and unpaid interest to the date
fixed for redemption.
If the Junior Subordinated Debentures are redeemed prior
to their Stated Maturity, the Trust Issuer must apply the
proceeds of such redemption to redeem a Like Amount (as
defined herein) of the Preferred Securities and the
Common Securities. The Preferred Securities will be
redeemed upon repayment of the Junior Subordinated Debentures
at their Stated Maturity. See "Description of the Preferred
Securities--Redemption."
DISTRIBUTION OF THE JUNIOR SUBORDINATED
DEBENTURES UPON LIQUIDATION
OF THE TRUST ISSUER........................... The Company will have the right at any time to terminate
the Trust Issuer and, after satisfaction of creditors of the
Trust Issuer, if any, as provided by applicable law, cause
the Junior Subordinated Debentures to be distributed to
the holders of the Preferred Securities and the Common
Securities in exchange therefor upon liquidation of the
Trust Issuer. The ability of the Company to do so may
be subject to the Company's prior receipt of regulatory
approval.
In the event of the liquidation of the Trust Issuer, after
satisfaction of the claims of creditors of the Trust Issuer,
if any, as provided by applicable law, the holders of the
Preferred Securities will be entitled to receive a
7
<PAGE>
Liquidation Amount of $25 per Preferred Security plus
accumulated and unpaid Distributions thereon to the
date of payment, which may be in the form of a distribution
of a Like Amount (as defined herein) of the Junior
Subordinated Debentures, subject to certain exceptions
as described herein. See "Description of the Preferred
Securities-Liquidation of the Trust Issuer and Distribution
of the Junior Subordinated Debentures to Holders."
VOTING RIGHTS................................... Except in limited circumstances, the holders of the
Preferred Securities will have no voting rights. See
"Description of the Preferred Securities--Voting Rights;
Amendment of Trust Agreement."
USE OF PROCEEDS................................. All of the proceeds from the sale of the Preferred
Securities will be used by the Trust Issuer to purchase
Junior Subordinated Debentures. The Company intends
that the proceeds from the sale of such Junior
Subordinated Debentures will be used for general
corporate purposes, including, but not limited to,
acquisitions by either the Company or the Bank (although
there presently exist no agreements or understandings
with respect to any such acquisition), capital contributions
to the Bank to support growth and for working capital,
and the possible repurchase of shares of the Company's preferred
stock, subject to acceptable market conditions.
RISK FACTORS.................................... An investment in the Preferred Securities involves
substantial risks that should be considered by prospective
purchasers. In addition, because holders of the Preferred
Securities may receive Junior Subordinated Debentures on
termination of the Trust Issuer, and because payments
on the Junior Subordinated Debentures are the
sole source of funds for Distributions on and redemptions
of the Preferred Securities, prospective purchasers of the
Preferred Securities are also making an investment
decision with regard to the Junior Subordinated
Debentures and should carefully review all of the
information regarding the Junior Subordinated Debentures
contained herein. See "Risk Factors" and "Description of
the Junior Subordinated Debentures."
NASDAQ NATIONAL MARKET SYMBOL................... Application has been made to have the Preferred
Securities approved for listing on The NASDAQ Stock
Market's National Market under the symbol "BKUNZ."
</TABLE>
8
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA
The information for, and as of the end of, the six months ended March
31, 1997 and 1996 is unaudited, but in the opinion of management reflects all
adjustments (consisting only of normal recurring accruals) necessary for a fair
presentation of the results for such periods. The results for the six months
ended March 31, 1997 are not necessarily indicative of the results that may be
expected for the entire year. The summary consolidated financial information
should be read in conjunction with (i) the Company's Consolidated Financial
Statements and Notes thereto contained in the Company's Annual Report on Form
10-K/A for the fiscal year ended September 30, 1996 attached as Appendix A to
this Prospectus; and (ii) the Company's March 31, 1997 Operating Results and
Financial Information attached as Appendix B to this Prospectus; and (iii) the
Financial Statements of Suncoast attached as Appendix C to this
Prospectus.
<TABLE>
<CAPTION>
AT OR FOR THE SIX
MONTHS ENDED
MARCH 31, AT OR FOR THE FISCAL YEARS ENDED SEPTEMBER 30,
------------------- -----------------------------------------------------
1997(1) 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS DATA:
Interest income........................... $ 43,696 $ 23,326 $ 52,132 $ 39,419 $ 30,421 $ 25,722 $24,243
Interest expense.......................... 27,241 16,030 34,622 26,305 16,295 12,210 14,022
---------- --------- --------- --------- ---------- --------- -------
Net interest income before provision
(credit) for loan losses................ 16,455 7,296 17,510 13,114 14,126 13,512 10,221
Provision (credit) for loan losses........ 415 (300) (120) 1,221 1,187 1,052 70
---------- --------- --------- --------- ---------- --------- -------
Net interest income after provision
(credit) for loan losses................ 16,040 7,596 17,630 11,893 12,939 12,460 10,151
---------- --------- --------- --------- ---------- --------- -------
Non-interest income:
Service fees.............................. 1,449 281 597 423 358 221 142
Gain on sales of loans and
mortgage-backed securities, net......... 2 3 5 239 150 1,496 94
(Loss) gain on sales of other assets,
net(2).................................. -- (7) (6) 9,569 -- -- 2
Other..................................... 150 10 53 6 46 2 25
---------- --------- --------- --------- ---------- --------- -------
Total non-interest income............... 1,601 287 649 10,237 554 1,719 263
---------- --------- --------- --------- ---------- --------- -------
Non-interest expense:
Employee compensation and benefits........ 4,436 2,023 4,275 3,997 3,372 2,721 1,986
Occupancy and equipment................... 1,615 786 1,801 1,727 1,258 978 940
Insurance (3)............................. 471 469 3,610 1,027 844 835 697
Professional fees......................... 542 477 929 1,269 833 543 542
Preferred Dividends of Trust Subsidiary... 1,355 -- -- -- -- -- --
Other..................................... 3,515 1,537 3,421 4,129 3,579 2,746 2,002
---------- --------- --------- --------- ---------- --------- -------
Total non-interest expense.............. 11,934 5,292 14,036 12,149 9,886 7,823 6,167
---------- --------- --------- --------- ---------- --------- -------
Income before income taxes and Preferred
Stock dividends......................... 5,707 2,591 4,243 9,981 3,607 6,356 4,247
Provision for income taxes(4)............. 2,265 987 1,657 3,741 1,328 2,318 1,538
---------- --------- --------- --------- ---------- --------- -------
Net income before Preferred Stock
dividends............................... 3,442 1,604 2,586 6,240 2,279 4,038 2,709
Preferred Stock dividends................. 1,449 1,072 2,145 2,210 2,069 1,513 875
---------- --------- --------- --------- ---------- --------- -------
Net income after Preferred Stock dividends $ 1,993 $ 532 $ 441 $ 4,030 $ 210 $ 2,525 $ 1,834
========== ========= --------- ========= ========== ========= =======
FINANCIAL CONDITION DATA:
Total assets.............................. $1,453,161 $ 738,491 $ 824,360 $ 608,415 $ 551,075 $ 435,378 $345,931
Loans receivable, net, and mortgage-backed
securities(5)........................... 1,319,181 630,519 716,550 506,132 470,154 313,899 250,606
Investments, overnight deposits, tax
certificates, repurchase agreements,
certificates of deposits and other
interest earning assets................. 55,917 86,336 87,662 88,768 64,783 100,118 83,445
Total liabilities......................... 1,284,258 669,023 755,249 562,670 509,807 397,859 322,907
Deposits.................................. 1,011,475 423,568 506,106 310,074 347,795 295,108 275,026
Borrowings................................ 252,259 239,775 237,775 241,775 158,175 97,775 42,241
Trust Preferred Securities................ 70,000 -- -- -- -- -- --
Total stockholders' equity................ 98,903 69,468 69,111 45,745 41,268 30,273 16,797
Common stockholders' equity............... 64,799 45,155 44,807 21,096 16,667 17,162 11,134
PER COMMON SHARE DATA:
Primary earnings per common share and
common equivalent share................. $ .25 $ .18 $ .10 $ 1.77 $ .10 $ 1.42 $ 1.27
========== ========= --------- --------- ========== ========= =======
Earnings per common share assuming
full dilution........................... $ .25 $ .18 $ .10 $ 1.26 $ .10 $ 1.00 $ .92
========== ========= --------- ========= ========== ========= =======
Weighted average number of common shares
and common equivalent shares assumed
outstanding during the period:
Primary................................. 7,952,197 3,022,388 4,558,521 2,296,021 2,175,210 1,773,264 1,448,449
Fully diluted........................... 8,674,187 3,035,458 4,558,521 4,158,564 2,175,210 3,248,618 2,376,848
Equity per common share................... $ 7.32 $ 7.49 $ 7.85 $ 10.20 $ 8.33 $ 8.86 $ 8.51
Fully converted tangible equity per
common share............................ $ 6.50 $ 7.16 $ 7.13 $ 8.15 $ 7.39 $ 7.57 $ 6.86
</TABLE>
(Continued on next page)
9
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE SIX
MONTHS ENDED
MARCH 31, AT OR FOR THE FISCAL YEARS ENDED SEPTEMBER 30,
------------------- -----------------------------------------------------
1997(1) 1996 1996 1995 1994 1993 1992
------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS: (Annualized
where appropriate)
PERFORMANCE RATIOS:
Return on average assets(6)................. .58% .50% .36% 1.10% .46% 1.12% .92%
Return on average common equity............. 8.37 4.10 1.30 22.60 1.21 18.55 17.68
Return on average total equity.............. 7.74 6.34 4.30 14.70 5.84 14.07 14.72
Interest rate spread........................ 2.56 1.96 2.10 2.12 2.78 3.59 3.34
Net interest margin......................... 2.91 2.35 2.51 2.39 3.01 3.87 3.63
Dividend payout ratio(7).................... 42.10 66.83 82.95 35.42 96.79 40.66 34.97
Ratio of earnings to combined fixed
charges and preferred stock dividends(8):
Excluding interest on deposits........... 1.37 1.10 1.05 1.52 1.07 1.87 1.83
Including interest on deposits........... 1.11 1.05 1.02 1.21 1.03 1.27 1.18
Total loans, net, and mortgage-backed
securities to total deposits............. 130.42 148.86 141.58 163.13 134.40 109.65 91.12
Non-interest expenses to average assets..... 1.79 1.65 1.97 2.14 2.04 2.18 2.09
Efficiency ratio(9)......................... 62.80 68.60 76.45 14.58 66.06 45.17 57.76
ASSET QUALITY RATIOS:
Ratio of non-performing loans to total
loans..................................... .82% .95% .99% 1.02% 1.07% 1.54% .45%
Ratio of non-performing assets to total
loans, real estate owned and tax
certificates.............................. .93 1.24 1.14 1.35 1.41 1.78 .66
Ratio of non-performing assets to total
assets.................................... .79 .99 .95 1.10 1.17 1.46 .50
Ratio of charge-offs to total loans......... .04 .04 .08 .13 .39 .07 --
Ratio of loan loss allowance to total loans. .24 .38 .34 .32 .20 .38 .11
Ratio of loan loss allowance to
non-performing loans...................... 28.92 40.24 33.74 31.54 18.89 24.70 25.41
CAPITAL RATIOS:
Ratio of average common equity to average
total assets.............................. 4.03% 4.06% 4.78% 3.14% 3.58% 3.79% 3.51%
Ratio of average total equity to average
total assets.............................. 7.52 7.91 8.44 7.47 8.05 7.99 6.24
Tangible capital-to-assets ratio(10)........ 8.39 7.10 7.01 7.09 6.65% 7.56% 6.66%
Core capital-to-assets ratio(10)............ 8.39 7.10 7.01 7.09 6.65 7.56 6.66
Risk-based capital-to-assets ratio(10)...... 13.34 14.97 14.19 15.79 14.13 15.85 14.42
<FN>
- ----------
(1) Includes operations of Suncoast, from date of acquisition.
(2) In 1995, the Company recorded a $9.3 million gain ($5.8 million after tax) from the sale of its branches on the west coast
of Florida.
(3) In 1996, the Company recorded a one time SAIF special assessment of $2.6 million ($1.6 million after tax).
(4) Amount reflects expense from change in accounting principle of $195,000 for fiscal 1994. See Note 15 of Notes to
Consolidated Financial Statements contained in Appendix A to this Prospectus
.
(5) Does not include mortgage loans held for sale.
(6) Return on average assets is calculated before payment of preferred stock dividends.
(7) The ratio of total dividends declared during the period (including dividends on the Bank's and the Company's preferred
stock and the Company's Class A and Class B Common Stock) to total earnings for the period before dividends.
(8) The ratio of earnings to combined fixed charges and preferred stock dividends excluding interest on deposits is calculated
by dividing income before taxes and extraordinary items by interest on borrowings plus 33% of rental expense plus preferred
stock dividends on a pretax basis. The ratio of earnings to combined fixed charges and preferred stock dividends including
interest on deposits is calculated by dividing income before taxes and extraordinary items by interest on deposits plus
interest on borrowings plus 33% of rental expense plus preferred stock dividends on a pretax basis.
(9) Efficiency ratio is calculated by dividing non-interest expenses less non-interest income by net interest income.
(10) Regulatory capital ratio of the Bank.
</FN>
</TABLE>
10
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE PREFERRED SECURITIES INVOLVES A HIGH DEGREE OF
RISK. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER, TOGETHER WITH THE OTHER
INFORMATION CONTAINED AND INCORPORATED BY REFERENCE IN THIS PROSPECTUS, THE
FOLLOWING FACTORS IN EVALUATING THE COMPANY, ITS BUSINESS AND THE TRUST ISSUER
BEFORE PURCHASING THE PREFERRED SECURITIES OFFERED HEREBY. PROSPECTIVE INVESTORS
SHOULD NOTE, IN PARTICULAR, THAT THIS PROSPECTUS CONTAINS FORWARD-LOOKING
STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), AND SECTION 21E OF THE SECURITIES EXCHANGE ACT
OF 1934, AS AMENDED (THE "EXCHANGE ACT"), THAT INVOLVE SUBSTANTIAL RISKS AND
UNCERTAINTIES. WHEN USED IN THIS PROSPECTUS, OR IN THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN, THE WORD "ANTICIPATE," "BELIEVE," "ESTIMATE," "MAY," "INTEND"
AND "EXPECT" AND SIMILAR EXPRESSIONS IDENTIFY CERTAIN OF SUCH FORWARD-LOOKING
STATEMENTS. ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS COULD DIFFER MATERIALLY
FROM THOSE CONTEMPLATED, EXPRESSED OR IMPLIED BY THE FORWARD-LOOKING STATEMENTS
CONTAINED HEREIN. THE CONSIDERATIONS LISTED BELOW REPRESENT CERTAIN IMPORTANT
FACTORS THE COMPANY BELIEVES COULD CAUSE SUCH RESULTS TO DIFFER. THESE
CONSIDERATIONS ARE NOT INTENDED TO REPRESENT A COMPLETE LIST OF THE GENERAL OR
SPECIFIC RISKS THAT MAY AFFECT THE COMPANY AND THE TRUST ISSUER. IT SHOULD BE
RECOGNIZED THAT OTHER RISKS, INCLUDING GENERAL ECONOMIC FACTORS AND EXPANSION
STRATEGIES, MAY BE SIGNIFICANT, PRESENTLY OR IN THE FUTURE, AND THE RISKS SET
FORTH BELOW MAY AFFECT THE COMPANY AND THE TRUST ISSUER TO A GREATER EXTENT THAN
INDICATED.
RISK FACTORS RELATING TO THE OFFERING
SUBORDINATION OF THE GUARANTEE AND THE JUNIOR SUBORDINATED DEBENTURES
The obligations of the Company under the Guarantee issued by the
Company for the benefit of the holders of the Preferred Securities and under the
Junior Subordinated Debentures issued to the Trust Issuer will be unsecured and
will rank subordinate and junior in right of payment to all Senior Debt of the
Company. At March 31, 1997, the Company had no outstanding Senior Debt, but did
have outstanding $72.8 million of 10 1/4% Junior Subordinated Deferrable
Interest Debentures which rank PARI PASSU with the Junior Subordinated
Debentures Securities. There is no limitation on the amount of Senior Debt, or
subordinated debt which is PARI PASSU with the Junior Subordinated Debentures,
which the Company may issue. Because the Company is a holding company, the right
of the Company to participate in any distribution of assets of any subsidiary,
including the Bank, upon such subsidiary's liquidation or reorganization or
otherwise (and thus the ability of holders of the Preferred Securities to
benefit indirectly from such distribution), is subject to the prior claims of
creditors of that subsidiary (including depositors in the Bank), except to the
extent that the Company may itself be recognized as a creditor of that
subsidiary. If the Company is a creditor of a subsidiary, the claims of the
Company would be subject to any prior security interest in the assets of the
subsidiary and any indebtedness of the subsidiary senior to that of the Company.
Accordingly, 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. At March 31, 1997 the Bank had liabilities of
$1.3 billion (including $1.0 billion in deposits). Only the capital stock of the
Company is currently junior in right of payment to the Junior Subordinated
Debentures to be issued to the Trust Issuer. Holders of the Junior Subordinated
Debentures will be able to look only to the assets of the Company for payments
on the Junior Subordinated Debentures. None of the Indenture, the Guarantee, the
Expense Agreement or the Trust Agreement
11
<PAGE>
places any limitation on the amount of secured or unsecured debt, including
Senior Debt, that may be incurred by the Company. The Company expects from time
to time to incur additional indebtedness constituting Senior Debt. See
"Description of the Guarantee-Status of the Guarantee" and "Description of the
Junior Subordinated Debentures-Subordination."
SOURCE OF PAYMENTS TO HOLDERS OF PREFERRED SECURITIES
As a savings and loan holding company, the Company conducts its
operations principally through its subsidiaries and, therefore, its principal
source of cash, other than its investing and financing activities, is the
receipt of dividends from the Bank. Since the Company is without significant
assets other than the capital stock of the Bank, the ability of the Company to
pay interest on the principal of the Junior Subordinated Debentures to the Trust
Issuer (and consequently, the Trust Issuer's ability to pay Distributions on the
Preferred Securities and the Company's ability to pay its obligations under the
Guarantee) will be dependent on the ability of the Bank to pay dividends to the
Company in amounts sufficient to service the Company's obligations. The Company
is currently obligated to pay interest semi-annually on its outstanding 10 1/4%
Junior Subordinated Deferrable Interest Debentures and may become obligated to
make other payments with respect to securities issued by the Company in the
future which are PARI PASSU or have a preference over the Junior Subordinated
Debentures issued to the Trust Issuer with respect to the payment of principal,
interest or dividends. There is no restriction on the ability of the Company to
issue, or limitations on the amount of securities which the Company may issue,
which are PARI PASSU or have a preference over the Junior Subordinated
Debentures issued to the Trust Issuer, nor is there any restriction on the
ability of the Bank to issue additional capital stock or incur additional
indebtedness.
There are legal limitations on the source and amount of dividends that
a savings bank such as the Bank is permitted to pay. The current OTS regulation
applicable to the payment of dividends or other capital distributions by savings
institutions imposes limits on capital distributions based on an institution's
regulatory capital levels and net income. An institution that meets or exceeds
all of its fully phased-in capital requirements (both before and after giving
effect to the distribution) and is not in need of more than normal supervision
would be a "Tier 1 association." A Tier I association may make capital
distributions during a calendar year of up to the greater of (i) 100% of net
income for the current calendar year plus 50% of its capital surplus or (ii) 75%
of its net income over the most recent four quarters. Any additional capital
distributions would require prior regulatory approval. The Bank currently
exceeds its fully phased-in capital requirements and qualifies as a Tier 1
association under the regulation, but there is no assurance that the Bank will
continue to so qualify.
An institution that meets the minimum regulatory capital requirements
but does not meet the fully phased-in capital requirements would be a "Tier 2
association," which may make capital distributions of between 25% and 75% of its
net income over the most recent four-quarter period, depending on the
institution's risk-based capital level. A "Tier 3 association" is defined as an
institution that does not meet all of the minimum regulatory capital
requirements and therefore may not make any capital distributions without the
prior approval of the OTS.
12
<PAGE>
Savings institutions must provide the OTS with at least 30 days written
notice before making any capital distributions. All such capital distributions
are also subject to the OTS' right to object to a distribution on safety and
soundness grounds.
RIGHT TO DEFER INTEREST PAYMENT OBLIGATION; TAX CONSEQUENCES; MARKET PRICE
CONSEQUENCES
So long as no event of default under the Indenture has occurred and is
continuing, the Company has the right under the Indenture to defer the payment
of interest on the Junior Subordinated Debentures, at any time or from time to
time, for a period not exceeding 20 consecutive quarters with respect to each
Extension Period, provided that no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debentures. As a consequence of any such
deferral, quarterly Distributions on the Preferred Securities by the Trust
Issuer would also be deferred (and the amount of Distributions to which holders
of the Preferred Securities are entitled would 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 such Extension Period, the Company may not, and may not
permit any subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Company's capital stock, (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank PARI PASSU with or junior in interest
to the Junior Subordinated Debentures or (iii) make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any subsidiary
of the Company if such guarantee ranks PARI PASSU with or junior in interest to
the Junior Subordinated Debentures (other than (a) the reclassification of the
Company's capital stock into another class of capital stock, (b) dividends or
distributions in common stock of the Company, (c) 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, (d) payments under the Guarantee
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). Prior to the termination of any such Extension Period, the Company
may further defer the payment of interest, provided that no Extension Period may
exceed 20 consecutive quarters or extend beyond the Stated Maturity of the
Junior Subordinated Debentures. Upon the termination of any Extension Period and
the payment of all interest then accrued and unpaid on the Junior Subordinated
Debentures (together with interest thereon at the annual rate of ___%,
compounded quarterly from the relevant payment date for such interest, 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 so
long as no event of default under the Indenture has occurred and is continuing.
See "Description of the Preferred Securities--Distributions" and "Description of
the Junior Subordinated Debentures-Right to Defer Interest Payment Obligation."
If an Extension Period were to occur, a holder of the Preferred
Securities would continue to accrue income (in the form of original issue
discount) for United States federal income tax purposes in respect of its PRO
RATA share of the interest accruing on the Junior Subordinated Debentures held
by the Trust Issuer. As a result, a holder of the Preferred Securities would be
required to include such income in gross income for United States federal income
tax purposes in advance of the receipt
13
<PAGE>
of cash and would not receive the cash related to such income from the Trust
Issuer if the holder disposed of the Preferred Securities prior to the record
date for the payment of Distributions. See "Certain Federal Income Tax
Consequences--Interest Income and Original Issue Discount" and "--Sales or
Redemption of the Preferred Securities."
The Company has no current intention of exercising its right to defer
payments of interest on the Junior Subordinated Debentures. However, should the
Company elect to exercise such right in the future, the market price of the
Preferred Securities would likely be adversely affected. A holder that disposed
of its Preferred Securities during an Extension Period, therefore, might not
receive the same return on its investment as a holder that continued to hold its
Preferred Securities. In addition, as a result of the existence of the Company's
right to defer interest payments, the market price of the Preferred Securities
may be more volatile than the market prices of other similar securities that are
not subject to such deferrals.
SHORTENING OF STATED MATURITY OF JUNIOR SUBORDINATED DEBENTURES
The Company has the right, at any time, to shorten the maturity of the
Junior Subordinated Debentures to a date not earlier than ______, 2002. The
exercise of such right is subject to the Company having received prior
regulatory approval. See "Description of the Junior Subordinated Debentures--
General."
REDEMPTION DUE TO TAX EVENT, INVESTMENT COMPANY EVENT OR CAPITAL TREATMENT EVENT
The Company has the right, but not the obligation, to redeem the Junior
Subordinated Debentures in whole (but not in part) within 180 days following the
occurrence of a Tax Event, an Investment Company Event or a Capital Treatment
Event (whether occurring before or after __________, 2002), and, therefore,
cause a mandatory redemption of the Preferred Securities. The exercise of such
right may be subject to the Company having received prior regulatory approval.
A "Tax Event" means the receipt by the Trust Issuer 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 date of issuance of
the Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Trust Issuer 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 Issuer 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. The Company must request and receive an opinion with
regard
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to such matters within a reasonable period of time after it becomes aware of the
possible occurrence of any of the events described in clauses (i) through (iii)
above.
"Investment Company Event" means the receipt by the Trust Issuer of an
opinion of counsel experienced in such matters to the effect that, as a result
of the occurrence of a change in law or regulation or a change in interpretation
or application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, the Trust Issuer is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended (the "Investment Company Act"), which change
occurs or becomes effective on or after the date of original issuance of the
Preferred Securities.
"Capital Treatment Event" means the reasonable determination by the
Company that, as a result of any amendment to, or change (including any proposed
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such proposed change, pronouncement, action or decision is announced on or after
the date of original issuance of the Preferred Securities, there is more than an
insubstantial risk that the Company will not be entitled to treat an amount
equal to the Liquidation Amount of the Preferred Securities as "Tier 1 Capital"
(or the then equivalent thereof) for purposes of applicable capital adequacy
guidelines of the Federal Reserve (or any successor regulatory authority with
jurisdiction over bank holding companies), or any capital adequacy guidelines as
then in effect and applicable to the Company.
See "Certain Federal Income Tax Consequences--Possible Tax Law Changes"
for a discussion of certain legislative proposals that, if adopted, could give
rise to a Tax Event, which would permit the Company to cause a redemption of the
Preferred Securities.
EXCHANGE OF PREFERRED SECURITIES FOR JUNIOR SUBORDINATED DEBENTURES; REDEMPTION
AND TAX CONSEQUENCES
The Company has the right at any time to dissolve, wind-up or terminate
the Trust Issuer and, after the satisfaction of liabilities to creditors of the
Trust Issuer as required by applicable law, cause the Junior Subordinated
Debentures to be distributed to the holders of the Preferred Securities in
exchange therefor in liquidation of the Trust Issuer. The exercise of such right
may be subject to the Company having received prior regulatory approval. The
Company will have the right, in certain circumstances, to redeem the Junior
Subordinated Debentures in whole or in part, in lieu of a distribution of the
Junior Subordinated Debentures by the Trust Issuer, in which event the Trust
Issuer will redeem the Preferred Securities on a pro rata basis to the same
extent as the Junior Subordinated Debentures are redeemed by the Company. Any
such distribution or redemption prior to the Stated Maturity will be subject to
prior regulatory approval if then required under applicable capital guidelines
or regulatory policies. See "Description of the Preferred Securities-Liquidation
of the Trust Issuer and Distribution of the Junior Subordinated Debentures to
Holders" and "Description of the Subordinated Debenture--Redemption or
Exchange."
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Under current United States federal income tax law, a distribution of
Junior Subordinated Debentures upon the dissolution of the Trust Issuer would
not be a taxable event to holders of the Preferred Securities. If, however, the
Trust Issuer were characterized as an association taxable as a corporation at
the time of the dissolution of the Trust Issuer, the distribution of the Junior
Subordinated Debentures would constitute a taxable event to holders of Preferred
Securities. Moreover, any redemption of the Preferred Securities for cash would
be a taxable event to such holders. See "Certain Federal Income Tax
Consequences-Distribution of the Junior Subordinated Debentures to Holders of
the Preferred Securities" and "--Sales or Redemption of the Preferred
Securities."
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities upon a dissolution or liquidation of the Trust
Issuer. The Preferred Securities or the Junior Subordinated Debentures may trade
at a discount to the price that the investor paid to purchase the Preferred
Securities offered hereby. Because holders of Preferred Securities may receive
Junior Subordinated Debentures as a result of the liquidation of the Trust, and
because payments on the Junior Subordinated Debentures are the sole source of
funds for Distributions and redemptions of the Preferred Securities, prospective
purchasers of Preferred Securities are also making an investment decision with
regard to the Junior Subordinated Debentures and should carefully review all the
information regarding the Junior Subordinated Debentures contained herein.
If the Junior Subordinated Debentures are distributed to the holders of
Preferred Securities upon the liquidation of the Trust Issuer, the Company will
use its reasonable efforts to list the Junior Subordinated Debentures on the
NASDAQ Stock Market's National Market or SmallCap Market or such stock
exchanges, if any, on which the Preferred Securities are then listed.
RIGHTS UNDER THE GUARANTEE
The Guarantee guarantees to the holders of the Preferred Securities the
following payments, to the extent not paid by the Trust Issuer: (i) any
accumulated and unpaid Distributions required to be paid on the Preferred
Securities, to the extent that the Trust Issuer has funds on hand available
therefor at such time, (ii) the redemption price with respect to any Preferred
Securities called for redemption, to the extent that the Trust Issuer has funds
on hand available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, winding-up or liquidation of the Trust Issuer (unless
the Junior Subordinated Debentures are distributed to holders of the Preferred
Securities in exchange therefor), 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 Issuer has funds on hand available
therefor at such time, and (b) the amount of assets of the Trust Issuer
remaining available for distribution to holders of the Preferred Securities
after payment of creditors of the Trust Issuer as required by applicable law.
If the Company were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Trust Issuer would lack funds for
the payment of Distributions or amounts payable on redemption of the Preferred
Securities or otherwise, and, in such event, holders of the Preferred Securities
would not be able to rely upon the Guarantee for payment of such
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<PAGE>
amounts. The holders of not less than a majority in aggregate Liquidation Amount
of the Preferred Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Guarantee Trustee
in respect of the Guarantee or to direct the exercise of any trust power
conferred upon the Guarantee Trustee under the Guarantee. Any holder of the
Preferred Securities may institute a legal proceeding directly against the
Company to enforce its rights under the Guarantee without first instituting a
legal proceeding against the Trust Issuer, the Guarantee Trustee or any other
person or entity. In the event an event of default under the Indenture shall
have occurred and be continuing and such event is attributable to the failure of
the Company to pay interest on or principal of the Junior Subordinated
Debentures on the applicable payment date, a holder of the Preferred Securities
may institute a legal proceeding directly against the Company for enforcement of
payment to such holder of the principal of or interest on such Junior
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Preferred Securities of such holder (a "Direct
Action"). The exercise by the Company of its right, as described herein, to
defer the payment of interest on the Junior Subordinated Debentures does not
constitute an event of default under the Indenture. In connection with any
Direct Action, the Company will have a right of set-off under the Indenture to
the extent of any payment made by the Company to such holder of the Preferred
Securities in the Direct Action. Except as described herein, holders of the
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Junior Subordinated Debentures or assert
directly any other rights in respect of the Junior Subordinated Debentures. The
Bank of New York will act as the guarantee trustee under the Guarantee (the
"Guarantee Trustee") and will hold the Guarantee for the benefit of the holders
of the Preferred Securities. The Bank of New York will also act as Debenture
Trustee for the Junior Subordinated Debentures and as Property Trustee, and The
Bank of New York (Delaware) will act as Delaware Trustee under the Trust
Agreement. See "Description of the Junior Subordinated Debentures-Enforcement of
Certain Rights by Holders of the Preferred Securities," "Description of the
Junior Subordinated Debentures-Debenture Events of Default" and "Description of
the Guarantee." The Trust Agreement provides that each holder of the Preferred
Securities by acceptance thereof agrees to the provisions of the Guarantee and
the Indenture.
LIMITED COVENANTS
The covenants in the Indenture are limited and there are no covenants
in the Trust Agreement. As a result, neither the Indenture nor the Trust
Agreement protects holders of Junior Subordinated Debentures or Preferred
Securities, respectively, in the event of a material adverse change in the
Company's financial condition or results of operations or limits the ability of
the Company or any subsidiary to incur or assume additional indebtedness or
other obligations. Additionally, neither the Indenture nor the Trust Agreement
contains any financial ratios or specified levels of liquidity to which the
Company must adhere. Therefore, the provisions of these governing instruments
should not be considered a significant factor in evaluating whether the Company
will be able to or will comply with its obligations under the Junior
Subordinated Debentures or the Guarantee.
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<PAGE>
LIMITED VOTING RIGHTS
Holders of the Preferred Securities will generally have limited voting
rights relating only to the modification of the Preferred Securities and the
exercise of the Trust Issuer's rights as holder of the Junior Subordinated
Debentures and the Guarantee. Holders of the Preferred Securities will not be
entitled to vote to appoint, remove or replace the Property Trustee, the
Delaware Trustee or the Administrative Trustees, as such voting rights are
vested exclusively in the Company, as the holder of the Common Securities
(except, with respect to the Property Trustee and the Delaware Trustee, upon the
occurrence of certain events described herein). The Property Trustee, the
Administrative Trustees and the Company may amend the Trust Agreement without
the consent of holders of the Preferred Securities to ensure that the Trust
Issuer will be classified for United States federal income tax purposes as a
grantor trust even if such action adversely affects the interests of such
holders. See "Description of the Preferred Securities--Voting Rights; Amendment
of the Trust Agreement" and "--Removal of the Trust Issuer Trustees."
ABSENCE OF PRIOR PUBLIC MARKET FOR THE PREFERRED SECURITIES; TRADING PRICE AND
TAX CONSIDERATIONS
There is no current public market for the Preferred Securities.
Application has been made to list the Preferred Securities on the NASDAQ Stock
Market's National Market. However, one of the requirements for listing and
continued listing is the presence of two market makers for the Preferred
Securities. The Company has been advised that the Underwriters intend to make a
market in the Preferred Securities. However, the Underwriters are not obligated
to do so and such market making may be discontinued at any time. Therefore,
there is no assurance that an active trading market will develop for the
Preferred Securities or, if such market develops, that it will be maintained or
that the market price will equal or exceed the public offering price set forth
on the cover page of this Prospectus. Accordingly, holders of Preferred
Securities may experience difficulty reselling them or may be unable to sell
them at all. The public offering price for the Preferred Securities has been
determined through negotiations between the Company and the Underwriters. Prices
for the Preferred Securities will be determined in the marketplace and may be
influenced by many factors, including prevailing interest rates, the liquidity
of the market for the Preferred Securities, investor perceptions of the Company
and general industry and economic conditions.
Further, should the Company exercise its option to defer any payment of
interest on the Junior Subordinated Debentures, the Preferred Securities would
be likely to trade at prices that do not fully reflect the value of accrued but
unpaid interest with respect to the underlying Junior Subordinated Debentures.
In the event of such a deferral, a holder of Preferred Securities that disposed
of its Preferred Securities between record dates for payments of Distributions
(and consequently did not receive a Distribution from the Trust Issuer for the
period prior to such disposition) would nevertheless be required to include
accrued but unpaid interest on the Junior Subordinated Debentures through the
date of disposition in income as ordinary income and to add such amount to the
adjusted tax basis of the Preferred Securities disposed of. Such holder would
recognize a capital loss to the extent the selling price (which might not fully
reflect the value of accrued but unpaid interest) was less than its adjusted tax
basis (which would include all accrued but unpaid interest). 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
Consequences-Sales or Redemption of the Preferred Securities."
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<PAGE>
PREFERRED SECURITIES AND JUNIOR SUBORDINATED DEBENTURES ARE NOT INSURED
The Preferred Securities and Junior Subordinated Debentures are not
insured by the Bank Insurance Fund or the Savings Association Insurance Fund of
the Federal Deposit Insurance Corporation or by any other governmental agency.
POSSIBLE TAX LAW CHANGES AFFECTING THE PREFERRED SECURITIES
On February 6, 1997, President Clinton released his budget proposals
for fiscal year 1998. One of the revenue provisions of those proposals would
generally deny deductions for interest on an instrument issued by a corporation
that has a maximum term of more than 15 years and that is not shown as
indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. If enacted as
proposed by the President, this provision would be effective for instruments
issued on or after the date of first action by a Congressional committee with
respect to the proposal. It is not clear from the President's proposals what
will constitute Congressional "committee action" with respect to this proposal.
If the provision were to apply to the Junior Subordinated Debentures, the
Company would be unable to deduct interest on the Junior Subordinated
Debentures. Under current law, the Company will be able to deduct interest on
the Junior Subordinated Debentures. However, there is no assurance that future
legislation will not affect the ability of the Company to deduct interest on the
Junior Subordinated Debentures. Such a change would give rise to a Tax Event. A
Tax Event would permit the Company, upon receipt of regulatory approval if then
required under applicable capital guidelines or regulatory policies, to cause a
redemption of the Preferred Securities before, as well as after, __, 2002. See
"Description of the Junior Subordinated Debentures-Redemption or Exchange" and
"Certain Federal Income Tax Consequences-Possible Tax Law Changes."
RISK FACTORS RELATING TO THE COMPANY
POTENTIAL IMPACT OF CHANGES IN INTEREST RATES
The Bank's profitability is dependent to a large extent on its net
interest income, which is the difference between its income on interest-earning
assets and its expense on interest-bearing liabilities. The Bank, like most
financial institutions, is affected by changes in general interest rate levels
and by other economic factors beyond its control. Interest rate risk arises from
mismatches (i.e., the interest sensitivity gap) between the dollar amount of
repricing or maturing assets and liabilities, and is measured in terms of the
ratio of the interest rate sensitivity gap to total assets. More assets than
liabilities repricing or maturing over a given time frame is considered
asset-sensitive and is reflected as a positive gap, and more liabilities than
assets repricing or maturing over a given time frame is considered
liability-sensitive and is reflected as a negative gap. An asset-sensitive
position (i.e., a positive gap) will generally enhance earnings in a rising
interest rate environment and will reduce earnings in a falling interest rate
environment, while a liability-sensitive position (i.e., a negative gap) will
generally enhance earnings in a falling interest rate environment and reduce
earnings in a rising
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interest rate environment. Fluctuations in interest rates are not predictable or
controllable. At March 31, 1997, the Bank had a one year cumulative negative gap
of 10.84%. This negative one year gap position may, as noted above, have a
negative impact on earnings in a rising interest rate environment. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition-Interest Rate Sensitivity" contained in Appendix A to this Prospectus.
The Company faces significant risk that its net interest income will be
adversely affected if interest rates should rise or fall rapidly. If interest
rates rise rapidly, certain adjustable loans held by the Company will stop
repricing as interest rate caps on its adjustable rate mortgages ("ARMs") take
effect. The ARMs typically have annual interest rate caps that limit rate
increases to 2% per year. At March 31, 1997 the Company's residential loan
portfolio included $953.3 million of ARMs (78.9% of the Company's gross loan
portfolio).
Additionally, the Company sometimes purchases or originates loans with
"teaser" rates that are below market rates during an initial period after the
loan is originated. For loans with teaser rates, the borrower's ability to repay
is usually determined upon fully indexed rates. At March 31, 1997, $87.9 million
of the Company's ARM loans (7.3% of the Company's gross loan portfolio) were in
the "teaser rate" period.
There can be no assurances of the Company's ability to continue to
achieve positive net interest income. See "Management's Discussion and Analysis
of March 31, 1997 Operating Results and Financial Information-Asset and
Liability Management-Gap Table."
ALLOWANCE FOR LOAN LOSSES
Industry experience indicates that a portion of the Company's loans
will become delinquent and a portion of the loans will require partial or entire
charge-off. Regardless of the underwriting criteria utilized by the Company,
losses may be experienced as a result of various factors beyond the Company's
control, including, among other things, changes in market conditions affecting
the value of properties and problems affecting the credit of the borrower. The
Company's determination of the adequacy of its allowance for loan losses is
based on various considerations, including an analysis of the risk
characteristics of various classifications of loans, previous loan loss
experience, specific loans which would have loan loss potential, delinquency
trends, estimated fair value of the underlying collateral, current economic
conditions, the views of the Company's regulators, and geographic and industry
loan concentration. However, if delinquency levels were to increase as a result
of adverse general economic conditions, especially in Florida and California
where the Company's exposure is greatest, the loan loss reserve so determined by
the Company may not be adequate. There can be no assurance that the allowance
will be adequate to cover loan losses or that the Company will not experience
significant losses in its loan portfolios which may require significant
increases to the allowance for loan losses in the future.
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REGULATORY OVERSIGHT
The Bank is subject to extensive regulation, supervision and
examination by the OTS as its chartering authority and primary federal
regulator, and by the FDIC, which insures its deposits up to applicable limits.
The Bank is a member of the FHLB of Atlanta and is subject to certain limited
regulation by the Federal Reserve Board. As the holding company of the Bank, the
Company is also subject to regulation and oversight by the OTS. Such regulation
and supervision governs the activities in which an institution may engage and is
intended primarily for the protection of the FDIC insurance funds and
depositors. Regulatory authorities have been granted extensive discretion in
connection with their supervisory and enforcement activities and regulations
have been implemented which have increased capital requirements, increased
insurance premiums and have resulted in increased administrative, professional
and compensation expenses. Any change in the regulatory structure or the
applicable statutes or regulations could have a material impact on the Company
and the Bank and their operations. Additional legislation and regulations may be
enacted or adopted in the future which could significantly affect the powers,
authority and operations of the Bank and the Bank's competitors which in turn
could have a material adverse effect on the Bank and its operations. See
"Regulation" contained in Appendix A to this Prospectus.
COMPOSITION OF RESIDENTIAL AND COMMERCIAL LOAN PORTFOLIO
GEOGRAPHIC CONCENTRATION. Most of the loans in the Company's portfolio
are secured by real estate. At March 31, 1997, 48% of the Company's gross loans
receivable were secured by properties located in Florida, 14% by properties
located in California and the balance throughout the country. Therefore,
conditions in the real estate markets in which the collateral for the Company's
mortgage loans are located strongly influence the level of the Company's
non-performing loans and its results of operations. Real estate values are
affected by, among other things, changes in general or local economic
conditions, changes in governmental rules or policies, the availability of loans
to potential purchasers, and natural disasters. Declines in real estate markets
could negatively impact the value of the collateral securing the Company's loans
and its results of operations. In this regard, as a result of the downturn in
the California real estate market in 1993, the Company believes that certain of
its loans secured by real estate in California have current loan to value ratios
that are higher than those when the loans were originated. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations-Financial Condition-Credit Quality" and "Business of BankUnited
Financial Corporation-Lending Activities-Loan Portfolio" contained in Appendix A
to this Prospectus.
LENDING RISKS. The Company's recent operating strategy has included an
increased emphasis on originating and/or purchasing commercial real estate
(including multi-family residential) loans, and originating real estate
construction and commercial business loans. These lending categories are
generally considered to involve a higher degree of credit risk than that for
traditional single-family residential lending, because, among other factors,
such loans involve larger loan balances to a single borrower or groups of
related borrowers. At March 31, 1997, the Company had a balance of $123.5
million in commercial real estate loans, $11.6 million in construction loans and
$7.9 million in commercial business loans. As part of the Suncoast acquisition,
the Company acquired approximately $95.8 million in commercial real estate loans
and $14.1 million in real estate construction loans. See "Business of BankUnited
Financial Corporation-Commercial Real Estate Lending," "--Real Estate
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Construction Lending," and "Commercial Business Lending" contained in Appendix A
to this Prospectus.
COMPETITION
The Company faces substantial competition in purchasing and originating
real estate loans and in attracting deposits. The Company's competition in
originating real estate loans is principally from banks, other thrifts, mortgage
banking companies, real estate financing conduits, and small insurance
companies. In purchasing real estate loans the Company competes with other
participants in the secondary mortgage market. Many entities competing with the
Company enjoy competitive advantages over the Company relative to a potential
borrower or seller in terms of a prior business relationship, wide geographic
presence or more accessible branch office locations, the ability to offer
additional services or more favorable pricing alternatives, a lower origination
and operating cost structure, and other relevant items. The Company does not
have a significant market share of the real estate lending activities in the
areas in which it conducts operations, and increased competition in those areas
from traditional competitors or new sources could result in a decrease in the
origination or purchase of mortgage loans and could adversely affect the
Company's results of operations. In its deposit gathering activities, the
Company competes with insured depository institutions such as thrifts, credit
unions, and banks, as well as uninsured investment alternatives including money
market funds. These competitors may offer higher rates than the Company, which
could result in the Company either attracting fewer deposits or in requiring the
Company to increase the rates it pays to attract deposits. Increased deposit
competition could adversely affect the Company's ability to generate the funds
necessary for its lending operations and could adversely affect the Company's
results of operations. See "Business of BankUnited Financial Corporation-Market
Area and Competition" contained in Appendix A to this Prospectus.
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<PAGE>
BANKUNITED FINANCIAL CORPORATION
The Company is a Florida corporation organized in December 1992 for the
purpose of becoming the savings and loan holding company for BankUnited, FSB
(the "Bank"). This holding company reorganization, together with BankUnited's
conversion from a Florida-chartered stock savings bank to a federally chartered
stock savings bank, became effective on March 5, 1993. At March 31, 1997 the
Company had $1.0 billion in deposits and $98.9 million in stockholders' equity.
With over $1.4 billion in assets, the Company is the fourth largest publicly
held depository institution headquartered in South Florida.
The Company currently has fourteen branch offices in Dade, Broward and
Palm Beach Counties, Florida ("South Florida") and anticipates opening six or
more additional branches by June 30, 1998. The Company's business has
traditionally consisted of attracting deposits from the general public and using
those deposits, together with borrowings and other funds, to purchase nationwide
and to originate in its market area single-family residential mortgage loans,
and to a lesser extent, to purchase and originate commercial real estate,
commercial business and consumer loans. The Company also invests in tax
certificates and other permitted investments. The Company's revenues are derived
principally from interest earned on loans, mortgage-backed securities and
investments. The Company's primary expenses arise from interest paid on deposits
and borrowings and non-interest overhead expenses incurred in operations.
The Bank is a member of the Federal Home Loan Bank system and is
subject to comprehensive regulation, examination and supervision by the Office
of Thrift Supervision (the "OTS") and the Federal Deposit Insurance Corporation
(the "FDIC"). Deposits at the Bank are insured by the Savings Association
Insurance Fund of the FDIC (the "SAIF") to the maximum extent permitted by law.
In 1995, the Company redefined its strategy to increase its emphasis on
strategic product niches which management believes are being underserved as
South Florida's banking market consolidates. The products include commercial
business and commercial real estate lending and deposit services for small to
mid-sized businesses. The Company has also focused on attracting depositors by
stressing convenience, competitive rates and personalized service. In order to
accomplish this strategy, the Company has retained management with expertise in
developing and managing its new product lines.
The Company's operating plan emphasizes (i) concentrating lending
activities on originating single-family residential mortgage loans and
purchasing such loans as favorable market opportunities arise; (ii) expanding
the Company's deposit base by providing convenience, competitive rates and
personalized service in its market area; (iii) continuing expansion of the
Company's branch network through de novo branching or the acquisition of
branches of, and mergers with, existing financial institutions; (iv) expanding
the Company's commercial and multi-family real estate, commercial business, and
real estate construction lending; and (v) managing exposure to interest rate
risk, while optimizing operating results through effective asset/liability
management and investment policies.
The Company intends to continue to establish or acquire branches in
South Florida. In 1995, the Company sold its three branches on the west coast of
Florida, including their deposits, which totaled $130 million at the date of
sale, as part of its strategy to focus on South Florida and take
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advantage of consolidation trends in banking there. As part of this strategy,
the Company also opened branches in Boca Raton, Florida in December 1995, Delray
Beach, Florida in June 1996 and West Palm Beach, Florida in September 1996. On
March 29, 1996, the Company acquired the Bank of Florida with total assets of
$28.1 million which was merged into the Company's South Miami branch. On
November 15, 1996, the Company acquired Suncoast Savings and Loan Association,
FSA ("Suncoast"), a federally chartered stock savings association headquartered
in Hollywood, Florida with assets of $409 million at September 30, 1996, and
merged Suncoast into the Bank. The merger has increased the Company's market
share, particularly in Broward County, has allowed the Company to achieve
economies associated with an in-market merger, and, in the view of management,
will enable the Company to compete more effectively with larger financial
institutions in South Florida. Of Suncoast's six branch offices in South
Florida, five continue to operate and one has been consolidated with an existing
Bank branch office. As part of the Suncoast acquisition, the Company acquired
approximately $95.8 million in commercial real estate loans and $14.1 million in
real estate construction loans, and has greatly expanded its mortgage loan
servicing activities to include processing loan payments, remitting principal
and interest to investors, administering escrow funds and providing other
services in the administration of mortgage loans. The Company is an approved
seller/servicer for GNMA, the Federal Home Loan Mortgage Corporation ("FHLMC")
and Fannie Mae. The Company also services loans under contracts with the FDIC
and other financial institutions. See "Business of BankUnited Financial
Corporation-Commercial Real Estate Lending," "--Real Estate Construction
Lending," and "Commercial Business Lending" contained in Appendix A to this
Prospectus.
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THE TRUST ISSUER
BANKUNITED CAPITAL II
The Trust Issuer, BankUnited Capital II, is a statutory business trust
created under Delaware law pursuant to (i) the Trust Agreement executed by the
Company, as depositor, The Bank of New York, as Property Trustee, The Bank of
New York (Delaware), as Delaware Trustee, and the Administrative Trustees named
therein and (ii) the filing of a certificate of trust with the Delaware
Secretary of State on May 19, 1997. The trust agreement will be amended and
restated in its entirety (as so amended and restated, the "Trust Agreement").
The Trust Issuer 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 Junior Subordinated Debentures issued by the Company and
(iii) engaging in only those other activities necessary, advisable or incidental
thereto (such as registering the transfer of the Trust Securities). Accordingly,
the Junior Subordinated Debentures will be the sole assets of the Trust Issuer,
and payments under the Junior Subordinated Debentures will be the sole revenue
of the Trust Issuer.
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 Preferred Securities, except that upon the occurrence and continuance
of an event of default under the Trust Agreement resulting from an event of
default under the Indenture, the rights of the Company as holder of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption or otherwise will be subordinated to the rights of the holders of the
Preferred Securities. See "Description of the Preferred Securities-Subordination
of the Common Securities." The Company will acquire the Common Securities in an
aggregate Liquidation Amount equal to 4% of the total capital of the Trust
Issuer. The Trust Issuer has a term of 31 years, but may terminate earlier as
provided in the Trust Agreement. The Trust Issuer's business and affairs are
conducted by its trustees, each appointed by the Company as holder of the Common
Securities. The trustees for the Trust Issuer will be The Bank of New York, as
the Property Trustee (the "Property Trustee"), The Bank of New York (Delaware),
as the Delaware Trustee (the "Delaware Trustee"), and two individual trustees
(the "Administrative Trustees") who are employees or officers of or affiliated
with the Company (collectively, the "Trust Issuer Trustees"). The Bank of New
York, as Property Trustee, will act as sole indenture trustee under the Trust
Agreement for purposes of compliance with the Trust Indenture Act. The Bank of
New York will also act as guarantee trustee under the Guarantee and the
Indenture. See "Description of the Guarantee" and "Description of the Junior
Subordinated Debentures." The holder of the Common Securities or the holders of
a majority in Liquidation Amount of the Preferred Securities if an event of
default under the Trust Agreement resulting from an event of default under the
Indenture has occurred and is continuing, will be entitled to appoint, remove or
replace the Property Trustee and/or the Delaware Trustee. In no event will the
holders of the Preferred Securities have the right to vote to appoint, remove or
replace the Administrative Trustees; such voting rights are vested exclusively
in the Company as the holder of the Common Securities. The duties and
obligations of the Trust Issuer Trustees are governed by the Trust Agreement.
The Company will pay all fees and expenses related to the Trust Issuer and the
offering of the Preferred Securities and will pay, directly or indirectly, all
ongoing costs, expenses and liabilities of the Trust Issuer pursuant to the
Expense Agreement.
25
<PAGE>
USE OF PROCEEDS
All of the proceeds from the sale of the Preferred Securities will be
invested, together with the proceeds from the sale of the Common Securities, by
the Trust Issuer in Junior Subordinated Debentures. The Company intends to use
the proceeds from the sale of the Junior Subordinated Debentures for general
corporate purposes, including, but not limited to, acquisitions by either the
Company or the Bank (although there presently exist no agreements or
understandings with respect to any such acquisition), capital contributions to
the Bank to support growth and for working capital, and possible repurchase
of shares of the Company's preferred stock, subject to acceptable
market conditions.
MARKET FOR THE PREFERRED SECURITIES
Application has been made to list the Preferred Securities on the
NASDAQ Stock Market's National Market under the symbol "BKUNZ." Although the
Underwriters have informed the Company that they presently intend to make a
market in the Preferred Securities, the Underwriters are not obligated to do so
and any such market making may be discontinued at any time. Accordingly, there
is no assurance that an active and liquid trading market will develop or, if
developed, that such a market will be sustained. The offering price and
distribution rate have been determined by negotiations among representatives of
the Company and the Underwriters, and the offering price of the Preferred
Securities may not be indicative of the market price following the offering. See
"Underwriting."
ACCOUNTING TREATMENT
For financial reporting purposes, the Trust Issuer will be treated as a
subsidiary of the Company and, accordingly, the Trust Issuer's financial
statements will be included in the consolidated financial statements of the
Company. The Preferred Securities will be presented as a separate line item in
the consolidated statements of financial condition of the Company under the
caption "Company Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trust Holding Solely Junior Subordinated Deferrable Interest
Debentures of the Company" and appropriate disclosures about the Preferred
Securities will be included in the notes to the consolidated financial
statements. For financial reporting purposes, the Company will record
distributions payable on the Preferred Securities as a component of non-interest
expense in the consolidated statements of operations.
In its future financial reports, the Company will: (i) present the
Preferred Securities on the Company's statements of financial condition as a
separate line item entitled "Company Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trust Holding Solely Junior Subordinated Deferrable
Interest Debentures of the Company;" (ii) include in a footnote to the financial
statements disclosure that the sole assets of the Trust Issuer are the Junior
Subordinated Debentures specifying the principal amount, interest rate and
maturity date of Junior Subordinated Debentures held; and (iii) if Staff
Accounting Bulletin No. 53 treatment is sought, include, in an audited footnote
to the financial statements, disclosure that (a) the Trust Issuer is wholly
owned, (b) the sole assets of the Trust Issuer are its Junior Subordinated
Debentures, and (c) the obligations of the Company under the Junior Subordinated
Debentures, the Indenture, the Trust Agreement and the Guarantee, in the
aggregate, constitute a full and unconditional guarantee by the Company of the
Trust Issuer's obligations under the Preferred Securities.
26
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of March 31, 1997, as adjusted to give effect to the consummation of
the offering of the Preferred Securities. The following data should be read in
conjunction with the Consolidated Financial Statements and Notes thereto of the
Company contained in Appendix A to this Prospectus and the Company's March 31,
1997 Operating Results and Financial Information attached as Appendix B to this
Prospectus.
<TABLE>
<CAPTION>
AS
ACTUAL ADJUSTED
------ --------
(Dollars in thousands,
except per share amounts)
<S> <C> <C>
Deposits............................................................. $ 1,011,475 $ 1,011,475
FHLB advances........................................................ 251,484 251,484
Subordinated notes................................................... 775 775
----------- -----------
Total deposits and borrowed funds............................... 1,263,734 1,263,734
----------- -----------
Company Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trusts Holding Solely Junior
Subordinated Deferrable Interest Debentures of the
Company (2)....................................................... 70,000 110,000
----------- -----------
Stockholders' equity:
Preferred Stock, Series B, 8% Convertible and 9% Perpetual,
$.01 par value; authorized--10,000,000 shares; issued and
outstanding--2,998,688 shares(1).................................. 30 30
Class A Common Stock, $.01 par value; authorized--30,000,000
shares; issued and outstanding--8,571,246 shares.................. 85 85
Class B Common Stock, $.01 par value; authorized--3,000,000
shares, issued and outstanding--275,938 shares.................... 3 3
Additional paid-in capital.......................................... 90,608 90,608
Retained earnings................................................... 9,272 9,272
Net unrealized losses on securities available for sale, net of tax.. (1,095) (1,095)
------------ -----------
Total stockholders' equity....................................... 98,903 98,903
----------- -----------
Total deposits, borrowed funds and stockholders' equity.......... $ 1,432,637 $ 1,472,637
=========== ===========
<FN>
(1) Such shares had an aggregate liquidation preference of $34.1 million at March 31, 1997.
(2) As described herein, for the Preferred Securities offered hereby the sole asset of the Trust Issuer will be $41.6 million
aggregate principal amount of the Junior Subordinated Debentures issued by the Company to the Trust Issuer. The Junior
Subordinated Debentures will bear interest at the annual rate of ___% of the principal amount thereof, payable quarterly
and will mature on _________, 2027. The Company owns all of the Common Securities of the Trust Issuer.
</FN>
</TABLE>
27
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION AND OTHER DATA
The information for, and as of the end of, the six months ended March
31, 1997 and 1996 is unaudited, but in the opinion of management reflects all
adjustments (consisting only of normal recurring accruals) necessary for a fair
presentation of the results for such periods. The results for the six months
ended March 31, 1997 are not necessarily indicative of the results that may be
expected for the entire year. The summary consolidated financial information
should be read in conjunction with (i) the Company's Consolidated Financial
Statements and Notes thereto contained in the Company's Annual Report on Form
10-K/A for the fiscal year ended September 30, 1996 attached as Appendix A to
this Prospectus; and (ii) the Company's March 31, 1997 Operating Results and
Financial Information attached as Appendix B to this Prospectus; and (iii) the
Financial Statements of Suncoast attached as Appendix C to this Prospectus.
<TABLE>
<CAPTION>
AT OR FOR THE SIX
MONTHS ENDED
MARCH 31, AT OR FOR THE FISCAL YEARS ENDED SEPTEMBER 30,
------------------ -----------------------------------------------------
1997(1) 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS DATA:
Interest income.......................... $ 43,696 $ 23,326 $ 52,132 $ 39,419 $ 30,421 $ 25,722 $24,243
Interest expense......................... 27,241 16,030 34,622 26,305 16,295 12,210 14,022
---------- --------- --------- --------- ---------- --------- -------
Net interest income before provision
(credit) for loan losses............... 16,455 7,296 17,510 13,114 14,126 13,512 10,221
Provision (credit) for loan losses....... 415 (300) (120) 1,221 1,187 1,052 70
---------- --------- --------- --------- ---------- --------- -------
Net interest income after provision
(credit) for loan losses............... 16,040 7,596 17,630 11,893 12,939 12,460 10,151
---------- --------- --------- --------- ---------- --------- -------
Non-interest income:
Service fees............................. 1,449 281 597 423 358 221 142
Gain on sales of loans and
mortgage-backed securities, net........ 2 3 5 239 150 1,496 94
(Loss) gain on sales of other assets,
net(2)................................. -- (7) (6) 9,569 -- -- 2
Other.................................... 150 10 53 6 46 2 25
---------- --------- --------- --------- ---------- --------- -------
Total non-interest income.............. 1,601 287 649 10,237 554 1,719 263
---------- --------- --------- --------- ---------- --------- -------
Non-interest expense:
Employee compensation and benefits....... 4,436 2,023 4,275 3,997 3,372 2,721 1,986
Occupancy and equipment.................. 1,615 786 1,801 1,727 1,258 978 940
Insurance (3)............................ 471 469 3,610 1,027 844 835 697
Professional fees........................ 542 477 929 1,269 833 543 542
Preferred Dividends of Trust Subsidiary.. 1,355 -- -- -- -- -- --
Other.................................... 3,515 1,537 3,421 4,129 3,579 2,746 2,002
---------- --------- --------- --------- ---------- --------- -------
Total non-interest expense............. 11,934 5,292 14,036 12,149 9,886 7,823 6,167
---------- --------- --------- --------- ---------- --------- -------
Income before income taxes and Preferred
Stock dividends........................ 5,707 2,591 4,243 9,981 3,607 6,356 4,247
Provision for income taxes(4)............ 2,265 987 1,657 3,741 1,328 2,318 1,538
---------- --------- --------- --------- ---------- --------- -------
Net income before Preferred Stock
dividends.............................. 3,442 1,604 2,586 6,240 2,279 4,038 2,709
Preferred Stock dividends................ 1,449 1,072 2,145 2,210 2,069 1,513 875
---------- --------- --------- --------- ---------- --------- -------
Net income after Preferred Stock
dividends.............................. $ 1,993 $ 532 $ 441 $ 4,030 $ 210 $ 2,525 $ 1,834
========== ========= ========= ========= ========== ========= =======
FINANCIAL CONDITION DATA:
Total assets............................. $1,453,161 $ 738,491 $ 824,360 $ 608,415 $ 551,075 $ 435,378 $345,931
Loans receivable, net, and
mortgage-backed securities(5).......... 1,319,181 630,519 716,550 506,132 470,154 313,899 250,606
Investments, overnight deposits, tax
certificates, repurchase agreements,
certificates of deposits and other
interest earning assets................ 55,917 86,336 87,662 88,768 64,783 100,118 83,445
Total liabilities........................ 1,284,258 669,023 755,249 562,670 509,807 397,859 322,907
Deposits................................. 1,011,475 423,568 506,106 310,074 347,795 295,108 275,026
Borrowings............................... 252,259 239,775 237,775 241,775 158,175 97,775 42,241
Trust Preferred Securities............... 70,000 -- -- -- -- -- --
Total stockholders' equity............... 98,903 69,468 69,111 45,745 41,268 30,273 16,797
Common stockholders' equity.............. 64,799 45,155 44,807 21,096 16,667 17,162 11,134
PER COMMON SHARE DATA:
Primary earnings per common share and
common equivalent share................ $ .25 $ .18 $ .10 $ 1.77 $ .10 $ 1.42 $ 1.27
========== ========= --------- --------- ========== ========= =======
Earnings per common share assuming
full dilution.......................... $ .25 $ .18 $ .10 $ 1.26 $ .10 $ 1.00 $ .92
========== ========= --------- ========= ========== ========= =======
Weighted average number of common shares
and common equivalent shares assumed
outstanding during the period:
Primary................................ 7,952,197 3,022,388 4,558,521 2,296,021 2,175,210 1,773,264 1,448,449
Fully diluted.......................... 8,674,187 3,035,458 4,558,521 4,158,564 2,175,210 3,248,618 2,376,848
Equity per common share.................. $ 7.32 $ 7.49 $ 7.85 $ 10.20 $ 8.33 $ 8.86 $ 8.51
Fully converted tangible equity per
common share........................... $ 6.50 $ 7.16 $ 7.13 $ 8.15 $ 7.39 $ 7.57 $ 6.86
</TABLE>
(Continued on next page)
28
<PAGE>
<TABLE>
<CAPTION>
AT OR FOR THE SIX
MONTHS ENDED
MARCH 31, AT OR FOR THE FISCAL YEARS ENDED SEPTEMBER 30,
------------------ -----------------------------------------------------
1997(1) 1996 1996 1995 1994 1993 1992
------- ---- ---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS: (Annualized
where appropriate)
PERFORMANCE RATIOS:
Return on average assets(6)................. .58% .50% .36% 1.10% .46% 1.12% .92%
Return on average common equity............. 8.37 4.10 1.30 22.60 1.21 18.55 17.68
Return on average total equity.............. 7.74 6.34 4.30 14.70 5.84 14.07 14.72
Interest rate spread........................ 2.56 1.96 2.10 2.12 2.78 3.59 3.34
Net interest margin......................... 2.91 2.35 2.51 2.39 3.01 3.87 3.63
Dividend payout ratio(7).................... 42.10 66.83 82.95 35.42 96.79 40.66 34.97
Ratio of earnings to combined fixed
charges and preferred stock dividends(8):
Excluding interest on deposits........... 1.37 1.10 1.05 1.52 1.07 1.87 1.83
Including interest on deposits........... 1.11 1.05 1.02 1.21 1.03 1.27 1.18
Total loans, net, and mortgage-backed
securities to total deposits.............. 130.42 148.86 141.58 163.13 134.40 109.65 91.12
Non-interest expenses to average assets..... 1.79 1.65 1.97 2.14 2.04 2.18 2.09
Efficiency ratio(9)......................... 62.80 68.60 76.45 14.58 66.06 45.17 57.76
ASSET QUALITY RATIOS:
Ratio of non-performing loans to total
loans..................................... .82% .95% .99% 1.02% 1.07% 1.54% .45%
Ratio of non-performing assets to total
loans, real estate owned and tax
certificates.............................. .93 1.24 1.14 1.35 1.41 1.78 .66
Ratio of non-performing assets to total
assets.................................... .79 .99 .95 1.10 1.17 1.46 .50
Ratio of charge-offs to total loans......... .04 .04 .08 .13 .39 .07 --
Ratio of loan loss allowance to total loans. .24 .38 .34 .32 .20 .38 .11
Ratio of loan loss allowance to
non-performing loans...................... 28.92 40.24 33.74 31.54 18.89 24.70 25.41
CAPITAL RATIOS:
Ratio of average common equity to average
total assets.............................. 4.03% 4.06% 4.78% 3.14% 3.58% 3.79% 3.51%
Ratio of average total equity to average
total assets.............................. 7.52 7.91 8.44 7.47 8.05 7.99 6.24
Tangible capital-to-assets ratio(10)........ 8.39 7.10 7.01 7.09 6.65% 7.56% 6.66%
Core capital-to-assets ratio(10)............ 8.39 7.10 7.01 7.09 6.65 7.56 6.66
Risk-based capital-to-assets ratio(10)...... 13.34 14.97 14.19 15.79 14.13 15.85 14.42
<FN>
- ----------
(1) Includes operations of Suncoast, from date of acquisition.
(2) In 1995, the Company recorded a $9.3 million gain ($5.8 million after tax) from the sale of its branches on the west coast
of Florida.
(3) In 1996, the Company recorded a one time SAIF special assessment of $2.6 million ($1.6 million after tax).
(4) Amount reflects expense from change in accounting principle of $195,000 for fiscal 1994. See Note 15 to Notes to
Consolidated Financial Statements contained in Appendix A to this Prospectus.
(5) Does not include mortgage loans held for sale.
(6) Return on average assets is calculated before payment of preferred stock dividends.
(7) The ratio of total dividends declared during the period (including dividends on the Bank's and the Company's preferred
stock and the Company's Class A and Class B Common Stock) to total earnings for the period before dividends.
(8) The ratio of earnings to combined fixed charges and preferred stock dividends excluding interest on deposits is calculated
by dividing income before taxes and extraordinary items by interest on borrowings plus 33% of rental expense plus preferred
stock dividends on a pretax basis. The ratio of earnings to combined fixed charges and preferred stock dividends including
interest on deposits is calculated by dividing income before taxes and extraordinary items by interest on deposits plus
interest on borrowings plus 33% of rental expense plus preferred stock dividends on a pretax basis.
(9) Efficiency ratio is calculated by dividing non-interest expenses less non-interest income by net interest income.
(10) Regulatory capital ratio of the Bank.
</FN>
</TABLE>
29
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF MARCH 31, 1997 OPERATING
RESULTS AND FINANCIAL CONDITION
The following discussion and analysis presents a review of the consolidated
operating results and financial condition of the Company for the three and six
month periods ended March 31, 1997 and 1996. This discussion and analysis should
be read in conjunction with the Consolidated Financial Statements and Notes
thereto contained in the Company's Annual Report on Form 10-K/A for the year
ended September 30, 1996 attached as Appendix A to this Prospectus. The
consolidated financial statements for the six months and three months ended
March 31, 1997 and 1996 are attached as Appendix B to this Prospectus. The
consolidated financial statements of the Company for the six months and three
months ended March 31, 1997 and 1996 are attached as Appendix B to this
Prospectus.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND
1996.
NET INCOME AFTER PREFERRED STOCK DIVIDENDS
The Company had net income after preferred stock dividends of $1.1 million for
the three months ended March 31, 1997, compared to net income after preferred
stock dividends of $157,000 for the three months ended March 31, 1996. All major
categories of income and expense increased significantly in the three months
ended March 31, 1997 as compared to the three months ended March 31, 1996 and
reflect the significant growth the Company has experienced in the last year. A
significant factor in such growth was the acquisition of Suncoast, which was
completed on November 15, 1996 and the operations of which are included in the
Company's Consolidated Statement of Operations for the three months ended March
31, 1997. Below is a more detailed discussion of each major category of income
and expenses.
NET INTEREST INCOME
Net interest income increased $5.6 million, or 148.8%, to $9.4 million for the
three months ended March 31, 1997 from $3.8 million for the three months ended
March 31, 1996. This increase is attributable to an expansion of the net
interest rate spread of 61 basis points, to 2.52% for the three months ended
March 31, 1997 from 1.91% for the three months ended March 31, 1996, and an
increase in average interest-earning assets of $603.8 million, or 92.6%, to
$1,256.0 million for the three months ended March 31, 1997 from $652.2 million
for the three months ended March 31, 1996, offset by an increase in average
interest-bearing liabilities of $552.7 million, or 91.4%, to $1,158 million for
the three months ended March 31, 1997 from $605.0 million for the three months
ended March 31, 1996. Approximately $400.0 million of the increase in average
interest earning assets for the three months ended March 31, 1997 is a result of
the acquisition of Suncoast. The remaining increase in average interest earning
assets is due primarily to loan purchases. The average yield on interest-earning
assets increased 36 basis points to 7.71% for the three months ended March 31,
1997 from 7.35% for the three months ended March 31, 1996. The increase in
average yield is attributable to an increase in the yield on loans receivable
relating primarily to commercial real estate and construction loans acquired
with Suncoast. Suncoast had a greater percentage of higher yielding commercial
real estate and construction loans than BankUnited.
The increase in interest income of $12.2 million, or 101.7%, to $24.2 million
for the three months ended March 31, 1997 from $12.0 million for the three
months ended March 31, 1996, reflects increases in interest and fees on loans of
$11.6 million. The average yield on loans receivable
30
<PAGE>
increased to 7.93% for the three months ended March 31, 1997 from 7.60% for the
three months ended March 31, 1996 and the average balance of loans receivable
increased $565.9 million, or 114.1%, to $1,062.0 million for the three months
ended March 31, 1997. Approximately $360.0 million of the increase in loans is
due to the acquisition of Suncoast and, as stated above, the increase in the
yield on loans is also attributable to Suncoast.
The increase in interest expense of $6.6 million, or 80.2%, to $14.9 million for
the three months ended March 31, 1997 from $8.2 million for the three months
ended March 31, 1996 primarily reflects an increase in interest expense on
interest bearing deposits of $7.1 million, or 143%, from $4.8 million for the
three months ended March 31, 1996, to $12.0 million for the three months ended
March 31, 1997. This increase is due to an increase in average interest bearing
deposits of $567 million, or 152%, from $373.0 million for the three months
ended March 31, 1996 to $940 million for the three months ended March 31, 1997.
Approximately $300.0 million of this increase represents deposits acquired with
Suncoast. The average rate paid on interest bearing deposits decreased 6 basis
points from 5.19% for the three months ended March 31, 1996 to 5.13 % for the
three months ended March 31, 1997.
PROVISION FOR LOAN LOSSES
The provision for loan losses for the three months ended March 31, 1997 was
$165,000 as compared with no provision for loan losses for the three months
ended March 31, 1996. The provision for loan losses represents management's
estimate of the charge to operations after reviewing the nature, volume,
delinquency status and inherent risk in the loan portfolio in relation to the
allowance for loan losses.
NON-INTEREST INCOME
Non-interest income for the three months ended March 31, 1997 was $1.0 million
compared with $129,000 for the three months ended March 31, 1996, an increase of
$872,000. Of this increase, $481,000 represents loan servicing fees (net of
amortization of capitalized servicing rights) from operations acquired with
Suncoast. The remaining increase is primarily attributable to service fees on
deposits reflecting the increase in the amount of deposits outstanding. The
Company also received a payment of $65,000 in connection with the late delivery
by the seller of purchased residential loans.
NON-INTEREST EXPENSES
Operating expenses increased $4.3 million, or 157%, to $7.1 million for the
three months ended March 31, 1997 compared to $2.8 million for the three months
ended March 31, 1996. The increase in expenses is attributable to the preferred
dividends of the trust subsidiary and growth the Company has experienced,
including the expenses of Suncoast's operations. Preferred dividends of the
trust subsidiary were $1.3 million for the three months ended March 31, 1997.
There was no comparable expense in the three months ended March 31, 1996 since
the preferred securities were issued in December 1996 and March 1997.
31
<PAGE>
INCOME TAXES
The income tax provision was $1.2 million for the three months ended March 31,
1997 compared to $430,000 for the three months ended March 31, 1996. The
increase in income taxes is the result of the Company's higher pre-tax earnings
during the three months ended March 31, 1997, compared to the three months ended
March 31, 1996.
PREFERRED STOCK DIVIDENDS
Preferred stock dividends for the three months ended March 31, 1997 were
$777,000, an increase of $241,000, or 45.0%, as compared to $536,000 for the
three months ended March 31, 1996. This increase is the result of dividends paid
on the 8% Noncumulative Convertible Preferred Stock, Series 1996, issued in
connection with the acquisition of Suncoast, partially offset by the conversion
of the Noncumulative Convertible Preferred Stock, Series C and C-II in February
1997.
COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND
1996.
NET INCOME AFTER PREFERRED STOCK DIVIDENDS
The Company had net income after preferred stock dividends of $2.0 million for
the six months ended March 31, 1997, compared to net income after preferred
stock dividends of $532,000 for the six months ended March 31, 1996. All major
categories of income and expense increased significantly in the six months ended
March 31, 1997 as compared to the six months ended March 31, 1996 and reflect
the significant growth the Company has experienced in the last year. A
significant factor in such growth was the acquisition of Suncoast, which was
completed on November 15, 1996. The Company's Consolidated Statement of
Operations for the six months ended March 31, 1997 reflects Suncoast's
operations for the four and one-half months after the date of acquisition. Below
is a more detailed discussion of each major category of income and expenses.
NET INTEREST INCOME
Net interest income increased $9.2 million, or 120.6%, to $16.5 million for the
six months ended March 31, 1997 from $7.3 million for the six months ended March
31, 1996. This increase is attributable to an expansion of the net interest rate
spread of 60 basis points, to 2.56% for the six months ended March 31, 1997 from
1.96% for the six months ended March 31, 1996 and an increase in average
interest-earning assets of $498.6 million, or 79.5%, to $1,126 million for the
six months ended March 31, 1997 from $627.1 million for the six months ended
March 31, 1996, offset by an increase in average interest-bearing liabilities of
$467.6 million, or 80.3%, to $1,050 million for the six months ended March 31,
1997 from $582.4 million for the six months ended March 31, 1996. Approximately
$300.0 million of the increase in average interest earning assets for the six
months ended March 31, 1997 is a result of the acquisition of Suncoast. The
remaining increase in average interest earning assets is due primarily to loan
purchases. The average yield on interest-earning assets increased 32 basis
points to 7.75% for the six months ended March 31, 1997 from 7.43% for the six
months ended March 31, 1996. The increase in average yield is attributable to an
increase in the yield on loans receivable relating primarily to commercial real
estate and construction loans acquired with Suncoast. Suncoast had a greater
percentage of higher yielding commercial real estate and construction loans than
BankUnited.
32
<PAGE>
The increase in interest income of $20.4 million, or 87.3%, to $43.7 million for
the six months ended March 31, 1997 from $23.3 million for the six months ended
March 31, 1996, reflects increases in interest and fees on loans of $19.5
million. The average yield on loans receivable increased to 7.96% for the six
months ended March 31, 1997 from 7.64% for the six months ended March 31, 1996
and the average balance of loans receivable increased $468.1 million, or 98.2%,
to $944.8 million for the six months ended March 31, 1997. Approximately $270
million of the increase in loans is due to the acquisition of Suncoast and, as
stated above, the increase in the yield on loans is also attributed to Suncoast.
The increase in interest expense of $11.2 million, or 69.9%, to $27.2 million
for the six months ended March 31, 1997 from $16.0 million for the six months
ended March 31, 1996 primarily reflects an increase in interest expense on
interest bearing deposits of $11.7 million, or 130%, from $9.0 million for the
six months ended March 31, 1996, to $20.8 million for the six months ended March
31, 1997. This increase is due to an increase in average interest bearing
deposits of $470.0 million, or 135%, from $348.0 million for the six months
ended March 31, 1996 to $818.0 million for the six months ended March 31, 1997.
Approximately $275.0 million of this increase represents deposits acquired with
Suncoast. The average rate paid on interest bearing deposits decreased 10 basis
points from 5.19% for the six months ended March 31, 1996 to 5.09% for the six
months ended March 31, 1997.
PROVISION FOR LOAN LOSSES
The provision for loan losses for the six months ended March 31, 1997 was
$415,000 as compared with a credit for loan losses of $300,000 for the six
months ended March 31, 1996. The credit in 1996 was due to a recovery of
approximately $1.0 million as a result of a legal settlement relating to certain
loans previously purchased. The provision for loan losses represents
management's estimate of the charge to operations after reviewing the nature,
volume, delinquency status and inherent risk in the loan portfolio in relation
to the allowance for loan losses.
NON-INTEREST INCOME
Non-interest income for the six months ended March 31, 1997 was $1.6 million
compared with $287,000 for the six months ended March 31, 1996, an increase of
$1.3 million. Of this increase, $742,000 represents loan servicing fees (net of
amortization of capitalized servicing rights) from operations acquired with
Suncoast. The remaining increase is primarily attributable to service fees on
deposits reflecting the increase in the amount of deposits outstanding. The
Company also received a payment of $65,000 for the late delivery of purchased
residential loans.
NON-INTEREST EXPENSES
Operating expenses increased $6.6 million, or 126%, to $11.9 million for the six
months ended March 31, 1997 compared to $5.3 million for the six months ended
March 31, 1996. The increase in expenses is attributable to the preferred
dividends of the trust subsidiary, and the growth the Company has experienced
including the expenses of Suncoast's operations. Preferred dividends of the
trust subsidiary were $1.4 million for the six months ended March 31, 1997
compared with no expense in the six months ended March 31, 1996 since the
preferred securities were issued in December 1996 and March 1997.
33
<PAGE>
INCOME TAXES
The income tax provision was $2.3 million for the six months ended March 31,
1997 compared to $987,000 for the six months ended March 31, 1996. The increase
in income taxes is the result of the Company's higher pre-tax earnings during
the six months ended March 31, 1997, compared to the six months ended March 31,
1996.
PREFERRED STOCK DIVIDENDS
Preferred stock dividends for the six months ended March 31, 1997 were $1.4
million, an increase of $377,000, or 35.2%, as compared to $1.1 million for the
six months ended March 31, 1996. This increase is the result of dividends paid
on the 8% Noncumulative Convertible Preferred Stock, Series 1996, issued in
connection with the acquisition of Suncoast, partially offset by the conversion
of the Noncumulative Convertible Preferred Stock, Series C and CII in February
1997.
DISCUSSION OF FINANCIAL CONDITION CHANGES FROM SEPTEMBER 30, 1996 TO MARCH 31,
1997.
ASSETS
Total assets increased by $626.0 million, or 76.0%, from $824.0 million at
September 30, 1996, to $1.45 billion at March 31, 1997, due primarily to the
acquisition of Suncoast Savings and Loan Association, FSA ("Suncoast") on
November 15, 1996 and internally generated growth. On the date of the
acquisition, Suncoast had total assets of $435.7 million.
Cash and due from banks increased $15.1 million from $5.5 million as of
September 30, 1996 to $20.6 million at March 31, 1997. This increase is
primarily due to additional cash requirements as a result of the acquisition of
Suncoast's mortgage loan servicing operations.
The Company's short-term investments, consisting of Federal Home Loan Bank
("FHLB") overnight deposits and federal funds sold, decreased by $22.6 million,
or 79.0%, to $6.0 million at March 31, 1997, from $28.6 million at September 30,
1996. This decrease is due primarily to investing in loans receivable.
Mortgage-backed securities available for sale increased $44.7 million or 80.5%
from $55.5 million at September 30, 1996 to $100.2 million at March 31, 1997,
due primarily to $18.7 million of mortgage-backed securities acquired with
Suncoast and the purchase of $33.8 million of mortgage backed securities. All
mortgage backed-securities acquired with Suncoast as well as all mortgage
backed-securities purchased in the six months ended March 31, 1997 have been
classified as available for sale.
The Company's net loan portfolio increased by $553.6 million, or 85.6%, to $1.2
billion at March 31, 1997, from $646.4 million at September 30, 1996, primarily
due to the acquisition of $360.1 million of loans with Suncoast and the purchase
of $224.2 million of residential loans.
34
<PAGE>
The increase in mortgage servicing rights, goodwill, prepaid expenses and other
assets totaling $30.7 million relates to the acquisition of Suncoast. In the
second quarter, the Company sold $292.0 million of GNMA mortgage servicing
rights for $4.7 million. No gain or loss was recorded on the sale.
Non-performing assets as of March 31, 1997 were $11.5 million, which represents
an increase of $3.7 million or 47.4% from $7.8 million as of September 30, 1996.
Non-performing assets as a percentage of total assets declined 16 basis points
from .95% as of September 30, 1996 to .79% as of March 31, 1997. $2.4 million of
non-performing assets were acquired with Suncoast.
The allowance for loan losses increased $733,000 from $2.2 million as of
September 30, 1996 to $2.9 million as of March 31, 1997. The increase was
attributable primarily to the allowance acquired from Suncoast of $775,000.
35
<PAGE>
The following table sets forth information concerning the Company's
non-performing assets for the periods indicated.
MARCH 31, SEPTEMBER 30,
1997 1996
--------- -------------
(Dollars in thousands)
Non-accrual loans (1) $ 7,673 $ 4,939
Restructured loans 1,686 1,457
Loans past due 90 days and still accruing 581 --
------- -------
Total non-performing loans 9,940 6,396
Non-accrual tax certificates 761 800
REO 816 632
------- -------
Total non-performing assets $11,517 $ 7,828
======= =======
Allowance for tax certificates $ 658 $ 614
Allowance for loan losses 2,875 2,158
------- -------
Total allowance $ 3,517 $ 2,772
======= =======
Non-performing assets as a percentage of
total assets .79% .95%
Non-performing loans as a percentage of
total loans .82% .99%
Allowance for loan losses as a percentage of
total loans .24% .34%
Allowance for loan losses as a percentage of
non-performing loans 28.92% 33.74%
- -----------
(1) In addition, management had concerns as to the borrower's ability to
comply with present repayment terms on $1,794,000 and $109,000 of
accruing loans as of March 31, 1997 and September 30, 1996,
respectively. A substantial portion of this increase is due to one
commercial real estate loan with a balance of $1,258,000 which,
although now current, had in the past become 90 days past due. The loan
to value ratio on the loan is approximately 70%.
36
<PAGE>
The following table sets forth information regarding the Company's
allowance for loan losses for the periods indicated:
<TABLE>
<CAPTION>
For the For the
Six Months Six Months
Ended Ended
March 31, March 31,
1997 1996
------------- -------------
(In thousands)
<S> <C> <C>
Allowance for loan losses balance (at beginning of period).. $ 2,158 $ 1,469
Provision (credit) for loan losses.......................... 415 (300)
Allowance from Bank of Florida.............................. -- 183
Allowance from Suncoast .................................... 775 --
Loans Charged off:
One-to-four family residential loans........................ (492) (248)
Commercial and other........................................ -- --
------------- -------------
Total.................................................. (492) (248)
------------- -------------
Recoveries:
One-to-four family residential loans........................ 8 1,038
Commercial and other........................................ 11 --
------------- -------------
Total.................................................. 19 1,038
------------- -------------
Allowance for loan losses, balance (at end of period)....... $ 2,875 $ 2,142
============= =============
</TABLE>
LIABILITIES
Deposits increased by $505.4 million, or 99.8%, to $1.0 billion at March 31,
1997 from $506.1 million at September 30, 1996. Of this growth, $323.7 million
was acquired with Suncoast; $39.8 million of the increase represents growth in
former Suncoast branches since acquisition; $76.0 million represents growth in
the three branches opened in the last 18 months; and $22.0 million represents
deposits from the State of Florida. Management believes this strong deposit
growth is primarily attributable to the Company offering competitive interest
rates and personalized service. The Company intends to open 6 or more branches
by June 30, 1998.
FHLB advances were $251.5 million at March 31, 1997, up $14.5 million from
$237.0 million at September 30, 1996. This increase was the result of FHLB
advances assumed by BankUnited in connection with the Suncoast acquisition.
CAPITAL
The Company's total stockholders' equity was $98.9 million at March 31, 1997, an
increase of $29.8 million, or 43.1%, from $69.1 million at September 30, 1996.
The increase is due primarily to the issuance of 2,199,930 shares of Class A
Common Stock and 920,000 shares of 8% Noncumulative Convertible Preferred Stock,
Series 1996, issued in connection with the Suncoast acquisition. The recorded
value of the stock issued in the Suncoast acquisition was $27.8 million.
In December 1996, the Company's subsidiary, BankUnited Capital, issued $50
million of Trust Preferred Securities and in March 1997, BankUnited Capital
issued an additional $20 million of Trust Preferred Securities. (See Note 3 of
the condensed notes to consolidated financial statements). The net proceeds from
the sales of the Trust Preferred Securities were $67.4 million. These funds were
available
37
<PAGE>
for contributions as additional capital to the Bank to enable the Bank to
continue its expansion. In the six months ended March 31, 1997, BankUnited
Financial Corporation contributed $40 million of additional capital to the Bank.
In February 1997, the holder of the Company's Series C and Series C-II classes
of preferred stock exercised the right to convert both classes to Class A common
stock at exchange ratios of 1.45475 shares of Class A common stock for each
share of Series C preferred stock and 1.3225 shares of Class A common stock for
each share of Series C-II preferred stock. The Company had previously exercised
its right to call both classes of preferred stock.
LIQUIDITY AND CAPITAL RESOURCES
OTS regulations require that savings institutions, such as the Bank, maintain
specified levels of liquid investments in cash, United States government
securities and other qualifying investments. Regulations currently in effect
require the Bank to maintain liquid assets of not less than 5.0% of its net
withdrawal deposit accounts plus short term borrowings, of which short term
liquid assets must consist of not less than 1%. As of March 31, 1997, the Bank
had liquid assets and short term liquid assets of 6.2% and 2.4%, respectively,
which was in compliance with these requirements.
ASSET AND LIABILITY MANAGEMENT
The Company's net earnings depend primarily on its net interest income, which is
the difference between interest income received on its interest-earning assets
(principally loans, short-term and long-term investments, and mortgage-backed
securities) and interest expense paid on its interest-bearing liabilities
(principally deposits and FHLB advances).
GAP TABLE. The following table sets forth the amount of interest-earning assets
and interest-bearing liabilities outstanding at March 31, 1997, which are
expected to reprice or mature in each of the future time periods shown.
38
<PAGE>
<TABLE>
<CAPTION>
AT MARCH 31, 1997
--------------------------------------------------------------------------------
INTEREST SENSITIVITY PERIOD (1)
--------------------------------------------------------------------------------
NON-
6 MONTHS 6 MONTHS OVER 1 - OVER 5 - OVER 10- INTEREST
OR LESS - 1 YEAR 5 YEARS 10 YEARS YEARS EARNING TOTAL
-------- --------- --------- -------- --------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Investments, tax certificates, Federal
funds sold, FHLB overnight
deposits and other interest
earning assets, at cost...................... $ 30,696 $ 11,774 $ 13,279 $ 35 $ 133 $ -- $ 55,917
Mortgage-backed securities................... 7,643 4,764 50,799 19,772 30,396 -- 113,374
Loans:
Adjustable-rate mortgages.................... 586,267 200,004 153,546 6,459 -- 7,041 953,317
Fixed-rate mortgages......................... 19,688 24,567 94,475 54,769 50,964 494 244,957
Commercial and consumer loans................ 8,596 377 1,298 -- -- 137 10,408
--------- --------- --------- --------- --------- --------- -----------
Total loans............................... 614,551 224,948 249,319 61,228 50,964 7,672 1,208,682
--------- --------- --------- --------- --------- --------- -----------
Total interest-earning assets............. 652,890 241,486 313,397 81,035 81,493 7,672 1,377,973
Total non-interest-earning assets......... -- -- -- -- -- 75,188 75,188
--------- --------- --------- --------- --------- --------- -----------
Total assets.............................. 652,890 241,486 313,397 81,035 81,493 82,860 1,453,161
========= ========= ========= ========= ========= ========= ===========
Interest-bearing liabilities:
Customer deposits:
Money market and NOW accounts............. 69,598 -- -- -- -- 20,220 89,818
Passbook accounts......................... 154,209 -- -- -- -- -- 154,209
Certificate accounts...................... 421,706 211,389 134,353 -- -- -- 767,448
--------- --------- --------- --------- --------- --------- -----------
Total customer deposits.......................... 645,513 211,389 134,353 -- -- 20,220 1,011,475
Borrowings:
FHLB advances................................ 170,000 25,000 55,000 1,484 -- -- 251,484
Other borrowings............................. -- -- -- 460 315 -- 775
--------- --------- --------- --------- --------- --------- -----------
Total borrowings............................. 170,000 25,000 55,000 1,944 315 -- 252,259
Total interest-bearing liabilities........... 815,513 236,389 189,353 1,944 315 20,220 1,263,734
Total non-interest-bearing liabilities........... -- -- -- -- -- 20,524 20,524
Trust Preferred.................................. -- -- -- -- 70,000 -- 70,000
Stockholders' equity............................. -- -- -- -- -- 98,903 98,903
--------- --------- --------- --------- --------- --------- -----------
Total liabilities and stockholders' equity... 815,513 236,389 189,353 1,944 70,315 139,647 1,453,161
========= ========= ========= ========= ========= ========= ===========
Total interest-earning assets less
interest-bearing liabilities ("GAP")......... (162,623) 5,097 124,044 79,091 11,178 (56,787) --
========= ========= ========= ========= ========= ========= ===========
Ratio of GAP to total assets..................... -11.19% 0.35% 8.54% 5.44% 0.77% -3.91%
========= ========= ========= ========= ========= =========
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities.......................... (162,623) (157,526) (33,482) 45,609 56,787
========= ========= ========= ========= =========
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities, as a percentage
of total assets.............................. -11.19% -10.84% -2.30% 3.14% 3.91%
========= ========= ========= ========= =========
<FN>
(1) In preparing the table above, certain assumptions have been made with
regard to the repricing or maturity of certain assets and liabilities.
Assumptions as to prepayments on first and second mortgage loans and
mortgage-backed securities were obtained from prepayment rate tables
that provide assumptions correlating to recent actual repricing
experienced in the marketplace. Assumptions have also been made with
regard to payments on tax certificates based on historical experience.
Money market, NOW and passbook accounts are assumed to be rate
sensitive in six months or less. The rates paid in these accounts,
however, are determined by management based on market conditions and
other factors and may reprice more slowly than assumed. All other
assets and liabilities have been repriced based on the earlier of
repricing or contractual maturity. The mortgage prepayment rate tables,
deposit decay rates and the historical assumptions used regarding
payments on tax certificates should not be regarded as indicative of
the actual repricing that may be experienced by the Company.
</FN>
</TABLE>
39
<PAGE>
YIELDS EARNED AND RATES PAID
The following tables set forth certain information relating to the categories of
the Company's interest-earning assets and interest-bearing liabilities for the
periods indicated. All yield and rate information is calculated on an annualized
basis. Yield and rate information for a period is average information for the
period calculated by dividing the income or expense item for the period by the
average balances during the period of the appropriate balance sheet item. Net
interest margin is net interest income divided by average interest-earning
assets. Non-accrual loans are included in asset balances for the appropriate
period, whereas recognition of interest on such loans is discontinued and any
remaining accrued interest receivable is reversed, in conformity with federal
regulations. The yields and net interest margins appearing in the following
table have been calculated on a pre-tax basis.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------------------------------------------------
1997 1996
------------------------------------ ---------------------------------
AVERAGE AVERAGE
BALANCE INTEREST YIELD/RATE BALANCE INTEREST YIELD/RATE
---------- -------- ---------- -------- -------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable, net $1,061,931 $ 21,062 7.93% $495,985 $ 9,432 7.60%
Mortgage-backed securities 93,024 1,551 6.67 53,046 898 6.77
Short-term investments (1) 48,479 667 5.50 61,867 846 5.41
Tax certificates 29,990 541 7.22 27,908 586 8.40
Long-term investments and
FHLB stock, net 22,525 384 6.87 13,349 240 7.23
---------- -------- ---- -------- -------- ----
Total interest-earning assets 1,255,949 24,205 7.71 652,155 12,002 7.35
---------- -------- ---- -------- -------- ----
Interest-bearing liabilities:
NOW/money market 98,236 587 2.42 23,156 113 1.96
Savings 142,819 1,595 4.53 53,246 575 4.34
Certificates of deposit 699,150 9,705 5.63 296,610 4,121 5.59
FHLB advances and other
borrowings 217,570 2,967 5.45 232.017 3,435 5.86
---------- -------- ---- -------- -------- ----
Total interest-bearing
liabilities 1,157,775 14,854 5.19 605,029 8,244 5.44
---------- -------- ---- -------- -------- ----
Excess of interest-earning assets
over interest-bearing liabilities $ 98,174 $ 47,126
========== ========
Net interest income $ 9,351 $ 3,758
======== ========
Interest rate spread 2.52% 1.91%
==== ====
Net interest margin 2.93% 2.31%
==== ====
Ratio of interest-earning assets to
interest-bearing liabilities 108.48% 107.79%
========== ========
<FN>
- --------
(1) Short-term investments include FHLB overnight deposits, securities
purchased under agreements to resell, federal funds sold and
certificates of deposit.
</FN>
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
--------------------------------------------------------------------------
1997 1996
----------------------------------- ----------------------------------
AVERAGE AVERAGE
BALANCE INTEREST YIELD/RATE BALANCE INTEREST YIELD/RATE
--------- -------- ---------- -------- -------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable, net $ 944,782 $ 37,678 7.96% $476,634 $ 18,198 7.64%
Mortgage-backed securities 85,784 2,860 6.67 52,693 1,787 6.78
Short-term investments (1) 40,664 1,134 5.52 50,732 1,449 5.62
Tax certificates 33,373 1,297 7.77 31,914 1,347 8.44
Long-term investments and
FHLB stock, net 21,115 727 6.90 15,139 545 7.20
--------- -------- ---- -------- -------- ----
Total interest-earning assets 1,125,718 43,696 7.75 627,112 23,326 7.43
--------- -------- ---- -------- -------- ----
Interest-bearing liabilities:
NOW/money market 85,531 1,000 2.34 24,127 239 1.98
Savings 124,313 2,850 4.60 52,846 1,150 4.35
Certificates of deposit 608,482 16,919 5.58 271,021 7,643 5.64
FHLB advances and other
borrowings 231,698 6,472 5.53 234,409 6,998 5.87
-------- -------- ---- -------- -------- ----
Total interest-bearing
liabilities 1,050,024 27,241 5.19 582,403 16,030 5.47
--------- -------- ---- -------- -------- ----
Excess of interest-earning assets
over interest-bearing liabilities $ 75,694 $ 44,709
========= ========
Net interest income $ 16,455 $ 7,296
======== ========
Interest rate spread 2.56% 1.96%
===== ====
Net interest margin 2.91% 2.35%
===== ====
Ratio of interest-earning assets to
interest-bearing liabilities 107.21% 107.68%
======= =======
<FN>
- --------
(1) Short-term investments include FHLB overnight deposits, securities
purchased under agreements to resell, federal funds sold and
certificates of deposit.
</FN>
</TABLE>
41
<PAGE>
RATE/VOLUME ANALYSIS
The following tables present, for the periods indicated, the change in interest
income and the changes in interest expense attributable to the changes in
interest rates and the changes in the volume of interest-earning assets and
interest-bearing liabilities. For each category of interest-earning assets and
interest-bearing liabilities, information is provided on changes attributable
to: (i) changes in volume (change in volume multiplied by prior year rate); (ii)
changes in rate (change in rate multiplied by prior year volume); (iii) changes
in rate/volume (change in rate multiplied by change in volume); and (iv) total
changes in rate and volume.
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------------------------------------
1997 VS. 1996
--------------------------------------------------------------
INCREASE (DECREASE) DUE TO
--------------------------------------------------------------
CHANGES CHANGES CHANGES TOTAL
IN IN IN INCREASE/
VOLUME RATE RATE/VOLUME (DECREASE)
------- ------- ----------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Interest income attributable to:
Loans $11,058 $ 201 $ 371 $11,630
Mortgage-backed securities 677 (14) (10) 653
Short-term investments (1) (181) 14 (12) (179)
Tax certificates 44 (83) (6) (45)
Long-term investments and FHLB
stock 159 (4) (11) 144
------- ----- ----- -------
Total interest-earning assets 11,757 114 332 12,203
------- ----- ----- -------
Interest expense attributable to:
NOW/money market 363 26 85 474
Savings 959 24 37 1,020
Certificates of deposit 5,547 30 7 5,584
FHLB advances and other
borrowings (213) (237) (18) (468)
------- ----- ----- -------
Total interest-bearing liabilities 6,656 (157) 111 6,610
------- ----- ----- -------
Increase in net interest income $ 5,101 $ 271 $ 221 $ 5,593
======= ===== ===== =======
<FN>
- ------------
(1) Short-term investments include FHLB overnight deposits, securities purchased
under agreements to resell, federal funds sold and certificates of deposit.
</FN>
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
-------------------------------------------------------------
1997 VS. 1996
-------------------------------------------------------------
INCREASE (DECREASE) DUE TO
-------------------------------------------------------------
CHANGES CHANGES CHANGES TOTAL
IN IN IN INCREASE/
VOLUME RATE RATE/VOLUME (DECREASE)
------- ------- ----------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Interest income attributable to:
Loans $18,651 $ 338 $ 491 $19,480
Mortgage-backed securities 1,122 (30) (19) 1,073
Short-term investments (1) (286) (26) (3) (315)
Tax certificates 62 (107) (5) (50)
Long-term investments and FHLB
stock 210 (13) (15) 182
------- ----- ----- -------
Total interest-earning assets 19,759 162 449 20,370
------- ----- ----- -------
Interest expense attributable to:
NOW/money market 607 44 110 761
Savings 1,551 65 84 1,700
Certificates of deposit 9,490 (86) (128) 9,276
FHLB advances and other
borrowings (80) (413) (33) (526)
------- ----- ----- -------
Total interest-bearing liabilities 11,568 (390) 33 11,211
------- ----- ----- -------
Increase in net interest income $ 8,191 $ 552 $ 416 $ 9,159
======= ===== ===== =======
<FN>
- ------------
(1) Short-term investments include FHLB overnight deposits, securities purchased
under agreements to resell, federal funds sold and certificates of deposit.
</FN>
</TABLE>
LENDING ACTIVITIES
The Company focuses its lending activity on purchasing and originating
single-family residential mortgage loans. The Company's lending strategy also
includes expanding its commercial real estate, commercial business, and real
estate construction lending. The Company also currently offers consumer loans,
such as automobile loans and boat loans, primarily as an accommodation to
existing customers.
Set forth below is a table showing the Company's loan origination, purchase and
sale activity for the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31,
1997 1996
------------ -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Total loans receivable, net, at beginning of period (1)...................... $ 646,385 $ 453,350
Loans originated:
Residential real estate................................................... 84,465 26,895
Commercial business and consumer.......................................... 6,934 9,777
------------- -----------
Total loans originated................................................ 91,399 36,672
Loans acquired with Suncoast/Bank of Florida................................. 360,066 5,506
Loans purchased.............................................................. 224,239 133,954
Loans sold................................................................... (5,982) (3,429)
Principal payments and amortization of discounts and premiums................ (108,175) (64,962)
Loans charged off............................................................ (492) (248)
Transfers to real estate owned, net.......................................... (1,633) (426)
------------- -----------
Total loans receivable, net, at end of period(1)...................... $ 1,205,807 $ 560,417
============= ===========
<FN>
- ----------
(1) Includes loans held for sale.
</FN>
</TABLE>
43
<PAGE>
The following table sets forth certain information with respect to the
composition of the Company's loan portfolio, including mortgage loans held for
sale and mortgage-backed securities, as of the dates indicated. For additional
information as to the Company's mortgage-backed securities, including carrying
values and approximate market values of such securities, see Notes 1 and 4 of
the Notes to the Company's Consolidated Financial Statements included in
Appendix A hereto.
<TABLE>
<CAPTION>
MARCH 31, 1997 SEPTEMBER 30, 1996
---------------------- --------------------
AMOUNT PERCENT AMOUNT PERCENT
------------- ------- ----------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C>
First Mortgage Loans:
One-to four-family residential loans............................ $ 1,011,707 83.9% $ 568,243 87.9%
Five or more units residential loans............................ 31,599 2.6% 12,559 2.0%
Commercial...................................................... 123,530 10.2% 49,318 7.6%
Construction.................................................... 11,558 1.0% -- --%
Land............................................................ 6,919 .06% 2,648 .4%
Second Mortgages.................................................. 5,894 .05% 2,748 .4%
------------- ------- ----------- ------
Total First and Second Mortgages........................... 1,191,207 98.8% 635,515 98.3%
Consumer Loans.................................................... 2,987 0.2% 2,648 .4%
Commercial Business Loans......................................... 7,862 0.7% 5,822 .9%
------------- ----- ----------- -----
Total Loans................................................ 1,202,056 99.7% 643,985 99.6%
Deferred Fees..................................................... 6,626 0.5% 4,558 .7%
Allowance for loan losses......................................... (2,875) -0.2% (2,158) (.3)%
------------- ------ ----------- ------
Loans, net................................................. $ 1,205,807 100.0% $ 646,385 100.0%
============= ===========
</TABLE>
44
<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES
GENERAL
The following is a summary of certain terms and provisions of the
Preferred Securities. This summary of certain terms and provisions of the
Preferred Securities does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the Trust Agreement. The form of the
Trust Agreement has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part.
DISTRIBUTIONS
The Preferred Securities represent preferred undivided beneficial
interests in the assets of the Trust Issuer. Distributions on such Preferred
Securities will be payable at the annual rate of ___% of the stated Liquidation
Amount of $25, payable quarterly in arrears on March 31, June 30, September 30
and December 31 of each year, to the holders of the Preferred Securities on the
relevant record dates. The record date will be the 15th day of the month in
which the relevant Distribution payment date occurs. Distributions will
accumulate from the date of the initial issuance of the Preferred Securities and
are cumulative. The first Distribution payment date for the Preferred Securities
will be the first payment date following the date of issuance. The amount of
Distributions payable for any period will be computed on the basis of a 360-day
year of twelve 30-day months. In the event that any date on which Distributions
are payable on the Preferred Securities is not a Business Day, then payment of
the Distributions payable on such date will be made on the next succeeding day
that is a Business Day (and without any additional Distributions or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on the date such payment was originally payable (each date on which
Distributions are payable in accordance with the foregoing, a "Distribution
Date"). A "Business Day" shall mean any day other than a Saturday or a Sunday,
or a day on which banking institutions in the City of New York are authorized or
required by law or executive order to remain closed or a day on which the
principal corporate trust office of the Property Trustee or the Debenture
Trustee is closed for business.
So long as no event of default under the Indenture has occurred and is
continuing, the Company has the right under the Indenture to defer the payment
of interest on the Junior Subordinated Debentures at any time or from time to
time for a period not exceeding 20 consecutive quarters with respect to each
Extension Period, provided that no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debentures. As a consequence of any such
deferral of interest, quarterly Distributions on the Preferred Securities by the
Trust Issuer will also be deferred during any such Extension Period.
Distributions to which holders of the Preferred Securities are entitled will
accumulate additional Distributions thereon at the rate per annum of ___%
thereof, compounded quarterly from the relevant payment date for such
Distributions. The term "Distributions" as used herein, shall include any such
additional Distributions. During any such Extension Period, the Company may not,
and may not permit any subsidiary of the Company to, (i)
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declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to, any of the Company's capital
stock, (ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities of the Company that rank PARI
PASSU with or junior in interest to the Junior Subordinated Debentures or (iii)
make any guarantee payments with respect to any guarantee by the Company of the
debt securities of any subsidiary of the Company if such guarantee ranks PARI
PASSU with or junior in interest to the Junior Subordinated Debentures (other
than (a) the reclassification of any class of the Company's capital stock into
another class of capital stock, (b) dividends or distributions in common stock
of the Company, (c) 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, (d) payments under the Guarantee 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). Prior to the
termination of any such Extension Period, the Company may further defer the
payment of interest on the Junior Subordinated Debentures, provided that no
Extension Period may exceed 20 consecutive quarters or extend beyond the
Stated Maturity of the Junior Subordinated Debentures. Upon the termination of
any such Extension Period and the payment of all interest then accrued and
unpaid (together with interest thereon at the rate of %, compounded quarterly,
to the extent permitted by applicable law), the Company may elect to begin a new
Extension Period. There is no limitation on the number of times that the Company
may elect to begin an Extension Period. See "Description of the Junior
Subordinated Debentures-Right to Defer Interest Payment Obligation" and "Certain
Federal Income Tax Consequences-Original Issue Discount."
The revenue of the Trust Issuer available for distribution to holders
of its Preferred Securities will be limited to payments under the Junior
Subordinated Debentures in which the Trust Issuer will invest the proceeds from
the issuance and sale of its Trust Securities. See "Description of the Junior
Subordinated Debentures." 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 Preferred Securities. The payment of
Distributions (if and to the extent the Trust Issuer has funds legally available
for the payment of such Distributions and cash sufficient to make such payments)
is guaranteed by the Company on a limited basis as set forth herein under
"Description of the Guarantee."
The Company has no current intention of exercising its right to defer
payments of interest on the Junior Subordinated Debentures.
SUBORDINATION OF THE COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the Preferred
Securities and Common Securities, as applicable, shall be made PRO RATA based on
the Liquidation Amount of the Preferred Securities and the Common Securities;
PROVIDED, HOWEVER, that if on any Distribution Date or Redemption Date an event
of default under the Indenture shall have occurred and be continuing, no payment
of any Distribution on, or Redemption Price of, any of the Common Securities,
and no other payment on account of the redemption, liquidation or other
acquisition of such Common Securities, shall be made unless payment in full in
cash of all accumulated and unpaid Distributions
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on all of the outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or, in the case of payment of the Redemption
Price, the full amount of such Redemption Price on all of the outstanding
Preferred Securities then called for redemption shall have been made or provided
for, and all funds available to the Property Trustee shall first be applied to
the payment in full in cash of all Distributions on, or Redemption Price of, the
Preferred Securities then due and payable.
In the case of any event of default under the Trust Agreement resulting
from an event of default under the Indenture, the Company as holder of the
Common Securities will be deemed to have waived any right to act with respect to
any such event of default under the Trust Agreement until the effect of all such
events of default with respect to the Preferred Securities shall have been
cured, waived or otherwise eliminated. Until any such events of default under
the Trust Agreement shall have been so cured, waived or otherwise eliminated,
the Property Trustee shall act solely on behalf of the holders of the Preferred
Securities and not on behalf of the Company as holder of the Common Securities,
and only the holders of the Preferred Securities will have the right to direct
the Property Trustee to act on their behalf.
REDEMPTION
The Preferred Securities are subject to mandatory redemption, in whole
or in part, upon repayment of the Junior Subordinated Debentures at their Stated
Maturity or earlier redemption as provided in the Indenture. The proceeds from
such repayment or redemption shall be applied by the Property Trustee to redeem
a Like Amount (as defined below) of the Preferred Securities upon not less than
30 nor more than 60 days notice prior to the date fixed for repayment or
redemption, at a redemption price equal to the aggregate Liquidation Amount of
such Preferred Securities plus accumulated and unpaid Distributions thereon (the
"Redemption Price") to the date of redemption (the "Redemption Date"). For a
description of the Stated Maturity and redemption provisions of the Junior
Subordinated Debentures, see "Description of the Junior Subordinated
Debentures-General," and "Redemption or Exchange."
The Company has the option to redeem the Junior Subordinated Debentures
prior to maturity on or after ________, 2002, in whole at any time or in part
from time to time, and thereby cause a mandatory redemption of a Like Amount of
the Preferred Securities. See "Description of the Junior Subordinated
Debentures-Redemption or Exchange." Any time that a Tax Event, an Investment
Company Event or a Capital Treatment Event (each as defined below) shall occur
and be continuing, the Company has the right to redeem the Junior Subordinated
Debentures in whole (but not in part) and thereby cause a mandatory redemption
of the Preferred Securities in whole (but not in part). See "Description of the
Junior Subordinated Debentures-Redemption or Exchange."
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price with the applicable proceeds from the contemporaneous
redemption of a Like Amount of the Junior Subordinated Debentures. Redemptions
of the Preferred Securities shall be made and the
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Redemption Price shall be paid on each Redemption Date only to the extent that
the Trust Issuer has funds on hand available for the payment of such Redemption
Price. See also "--Subordination of the Common Securities."
If the Trust Issuer gives a notice of redemption in respect of the
Preferred Securities, then, by 10:00 a.m., New York City time, on the Redemption
Date, to the extent funds are available, the Property Trustee will deposit
irrevocably with the DTC funds sufficient to pay the applicable Redemption Price
and will give DTC irrevocable instructions and authority to pay the Redemption
Price to the holders thereof upon surrender of their certificates evidencing
such Preferred Securities. Notwithstanding the foregoing, Distributions payable
on or prior to the Redemption Date for the Preferred Securities called for
redemption shall be payable to the holders of the Preferred Securities on the
relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then, upon the
date of such deposit, all rights of the holders of such Preferred Securities so
called for redemption will cease, except the right of the holders of such
Preferred Securities to receive the Redemption Price, but without interest on
such Redemption Price, and such Preferred Securities will cease to be
outstanding.
In the event that any date fixed for redemption of the Preferred
Securities is not a Business Day, then payment of the Redemption Price payable
on such date will be made on the next succeeding day which is a Business Day
(and without any interest or other payment in respect of any such delay), except
that, if such Business Day falls in the next calendar year, such payment will be
made on the immediately preceding Business Day. In the event that payment of the
Redemption Price in respect of the Preferred Securities called for redemption is
improperly withheld or refused and not paid either by the Trust Issuer or by the
Company pursuant to the Guarantee as described under "Description of the
Guarantee," Distributions on such Preferred Securities will continue to accrue
at the then applicable rate, from the Redemption Date originally established by
the Trust Issuer for such Preferred Securities to the date such Redemption Price
is actually paid, in which case the actual payment date will be the date fixed
for redemption for purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities law), the Company or its subsidiaries may at any time and
from time to time purchase outstanding Preferred Securities by private
agreement.
Payment of the Redemption Price on the Preferred Securities and any
distribution of the Junior Subordinated Debentures to holders of the Preferred
Securities shall be made to the applicable recordholders thereof as they appear
on the register for the Preferred Securities on the relevant record date, which
date shall be the date at least 15 days prior to the Redemption Date or
liquidation date, as applicable.
If less than all of the Preferred Securities and Common Securities
issued by the Trust Issuer are to be redeemed on a Redemption Date, then the
aggregate Liquidation Amount of the Preferred Securities and Common Securities
to be redeemed shall be allocated PRO RATA to the Preferred Securities and the
Common Securities based upon the relative Liquidation Amounts of such classes.
The particular Preferred Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Property Trustee from the
outstanding Preferred Securities not previously
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called for redemption, or if the Preferred Securities are then held in the form
of a global preferred security in accordance with DTC's customary procedures.
The Property Trustee shall promptly notify the trust registrar in writing of the
Preferred Securities selected for redemption and, in the case of any Preferred
Securities selected for partial redemption, the Liquidation Amount thereof to be
redeemed. For all purposes of the Trust Agreement, unless the context otherwise
requires, all provisions relating to the redemption of the Preferred Securities
shall relate, in the case of the Preferred Securities redeemed or to be redeemed
only in part, to the portion of the aggregate Liquidation Amount of the
Preferred Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each Holder of the Preferred
Securities to be redeemed at its registered address. Unless the Company defaults
in payment of the Redemption Price on the Junior Subordinated Debentures, on and
after the Redemption Date interest will cease to accrue on the Junior
Subordinated Debentures or portions thereof called for redemption.
LIQUIDATION OF THE TRUST ISSUER AND DISTRIBUTION OF THE JUNIOR SUBORDINATED
DEBENTURES TO HOLDERS
The Company has the right at any time to terminate the Trust Issuer
and, after satisfaction of the liabilities of creditors of the Trust Issuer as
provided by applicable law, cause Junior Subordinated Debentures to be
distributed to the holders of the Preferred Securities and Common Securities in
exchange therefor upon liquidation of the Trust Issuer.
After the liquidation date fixed for any distribution of the Junior
Subordinated Debentures for Preferred Securities (i) such Preferred Securities
will no longer be deemed to be outstanding, and (ii) DTC or its nominee, as the
registered holder of Preferred Securities will receive a registered global
certificate or certificates representing the Junior Subordinated Debentures to
be delivered upon such distribution with respect to Preferred Securities held by
DTC or its nominee, (iii) any certificates representing the Preferred Securities
not held by DTC or its nominee will be deemed to represent Junior Subordinated
Debentures having a principal amount equal to the stated Liquidation Amount of
such Preferred Securities, and bearing accrued and unpaid interest in an amount
equal to the accumulated and unpaid Distributions on such series of the
Preferred Securities until such certificates are presented to the Administrative
Trustees or their agent for transfer or reissuance.
Under current United States federal income tax law and interpretations,
a distribution of the Junior Subordinated Debentures should not be a taxable
event to holders of the Preferred Securities. Should there be a change in law, a
change in legal interpretation, a Tax Event or other circumstances, however, the
distribution could be a taxable event to holders of the Preferred Securities.
See "Certain Federal Income Tax Consequences-Distribution of the Junior
Subordinated Debentures to Holders of the Preferred Securities."
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LIQUIDATION DISTRIBUTION UPON TERMINATION
Pursuant to the Trust Agreement, the Trust Issuer shall automatically
terminate upon expiration of its term and shall terminate on the first to occur
of (i) certain events of bankruptcy, dissolution or liquidation of the Company,
subject in certain instances to any such event remaining in effect for a period
of 60 consecutive days; (ii) the distribution of a Like Amount of the Junior
Subordinated Debentures to the holders of its Preferred Securities, if the
Company, as depositor, has given written direction to the Property Trustee to
terminate the Trust Issuer (which direction is optional and wholly within the
discretion of the Company, as depositor); (iii) redemption of all of the
Preferred Securities as described under "Description of the Preferred
Securities-Redemption;" and (iv) the entry of an order for the dissolution of
the Trust Issuer by a court of competent jurisdiction.
If an early termination occurs as described in clause (i), (ii) or (iv)
of the preceding paragraph, the Trust Issuer shall be liquidated by the Trust
Issuer Trustees as expeditiously as the Trust Issuer Trustees determine to be
possible by distributing, after satisfaction of liabilities to creditors of the
Trust Issuer, if any, as provided by applicable law, to the holders of the
Preferred Securities a Like Amount of the Junior Subordinated Debentures, unless
such distribution is determined by the Property Trustee not to be practical, in
which event such holders will be entitled to receive out of the assets of the
Trust Issuer available for distribution to holders, after satisfaction of
liabilities to creditors of the Trust Issuer, if any, as provided by applicable
law, an amount equal to, in the case of holders of the Preferred Securities, the
aggregate of the Liquidation Amount plus accrued 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 Issuer has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust Issuer on Preferred Securities shall be paid on a PRO RATA basis. The
Company, as the holder of the Common Securities, will be entitled to receive
distributions upon any such liquidation PRO RATA with the holders of the
Preferred Securities, except that if an event of default under the Indenture has
occurred and is continuing, the Preferred Securities shall have a priority over
the Common Securities with respect to any such distributions.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under
the Trust Agreement (an "Event of Default") with respect to the Preferred
Securities issued thereunder (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(i) the occurrence of an event of default under the Indenture
(see "Description of the Junior Subordinated Debentures-Debenture
Events of Default"); or
(ii) default in the payment of any Distribution when it
becomes due and payable, and continuation of such default for a period
of 30 days; or
(iii) default in the payment of any Redemption Price of any
Preferred Security when it becomes due and payable; or
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(iv) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Trust Issuer Trustees in
the Trust Agreement (other than a covenant or warranty a default in the
performance of which or the breach of which is dealt with in clause
(ii) or (iii) above), and continuation of such default or breach for a
period of 60 days after there has been given, by registered or
certified mail, to the defaulting Trust Issuer Trustee or Trustees by
the holders of at least 25% in aggregate Liquidation Amount of the
outstanding Preferred Securities, a written notice specifying such
default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or
insolvency with respect to the Property Trustee and the failure by the
Company to appoint a successor Property Trustee within 60 days thereof.
Within 90 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 Company, as depositor, unless such Event of
Default shall have been cured or waived. The Company, as depositor, and the
Administrative Trustees are required to file annually with the Property Trustee
a certificate as to whether or not they arc in compliance with all the
conditions and covenants applicable to them under the Trust Agreement.
If an event of default under the Indenture has occurred and is
continuing, the Preferred Securities shall have a preference over the Common
Securities as described above. See "-- Subordination of the Common Securities"
and "--Liquidation Distribution Upon Termination". The existence of an event of
default does not entitle the holders of the Preferred Securities to accelerate
the payment thereof.
REMOVAL OF THE TRUST ISSUER TRUSTEES
Unless an event of default under the Indenture shall have occurred and
be continuing, any Trust Issuer Trustee may be removed at any time by the holder
of the Common Securities. If an event of default under the Indenture 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
Company as the holder of the Common Securities. No resignation or removal of any
Trust 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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CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act, if applicable, or of any jurisdiction in which any part of
the Trust Property (as defined in the Trust Agreement) may at the time be
located, the Company, as the holder of the Common Securities, and the
Administrative Trustees shall have power to appoint one or more persons either
to act as a co-trustee, jointly with the Property Trustee, of all or any part of
such Trust 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 the Trust Agreement. In the event an event of default under the
Indenture has occurred and is continuing, the Property Trustee alone shall have
power to make such appointment.
MERGER OR CONSOLIDATION OF THE TRUST ISSUER TRUSTEES
Any entity 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 bc consolidated, or any entity resulting from any merger,
conversion or consolidation to which such Trustee shall be a party or any entity
succeeding to all or substantially all the corporate trust business of such
Trustee, shall be the successor of such Trustee under the Trust Agreement,
provided such entity shall be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST ISSUER
The Trust Issuer may not merge with or into, consolidate, amalgamate,
be replaced by, convey, transfer or lease its properties and assets
substantially as an entirety to any entity or other Person, except as described
below or as otherwise described in the Trust Agreement. The Trust Issuer may, at
the request of the Company, with the consent of the Administrative Trustees and
without the consent of the holders of the Preferred Securities, the Property
Trustee or the Delaware Trustee, merge with or into, consolidate, amalgamate, be
replaced by, convey, transfer or lease its properties and assets substantially
as an entirety to, a trust organized as such under the laws of any State:
PROVIDED, that (i) such successor entity either (a) expressly assumes all of the
obligations of the Trust Issuer with respect to the Preferred Securities or (b)
substitutes for the Preferred Securities other securities having substantially
the same terms as the Preferred Securities (the "Successor Securities") so long
as the Successor Securities rank the same as the Preferred Securities 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 as the
holder of the Junior Subordinated Debentures, (iii) the Successor Securities are
registered or listed, or any Successor Securities will be registered or listed
upon notification of issuance, on any national securities exchange or other
organization on which the Preferred Securities are then registered or listed
(including, if applicable, the Nasdaq Stock Market's National Market), if any,
(iv) such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any
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nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
adversely affect the rights, preferences and privileges of the holders of the
Preferred Securities (including any Successor Securities) in any material
respect, (vi) such successor entity has a purpose substantially identical to
that of the Trust Issuer, (vii) prior to such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, the Company has
received an opinion from independent counsel to the Trust Issuer experienced in
such matters to the effect that (a) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Preferred Securities (including
any Successor Securities) in any material respect and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Trust Issuer 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 or its equivalent 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 Issuer shall not, except with the
consent of holders of 100% in Liquidation Amount of the Preferred Securities,
consolidate, amalgamate, merge with or into or be replaced by or convey,
transfer or lease its properties and assets substantially as an entirety to any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust Issuer or the successor
entity to be classified as other than a grantor trust for United States federal
income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "Description of the
Guarantee-Amendments and Assignment" and as otherwise required by law and the
Trust Agreement, the holders of the Preferred Securities will have no voting
rights.
The Trust Agreement may be amended from time to time by the Company,
the Property Trustee and the Administrative Trustees, without the consent of the
holders of the Preferred Securities, (i) with respect to acceptance of
appointment of a successor trustee, (ii) 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 (iii) to modify, eliminate
or add to any provisions of the Trust Agreement to such extent as shall be
necessary to ensure that the Trust Issuer will be classified for United States
federal income tax purposes as a grantor trust at all times that the Preferred
Securities are outstanding or to ensure that the Trust Issuer will not be
required to register as an "investment company" under the Investment Company
Act; PROVIDED, however, that in the case of clause (ii), such action shall not
adversely affect in any material respect the interests of any holder of the
Preferred Securities, and any amendments of the Trust Agreement shall become
effective when notice thereof is given to the holders of the Preferred
Securities. The Trust Agreement may be amended by the Trust Issuer Trustees and
the Company with (i) the consent of holders representing not less than a
majority (based upon Liquidation Amounts) of the outstanding Preferred
Securities and (ii) receipt by the Trust Issuer Trustees of an
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opinion of counsel to the effect that such amendment or the exercise of any
power granted to the Trust Issuer Trustees in accordance with such amendment
will not affect the Trust Issuer's status as a grantor trust for United States
federal income tax purposes or the Trust Issuer's exemption from status as an
"investment company" under the Investment Company Act, PROVIDED that without the
consent of each holder of the Preferred Securities, the Trust Agreement may not
be amended to (a) change the amount or timing of any Distribution on the
Preferred Securities or otherwise adversely affect the amount of any
Distribution required to be made in respect of the Preferred Securities as of a
specified date or (b) restrict the right of a holder of the Preferred Securities
to institute suit for the enforcement of any such payment on or after such date.
So long as the Junior Subordinated Debentures are held by the Property
Trustee, the Trust Issuer 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 the Property Trustee with
respect to the Junior Subordinated Debentures, (ii) waive any past default that
is waivable under the Indenture, (iii) exercise any right to rescind or annul a
declaration that the principal of all the Junior Subordinated Debentures shall
be due and payable or (iv) consent to any amendment, modification or termination
of the Indenture or the Junior Subordinated Debentures, where such consent shall
be required, without, in each case, obtaining the prior approval of the holders
of a majority in aggregate Liquidation Amount of all outstanding Preferred
Securities; PROVIDED, however, that where a consent under the Indenture would
require the consent of each holder of the Junior Subordinated Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior consent of each holder of the Preferred Securities. The Trust Issuer
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 the
holders of the Preferred Securities. The Property Trustee shall notify each
holder of the Preferred Securities of any notice of default with respect to the
Junior Subordinated Debentures. In addition to obtaining the foregoing approvals
of the holders of the Preferred Securities, prior to taking any of the foregoing
actions, the Trust Issuer Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the Trust Issuer will not be
classified 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 the Preferred Securities may be
given at a meeting of holders of the Preferred Securities convened for such
purpose or pursuant to written consent. The Property Trustee will cause a notice
of any meeting at which holders of the 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 the Preferred Securities in
the manner set forth in the Trust Agreement.
No vote or consent of the holders of the Preferred Securities will be
required for the Trust Issuer to redeem and cancel the Preferred Securities in
accordance with the Trust Agreement.
Notwithstanding that holders of the Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Company, the Trust Issuer Trustees or
any affiliate of the Company or the Trust Issuer Trustees shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
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LIQUIDATION VALUE
The amount payable on the Preferred Securities in the event of any
liquidation of the Trust Issuer is $25 per Preferred Security plus accumulated
and unpaid Distributions, which may be in the form of a distribution of such
amount in Junior Subordinated Debentures, subject to certain exceptions. See
"--Liquidation Distribution Upon Termination."
EXPENSES AND TAXES
In the Indenture, the Company, as borrower, has agreed to pay all debts
and other obligations (other than with respect to the Preferred Securities) and
all costs and expenses of the Trust Issuer (including costs and expenses
relating to the organization of the Trust Issuer, the fees and expenses of the
Trust Issuer Trustees and the costs and expenses relating to the operation of
the Trust Issuer) and to pay any and all taxes and all costs and expenses with
respect thereto (other than United States withholding taxes) to which the Trust
Issuer might become subject. The foregoing obligations of the Company under the
Indenture are for the benefit of, and shall be enforceable by, any person to
whom any such debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice thereof. Any such
Creditor may enforce such obligations of the Company directly against the
Company, and the Company has irrevocably waived any right or remedy to require
that any such Creditor take any action against the Trust Issuer or any other
person before proceeding against the Company. The Company has also agreed in the
Indenture to execute such additional agreements as may be necessary or desirable
to give full effect to the foregoing.
BOOK ENTRY, DELIVERY AND FORM
The Preferred Securities will be issued in the form of one or more
fully registered global securities which will be deposited with, or on behalf
of, DTC and registered in the name of DTC's nominee. Unless and until it is
exchangeable in whole on in part for the Preferred Securities in definitive
form, a global security may not be transferred except as a whole by DTC to a
nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC
or any such nominee to a successor of such Depository or a nominee of such
successor.
Ownership of beneficial interests in a global security will be limited
to persons that have accounts with DTC or its nominee ("Participants") or
persons that may hold interests through Participants. The Company expects that,
upon the issuance of a global security, DTC will credit, on its book-entry
registration and transfer system, the Participants' accounts with their
respective principal amounts of the Preferred Securities represented by such
global security. Ownership of beneficial interests in such global security will
be shown on, and the transfer of such ownership interests will be effected only
through, records maintained by DTC (with respect to interests of Participants)
and on the records of Participants (with respect to interests of Persons held
through Participants). Beneficial owners will not receive written confirmation
from DTC of their purchase, but are expected to receive written confirmations
from the Participants through which the beneficial owner entered into the
transaction. Transfers of ownership interests will be accomplished by entries on
the books of Participants acting on behalf of the beneficial owners.
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So long as DTC, or its nominee, is the registered owner of a global
security, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Preferred Securities represented by such global security
for all purposes under the Junior Subordinated Indenture. Except as provided
below, owners of beneficial interests in a global security will not be entitled
to receive physical delivery of the Preferred Securities in definitive form and
will not be considered the owners or holders thereof under the Junior
Subordinated Indenture. Accordingly, each person owning a beneficial interest in
such a global security must rely on the procedures of DTC and, if such person is
not a Participant, on the procedures of the Participant through which such
person owns its interest, to exercise any rights of a holder of Preferred
Securities under the Junior Subordinated Indenture. The Company understands
that, under DTC's existing practices, in the event that the Company requests any
action of holders, or an owner of a beneficial interest in such a global
security desires to take any action which a holder is entitled to take under the
Junior Subordinated Indenture, DTC would authorize the Participants holding the
relevant beneficial interests to take such action, and such Participants would
authorize beneficial owners owning through such Participants to take such action
or would otherwise act upon the instructions of beneficial owners owning through
them. Redemption notices will also be sent to DTC. If less than all of the
Preferred Securities are being redeemed, the Company understands that it is
DTC's existing practice to determine by lot the amount of the interest of each
Participant to be redeemed.
Distributions on the Preferred Securities registered in the name of DTC
or its nominee will be made to DTC or its nominee, as the case may be, as the
registered owner of the global security representing such Preferred Securities.
None of the Company, the Trust Issuer Trustee, the Administrators, any Paying
Agent or any other agent of the Company or the Trust Issuer Trustees will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global
security for such Preferred Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
Disbursements of Distributions to Participants shall be the responsibility of
DTC. DTC's practice is to credit Participants' accounts on a payable date in
accordance with their respective holdings shown on DTC's records unless DTC has
reason to believe that it will not receive payment on the payable date. Payments
by Participants to beneficial owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC, the Company, the Trust Issuer
Trustees, the Paying Agent or any other agent of the Company, subject to any
statutory or regulatory requirements as may be in effect from time to time.
DTC may discontinue providing its services as securities depository
with respect to the Preferred Securities at any time by giving reasonable notice
to the Company or the Trust Issuer Trustees. If DTC notifies the Company that it
is unwilling to continue as such, or if it is unable to continue or ceases to be
a clearing agency registered under the Exchange Act and a successor depository
is not appointed by the Company within ninety days after receiving such notice
or becoming aware that DTC is no longer so registered, the Company will issue
the Preferred Securities in definitive form upon registration of transfer of, or
in exchange for, such global security. In addition, the Company may at any time
and in its sole discretion determine not to have the Preferred Securities
represented by one or more global securities and, in such event, will issue
Preferred Securities in definitive form in exchange for all of the global
securities representing such Preferred Securities.
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DTC has advised the Company and the Trust Issuer as follows: DTC is a
limited purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its Participants and to facilitate the clearance and
settlement of securities transactions between Participants through electronic
book entry changes to accounts of its Participants, thereby eliminating the need
for physical movement of certificates. Participants include securities brokers
and dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Certain of such Participants (or their
representatives), together with other entities, own DTC. Indirect access to the
DTC system is available to others such as banks, brokers, dealers and trust
companies that clear through, or maintain a custodial relationship with, a
Participant, either directly or indirectly.
SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Preferred Securities will be made by the
Underwriters in immediately available funds.
Secondary trading in preferred securities of corporate issuers is
generally settled in clearinghouse or next-day funds. In contrast, the Preferred
Securities will trade in DTC's Same-Day Funds Settlement System, and secondary
market trading activity in the Preferred Securities will therefore be required
by DTC to settle in immediately available funds. No assurance can be given as to
the effect, if any, of settlement in immediately available funds on trading
activity in the Preferred Securities.
PAYMENT AND PAYING AGENCY
Payments in respect of the Preferred Securities will be made to DTC,
which will credit the relevant accounts at DTC on the applicable Distribution
Dates or, if the Preferred Securities are not held by DTC, such payments will be
made by check mailed to the address of the holder entitled thereto. as such
address appears on the securities register for the Trust Securities. The paying
agent (the "Paying Agent") will initially be the Property Trustee and any
co-paying agent chosen by the Property Trustee and acceptable to the
Administrators. The Paying Agent will be permitted to resign as Paying Agent
upon 30 days' written notice to the Property Trustee and the Administrators. If
the Property Trustee is no longer the Paying Agent, the Property Trustee will
appoint a successor (which must be a bank or trust company reasonably acceptable
to the Administrators) to act as Paying Agent.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as the registrar and the transfer agent
for the Preferred Securities. Registration of transfers of Preferred Securities
will be effected without charge by or on behalf of the Trust Issuer, except for
the payment of any tax or other governmental charges that may be imposed in
connection with any transfer or exchange. In the event of any redemption, the
Trust
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Issuer will not be required to (i) issue, register the transfer of, or exchange
any Preferred Securities during a period beginning at the opening of business 15
days before the date of mailing of a notice of redemption of any Preferred
Securities called for redemption and ending at the close of business on the day
of such mailing; or (ii) register the transfer of or exchange any Preferred
Securities so selected for redemption, in whole or in part, except the
unredeemed portion of any such Preferred Securities being redeemed in part.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than upon the occurrence and during the
continuance of an Event of Default, undertakes to perform only such duties as
are specifically set forth in the Trust Agreement and, after such Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to this
provision, the Property Trustee is under no obligation to exercise any of the
powers vested in it by the Trust Agreement at the request of any holder of
Preferred Securities unless it is offered reasonable indemnity against the
costs, expenses and liabilities that might be incurred thereby. 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 Preferred
Securities are entitled under the Trust Agreement to vote, then the Property
Trustee will take such action as it deems advisable and in the best interests of
the holders of the Preferred 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 Issuer in such a way that the Trust Issuer
will not be deemed to be an "investment company" required to be registered under
the Investment Company Act or classified as an association taxable as a
corporation for United States federal income tax purposes and so that the Junior
Subordinated Debentures will be treated as indebtedness of the 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, the certificate of trust of the Trust Issuer or the Trust
Agreement, that the Company and the Administrative Trustees determine in their
discretion to be necessary or desirable for such purposes.
Holders of the Preferred Securities have no preemptive or similar
rights.
The Trust Agreement and the Preferred Securities will be governed by,
and construed in accordance with, the internal laws of the State of Delaware.
DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under an Indenture
(the "Indenture") between the Company and The Bank of New York, as trustee (the
"Debenture Trustee"). The Indenture will be qualified as an Indenture under the
Trust Indenture Act. This summary of certain
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terms and provisions of the Junior Subordinated Debentures and the Indenture
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the Indenture, and to the Trust Indenture Act.
Wherever particular defined terms of the Indenture are referred to, but not
defined herein, such defined terms are incorporated herein by reference. The
form of the Indenture has been filed as an exhibit to the Registration Statement
of which this Prospectus forms a part.
GENERAL
Concurrently with the issuance of the Preferred Securities, the Trust
Issuer will invest the proceeds thereof, together with the consideration paid by
the Company for the Common Securities, in the Junior Subordinated Debentures.
The Junior Subordinated Debentures will bear interest at the annual rate of %,
payable quarterly in arrears on March 31, June 30, September 30, and December 31
of each year (each, an "Interest Payment Date"), commencing _____________, 1997,
to the person in whose name each Subordinated Debenture is registered, subject
to certain exceptions, at the close of business on the Business Day next
preceding such Interest Payment Date. It is anticipated that, until the
liquidation, if any, of the Trust Issuer, the Junior Subordinated Debentures
will be held in the name of the Property Trustee in trust for the benefit of the
holders of the Preferred Securities. The amount of interest payable for any
period will be computed on the basis of a 360-day year of twelve 30-day months.
In the event that any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on the date such payment was
originally payable. Accrued interest that is not paid on the applicable Interest
Payment Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of ____% thereof, compounded quarterly
from the relevant Interest Payment Date. 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.
The Junior Subordinated Debentures will mature on ____________, 2027
(such date, as it may be shortened as hereinafter described, the "Stated
Maturity"). Such date may be shortened at any time by the Company to any date
not earlier than ____________, 2002, subject to the Company having received
prior regulatory approval if then required under applicable capital guidelines
or regulatory policies. In the event that the Company elects to shorten the
Stated Maturity of the Junior Subordinated Debentures, it will give notice
thereof to the Debenture Trustee, the Trust Issuer and to the holders of the
Junior Subordinated Debentures no more than 180 days and no less than 90 days
prior to the effectiveness thereof.
The Junior Subordinated Debentures will be unsecured and will rank
junior and be subordinate in right of payment to all Senior Debt of the Company.
Because the Company is a holding company, the right of the Company to
participate in any distribution of assets of any subsidiary, including the Bank,
upon such subsidiary's liquidation or reorganization or otherwise, is subject to
the prior claims of creditors of that subsidiary, except to the extent that the
Company may itself be recognized as a creditor of that subsidiary. Accordingly,
the Junior Subordinated Debentures will be effectively
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subordinated to all existing and future liabilities of the Company's
subsidiaries, and holders of the Junior Subordinated Debentures should look only
to the assets of the Company for payments on the Junior Subordinated Debentures.
The Indenture does not limit the incurrence or issuance of other secured or
unsecured debt of the Company, including Senior Debt, whether under the
Indenture or any existing or other indenture that the Company may enter into in
the future or otherwise.
RIGHT TO DEFER INTEREST PAYMENT OBLIGATION
So long as no event of default under the Indenture has occurred and is
continuing, the Company has the right under the Indenture at any time or from
time to time during the term of the Junior Subordinated Debentures to defer the
payment of interest on the Junior Subordinated Debentures for a period not
exceeding 20 consecutive quarters with respect to each Extension Period,
PROVIDED that no Extension Period may extend beyond the Stated Maturity of the
Junior Subordinated Debentures. At the end of each Extension Period, the Company
must pay all interest then accrued and unpaid on the Junior Subordinated
Debentures (together with interest on such unpaid interest at the annual rate of
____%, compounded quarterly from the relevant Interest Payment Date, to the
extent permitted by applicable law). During an Extension Period, interest would
continue to accrue and holders of the Junior Subordinated Debentures would be
required to accrue interest income for United States federal income tax
purposes. See "Certain Federal Income Tax Consequences-Interest Income and
Original Issue Discount."
During any such Extension Period, the Company may not, and may not
permit any subsidiary of the Company to, (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Company's capital stock or (ii) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Company that rank PARI PASSU with or junior in interest
to the Junior Subordinated Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any subsidiary
of the Company if such guarantee ranks PARI PASSU with or junior in interest to
the Junior Subordinated Debentures (other than (a) the reclassification of any
class of the Company's capital stock into another class of capital stock, (b)
dividends or distributions in common stock of the Company, (c) any declaration
of a dividend in connection with the implementation of a stockholders' rights
plan, the issuance of stock under any such plan in the future or the redemption
or repurchase of any such rights pursuant thereto, (d) payments under the
Guarantee 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). Prior to the termination of any such Extension Period,
the Company may further defer the payment of interest, PROVIDED that no
Extension Period may exceed 20 consecutive quarters or extend beyond the Stated
Maturity of the Junior Subordinated Debentures. Upon the termination of any such
Extension Period and the payment of all interest then accrued and unpaid
(together with interest thereon at the 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. 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 such Extension Period at least one Business Day prior
to the earlier of (i) the date interest on the Junior Subordinated Debentures
would have been payable except for the election to begin such Extension Period
or (ii)
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the date the Administrative Trustees are required to give notice of the record
date, or the date such Distributions are payable, to the Nasdaq Stock Market's
National Market or other applicable self-regulatory organization or to holders
of the Preferred Securities as 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 notice of the Company's election
to begin a new Extension Period to the holders of the Preferred Securities.
There is no limitation on the number of times that the Company may elect to
begin an Extension Period.
ADDITIONAL SUMS
If the Trust Issuer or the Property Trustee is required to pay any
additional taxes, duties or other governmental charges as a result of a Tax
Event, the Company will pay such additional amounts (the "Additional Sums") on
the Junior Subordinated Debentures as shall be required so that the
Distributions payable by the Trust Issuer shall not be reduced as a result of
any such additional taxes, duties or other governmental charges.
REDEMPTION OR EXCHANGE
The Company will have the right to redeem the Junior Subordinated
Debentures prior to maturity (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), within
180 days following the occurrence of a Tax Event, an Investment Company Event or
a Capital Treatment Event, in each case at a redemption price equal to the
accrued and unpaid interest on the Junior Subordinated Debentures so redeemed to
the date fixed for redemption, plus 100% of the principal amount thereof. Any
such redemption prior to the Stated Maturity will be subject to prior regulatory
approval if then required.
"Investment Company Event" means the receipt by the Trust Issuer of an
opinion of counsel experienced in such matters to the effect that, as a result
of the occurrence of a change in law or regulation or a change in interpretation
or application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, the Trust Issuer is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act, which change becomes effective on or after the date of original
issuance of the Preferred Securities.
"Capital Treatment Event" means the reasonable determination by the
Company that, as a result of any amendment to, or change (including any proposed
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such proposed change, pronouncement, action or decision is announced on or after
the date of original issuance of the Preferred Securities, there is more than an
insubstantial risk that the Company will not be entitled to treat an amount
equal to the Liquidation Amount of the Preferred Securities as "Tier 1 Capital"
(or the then equivalent thereof) for purposes of the capital adequacy guidelines
of the Federal Reserve (or any successor regulatory authority with jurisdiction
over bank holding companies), or any capital
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adequacy guidelines as then in effect and applicable to the Company. There are
currently no capital adequacy guidelines applicable to savings bank holding
companies such as the Company.
The Junior Subordinated Debentures will not be subject to any sinking
fund.
"Tax Event" means the receipt by the Trust Issuer of an opinion of
counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Trust Issuer is, or will be within 90 days of
the date of such opinion, subject to United Stated 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 Issuer 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.
"Additional Sums" means the additional amounts as may be necessary in
order that the amount of Distributions then due and payable by the Trust Issuer
on the outstanding Preferred Securities and Common Securities shall not be
reduced as a result of any additional taxes, duties and other governmental
charges to which the Trust Issuer has become subject as a result of a Tax Event.
"Like Amount" means (i) with respect to a redemption of the Preferred
Securities, Preferred Securities having a Liquidation Amount equal to that
portion of the principal amount of the Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Indenture, allocated to the
Common Securities and to the Preferred Securities PRO RATA based upon the
relative Liquidation Amounts of such Preferred Securities and the proceeds of
which will be used to pay the Redemption Price of such Preferred Securities and
(ii) with respect to a distribution of the Junior Subordinated Debentures to
holders of the Preferred Securities in exchange therefor in connection with a
dissolution or liquidation of the Trust Issuer, Junior Subordinated Debentures
having a principal amount equal to the Liquidation Amount of the Preferred
Securities of the holder to whom such Junior Subordinated Debentures would be
distributed.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of the Junior
Subordinated Debentures to be redeemed at its registered address. Unless the
Company defaults in payment of the redemption price, on and after the redemption
date interest ceases to accrue on the Junior Subordinated Debentures or portions
thereof called for redemption.
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REGISTRATION, DENOMINATION AND TRANSFER
The Junior Subordinated Debentures will initially be registered in the
name of the Trust Issuer. If the Junior Subordinated Debentures are distributed
to holders of Preferred Securities, it is anticipated that the depository
arrangements for the Junior Subordinated Debentures will be substantially
identical to those in effect for the Preferred Securities. See "Description of
Preferred Securities -- Book Entry, Delivery and Form."
Although DTC has agreed to the procedures described above, it is under
no obligation to perform or continue to perform such procedures, and such
procedures may be discontinued at any time. If DTC is at any time unwilling or
unable to continue as depositary and a successor depositary is not appointed by
the Company within 90 days of receipt of notice from DTC to such effect, the
Company will cause the Junior Subordinated Debentures to be issued in definitive
form.
Payments on Junior Subordinated Debentures represented by a global
security will be made to Cede & Co., the nominee for DTC, as the registered
holder of the Junior Subordinated Debentures, as described under "Description of
Preferred Securities -- Book Entry, Delivery and Form." If Junior Subordinated
Debentures are issued in certificated form, principal and interest will be
payable, the transfer of the Junior Subordinated Debentures will be registrable,
and Junior Subordinated Debentures will be exchangeable for Junior Subordinated
Debentures of other authorized denominations of a like aggregate principal
amount, at the corporate trust office of the Debenture Trustee in New York, New
York or at the offices of any Paying Agent or transfer agent appointed by the
Company, provided that payment of interest may be made at the option of the
Company by check mailed to the address of the persons entitled thereto. However,
a holder of $1 million or more in aggregate principal amount of Junior
Subordinated Debentures may receive payments of interest (other than interest
payable at the Stated Maturity) by wire transfer of immediately available funds
upon written request to the Debenture Trustee not later than 15 calendar days
prior to the date on which the interest is payable.
Junior Subordinated Debentures will be exchangeable for other Junior
Subordinated Debentures of like tenor, of any authorized denominations. and of a
like aggregate principal amount.
Junior Subordinated Debentures may be presented for exchange as
provided above, and may be presented for registration of transfer (with the form
of transfer endorsed thereon, or a satisfactory written instrument of transfer,
duly executed), at the office of the securities registrar appointed under the
Indenture or at the office of any transfer agent designated by the Company for
such purpose without service charge and upon payment of any taxes and other
governmental charges as described in the Junior Subordinated Indenture. The
Company will appoint the Debenture Trustee as securities registrar under the
Indenture. The Company may at any time designate additional transfer agents with
respect to the Junior Subordinated Debentures.
In the event of any redemption, neither the Company nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of the Junior
Subordinated Debentures to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated
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Debentures so selected for redemption, except, in the case of any Junior
Subordinated Debentures being redeemed in part, any portion thereof not to be
redeemed.
Any monies deposited with the Debenture Trustee or any paying agent, or
then held by the Company in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Company, be repaid to
the Company and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Company for
payment thereof.
RESTRICTIONS ON CERTAIN PAYMENTS
The Company will also covenant, as to the Junior Subordinated
Debentures, that it will not, and will not permit any subsidiary of the Company
to, (i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Company's
capital stock, (ii) make any payment of principal, interest or premium, if any,
on or repay or repurchase or redeem any debt securities of the Company that rank
PARI PASSU with or junior in interest to the Junior Subordinated Debentures or
(iii) make any guarantee payments with respect to any guarantee by the Company
of the debt securities of any subsidiary of the Company if such guarantee ranks
PARI PASSU with or junior in interest to the Junior Subordinated Debentures
(other than (a) the reclassification of any class of the Company's capital stock
into another class of capital stock, (b) dividends or distributions in common
stock of the Company, (c) any declaration of a dividend in connection with the
implementation of a stockholders' rights plan, the issuance of stock under any
such plan in the future or the redemption or repurchase of any such rights
pursuant thereto, (d) payments under the Guarantee 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), if at such
time (i) there shall have occurred any event of which the Company has actual
knowledge (a) that with the giving of notice or the lapse of time, or both,
would constitute an event of default under the Indenture with respect to the
Junior Subordinated Debentures and (b) in respect of which the Company shall not
have taken reasonable steps to cure, (ii) if the Junior Subordinated Debentures
are held by the Trust Issuer, the Company shall be in default with respect to
its payment of any obligations under the Guarantee relating to such Preferred
Securities or (iii) the Company shall have given notice of its selection of an
Extension Period as provided in the Indenture with respect to the Junior
Subordinated Debentures and shall not have rescinded such notice, or such
Extension Period, or any extension thereof, shall be continuing.
MODIFICATION OF INDENTURE
From time to time the Company and the Debenture Trustee may, without
the consent of the holders of the 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 the
Junior Subordinated Debentures or the ability to qualify, or maintain the
qualification of, the Indenture under the Trust Indenture Act. The Indenture
contains provisions permitting the Company
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and the Debenture Trustee, with the consent of the holders of not less than a
majority in principal amount of the Junior Subordinated Debentures affected, to
modify the Indenture in a manner affecting the rights of the holders of the
Junior Subordinated Debentures, PROVIDED that no such modification may, without
the consent of the holder of each outstanding Subordinated Debenture so
affected, (i) change the Stated Maturity of the Junior Subordinated Debentures,
reduce the principal amount thereof or reduce the rate or extend the time of
payment of interest thereon or (ii) reduce the percentage of principal amount of
the 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 that has occurred and
is continuing constitutes a "Debenture Event of Default":
(i) failure for 30 days to pay interest on the Junior
Subordinated Debentures when due (subject to the deferral of certain
due dates in the case of an Extension Period); or
(ii) failure to pay any principal on the Junior Subordinated
Debentures when due, whether at maturity, upon redemption by
declaration or otherwise; or
(iii) failure to observe or perform in any material respect
certain other covenants 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 the
outstanding Junior Subordinated Debentures; or
(iv) certain events in bankruptcy, insolvency or
reorganization of the Company, subject in certain instances to any such
event remaining in effect for a period of 60 consecutive days.
The holders of a majority in aggregate outstanding principal amount of
the Junior Subordinated Debentures have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Debenture
Trustee. The Debenture Trustee or the holders of not less than 25% in aggregate
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,
except a default in the payment of principal or interest (unless such default
has been cured and a sum sufficient to pay all matured installments of interest
and
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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 Subordinated Debenture. The Company is required to
file annually with the Debenture Trustee a certificate as to whether or not the
Company is in compliance with all the conditions and covenants applicable to it
under the Indenture.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF THE PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest or principal
on the Junior Subordinated Debentures on the date such interest or principal is
otherwise payable, a holder of the Preferred Securities may institute a legal
proceeding directly against the Company for enforcement of payment to such
holder of the principal of or interest on the Junior Subordinated Debentures
having a principal amount equal to the aggregate Liquidation Amount of the
Preferred Securities of such holder (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 Preferred
Securities. If the right to bring a Direct Action is removed, the Trust Issuer
may become subject to the reporting obligations under the Exchange Act. The
Company shall have the right under the Indenture to set-off any payment made to
such holder of the Preferred Securities by the Company in connection with a
Direct Action.
The holders of the 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. See "Description
of the Preferred Securities-Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Indenture provides that the Company shall not consolidate with or
merge into any other entity or convey, transfer or lease its properties and
assets substantially as an entirety to any entity, and no entity shall
consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless: (i)
in the event the Company consolidates with or merges into another entity or
conveys or transfers its properties and assets substantially as an entirety to
any entity, the successor entity is organized under the laws of the United
States or any state or the District of Columbia, and such successor entity
expressly assumes the Company's obligations on the Junior Subordinated
Debentures issued under the Indenture; (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 by
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.
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SATISFACTION AND DISCHARGE
The Indenture provides that when, among other things, all of the 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 their Stated Maturity 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 in the currency or currencies in which the Junior Subordinated
Debentures are payable sufficient to pay and discharge the entire indebtedness
on the Junior Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation, for the principal and interest to the date of the
deposit or to the Stated Maturity, 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 the Junior
Subordinated Debentures issued thereunder will be subordinate and junior in
right of payment to all Senior Debt to the extent provided in the Indenture.
Upon any payment or distribution of assets to creditors upon the liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of the Company, the holders of Senior Debt will first be
entitled to receive payment in full of principal of (and premium, if any) and
interest, if any, on such Senior Debt before the holders of the Junior
Subordinated Debentures, or the Property Trustee on behalf of the holders, will
be entitled to receive or retain any payment in respect of the principal of or
interest, if any, on the Junior Subordinated Debentures.
In the event of the acceleration of the maturity of any of the Junior
Subordinated Debentures, the holders of all Senior Debt outstanding at the time
of such acceleration will first be entitled to receive payment in full of all
amounts due thereon (including any amounts due upon acceleration) before the
holders of the Junior Subordinated Debentures will be entitled to receive or
retain any payment in respect of the principal of or interest, if any, on 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 Senior Debt or an event
of default with respect to any Senior Debt resulting in the acceleration of the
maturity thereof, or if any judicial proceeding shall be pending with respect to
any such default.
"Debt" means with respect to any Person, whether recourse is to all or
a portion of the assets of such Person and whether or not contingent: (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation
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of such Person issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued liabilities arising in
the ordinary course of business); (v) every capital lease obligation of such
Person; (vi) all indebtedness of such Person whether incurred on or prior to the
date of the Indenture or thereafter incurred, for claims in respect of
derivative products, including interest rate, foreign exchange rate and
commodity forward contracts, options and swaps and similar arrangements; and
(vii) every obligation of the type referred to in clauses (i) through (vi) of
another Person and all dividends of another Person the payment of which, in
either case, such Person has guaranteed or is responsible or liable, directly or
indirectly, as obligor or otherwise.
"Senior Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on
Debt, 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
Debt which is PARI PASSU with, or subordinated to, the Junior Subordinated
Debentures; PROVIDED, HOWEVER, that Senior Debt shall not be deemed to include:
(i) any Debt 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 Debt of the Company to
any of its subsidiaries, and (iii) any Debt to any employee of the Company.
The Indenture places no limitation on the amount of Senior Debt or
subordinated debt which is PARI PASSU with the Subordinated Indentures, that may
be incurred by the Company. The Company expects from time to time to incur
additional indebtedness constituting Senior Debt.
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, without
regard to conflicts of laws principles thereof.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Debenture Trustee is under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any holder of the 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.
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DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES
As described under "Description of the Preferred Securities-Liquidation
of the Trust Issuer and Distribution of the Junior Subordinated Debentures to
Holders," under certain circumstances involving the termination of the Trust
Issuer, Junior Subordinated Debentures may be distributed to the holders of the
Preferred Securities in exchange therefor upon liquidation of the Trust Issuer,
after satisfaction of liabilities to creditors of the Trust Issuer as provided
by applicable law. Any such distribution will be subject to receipt of prior
regulatory approval if then required. If the Junior Subordinated Debentures are
distributed to the holders of Preferred Securities upon the liquidation of the
Trust Issuer, the Company will use its best efforts to list the Junior
Subordinated Debentures on the Nasdaq Stock Market's National Market or such
stock exchanges, if any, on which the Preferred Securities are then listed.
There can be no assurance as to the market price of any Junior Subordinated
Debentures that may be distributed to the holders of the Preferred Securities.
PAYMENT AND PAYING AGENTS
Payment of principal of and any interest on the Junior Subordinated
Debentures will be made at the offices of the Debenture Trustee in the city of
New York or at the offices 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 (i) by check mailed to the address of the
Person entitled thereto as such address shall appear in the Securities Register
or (ii) by transfer to an account maintained by the Person entitled thereto as
specified in the Securities Register, provided that proper transfer instructions
have been received by the Regular Record Date. Payment of any interest on the
Junior Subordinated Debentures will be made to the Person in whose name the
Subordinated Debenture is registered at the close of business on the Regular
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, or
then held by the Company in trust, for the payment of the principal of or
interest on the Junior Subordinated Debentures and remaining unclaimed for two
years after such principal or interest has become due and payable shall be
repaid to the Company upon written request of the Company on May 31 of each year
or (if then held in trust by the Company) will be discharged from such trust and
the holders of the Junior Subordinated Debentures shall thereafter look, as
general unsecured creditors, only to the Company for payment thereof.
REGISTRAR AND TRANSFER AGENT
The Debenture Trustee will act as the registrar and the transfer agent
for the Junior Subordinated Debentures. Junior Subordinated Debentures may be
presented for registration of transfer (with the form of transfer endorsed
thereon, or a satisfactory written instrument of transfer, duly executed) at the
office of the registrar. The Company may at any time rescind the designation of
any such transfer agent or approve a change in the location through which any
such transfer agent acts; provided that the Company maintains a transfer agent
in the place of payment. The Company may at any time designate additional
transfer agents with respect to the Junior Subordinated
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Debentures. In the event of any redemption, neither the Company nor the
Debenture Trustee will be required to (i) issue, register the transfer of or
exchange Junior Subordinated Debentures during a period beginning at the opening
of business 15 days before the day of selection for redemption of Junior
Subordinated Debentures and ending at the close of business on the day of
mailing of the relevant notice of redemption, or (ii) transfer or exchange any
Junior Subordinated Debentures so selected for redemption, except, in the case
of any Junior Subordinated Debentures being redeemed in part, any portion
thereof not to be redeemed.
DESCRIPTION OF THE GUARANTEE
A Guarantee will be executed and delivered by the Company concurrently
with the issuance of the Preferred Securities for the benefit of the holders
from time to time of such Preferred Securities (the "Guarantee"). The Bank of
New York will act as trustee ("Guarantee Trustee") under the Guarantee. This
summary of certain provisions of the Guarantee does not purport to be complete
and is subject to, and qualified in its entirety by reference to, all of the
provisions of the Guarantee. Wherever particular defined terms of the Guarantee
are referred to, but not defined herein, such defined terms are incorporated
herein by reference. The form of the Guarantee has been filed as an exhibit to
the Registration Statement of which this Prospectus forms a part.
GENERAL
The Company will irrevocably agree to pay in full on a subordinated
basis, to the extent set forth herein, the Guarantee Payments (as defined below)
to the holders of the Preferred Securities, as and when due, regardless of any
defense, right of set-off or counterclaim that the Trust Issuer may have or
assert other than the defense of payment. The following payments with respect to
the Preferred Securities, to the extent not paid by or on behalf of the Trust
Issuer (the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on the Preferred
Securities, to the extent that the Trust Issuer has funds on hand available
therefor at such time, (ii) the Redemption Price with respect to any Preferred
Securities called for redemption, to the extent that the Trust Issuer has funds
on hand available therefor at such time, or (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Trust Issuer (unless
the Junior Subordinated Debentures are distributed to holders of the Preferred
Securities), the lesser of (a) the Liquidation Distribution, to the extent that
the Trust Issuer has funds available therefor at such time, and (b) the amount
of assets of the Trust Issuer remaining available for distribution to holders of
the Preferred Securities after satisfaction of liabilities to creditors of the
Trust Issuer 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 Preferred Securities or by causing the Trust
Issuer to pay such amounts to such holders.
The Guarantee will be an irrevocable guarantee on a subordinated basis
of the Trust Issuer's obligations under the Preferred Securities, but will apply
only to the extent that the Trust Issuer has funds sufficient to make such
payments, and is not a guarantee of collection.
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If the Company does not make interest payments on the Junior
Subordinated Debentures held by the Trust Issuer, the Trust Issuer will not be
able to pay Distributions on the Preferred Securities and will not have funds
legally available therefor. The Guarantee will rank subordinate and junior in
right of payment to all Senior Debt of the Company. 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 will be effectively subordinated to
all existing and future liabilities of the Company's subsidiaries, and claimants
should look only to the assets of the Company for payments thereunder. The
Guarantee does not limit the incurrence or issuance of other secured or
unsecured debt of the Company, including Senior Debt, whether under the
Indenture, any other indenture that the Company may enter into in the future, or
otherwise. The Company expects from time to time to incur additional
indebtedness constituting Senior Debt.
The Company and the Trust Issuer believe that the Company has, through
the Guarantee, the Trust Agreement, the Junior Subordinated Debentures, the
Indenture and the Expense Agreement, taken together, fully, irrevocably and
unconditionally guaranteed all of the Trust Issuer's obligations under the
Preferred Securities, on a subordinated basis. 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 Issuer's obligations under the Preferred Securities. See
"Relationship Among the Preferred Securities, the Junior Subordinated
Debentures, the Expense Agreement 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 Debt of
the Company in the same manner as the Junior Subordinated Debentures.
The Guarantee will constitute a guarantee of payment and not of
collection (i.e., the guaranteed party may institute a legal proceeding directly
against the 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 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 Issuer or upon
distribution to the holders of the Preferred Securities of the Junior
Subordinated Debentures.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not materially adversely
affect the rights of holders of the Preferred Securities (in which case no vote
will be required), the Guarantee may not be
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amended without the prior approval of the holders of not less than a majority of
the aggregate Liquidation Amount of such outstanding Preferred Securities. The
manner of obtaining any such approval will be as set forth under "Description of
the Preferred Securities-Voting Rights; Amendment of the Trust Agreement." All
guarantees and agreements contained in the Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Company and shall inure
to the benefit of the holders of the Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of
the Company to perform any of its payments or other obligations thereunder. The
holders of not less than a majority in aggregate Liquidation Amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Guarantee Trustee in
respect of such Guarantee or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under the Guarantee.
The Company, as guarantor, is required to file annually with the
Guarantee Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance
of a default by the Company in the performance of the Guarantee, undertakes to
perform only such duties as are specifically set forth in the Guarantee and,
after default with respect to the Guarantee, must exercise the same degree of
care and skill as a prudent person would exercise or use in the conduct of his
or her own affairs. Subject to this provision, the Guarantee Trustee is under no
obligation to exercise any of the powers vested in it by the Guarantee at the
request of any holder of the Preferred Securities unless it is offered
reasonable indemnity by such holder against the costs, expenses and liabilities
that might be incurred thereby. The Guarantee 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 Guarantee Trustee reasonably believes repayment
or adequate indemnity is not reasonably assured to it.
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
(a) full payment of the Redemption Price of the Preferred Securities, (b) full
payment of the amounts payable upon liquidation of the Trust Issuer, or (c)
distribution of the Junior Subordinated Debentures to the holders of the
Preferred Securities in exchange therefor. The Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any holder
of the Preferred Securities must restore payment of any sums paid under the
Preferred Securities or the Guarantee.
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GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the
laws of the State of New York, without regard to conflicts of laws principles
thereof.
THE EXPENSE AGREEMENT
Pursuant to the Expense Agreement entered into by the Company under the
Trust Agreement (the "Expense Agreement"), the Company will irrevocably and
unconditionally guarantee to each person or entity to whom the Trust Issuer
becomes indebted or liable, the full payment of any costs, expenses or
liabilities of the Trust Issuer, other than obligations of the Trust Issuer to
pay to the holders of the Preferred Securities the amounts due such holders
pursuant to the terms of the Preferred Securities. Third party creditors of the
Trust Issuer may proceed directly against the Company under the Expense
Agreement, regardless of whether such creditors had notice of the Expense
Agreement.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
THE JUNIOR SUBORDINATED DEBENTURES, THE EXPENSE
AGREEMENT AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred
Securities (to the extent the Trust Issuer has funds available for the payment
of such Distributions) are irrevocably guaranteed by the Company as and to the
extent set forth under "Description of the Guarantee." The Company and the Trust
Issuer believe that, taken together, the Company's obligations under the Junior
Subordinated Debentures, the Indenture, the Trust Agreement, the Expense
Agreement and the Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the Preferred Securities, on a subordinated basis. 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 Issuer's obligations under the Preferred Securities. If and to the
extent that the Company does not make payments on the Junior Subordinated
Debentures, the Trust Issuer will not pay Distributions or other amounts due on
its Preferred Securities. The Guarantee does not cover payment of Distributions
when the Trust Issuer does not have sufficient funds to pay such Distributions.
In such event, the remedy of a holder of the Preferred Securities is to
institute a Direct Action against the Company for enforcement of payment of such
Distributions to such holder. The obligations of the Company under the Guarantee
are subordinate and junior in right of payment to all Senior Debt.
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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 Preferred Securities, primarily
because: (i) the aggregate principal amount of the Junior Subordinated
Debentures will be equal to the sum of the aggregate stated Liquidation Amount
of the Preferred Securities and Common Securities; (ii) the interest rate and
interest and other payment dates on the Junior Subordinated Debentures will
match the Distribution rate and Distribution and other payment dates for the
Preferred Securities; (iii) the Company shall pay for all and any costs,
expenses and liabilities of the Trust Issuer except the Trust Issuer's
obligations to holders of its Preferred Securities; and (iv) the Trust Agreement
further provides that the Trust Issuer will not engage in any activity that is
not consistent with the limited purposes of the Trust Issuer.
Notwithstanding anything to the contrary in the Indenture, the Company
has the right to set off any payment it is otherwise required to make thereunder
with and to the extent the Company has theretofore made, or is concurrently on
the date of making such payment, a payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF THE PREFERRED SECURITIES
A holder of a 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
Issuer or any other person or entity.
A default or event of default under any Senior Debt of the Company
would not constitute a default or event of default under the Indenture. However,
in the event of payment defaults under, or acceleration of, Senior Debt of the
Company, the subordination provisions of the Indenture provide that no payments
may be made in respect of the Junior Subordinated Debentures until such Senior
Debt has been paid in full or any payment default thereunder has been cured or
waived. Failure to make required payments on the Junior Subordinated Debentures
would constitute an event of default under the Indenture.
LIMITED PURPOSE OF THE TRUST ISSUER
The Preferred Securities evidence a preferred undivided beneficial
interest in the Trust Issuer, and the Trust Issuer exists for the sole purpose
of issuing its Preferred Securities and Common Securities and investing the
proceeds thereof in Junior Subordinated Debentures. A principal difference
between the rights of a holder of a Preferred Security and a holder of a
Subordinated Debenture is that a holder of a Subordinated Debenture is entitled
to receive from the Company the principal amount of and interest accrued on
Junior Subordinated Debentures held, while a holder of the Preferred Securities
is entitled to receive Distributions from the Trust Issuer (or from the Company
under the Guarantee) if, and to the extent, the Trust Issuer has funds available
for the payment of such Distributions.
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RIGHTS UPON TERMINATION
Upon any voluntary or involuntary termination, winding-up or
liquidation of the Trust Issuer involving the liquidation of the Junior
Subordinated Debentures, after satisfaction of liabilities to creditors of the
Trust Issuer, if any, as provided by applicable law, the holders of the
Preferred Securities will be entitled to receive, out of assets held by the
Trust Issuer, the Liquidation Distribution in cash. See "Description of the
Preferred Securities-Liquidation Distribution Upon Termination." 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 Debt 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. Since the Company is the guarantor under the
Guarantee and has agreed to pay for all costs, expenses and liabilities of the
Trust Issuer (other than the Trust Issuer's obligations to the holders of its
Preferred Securities), the positions of a holder of such Preferred Securities
and a holder of the Junior Subordinated Debentures relative to other creditors
and to stockholders of the Company in the event of liquidation or bankruptcy of
the Company are expected to be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal United States federal
income tax consequences of the purchase, ownership and disposition of the
Preferred Securities. This summary addresses only the tax consequences to a
person that acquires Preferred Securities on their original issue at their
original offering price and does not address the tax consequences to persons
that may be subject to special treatment under United States federal income tax
law, such as banks, insurance companies, thrift institutions, regulated
investment companies, real estate investment trusts, tax-exempt organizations,
dealers in securities or currencies, persons that will hold Preferred Securities
as part of a position in a "straddle" or as part of a "hedging", "conversion" or
other integrated investment transaction for federal income tax purposes, persons
whose functional currency is not the United States dollar or persons that do not
hold Preferred Securities as capital assets.
The statements of law or legal conclusions set forth in this summary
constitute the opinion of Kronish, Lieb, Weiner & Hellman LLP ("Kronish Lieb"),
special tax counsel to the Company and the Trust Issuer. This summary is based
upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations, Internal Revenue Service rulings and pronouncements and judicial
decisions now in effect, all of which are subject to change at any time. Such
changes may be applied retroactively in a manner that could cause the tax
consequences to vary substantially from the consequences described below,
possibly adversely affecting a beneficial owner of the Preferred Securities. In
particular, legislation has been proposed that could adversely affect the
Company's ability to deduct interest on the Junior Subordinated Debentures,
which would in turn permit the Company to cause a redemption of the Preferred
Securities. See "--Possible Tax Law Changes." The authorities on which this
summary is based are subject to various interpretations, and it is therefore
possible that the federal income tax treatment of the purchase, ownership and
disposition of the Preferred Securities may differ from the treatment described
below.
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PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX
ADVISORS IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE FEDERAL TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE PREFERRED
SECURITIES, AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
CLASSIFICATION OF THE TRUST ISSUER
In the opinion of Kronish Lieb, under current law, the Trust Issuer
will not be classified as an association taxable as a corporation for United
States federal income tax purposes. As a result, each beneficial owner of
Preferred Securities (a "Securityholder") will be required to include in its
gross income its PRO RATA share of the interest (or accrued original issue
discount) with respect to the Junior Subordinated Debentures. See "--Interest
Income and Original Issue Discount." No amount included in income with respect
to the Preferred Securities will be eligible for the dividends-received
deduction.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under applicable Treasury regulations (the "Regulations"), if the terms
and conditions of a debt instrument make the likelihood that stated interest
will not be timely paid a "remote" contingency, such contingency will be ignored
in determining whether the debt instrument is issued with original issue
discount ("OID"). The Company believes that the likelihood of its exercising its
option to defer payments of interest on the Junior Subordinated Debentures is
remote, since exercising that option would prevent it from declaring dividends
on any class of its stock. Based on the foregoing, the Company intends to take
the position that the Junior Subordinated Debentures were not issued with OID
and, accordingly, a Securityholder should include in gross income only such
Securityholder's pro rata share of stated interest on the Junior Subordinated
Debentures in accordance with such Securityholder's method of tax accounting.
The Regulations have not yet been addressed in any rulings or other
published interpretations by the Internal Revenue Service (the "IRS"). In the
opinion of Kronish Lieb, it is not unreasonable for the Company to take the
position that the Junior Subordinated Debentures will not be issued with OID.
However, it is possible the IRS could take the position that the likelihood of
deferral was not a remote contingency within the meaning of the Regulations.
Under the Regulations, if the Company were to exercise its option to
defer payments of interest after treating the Junior Subordinated Debentures as
issued without OID, the Junior Subordinated Debentures would be treated as
re-issued with OID at that time, and all stated interest (and DE MINIMIS OID, if
any) on the Junior Subordinated Debentures would thereafter be treated as OID as
long as the Junior Subordinated Debentures remained outstanding. In such event,
all of a Securityholder's income with respect to the Junior Subordinated
Debentures would be accounted for as OID on an economic accrual basis regardless
of such Securityholder's method of tax accounting, and actual distributions of
stated interest would not be includable in gross income. Consequently, a
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Securityholder would be required to include OID in gross income even though the
Company would not make any actual cash payments during an Extension Period.
A Securityholder that disposed of Preferred Securities prior to the
record date for the payment of Distributions following an Extension Period would
include OID in gross income but would not receive any cash related thereto from
the Trust Issuer. Any amount of OID included in a Securityholder's gross income
(whether or not during an Extension Period) would increase such Securityholder's
tax basis in its Preferred Securities, and the amount of Distributions not
includable in gross income would reduce such Securityholder's tax basis in its
Preferred Securities.
DISTRIBUTION OF THE JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF THE PREFERRED
SECURITIES
Under current law, a distribution by the Trust Issuer of the Junior
Subordinated Debentures as described under the caption "Description of the
Preferred Securities-Liquidation of the Trust Issuer and Distribution of the
Junior Subordinated Debentures to Holders" will be nontaxable and will result in
a Securityholder's receiving directly its PRO RATA share of the Junior
Subordinated Debentures previously held indirectly through the Trust Issuer,
with a holding period and aggregate tax basis equal to the holding period and
aggregate tax basis such Securityholder had in its Preferred Securities before
such distribution. A Securityholder will account for interest in respect of the
Junior Subordinated Debentures received from the Trust Issuer in the manner
described above under "-- Interest Income and Original Issue Discount."
SALES OR REDEMPTION OF THE PREFERRED SECURITIES
Gain or loss will be recognized by a Securityholder on a sale of the
Preferred Securities (including a redemption for cash) in an amount equal to the
difference between the amount realized and the Securityholder's adjusted tax
basis in the Preferred Securities sold or so redeemed. Gain or loss recognized
by a Securityholder on Preferred Securities held for more than one year will
generally be taxable as long-term capital gain or loss.
If the Company were to exercise its option to defer payments of
interest on the Junior Subordinated Debentures, the Preferred Securities might
trade at a price that did not fully reflect the value of accrued but unpaid
interest with respect to the underlying Junior Subordinated Debentures. A
Securityholder that disposed of its Preferred Securities between record dates
for payments of Distributions (and consequently did not receive a Distribution
from the Trust Issuer for the period prior to such disposition) would
nevertheless be required to include in income as ordinary income accrued but
unpaid interest on the Junior Subordinated Debentures through the date of
disposition and to add such amount to its adjusted tax basis in its Preferred
Securities disposed of. Such Securityholder would recognize a capital loss on
the disposition of its Preferred Securities to the extent the selling price
(which might not fully reflect the value of accrued but unpaid interest) was
less than the Securityholder's adjusted tax basis in the Preferred Securities
(which would include accrued but unpaid interest). Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
federal income tax purposes.
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POSSIBLE TAX LAW CHANGES
On February 6, 1997, President Clinton released his budget proposals
for fiscal year 1998. One of the revenue provisions of those proposals would
generally deny deductions for interest on an instrument issued by a corporation
that has a maximum term of more than 15 years and that is not shown as
indebtedness on the separate balance sheet of the issuer or, where the
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not shown
as indebtedness on the issuer's consolidated balance sheet. If enacted as
proposed by the President, this provision would be effective for instruments
issued on or after the date of first action by a Congressional committee with
respect to the proposal. It is not clear from the President's proposals what
will constitute Congressional "committee action" with respect to this proposal.
If the provision were to apply to the Junior Subordinated Debentures, the
Company would be unable to deduct interest on the Junior Subordinated
Debentures. Under current law, the Company will be able to deduct interest on
the Junior Subordinated Debentures. There can be no assurance, however, that
future legislation will not affect the ability of the Company to deduct interest
on the Junior Subordinated Debentures. Such a change would give rise to a Tax
Event, which would permit the Company, upon receipt of regulatory approval if
then required under applicable capital guidelines or regulatory policies, to
cause a redemption of the Preferred Securities, as described more fully in this
Prospectus under "Description of the Preferred Securities--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, as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership or a non-resident fiduciary of a foreign estate or trust.
Under current United States federal income tax law: (i) payments by the
Trust Issuer or any of its paying agents to any Securityholder who or which is a
United States Alien Holder will not be subject to United States federal
withholding tax; PROVIDED, that (a) the Securityholder does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of the Company entitled to vote, (b) the Securityholder is not a
controlled foreign corporation that is related to the Company through stock
ownership and (c) either (A) the Securityholder certifies to the Trust Issuer or
its agent, under 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") certifies to the
Trust Issuer or its agent, under penalties of perjury, that such statement has
been received from the Securityholder by it or by a Financial Institution
holding such security for the Securityholder and furnishes the Trust Issuer or
its agent with a copy thereof, and (ii) a United States Alien Holder of a
Preferred Security will not be subject to United States federal withholding tax
on any gain realized upon the sale or other disposition of a Preferred Security.
Proposed Treasury regulations (the "Proposed Regulations") would
provide alternative methods for satisfying the certification requirement
described in clause (i)(c) above. The Proposed Regulations also would require,
in the case of Preferred Securities held by a foreign partnership, that (x) the
certification described in clause (i)(c) above be provided by the partners
rather than by the foreign
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partnership and (y) the partnership provide certain information, including a
United States taxpayer identification number. A look-through rule would apply in
the case of tiered partnerships. The Proposed Regulations are proposed to be
effective for payments made after December 31, 1997. There can be no assurance
that the regulations will be adopted or as to the provisions that they will
include if and when adopted in temporary or final form.
INFORMATION REPORTING TO SECURITYHOLDERS
Generally, income on the Preferred Securities will be reported to
Securityholders on Forms 1099, which should be mailed to Securityholders by
January 31 following each calendar year.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of, Preferred Securities
may be subject to a "backup" withholding tax of 31% unless the Securityholder
complies with certain certification requirements. Any withheld amounts will be
allowed as a credit against the Securityholder's United States federal income
tax, provided the required information is provided to the Internal Revenue
Service on a timely basis.
ERISA CONSIDERATIONS
The Company and certain affiliates of the Company may each be
considered a "party in interest" within the meaning of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or a "disqualified person"
within the meaning of Section 4975 of the Code with respect to many employee
benefit plans ("Plans") that are subject to ERISA. The purchase of the Preferred
Securities by a Plan that is subject to the fiduciary responsibility provisions
of ERISA or the prohibited transaction provisions of Section 4975(e)(1) of the
Code and with respect to which the Company, or any affiliate of the Company, is
a service provider (or otherwise is a party in interest or a disqualified
person) may constitute or result in a prohibited transaction under ERISA or
Section 4975 of the Code, unless the Preferred Securities are acquired pursuant
to and in accordance with an applicable exemption. Any pension or other employee
benefit plan proposing to acquire any Preferred Securities should consult with
its counsel.
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UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Underwriters, Raymond James & Associates, Inc. and Ryan, Beck &
Co., Inc., have severally agreed to purchase from the Trust Issuer the number of
Preferred Securities set forth opposite their respective names below. The
Underwriters are committed to purchase and pay for all Preferred Securities if
any Preferred Securities are purchased.
UNDERWRITERS NUMBER OF SECURITIES
- ------------ --------------------
Raymond James & Associates, Inc................................._________
Ryan, Beck & Co................................................._________
The Company has been advised by the Underwriters that the Underwriters
propose initially to offer the Preferred Securities to the public 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 Preferred
Security. The Underwriters may allow and such dealers may re-allow a concession
not in excess of $_____ per Preferred Security to certain other dealers. After
the initial public offering, the public offering price and such concessions may
be changed by the Underwriters.
In view of the fact that the proceeds from the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures issued by
the Company, the Underwriting Agreement provides that the Company will pay as
compensation an amount of $_____ per Preferred Security for the Underwriters'
arranging the investment therein of such proceeds.
The Trust Issuer has granted to the Underwriters an option, exercisable
for 30 days from the date of this Prospectus, to purchase up to an additional
240,000 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 Preferred Securities solely for the purpose of
covering over-allotments, if any, incurred in the sale of the Preferred
Securities.
To the extent that the Underwriters exercise their option to purchase
additional Preferred Securities, the Trust Issuer will issue and sell to the
Company additional Common Securities and the Company will issue and sell to the
Trust Issuer Junior Subordinated Debentures in an aggregate principal amount
equal to the total aggregate Liquidation Amount of the additional Preferred
Securities being purchased pursuant to the option and the additional Common
Securities.
In connection with the offering of the Preferred Securities, the
Underwriters and any selling group members and their respective affiliates may
engage in transactions effected in accordance with Rule 104 of the Securities
and Exchange Commission's Regulation M that are intended to stabilize, maintain
or otherwise affect the market price of the Preferred Securities. Such
transactions may include over-allotment transactions in which the Underwriters
create a short position for their own account by selling more Preferred
Securities than they are committed to purchase from the Trust Issuer. In such a
case, to cover all or part of the short position, the Underwriters may exercise
the over-allotment option described above or may purchase Preferred Securities
in the open market following completion of the initial offering of the Preferred
Securities. The Underwriters also may engage in stabilizing tranactions in which
they bid for, and purchase, shares of the Preferred Securities at a level above
that which might otherwise prevail in the open market for the purpose of
preventing or retarding a decline in the market price of the Preferred
Securities. The Underwriters also may reclaim any selling concessions allowed to
an Underwriter or dealer if the Underwriters repurchase shares distributed by
the Underwriter or dealer. Any of the foregoing transactions may result in the
maintenance of a price for the Preferred Securities at a level above that which
might otherwise prevail in the open market. Neither the Company nor any of the
Underwriters makes any representation or prediction as to the direction or
magnitude of any effect that the transactions described above may have on the
price of the Preferred Securities. The Underwriters are not required to engage
in any of the foregoing transactions and, if commenced, such transactions may
discontinued at any time without notice.
Because the National Association of Securities Dealers, Inc. ("NASD") is
expected to view the Preferred Securities as interests in a direct participation
program, the offering of the Preferred Securities is being made in compliance
with the applicable provisions of Rule 2810 of the NASD's Rules of Conduct.
The Company and the Trust Issuer have agreed to indemnify the
Underwriters against and contribute toward certain liabilities, including
liabilities under the Securities Act. The Company has
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agreed to reimburse the Underwriters for certain expenses and legal fees related
to the sale of the Preferred Securities.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the
Preferred Securities, the enforceability of the Trust Agreement and the creation
of the Trust Issuer will be passed upon by Richards, Layton & Finger, special
Delaware counsel to the Company and the Trust Issuer. The validity of the
Guarantee and the Junior Subordinated Debentures will be passed upon for the
Company by Stuzin and Camner, P.A. Certain legal matters will be passed upon for
the Underwriters by Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.
Alfred R. Camner, Chairman of the Board, Chief Executive Officer, President, and
a director of the Company is the senior managing director and a shareholder of
Stuzin and Camner, P.A. and Mark Lipsitz, a director of the Company, is the
managing director of Stuzin and Camner, P.A. Certain matters relating to United
States federal income tax considerations will be passed upon for the Company by
Kronish, Lieb, Weiner & Hellman LLP.
EXPERTS
The consolidated financial statements of the Company and subsidiaries as
of September 30, 1996 and 1995 and for each of the three years in the period
ended September 30, 1996 incorporated by reference herein and included as
Appendix A to this Prospectus have been so included in reliance upon the report
of Price Waterhouse LLP, independent certified public accountants, given on the
authority of said firm as experts in auditing and accounting.
The consolidated financial statements of Suncoast and subsidiaries as of
June 30, 1996 and 1995 and for each of the three years in the period ended June
30, 1996 incorporated by reference herein and included as Appendix C to this
Prospectus have been so included in reliance upon the report of Price Waterhouse
LLP, independent certified public accountants, given on the authority of said
firm as experts in auditing and accounting.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission located at
7 World Trade Center, 13th Floor, Suite 1300, New York, New York 10048 and Suite
1400, Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois
60661. Copies of such material can also be obtained at prescribed rates by
writing to the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Such material may also be accessed electronically
by means of the Commission's home page on the Internet at http://www.sec.gov.
Reports, proxy statements and other information filed by Suncoast Savings and
Loan Association, FSA ("Suncoast") pursuant to the informational requirements
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of the Exchange Act, prior to the acquisition of Suncoast by the Company, can be
inspected and copied at the public reference facilities maintained by the OTS at
1700 G Street, N.W., Washington, D.C. 20552 or at the OTS Southeast Regional
Office, 1475 Peachtree Street, N.E., Atlanta, Georgia 30309.
The Company and the Trust Issuer have filed with the Commission a
Registration Statement on Form S-2 (together with all amendments thereto, the
"Registration Statement"), of which this Prospectus is a part, under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Preferred Securities, the Junior Subordinated Debentures and the Guarantee. This
Prospectus does not contain all of the information set forth in the Registration
Statement, certain portions of which have been omitted as permitted by the rules
and regulations of the Commission. In addition, certain documents filed by the
Company with the Commission have been incorporated in this Prospectus by
reference. See "Incorporation of Certain Documents by Reference." For further
information with respect to the Company, the Trust Issuer, the Preferred
Securities and the Junior Subordinated Debentures, reference is made to the
Registration Statement, including the exhibits thereto and the documents
incorporated herein by reference. Any statements contained herein concerning the
provisions of any document filed as an exhibit to the Registration Statement or
otherwise filed with the Commission or incorporated by reference herein are not
necessarily complete, and, in each instance, reference is made to the copy of
such document so filed for a more complete description of the matter involved.
Each such statement is qualified in its entirely by such reference. The
Registration Statement may be inspected without charge at the principal office
of the Commission in Washington, D.C, and copies of all or part of it may be
obtained from the Commission upon payment of the prescribed fees.
No separate financial statements of the Trust Issuer have been included
herein. The Company does not consider that such financial statements would be
material to holders of Preferred Securities because (i) all of the voting
securities of the Trust Issuer will be owned by the Company, a reporting company
under the Exchange Act, (ii) the Trust Issuer has no independent operations but
exists for the sole purpose of issuing securities representing undivided
beneficial interests in the assets of the Trust Issuer and investing the
proceeds thereof in Junior Subordinated Debentures issued by the Company, and
(iii) the obligations of the Company described herein to provide certain
indemnities in respect of and be responsible for certain costs, expenses, debts
and liabilities of the Trust Issuer under the Indenture and pursuant to the
Trust Agreement, the guarantee issued by the Company with respect to the
Preferred Securities, the Junior Subordinated Debentures purchased by the Trust
Issuer, the related Indenture and the Expense Agreement, taken together,
constitute, in the belief of the Company and the Trust Issuer full and
unconditional guarantee of payments due on the Preferred Securities. See
"Description of the Junior Subordinated Debentures" and "Description of the
Guarantee."
The Trust Issuer is not currently subject to the information reporting
requirements of the Exchange Act and the Company does not expect that the Trust
Issuer will file reports, proxy statements and other information under the
Exchange Act with the Commission.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following BankUnited documents are incorporated by reference herein
(Commission File No. 5-43936):
(1) BankUnited's Annual Report on Form 10-K/A for the year ended
September 30, 1996 filed with the Commission on December 23, 1996.
(2) BankUnited's Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1996 and March 31, 1997 filed with the Commission on February 14,
1997 and May 15, 1997, respectively.
(3) BankUnited's Current Reports on Form 8-K dated November 15, 1996,
December 30, 1996, February 25, 1997, March 24, 1997 and April 2, 1997 filed
with the Commission on December 2, 1996, January 9, 1997, February 25, 1997,
March 26, 1997 and April 4, 1997, respectively.
The following Suncoast documents are incorporated by reference herein
(OTS File No. 8147):
Suncoast's Annual Report on Form 10-K for the year ended June 30, 1996
filed with the OTS on September 27, 1996, is also incorporated by reference
herein.
Suncoast's Quarterly Report on Form 10-Q for the quarter ended September
30, 1996 filed with the OTS on November 13, 1996, is also incorporated by
reference herein.
Any statement contained in this Prospectus or in a document incorporated
or deemed to be incorporated by reference herein will be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded will not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. COPIES OF ANY SUCH DOCUMENTS, OTHER THAN
EXHIBITS THERETO, ARE AVAILABLE WITHOUT CHARGE TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS IS DELIVERED UPON WRITTEN OR ORAL
REQUEST TO BANKUNITED FINANCIAL CORPORATION, 255 ALHAMBRA CIRCLE, CORAL GABLES,
FLORIDA 33134, ATTENTION: NANCY L. ASHTON, (305) 569-2000.
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APPENDIX A
BANKUNITED FINANCIAL CORPORATION
ANNUAL REPORT ON FORM 10-K/A
FOR THE YEAR ENDED SEPTEMBER 30, 1996
<PAGE>
APPENDIX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-21850
BANKUNITED FINANCIAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA 65-037773
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
255 ALHAMBRA CIRCLE, CORAL GABLES, FLORIDA 33134
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) ZIP CODE
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (305) 569-2000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
CLASS A COMMON STOCK, $.01 PAR VALUE
8% NONCUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES 1996
8% NONCUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES 1993
9% NONCUMULATIVE PERPETUAL PREFERRED STOCK
(TITLE OF CLASS)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. [ ]
The aggregate market value of the Class A Common Stock held by
non-affiliates of the Registrant, based upon the average price on December
11, 1996, was $68,776,342.* The other voting securities of the Registrant are
not publicly traded.
The shares of the Registrant's common stock outstanding as of December 11,
1996 were as follows:
CLASS NUMBER OF SHARES
----- ----------------
Class A Common Stock, $.01 par value 7,675,931
Class B Common Stock, $.01 par value 251,515
DOCUMENTS INCORPORATED BY REFERENCE
The Registrant's Definitive Proxy Statement for its 1997 Annual Meeting of
Stockholders will be filed with the Securities and Exchange Commission not
later than 120 days after the end of the fiscal year covered by this Form
10-K pursuant to Rule G(3) of the General Instructions for Form 10-K.
Information from such Definitive Proxy Statement will be incorporated by
reference into Part III, Items 10, 11, 12 and 13 hereof.
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- -----------------------------------------------------------------------------
* Based on reported beneficial ownership of all directors and executive
officers of the Registrant; this determination does not, however,
constitute an admission of affiliated status for any of these individual
stockholders.
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
A-1
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PART I
ITEM 1. BUSINESS
BUSINESS OF BANKUNITED FINANCIAL CORPORATION
BankUnited Financial Corporation (the "Company" or "BankUnited") is a
Florida corporation organized in December 1992 for the purpose of becoming
the savings and loan holding company for BankUnited, FSB (the "Bank"). This
holding company reorganization, together with BankUnited's conversion from a
Florida-chartered stock savings bank to a federally chartered stock savings
bank, became effective in March 1993. Unless the context requires otherwise,
all references herein to the Company include the Company, the Bank and their
subsidiaries on a consolidated basis, and before March 15, 1993, include the
Bank and its subsidiaries only.
The Company currently has 15 branch offices in Dade, Broward and Palm
Beach counties, Florida ("South Florida") and anticipates opening three or
more additional branches there in the next 18 months. The Company's business
has traditionally consisted of attracting deposits from the general public
and using those deposits, together with borrowings and other funds, to
purchase nationwide and to originate in its market area single-family
residential mortgage loans, and to a lesser extent, to purchase and originate
commercial real estate, commercial business and consumer loans. The Company's
revenues are derived principally from interest earned on loans,
mortgage-backed securities and investments. The Company's primary expenses
arise from interest paid on savings deposits and borrowings and overhead
expenses incurred in its operations.
The Company's operating plan emphasizes (i) concentrating lending
activities on the origination of single-family residential mortgage loans and
purchasing such loans as favorable market opportunities arise; (ii) expanding
the Company's deposit base by providing convenience, competitive rates and
personalized service in its market area; (iii) continuing expansion of the
Company's branch network through de novo branching or the acquisition of
branches of, and mergers with, existing financial institutions, although
there are no current plans, arrangements, understandings, or agreements
regarding such acquisitions; (iv) expanding the Company's commercial and
multi-family real estate, commercial business, and real estate construction
lending; and (v) managing exposure to interest rate risk, while optimizing
operating results through effective asset/liability management and investment
policies.
In 1995, the Company redefined its strategy to increase its emphasis on
strategic product niches which management believes are being underserved as
South Florida's banking market consolidates. These products include
commercial business and commercial real estate lending and deposit services
for small to mid-size businesses. The Company has also focused on attracting
depositors who are seeking convenience, competitive rates and personalized
service. In order to accomplish this strategy, the Company has attracted
management with expertise in developing and managing its new product lines.
The Bank is a member of the Federal Home Loan Bank ("FHLB") system and is
subject to comprehensive regulation, examination and supervision by the
Office of Thrift Supervision (the "OTS") and the Federal Deposit Insurance
Corporation (the "FDIC"). Deposits at the Bank are insured by the Savings
Association Insurance Fund of the FDIC (the "SAIF") for up to $100,000 for
each insured account holder, which is the maximum permitted by law.
FORWARD-LOOKING STATEMENTS
When used in this Form 10-K or future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases or other
public or shareholder communications, or in oral statements made with the
approval of an authorized executive officer, the words or phrases "will
likely result", "are expected to", "will continue", "is anticipated",
"estimate", "project", "believe" or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
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Securities Litigation Reform Act of 1995. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements,
which speak only as of the date made, and to advise readers that various
factors, including regional and national economic conditions, changes in
levels of market interest rates, credit risks of lending activities, and
competitive and regulatory factors, could affect the Company's financial
performance and could cause the Company's actual results for future periods
to differ materially from those anticipated or projected.
The Company does not undertake, and specifically disclaims any obligation,
to publicly release the result of any revisions which may be made to any
forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statements.
SUNCOAST ACQUISITION
As part of the Company's plan to expand within South Florida, on November
15, 1996, the Company completed the purchase of Suncoast Savings & Loan
Association, FSA ("Suncoast"), a federally chartered savings association with
assets of $409.0 million at September 30, 1996 and merged Suncoast into the
Bank (the "Merger"). Suncoast had six branch offices in the South Florida
market of which at least five will continue to operate and one may be
consolidated with an existing Bank branch office. In addition, as of
September 30, 1996, Suncoast serviced or subserviced approximately $1.2
billion in loans for others. The Company is currently exploring the
possibility of selling a portion of Suncoast's servicing portfolio and
discontinuing certain of Suncoast's subservicing activities. Such actions
could substantially reduce the income derived from servicing as well as the
related expenses from the income and expenses previously reported by
Suncoast.
For additional information, see "Unaudited Pro Forma Condensed Combined
Financial Statements" and Note 18 of Notes to the Consolidated Financial
Statements.
MARKET AREA AND COMPETITION
The Company conducts operations in South Florida, which at June 30, 1996
had a total of approximately $73 billion in deposits in commercial banks,
savings institutions, and credit unions (41% of the total of $178 billion of
deposits in Florida). The Company intends to continue to establish or acquire
branches in its market area where the Company can service its customer base.
In 1995, the Company sold its three branches on the west coast of Florida,
including their deposits which totaled $130 million at the date of sale. The
sale was part of a shift in growth strategy to focus on South Florida and
take advantage of consolidation trends in banking there. Also, as part of
this strategy, the Company opened branches in Boca Raton, Florida in December
1995, Delray Beach, Florida in June 1996 and West Palm Beach, Florida in
September 1996. On March 29, 1996, the Company acquired the Bank of Florida
with total assets of $28.1 million which was merged into the Company's South
Miami Branch. Then on November 15, 1996, as discussed above, the Company
acquired Suncoast.
The Company encounters strong competition in attracting deposits and in
its lending activities. Its most direct competition for deposits historically
has been from commercial banks, brokerage houses, other savings associations,
and credit unions located in the Company's market area, and the Company
expects continued strong competition from such financial institutions in the
foreseeable future. Within the Company's market area are branches of several
commercial banks and savings associations that are substantially larger and
that have more extensive operations than does the Company. In addition, many
financial institutions based in South Florida have recently been acquired by
larger institutions based in other parts of the state or based out of state.
The Company's goal is to compete for savings and other deposits by offering
depositors a higher level of personal service and expertise, together with a
wide range of financial services offered at competitive rates. The Company
believes that this strategy will enable it to attract depositors as the
number of local institutions remaining declines and depositors who desire
more personal service, particularly retirees, relocate their accounts.
The competition in originating real estate and other loans comes
principally from commercial banks, mortgage banking companies and other
savings associations. The Company competes for loan
A-3
<PAGE>
originations primarily through the interest rates and loan fees it charges,
the type of loans it offers, and the efficiency and quality of service it
provides. The Company purchases residential first mortgage loans in the
existing secondary mortgage market and competes with other mortgage
purchasers in the secondary market primarily on the basis of price. While the
Company has been, and intends to continue to be, primarily a residential
lender, the Company has recently placed more emphasis on commercial real
estate, construction and commercial lending, as discussed more fully below.
Factors that affect competition in lending include general and local economic
conditions, current interest rates and volatility of the mortgage markets. As
with its deposit products, the Company's strategy is to promote its greater
level of personal service and to position itself as a small-to-middle-market
lender to businesses left underserved by larger institutions.
Management's strategy has included and continues to include evaluation of
market needs and offering products to meet those needs. The Company will
continue to offer products and services that will allow it to control the
growth of its assets and liabilities. These new products and services will
allow the Company to properly position itself to its customers as a community
bank.
FACTORS AFFECTING EARNINGS
The results of the Company's operations are affected by many factors
beyond the Company's control, including general economic conditions and the
related monetary and fiscal policies of the federal government. Lending
activities are affected by the demand for mortgage financing and other types
of loans, which is in turn affected by the interest rates at which such
financing may be offered, and other factors affecting the supply of housing
and the availability of funds. Deposit flows and costs of funds are
influenced by yields available on competing investments and by general market
rates of interest.
ASSET AND LIABILITY MANAGEMENT. The Company's net earnings depend
primarily on its net interest income, which is the difference between
interest income received on its interest-earning assets (principally loans,
short-term and long-term investments, and mortgage-backed securities) and
interest expense paid on its interest-bearing liabilities (principally
deposits and FHLB advances). The Company's net interest income is
significantly affected by (i) the difference (the "interest rate spread")
between yields received on its interest-earning assets and the rates paid on
its interest-bearing liabilities and (ii) the relative amounts of its
interest-earning assets and interest-bearing liabilities. When
interest-earning assets equal or exceed interest-bearing liabilities, any
positive interest rate spread will generate net interest income. The more
such liabilities exceed such assets, the greater the positive interest rate
spread and/or non-interest income must be in order to produce net income.
Non-interest sources of income and non-interest expenses also affect the
Company's net income. The higher non-interest expenses are, the greater the
positive interest rate spread and/or non-interest sources of income must be
to produce net income.
To reduce the adverse impact of rapid increases in market interest rates
on the Company's net interest income, the Company has emphasized the
origination and purchase of adjustable-rate mortgage loans. At September 30,
1996, 69.8% of the Company's net loans receivable and mortgage-backed
securities carried adjustable interest rates. The Company has from time to
time acquired longer term fixed-rate mortgage loans when the yields on these
interest-earning assets have been deemed advantageous by management. As a
part of its asset and liability management program, and as market conditions
permit, the Company attempts to lengthen the maturities of its
interest-bearing liabilities (i) with longer term deposits or (ii) when
advantageous, with borrowed funds. The Company's ability to manage interest
rate risk in its loan and investment portfolios depends upon a number of
factors, such as competition for loans and deposits in its market area and
conditions prevailing in the secondary mortgage market.
The Company has rate-sensitive (due or subject to repricing within one
year) liabilities that exceed its rate-sensitive assets, resulting in a
negative cumulative one-year gap position of 6.4% of total assets as of
September 30, 1996. This imbalance, when coupled with the deregulation of the
restrictions
A-4
<PAGE>
previously imposed on the types of savings products that financial
institutions are permitted to offer, subjects the Company's earnings to
change based on fluctuations in interest rates and affects the ability of the
Company to maintain adequate liquidity levels. The Company constantly
attempts to reduce the sensitivity of its earnings to fluctuations in
interest rates by adjusting the average maturities of its interest-bearing
liabilities and interest-earning assets. There can be no assurance, however,
of the degree to which the Company will be able to effectively maintain the
balance of its short-term interest-earning assets as compared to its
short-term interest-bearing liabilities and manage the risks to liquidity
associated therewith.
A-5
<PAGE>
GAP TABLE. The following table sets forth the amount of interest-earning
assets and interest-bearing liabilities outstanding at September 30, 1996,
which are expected to reprice or mature in each of the future time periods
shown.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------
INTEREST SENSITIVITY
PERIOD(1)
--------------------------
OVER
6 MONTHS 6 MONTHS
OR LESS -1 YEAR
------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Interest-earning assets:
Investments, tax certificates,
Federal funds sold, FHLB overnight
deposits and other interest earning
assets, at cost .................... $ 62,988 $ 20,892
Mortgage-backed securities ........... 10,738 7,491
Loans:
Adjustable-rate mortgages ............ 383,997 61,532
Fixed-rate mortgages ................. 14,207 9,428
Commercial and consumer loans ....... 6,995 547
---------- -----------
Total loans ......................... 405,199 71,507
---------- -----------
Total interest-earning assets ...... 478,925 99,890
Total non-interest-earning assets .. -- --
---------- -----------
Total assets ........................ $478,925 $ 99,890
========== ===========
Interest-bearing liabilities:
Customer deposits:
Money market and NOW accounts ...... $ 33,821 $ --
Passbook accounts ................... 73,780 --
Certificate accounts ................ 229,225 87,337
---------- -----------
Total customer deposits ............... 336,826 87,337
Borrowings:
FHLB advances ........................ 162,000 45,000
Other borrowings ..................... -- --
---------- -----------
Total borrowings .................... 162,000 45,000
---------- -----------
Total interest-bearing liabilities . 498,826 132,337
---------- -----------
Total non-interest-bearing liabilities -- --
Stockholders' equity .................. -- --
---------- -----------
Total liabilities and stockholders'
equity ............................ $498,826 $132,337
========== ===========
Total interest-earning assets less
interest-bearing liabilities ("GAP") $(19,901) $(32,447)
========== ===========
Ratio of GAP to total assets .......... -2.41% -3.94%
========== ===========
Cumulative excess (deficiency) of
interest-earning assets over
interest-bearing liabilities ........ $(19,901) $(52,348)
========== ===========
Cumulative excess (deficiency) of
interest-earning assets over
interest-bearing liabilities, as a
percentage of total assets .......... -2.41% -6.35%
========== ===========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
NON-
OVER 1 - OVER 5 - OVER 10 - INTEREST
5 YEARS 10 YEARS YEARS EARNING TOTAL
------------ ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Interest-earning assets:
Investments, tax certificates,
Federal funds sold, FHLB overnight
deposits and other interest earning
assets, at cost .................... $ 3,782 $ -- $ -- $ -- $ 87,662
Mortgage-backed securities ........... 36,734 10,353 4,849 -- 70,165
Loans:
Adjustable-rate mortgages ............ 45,940 -- -- 4,600 496,069
Fixed-rate mortgages ................. 56,630 30,949 32,466 324 144,004
Commercial and consumer loans ....... 897 16 -- 15 8,470
---------- ---------- ----------- ------------ -----------
Total loans ......................... 103,467 30,965 32,466 4,939 648,543
A-6
<PAGE>
NON-
OVER 1 - OVER 5 - OVER 10 - INTEREST
5 YEARS 10 YEARS YEARS EARNING TOTAL
------------ ----------- ------------ ------------ -----------
------------ ----------- ------------ ------------ -----------
Total interest-earning assets ...... 143,983 41,318 37,315 4,939 806,370
Total non-interest-earning assets .. -- -- -- 17,990 17,990
---------- ---------- ----------- ------------ -----------
Total assets ........................ $143,983 $41,318 $37,315 $ 22,929 $824,360
========== ========== =========== ============ ===========
Interest-bearing liabilities:
Customer deposits:
Money market and NOW accounts ...... $ -- $ -- $ -- $ 7,301 $ 41,122
Passbook accounts ................... -- -- -- -- 73,780
Certificate accounts ................ 74,642 -- -- -- 391,204
---------- ---------- ----------- ------------ -----------
Total customer deposits ............... 74,642 -- -- 7,301 506,106
Borrowings:
FHLB advances ........................ 30,000 -- -- -- 237,000
Other borrowings ..................... -- 460 315 -- 775
---------- ---------- ----------- ------------ -----------
Total borrowings .................... 30,000 460 315 -- 237,775
---------- ---------- ----------- ------------ -----------
Total interest-bearing liabilities . 104,642 460 315 7,301 743,881
---------- ---------- ----------- ------------ -----------
Total non-interest-bearing liabilities -- -- -- 11,368 11,368
Stockholders' equity .................. -- -- -- 69,111 69,111
---------- ---------- ----------- ------------ -----------
Total liabilities and stockholders'
equity ............................ $104,642 $ 460 $ 315 $ 87,780 $824,360
========== ========== =========== ============ ===========
Total interest-earning assets less
interest-bearing liabilities ("GAP") $ 39,341 $40,858 $37,000 $(64,851) $ --
========== ========== =========== ============ ===========
Ratio of GAP to total assets .......... 4.77% 4.96% 4.49% -7.87% --
========== ========== =========== ============ ===========
Cumulative excess (deficiency) of
interest-earning assets over
interest-bearing liabilities ........ $(13,007) $27,851 $64,851 $ -- $ --
========== ========== =========== ============ ===========
Cumulative excess (deficiency) of
interest-earning assets over
interest-bearing liabilities, as a
percentage of total assets .......... -1.58% 3.38% 7.87% -- --
========== ========== =========== ============ ===========
</TABLE>
- -----------------------------------------------------------------------------
(1) In preparing the table above, certain assumptions have been made with
regard to the repricing or maturity of certain assets and liabilities.
Assumptions as to prepayments on first and second mortgage loans and
mortgage-backed securities were obtained from prepayment rate tables that
provide assumptions correlating to recent actual repricing experienced in
the marketplace. Assumptions have also been made with regard to payments
on tax certificates based on historical experience. Money market, NOW and
passbook accounts are assumed to be rate sensitive in six months or less.
The rates paid in these accounts, however, are determined by management
based on market conditions and other factors and may reprice more slowly
than assumed. All other assets and liabilities have been repriced based
on the earlier of repricing or contractual maturity. The mortgage
prepayment rate tables, deposit decay rates and the historical
assumptions used regarding payments on tax certificates should not be
regarded as indicative of the actual repricing that may be experienced by
the Company.
A-6
<PAGE>
ASSET AND LIABILITY MANAGEMENT. The Company's net earnings depend
primarily on its net interest income, which is the difference between
interest income received on its interest-earning assets (principally loans,
short-term and long-term investments, and mortgage-backed securities) and
interest expense paid on its interest-bearing liabilities (principally
deposits and FHLB advances).
NET PORTFOLIO VALUE. The OTS adopted a final rule in August of 1993
incorporating an interest rate risk ("IRR") component into the risk-based
capital rules (see "Regulations"). The IRR component is a dollar amount that
is deducted from total capital for the purpose of calculating an
institution's risk-based capital requirement and is measured in terms of the
sensitivity of its net portfolio value ("NPV") to changes in interest rates.
An institution's NPV is the difference between incoming and outgoing
discounted cash flows from assets, liabilities, and off-balance sheet
contracts. An institution's IRR component is measured as the change in the
ratio of NPV to the present value of total assets as a result of a
hypothetical 200 basis point change in market interest rates. A resulting
decline in this ratio of more than 2% of the estimated market value of an
institution's assets will require the institution to deduct from its capital
50% of that excess decline. Implementation of the rule has been postponed
indefinitely.
The following table presents the Company's ratio of NPV to the present
value of total assets as of September 30, 1996, as calculated by the OTS,
based on information provided to the OTS by the Company.
<TABLE>
<CAPTION>
CHANGE IN INTEREST RATES RATIO OF NPV
IN BASIS POINTS PRESENT VALUE OF TO THE PRESENT VALUE OF
(RATE SHOCK) NPV TOTAL ASSETS TOTAL ASSETS CHANGE
- ------------------------- ---------- ----------------- ------------------------ ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
+400 $19,142 $763,216 2.51% (5.92)%
+200 48,290 798,031 6.05 (2.38)
Static 69,597 825,359 8.43 --
-200 79,063 841,628 9.39 .96
-400 87,288 856,792 10.19 1.76
</TABLE>
Certain shortcomings are inherent in the method of analysis presented in
the foregoing table. For example, although certain assets and liabilities may
have similar maturities or periods to repricing, they may react in different
degrees to changes in market interest rates. Also, the interest rates on
certain types of assets and liabilities may fluctuate in advance of changes
in market interest rates, while interest rates on other types may lag behind
changes in market rates. Additionally, certain assets, such as
adjustable-rate mortgage loans, have features that restrict changes in
interest rates on a short-term basis and over the life of the asset. Further,
in the event of a change in interest rates, prepayment and early withdrawal
levels would likely deviate significantly from those assumed in calculating
the tables. Finally, the ability of many borrowers to service their debt may
decrease in the event of an interest rate increase.
In addition, the previous table does not necessarily indicate the impact
of general interest rate movements on the Company's net interest income
because the repricing of certain categories of assets and liabilities is
subject to competitive and other pressures beyond the Company's control. As a
result, certain assets and liabialities indicated as maturing or otherwise
repricing within a stated period may in fact mature or reprice at different
times and at different volumes.
A-7
<PAGE>
YIELDS EARNED AND RATES PAID. The following table sets forth certain
information relating to the categories of the Company's interest-earning
assets and interest-bearing liabilities for the periods indicated. All yield
and rate information is calculated on an annualized basis. Yield and rate
information for a period is average information for the period calculated by
dividing the income or expense item for the period by the average balances
during the period of the appropriate balance sheet item. Net interest margin
is net interest income divided by average interest-earning assets.
Non-accrual loans are included in asset balances for the appropriate periods,
whereas recognition of interest on such loans is discontinued and any
remaining accrued interest receivable is reversed, in conformity with federal
regulations. The yields and net interest margins appearing in the following
table have been calculated on a pre-tax basis.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
---------------------------------------
1996
---------------------------------------
AS OF
9/30/96 AVERAGE
YIELD/RATE BALANCE INTEREST
------------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Interest-earning assets:
Loans receivable, net ........... 7.97% $540,313 $41,313
Mortgage-backed securities ..... 6.82 62,711 4,250
Short-term investments(1) ...... 5.30 41,240 2,359
Tax certificates ................ 8.96 34,831 3,018
Long-term investments and FHLB
stock, net .................... 6.98 17,352 1,192
--------- --------- ---------
Total interest-earning assets . 7.80 696,447 52,132
--------- --------- ---------
Interest-bearing liabilities:
NOW/Money Market ................ 2.45 33,148 775
Savings ......................... 4.40 59,965 2,627
Certificate of deposits ......... 5.52 313,521 17,389
FHLB advances and other
borrowings .................... 5.74 235,264 13,831
--------- --------- ---------
Total interest-bearing
liabilities .................. 5.31 641,898 34,622
--------- --------- ---------
Excess of interest-earning assets
over interest-bearing
liabilities .................... $ 54,549
========= ---------
Net interest income .............. $17,510
=========
Interest rate spread ............. 2.49%
=============
Net interest margin .............. 2.90%
=============
Ratio of interest-earning assets
to interest-bearing liabilities 108.50%
=========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1995 1994
----------------------------------- ----------------------------------------------
YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
--------- ----------- ----------- --------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable, net ........... 7.65% $419,501 $30,171 7.19% $364,224 $23,513 6.46%
Mortgage-backed securities ..... 6.78 59,204 4,093 6.91 35,215 2,308 6.55
Short-term investments(1) ...... 5.72 23,844 1,491 6.25 21,101 803 3.81
Tax certificates ................ 8.66 37,377 3,087 8.26 39,228 3,207 8.17
Long-term investments and FHLB
stock, net .................... 6.87 7,930 577 7.29 10,041 590 5.89
------- ----------- ----------- --------- ----------- ----------- ---------
Total interest-earning assets . 7.49 547,856 39,419 7.20 469,809 30,421 6.48
------- ----------- ----------- --------- ----------- ----------- ---------
Interest-bearing liabilities:
NOW/Money Market ................ 2.34 41,196 875 2.12 51,860 1,102 2.12
Savings ......................... 4.38 55,950 2,420 4.33 46,925 1,716 3.66
Certificate of deposits ......... 5.55 276,564 14,554 5.26 221,074 8,526 3.86
FHLB advances and other
borrowings .................... 5.88 144,052 8,456 5.87 120,604 4,951 4.11
------- ----------- ----------- --------- ----------- ----------- ---------
Total interest-bearing
liabilities .................. 5.39 517,762 26,305 5.08 440,463 16,295 3.70
------- ----------- ----------- --------- ----------- ----------- ---------
Excess of interest-earning assets
over interest-bearing
liabilities .................... $ 30,094 $ 29,346
<PAGE>
1995 1994
----------------------------------- -----------------------------------------------
YIELD/ AVERAGE YIELD/ AVERAGE YIELD/
RATE BALANCE INTEREST RATE BALANCE INTEREST RATE
--------- ----------- ----------- --------- ----------- ----------- ---------
--------- =========== ----------- --------- ===========
Net interest income .............. $13,114 $14,126
--------- =========== ===========
Interest rate spread ............. 2.10% 2.12% 2.78%
========= ========= =========
Net interest margin .............. 2.51% 2.39% 3.01%
========= ========= =========
Ratio of interest-earning assets
to interest-bearing liabilities 105.81% 106.66%
========= =========== ===========
</TABLE>
- --------------
(1) Short-term investments include FHLB overnight deposits, securities
purchased under agreements to resell, federal funds sold and certificates
of deposit.
A-8
<PAGE>
RATE/VOLUME ANALYSIS. The following table presents, for the periods
indicated, the changes in interest income and the changes in interest expense
attributable to the changes in interest rates and the changes in the volume
of interest-earning assets and interest-bearing liabilities. For each
category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to: (i) changes in volume
(change in volume multiplied by prior year rate); (ii) changes in rate
(change in rate multiplied by prior year volume); (iii) changes in
rate/volume (change in rate multiplied by change in volume); and (iv) total
changes in rate and volume.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------
1996 V. 1995
--------------------------------------
INCREASE (DECREASE)
DUE TO
--------------------------------------
CHANGES CHANGES CHANGES
IN IN IN
VOLUME RATE RATE/VOLUME
---------- ---------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest income attributable to:
Loans .............................. $ 8,689 $1,905 $548
Mortgage-backed securities and
collateralized mortgage obligations 242 (81) (4)
Short-term investments(1) .......... 1,088 (127) (93)
Tax Certificates ................... (210) 152 (11)
Long-term investments and
FHLB stock ....................... 687 (33) (39)
--------- --------- -----------
Total interest-earning assets .... 10,496 1,816 401
--------- --------- -----------
Interest expense attributable to:
NOW/Money Market ................. (171) 88 (17)
Savings ............................ 173 31 3
Certificates of Deposit ............ 1,946 785 104
FHLB advances and other borrowings 5,354 13 8
--------- --------- -----------
Total interest-bearing liabilities 7,302 917 98
--------- --------- -----------
Increase (decrease) in net interest
income ........................... $ 3,194 $ 899 $303
========= ======== ===========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------------------------------------------------
1995 V. 1994
------------------------------------------------------------------
INCREASE (DECREASE)
DUE TO
------------------------------------------------------------------
TOTAL CHANGES CHANGES CHANGES TOTAL
INCREASE IN IN IN INCREASE
(DECREASE) VOLUME RATE RATE/VOLUME (DECREASE)
----------- ---------- ----------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Interest income attributable to:
Loans .............................. $11,142 $3,568 $ 2,683 $ 407 $ 6,658
Mortgage-backed securities and
collateralized mortgage obligations 157 1,572 126 87 1,785
Short-term investments(1) .......... 868 104 517 67 688
Tax Certificates ................... (69) (151) 33 (2) (120)
Long-term investments and
FHLB stock ....................... 615 (124) 140 (29) (13)
--------- --------- ----------- ---------- ---------
Total interest-earning assets .... 12,713 4,969 3,499 530 8,998
--------- --------- ----------- ---------- ---------
Interest expense attributable to:
NOW/Money Market ................. (100) (227) -- -- (227)
Savings ............................ 207 330 314 60 704
Certificates of Deposit ............ 2,835 2,140 3,108 780 6,028
FHLB advances and other borrowings 5,375 963 2,128 414 3,505
--------- --------- ----------- ---------- ---------
Total interest-bearing liabilities 8,317 3,206 5,550 1,254 10,010
--------- --------- ----------- ---------- ---------
Increase (decrease) in net interest
income ........................... $ 4,396 $1,763 $(2,051) $ (724) $(1,012)
========= ========= =========== ========== =========
</TABLE>
- ---------
(1) Short-term investments include FHLB overnight deposits, securities
purchased under agreements to resell, federal funds sold and certificates
of deposit.
A-9
<PAGE>
LENDING ACTIVITIES
GENERAL. The Company focuses its lending activity on purchasing and
originating single-family residential mortgage loans. The Company's lending
strategy also includes expanding its commercial real estate, commercial
business, and real estate construction lending. The Company also currently
offers consumer loans, such as automobile loans and boat loans, primarily as
an accommodation to existing customers.
LOAN PORTFOLIO. The Company's loan portfolio primarily consists of
adjustable-rate mortgage loans and, to a lesser extent, fixed-rate mortgage
loans secured by one-to-four-family residential and commercial real estate.
As of September 30, 1996, the Company's loan portfolio totaled $646.4
million, of which $570.8 million or 88.3% consisted of one-to-four-family
residential first mortgages. At the present time, the Company's residential
real estate loans are primarily "conventional" loans, which means that these
loans are not insured by the Federal Housing Administration (the "FHA") or
guaranteed by the Veterans Administration (the "VA"). The Company is,
however, approved to originate FHA and VA loans. The average yield on the
Company's mortgage loans, of which 76.7% had adjustable rates and 23.3% had
fixed rates, was 7.65%, 7.19% and 6.46% for the fiscal years ended September
30, 1996, 1995 and 1994, respectively. The remainder of the Company's loan
portfolio consisted of $49.2 million of commercial real estate loans (7.6% of
total loans); five or more unit
A-9
<PAGE>
residential loans of $12.6 million (1.9% of total loans); $2.7 million of
second mortgage loans (0.4% of total loans); $2.6 million of consumer loans
(0.4% of total loans); $5.8 million of commercial business loans (0.9% of
total loans); and $2.7 million of other loans (0.4% of total loans).
At September 30, 1996, the Company's loan portfolio included $38.2 million
of residential mortgage loans to nonresident aliens. See "Mortgage Loan
Purchases and Originations" for additional information on the Company's loans
to non-resident aliens.
Set forth below is a table showing the Company's loan origination,
purchase and sale activity for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
--------------------------------------
1996 1995 1994
------------ ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Total loans receivable, net, at beginning of period(1) ..... $ 453,350 $413,287 $310,441
Loans originated:
Residential real estate .................................... 65,954 54,438 72,108
Commercial, business and consumer .......................... 16,705 7,556 3,885
------------ ----------- -----------
Total loans originated .................................... 82,659 61,994 75,993
Loans purchased ............................................. 250,215 76,081 150,502
Loans sold .................................................. (4,356) (2,449) (21,867)
Principal payments and amortization of discounts and
premiums .................................................. (133,836) (93,787) (96,214)
Loans charged off ........................................... (493) (594) (1,582)
Transfers to real estate owned .............................. (1,154) (1,182) (3,986)
------------ ----------- -----------
Total loans receivable, net, at end of period(1) ........ $ 646,385 $453,350 $413,287
============ =========== ===========
</TABLE>
- ---------
(1) Includes loans held for sale.
A-10
<PAGE>
The following table sets forth certain information with respect to the
composition of the Company's loan portfolio, including mortgage loans held
for sale and mortgage-backed securities, as of the dates indicated. For
additional information as to the Company's mortgage-backed securities,
including carrying values and approximate market values of such securities,
see Notes 1 and 4 of the Notes to the Company's Consolidated Financial
Statements included in Appendix D hereto.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
------------------------------------
1996 1995
----------------------- -----------
AMOUNT PERCENT AMOUNT
----------- ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
First mortgage loans:
One-to-four-family residential $570,890 79.7% $433,122
Five-or-more-unit residential . 12,559 1.7 1,124
Commercial ..................... 49,318 6.9 10,223
Second mortgage loans ........... 2,748 0.4 2,412
---------- ---------- -----------
Total first and second mortgage
loans ........................... 635,515 88.7 446,881
---------- ---------- -----------
Consumer loans .................. 2,648 0.4 920
Commercial business loans ...... 5,822 0.8 3,632
---------- ---------- -----------
Total loans receivable ......... 643,985 89.9 451,433
---------- ---------- -----------
Deferred loan fees, premiums and
(discounts) ..................... 4,558 0.6 3,386
Allowance for loan losses ...... (2,158) (0.3) (1,469)
---------- ---------- -----------
Loans receivable, net(1) ........ 646,385 90.2 453,350
---------- ---------- -----------
Mortgage-backed securities, net 70,165 9.8 52,998
---------- ---------- -----------
Total loans receivable, net
and mortgage-backed
securities .................. $716,550 100.0% $506,348
========== ========== ===========
Weighted average yield on total
loan losses receivable, net, and
mortgage-backed securities ..... 7.86%
==========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
1994 1993 1992
----------------------- ----------------------- -----------------------
PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
---------- ----------- ---------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
First mortgage loans:
One-to-four-family residential 85.5% $395,028 84.0% $301,689 93.3% $224,707 89.7%
Five-or-more-unit residential . 0.2 2,164 0.5 705 0.2 856 0.3
Commercial ..................... 2.0 4,469 0.9 748 0.2 350 0.1
Second mortgage loans ........... 0.5 2,616 0.6 623 0.2 631 0.3
-------- ---------- -------- ---------- ---------- -------- --------
Total first and second mortgage
loans ........................... 88.2 404,277 86.0 303,765 93.9 226,544 90.4
-------- ---------- -------- ---------- ---------- -------- --------
Consumer loans .................. 0.2 2,336 0.5 2,786 0.9 2,664 1.1
Commercial business loans ...... 0.7 4,732 1.0 3,665 1.1 2,143 0.8
-------- ---------- -------- ---------- ---------- -------- --------
Total loans receivable ......... 89.1 411,345 87.5 310,216 95.9 231,351 92.3
-------- ---------- -------- ---------- ---------- -------- --------
Deferred loan fees, premiums and
(discounts) ..................... 0.7 2,783 0.6 1,409 0.4 (437) (0.2)
Allowance for loan losses ...... (0.3) (841) (0.2) (1,184) (0.4) (265) (0.1)
-------- ---------- -------- ---------- ---------- -------- --------
Loans receivable, net(1) ........ 89.5 413,287 87.9 310,441 95.9 230,649 92.0
-------- ---------- -------- ---------- ---------- -------- --------
Mortgage-backed securities, net 10.5 57,155 12.1 13,156 4.1 19,957 8.0
-------- ---------- -------- ---------- ---------- -------- --------
Total loans receivable, net
and mortgage-backed
securities .................. 100.0% $470,442 100.0% $323,597 100.0% $250,606 100.0%
======== ========== ======== ========== ========== ======== ========
Weighted average yield on total
loan losses receivable, net, and
mortgage-backed securities ..... 7.53% 6.60% 6.37% 7.90%
======== ======== ========== ========
</TABLE>
- ---------
(1) Includes loans held for sale.
The following table sets forth, as of September 30, 1996 the amount of
A-11
<PAGE>
loans, mortgage loans held for sale and mortgage-backed securities held in
the Company's portfolio by category and expected principal repayments by
year. As of September 30, 1996, the total amount of loans with contractual
maturities greater than one year with fixed and adjustable interest rates
totaled approximately $119.0 million and $368.3 million, respectively.
<TABLE>
<CAPTION>
OUTSTANDING ON
SEPTEMBER 30,
1996 1997 1998
--------------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
First Mortgage Loans:
One-to-four-family residential $570,890 $133,259 $ 96,871
Five-or-more-unit residential . 12,559 3,763 2,973
Commercial ..................... 49,318 13,415 10,668
Second Mortgage loans ........... 2,748 792 736
--------------- ----------- -----------
Total first and second mortgage
loans ........................ 635,515 151,229 111,248
Consumer ....................... 2,648 1,552 1,096
Commercial business loans ..... 5,822 3,885 1,937
--------------- ----------- -----------
Total loans receivable ......... 643,985 156,666 114,281
Mortgage-backed securities ..... 70,002 17,099 14,128
--------------- ----------- -----------
Total ......................... $713,987 $173,765 $128,409
=============== =========== ===========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
2001- 2003- 2006 AND
1999 2000 2002 2006 THEREAFTER
---------- ---------- ---------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
First Mortgage Loans:
One-to-four-family residential $72,613 $55,069 $42,273 $109,147 $61,658
Five-or-more-unit residential . 2,331 1,810 1,390 292 --
Commercial ..................... 8,431 6,614 10,190 -- --
Second Mortgage loans ........... 686 534 -- -- --
--------- ---------- ---------- ---------- -----------
Total first and second mortgage
loans ........................ 84,061 64,027 53,853 109,439 61,658
Consumer ....................... -- -- -- -- --
Commercial business loans ..... -- -- -- -- --
--------- ---------- ---------- ---------- -----------
Total loans receivable ......... 84,061 64,027 53,853 109,439 61,658
Mortgage-backed securities ..... 11,738 6,943 3,951 10,718 5,425
--------- ---------- ---------- ---------- -----------
Total ......................... $95,799 $70,970 $57,804 $120,157 $67,083
========= ========== ========== ========== ===========
</TABLE>
Applicable regulations permit the Company to engage in various categories
of secured and unsecured commercial and consumer lending, in addition to
residential real estate financing, subject to limitations on the percentage
of total assets attributable to certain categories of loans. An additional
A-11
<PAGE>
limitation imposed by regulation requires that certain types of loans only be
made in aggregate amounts that do not exceed specified percentages of the
institution's capital. As of September 30, 1996, 19.5% of the Company's gross
loans receivable (15.3% of total assets) were secured by properties located
in California and 40.8% of gross loans receivable (31.9% of total assets)
were secured by properties located in Florida. Because of this concentration,
regional economic circumstances in those states could affect the level of the
Company's non-performing loans. The following table sets forth, as of
September 30, 1996 the distribution of the amount of the Company's loans
(including mortgage loans held for sale) by state.
<TABLE>
<CAPTION>
OUTSTANDING ON
STATE SEPTEMBER 30, 1996
- ---------------------------- -------------------
(IN THOUSANDS)
<S> <C>
Florida(1) ................. $262,747
California ................. 125,802
Ohio ....................... 27,808
New Jersey ................. 20,411
Maryland ................... 19,346
Colorado ................... 19,099
Virginia ................... 19,038
New York ................... 18,363
Illinois ................... 16,261
Arizona .................... 12,275
Michigan ................... 11,179
Minnesota .................. 10,996
Connecticut ................ 10,661
Massachusetts .............. 10,274
Texas ...................... 6,884
Georgia .................... 5,679
Washington ................. 5,492
Pennsylvania ............... 4,475
Nevada ..................... 2,762
Utah ....................... 1,915
District of Columbia ....... 1,839
Missouri ................... 1,816
Tennessee .................. 1,704
South Carolina ............. 1,664
North Carolina ............. 1,485
Oregon ..................... 1,458
New Hampshire .............. 1,357
Oklahoma ................... 1,331
Kentucky ................... 1,280
Arkansas ................... 1,250
Alabama .................... 1,154
Indiana .................... 1,036
Kansas ..................... 1,036
Wisconsin .................. 1,010
Maine ...................... 858
Louisana ................... 831
Rhode Island ............... 792
Hawaii ..................... 731
Idaho ...................... 641
Others(2) .................. 775
Not secured by real estate 8,470
-------------------
Total ..................... $643,985
===================
</TABLE>
- ---------
(1) Does not include $40.1 million of tax certificates representing liens
secured by properties in Florida.
(2) Less than $500,000 in any one state.
A-12
<PAGE>
RESIDENTIAL MORTGAGE LOAN PURCHASES AND ORIGINATIONS. The Company's
lending primarily involves purchasing in the secondary mortgage market and
originating loans secured by first mortgages on real estate improved with
single-family dwellings. The Company services loans in its portfolio that it
originates. The Company attempts to purchase loans servicing-released, when
available, although at September 30, 1996, the Company's loan portfolio
included $320.0 million of loans that were serviced by others. As of
September 30, 1996, the Company was servicing a total of approximately $318.8
million in mortgage loans, including $3.8 of loans serviced for others.
The Company's first mortgage loans purchased or originated are generally
repayable over 15 or 30 years. Additionally, the Company offers second
mortgage residential loans with maturities ranging from five to 15 years.
Residential loans typically remain outstanding for shorter periods than their
contractual maturities because borrowers prepay the loans in full upon sale
of the mortgaged property or upon refinancing of the original loan. The
Company currently originates and purchases fixed-rate and adjustable-rate
first mortgage loans secured by owner-occupied residences with 15-year term
or 30-year term amortization, and second mortgage loans with 15-year term
amortization or 30-year term amortization with a balloon payment after five
years.
The Company's adjustable-rate mortgage loans ("ARMs") generally have
interest rates that adjust monthly, semi-annually or annually at a margin
over the weekly average yield on U.S. Treasury securities adjusted to a
constant maturity of one year published by the Federal Reserve or the FHLB
11th District cost-of-funds index ("COFI") published by the FHLB of San
Francisco. The maximum interest rate adjustment of the Company's ARMs is
generally 1% semi-annually and 6% over the life of the loan, above or below
the initial rate on the loan for semi-annual adjustables, or 2% annually and
6% over the life of the loan, above or below the initial rate on the loan for
annual adjustables. The Company's COFI loans with monthly adjustable interest
rates also provide for a 7.5% cap on monthly payment increases from one
annual payment adjustment to the next, except at the end of five years, when
monthly payments may be adjusted by more than the payment increase cap in
order to provide for the complete amortization by maturity. Because of the
payment cap and the different times at which interest rate adjustments and
payment adjustments are made on these loans, monthly payments on these loans
may not be sufficient to pay the interest accruing on the loan. The amount of
any shortage is added to the principal balance of the loan to be repaid
through future monthly payments to the Company ("negative amortization"). If
the loan-to-value ratio is high, negative amortization could significantly
increase the risk associated with the loan; the Company's management,
however, believes that this risk is mitigated due to the relative stability
of the index used and to conservative underwriting policies.
The Company sometimes purchases or originates loans with "teaser" rates
that are below market rates during an initial period after the loan is x
originated. For loans with teaser rates, the borrower's ability to repay is
determined upon fully indexed rates.
Applicable regulations permit the Company to lend up to 100% of the
appraised value of the real property securing a loan ("loan-to-value ratio").
The Company, however, generally does not make or acquire loans with
loan-to-value ratios that exceed 80% at origination. When terms are
favorable, the Company will purchase or originate single-family mortgage
loans with loan-to value ratios between 80% and 95%. In most of these cases,
the Company will, as a matter of policy, require the borrower to obtain
private mortgage insurance that insures that portion of the loan exceeding
the 80% loan-to-value ratio, thereby reducing the risk to no more than 80% of
appraised value.
The Company generally applies the same underwriting criteria to
residential mortgage loans purchased or originated. In its loan purchases,
the Company generally reserves the right to reject particular loans from a
loan package being purchased and does reject loans in a package that do not
meet its underwriting criteria. In determining whether to purchase or
originate a loan, the Company assesses both the borrower's ability to repay
the loan and the adequacy of the proposed collateral. On originations, the
Company obtains appraisals of the property securing the loan. On purchases,
the Company reviews the appraisal obtained by the loan seller or originator
and arranges for an updated
A-13
<PAGE>
review appraisal before purchasing the loan. On purchases and originations,
the Company reviews information concerning the income, financial condition,
employment and credit history of the applicant. On purchases, the Company
generally obtains a credit report on the borrower separate from that provided
by the loan seller.
The Company has adopted written, non-discriminatory underwriting standards
for use in the underwriting and review of every loan considered for
origination or purchase. These underwriting standards are reviewed and
approved annually by the Company's Board of Directors. The Company's
underwriting standards for residential mortgage loans generally conform to
(except as to principal balance and with regard to certain loans discussed
below, as to the borrower's citizenship and related factors) standards
established by Fannie Mae ("FNMA") and the Federal Home Loan Mortgage
Corporation (the "FHLMC"). A loan application is obtained or reviewed by the
Company's underwriters to determine the borrower's ability to repay, and
confirmation of the more significant information is obtained through the use
of credit reports, financial statements, and employment and other
verifications.
The Company generally uses appraisals to determine the value of collateral
for all loans it originates. When originating a real estate mortgage loan,
the Company obtains a new appraisal of the property from an independent third
party to determine the adequacy of the collateral, and such appraisal is
reviewed by one of the underwriters. With respect to a substantial percentage
of loans purchased, the collateral value is determined by reference to a
review appraisal. Otherwise, the collateral value is determined by reference
to the documentation contained in the original file. Borrowers are required
to obtain casualty insurance and, if applicable, flood insurance in amounts
at least equal to the outstanding loan balance or the maximum amount allowed
by law.
The Company also requires that a survey be conducted and title insurance
be obtained, insuring the priority of its mortgage lien. Pursuant to its
underwriting standards, the Company generally requires private mortgage
insurance policies on newly originated mortgage loans with loan-to-value
ratios greater than 80%. All loans are reviewed by the Company's underwriters
to ensure that its guidelines are met or that waivers are obtained in limited
situations where offsetting factors exist.
With regard to loan purchases, a legal review of every loan file is
conducted to determine the adequacy of the legal documentation. The Company
receives various representations and warranties from the sellers of the loans
regarding the quality and characteristics of the loans.
Approximately $38.2 million, or 5.9%, of the Company's gross loans
receivable are first mortgage loans to non-resident aliens secured by
single-family residences located in Florida. These loans are purchased and
originated by the Company in a manner similar to that described above for
other residential loans. Loans to non-resident aliens generally afford the
Company an opportunity to receive rates of interest higher than those
available from other single-family residential loans. Nevertheless, such
loans generally involve a greater degree of risk than other single-family
residential mortgage loans. The ability to obtain access to the borrower is
more limited for non-resident aliens, as is the ability to attach or verify
assets located in foreign countries. The Company has attempted to minimize
these risks through its underwriting standards for such loans (including
generally lower loan-to-value ratios and qualification based on verifiable
assets located in the United States).
COMMERCIAL REAL ESTATE LENDING. The Company's commercial real estate
lending division originates or purchases multi-family and commercial real
estate loans from $250,000 to $4.0 million. The Company's strategy is to
promote commercial lending together with private banking (see "Private
Banking" below), as both areas seek to develop long-term relationships with
select businesses, real estate borrowers, and professionals. At September 30,
1996, the Company had $49.3 million of commercial real estate loans,
representing a total of 7.7% of the Company's loan portfolio before net
items. The Company's commercial real estate loan portfolio includes loans
secured by apartment buildings, office buildings, warehouses, retail stores
and other properties, which are located in the Company's primary market area.
Commercial real estate loans generally are originated in amounts up
A-14
<PAGE>
to 75% of the appraised value of the property securing the loan. In
determining whether to originate or purchase multi-family or commercial real
estate loans, the Company also considers such factors as the financial
condition of the borrower and the debt service coverage of the property.
Commercial real estate loans are made at both fixed and adjustable interest
rates for terms of up to 10 years.
Appraisals on properties securing commercial real estate loans originated
by the Company are performed at the time the loan is made by an independent
appraiser. In addition, the Company's underwriting procedures generally
require verification of the borrower's credit history, income and financial
statements, banking relationships, references and income projections for the
property. Personal guarantees are generally obtained for the Company's
commercial real estate loans.
Management's expansion into this area reflects its business strategy to
obtain seasoned loan product divested by the super-regional financial
companies in South Florida and its belief that commercial real estate loans
are generally of short-to moderate-term with higher-yielding variable
interest rates as compared to residential loans. In December 1995, the
Company purchased approximately $32.0 million of commercial real estate loans
in Florida from another financial institution. The loan package comprised 23
loans with principal balances ranging from $376,000 to $4.7 million.
Management believes that with the recent acquisition of several Florida-based
financial institutions by out-of-state regional banks, the Company will be
able to expand its commercial real estate business.
Commercial real estate lending affords the Company an opportunity to
receive interest at rates higher than those generally available from
one-to-four-family residential lending. Nevertheless, loans secured by such
properties are generally larger and involve a greater degree of risk than
one-to-four-family residential mortgage loans. Because payments on loans
secured by commercial real estate properties are often dependent on the
successful operation or management of the properties, repayment of such loans
may be subject to adverse conditions in the real estate market or the
economy. If the cash flow from the project is reduced (for example, if leases
are not obtained or renewed), the borrower's ability to repay the loan may be
impaired. In addition, adjustable-rate commercial real estate loans are
subject to increased risk of delinquency or default as interest rates
increase. The Company has attempted to minimize these risks through its
underwriting standards.
REAL ESTATE CONSTRUCTION LENDING. The Company has commenced a program to
make real estate construction loans to individuals for the construction of
their residences, as well as to builders and real estate developers for the
construction of one-to-four-family residences and commercial and multi-family
real estate, although at September 30, 1996, the Company had no construction
loans.
Construction loans to individuals for their residences may be, but would
not be required to be, structured to be converted to permanent loans with the
Company at the end of the construction phase. Such residential construction
loans would generally be underwritten pursuant to the same guidelines used
for originating permanent residential loans. The Company's construction loans
would typically have terms of up to nine months and have rates higher than
permanent one-to-four-family loans offered by the Company. During the
construction phase, the borrower would pay interest only. Generally, the
maximum loan-to-value ratio of owner-occupied, single-family construction
loans would be 75%.
The Company may from time to time make construction loans on commercial
real estate projects secured by apartments, shopping centers, industrial
properties, small office buildings, medical facilities or other property.
Such loans would generally be structured to be converted to permanent loans
at the end of the construction phase, which generally runs from 12 to 18
months. These construction loans would have rates and terms that match any
permanent commercial real estate loan then offered by the Company, except
that during the construction phase, the borrower would pay interest only.
These loans would generally provide for the payment of interest and loan fees
from loan proceeds.
Because of the uncertainties inherent in estimating construction costs and
the market for the project upon completion, it is relatively difficult to
evaluate accurately the total loan funds that would be required to complete a
project, the related loan-to-value ratios, and the likelihood of ultimate
A-15
<PAGE>
success of a project. Construction loans to borrowers other than
owner-occupants also involve many of the same risks discussed above regarding
commercial real estate loans and tend to be more sensitive to general
economic conditions than many other types of loans. Also, the funding of loan
fees and interest during the construction phase makes the monitoring of the
progress of the project particularly important, as customary early warning
signals of project difficulties may not be present.
COMMERCIAL BUSINESS LENDING. Commercial business loans totaled $5.8
million as of September 30, 1996, representing .9% of total loans. In its
commercial business loan underwriting, the Company evaluates the value of the
collateral securing the loan and assesses the borrower's creditworthiness and
ability to repay. While commercial business loans generally are made for
shorter terms and at higher yields than one-to-four-family residential loans,
such loans generally involve a higher level of risk than one-to-four-family
residential loans because the risk of borrower default is greater and the
collateral may be more difficult to liquidate and more likely to decline in
value.
LOAN PORTFOLIO QUALITY. Federal regulations require a savings institution
to review its assets on a regular basis and, if appropriate, to classify
assets as "substandard," "doubtful", or "loss" depending on the likelihood of
loss. General allowances for loan losses are required to be established for
assets classified as substandard or doubtful. For assets classified as loss,
the institution must either establish specific allowances equal to the amount
classified as a loss or charge off such amount. Assets that do not require
classification as substandard but that possesses credit deficiencies or
potential weaknesses deserving management's close attention are required to
be designated as "special mention." The deputy director of the appropriate
OTS regional office may approve, disapprove or modify any classifications of
assets and any allowance for loan losses established.
Additionally, under standard banking practices, an institution's asset
quality is also measured by the level of non-performing loans in the
institution's portfolio. Non-performing loans consist of (i) non-accrual
loans; (ii) loans that are more than 90 days contractually past due as to
interest or principal but that are well-secured and in the process of
collection or renewal in the normal course of business; and (iii) loans that
have been renegotiated to provide a deferral of interest or principal because
of a deterioration in the financial condition of the borrower. The Company
provides delinquency notices to borrowers when loans are 30 or more days past
due. The Company places conventional mortgage loans on non-accrual status
when more than 90 days past due. When a loan is placed on non-accrual status,
the Company reverses all accrued and uncollected interest. The Company also
begins appropriate legal procedures to obtain repayment of the loan or
otherwise satisfy the obligation.
As of September 30, 1996, the Company had $8.3 million in substandard
assets of which $7.8 million are included in non-performing assets.
Substandard assets consisted of the following:
AS OF
SEPTEMBER 30, 1996
-------------------
(IN THOUSANDS)
One-to-four-family residential loans ........ $6,409
Consumer and business loans ................ 15
REO ......................................... 632
Tax certificates ............................ 1,264
------
Total Substandard Assets ................... $8,320
======
In addition, $259,000 of tax certificates were classified as loss as of
September 30, 1996 and have been specifically reserved for.
A-16
<PAGE>
The following table sets forth information regarding the Company's
allowance for loan losses for the periods indicated:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- ---------- --------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Allowance for loan losses balance (at beginning of period $1,469 $ 841 $ 1,184 $ 265 $195
Provisions (credit) for loan losses ...................... (120) 1,221 1,187 1,052 70
Allowance from Bank of Florida ........................... 183 -- -- -- --
Allocation from discounts on loans purchased ............. -- -- -- 90 --
Loans charged off:
One-to four-family residential loans ..................... (493) (535) (1,582) (223) --
Commercial and other ..................................... -- (59) -- -- --
-------- --------- ---------- ---------- --------
Total (493) (594) (1,582) (223) --
-------- --------- ---------- ---------- --------
Recoveries:
One-to four-family residential loans ..................... 1,119 1 52 -- --
-------- --------- ---------- ---------- --------
Allowance for loan losses, balance (at end of period) ... $2,158 $1,469 $ 841 $1,184 $265
======== ========= ========== ========== ========
</TABLE>
Historically, recoveries of charged off loans have been minimal since
charged off loans have been primarily one-to-four family residential loans
and typically the only substantial asset available to the Company is the real
estate securing the loan which is acquired through foreclosure and sold.
However, in its fiscal year ended September 30, 1996, the Company received a
recovery of approximately $1.0 million as settlement of litigation the
Company initiated against a seller of residential mortgage loans. The Company
is not aware of any significant liability related to REO or loans that may be
foreclosed.
The following table sets forth the allocation of general allowance for
loan losses by loan category for the periods indicated.
<TABLE>
<CAPTION>
AT SEPTEMBER 30,
------------------------------------------------------------------------------
1996 1995 1994
------------------------ ------------------------ ---------------------------
% OF LOANS % OF LOANS % OF LOANS
IN EACH IN EACH IN EACH
CATEGORY TO CATEGORY TO CATEGORY TO
AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS AMOUNT TOTAL LOANS
--------- -------------- --------- -------------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance at end of period
applicable to: ..................
One-to-four-family residential
mortgages ....................... $1,381 88.6% $1,207 95.9% $766 96.0%
Commercial and other loans ..... 739 11.4% 168 4.1% 75 4.0%
Unallocated ..................... 38 N/A 94 N/A -- N/A
-------- --------- ------- -------- -------- ------
Total allowances for loan losses $2,158 100.0% $1,469 100.0% $841 100.0%
======== ========= ======= ======== ======== ======
</TABLE>
For additional information regarding the Company's allowance for loan
losses and the credit quality of the Company's assets, see "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Financial Condition--Credit Quality" in Appendix C hereto.
PRIVATE BANKING
The Company's Private Banking Division focuses on the diverse lending and
deposit needs of professionals and executives in South Florida. Private
banking is customer-oriented, not transaction-oriented, with an emphasis on
building a total banking relationship. The Private Banking target market
includes the upscale markets of metropolitan Miami with emphasis on the Coral
Gables and southwest Dade County areas.
Currently, the Company's commercial business loans and
non-interest-bearing demand deposit accounts are originated primarily by the
Private Banking Division. The Company is developing its
A-17
<PAGE>
capability to deliver loan services to businesses in communities served by
its branch offices. The Private Banking Division is also responsible for a
portion of the residential real estate loans originated by the Company,
particularly the loans with higher balances, which usually generate higher
fees. The Company's consumer lending business is also generated by this
division.
MORTGAGE BANKING
The Company has established a correspondent mortgage banking operation for
the origination of single-family residential mortgage loans in its market
area. This correspondent operation consists of a network of mortgage brokers
and lenders in South Florida that generate mortgage loans for the Company.
Originations in the correspondent program, together with branch lending,
reached $54.0 million in fiscal 1996.
INVESTMENTS
The Company maintains an investment portfolio consisting primarily of
federal agency securities, FHLB overnight deposits, securities purchased
under agreements to resell and tax certificates. Federal regulations limit
the instruments in which the Company may invest its funds. The Company's
current investment policy permits purchases only of investments (with the
exception of tax certificates) rated in one of the three highest grades by a
nationally recognized rating agency and does not permit purchases of
securities of non-investment grade quality (such as so-called "junk bonds").
The Company's portfolio also includes tax certificates issued by various
counties in the State of Florida. Tax certificates represent tax obligations
that are auctioned by county taxing authorities on an annual basis in order
to collect delinquent real estate taxes. Although tax certificates have no
stated maturity, the certificate holder has the right to collect the
delinquent tax amount, plus interest, and can file for a tax deed if the
delinquent tax amount is unpaid at the end of two years. Tax certificates
have a claim superior to most other liens. If the holder does not file for
deed within seven years, the certificate becomes null and void. The Company
has adopted detailed policies with regard to its investment in tax
certificates, which specify due diligence procedures, purchasing procedures
(including parameters for the location, type and size of tax certificates
acceptable for purchase) and procedures for managing the portfolio after
acquisition.
The following table sets forth information regarding the Company's
investments as of the dates indicated. Amounts shown are historical amortized
cost. For additional information regarding the Company's investment
securities, including the carrying values and approximate market values of
such investment securities, see Notes 1 and 4 of the Notes to the Company's
Consolidated Financial Statements included in Appendix D hereto.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
----------------------------------
1996 1995 1994
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Securities purchased under agreements to
resell ........................................ $ -- $ -- $ 700
Federal funds sold ............................ 400 400 375
Federal agency securities ..................... 4,985 4,675 2,003
FHLB overnight deposits ....................... 28,253 31,813 11,212
Tax certificates .............................. 40,088 39,544 42,612
Other ......................................... 1,711 11 11
--------- --------- ---------
Total investment securities .................. $75,437 $76,443 $56,913
========= ========= =========
Weighted average yield ....................... 7.35% 7.88% 7.61%
========= ========= =========
</TABLE>
A-18
<PAGE>
The following table sets forth information regarding the maturities of the
Company's investments as of September 30, 1996. Amounts shown are book
values.
<TABLE>
<CAPTION>
PERIODS TO MATURITY
FROM SEPTEMBER 30, 1996
------------------------------------
WITHIN 1 THROUGH OVER
1 YEAR 5 YEARS 5 YEARS
---------- ------------ -----------
<S> <C> <C> <C>
Federal agency securities $ 2,004 $2,981 $ --
FHLB overnight deposits .. 28,253 -- --
Tax certificates(1) ....... 40,088 -- --
Federal funds sold ........ 400 -- --
Other ..................... 910 765 36
--------- --------- -------
Total .................... $71,655 $3,746 $ 36
========= ========= =======
Weighted average yield .. 7.36% 7.15% 6.76%
========= ========= =======
</TABLE>
- ----------
(1) Maturities are based on historical experience.
OTHER INTEREST-EARNINGS ASSETS
Included in other interest-earning assets is stock of the FHLB of Atlanta,
which totaled $12.2 million, $12.3 million and $7.9 million as of September
30, 1996, 1995 and 1994, respectively. The Company also had a $25,000 equity
investment in the Community Reinvestment Group as of September 30, 1996 and
1995. Carrying value, which is par, is estimated to be the fair market value
of these assets.
SOURCES OF FUNDS
The Company's primary sources of funds for its investment and lending
activities are customer deposits, loan repayments, funds from operations, the
Company's capital and FHLB advances.
DEPOSITS. The Company offers a full variety of deposit accounts ranging
from passbook accounts to certificates of deposit with maturities of up to
five years. The Company also offers transaction accounts, which include
commercial checking accounts, negotiable order of withdrawal ("NOW")
accounts, super NOW accounts and money market deposit accounts. The rates
paid on deposits are established periodically by management based on the
Company's need for funds and the rates being offered by the Company's
competitors with the goal of remaining competitive without offering the
highest rates in the market area. The Company has not utilized brokered
deposits.
The Company has placed increasing reliance on passbook accounts, money
market accounts, certificates of deposit and other savings alternatives that
are more responsive to market conditions than long-term, fixed-rate
certificates. While market-sensitive savings vehicles permit the Company to
reduce its cost of funds during periods of declining interest rates, such
savings alternatives also increase the Company's vulnerability to periods of
high interest rates. There are no regulatory interest rate ceilings on the
Company's accounts.
A-19
<PAGE>
The following table sets forth information concerning the Company's
deposits by account type and the weighted average nominal rates at which
interest is paid thereon as of the dates indicated:
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
--------------------------------------------------------------------
1996 1995 1994
--------------------- --------------------- -----------------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
----------- -------- ----------- -------- ----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Passbook accounts:
Regular ............................... $ 73,741 4.44% $ 50,327 3.04% $ 44,533 3.04%
Holiday club .......................... 39 2.00 46 2.00 50 1.75
----------- ---------- -------------
Total passbook accounts .............. 73,780 50,373 44,583
----------- ---------- -------------
Checking:
Insured money market .................. 16,556 3.87 7,733 2.68 18,006 1.51
NOW and non-interest-bearing accounts 24,566 1.49 18,157 2.17 29,805 1.67
----------- -------- ---------- ------------
Total transaction accounts ........... 41,122 25,890 47,811
----------- ---------- ------------
Total passbook and checking accounts 114,902 76,263 92,394
----------- ---------- ------------
Certificates:
30-89-day certificates of deposit .... 91 2.73 166 3.01
3-5-month certificates of deposit .... 7,114 4.67 1,465 4.78 4,552 3.95
6-8-month certificates of deposit .... 159,850 5.40 93,684 5.65 87,071 4.23
9-11-month certificates of deposit ... 20,279 5.45 5,654 5.55 1,302 3.53
12-17-month certificates of deposit .. 124,637 5.49 79,637 5.90 71,115 4.44
18-23-month certificates of deposit .. 12,375 5.79 12,382 5.37 33,282 4.31
24-29-month certificates of deposit .. 42,875 5.94 18,593 5.57 24,453 4.36
30-35-month certificates of deposit .. 1,774 5.57 2,868 4.99 4,867 4.66
36-60-month certificates of deposit .. 22,300 5.93 19,437 5.81 28,593 5.46
----------- -------- ---------- ----------- --------
Total certificates ................... 391,204 233,811 255,401
----------- ---------- -----------
Total ............................... $506,106 $310,074 $347,795
=========== ========== ===========
Weighted average rate .............. 5.11% 4.99% 3.88%
======== ======== ========
</TABLE>
The following table sets forth information by various rate categories
regarding the amounts of the Company's certificate accounts (under $100,000)
as of September 30, 1996 that mature during the periods indicated:
<TABLE>
<CAPTION>
PERIODS TO MATURITY
FROM SEPTEMBER 30, 1996
-------------------------------------------------
AS OF WITHIN 1 TO 2 TO MORE THAN
SEPTEMBER 30, 1996 1 YEAR 2 YEARS 3 YEARS 3 YEARS
------------------- ----------- ---------- ---------- ------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Certificate accounts:
3.00% to 3.99% ................... $ 93 $ 93 $ -- $ -- $ --
4.00% to 4.99% ................... 6,700 6,182 366 152 --
5.00% to 5.99% ................... 309,070 257,517 43,406 3,965 4,182
6.00% to 6.99% ................... 21,555 8,819 6,762 2,405 3,569
7.00% to 7.99% ................... 862 368 -- 48 446
8.00% to 8.99% ................... -- -- -- -- --
------------------- ----------- ---------- ---------- ------------
Total certificate accounts (under
$100,000) ....................... $338,280 $272,979 $50,534 $6,570 $8,197
=================== =========== ========== ========== ============
</TABLE>
A-20
<PAGE>
The following table sets forth information by various rate categories
regarding the amounts of the Company's jumbo ($100,000 and over) certificate
accounts as of September 30, 1996 that mature during the periods indicated:
<TABLE>
<CAPTION>
PERIODS TO MATURITY
FROM SEPTEMBER 30, 1996
------------------------------------------------
AS OF WITHIN 1 TO 2 TO MORE THAN
SEPTEMBER 30, 1996 1 YEAR 2 YEARS 3 YEARS 3 YEARS
------------------- ---------- ---------- ---------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Jumbo certificate accounts:
2.00% to 2.99% .................. $ 100 $ 100 $ 135 $ -- $ --
4.00% to 4.99% .................. 1,733 1,598 6,308 331 219
5.00% to 5.99% .................. 46,969 40,111 1,076 631 540
6.00% to 6.99% .................. 4,021 1,774 -- -- --
7.00% to 7.99% .................. 101 -- -- -- 101
------------------- ---------- ---------- ---------- ------------
Total jumbo certificate accounts $52,924 $43,583 $7,519 $962 $860
=================== ========== ========== ========== ============
</TABLE>
Of the Company's total deposits at September 30, 1996, 1995 and 1994,
10.5%, 8.6% and 10.3%, respectively, were deposits of $100,000 or more issued
to the public. Although jumbo certificates of deposit are generally more rate
sensitive than smaller size deposits, management believes that the Company
will retain these deposits.
In 1995, the Company sold its three branches on the west coast of Florida,
including their deposits which totaled $130 million at the date of sale. The
sale was part of a shift in growth strategy to focus on South Florida and
take advantage of consolidation trends in banking there. Also, as part of
this strategy, the Company opened branches in Boca Raton, Florida in December
1995, Delray Beach, Florida in June 1996 and West Palm Beach, Florida in
September 1996. On March 29, 1996, the Company acquired the Bank of Florida
whose single branch with total deposits of $27.3 million was consolidated
with the Company's South Miami branch. On November 15, 1996, as discussed
above, the Company acquired Suncoast which had six branches.
BORROWINGS. When the Company's primary sources of funds are not sufficient
to meet deposit outflows, loan originations and purchases and other cash
requirements, the Company may borrow funds from the FHLB of Atlanta and from
other sources. The FHLB system acts as an additional source of funding for
savings institutions. In addition, the Company uses subordinated notes and
agreements to repurchase in order to increase funds.
FHLB borrowings, known as "advances," are made on a secured basis, and the
terms and rates charged for FHLB advances vary in response to general
economic conditions. As a shareholder of the FHLB of Atlanta, the Bank is
authorized to apply for advances from this bank. A wide variety of borrowing
plans are offered by the FHLB of Atlanta, each with its own maturity and
interest rate. The FHLB of Atlanta will consider various factors, including
an institution's regulatory capital position, net income, quality and
composition of assets, lending policies and practices, and level of current
borrowings from all sources, in determining the amount of credit to extend to
an institution. In addition, an institution that fails to meet the qualified
thrift lender test may have restrictions imposed on its ability to obtain
FHLB advances. BankUnited currently meets the qualified thrift lender test.
See "Regulation--Savings Institution Regulation--Qualified Thrift Lender
Test."
A-21
<PAGE>
The following tables set forth information as to the Company's borrowings
as of the dates and for the periods indicated.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
-----------------------------------------------------------------------------
1996 1995 1994
------------------------ ------------------------ --------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
BALANCE RATE BALANCE RATE BALANCE RATE
----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
PERIOD END BALANCES:
FHLB advances(1) ................... $237,000 5.73% $241,000 5.92% $136,000 5.17%
Subordinated notes ................. 775 9.00 775 9.00 775 9.00
Securities sold under agreements to
repurchase (2) ..................... -- -- -- -- 21,400 4.49
----------- ----------- ----------- ---------- ----------- --------
Total borrowings .................. $237,775 5.74% $241,775 5.93% $158,175 5.10%
========== ========= =========== ========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------------------------------
1996 1995 1994
------------------------ ------------------------ --------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
BALANCE RATE BALANCE RATE BALANCE RATE
----------- ----------- ----------- ----------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
AVERAGE BALANCES:
FHLB advances(1) ................... $234,489 5.77% $136,706 5.86% $116,493 4.03%
Subordinated notes ................. 775 9.00 775 9.00 775 9.00
Securities sold under agreements to
repurchase (2) ................... -- -- 6,571 5.59 3,224 5.68
----------- --------- ----------- ------- --------- -----
Total borrowings .................. $235,264 5.78% $144,052 5.86% $120,492 4.11%
=========== ========= =========== ======= ========= ====
</TABLE>
- ----------
(1) The maximum amount of FHLB advances outstanding during the years ended
September 30, 1996, 1995 and 1994 was $244.0 million, $246.0 million and
$149.0 million, respectively.
(2) The maximum amount of securities sold under agreements to repurchase at
any month-end during the years ended September 30, 1995 and 1994 was
$33.6 million and $21.4 million.
ACTIVITIES OF SUBSIDIARY.
T&D Properties of South Florida, Inc., a Florida corporation ("T&D"), is a
wholly owned operating subsidiary of the Bank, organized in 1991 to invest in
tax certificates. T&D also holds title to, maintains, manages and supervises
the disposition of real property acquired through tax deeds.
Bay Holdings, Inc., a Florida corporation ("Bay Holding") is a wholly
owned operating subsidiary of the Bank that holds title to, maintains,
manages and supervises the disposition of real property acquired through
foreclosure. Bay Holdings was established in 1994 for the purpose of
insulating the Bank from risk of liability concerning maintenance, management
and disposition of real property.
BU Ventures, Inc., a Florida corporation ("BU Ventures") is a wholly owned
operating subsidiary of the Company organized in 1994 to assume from T&D the
responsibility for the maintenance, management and disposition of real
property acquired through tax deeds.
EMPLOYEES
At September 30, 1996, the Company had 126 full-time equivalent employees.
The Company's employees are not represented by a collective bargaining group,
and the Company considers its relations with its employees to be excellent.
The Company provides employee benefits customary in the
A-22
<PAGE>
savings industry, which include group medical and life insurance, a 401(k)
savings plan and paid vacations. The Company also provides stock awards and a
profit sharing plan for certain officers, directors and employees.
REGULATION
RECENT LEGISLATIVE DEVELOPMENTS
In recent years, measures have been taken to reform the thrift and banking
industries and to strengthen the insurance funds for depository institutions.
The most significant of these measures for savings institutions was the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (the
"FIRREA"), which has had a major impact on the operation and regulation of
savings associations generally. In 1991, the Federal Deposit Insurance
Corporation Improvement Act of 1991 (the "FDICIA"), became law. Although the
FDICIA's primary purpose was to recapitalize the Bank Insurance Fund (the
"BIF") of the FDIC, which insures the deposits of commercial banks, the
FDICIA also affected the supervision and regulation of all federally insured
depository institutions, including federal savings banks such as the Bank.
More recent legislation has attempted to resolve the problems of the SAIF in
meeting its minimum required reserve ratio and the related concern facing
SAIF-insured institutions, such as the Bank, of paying significantly higher
deposit insurance premiums than BIF-insured institutions. The following
discussion is a summary of the significant provisions of the recent
legislation affecting the banking industry.
THE FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT OF 1989.
The FIRREA, which was enacted in response to concerns regarding the soundness
of the thrift industry, brought about a significant regulatory restructuring,
limited savings institutions' business activities, and increased their
regulatory capital requirements. The FIRREA abolished the Federal Home Loan
Bank Board and the Federal Savings and Loan Insurance Corporation (the
"FSLIC"), and established the OTS as the primary federal regulator for
savings institutions. Deposits at the Bank are insured through the SAIF, a
separate fund managed by the FDIC for institutions whose deposits were
formerly insured by the FSLIC. Regulatory functions relating to deposit
insurance are generally exercised by the FDIC. The Resolution Trust
Corporation (the "RTC") was created to manage conservatorships and
receiverships of insolvent thrifts.
THE FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991. The
FDICIA authorizes regulators to take prompt corrective action to solve the
problems of critically undercapitalized institutions. As a result, the
banking regulators are required to take certain supervisory actions against
undercapitalized institutions, the severity of which increases as an
institution's level of capitalization decreases. Pursuant to the FDICIA, the
federal banking agencies have established the levels at which an insured
institution is considered to be "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically
undercapitalized." See "--Savings Institution Regulations--Prompt Corrective
Action" below for a discussion of the applicable capital levels.
The FDICIA requires that the federal banking agencies revise their
risk-based capital requirements to include components for interest rate risk,
concentration of credit risk and the risk of non-traditional activities. See
"--Savings Institution Regulations--Regulatory Capital Requirements" below
for a description of the final rule adopted by the OTS that incorporates an
interest rate risk component in the risk-based capital requirement. Although
adopted, implementation of this rule has been postponed indefinitely.
In addition, the FDICIA requires each federal banking agency to establish
standards relating to internal controls, information systems, and internal
audit systems that are designed to assess the financial condition and
management of the institution; loan documentation; credit underwriting;
interest
A-23
<PAGE>
rate exposure; asset growth; and compensation, fees and benefits. The FDICIA
lowered the qualified thrift lender ("QTL") investment percentage applicable
to SAIF-insured institutions. See "--Savings Institution
Regulations--Qualified Thrift Lender Test" below. The FDICIA also provided
that a risk-based assessment system for insured depository institutions must
be established before January 1, 1994. See "--Savings Institution
Regulations--Insurance of Accounts" below. These requirements have been
implemented. The FDICIA further requires annual on-site full examinations of
depository institutions, with certain exceptions, and annual reports on
institutions' financial and management controls.
THE RIEGLE-NEAL INTERSTATE BANKING AND BRANCHING EFFICIENCY ACT OF 1994.
In September 1994, the Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "Interstate Branching Act") became law. Savings
associations, whose primary federal regulator is the OTS, generally are not
directly affected by the Interstate Branching Act except for a provision that
allows an insured savings association that was an affiliate of a bank on July
1, 1994, to act as the bank's agent as though it were an insured bank
affiliate of the bank.
The FDIC's deposit insurance premiums are assessed through a risk-based
system under which all insured depository institutions are placed into one of
nine categories and assessed insurance premiums based upon their level of
capital and supervisory evaluation. Under the system, institutions classified
as well capitalized (i.e., a core capital ratio of at least 5%, a ratio of
Tier 1 or core capital to risk-weighted assets ("Tier 1 risk-based capital")
of at least 6% and a risk-based capital ratio of at least 10%) and considered
healthy pay the lowest premium while institutions that are less than
adequately capitalized (i.e., core or Tier 1 risk-based capital ratios of
less than 4% or a risk-based capital ratio of less than 8%) and considered of
substantial supervisory concern pay the highest premium. Risk classification
of all insured institutions is made by the FDIC for each semi-annual
assessment period.
The FDIC is authorized to increase assessment rates, on a semiannual
basis, if it determines that the reserve ratio of the SAIF will be less than
the designated reserve ratio of 1.25% of SAIF insured deposits. In setting
these increased assessments, the FDIC must seek to restore the reserve ratio
to that designated reserve level, or such higher reserve ratio as established
by the FDIC. The FDIC may also impose special assessments on SAIF members to
repay amounts borrowed from the United States Treasury or for any other
reason deemed necessary by the FDIC.
For the first six months of 1995, the assessment schedule for members of
the Bank Insurance Fund ("BIF") of the FDIC and SAIF members ranged from .23%
to .31% of deposits. As is the case with the SAIF, the FDIC is authorized to
adjust the insurance premium rates for banks that are insured by the BIF of
the FDIC in order to maintain the reserve ratio of the BIF at 1.25% of BIF
insured deposits. As a result of the BIF reaching its statutory reserve ratio
the FDIC revised the premium schedule for BIF insured institutions to provide
a range of .04% to .31% of deposits. The revisions became effective in the
third quarter of 1995. In addition, the BIF rates were further revised,
effective January 1996, to provide a range of 0% to .27%. The SAIF rates,
however, were not adjusted. At the time the FDIC revised the BIF premium
schedule, it noted that, absent legislative action (as discussed below), the
SAIF would not attain its designated reserve ratio until the year 2002. As a
result, SAIF insured members would continue to be generally subject to higher
deposit insurance premiums than BIF insured institutions until, all things
being equal, the SAIF attained its required reserve ratio.
In order to eliminate this disparity and any competitive disadvantage
between BIF and SAIF member institutions with respect to deposit insurance
premiums, legislation to recapitalize the SAIF was enacted in September 1996.
The legislation provides for a one-time assessment to be imposed on all
deposits assessed at the SAIF rates, as of March 31, 1995, in order to
recapitalize the SAIF. It also provides for the merger of the BIF and the
SAIF on January 1, 1999 if no savings associations then exist. The special
assessment rate has been established at .657% of deposits by the FDIC and the
resulting assessment of $2.6 million (exclusive of an additional $2.3 million
payment which relates to Suncoast deposits) was paid in November 1996. This
special assessment significantly increased noninterest expense and adversely
affected the Bank's results of operations for the year ended September 30,
1996. As a result of the special assessment, the Bank's deposit insurance
premiums were
A-24
<PAGE>
reduced to .067% based upon its current risk classification and the new
assessment schedule for SAIF insured institutions. These premiums are subject
to change in future periods.
Prior to the enactment of the legislation, a portion of the SAIF
assessment imposed on savings associations was used to repay obligations
issued by a federally chartered corporation to provide financing ("FICO") for
resolving the thrift crisis in the 1980's. Although the FDIC has proposed
that the SAIF assessment be equalized with the BIF assessment schedule,
effective October 1, 1996, SAIF-insured institutions will continue to be
subject to a FICO assessment as a result of this continuing obligation.
Although the legislation also now requires assessments to be made on
BIF-assessable deposits for this purpose, effective January 1, 1997, that
assessment will be limited to 20% of the rate imposed on SAIF assessable
deposits until the earlier of December 31, 1999 or when no savings
association continues to exist, thereby imposing a greater burden on SAIF
member institutions such as the Bank. Thereafter, however, assessments on
BIF-member institutions will be made on the same basis as SAIF-member
institutions. The rates to be established by the FDIC to implement this
requirement for all FDIC-insured institutions is uncertain at this time, but
are anticipated to be about a 6.5 basis points assessment on SAIF deposits
and 1.5 basis points on BIF deposits until BIF insured institutions
participate fully in the assessment.
SAVINGS AND LOAN HOLDING COMPANY REGULATIONS
TRANSACTIONS WITH AFFILIATES. The Company is a unitary savings and loan
holding company and is subject to the OTS regulations, examination,
supervision and reporting requirements pursuant to certain provisions of the
Home Owners' Loan Act (the "HOLA") and the Federal Deposit Insurance Act. As
an insured institution and a subsidiary of a savings and loan holding
company, the Bank is subject to restrictions in its dealings with companies
that are "affiliates" of the Company under the HOLA, certain provisions of
the Federal Reserve Act that were made applicable to savings institutions by
the FIRREA, and the OTS regulations.
As a result of the FIRREA, savings institutions' transactions with its
affiliates are subject to the limitations set forth in the HOLA and the OTS
regulations, which incorporate Sections 23A, 23B, 22(g) and 22(h) of the
Federal Reserve Act and Regulation O adopted by the Board of Governors of the
Federal Reserve System (the "Federal Reserve Board"). Under Section 23A, an
"affiliate" of an institution is defined generally as (i) any company that
controls the institution and any other company that is controlled by the
company that controls the institution, (ii) any company that is controlled by
the shareholders who control the institution or any company that controls the
institution, or (iii) any company that is determined by regulation or order
to have a relationship with the institution (or any subsidiary or affiliate
of the institution) such that "covered transactions" with the company may be
affected by the relationship to the detriment of the institution. "Control"
is determined to exist if a percentage stock ownership test is met or if
there is control over the election of directors or the management or policies
of the company or institution. "Covered transactions" generally include loans
or extensions of credit to an affiliate, purchases of securities issued by an
affiliate, purchases of assets from an affiliate (except as may be exempted
by order or regulation), and certain other transactions. The OTS regulations
and Sections 23A and 23B require that covered transactions and certain other
transactions with affiliates be on terms and conditions consistent with safe
and sound banking practices or on terms comparable to similar transactions
with non-affiliated parties, and imposes quantitative restrictions on the
amount of and collateralization requirements on covered transactions. In
addition, a savings institution is prohibited from extending credit to an
affiliate (other than a subsidiary of the institution), unless the affiliate
is engaged only in activities that the Federal Reserve Board has determined,
by regulation, to be permissible for bank holding companies. Sections 22(g)
and 22(h) of the Federal Reserve Act impose limitations on loans and
extensions of credit from an institution to its executive officers, directors
and principal stockholders and each of their related interests.
ACTIVITIES LIMITATIONS. A unitary savings and loan holding company, such
as the Company, whose sole insured institution subsidiary qualifies as a QTL
(described below) generally has the broadest authority to engage in various
types of business activities. A holding company that acquires
A-25
<PAGE>
another institution and maintains it as a separate subsidiary or whose sole
subsidiary fails to meet the QTL test will become subject to the activities
limitations applicable to multiple savings and loan holding companies.
In general, a multiple savings and loan holding company (or subsidiary
thereof that is not an insured institution) may not commence, or continue for
more than a limited period of time after becoming a multiple savings and loan
holding company (or a subsidiary thereof), any business activity other than
(i) furnishing or performing management services for a subsidiary insured
institution, (ii) conducting an insurance agency or an escrow business, (iii)
holding, managing or liquidating assets owned by or acquired from a
subsidiary insured institution, (iv) holding or managing properties used or
occupied by a subsidiary insured institution, (v) acting as trustee under
deeds of trust, (vi) those activities previously directly authorized by the
OTS by regulation as of March 5, 1987 to be engaged in by multiple savings
and loan holding companies, or (vii) subject to prior approval of the OTS,
those activities authorized by the Federal Reserve Board as permissible for
bank holding companies. These restrictions do not apply to a multiple savings
and loan holding company if (a) all, or all but one, of its insured
institution subsidiaries were acquired in emergency thrift acquisitions or
assisted acquisitions and (b) all of its insured institution subsidiaries are
QTLs.
SAVINGS INSTITUTION REGULATIONS
Federal savings institutions such as the Bank are chartered by the OTS,
are members of the FHLB system, and have their deposits insured by the SAIF.
They are subject to comprehensive OTS and FDIC regulations that are intended
primarily to protect depositors. SAIF-insured, federally chartered
institutions may not enter into certain transactions unless applicable
regulatory tests are met or they obtain necessary approvals. They are also
required to file reports with the OTS describing their activities and
financial condition, and periodic examinations by the OTS test compliance by
institutions with various regulatory requirements, some of which are
described below.
INSURANCE OF ACCOUNTS. The Bank's deposits are insured by the SAIF up to
$100,000 for each insured account holder, the maximum amount currently
permitted by law. Under the FDIC regulations implementing risk-based
insurance premiums, institutions are divided into three groups--well
capitalized, adequately capitalized and undercapitalized--based on criteria
consistent with those established pursuant to the prompt corrective action
provisions of the FDICIA. See "--Prompt Corrective Action" below. Each of
these groups is further divided into three subgroups, based on a subjective
evaluation of supervisory risk to the insurance fund posed by the
institution.
As an insurer, the FDIC issues regulations and conducts examinations of
its insured members. SAIF insurance of deposits may be terminated by the
FDIC, after notice and hearing, upon a finding that an institution has
engaged in unsafe and unsound practices, cannot continue operations because
it is in an unsafe and unsound condition, or has violated any applicable law,
regulation, rule, order or condition imposed by the OTS or FDIC. When
conditions warrant, the FDIC may impose less severe sanctions as an
alternative to termination of insurance. The Bank's management does not know
of any present condition pursuant to which the FDIC would seek to impose
sanctions on the Bank or terminate insurance of its deposits.
REGULATORY CAPITAL REQUIREMENTS. As mandated by the FIRREA, the OTS
adopted capital standards under which savings institutions must currently
maintain (i) a tangible capital requirement of 1.5% of tangible assets, (ii)
a leverage (or core capital) ratio of 3.0% of adjusted tangible assets, and
(iii) a risk-based capital requirement of 8.0% of risk-weighted assets. These
requirements (which cannot be less stringent than those applicable to
national banks) apply to the Bank. Under current law and regulations, there
are no capital requirements directly applicable to the Company. See also
"--Changes to Capital Requirements" below.
Under the current OTS regulations, "tangible capital" includes common
stockholders' equity, noncumulative perpetual preferred stock and related
paid-in capital, certain qualifying non-withdrawable accounts and pledged
deposits, and minority interests in fully consolidated subsidiaries,
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<PAGE>
less intangible assets (except certain purchased mortgage servicing rights)
and specified percentages of debt and equity investments in certain
subsidiaries. "Core capital" is tangible capital plus limited amounts of
intangible assets meeting marketability criteria. The "risk-based capital"
requirement provides that an institution's total capital must equal 8% of
risk-weighted assets. Certain institutions will be required to deduct an
interest rate risk component from their total capital, as described below.
"Total capital" equals core capital plus "supplementary capital" (which
includes specified amounts of cumulative preferred stock, certain
limited-life preferred stock, subordinated debt and other capital
instruments) in an amount equal to not more than 100% of core capital.
"Risk-weighted assets" are determined by assigning designated risk weights
based on the credit risk associated with the particular asset. As provided by
OTS regulations, representative risk weights include: 0% for cash and assets
that are backed by the full faith and credit of the United States; 20% for
cash items in the process of collection, FHLB stock, agency securities not
backed by the full faith and credit of the United States and certain
high-quality mortgage-related securities; 50% for certain revenue bonds,
qualifying mortgage loans, certain non-high-quality mortgage-related
securities and certain qualifying residential construction loans; and 100%
for consumer, commercial and other loans, repossessed assets, assets that are
90 or more days past due, and all other assets.
As of September 30, 1996, the Bank's tangible, core and risk-based capital
ratios were 7.0%, 7.0% and 14.2%, respectively.
The OTS regulatory capital regulations take into account a savings
institution's exposure to the risk of loss from changing interest rates.
Under the regulations, a savings institution with an above normal level of
interest rate risk exposure will be required to deduct an interest rate risk
("IRR") component from its total capital when determining its compliance with
the risk-based capital requirements. An "above normal" level of interest rate
risk exposure is a projected decline of 2% in the net present value of an
institution's assets and liabilities resulting from a 2% swing in interest
rates. The IRR component will equal one-half of the difference between the
institution's measured interest rate exposure and the "normal" level of
exposure. Savings institutions are required to file data with the OTS that
the OTS will use to calculate, on a quarterly basis, the institutions'
measured interest rate risk and IRR components. The IRR component to be
deducted from capital is the lowest of the IRR components for the preceding
three quarters. The OTS may waive or defer an institution's IRR component on
a case-by-case basis. Implementation of the IRR requirements have been
delayed. As of September 30, 1996, the Company would have been required to
deduct an IRR component from its total capital when determining its
compliance with the Bank's risk-based capital requirements; however, the Bank
would continue to be well capitalized.
If an institution becomes categorized as "undercapitalized" under the
definitions established by the "prompt corrective action" provisions of the
FDICIA, it will become subject to certain restrictions imposed by the FDICIA.
See "--Prompt Corrective Action" below.
PROMPT CORRECTIVE ACTION. The OTS and other federal banking regulators
have established capital levels for institutions to implement the "prompt
corrective action" provisions of the FDICIA. Based on these capital levels,
insured institutions will be categorized as well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized or critically
undercapitalized. The FDICIA requires federal banking regulators, including
the OTS, to take prompt corrective action to solve the problems of those
institutions that fail to satisfy their applicable minimum capital
requirements. The level of regulatory scrutiny and restrictions imposed
become increasingly severe as an institution's capital level falls.
A "well capitalized" institution must have risk-based capital of 10% or
more, core capital ratio of 5% or more and Tier 1 risk-based capital (based
on the ratio of core capital to risk-weighted assets) of 6% or more and may
not be subject to any written agreement, order, capital directive, or prompt
corrective action directive issued by the OTS. The Bank is a well capitalized
institution under the definitions as adopted. An institution will be
categorized as "adequately capitalized" if it has total risk-based capital of
8% or more, Tier 1 risk-based capital of 4% or more, and core capital of 4%
or
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<PAGE>
more; "undercapitalized" if it has total risk-based capital of less than 8%,
Tier 1 risk-based capital of less than 4%, or core capital of less than 4%;
"significantly undercapitalized" if it has total risk-based capital of less
than 6%, Tier 1 risk-based capital of less than 3%, or core capital of less
than 3%; and "critically undercapitalized" if it has a ratio of tangible
equity to total assets that is equal to less than 2%.
In the case of an institution that is categorized as "undercapitalized,"
such an institution must submit a capital restoration plan to the OTS. An
undercapitalized depository institution generally will not be able to acquire
other banks or thrifts, establish additional branches, pay dividends, or
engage in any new lines of business unless consistent with its capital plan.
A "significantly undercapitalized" institution will be subject to additional
restrictions on its affiliate transactions, the interest rates paid by the
institution on its deposits, the institution's asset growth, compensation of
senior executive officers, and activities deemed to pose excessive risk to
the institution. Regulators may also order a significantly undercapitalized
institution to hold elections for new directors, terminate any director or
senior executive officer employed for more than 180 days prior to the time
the institution became significantly undercapitalized, or hire qualified
senior executive officers approved by the regulators.
The FDICIA provides that an institution that is "critically
undercapitalized" must be placed in conservatorship or receivership within 90
days of becoming categorized as such unless the institution's regulator and
the FDIC jointly determine that some other course of action would result in a
lower resolution cost to the institution's insurance fund. Thereafter, the
institution's regulator must periodically reassess its determination to
permit a particular critically undercapitalized institution to continue to
operate. A conservator or receiver must be appointed for the institution at
the end of an approximately one-year period following the institution's
initial classification as critically undercapitalized unless a number of
stringent conditions are met, including a determination by the regulator and
the FDIC that the institution has positive net worth and a certification by
such agencies that the institution is viable and not expected to fail.
The final rules establishing the capital levels for purposes of the FDICIA
also indicate that the federal regulators intend to lower or eliminate the
core capital requirement from the definitions of well capitalized, adequately
capitalized and undercapitalized after the requirement to deduct an IRR
component from total capital becomes effective. This action has not yet been
taken. See "--Regulatory Capital Requirements" above.
In addition to the foregoing prompt corrective action provisions, the
FDICIA also sets forth requirements that the federal banking agencies,
including the OTS, review their capital standards every two years to ensure
that their standards require sufficient capital to facilitate prompt
corrective action and to minimize loss to the SAIF and the BIF.
RESTRICTIONS ON DIVIDENDS AND OTHER CAPITAL DISTRIBUTIONS. The current OTS
regulation applicable to the payment of dividends or other capital
distributions by savings institutions imposes limits on capital distributions
based on an institution's regulatory capital levels and net income. An
institution that meets or exceeds all of its capital requirements (both
before and after giving effect to the distribution) and is not in need of
more than normal supervision would be a "Tier 1 association." A Tier 1
association may make capital distributions during a calendar year of up to
the greater of (i) 100% of net income for the current calendar year plus 50%
of its capital surplus or (ii) or the amount permitted for a "Tier 2
association" which is 75% of its net income over the most recent four
quarters. Any additional capital distributions would require prior regulatory
approval. The Bank currently exceeds its fully phased-in capital requirements
and qualifies as a Tier 1 association under the regulation. A "Tier 3
association" is defined as an institution that does not meet all of the
minimum regulatory capital requirements and therefore may not make any
capital distributions without the prior approval of the OTS.
Savings institutions must provide the OTS with at least 30 days' written
notice before making any capital distributions. All such capital
distributions are also subject to the OTS' right to object to a distribution
on safety and soundness grounds.
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The OTS has proposed regulations that would revise the current capital
distribution restrictions. Under the proposal a savings association may make
a capital distribution without notice to the OTS (unless it is a subsidiary
of a holding company) provided that it has a CAMEL 1 or 2 rating, is not of
supervisory concern, and would remain adequately capitalized (as defined in
the OTS prompt corrective action regulations) following the proposed
distribution. Savings associations that would remain adequately capitalized
following the proposed distribution but do not meet the other noted
requirements must notify the OTS 30 days prior to declaring a capital
distribution. The OTS stated it will generally regard as permissible that
amount of capital distributions that do not exceed 50% of the institution's
excess regulatory capital plus net income to date during the calendar year.
As under the current rule, the OTS may object to a capital distribution if it
would constitute an unsafe or unsound practice. No assurance may be given as
to whether or in what form the regulations may be adopted.
QUALIFIED THRIFT LENDER TEST. Pursuant to amendments effected by the
FDICIA, a savings institution will be a QTL if its qualified thrift
investments equal or exceed 65% of its portfolio assets on a monthly average
basis in nine of every 12 months. Qualified thrift investments, under the
revised QTL test, include (i) certain housing-related loans and investments,
(ii) certain obligations of the FSLIC, the FDIC, the FSLIC Resolution Fund
and the RTC, (iii) loans to purchase or construct churches, schools, nursing
homes and hospitals (subject to certain limitations), (iv) consumer loans
(subject to certain limitations), (v) shares of stock issued by any FHLB, and
(vi) shares of stock issued by the FHLMC or the FNMA (subject to certain
limitations). Portfolio assets under the revised test consist of total assets
minus (a) goodwill and other intangible assets, (b) the value of properties
used by the savings institution to conduct its business, and (c) certain
liquid assets in an amount not exceeding 20% of total assets.
Any savings institution that fails to become or remain a QTL must either
convert to a national bank charter or be subject to restrictions specified in
the OTS regulations. Any such savings institution that does not become a bank
will be: (i) prohibited from making any new investment or engaging in
activities that would not be permissible for national banks; (ii) prohibited
from establishing any new branch office in a location that would not be
permissible for a national bank in the institution's home state; (iii)
ineligible to obtain new advances from any FHLB; and (iv) subject to
limitations on the payment of dividends comparable to the statutory and
regulatory dividend restrictions applicable to national banks. Also,
beginning three years after the date on which the savings association ceases
to be a QTL, the savings association would be prohibited from retaining any
investment or engaging in any activity not permissible for a national bank
and would be required to repay any outstanding advances to any FHLB. A
savings institution may requalify as a QTL if it thereafter complies with the
QTL test. At September 30, 1996, the Bank exceeded the QTL requirements.
FEDERAL HOME LOAN BANK SYSTEM. The Bank is a member of the FHLB system,
which consists of 12 regional Federal Home Loan Banks governed and regulated
by the Federal Housing Finance Board. The Federal Home Loan Banks provide a
central credit facility for member institutions. The Bank, as a member of the
FHLB of Atlanta, is required to acquire and hold shares of capital stock in
the FHLB of Atlanta in an amount at least equal to the greater of 1% of the
aggregate principal amount of its unpaid residential mortgage loans, home
purchase contracts and similar obligations as of the close of each calendar
year, or 5% of its borrowings from the FHLB of Atlanta (including advances
and letters of credit issued by the FHLB on the Bank's behalf). The Bank is
currently in compliance with this requirement, with a $12.2 million
investment in stock of the FHLB of Atlanta as of September 30, 1996.
The FHLB of Atlanta makes advances to members in accordance with policies
and procedures periodically established by the Federal Housing Finance Board
and the Board of Directors of the FHLB of Atlanta. Currently outstanding
advances from the FHLB of Atlanta are required to be secured by a member's
shares of stock in the FHLB of Atlanta and by certain types of mortgages and
other assets. The FIRREA further limited the eligible collateral in certain
respects. Interest rates charged for advances vary depending on maturity, the
cost of funds to the FHLB of Atlanta and the purpose of the borrowing. As of
September 30, 1996, advances from the FHLB of Atlanta totaled $237.0 million.
See Note 8 of the Notes to the Company's Consolidated Financial Statements.
The FIRREA restricted the amount of FHLB advances that a member institution
may obtain, and in some
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<PAGE>
circumstances requires repayment of outstanding advances, if the institution
does not meet the QTL test. See "--Qualified Thrift Lender Test," above.
LIQUIDITY. OTS regulations currently require member savings institutions
to maintain for each calendar month an average daily balance of liquid assets
(cash and certain time deposits, securities of certain mutual funds, bankers'
acceptances, corporate debt securities and commercial paper, and specified
U.S. government, state government and federal agency obligations) equal to at
least 5% of its average daily balance during the preceding calendar month of
net withdrawable deposits and short-term borrowings (generally borrowings
having maturities of one year or less). An institution must also maintain for
each calendar month an average daily balance of short-term liquid assets
(generally those having maturities of one year or less) equal to at least 1%
of its average daily balance during the preceding calendar month of net
withdrawable accounts and short-term borrowings. The Director of the OTS may
vary this liquidity requirement from time to time within a range of 4% to
10%. Monetary penalties may be imposed for failure to meet liquidity
requirements. For the month of September 1996, the Bank's liquidity ratio was
3.80%, and its short-term liquidity ratio, which must be at least 1%, was
6.75%.
COMMUNITY REINVESTMENT ACT. Under the Community Reinvestment Act (the
"CRA"), as implemented by the OTS regulations, a savings institution has a
continuing and affirmative obligation consistent with its safe and sound
operation to help meet the credit needs of its entire community, including
low and moderate income neighborhoods. The CRA does not establish specific
lending requirements or programs for financial institutions nor does it limit
an institution's discretion to develop the types of products and services
that it believes are best suited to its particular community, consistent with
the CRA. The CRA requires the OTS, in connection with its examination of a
financial institution, to assess the institution's record of meeting the
credit needs of its community and to take such records into account in its
evaluation of certain applications. The FIRREA amended the CRA to require
public disclosure of an institution's CRA rating and to require that the OTS
provide a written evaluation of an institution's CRA performance utilizing a
four-tiered descriptive rating system in lieu of the existing five-tiered
numerical rating system. Based upon an OTS examination in fiscal 1995, the
Bank's CRA rating is satisfactory.
Effective July 1, 1995, the OTS together with the other federal banking
agencies, adopted a joint rule amending each of their regulations concerning
the CRA. Subject to certain exceptions and elections, the new regulations
prescribe three tests for the evaluation of a savings institution's
performance. The lending test evaluates a savings institution's record of
helping to meet the credit needs of its assessment area through its lending
activities by considering an institution's home mortgage, small business,
small farm, and community development lending. The investment test evaluates
a savings institution's record of helping to meet the credit needs of its
assessment area through qualified investments that benefit its assessment
area or a broader statewide or regional area including the assessment area.
Finally, the service test evaluates a savings institution by analyzing both
the availability and the effectiveness of the institution's systems for
delivering retail banking services and the extent and innovativeness of its
community development services. Based upon the savings institution's
performance under the lending, investment and service tests, and any other
tests which may be applicable to the institution under the new regulations,
the OTS will assign the savings institution one of the same four ratings
prescribed under current regulations. Additionally, under the new
regulations, the OTS will continue to consider an institution's record of
performance under the CRA in the same manner and for the same purposes as
required under current regulations.
These new regulations, while effective July 1, 1995, will be implemented
over a two-year time frame. A savings institution may elect to be evaluated
under the revised performance tests beginning January 1, 1996, although the
Company has not made such election. Absent such an election, these revised
performance tests will not become mandatory and will not be deemed to replace
the current regulations described above until July 1, 1997.
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<PAGE>
LOANS-TO-ONE-BORROWER LIMITATIONS
The FIRREA provided that loans-to-one borrower limits applicable to
national banks apply to savings institutions. Generally, under current
limits, loans and extensions of credit outstanding at one time to a single
borrower shall not exceed 15% of the savings institution's unimpaired capital
and unimpaired surplus. Loans and extensions of credit fully secured by
certain readily marketable collateral may represent an additional 10% of
unimpaired capital and unimpaired surplus. As of September 30, 1996, the Bank
was in compliance with the loans-to-one-borrower limitations.
PORTFOLIO POLICY GUIDELINES
The Federal Financial Institutions Examination Council issued a
Supervisory Policy Statement on Securities Activities (the "Policy"), which
provides guidance to an institution in developing its portfolio policy,
specifies factors that must be considered when evaluating an institution's
investment portfolio, and provides guidance on the suitability of acquiring
and holding certain products, such as mortgage derivative products, in its
investment portfolio. The Policy, among other things, defines "high-risk
mortgage securities" and provides that such securities are not suitable
investment portfolio holdings for depository institutions and that they may
only be acquired to reduce interest rate risk. The determination of a
high-risk mortgage security will be based upon a quantitative calculation of
the average life of the security, and the change in the average life and
market price sensitivity of the security based on a 300-basis-point shift in
the yield curve. Currently, the Bank does not hold any high-risk mortgage
securities. The Policy, however, is applicable to all depository institutions
and will affect the Bank's ability to invest in certain mortgage securities,
primarily collateralized mortgage obligations, in the future.
GENERAL LENDING REGULATIONS
The Bank's lending activities are subject to federal and state regulation,
including the Equal Credit Opportunity Act, the Truth in Lending Act, the
Real Estate Settlement Procedures Act, the Community Reinvestment Act and the
laws of Florida, California and other jurisdictions governing discrimination,
lender disclosure to borrowers, foreclosure procedures and anti-deficiency
judgments, among other matters.
FEDERAL RESERVE SYSTEM
The Bank is subject to certain regulations promulgated by the Federal
Reserve Board. Pursuant to such regulations, savings institutions are
required to maintain reserves against their transaction accounts (primarily
interest-bearing checking accounts) and non-personal time deposits. The
balances maintained to meet the reserve requirements imposed by the Federal
Reserve Board may be used to satisfy liquidity requirements imposed by the
OTS. In addition, Federal Reserve Board regulations limit the periods within
which depository institutions must provide availability for and pay interest
on deposits to transaction accounts. Depository institutions are required to
disclose their check-hold policies and any changes to those policies in
writing to customers. The Bank is in compliance with all such Federal Reserve
Board regulations.
TAXATION
The Company reports its income and expenses under an accrual method of
accounting and has been filing federal income tax returns on a calendar year
basis. For 1994 and thereafter, the Company and its subsidiaries have elected
to file consolidated tax returns on a fiscal year basis ended September 30.
The Tax Reform Act of 1986 (the "1986 Act"), which was signed into law on
October 22, 1986, revised the income tax laws applicable to corporations in
general and to savings institutions, such as the Bank, in particular. Except
as specifically noted, the discussion below relates to taxable years
beginning after December 31, 1986.
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<PAGE>
The Company has not been notified of a proposed examination by the
Internal Revenue Service (the "IRS") of its federal income tax returns.
BAD DEBT RESERVES
DEDUCTIONS. The Internal Revenue Code of 1986, as amended (the "Code"),
currently permits savings institutions, such as the Bank, to establish a
reserve for bad debts and to make annual additions thereto, which additions
may, within specified formula limits, be deducted in determining taxable
income. The bad debt reserve deduction is generally based upon a savings
institution's actual loss experience (the "experience method"). In addition,
provided that certain definitional tests relating to the composition of
assets and sources of income are met, a savings institution was permitted to
elect annually to compute the allowable addition to its bad debt reserve for
losses on qualifying real property loans (generally loans secured by improved
real estate) by reference to a percentage of its taxable income (the
"percentage of taxable income method").
Under the percentage of taxable income method, a savings institution was
permitted, in general, to claim a deduction for additions to bad debt
reserves equal to 8% of the savings institution's taxable income. Taxable
income for this purpose is defined as taxable income before the bad debt
deduction, but reduced for any addition to the reserve for non-qualifying
loans. For this purpose, the taxable income of a savings institution for a
taxable year is calculated after utilization of net operating loss
carryforwards.
In August 1996, legislation was enacted that repeals the reserve method of
accounting (including the percentage of taxable income method) used by many
thrifts, including the Bank, to calculate their bad debt reserve for federal
income tax purposes. As a result, large thrifts such as the Bank must
recapture that portion of the reserve that exceeds the amount that could have
been taken under the specific charge-off method for post-1987 tax years. The
legislation also requires thrifts to account for bad debts for federal income
tax purposes on the same basis as commercial banks for tax years beginning
after December 31, 1995. The recapture will occur over a six-year period, the
commencement of which will be delayed until the first taxable year beginning
after December 31, 1997, provided the institution meets certain residential
lending requirements. The management of the Company does not believe that the
legislation will have a material impact on the Company or the Bank.
DISTRIBUTIONS. Under the Code, a portion of the Bank's bad debt reserves
may be reduced on account of a "non-dividend" distribution. A distribution is
a non-dividend distribution to the extent that, for federal income tax
purposes, (i) it is in redemption of shares, (ii) it is pursuant to a
liquidation of the institution, or (iii) in the case of a current
distribution it, together with all other such distributions during the
taxable year, exceeds the Bank's current and post-1951 accumulated earnings
and profits. The amount charged against the Bank's bad debt reserves in
respect of a distribution will be includable in its gross income and will
equal the amount of such distribution, increased by the amount of federal
income tax resulting from such inclusion.
ALTERNATIVE MINIMUM TAX
In addition to the income tax, corporations are generally subject to an
alternative minimum tax at a rate of 20%. The alternative minimum tax is
imposed on the sum of regular taxable income (with certain adjustments) and
tax preference items, less any available exemption ("AMTI"). The alternative
minimum tax is imposed to the extent that it exceeds a corporation's regular
income tax liability. The items of tax preference that constitute AMTI for
1990 and thereafter include 75% of the excess of the taxpayer's adjusted
current earnings over AMTI (determined without regard to this preference and
prior to any deduction for net operating loss carryforwards or carrybacks).
Another item of tax preference is the excess of the bad debt deduction over
the amount allowable under the actual loss experience method. In addition,
net operating loss carryforwards cannot offset more than 90% of AMTI.
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INTEREST ALLOCABLE TO TAX-EXEMPT OBLIGATIONS
The 1986 Act eliminates for financial institutions the deduction for
interest expense allocable to the purchase or carrying of most tax-exempt
obligations for taxable years ending after December 31, 1986, with respect to
tax-exempt obligations acquired after August 7, 1986 excluding certain
financial institution-qualified issues. For all qualified issues and for
non-qualified tax-exempt obligations acquired after 1982 and before August 7,
1986, 20% of allocable interest expense deductions will be disallowed.
STATE TAXATION
The State of Florida imposes a corporate franchise tax on the Company, at
a rate of 5% of the Company's taxable income as determined for Florida
franchise tax purposes. Taxable income for this purpose is based on federal
taxable income with certain adjustments. A credit against the franchise tax,
for Florida intangible taxes paid, is allowable in an amount equal to the
lesser of (i) the amount of such intangible taxes paid or (ii) 65% of the
franchise tax.
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ITEM 2. PROPERTIES.
The executive and administrative offices of the Company and the Bank and
the Coral Gables branch are located at 255 Alhambra Circle, Coral Gables,
Florida 33134. On November 15, 1996 the Company completed the purchase of
Suncoast Savings and Loan Association FSA ("Suncoast"). Suncoast had six
branch offices, two mortgage origination offices and several other facilities
which were acquired by the Company. The Company owns electronic data
processing equipment for its exclusive use, which consists of personal
computers and peripherals and software having an aggregate net book value of
approximately $330,000 as of September 30, 1996.
The following table sets forth the location of, and certain additional
information regarding, the Company's and the Bank's executive and
administrative offices and branches, including Suncoast properties. The total
net book value of the Company's premises as of September 30, 1996 which
excludes the Suncoast properties was approximately $1.1 million.
<TABLE>
<CAPTION>
NET BOOK VALUE OF LEASE EXPIRATION DATE
LOCATION LEASEHOLD IMPROVEMENTS AND RENEWAL TERMS SQUARE FOOTAGE
- ----------------------------------- ----------------------- ---------------------- -----------------
<S> <C> <C> <C>
Executive and
administrative offices, and
savings branches ..................
Boca Raton branch ................. $80,637 1999 2,442
21222 St. Andrews Boulevard #11 (3 options to renew
Boca Raton, Florida 33434 for 3 years each)
Boynton Beach branch .............. $139,182 2001 2,933
117 North Congress Avenue ........ (2 options to renew
Boynton Beach, Florida 33426 .... for 5 years each)
Coral Gables branch ............... $543,891 2004 14,097
255 Alhambra Circle (2 options to renew
Coral Gables, Florida 33134 for 5 years)
Coral Springs branch .............. $22,901 2001 2,805
1307 University Drive (2 options to renew
Coral Springs, Florida 33071 for 5 years each)
Deerfield Beach branch
and Commercial Real Estate office $217,268 1998 4,000
2201 West Hillsboro Boulevard (2 options to renew
Deerfield Beach, Florida 33442 for 5 years each)
Delray Beach branch ............... $16,135 1995 4,000
7431-39 West Atlantic Avenue (3 options to renew
Delray Beach, Florida 33446 for 5 years each)
East Delray Beach branch .......... (5) 2001 4,059
1177 George Bush Boulevard, #102 (1 option to renew
Delray Beach, Florida for 5 years)
Hallandale branch ................. (5) -- (1)(3) 4,500
501 Golden Isles Drive
Hallandale, Florida
Hollywood branch .................. (5) -- (1)(2) 12,200
4350 Sheridan Street
Hollywood, Florida
Lauderdale-by-the-Sea branch ..... (5) -- (1) 5,000
227 Commercial Boulevard
Lauderdale-by-the-Sea, Florida
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<PAGE>
NET BOOK VALUE OF LEASE EXPIRATION DATE
LOCATION LEASEHOLD IMPROVEMENTS AND RENEWAL TERMS SQUARE FOOTAGE
- ----------------------------------- ----------------------- ---------------------- ------------------
Pembroke Pines branch ............. (5) 2,000 3,500
100 South Flamingo Road (1 option to renew
Pembroke Pines, Florida for 5 years)
Pompano Beach branch .............. (5) -- (1) 7,600
1313 North Ocean Boulevard
Pompano Beach, Florida ...........
South Miami branch ................ $43,059 1998 6,100
6075 Sunset Drive
South Miami, Florida 33143
Tamarac branch .................... $32,148 2002 3,531
5779 North University Drive (1 option to renew
Tamarac, Florida 33321 for 5 years)
West Palm Beach branch ............ $36,379 2001 3,740
2911C North Military Trail ...... (2 options to renew
West Palm Beach, Florida 33409 for 5 years each)
Mortgage Origination office ...... (5) 1998 1,129
7700 North Kendall Drive, #506
Miami, Florida ...................
Mortgage Origination office ...... (5) 2000 32,850
Presidential Circle (2 options to renew
4000 Hollywood Boulevard for 5 years each)
Hollywood, Florida ...............
Storage Warehouses ................ (5) 1996 1,500
1009 South 21st Avenue
Hollywood, Florida
1017 South 21st Avenue (5) 1996 2,322
Hollywood, Florida
Other ............................. (5) 1998 5,371
1177 George Bush Boulevard, #200 (1 option to renew
Delray Beach, Florida ............ for 3 years)(4)
4340 Sheridan Street .............. (5) -- (1)(4) 4,764
Hollywood, Florida
6101 Sunset Drive
South Miami, Florida 33143 ...... -- 1998 4,000
</TABLE>
- --------
(1) The Bank owns the facility.
(2) A savings branch occupies 3,100 square feet. The remainder of the
building is leased by unrelated parties.
(3) The Bank leases 1,400 square feet to unrelated parties.
(4) The entire space is currently sub-leased to an unrelated party
(5) Prior Suncoast properties acquired on November 15, 1996.
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<PAGE>
ITEM 3. LEGAL PROCEEDINGS.
The Company and its subsidiaries, from time to time, are involved as
plaintiff or defendant in various legal actions arising in the normal course
of their businesses. While the ultimate outcome of any such proceedings
cannot be predicted with certainty, it is the opinion of management that no
proceeding exist, either individually or in the aggregate, that, if
determined adversely to the Company and its subsidiaries, would have a
material adverse effect on the Company's consolidated financial condition,
results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal year ended September 30, 1996.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth information concerning the executive
officers and directors of the Company and the Bank.
<TABLE>
<CAPTION>
POSITIONS WITH COMPANY
NAME AGE AND BUSINESS EXPERIENCE
---- --- -----------------------
<S> <C> <C>
Alfred R. Camner 52 Director, Chairman of the Board, Chief Executive Officer and President
of the Company (1993 to present); Director, Chairman of the Board and Chief
Executive Officer and President (1984 to present) of the Bank; Senior Managing
Director (1996 to present) and Managing Director of Stuzin and Camner,
Professional Association, attorneys-at-law (1973 to present); Director
and member of the executive committee of the Board of Directors of Loan
America Financial Corporation, a national mortgage banking company (1985
to 1994); Director of CSW Associates, Inc., an asset management firm (1990
to 1995).
Lawrence H. Blum 53 Director and Vice Chairman of the Board of the Company (1993 to present)
and the Bank (1984 to present); Managing Director (1992 to present) and
partner (1974 to present) of Rachlin, Cohen & Holtz, certified public
accountants.
Albert J. Finch(1) 59 Director and Vice Chairman of the Company and the Bank (November 1996 to
present); President and sole owner of Finch Financial, Inc., a financial
consulting firm (November 1996 to present); Director, Chairman of the Board
and Chief Executive Officer of Suncoast (1985 to November 1996); Chief
Operating Officer and President of Suncoast (1992 to November 1996).
James A. Dougherty 46 Director (December 1995 to present) and Executive Vice President of the
Company (1994 to present); Director, Executive Vice President and Chief
Operating Officer of the Bank (1994 to present); Executive Vice President
of Retail Banking of Intercontinental Bank (1989 to 1994).
A-36
<PAGE>
POSITIONS WITH COMPANY
NAME AGE AND BUSINESS EXPERIENCE
---- --- -----------------------
Earline G. Ford 53 Director, Executive Vice President and Treasurer of the Company (1993 to
present); Director (1984 to present), Executive Vice President (1990 to
present), Senior Vice President--Administration (1988 to 1990), Treasurer
(1984 to present) and Vice President--Administration (1984 to 1988) of
the Bank; Legal Administrator of Stuzin and Camner, Professional Association,
attorneys-at-law (1973 to 1996); Vice Chairman of CSW Associates, Inc.,
an asset management firm (1990 to 1995).
Marc D. Jacobson 54 Director and Secretary of the Company (1993 to present) and the Bank (1984
to present); Vice President of Head-Beckham Insurance Agency, Inc. (1990
to present); President and principal owner of American Central Insurance
Agency, Inc. (1969 to 1990).
Allen M. Bernkrant 65 Director of the Company (1993 to present) and the Bank; private investor
in Miami, Florida (1990 to present); Chairman, President and principal
owner of Southern General Diversified, Inc., manufacturer and distributor
of recreational equipment (1960 to 1990).
Irving P. Cohen(1) 55 Director of the Company and the Bank (November 1996 to present); Director
of Suncoast (1988 to 1996); Partner, Thompson Hine & Flory, attorneys at
law (1995 to present); Partner, Semmes Bowen & Semmes, attorneys at law
(1990 to 1995).
Bruce Friesner 71 Director of the Company (1996 to present) and the Bank (1996 to present);
Director of Loan America Financial Corporation (1990-1994); Partner of
F&G Associates, a commercial real estate development company (1972 to
present).
Patricia L. Frost 58 Director of the Company (1993 to present) and the Bank; private investor
in Miami, Florida; Principal of West Laboratory School, Coral Gables, Florida
(1970 to 1993).
Sandra Goldstein 55 Director of the Company and the Bank (1993 to present); Real estate broker,
Sandra Goldstein & Associates, Inc. (1995 to present); Codina-Klein Realty,
Inc. (1989 to 1995); Broker/salesperson with L.J. Hooker International,
Inc., a real estate agency (1986 to 1989).
Elia J. Gusti(1) 62 Director of the Company and the Bank (November 1996 to present); Director
of Suncoast (1990 to 1996); President and principal owner of Lee Guisti
Realty, Inc., a real estate and mortgage brokerage firm (1982 to present).
Marc Lipsitz 55 Director of the Company (1996 to present); Managing Director (1996 to present)
of Stuzin & Camner, P.A.; General Counsel of Jefferson National Bank
(1993-1996); Partner, Stroock Stroock & Lavan, attorneys at law (1991-1993).
Robert D. Lurie 50 Director of the Company (1993 to present) and the Bank (1993-1996); Chairman,
President and principal owner of Resources for Child Care Management, Inc.,
a provider of child care services to companies (1985 to 1995); Chairman
of Corporate Childcare, Inc. (beginning in 1995).
A-37
<PAGE>
POSITIONS WITH COMPANY
NAME AGE AND BUSINESS EXPERIENCE
---- --- -----------------------
Norman E. Mains(1) 53 Director of the Company and the Bank (November 1996 to present); Director
of Suncoast (1985 to 1986); Chief Economist and Director of Research for
the Chicago Mercantile Exchange (1994 to present); President and Chief
Operating Officer of Rodman & Renshaw Capital Group, Inc., a securities
broker/dealer firm (1991 to 1994).
Neil Messinger 58 Director of the Company (1996 to present) and the Bank (1996 to present);
radiologist; President (1986 to present), Radiological Associates, P.A.;
Chairman (1986 to present) of Imaging Services of Baptist Hospital.
Christina Cuervo Migoya 31 Director of the Company and the Bank (1995 to present); Assistant City
Manager and Chief of Staff of the City of Miami (1992 to present); Assistant
Vice President of United National Bank (1992); Assistant Vice President,
First Union National Bank/Southeast Bank (1986 to 1992).
Anne W. Solloway 79 Director of the Company and the Bank (1993 to present); private investor
in Miami, Florida.
OFFICERS OF THE COMPANY
AND/OR THE BANK WHO
ARE NOT DIRECTORS:
Charles A. Arnett 48 Executive Vice President of the Bank (beginning in 1995); Executive Vice
President of Intercontinental Bank (1991 to 1995); President and Chief
Executive Officer of Northridge Bank (1990-1991).
Samuel A. Milne 46 Executive Vice President (1996 to present) and Senior Vice President and
Chief Financial Officer of the Company and the Bank (May 1995 to present);
Senior President and Chief Financial Officer, Consolidated Bank (1992 to
1995); Senior Vice President, Southeast Bank (1984 to 1991)
Donald Putnam 40 Executive Vice President of the Bank (1996 to present); Senior Vice President
and Regional Sales Manager, NationsBank of Florida, N.A. (1996); Senior
Vice President of Citizens Federal Bank, a Federal Savings Bank (1994 to
1996); First Vice President (1987-1994).
Nancy L. Ashton 42 Senior Vice President and Assistant Secretary of the Company (1993 to present);
Senior Vice President (1990 to present), Vice President (1988 to 1990),
and Assistant Vice President (1984 to 1988) of the Bank.
Jessica Atkinson 44 Senior Vice President of the Bank (beginning in 1995); Vice President (1991
to 1995) and Southeast Regional Director (1989 to 1991) of American Savings
of Florida, F.S.B.
Pedro J. Gomez 42 Senior Vice President of the Bank (beginning in 1995); Vice President,
First Union National Bank of Florida (1991 to 1995); Vice President of
Southeast Bank, N.A. (1978 to 1991).
Anne Lehner-Garcia 35 Senior Vice President and Secretary of the Bank (1993 to present); Senior
Vice President (1990 to present), Vice President (1987 to 1990) and Assistant
Vice President (1986 to 1987) of the Bank.
A-38
<PAGE>
POSITIONS WITH COMPANY
NAME AGE AND BUSINESS EXPERIENCE
---- --- -----------------------
Teresa Pacin 42 Senior Vice President of the Bank (beginning in 1995); Vice President,
NationsBank of Florida, N.A. (1994 to 1995); Vice President, First Union
National Bank of Florida (1985 to 1994).
</TABLE>
- -----------
(1) Under the merger agreement with Suncoast, Messrs. Mains, Guisti, and
Cohen were appointed directors of the Company and the Bank, and Mr. Finch
was appointed as a Director and a Vice Chairman of the Company and
BankUnited.
--------------
All executive officers serve at the discretion of the Board of Directors
and are elected annually by the Board.
A-39
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDERS
MATTERS
STOCK INFORMATION
The Company's Class A Common Stock, $.01 par value ("Class A Common
Stock"), is traded in the over-the-counter market and quoted in the Nasdaq
Stock Market, ("Nasdaq"). The Company's Class B Common Stock, $.01 par value
("Class B Common Stock"), is not currently traded on any established public
market.
At December 11, 1996, there were 430 and 19 holders of record of the
Company's Class A Common Stock and Class B Common Stock, respectively. The
number of holders, of record of the Class A Common Stock includes nominees of
various depository trust companies for an undeterminable number of individual
stockholders. Class B Common Stock is convertible into Class A Common Stock
at a ratio (subject to adjustment on the occurrence of certain events) of one
share of Class A Common Stock for each Class B share surrendered for
conversion.
There were no common stock dividends declared or paid in fiscal 1996 or
1995. See Note 11 to the Company's Consolidated Financial Statements for a
discussion of restrictions on the Bank's payment of dividends to the Company.
The following tables set forth, for the periods indicated, the range of
hgh and low bid prices for the Class A Common Stock quoted on Nasdaq. Stock
price data in the Nasdaq reflects inter-dealer prices, without retail
mark-up, mark-down or commission, and may not necessarily represent actual
transactions.
<TABLE>
<CAPTION>
CLASS A COMMON
STOCK
------------------
PRICE
------------------
HIGH LOW
-------- --------
<S> <C> <C>
Fiscal Year Ended September 30, 1996:
1st Quarter ........................ $8.75 $6.00
2nd Quarter ........................ $8.50 $6.50
3rd Quarter ........................ $8.50 $7.25
4th Quarter ........................ $8.25 $7.25
Fiscal Year Ended September 30, 1995:
1st Quarter ........................ $7.00 $4.50
2nd Quarter ........................ $6.25 $4.75
3rd Quarter ........................ $7.00 $5.00
4th Quarter ........................ $8.75 $7.13
</TABLE>
A-40
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
AS OF OR FOR THE YEARS ENDED SEPTEMBER 30,
--------------------------------------------------------------------
1996 1995 1994 1993 1992
------------ ------------ ------------ ------------ ---------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
OPERATIONS DATA
Interest income ..................................... $ 52,132 $ 39,419 $ 30,421 $ 25,722 $ 24,243
Interest expense .................................... 34,622 26,305 16,295 12,210 14,022
----------- ------------ ------------- ----------- ------------
Net interest income ................................. 17,510 13,114 14,126 13,512 10,221
Provision for loan losses ........................... (120) 1,221 1,187 1,052 70
----------- ------------ ------------- ----------- ------------
Net interest income after provision for loan losses 17,630 11,893 12,939 12,460 10,151
----------- ------------ ------------- ----------- ------------
Non-interest income:
Service fees ........................................ 597 423 358 221 142
Gain on sales of loans and mortgage-backed
securities, net ................................... 5 239 150 1,496 94
Gain (loss) on sales of other assets, net(2) ....... (6) 9,569 -- -- 2
Other ............................................... 53 6 46 2 25
----------- ------------ ------------- ----------- ------------
Total non-interest income ......................... 649 10,237 554 1,719 263
----------- ------------ ------------- ----------- ------------
Non-interest expense:
Employee compensation and benefits ................. 4,275 3,997 3,372 2,721 1,986
Occupancy and equipment ............................ 1,801 1,727 1,258 978 940
Insurance(1) ....................................... 3,610 1,027 844 835 697
Professional fees .................................. 929 1,269 833 543 542
Other .............................................. 3,421 4,129 3,579 2,746 2,002
----------- ------------ ------------- ----------- ------------
Total non-interest expense ........................ 14,036 12,149 9,886 7,823 6,167
----------- ------------ ------------- ----------- ------------
Income before income taxes .......................... 4,243 9,981 3,607 6,356 4,247
Provision for income taxes(3) ....................... 1,657 3,741 1,328 2,318 1,538
----------- ------------ ------------- ----------- ------------
Net income before Preferred Stock dividends ........ 2,586 6,240 2,279 4,038 2,709
Preferred stock dividends:
Bank ............................................... -- -- 198 787 515
Company ............................................ 2,145 2,210 1,871 726 360
----------- ------------ ------------- ----------- ------------
Net income after preferred stock dividends ......... $ 441 $ 4,030 $ 210 $ 2,525 $ 1,834
=========== ============ ============= =========== ============
FINANCIAL CONDITION DATA
Total assets ........................................ $ 824,360 $ 608,415 $ 551,075 $ 435,378 $ 345,931
Loans receivable, net, and mortgage-backed
securities(5) ..................................... 716,550 506,132 470,154 313,899 250,606
Investments, overnight deposits, tax certificates,
reverse purchase agreements, certificates of
deposits and other earning assets ................. 87,662 88,768 64,783 100,118 83,445
Total liabilities ................................... 755,249 562,670 509,807 397,859 322,907
Deposits ............................................ 506,106 310,074 347,795 295,108 275,026
Borrowings .......................................... 237,775 241,775 158,175 97,775 42,241
Total stockholders' equity .......................... 69,111 45,745 41,268 30,273 16,797
Common stockholders' equity ......................... 42,350 21,096 16,667 17,162 11,134
PER COMMON SHARE DATA
Primary earnings per common share and common
equivalent share .................................. $ .10 $ 1.77 $ .10 $ 1.42 $ 1.27
=========== ============ ============= =========== ============
Earnings per common share assuming full dilution ... $ .10 $ 1.26 $ .10 $ 1.00 $ .92
=========== ============ ============= =========== ============
Weighted average number of common shares and common
equivalent shares assumed outstanding during the
period:
Primary .......................................... 4,558,521 2,296,021 2,175,210 1,773,264 1,448,449
Fully diluted ...................................... 4,558,521 4,158,564 2,175,210 3,248,618 2,376,848
Equity per common share ............................. $ 7.85 $ 10.20 $ 8.33 $ 8.86 $ 8.51
Fully diluted equity per common share ............... $ 6.83 $ 7.81 $ 6.87 $ 7.07 $ 6.40
Cash dividends per common share
Class A ............................................ $ -- $ -- $ .075 $ .094 $ .10
Class B ............................................ $ -- $ -- $ .03 $ .038 $ --
</TABLE>
(CONTINUED ON NEXT PAGE)
A-41
<PAGE>
<TABLE>
<CAPTION>
AS OF OR FOR THE YEARS ENDED SEPTEMBER 30,
----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS
Performance ratios:
Return on average assets(6) ...................................... .36% 1.10% .46% 1.12% .92%
Return on average common equity .................................. 1.30 22.60 1.21 18.55 17.68
Return on average total equity ................................... 4.30 14.70 5.84 14.07 14.72
Interest rate spread ............................................. 2.10 2.12 2.78 3.59 3.34
Net interest margin .............................................. 2.51 2.39 3.01 3.87 3.63
Dividend payout ratio(7) ......................................... 82.95 35.42 96.79 40.66 34.97
Ratio of earnings to combined fixed charges and preferred stock
dividends(8):
Excluding interest on deposits ................................ 1.05 1.52 1.07 1.87 1.83
Including interest on deposits .................................. 1.02 1.21 1.03 1.27 1.18
Total loans, net, and mortgage-backed securities to total
deposits ......................................................... 141.58 163.13 134.40 109.65 91.12
Non-interest expenses to average assets .......................... 1.97 2.14 2.04 2.18 2.09
Efficiency ratio(9) .............................................. 76.45 14.58 66.06 45.17 57.76
ASSET QUALITY RATIOS:
Ratio of non-performing loans to total loans ..................... .99% 1.02% 1.07% 1.54% .45%
Ratio of non-performing assets to total loans, real estate owned
and tax certificates ........................................... 1.14 1.35 1.41 1.78 .66
Ratio of non-performing assets to total assets ................... .95 1.10 1.17 1.46 .50
Ratio of charge-offs to total loans .............................. .08 .13 .39 .07 --
Ratio of loan loss allowance to total loans ...................... .34 .32 .20 .38 .11
Ratio of loan loss allowance to non-performing loans ............ 33.74 31.54 18.89 24.70 25.41
CAPITAL RATIOS:
Ratio of average common equity to average total assets .......... 4.78% 3.14% 3.58% 3.79% 3.51%
Ratio of average total equity to average total assets ........... 8.44 7.47 8.05 7.99 6.24
Tangible capital-to-assets ratio(10) ............................. 7.01% 7.09% 6.65% 7.56% 6.66%
Core capital-to-assets ratio(10) ................................. 7.01 7.09 6.65 7.56 6.66
Risk-based capital-to-assets ratio(10) ........................... 14.19 15.79 14.13 15.85 14.42
</TABLE>
- -----------
(1) In 1996 the Company recorded a one-time SAIF special assessment of $2.6
million ($1.6 million after tax).
(2) In 1995, the Company recorded a $9.3 million gain ($5.8 million after
tax) from the sale of its branches on the west coast of Florida. See
"Risk Factors--Effect of Non-interest Income."
(3) Amount reflects expense from change in accounting principle of $194,843
for fiscal 1994. See Note 15 to Consolidated Financial Statements.
(4) Amount is 1991 reflects extraordinary loss of $50,390 from early
extinguishment of debt.
(5) Does not include mortgage loans held for sale.
(6) Return on average assets is calculated before payment of Preferred Stock
dividends.
(7) The ratio of total dividends declared during the period (including
dividends on the Bank's and the Company's preferred stock and the
Company's Class A and Class B Common Stock) to total earnings for the
period before dividends.
(8) The ratio of earnings to combined fixed charges and Preferred Stock
dividends excluding interest on deposits is calculated by dividing
income before taxes and extraordinary items by interest on borrowings
plus 33% of rental expense plus Preferred Stock dividends on a pretax
basis. The ratio of earnings to combined fixed charges and Preferred
Stock dividends including interest on deposits is calculated by dividing
income before taxes and extraordinary items by interest on deposits plus
interest on borrowings plus 33% of rental expense plus Preferred Stock
dividends on a pretax basis.
(9) Efficiency ratio is calculated by dividing non-interest expenses less
non-interest income by net interest income.
(10) Regulatory capital ratio of the Bank.
A-42
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This discussion and the related financial data contained herein are
presented to assist the reader in the understanding and evaluating the
financial condition, results of operations and future prospects of BankUnited
Financial Corporation (the "Company") and are intended to supplement, and
should be read in conjunction with, the Consolidated Financial Statements and
related Notes and other financial information presented herein.
The Company's income is derived primarily from its loans and other
investments. Funding for such loans and investments is derived principally
from deposits, loan repayments, and borrowings. Consequently, the Company's
net income depends, to a large extent, on the interest rate spread between
the average yield earned on loans and investments and the average rate paid
on deposits and borrowings. Results of operations are also dependent on the
dollar volume and asset quality of the Company's loans and investments.
The results of the Company's operations, like those of other financial
institution holding companies, are affected by the Company's asset and
liability management policies, as well as factors beyond the Company's
control, such as general economic conditions and the monetary and fiscal
policies of the federal government. Lending activities are affected by the
demand for mortgage financing and other types of loans, which is in turn
affected by the interest rates at which such financing may be offered and
other factors affecting the supply of housing and the availability of funds.
Deposit flows and costs of funds are influenced by yields available on
competing investments and by general market rates of interest.
ACQUISITION OF SUNCOAST SAVINGS & LOAN ASSOCIATION, FSA AND THE BANK OF
FLORIDA.
On November 15, 1996, the Company completed its acquisition of Suncoast
Savings & Loan Association, FSA ("Suncoast"). Suncoast had total assets of
$409.4 million, net loans of $335.0 million, deposits of $298.5 million and
stockholders' equity of $24.7 million as of September 30, 1996. The cost of
the acquisition to the Company was $27.8 million, representing the fair value
of consideration given to Suncoast shareholders as well as option and warrant
holders. See Note 18 of Notes to Consolidated Financial Statements for
additional information regarding this acquisition.
In March 1996, the Company also acquired for cash consideration of $2.8
million, The Bank of Florida, a one branch state commercial bank which had
assets of $28.1 million and deposits of $27.3 million on the date of
acquisition.
RESULTS OF OPERATIONS FOR THE YEARS ENDED SEPTEMBER 30, 1996 AND 1995
NET INCOME. Net income before preferred stock dividends for fiscal 1996
was $2.6 million compared to $6.2 million in 1995. The decrease in net income
was primarily attributable to the pretax gain recorded in the fourth quarter
of 1995 of $9.3 million ($5.8 million after tax) from the sale of the
Company's three branches on the west coast of Florida and the expense of a
one-time special assessment by the Savings Association Insurance Fund
("SAIF") of $2.6 million ($1.6 million after tax) in the fourth quarter of
1996. The SAIF special assessment became effective on September 30, 1996, in
connection with the federal government's plan to recapitalize the SAIF. Many
banks and thrifts were levied a 65.7 basis point charge against their SAIF
deposit base to help meet the 1.25% mandated deposit reserve ratio. See
"Non-Interest Expenses" below.
Primary earnings per share were $0.10 in 1996 compared to $1.77 in 1995.
Fully diluted earnings per share totaled $0.10 in 1996 compared to $1.26 in
1995. There were no common stock dividends declared in fiscal 1996 or 1995.
In the fourth quarter of fiscal 1994 the Company suspended common stock
dividends for the foreseeable future in order to use funds to support managed
and controlled growth.
NET INTEREST INCOME. Net interest income before provision for loan losses
increased $4.4 million or 33.6% to $17.5 million in fiscal 1996 from $13.1
million in fiscal 1995. The increase was attributable to an
A-43
<PAGE>
increase in the average interest-earning assets of $148.6 million, or 27.1%,
to $696.4 million in 1996 from $547.9 million in 1995, offset by a decline in
the net interest rate spread of two basis points, to 2.10% for 1996 from
2.12% for 1995. Average interest earning assets increased primarily because
of purchases of loans which were funded by an increase in certificates of
deposit. The average yield on interest-earning assets increased 29 basis
points to 7.49% for 1996 from 7.20% for fiscal 1995, and the average cost of
interest-bearing liabilities increased 31 basis points to 5.39% for 1996 from
5.08% for 1995.
The increase in interest income of $12.7 million, or 32.2%, to $52.1
million for fiscal 1996 from $39.4 million for 1995 reflects increases in
interest and fees on loans of $11.1 million or 36.9%. The average yield on
loans increased to 7.65% for 1996 from 7.19% for 1995 and the average balance
of loans receivable increased $120.8 million, or 28.8%, to $540.3 million for
fiscal 1996. The increase in average loans receivable was primarily due to
purchases of residential loans. In order to diversify its portfolio and
improve yields on loans receivable, the Company intends to increase
significantly through purchases and originations the amount of
non-residential loans in its portfolio. In this regard the Company acquired
$108.0 million as part of the Suncoast acquisition subsequent to year end.
The increase in interest expense of $8.3 million, or 31.6% to $34.6
million for fiscal 1996 from $26.3 million for 1995 primarily reflects an
increase in interest on deposits of $2.9 million or 16.5% to $20.8 million
for 1996, and an increase in interest on borrowings of $5.4 million, or
63.6%, to $13.8 million for 1996. The average cost of interest bearing
deposits increased 61 basis points to 5.39% in fiscal 1996 compared with
4.78% in fiscal 1995. The average cost of interest bearing deposits increased
primarily because higher rate certificates of deposit represent a greater
percentage of interest bearing liabilities. The average balance of interest
bearing deposits increased $32.9 million or 8.8% to $406.6 million for fiscal
1996. The average cost of borrowings remained relatively unchanged at 5.88%
in fiscal 1996 versus 5.87% in fiscal 1995, however the average balance of
borrowings increased $91.2 million, or 63.3%, to $235.3 million for 1996.
Borrowings increased in the fourth quarter of fiscal 1995 to replace deposits
sold with the Company's branches on the west coast of Florida.
PROVISION FOR LOAN LOSSES. In fiscal 1996, the Company recorded a credit
for loan losses of $120,000 as compared to a provision of $1.2 million in
fiscal 1995. The credit for loan losses recorded in fiscal 1996 was primarily
due to a recovery of $1.0 million as a result of a legal settlement reached
in October, 1995 with a seller/servicer of loans from which the Company had
previously purchased approximately $38.7 million of loans. The Company
experienced unusually large losses on these purchased loans and as a result
instituted a lawsuit against the seller for breach of warranty. Total charge
offs in fiscal 1996 were $493,000 and recoveries were $1.1 million compared
with charge offs of $594,000 and recoveries of $1,000 in fiscal 1995. For a
detailed discussion of the Company's asset quality and allowance for loan
losses, see "Financial Condition-Credit Quality".
NON-INTEREST INCOME. Other income for fiscal 1996 was $0.6 million
compared with $10.2 million in fiscal 1995. Fiscal 1995 included a gain of
$9.3 million from the sale of the Company's branches on the west coast of
Florida, a gain of $263,000 from the sale of $23.7 million of mortgage
servicing rights and gains of $239,000 from the sale of loans and
mortgage-backed securities. There were no significant gains or losses from
the sale of assets in 1996.
NON-INTEREST EXPENSES. Operating expenses increased $1.9 million or 15.7%
to $14.0 million for fiscal 1996 compared to $12.1 million for fiscal 1995
primarily as a result of a $2.6 million ($1.6 million after tax) accrual for
the one time SAIF special assessment. The SAIF special assessment was a 65.7
basis point charge on deposits that were insured by the SAIF of the FDIC on
March 31, 1995. There will be a significant reduction in deposit insurance
premiums in fiscal 1997.
The reduction of operating expenses as a result of the sale of the
Company's three branches on the west coast of Florida in July 1995 were
substantially offset by the opening of three new branches in Palm Beach
County on the east coast of Florida in fiscal 1996.
Employee compensation and benefits increased $278,000 or 7.0% to $4.3
million in fiscal 1996 from $4.0 million in fiscal 1995. The increase
primarily represents increased personnel resulting from the Company's growth.
A-44
<PAGE>
Insurance expense increased 251.5% due to the one time SAIF special
assessment of $2.6 million. Insurance expense is expected to decrease because
the annual insurance rate will decline to 6.7 basis points in 1997.
Expenses associated with real estate owned ("REO") decreased to $73,000 in
fiscal 1996 from $559,000 in fiscal 1995, a decrease of $486,000. This
decrease reflected net gains on the sale of REO of $178,000 in fiscal 1996,
compared with net losses of $172,000 in fiscal 1995.
Other operating expenses decreased $420,000 or 17.1%, to $2.0 million for
fiscal 1996 from $2.4 million for fiscal 1995. The decrease primarily
reflects a decrease in the provision for losses on tax certificates. In
fiscal 1995, the Company recorded an additional provision on tax certificates
previously purchased, which have not been redeemed and on which the Company
elected not to seek tax deeds.
INCOME TAX PROVISION. The income tax provision was $1.7 million for fiscal
1996 compared to $3.7 million for fiscal 1995. The difference primarily
results in the difference in income before income taxes. The effective tax
rate was 39.1% in 1996 and 37.5% in 1995.
PREFERRED STOCK DIVIDENDS. Total preferred stock dividends were $2.1
million in fiscal 1996 compared to $2.2 million in fiscal 1995. This decrease
was because the Company declared a special dividend in the fourth quarter of
fiscal 1995 on the Series A and Series B Non-Cumulative Convertible Preferred
Stock of $1.25 and $0.92 per share, respectively, payable in Class A Common
Stock. The special dividend represented five quarters of unpaid dividends.
Regular dividends were paid on all other classes of preferred stock for both
fiscal 1996 and 1995.
FINANCIAL CONDITION
Total assets increased $216.0 million, or 35.5% to $824.4 million at
September 30, 1996 from $608.4 million at September 30, 1995, as compared to
$551.1 million at September 30, 1994.
LOANS. The Company's net loans receivable increased by $193.3 million, or
42.6%, to $646.4 million, at September 30, 1996 from $453.1 million at
September 30, 1995. The increase was primarily the result of $218.9 million
of purchased residential loans, a $32.0 million purchase of a commercial real
estate loan package, and $82.7 million of loan originations, partially offset
by principal repayments of $133.8 million, sales of $4.4 million, and
principal charge-offs and transfers to REO of $1.1 million. The commercial
real estate loan package was comprised of 23 loans in South Florida with
principal balances ranging from $376,000 to $4.7 million. Loans receivable
increased $40.2 million from September 30, 1994 to September 30, 1995, a 9.8%
change, primarily due to $76.1 million in residential loans purchased in
fiscal 1995.
Of the new loans originated or purchased during fiscal 1996 totaling
$332.9 million, $207.1 million or 62.3% represented adjustable-rate
residential loans. Of the Company's total net loans receivable of $646.4
million, at September 30, 1996, $448.7 million or 69.4% were adjustable-rate
mortgage loans ("ARM's"). Of this amount the Company had at September 30,
1996 $155.7 million in ARM's tied to the 11th District Federal Home Loan Bank
cost of funds index ("COFI"). COFI is a lagging index in that it does not
change as quickly as market rates.
CREDIT QUALITY. At September 30, 1996 non-performing assets totaled $7.8
million as compared to $6.7 million and $6.4 million at September 30, 1995
and 1994, respectively. Expressed as a percentage of total assets,
non-performing assets declined to 0.95% as of September 30, 1996 as compared
to 1.10% as of September 30, 1995. The declines in fiscal 1996 and fiscal
1995 were due to asset growth.
Prior to 1993, the Company did not experience significant loan losses.
However, beginning late in 1993, the Company began to charge off loans,
particularly in Southern California where real estate values declined. Real
estate values in Southern California had declined because of i) a slowing in
the economy due to plant closings and layoffs in certain industries, ii)
natural disasters in the area, and
A-45
<PAGE>
iii) an over-valuation of the real estate market, in general, prior to the
decline. While real estate values in Southern California stabilized during
1996, the Company believes that real estate values there have declined
sufficiently since 1993 for there to be a continuing risk that borrowers
faced with home mortgage payments based on 1993 values would default on their
home mortgages. From late 1993 through September 30, 1996 the Company
recorded a total of $2.4 million in charge offs for residential loans secured
by property in Southern California. Of these Southern California charge offs,
$1.0 million or 41.7% (an unusually high charge off rate) were for loans
purchased from a single seller. As a result, the Company instituted legal
action against the seller for breach of warranty to recover the Company's
losses. In October 1995, this legal action was settled, which resulted in a
recovery of $1.0 million. Taking into account this $1.0 million recovery, the
Company recorded net charge offs of $1.7 million for the period from late
1993 through September 30, 1996, of which $1.4 million or 82.4% were for
residential loans secured by real properties in Southern California.
Beginning in fiscal 1993, management began to reduce the percentage of new
loans acquired in California and ceased acquiring all but de minimis amounts
of such loans in April 1994. As of September 30, 1996 the Company had $125.8
million of residential loans in California which constituted 15.3% of its
assets. This compares to $183.6 million, or 33.3% of its assets as of
September 30, 1994, and $147.2 million or 24.2% as of September 30, 1995.
Effective in fiscal 1997, after taking into account the improved economic
conditions in Southern California, management has discontinued this policy
and may purchase additional recently originated residential loans secured by
property located in California.
The allowance for loan losses was $2.2 million, $1.5 million, and $0.8
million at September 30, 1996, 1995, and 1994, respectively. The allowance
for loan losses as a percentage of total loans increased to 0.34% at fiscal
year end 1996, as compared to 0.32% at fiscal year end 1995, and .20% at
fiscal year end 1994. The increase in non-performing assets to $7.8 million
as of September 30, 1996 from $6.7 million as of September 30, 1995 was due
to increases in non-performing loans of $1.7 million and non-accrual tax
certificates of $226,000, partially offset by a decrease in REO of $821,000.
The increase in non-accrual tax certificates was due primarily to
certificates purchased in 1993 which were not redeemed and on which the
Company determined not to apply for tax deeds. REO declined from $1.5 million
as of September 30, 1995 to $632,000 as of September 30, 1996. The decrease
in REO was due to sales of properties in fiscal 1996 with net book values
totaling $2.3 million, partially offset by new additions to REO of $1.4
million during the year. As a percentage of non-performing loans, the
allowance for loan losses increased from 18.9% at September 30, 1994, to
31.5% at September 30, 1995 and 33.7% at September 30, 1996. At September 30,
1996, $2.8 million, or 43.4%, of the Company's non-performing loans were
secured by Southern California properties as compared to $1.5 million or
37.6%, as of September 30, 1995. This level of Southern California
non-performing loans reflected the longer time period required for
foreclosures to be completed on California properties, as compared to that
for foreclosures in other states .
Effective October 1, 1995, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for
Impairment of a Loan" as amended by SFAS No. 118. "Accounting by Creditors
for Impairment of a Loan--Income Recognition and Disclosures ("SFAS No.
114"). There was no impact on the consolidated statement of operations upon
implementation due to the composition of the Company's loan portfolio
(primarily residential or collateral dependent loans) and the Company's
policy for establishing the allowance for loan losses. The only impact to the
consolidated statement of financial condition and to non-performing assets
was to reclassify three loans totaling $522,000 previously classified as in
substance foreclosures in real estate owned to non accrual loans. These loans
were reclassified because the Company did not have possession of the
collateral which, under SFAS No. 114 is required for a loan to be classified
as real estate owned. SFAS No. 114 does not apply to large groups of smaller
balance homogenous loans that are collectively evaluated for impairment.
Loans collectively reviewed by the Company for impairment include all
residential and consumer loans that are past due not more than 60 days. All
other loans are reviewed based on specific criteria such as delinquency or
other factors that may come to the attention of management. The Company's
impaired loans within the scope of SFAS No. 114 include all non-performing
loans.
A-46
<PAGE>
The Company's process for evaluating the adequacy of the allowance for
loans losses has three basic elements: first is the identification of
impaired loans; second is the establishment of an appropriate loan loss
allowance once individual specific impaired loans are identified; and third
is a methodology for establishing loans losses based on the inherent risk in
the remainder of the loan portfolio, past loan loss experience, specific
loans which could have loss potential, geographic and industry concentration,
delinquency trends, economic conditions, the views of its regulators, and
other relevant factors.
The identification of impaired loans is achieved mainly through individual
reviews of all loans 60 or more days past due. Loss allowances are
established for specifically identified impaired loans based on the fair
value of the underlying collateral in accordance with SFAS No. 114.
Impairment losses are included in the allowance for loan losses through a
charge to the provision for loan losses. Adjustments to impairment losses
resulting from changes in the fair value of an impaired loan's collateral are
included in the provision for loan losses. Upon disposition of an impaired
loan any related valuation allowance is removed from the allowance for loan
losses. The allowance for loan losses is adjusted by additions charged to
operations as a provision for loan losses and by loan recoveries, with actual
losses charged as reductions to the allowance.
Management believes that the allowance for loan losses is adequate given
the strength of the Company's collateral position and the attention given to
loan review and classifications. There can be no assurance that additional
provisions for loan losses will not be required in future periods.
The following table sets forth information concerning the Company's
non-performing assets for the periods indicated:
<TABLE>
<CAPTION>
SEPEMBER 30,
--------------------------------------------------------
1996 1995 1994 1993 1992
------------ --------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Non-accrual loans(1) ........................ $4,939(3) $3,496 $3,918 $4,225 $1,043
Restructured loans(2) ....................... 1,457 1,070 533 569 --
Loans past due 90 days and still accruing .. -- 92 -- -- --
------------ --------- -------- -------- ---------
Total non-performing loans ................. 6,396 4,658 4,451 4,794 1,043
Non-accrual tax certificates ................ 800 574 -- -- --
Real estate owned ........................... 632 1,453 1,983 1,581 680
------------ --------- -------- -------- ---------
Total non-performing assets ................ $7,828 $6,685 $6,434 $6,375 $1,723
============ ========= ======== ======== =========
Allowance for losses on tax certificates ... $ 614 $ 569 $ 85 $ -- $ --
Allowance for loan losses ................... 2,158 1,469 841 1,184 265
------------ --------- -------- -------- ---------
Total allowance ............................ $2,772 $2,038 $ 926 $1,184 $ 265
============ ========= ======== ======== =========
Non-performing assets as a percentage
of total assets ........................... .95% 1.10% 1.17% 1.46% .50%
Non-performing loans as a percentage
of total loans(4) ......................... .99% 1.02% 1.07% 1.54% .45%
Allowance for loan losses as a percentage
of total loans(4) ......................... .34% .32% .20% .38% .11%
Allowance for loan losses as a percentage of
non-performing loans ...................... 33.74% 31.54% 18.89% 24.70% 25.41%
</TABLE>
- ----------
(1) Gross interest income that would have been recorded on non-accrual loans
had they been current in accordance with original terms was $217,000,
$128,000, $52,000, $295,000, and $127,000, for the years ended September
30, 1996, 1995, 1994, 1993, and 1992, respectively. The amount of
interest income on such non-accrual loans included in net income for
years ended September 30, 1996, 1995, and 1994 was $145,000, $113,000 and
$15,000, respectively.
(2) All restructured loans were accruing.
(3) In addition to the above, management has concerns as to the borrower's
ability to comply with present repayment terms on $109,000 of accruing
loans as of September 30, 1996.
(4) Based on balances prior to deductions for allowance for loan losses.
A-47
<PAGE>
TAX CERTIFICATES. The Company's investment in tax certificates increased
$544,000, or 1.4%, to $40.1 million at September 30, 1996 from $39.5 million
at September 30, 1995. The increase was primarily the result of $30.4 million
in certificate purchases during fiscal 1996 which exceeded $29.9 million in
certificate redemptions and repayments.
MORTGAGE-BACKED SECURITIES. The Company's held-to-maturity mortgage-backed
securities portfolio decreased $36.2 million, or 71.1%, to $14.7 million at
September 30, 1996 from $50.9 million at September 30, 1995, primarily as a
result of the Company's reclassifying $31.8 million of held-to-maturity
mortgage-backed securities to available-for-sale in accordance with "A Guide
to Implementation of Statement 115 on Accounting for Certain Investments in
Debt and Equity Securities" issued by the Financial Accounting Standards
Board which permitted a one-time reclassification. The reclassified
securities had a market value of $916,000 in excess of their book value at
the time of the transfer.
The Company's available for sale mortgage-backed securities portfolio
increased $53.4 million to $55.5 million as of September 30, 1996 from $2.1
million as of September 30, 1995: $31.8 million of the increase was due to
the reclassification from held to maturity discussed above; $9.1 million of
the increase was due to securities acquired with the Bank of Florida; and the
remainder of the increase was due to purchases made during the 1996 fiscal
year.
DEPOSITS. Deposits increased by $196.0 million, or 63.2%, to $506.1
million at September 30, 1996 from $310.1 million at September 30, 1995.
Management believes the increase in deposits was attributable to the Company
offering competitive interest rates and personalized service. In addition,
the Company acquired deposits of $27.3 million in the purchase of the Bank of
Florida and opened branches in Boca Raton, Florida in December, 1995, Boynton
Beach, Florida in June 1996 and West Palm Beach, Florida in September, 1996.
In July 1995, the Company sold its three branches on the west coast of
Florida with total deposits of $130.3 million. The Company has shifted its
deposit growth strategy to focus on Dade, Broward and Palm Beach Counties.
STOCKHOLDERS' EQUITY. Stockholders' equity was $69.1 million at September
30, 1996, an increase of $23.4 million or 51.1% from $45.7 million at
September 30, 1995. The increase was due primarily to the issuance of
3,565,000 shares of Class A Common Stock pursuant to a stock offering
completed in February 1996. Net proceeds from the offering were approximately
$23.0 million.
LIQUIDITY AND CAPITAL RESOURCES
The Company's most significant sources of funds are deposits, Federal Home
Loan Bank ("FHLB") advances, amortization and pre-payment of mortgage loans
and securities, maturities of investment securities and other short term
investments, and earnings and funds provided from operations. While FHLB
advances, scheduled mortgage loan repayments and securities repayments are
relatively predicable sources of funds, deposit flows and prepayments on
loans and mortgage-backed securities are greatly influenced by general
interest rates, economic conditions and competition. The Company manages the
pricing of its deposits to maintain a desired balance. In addition, the
Company invests excess funds in federal funds and other short-term
interest-earning assets which provide liquidity to meet lending requirements.
The Bank is required under applicable federal regulations to maintain
specified levels of liquid investments in cash, United States government
securities and other qualifying investments. Regulations currently in effect
require the Bank to maintain liquid assets of not less than 5.0% of its net
withdrawable accounts plus short-term borrowings, of which short-term liquid
assets must consist of not less than 1.0%. As of September 30, 1996, the Bank
had liquid assets and short-term liquid assets of 6.75% and 3.80%,
respectively, which was in compliance with these requirements.
The Company's primary use of funds is to purchase or originate loans and
to purchase mortgage-backed and investment securities. In fiscal 1996, 1995,
and 1994, loans increased $192.8 million, $43.1
A-48
<PAGE>
million, and $117.6 million, respectively, and the Company purchased $22.7
million, $16.6 million, and $61.4 million, respectively, of mortgage-backed
and investment securities. In addition, in 1995, the Company sold branches
having $130.3 million of deposits. Funding for the above came primarily from
increases in deposits of $196.0 million in 1996, increases in FHLB advances
of $83.6 million in 1995 and increases in both deposits and FHLB advances of
$52.7 million and $60.4 million, respectively in 1994.
Federal savings banks such as BankUnited, FSB (the "Bank") are also
required to maintain capital at levels specified by applicable minimum
capital ratios. For a detailed discussion of these requirements, see Note 11
of Notes to Consolidated Financial Statements. At September 30, 1996, the
Bank was in compliance with all capital requirements and met the definition
of a "well capitalized" institution under applicable federal regulations.
The Company is exploring several alternative public and/or private
financings that would provide the Bank with a significant increase in
liquidity and Tier 1 capital to permit additional growth.
IMPACT OF INFLATION AND CHANGING PRICES
The Consolidated Financial Statements presented herein have been prepared
in accordance with generally accepted accounting principles, which require
the measurements of financial position and operating results in terms of
historical dollars without considering changes in the relative purchasing
power of money over time due to inflation. Savings institutions have asset
and liability structures that are essentially monetary in nature, and their
general and administrative costs constitute relatively small percentages of
total expenses. Thus, increases in the general price levels for goods and
services have a relatively minor effect on the total expenses of the Company.
Interest rates have a more significant impact on the Company's financial
performance than the effect of general inflation. Interest rates do not
necessarily move in the same direction or change in the same magnitude as the
prices of goods and services, although periods of increased inflation may
accompany a rising interest rate environment.
RESULTS OF OPERATIONS FOR THE YEARS ENDED SEPTEMBER 30, 1995 AND 1994
NET INCOME. Net income before preferred stock dividends for fiscal 1995
was $6.2 million compared to $2.3 million in 1994. The increase in net income
was primarily attributed to the pretax gain recorded in the fourth quarter of
1995 of $9.3 million ($5.8 million after tax) from the sale of the Company's
three branches on the west coast of Florida
Primary earnings per share were $1.77 in 1995 compared to $0.10 in 1994.
Fully diluted earnings per share totaled $1.26 compared to $0.10 in 1994.
There were no common stock dividends declared in fiscal 1995 compared to
dividends of $0.075 per share of Class A Common Stock and $0.03 per share of
Class B Common Stock declared in fiscal 1994.
NET INTEREST INCOME. Net interest income before provision for loan losses
was $13.1 million in fiscal 1995 as compared to $14.1 million in fiscal 1994.
The $1.0 million, or 7.2%, decrease was attributable to a decline in the net
interest rate spread to 2.12% for fiscal 1995, from 2.78% for fiscal 1994,
which was only partially offset by an increase in the average balance of
interest-earning assets. The average yield on interest-earning assets
increased to 7.20% in fiscal 1995 from 6.48% in fiscal 1994 and the average
cost of interest-bearing liabilities increased to 5.08% in fiscal 1995
compared to 3.70% in fiscal 1994.
The net interest rate spread was negatively impacted by the 300 basis
point rise in market interest rates in 1994 and early 1995, resulting in
interest rate adjustments that were limited by the caps on the Company's
ARMs. In addition, the Company had at September 30, 1995, $156.4 million in
ARMs tied to COFI. Also, in fiscal 1995, in order to mitigate the loss of
deposits from the sale of the west coast branches, the Company paid higher
than usual rates on deposits in an effort to attract new deposits in its
remaining branches, and utilized these new funds and higher cost FHLB
advances in order to maintain its asset size.
A-49
<PAGE>
The increase in interest income of $9.0 million, or 29.6%, to $39.4
million for fiscal 1995 from $30.4 million for fiscal 1994 reflects increases
in interest and fees on loans of $6.7 million, or 28.3%, and interest on
mortgage-backed securities of $1.8 million, or 77.3%. The yield on loans
increased to 7.19% in fiscal 1995 from 6.46% in fiscal 1994 and the average
balance of loans receivable increased $55.3 million, or 15.2%, to $419.5
million for fiscal 1995. The yield on mortgage-backed securities increased to
6.91% in fiscal 1995 from 6.55% in fiscal 1994 and the average balance of
mortgage-backed securities increased $24.0 million, or 68.1%, to $59.2
million for fiscal 1995. In order to diversify its loan portfolio and improve
yields on loans receivable, the Company intends to increase significantly
through purchases and originations the amount of non-residential loans in its
portfolio. In December 1995, the Company purchased $32.0 million of
commercial real estate loans.
The increase in interest expense of $10.0 million, or 61.4%, to $26.3
million in fiscal 1995 from $16.3 million in fiscal 1994 reflects increases
in interest on deposits of $6.5 million, or 57.3%, to $17.8 million for
fiscal 1995 and an increase in interest on borrowings of $3.5 million, or
70.8%, to $8.4 million in fiscal 1995. The average cost of interest-bearing
deposits increased from 3.55% to 4.78%, and the average balance of
interest-bearing deposits increased $53.9 million, or 16.8%, to $373.7
million for fiscal 1995. The average cost of borrowings increased to 5.87% in
fiscal 1995 from 4.11% in fiscal 1994, and the average balance of borrowings
increased $23.5 million, or 19.4%, to $144.1 million for fiscal 1995.
PROVISIONS FOR LOAN LOSSES. The provision for loan losses increased
$34,000, or 2.9%, to $1.2 million in fiscal 1995. Net charge offs for fiscal
1995 were $593,000 compared to $1.5 million in fiscal 1994. for a detailed
discussion of the Company's asset quality and allowance for loan losses, see
"Financial Condition--Credit Quality."
NON-INTEREST INCOME. Other income for fiscal 1995 was $10.2 million
compared with $0.6 million in fiscal 1994. Fiscal 1995 included a gain of
$9.3 million from the sale of Company's branches on the west coast of
Florida, a gain of $263,000 from the sale of $23.7 million in mortgage
servicing rights and gains of $239,000 from sale of loans and mortgage-backed
securities. Fiscal 1994 included gains of $150,000 from the sale of loans and
mortgage-backed securities.
NON-INTEREST EXPENSES. Operating expenses increased $2.3 million, or
22.9%, to $12.1 million for fiscal 1995 compared to $9.9 million for fiscal
1994. Expenses increased in nearly every major category. The sale of the
Company's west coast branches did not significantly impact expenses because
it occurred late in the year.
Employee compensation and benefits increased $625,000 or 18.5% to $4.0
million in fiscal 1995 from $3.4 million in fiscal 1994. The increase
primarily represents a carryover from 1994, when the Company opened a new
branch in Deerfield Beach, Florida and a mortgage origination center in
Plantation, Florida.
Occupancy and equipment expense increased $469,000, or 37.2%, as a result
of the opening of the new branch and lending office in 1994 and increased
rent expense paid while the new space for the Company's executive and
administrative offices was being prepared for occupancy.
Insurance expense increased $183,000, or 21.7%, due to FDIC insurance paid
on the Company's increased deposits.
Professional fees--legal and accounting increased $436,000, or 52.3%, due
primarily to a legal action to recover losses on loans purchased from a
single seller which was settled in October 1995 and the payment of disputed
prior year legal fees.
Expenses associated with REO increased to $559,000 in fiscal 1995, from
$230,000 in fiscal 1994, an increase of $329,000. Net losses on the sale of
REO increased $117,000 primarily because of losses on
A-50
<PAGE>
property in Southern California. REO operating expenses increased $213,000
for fiscal 1995, due to higher levels of REO during the year.
INCOME TAX PROVISION. The income tax provision was $3.7 million for fiscal
1995 compared to $1.3 million for fiscal 1994. The difference primarily
resulted from the difference in income before income taxes. The effective tax
rate was 37.5% in 1995 and 31.4% in 1994; 1994 includes a $195,000 expense
for the cumulative effect of a change in accounting principle as a result of
the Company's adoption of Statement of Financial Accounting Standards No.
109-"Accounting for Income Taxes."
PREFERRED STOCK DIVIDENDS. Total preferred stock dividends were $2.2
million in fiscal 1995 compared to $1.9 million in fiscal 1994. In the fourth
quarter of fiscal 1995, the Company declared a special dividend on the Series
A and Series B Non-Cumulative Convertible Preferred Stock of $1.25 and $0.92
per share, respectively, payable in Class A Common Stock. The dividend
represented five quarters of unpaid dividends. In fiscal 1994, the Company
paid cash dividends of $0.75 and $0.55 on the Series A and Series B
Non-Cumulative Convertible Preferred Stock, respectively. Dividends of $0.55,
$0.80, and $0.80 were paid on the Company's Series C, Series C-II, and Series
1993, Non Cumulative Convertible Preferred Stock respectively for both years.
Dividends on the 9% Non Cumulative Perpetual Preferred Stock which was issued
in the first quarter of fiscal 1994, were $0.90 and $0.675 per share in
fiscal 1995 and 1994, respectively. In 1994, the Bank paid $198,000 in
preferred stock dividends on stock redeemed with the issuance of the
Non-Cumulative Perpetual Preferred Stock, Series 1993.
A-51
<PAGE>
SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Set forth below is selected quarterly data for the fiscal years ended
September 30, 1996 and 1995.
<TABLE>
<CAPTION>
1996
----------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS EXCEPT EARNINGS PER SHARE)
<S> <C> <C> <C> <C>
Net interest income .................................... $3,538 $3,758 $4,723 $5,491
Provision (credit)for loan losses ...................... (300) (--) 75 105
Non-interest income .................................... 158 129 198 164
Non-interest expense ................................... 2,528 2,764 3,006 5,738
-------- ---------- ---------- ----------
Income (loss) before taxes and preferred stock
dividends .............................................. 1,468 1,123 1,840 (188)
Income taxes ........................................... 557 430 706 (36)
-------- ---------- ---------- ----------
Net income (loss) before preferred stock dividends .... 911 693 1,134 (152)
Preferred stock dividends .............................. 536 536 537 536
-------- ---------- ---------- ----------
Net income (loss) applicable to common stock .......... $ 375 $ 157 $ 597 $ (688)
======== ========== ========== ==========
Primary earnings (loss) per share ...................... $ 0.16 $ 0.04 $ 0.10 $(0.12)
======== ========== ========== ==========
Fully diluted earnings (loss) per share ................ $ 0.15 $ 0.04 $ 0.10 $(0.12)
======== ========== ========== ==========
</TABLE>
In the fourth quarter of 1996, the Company recorded an expense of $2.6
million for a one-time special assessment by the Savings Association
Insurance Fund ("SAIF"). The SAIF special assessment required by the FDIC
became effective on September 30, 1996, in connection with the federal
government's plan to recapitalize the SAIF.
<TABLE>
<CAPTION>
1995
----------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS EXCEPT EARNINGS PER SHARE)
<S> <C> <C> <C> <C>
Net interest income ............................. $3,455 $3,497 $3,177 $2,985
Provision for loan losses ....................... 150 115 75 881
Non-interest income ............................. 369 232 215 9,421
Non-interest expense ............................ 2,856 2,919 2,822 3,552
---------- ---------- ---------- ----------
Income before taxes and preferred stock
dividends ....................................... 818 695 495 7,973
Income taxes .................................... 296 254 181 3,010
---------- ---------- ---------- ----------
Net income before preferred stock dividends .... 522 441 314 4,963
Preferred stock dividends ....................... 502 502 502 704
---------- ---------- ---------- ----------
Net income (loss) applicable to common stock ... $ 20 $ (61) $ (188) $4,259
========== ========== ========== ==========
Primary earnings (loss) per share ............... $ 0.01 $(0.03) $(0.09) $ 1.80
========== ========== ========== ==========
Fully diluted earnings (loss) per share ........ $ 0.01 $(0.03) $(0.09) $ 1.11
========== ========== ========== ==========
</TABLE>
In the fourth quarter of 1995, the Company sold its three branches on the
west coast of Florida and recorded a gain of $9.3 million. In addition, the
Company increased its allowance for loan losses from $720,000 at June 30,
1995 to $1.5 million at September 30, 1995, which required a fourth quarter
provision of $881,000. The additional allowance was required primarily due to
continued deterioration in the Southern California real estate market. The
Company also paid in the fourth quarter approximately $272,000 in previously
disputed legal fees and as part of its annual filings for tax deeds on tax
certificates, recorded approximately $350,000 for losses on tax certificates
primarily for certificates purchased in June 1992, for which the deeds will
not be applied.
A-52
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BANKUNITED FINANCIAL CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
---------
Report of Independent Certified Public Accountants ........................ 54
Consolidated Statements of Financial Condition as of September 30, 1996
and September 30, 1995 .................................................... 55
Consolidated Statements of Operations for the Years Ended
September 30, 1996, 1995 and 1994 ......................................... 56
Consolidated Statements of Stockholders' Equity for the Years Ended
September 30, 1996, 1995 and 1994 ......................................... 57
Consolidated Statements of Cash Flows for the Years Ended
September 30, 1996, 1995 and 1994 ......................................... 59
Notes to Consolidated Financial Statements ................................ 61
Unaudited Pro Forma Condensed Combined Financial Statements .............. 88
</TABLE>
A-53
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
BankUnited Financial Corporation:
In our opinion, the accompanying consolidated statements of financial
condition and the related consolidated statements of operations, of
stockholders' equity, and of cash flows present fairly, in all material
respects, the financial position of BankUnited Financial Corporation and its
subsidiaries at September 30, 1996 and 1995, and the results of their
operations and their cash flows for each of the three years in the period
ended September 30, 1996, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for the opinion expressed above.
As discussed in Notes 1 and 15 to the consolidated financial statements,
the Company changed its method of accounting for income taxes as of October
1, 1993.
PRICE WATERHOUSE LLP
Miami, Florida
November 4, 1996, except as to Note 18,
which is as of November 15, 1996
A-54
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------
1996 1995
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash ........................................................................ $ 5,483 $ 2,517
Federal Home Loan Bank overnight deposits ................................... 28,253 31,813
Federal funds sold .......................................................... 400 400
Tax certificates, (net of reserves of $614 and $569 at September 30, 1996
and 1995, respectively) ................................................... 40,088 39,544
Investments held to maturity, (market value of approximately $11 and $4,686
at September 30, 1996 and 1995, respectively) ............................. 11 4,686
Investments available for sale, at market ................................... 6,685 --
Mortgage-backed securities held to maturity, (market value of approximately
$14,274 and $50,670 at September 30, 1996 and 1995, respectively) ......... 14,698 50,934
Mortgage-backed securities available for sale, at market .................... 55,467 2,064
Loans receivable, net ....................................................... 646,385 453,134
Mortgage loans held for sale (market value of approximately $217 at
September 30, 1995) ....................................................... -- 216
Other interest earning assets ............................................... 12,225 12,325
Office properties and equipment, net ........................................ 2,608 2,119
Real estate owned, net ...................................................... 632 1,453
Accrued interest receivable ................................................. 7,023 5,573
Prepaid expenses and other assets ........................................... 4,402 1,637
---------- -----------
Total assets .............................................................. $824,360 $608,415
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits ................................................................... $506,106 $310,074
Advances from Federal Home Loan Bank ....................................... 237,000 241,000
Subordinated notes ......................................................... 775 775
Interest payable (primarily on deposits and advances from Federal Home Loan
Bank) .................................................................... 1,244 1,169
Advance payments by borrowers for taxes and insurance ...................... 4,292 3,732
Accrued expenses and other liabilities ..................................... 5,832 5,920
---------- -----------
Total liabilities ......................................................... 755,249 562,670
---------- -----------
Commitments and contingencies (Notes 6 and 16)
Stockholders' equity:
Preferred stock, Series B, C, C-II, 1993 and 9%, $0.01 par value.
Authorized shares--10,000,000; issued and outstanding shares--2,664,547
and 2,679,107 at September 30, 1996 and 1995, respectively ............... 27 27
Class A Common Stock, $.01 par value. Authorized shares--15,000,000; issued
and outstanding shares--5,454,201 and 1,835,170 at September 30, 1996 and
1995, respectively ....................................................... 54 18
Class B Common Stock, $.01 par value. Authorized shares--3,000,000; issued
and outstanding shares--251,515 and 232,324 at September 30, 1996 and
1995, respectively ....................................................... 3 2
Additional paid-in capital .................................................. 62,055 38,835
Retained earnings ........................................................... 7,279 6,838
Net unrealized (losses) gains on securities available for sale, net of tax . (307) 25
---------- -----------
Total stockholders' equity ................................................ 69,111 45,745
---------- -----------
Total liabilities and stockholders' equity ................................ $824,360 $608,415
========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
A-55
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
SEPTEMBER 30,
----------------------------------
1996 1995 1994
---------- ---------- -----------
(DOLLARS IN THOUSANDS,
EXCEPT EARNINGS PER SHARE)
<S> <C> <C> <C>
Interest income:
Interest and fees on loans ........................................... $41,313 $30,171 $23,513
Interest on mortgage-backed securities ............................... 4,250 4,093 2,308
Interest on short-term investments ................................... 2,359 1,491 803
Interest and dividends on long-term investments and other
interest-earning assets ............................................ 4,210 3,664 3,797
---------- ---------- ----------
Total interest income ............................................... 52,132 39,419 30,421
---------- ---------- ----------
Interest expense:
Interest on deposits ................................................. 20,791 17,849 11,344
Interest on borrowings ............................................... 13,831 8,456 4,951
---------- ---------- ----------
Total interest expense .............................................. 34,622 26,305 16,295
---------- ---------- ----------
Net interest income before provision (credit) for loan losses ....... 17,510 13,114 14,126
Provision (credit) for loan losses .................................... (120) 1,221 1,187
---------- ---------- ----------
Net interest income after provision (credit) for loan losses ........ 17,630 11,893 12,939
---------- ---------- ----------
Non-interest income:
Service fees ......................................................... 597 423 358
Gain on sale of loans and mortgage-backed securities ................. 5 239 150
Gain (loss) on sale of other assets .................................. (6) 9,569 --
Other ................................................................ 53 6 46
---------- ---------- ----------
Total non-interest income ........................................... 649 10,237 554
---------- ---------- ----------
Non-interest expenses:
Employee compensation and benefits ................................... 4,275 3,997 3,372
Occupancy and equipment .............................................. 1,801 1,727 1,258
Insurance ............................................................ 3,610 1,027 844
Professional fees--legal and accounting .............................. 929 1,269 833
Data processing ...................................................... 340 356 335
Loan servicing expense ............................................... 979 765 672
Real estate owned operations ......................................... 73 559 230
Other operating expenses ............................................. 2,029 2,449 2,342
---------- ---------- ----------
Total non-interest expenses ......................................... 14,036 12,149 9,886
---------- ---------- ----------
Income before income taxes and cumulative effect of change in
accounting principle .............................................. 4,243 9,981 3,607
Income taxes .......................................................... 1,657 3,741 1,133
---------- ---------- ----------
Income before cumulative effect of change in accounting principle
and preferred stock dividends ..................................... 2,586 6,240 2,474
Cumulative effect of change in accounting principle ................... -- -- 195
---------- ---------- ----------
Net income before preferred stock dividends ......................... 2,586 6,240 2,279
Preferred stock dividends of BankUnited, FSB .......................... -- -- 198
Preferred stock dividends of the Company .............................. 2,145 2,210 1,871
---------- ---------- ----------
Net income after preferred stock dividends .......................... $ 441 $ 4,030 $ 210
========== ========== ==========
Primary earnings per share before cumulative effect of change in
accounting principle ................................................ $ 0.10 $ 1.77 $ 0.19
Expense from change in accounting principle ........................... -- -- 0.09
---------- ---------- ----------
Primary earnings per share ............................................ $ 0.10 $ 1.77 $ 0.10
========== ========== ==========
Fully diluted earnings per share before cumulative effect of change in
accounting principle ................................................ $ 0.10 $ 01.26 $ 0.19
Expense from change in accounting principle ........................... -- -- 0.09
---------- ---------- ----------
Fully diluted earnings per share ...................................... $ 0.10 $ 1.26 $ 0.10
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
A-56
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS A
COMMON
PREFERRED STOCK STOCK
----------------------- ------------
SHARES AMOUNT SHARES
------------ --------- -------------
<S> <C> <C> <C>
Balance at September 30, 1993 .. 1,529,107 $16 1,721,325
Underwritten public offering of
the Company's preferred stock
Series 9% .................... 1,150,000 11 --
Issuance costs of the Company's
preferred stock, Series 9% ... -- -- --
Issuance of Class A and Class B
Common Stock ................. -- -- 57,179
Conversion of Class B
Common Stock to Class A Common
Stock ........................ -- -- 8,514
Payment of dividends on
Company's preferred stock .... -- -- --
Payment of dividends on
BankUnited, FSB's
noncumulative
preferred stock .............. -- -- --
Dividend payment of $.075 per
Class A Common Stock and $.03
per Class B Common Stock ..... -- -- --
Net income for the year ended
September 30, 1994 ........... -- -- --
------------ --------- ------------
Balance at September 30, 1994 .. 2,679,107 27 1,787,018
Issuance of Class A and Class B
Common Stock ................. -- -- 22,418
Conversion of Class B
Common Stock to Class A Common
Stock ........................ -- -- 742
Payment of dividends on
Company's preferred stock .... -- -- 24,992
Net unrealized gain on
investments available
for sale ..................... -- -- --
Net income for the year ended
September 30, 1995 ........... -- -- --
------------ --------- ------------
Balance at September 30, 1995 .. 2,679,107 27 1,835,170
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
UNREALIZED
GAIN ON
CLASS B SECURITIES
COMMON STOCK AVAILABLE TOTAL
------------------------------- PAID-IN RETAINED FOR SALE, STOCKHOLDERS'
AMOUNT SHARES AMOUNT CAPITAL EARNINGS NET OF TAX EQUITY
--------- ---------- --------- ----------- ----------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1993 .. $17 215,765 $ 2 $27,503 $ 2,735 $-- $30,273
Underwritten public offering of
the Company's preferred stock
Series 9% .................... -- -- -- 11,489 -- -- 11,500
Issuance costs of the Company's
preferred stock, Series 9% ... -- -- -- (876) -- -- (876)
Issuance of Class A and Class B
Common Stock ................. 1 7,583 -- 297 -- -- 298
Conversion of Class B
Common Stock to Class A Common
Stock ........................ -- (8,514) -- -- -- -- --
Payment of dividends on
Company's preferred stock .... -- -- -- -- (1,871) -- (1,871)
Payment of dividends on
BankUnited, FSB's
noncumulative
preferred stock .............. -- -- -- -- (198) -- (198)
Dividend payment of $.075 per
Class A Common Stock and $.03
per Class B Common Stock ..... -- -- -- -- (137) -- (137)
Net income for the year ended
September 30, 1994 ........... -- -- -- -- 2,279 -- 2,279
------ ---------- -------- --------- ----------- --------- --------------
Balance at September 30, 1994 .. 18 214,834 2 38,413 2,808 -- 41,268
Issuance of Class A and Class B
Common Stock ................. -- 18,232 -- 222 -- -- 222
Conversion of Class B
Common Stock to Class A Common
Stock ........................ -- (742) -- -- -- -- --
A-57
<PAGE>
UNREALIZED
GAIN ON
CLASS B SECURITIES
COMMON STOCK AVAILABLE TOTAL
------------------------------- PAID-IN RETAINED FOR SALE, STOCKHOLDERS'
AMOUNT SHARES AMOUNT CAPITAL EARNINGS NET OF TAX EQUITY
--------- ---------- --------- ----------- ----------- ------------- ------------
Payment of dividends on
Company's preferred stock .... -- -- -- 200 (2,210) -- (2,010)
Net unrealized gain on
investments available
for sale ..................... -- -- -- -- -- 25 25
Net income for the year ended
September 30, 1995 ........... -- -- -- -- 6,240 -- 6,240
------ --------- ----- ------- ------- ------- ---------
Balance at September 30, 1995 .. 18 232,324 2 38,835 6,838 25 45,745
</TABLE>
(TABLE CONTINUED ON NEXT PAGE)
A-57
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY--(CONTINUED)
FOR THE YEARS ENDED SEPTEMBER 30, 1996, 1995 AND 1994
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS A
COMMON
PREFERRED STOCK STOCK
----------------------- ------------
SHARES AMOUNT SHARES
------------ --------- ------------
<S> <C> <C> <C>
Conversion of Preferred Stock
to Common Stock Class A .... (14,560) -- 21,340
Issuance of Class A and Class
B Common Stock ............. -- -- 25,210
Underwritten public offering
of the Company's Common
Class A, net ............... -- -- 3,565,000
Payment of dividends on the
Company's Preferred Stock .. -- -- 7,481
Net change in unrealized loss
on investments available
for sale ................... -- -- --
Net income for the year ended
September 30, 1996 ......... -- -- --
----------- ------- ---------
Balance at September 30, 1996 2,664,547 $27 5,454,201
=========== ======= =========
</TABLE>
(RESTUBBED TABLE CONTINUED FROM ABOVE)
<TABLE>
<CAPTION>
UNREALIZED
GAIN ON
CLASS B SECURITIES
COMMON STOCK AVAILABLE TOTAL
------------------------------- PAID-IN RETAINED FOR SALE, STOCKHOLDERS'
AMOUNT SHARES AMOUNT CAPITAL EARNINGS NET OF TAX EQUITY
--------- ---------- --------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Conversion of Preferred Stock
to Common Stock Class A .... -- -- -- -- -- -- --
Issuance of Class A and Class
B Common Stock ............. -- 19,191 1 330 -- -- 331
Underwritten public offering
of the Company's Common
Class A, net ............... 36 -- -- 22,831 -- -- 22,867
Payment of dividends on the
Company's Preferred Stock .. -- -- -- 59 (2,145) -- (2,086)
Net change in unrealized loss
on investments available
for sale ................... -- -- -- -- -- (332) (332)
Net income for the year ended
September 30, 1996 ......... -- -- -- -- 2,586 -- 2,586
------ --------- ------ --------- --------- --------- -----------
Balance at September 30, 1996 $54 251,515 $ 3 $62,055 $ 7,279 $(307) $69,111
====== ========= ====== ========= ========= ========= ===========
</TABLE>
The beginning balance at September 30, 1993 of each series of the
Company's preferred stock were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
------------ ---------
<S> <C> <C>
Series A ..... 55,000 $ 1
Series B ..... 142,378 2
Series C ..... 363,636 4
Series C-II . 222,223 2
Series 1993 . 745,870 7
----------- -------
Total ...... 1,529,107 $16
=========== =======
</TABLE>
The ending balance at September 30, 1996 of Preferred Stock were as
follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
------------ ---------
<S> <C> <C>
Series B ..... 183,818 $ 2
Series C ..... 363,636 4
Series C-II . 222,223 2
Series 1993 . 744,870 7
Series 9% .... 1,150,000 12
----------- -------
Total ...... 2,664,547 $27
=========== =======
</TABLE>
Effective September 30, 1995, the Series A Preferred Stock was exchanged
for Series B Preferred Stock.
See accompanying notes to consolidated financial statements.
A-58
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
SEPTEMBER 30,
----------------------------------------
1996 1995 1994
------------ ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income ................................................... $ 2,586 $ 6,240 $ 2,279
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Provision (credit) for loan losses ........................ (120) 1,221 1,187
Provision for losses on tax certificates .................... 76 484 85
Depreciation and amortization ............................... 674 526 308
Amortization of discounts and premiums on investments ...... 20 3 32
Amortization of discounts and premiums on
mortgage-backed securities ................................ 144 84 92
Amortization of discounts and premiums on loans ............ (2,332) (784) 138
Loans originated for sale ................................... (4,141) (2,376) (12,387)
Increase in accrued interest receivable ..................... (1,239) (320) (859)
Increase in interest payable on deposits and FHLB advances . 31 685 61
Increase (decrease) in accrued expenses ..................... 213 (68) 121
Increase (decrease) in accrued taxes ........................ (2,960) 3,065 (547)
Increase (decrease) in deferred taxes ....................... (469) 33 (174)
Increase (decrease) in other liabilities .................... 2,841 1,763 (800)
(Increase) decrease in prepaid expenses and other assets ... (224) 566 (962)
Gain on sales of mortgage-backed securities ................. -- (231) (221)
Proceeds from sale of loans ................................. 4,362 2,456 21,797
Recovery on loans ........................................... 1,119 1 52
(Gain) loss on sales of loans ............................... (5) (8) 71
(Gain) loss on real estate owned operations ................. (185) 94 63
(Gain) on sales of tax certificates ......................... -- (3) (1)
(Gain) loss on sale of other assets ......................... 7 -- --
Gain on sale of loan servicing rights ....................... -- (265) --
Gain on sale of branches .................................... -- (9,304) --
----------- ---------- -----------
Net cash provided by (used in) operating activities ....... (398) 3,862 10,335
----------- ---------- -----------
Cash flows from investing activities:
Net increase in loans ....................................... (185,457) (44,744) (117,689)
Proceeds from sale of real estate owned ..................... 2,661 4,607 3,522
Purchase of investment securities ........................... (3,510) (4,675) (4,180)
Purchase of mortgage-backed securities ...................... (19,228) (11,931) (57,188)
Purchases of other earning assets ........................... (650) (9,580) --
Proceeds from sale of loan servicing rights ................. -- 265 --
Proceeds from repayments of investment securities .......... 5,675 2,000 7,150
Proceeds from repayments of mortgage-backed securities ..... 10,523 6,326 7,021
Proceeds from repayments of other earning assets ........... 750 5,125 --
Proceeds from sales of investment securities ................ 2,097 -- --
Proceeds from sale of mortgage-backed securities ........... -- 9,947 6,297
Purchases of office properties and equipment ................ (1,170) (742) (1,109)
Net decrease (increase) in tax certificates ................. (620) 2,587 1,682
Purchase of Bank of Florida, net of acquired cash
equivalents ............................................... 1,521 -- --
----------- ---------- -----------
Net cash used in investing activities ...................... (187,408) (40,815) (154,494)
----------- ---------- -----------
</TABLE>
(CONTINUED ON NEXT PAGE)
A-59
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
SEPTEMBER 30,
--------------------------------------
1996 1995 1994
----------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from financing activities:
Net increase in deposits ...................................... $168,744 $ 92,555 $ 52,687
Net (decrease) in deposits from sale of branches .............. -- (130,276) --
Net (decrease) increase in Federal Home Loan Bank advances ... (4,000) 105,000 39,000
Net (decrease) increase in other borrowings ................... -- (21,400) 21,400
Premium on sale of branches ................................... -- 9,304 --
Underwritten public offering of Company's 9%
Preferred Stock ............................................. -- -- 5,873
Redemption of preferred stock--minority interests ............ -- -- (2,496)
Net proceeds from issuance of common stock .................... 23,198 222 298
Cash dividends paid on the Bank's noncumulative
preferred stock ............................................. -- -- (198)
Dividends paid on the Company's preferred stock ............... (2,086) (2,010) (1,871)
Cash dividends on common stock ................................ -- -- (137)
Increase in advances from borrowers for taxes and insurance .. 560 1,526 200
---------- ---------- --------
Net cash provided by financing activities .................... 186,416 54,921 114,756
---------- ---------- --------
Increase (decrease) in cash and cash equivalents .............. (594) 17,968 (29,403)
Cash and cash equivalents at beginning of year ................ 34,730 16,762 46,165
---------- ---------- --------
Cash and cash equivalents at end of year ...................... $ 34,136 $ 34,730 $ 16,762
========== ========== ========
Supplemental Disclosures:
Interest paid on deposits and borrowings ...................... $ 34,547 $ 25,617 $ 16,235
========== ========== ========
Income taxes paid ............................................. $ 4,626 $ 676 $ 1,888
========== ========== ========
Transfers from loans to real estate owned ..................... $ 1,154 $ 1,182 $ 3,986
========== ========== ========
Transfer of mortgage-backed securities from held for sale to
held to maturity at the lower of cost or market ............. $ -- $ -- $ 3,627
========== ========== ========
Transfer of mortgage-backed securities from held to maturity
to available for sale ....................................... $ 31,780 $ -- $ --
========== ========== ========
</TABLE>
See accompanying notes to consolidated financial statements.
A-60
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of BankUnited Financial Corporation
(the "Company") and subsidiaries conform to generally accepted accounting
principles and to general practices within the savings and loan industry.
Presented below is a description of the Company and its principal accounting
policies.
(A) BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries, BankUnited, FSB ("the Bank"), a federally chartered
savings bank and BU Ventures, Inc. and the Bank's wholly-owned subsidiaries,
T&D Properties of South Florida, Inc. ("T&D") and Bay Holdings Company, Inc.,
("Bay Holdings"). The Bank provides a full range of banking services to
individual and corporate customers through its branches in South Florida. The
Bank is subject to the regulations of certain federal agencies and undergoes
periodic examinations by those regulatory authorities. T&D invests in tax
certificates and holds title to, maintains, manages and supervises the
disposition of real property acquired through tax deeds. Bay Holdings holds
title to, maintains, manages and supervises the disposition of real estate
acquired through foreclosure. All significant intercompany transactions and
balances have been eliminated.
The consolidated financial statements have been prepared in conformity
with generally accepted accounting principles. In preparing the consolidated
financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities as of
the date of the consolidated statements of financial condition and operations
for the period.
Material estimates that are particularly susceptible to significant change
in the near term relate to the determination of the allowances for loan
losses and the allowance for losses on tax certificates and the valuation of
real estate acquired in connection with foreclosures or in satisfaction of
loans. In connection with the determination of the allowances for loan losses
and real estate owned, management obtains independent appraisals for all
properties.
(B) MORTGAGE-BACKED SECURITIES AND INVESTMENTS
The Company adopted Statement of Financial Accounting Standards No. 115
("SFAS No. 115"), "Accounting for Certain Investments in Debt and Equity
Securities," effective October 1, 1994. In accordance with SFAS No. 115,
mortgage-backed securities and other investments available for sale are
carried at fair value (market value), inclusive of unrealized gains and/or
losses, and net of discount accretion and premium amortization computed using
the level yield method. Net unrealized gains and losses are reflected as a
separate component of stockholders' equity, net of applicable deferred taxes.
Prior to adoption of SFAS No. 115, mortgage-backed securities and other
securities designated as held for sale were carried at the lower of cost or
market value, determined in the aggregate. Net unrealized losses were
recognized in a valuation allowance by charges to income.
Mortgage-backed securities and investments held to maturity are carried at
amortized cost. Under the guidance of SFAS No. 115, mortgage-backed
securities and investment securities that the Company has the positive intent
and ability to hold to maturity are designated as held-to-maturity
securities.
Gain or losses on sales of mortgage securities and investments are
recognized on the specific identification basis.
A-61
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Tax certificates are considered investments held to maturity and,
accordingly, are carried at cost less a valuation allowance. Interest is
accrued on tax certificates until payoff or until it appears uncollectible.
When deemed uncollectible, accrued but uncollected interest is reversed.
Applicable law permits application for tax deeds to be applied for two years
after the effective date of the acquisition of the tax certificate. Tax deeds
applied for are carried at the cost adjusted for accrued interest. Tax deeds
applied for carry an annual interest rate of 18%.
(C) ALLOWANCE FOR LOAN LOSSES
A provision for losses on loans is charged to operations when, in
management's opinion, the collectibility of the balances is doubtful and the
carrying value is greater than the estimated net realizable value of the
collateral. The provision is based upon a review of the nature, volume,
delinquency status and inherent risk of the loan portfolio in relation to the
allowance for loan losses.
Management believes that the allowance for loan losses is adequate. While
management uses available information to recognize losses on loans, future
additions to the allowance may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the allowance for loan losses.
Such agencies may require additions to the allowance based on their judgments
about information available to them at the time of their examination.
The Company's non-accrual policy provides that all loans are placed on
non-accrual status when they are 90 days past due as to either principal or
interest, unless the loan is fully secured and in the process of collection.
Loans are returned to accrual status when they become less than 90 days
delinquent.
Payments received on impaired loans are generally applied to principal and
interest based on contractual terms.
See Note 5 for information regarding the Company's adoption of Statement
of Financial Accounting Standards No. 114 "Accounting by Creditors for
Impairment of a Loan".
(D) LOANS RECEIVABLE
Loans receivable are considered long-term investments and, accordingly,
are carried at historical cost. Loans held for sale are recorded at the lower
of cost or market, determined in the aggregate. In determining cost, deferred
loan origination fees are deducted from principal balances of the related
loans.
(E) LOAN-ORIGINATION FEES, COMMITMENT FEES AND RELATED COSTS
Loan origination fees are accounted for in accordance with SFAS No. 91,
"Accounting for Non-refundable Fees and Costs Associated with Originating or
Acquiring Loans and Initial Direct Costs of Leases." Loan origination fees
and certain direct loan origination costs are deferred, and the net fee or
cost is recognized as an adjustment to interest income using the interest
method over the contractual life of the loans, adjusted for estimated
prepayments based on the Company's historical prepayment
A-62
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
experience. Commitment fees and costs relating to commitments, of which the
likelihood of exercise is remote, are recognized over the commitment period
on a straight-line basis. If the commitment is subsequently exercised during
the commitment period, the remaining unamortized commitment fee at the time
of exercise is recognized over the life of the loan as an adjustment of
yield.
(F) OTHER INTEREST EARNING ASSETS
Other interest earning assets include Federal Home Loan Bank of Atlanta
stock and an equity investment in the Community Reinvestment Group. The fair
value is estimated to be the carrying value which is par.
(G) OFFICE PROPERTIES AND EQUIPMENT
Office properties and equipment are carried at cost less accumulated
depreciation and amortization. Depreciation is provided using the estimated
service lives of the assets for furniture, fixtures and equipment (7 to 10
years), and computer equipment and software (3 to 5 years), or with leases,
the term of the lease or the useful life (10 years), whichever is shorter.
Repair and maintenance costs are charged to operations as incurred, and
improvements are capitalized.
(H) ACCRUED INTEREST RECEIVABLE
Recognition of interest on the accrual method is generally discontinued
when interest or principal payments are greater than 90 days in arrears,
unless the loan is well secured and in the process of collection. At the time
a loan is placed on nonaccrual status, previously accrued and uncollected
interest is reversed against interest income in the current period.
(I) INCOME TAXES
The Company and its subsidiaries file consolidated income tax returns.
Deferred income taxes have been provided for elements of income and expense
which are recognized for financial reporting purposes in periods different
than such items are recognized for income tax purposes. Effective October 1,
1993, the Company implemented Statement of Financial Accounting Standards No.
109 ("SFAS No. 109"), "Accounting for Income Taxes." SFAS No. 109 requires
accounting for deferred taxes utilizing the liability method, which applies
the enacted statutory rates in effect at the statement of financial condition
date to differences between the book and tax bases of assets and liabilities.
The resulting deferred tax liabilities and assets are adjusted to reflect
changes in tax laws. Prior to implementing SFAS No. 109, the Company
accounted for income taxes in accordance with Accounting Principles Board
Opinion No. 11, which provided for deferred taxes based on differences
between taxable income and book income.
The implementation of SFAS No. 109 on October 1, 1993 resulted in an
increase of the net deferred tax liability of $195,000. This amount was
reported separately as a cumulative effect of a change in the method of
accounting for income taxes in the Consolidated Statement of Operations.
(J) EARNINGS PER SHARE
Primary earnings per common and common equivalent share is computed on a
weighted average number of common shares and common share equivalents
outstanding during the year. Common share
A-63
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
equivalents include the dilutive effect of stock options using the treasury
stock method. The weighted average number of common share equivalents assumed
outstanding for the years ended September 30, 1996, 1995 and 1994 were
4,559,000, 2,296,000, and 2,175,000, respectively. Earnings per common share,
assuming full dilution, assume the maximum dilutive effect of the average
number of shares from stock options and the conversion equivalents of
preferred stocks. The weighted average number of fully diluted common shares
outstanding during the years ended September 30, 1996, 1995 and 1994 were
4,559,000, 4,159,000, and 2,175,000, respectively. Stock dividends have been
included in the calculation of earnings per share for all years presented.
(K) REAL ESTATE OWNED
Property acquired through foreclosure, deeds in lieu of foreclosures, or
loans judged to be in-substance foreclosures are recorded at the lower of the
related principal balance at foreclosure or estimated fair value less
estimated costs to sell the property. Any excess of the loan balance over the
net realizable value is charged to the allowance for loan losses when the
property is classified as real estate owned. The net realizable value is
reviewed periodically and, when necessary, any decline in the value of the
real estate is charged to expense. Significant property improvements which
enhance the salability of the property are capitalized to the extent that the
carrying values do not exceed their estimated realizable values. Maintenance
and carrying costs on the property are charged to operations as incurred.
(L) STOCK OPTIONS
At the time stock options are granted to employees and directors, no
accounting entries are made, as the options are granted at the fair market
value of the Company's common stock. The proceeds from the exercise of
options are credited to common stock for the par value of the shares issued,
and the excess, net of any tax benefit is credited to paid-in capital.
(M) IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS
In May 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 122 ("SFAS No. 122")
"Accounting for Mortgage Servicing Rights" an amendment of FASB Statement No.
65. SFAS No. 122 requires that the Company recognize rights to service
mortgage loans for others as a separate asset, regardless of how those
servicing rights were acquired. The value of the mortgage servicing rights
should be recorded at their relative fair values. SFAS No. 122 was adopted
prospectively beginning October 1, 1995. The impact of adopting SFAS No. 122
was not material.
In October 1995, the FASB issued Statement of Financial Accounting
Standards No. 123 ("SFAS No. 123"), "Accounting for Stock-Based
Compensation." SFAS No. 123 establishes financial accounting and reporting
standards for stock based employee compensation plans. The statement defines
a "fair value based method" of accounting for employee stock options or
similar equity instruments and encourages all entities to adopt that method
of accounting for all of their employee stock compensation plans. However,
SFAS No. 123 also allows an entity to continue to measure compensation costs
for those plans using the "intrinsic value based method" of accounting, which
the Company currently uses. The Company currently intends to continue to use
the "intrinsic value based method" and disclose in the notes to the
consolidated financial statements, the required information using the "fair
value based method."
A-64
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
In June 1996, the FASB issued Statement of Financial Accounting Standards
No. 125 ("SFAS 125"), "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities." SFAS 125 provides accounting and
reporting standards for transfers and servicing of financial assets and
extinguishment of liabilities based on a financial-components approach that
focuses on control. SFAS 125 is effective for transfers and servicing of
financial assets and extinguishment of liabilities occurring after December
31, 1996 and is to be prospectively applied. Management is currently
evaluating the impact of adoption of SFAS 125 on its financial position and
results of operations.
(N) FINANCIAL STATEMENT RECLASSIFICATIONS
Certain prior period amounts have been reclassified to conform to the
September 30, 1996 consolidated financial statements.
(2) TAX CERTIFICATES
Tax certificates are certificates representing delinquent real estate
taxes owed to the respective counties. A substantial percentage of tax
certificates are for properties located in southeast Florida. The Company's
policy is to purchase tax certificates only for properties located in
Florida.
The net carrying value of tax certificates was $40.0 million and $39.5
million at September 30, 1996 and 1995, respectively. Included in these
amounts at September 30, 1996 and 1995 were $1.9 million and $3.9 million,
respectively of tax certificates for which the Company had made application
for the tax deeds. The Company maintains loss reserves for tax certificates
which were $614,000 and $569,000 at September 30, 1996 and 1995,
respectively.
The estimated market values of the Company's tax certificates are the same
as the carrying values, since historically the tax certificates have had
relatively short lives and their yields approximate market rates.
(3) SECURITIES PURCHASED UNDER AGREEMENTS TO RESELL
Interest income from securities purchased under agreements to resell
aggregated approximately $1.2 million and $701,000 for the years ended
September 30, 1995 and 1994, respectively.
A-65
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
The following sets forth information concerning the Company's securities
purchased under agreements to resell for the periods indicated:
<TABLE>
<CAPTION>
AS OF AND FOR THE
YEAR ENDED SEPTEMBER 30,
-------------------------------------
1996 1995 1994
------- ---------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Maximum amount of outstanding agreements at
any month end during the period ............ -- $ 700 $ 6,800
Average amount outstanding during the period -- $20,262 $18,283
Weighted average interest rate for the period -- 6.10% 3.83%
Maturity ..................................... -- -- Oct. 1, 1994
</TABLE>
(4) INVESTMENTS AND MORTGAGE-BACKED SECURITIES
Pursuant to the provisions of SFAS No. 115, securities designated as
available for sale are carried at market value with the resultant after-tax
appreciation or depreciation from amortized cost reflected as an addition to,
or deduction from, stockholders' equity. In December of 1995 the Company
reclassified $31.8 million of held-to-maturity mortgage-backed securities to
available-for-sale in accordance with "A Guide to Implementation of Statement
115 on Accounting for Certain Investments in Debt and Equity Securities"
issued by the Financial Accounting Standard Board. The reclassified
securities had a market value of $916,000 in excess of their book value at
the time of transfer.
INVESTMENTS
Presented below is an analysis of the carrying values and approximate
market values of investments held to maturity.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
----------------------------------------------------
GROSS GROSS
CARRYING UNREALIZED UNREALIZED MARKET
VALUE GAINS LOSSES VALUE
----------- ------------- ------------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
State of Israel
bonds ............... $11 $-- $-- $11
----------- ------------ ------------- ---------
Total .............. $11 $-- $-- $11
=========== ============= ============= =========
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1995
----------------------------------------------------
GROSS GROSS
CARRYING UNREALIZED UNREALIZED MARKET
VALUE GAINS LOSSES VALUE
----------- ------------- ------------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. government agency securities $4,675 $-- $-- $4,675
State of Israel bonds ............ 11 -- -- 11
----------- ------------- ------------- ---------
Total ........................... $4,686 $-- $-- $4,686
=========== ============= ============= =========
</TABLE>
All investments held to maturity at September 30, 1996 and 1995 had
maturities between one and five years.
A-66
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(4) INVESTMENTS AND MORTGAGE-BACKED SECURITIES--(CONTINUED)
Presented below is an analysis of the investments designated as available
for sale.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------------------------------------
GROSS GROSS
HISTORICAL UNREALIZED UNREALIZED CARRYING
COST GAINS LOSSES VALUE
------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
U.S. Treasury notes .............. $2,005 $-- $ (1) $2,004
U.S. government agency securities 2,999 -- (18) 2,981
Other ............................ 1,702 -- (2) 1,700
------------- ------------- ------------- -----------
Total ........................... $6,706 $-- $(21) $6,685
============= ============= ============= ===========
</TABLE>
The Company had no investments classified as available for sale in 1995.
MORTGAGE-BACKED SECURITIES
The carrying value and historical cost of mortgage-backed securities
available for sale are summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
--------------------------------------------------------
GROSS GROSS
HISTORICAL UNREALIZED UNREALIZED CARRYING
COST GAINS LOSSES VALUE
------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
GNMA mortgage-backed securities $24,943 $207 $(338) $24,812
FNMA mortgage-backed securities 6,055 61 (2) 6,114
FHLMC mortgage-backed
securities ..................... 22,172 33 (432) 21,773
Other .......................... 2,772 6 (10) 2,768
------------- ------------- ------------- -----------
Total ......................... $55,942 $307 $(782) $55,467
============= ============= ============= ===========
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1995
--------------------------------------------------------
GROSS GROSS
HISTORICAL UNREALIZED UNREALIZED CARRYING
COST GAINS LOSSES VALUE
------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
FHLMC mortgage-backed securities $2,025 $39 $-- $2,064
------------- ------------- ------------- -----------
Total .......................... $2,025 $39 $-- $2,064
============= ============= ============= ===========
</TABLE>
A-67
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(4) INVESTMENTS AND MORTGAGE-BACKED SECURITIES--(CONTINUED)
The market value and historical cost of mortgage-backed securities held to
maturity are summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
----------------------------------------------------
GROSS GROSS
CARRYING UNREALIZED UNREALIZED MARKET
VALUE GAINS LOSSES VALUE
----------- ------------- ------------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
GNMA ............................... $ 83 $ 5 $ -- $ 88
FHLMC .............................. 4,144 -- (118) 4,026
Collateralized mortgage obligations 8,802 -- (289) 8,513
Mortgage pass-through certificates 1,669 -- (22) 1,647
----------- ------------- ------------- ---------
Total ............................. $14,698 $ 5 $(429) $14,274
=========== ============= ============= =========
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1995
-----------------------------------------------------
GROSS GROSS
CARRYING UNREALIZED UNREALIZED MARKET
VALUE GAINS LOSSES VALUE
----------- ------------- ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
GNMA ............................... $25,644 $453 $(143) $25,954
FNMA ............................... 4,761 126 -- 4,887
FHLMC .............................. 7,406 -- (231) 7,175
Collateralized mortgage obligations 3,580 -- (84) 3,496
Mortgage pass-through certificates 9,543 -- (385) 9,158
----------- ------------- ------------- ----------
Total ............................. $50,934 $579 $(843) $50,670
=========== ============= ============= ==========
</TABLE>
The mortgage-backed securities have contractual maturities which range
from the years 1996 to 2026, however, expected maturities will differ from
contractual maturities as borrowers have the right to prepay obligations with
or without prepayment penalties.
There were no sales of mortgage-backed securities and collateralized
mortgage obligations in 1996, however, gross proceeds on sales of
mortgage-backed securities and collateralized mortgage obligations were $10.0
million and $6.3 million during the years ended September 30, 1995 and 1994,
respectively. Gross realized gains were $231,000 and $221,000 on sales of
mortgage-backed securities during the years ended September 30, 1995 and
1994, respectively. There were no realized losses during the years ended
September 30, 1995 and 1994.
At September 30, 1995 and 1994, GNMA, FHLMC and FNMA mortgage-backed
securities with carrying values of approximately $3.0 million and $5.4
million, respectively, were pledged as collateral for public funds on
deposit. There were none pledged in 1996. At September 30, 1994, FNMA and
GNMA mortgage-backed securities with a carrying value of approximately $25.0
million and a market value of approximately $23.7 million were pledged as
collateral for a $21.4 million reverse repurchase agreement. The securities
underlying the agreement were held in safekeeping by a trustee.
A-68
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(5) LOANS RECEIVABLE
Loans receivable consist of the following:
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
------------------------
1996 1995
----------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Mortgage loans--conventional .................... $263,757 $224,160
Mortgage loans--conventional serviced by others 317,103 209,339
Mortgage loans--other ........................... 53,817 12,381
Commercial loans:
Secured ........................................ 5,618 3,372
Unsecured ...................................... 787 260
Line of credit loans ............................ 1,254 892
Share loans ..................................... 648 218
Installment loans ............................... 1,001 595
----------- -----------
Total .......................................... 643,985 451,217
Less allowance for loan losses .................. (2,158) (1,469)
Deferred loan fees, discounts and premiums ..... 4,558 3,386
----------- -----------
Loans receivable, net .......................... $646,385 $453,134
=========== ===========
</TABLE>
Of the total gross loans receivable of $644.0 million at September 30,
1996, approximately $262.7 million, or 40.8%, represents residential loans
secured by properties in Florida, $125.8 million, or 19.5% represents loans
in California and $255.5 million, or 39.7% represents loans in other states.
See Note 8 for loans collateralized for Federal Home Loan Bank Advances.
Changes in the allowance for loan losses are as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
--------------------------------
1996 1995 1994
--------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of the period $1,469 $ 841 $ 1,184
Provision (credit) ................ (120) 1,221 1,187
Allowance from Bank of Florida ... 183 -- --
Loans charged-off ................. (493) (594) (1,582)
Recoveries ........................ 1,119 1 52
--------- --------- ----------
Balance at end of the period ..... $2,158 $1,469 $ 841
========= ========= ==========
</TABLE>
Effective October 1, 1995, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for
Impairment of a Loan" as amended by SFAS No. 118, "Accounting by Creditors
for Impairment of a Loan Income Recognition and Disclosures" ("SFAS No.
114"). There was no impact on the consolidated statement of operations upon
implementation due to the composition of the Company's loan portfolio
(primarily residential or collateral dependent loans) and the Company's
policy for establishing the allowance for loan losses. The only impact to the
consolidated statement of financial condition and to non-performing assets
was to reclassify three loans totaling $522,000 previously classified as
insubstance foreclosures in real estate owned to non-accrual
A-69
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(5) LOANS RECEIVABLE--(CONTINUED)
loans. These loans were reclassified because the Company did not have
possession of the collateral which, under SFAS No. 114, is required for a
loan to be classified as real estate owned.
As of September 30, 1996 and 1995, the Company had impaired or non-accrual
loans of $4.9 million and $3.5 million, respectively, and had recorded
specific reserves on these loans of $801,000 and $802,000, respectively. For
the years ended September 30, 1996, 1995 and 1994 the average amounts of
impaired loans were $4,808,000, $2,251,000 and $2,576,000, respectively. No
income is recognized on loans during the period for which the loan is deemed
impaired.
(6) OFFICE PROPERTIES AND EQUIPMENT
Office properties and equipment are summarized as follows:
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30,
----------------------
1996 1995
---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Leasehold improvements .............. $ 1,640 $ 1,068
Furniture, fixtures and equipment .. 1,881 1,409
Computer equipment and software .... 1,124 1,016
--------- ----------
Total ............................... 4,645 3,493
Less: accumulated depreciation ..... (2,037) (1,374)
--------- ----------
Office properties and equipment, net $ 2,608 $ 2,119
========= ==========
</TABLE>
Depreciation expense was $674,000, $526,000, and $308,000 for the years
ended September 30, 1996, 1995, and 1994, respectively.
The Company has entered into non-cancelable leases with approximate
minimum future rentals as follows:
<TABLE>
<CAPTION>
YEARS ENDING SEPTEMBER 30, AMOUNT
- --------------------------- ---------------------
(DOLLARS IN THOUSANDS)
<S> <C>
1997 ..................... $1,002
1998 ..................... 917
1999 ..................... 837
2000 ..................... 809
2001 ..................... 754
Thereafter ............... 1,538
---------------------
Total ................... $5,857
=====================
</TABLE>
Rent expense for the years ended September 30, 1996, 1995, and 1994 was
$905,000, $959,000, and $768,000, respectively.
A-70
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(7) DEPOSITS
The weighted average nominal interest rate payable on all deposit accounts
at September 30, 1996 and 1995 was 5.11% and 5.14%, respectively.
Types of deposits and related range of interest rates were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------------------------------------------------------------
1996 1995
------------------------------------- -------------------------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Non-interest-bearing deposits .......... --% - --% $ 7,301 --% - --% $ 2,804
Passbook and statement savings deposits 2.00% - 4.97% 73,780 2.00% - 4.97% 50,373
Super NOW deposits ..................... .00% - 3.00% 17,265 0.00% - 3.00% 15,353
Money market deposits .................. .00% - 4.65% 16,556 0.00% - 3.10% 7,733
Certificates of deposit ................ 3.92% - 6.16% 391,204 2.71% - 6.65% 233,811
--------- ----------
Total ................................. $506,106 $310,074
========= ==========
</TABLE>
Deposit accounts with balances of $100,000 or more totaled approximately
$69.4 million and $33.4 million at September 30, 1996 and 1995, respectively.
Interest expense on deposits for the years ended September 30, 1996, 1995
and 1994 was as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Super NOW and money market deposits ... $ 775 $ 875 $ 1,102
Passbook and statement savings deposits 2,627 2,420 1,716
Certificates of deposit ................ 17,389 14,554 8,526
--------- ---------- ---------
Total ................................. $20,791 $17,849 $11,344
========= ========== =========
</TABLE>
Early withdrawal penalties on deposits are recognized as a reduction of
interest on deposits. For the years ended September 30, 1996, 1995 and 1994,
early withdrawal penalties totaled $42,000, $110,000, and $27,000,
respectively.
The amounts of scheduled maturities of certificate accounts at September
30, 1996 are as follows:
<TABLE>
<CAPTION>
YEARS ENDING SEPTEMBER 30, AMOUNT
- --------------------------- -------------------------
(DOLLARS IN THOUSANDS)
<S> <C>
1997 ..................... $316,562
1998 ..................... 58,053
1999 ..................... 7,532
Thereafter ............... 9,057
---------------------
Total: .................. $391,204
=====================
</TABLE>
A-71
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(8) ADVANCES FROM FEDERAL HOME LOAN BANK
Advances from the Federal Home Loan Bank of Atlanta (FHLB) incur interest
and are repayable as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
------------------------
REPAYABLE DURING YEAR ENDING SEPTEMBER 30, INTEREST RATE 1996 1995
- ------------------------------------------- ---------------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
1996 ..................................... 4.27% -6.80% $ -- $179,000
1997 ..................................... 4.56% -6.07% 192,000 57,000
1998 ..................................... 6.13% 5,000 5,000
2001(1) .................................. 5.33% -5.61% 40,000 --
---------- --------
$237,000 $241,000
========== ========
</TABLE>
- ------------------
(1) Advances for $15 million are callable by the FHLB in 1997 and $25 million
are callable in 1998.
The terms of a security agreement with the FHLB of Atlanta include a
blanket floating lien that requires the maintenance of qualifying first
mortgage loans as pledged collateral with unpaid principal amounts at least
equal to 100% of the FHLB advances, when discounted at 65% of the unpaid
principal balance. The FHLB of Atlanta stock, which is recorded at cost, is
also pledged as collateral for these advances.
(9) SECURITIES SOLD UNDER AN AGREEMENT TO REPURCHASE
Interest expense on securities sold under an agreement to repurchase
aggregated $367,000 and $183,000 for the years ended September 30, 1995 and
1994, respectively.
The following sets forth information concerning repurchase agreements for
the periods indicated:
<TABLE>
<CAPTION>
AS OF AND FOR THE
YEARS ENDED SEPTEMBER 30,
------------------------------------
1996 1995 1994
-------- ---------- ---------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Maximum amount of outstanding agreements at
any
month-end during the period ................. $ -- $33,600 $21,400
Average amount outstanding during the period . $-- $ 6,572 $ 3,856
Weighted average interest rate for the period $-- 5.59% 4.49%
Maturity ...................................... $-- -- Dec. 19, 1994
</TABLE>
At September 30, 1996 and 1995, the Company had no pledged securities
under repurchase agreements. At September 30, 1994, the Company had pledged
$25.0 million of FNMA and GNMA mortgage-backed securities as collateral for
the above repurchase agreements.
(10) SUBORDINATED NOTES
At September 30, 1996 and 1995, the Bank had outstanding $775,000, of
subordinated notes which, pursuant to the regulations of the Office of Thrift
Supervision (the "OTS"), are included in the Bank's risk-based capital. The
subordinated notes bear interest at 9% and mature from August 31, 2003 to
June 10, 2009.
A-72
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(11) REGULATORY CAPITAL
The Bank is required by federal regulations to maintain minimum levels of
capital as follows:
<TABLE>
<CAPTION>
REGULATORY CAPITAL
REQUIREMENT ACTUAL CAPITAL EXCESS CAPITAL
---------------------- ---------------------- ----------------------
1996 1995 1996 1995 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Tangible capital ... $12,196 $ 9,101 $56,967 $43,010 $44,771 $33,909
1.5% 1.5% 7.0% 7.1% 5.5% 5.6%
Core Capital ........ $24,392 $18,201 $56,967 $43,010 $32,575 $24,809
3.0% 3.0% 7.0% 7.1% 4.0% 4.1%
Risked-based capital $33,927 $23,008 $60,164 $45,426 $26,237 $22,418
8.0% 8.0% 14.2% 15.8% 6.2% 7.8%
</TABLE>
Under the OTS regulations adopted to implement the "prompt corrective
action" provisions of the Federal Deposit Insurance Corporation Improvement
Act of 1991 (the "FDICIA"), a "well capitalized" institution must have a
risk-based capital ratio of 10%, a core capital ratio of 5% and a Tier 1
risk-based capital ratio of 6%. (The "Tier 1 risk-based capital" ratio is the
ratio of core capital to risk-weighted assets.) The Bank is a well
capitalized institution under the definitions as adopted. Regulatory capital
and net income amounts as of and for the years ended September 30, 1996, 1995
and 1994 did not differ from regulatory capital and net income amounts
reported to the OTS.
On August 31, 1993, the OTS adopted an amendment to its regulatory capital
regulations to take into account a savings institution's exposure to the risk
of loss from changing interest rates. Under the regulation as amended, a
savings institution with an above normal level of interest rate risk exposure
will be required to deduct an interest rate risk ("IRR") component from its
total capital when determining its compliance with the risk-based capital
requirements. An "above normal" level of interest rate risk exposure is a
projected decline of 2% in the net present value of an institution's assets
and liabilities resulting from a 2% swing in interest rates. The IRR
component will equal one-half of the difference between the institution's
measured interest rate exposure and the "normal" level of exposure. Savings
institutions will be required to file data with the OTS that the OTS will use
to calculate, on a quarterly basis (but with a two-quarter lag),
institutions' measured interest rate risk and IRR components. Implementation
of the IRR requirements have been delayed pending the testing of the OTS
appeals process. If the IRR component had been required as of September 30,
1996, the Bank would have been required to deduct an IRR component from its
total capital when determining its compliance with its risk based capital
requirements, however the Bank would continue to be well capitalized.
Payment of dividends by the Bank is limited by federal regulations, which
provide for certain levels of permissible dividend payments depending on the
Bank's regulatory capital and other relevant factors.
(12) MINORITY INTERESTS--PREFERRED STOCK OF BANKUNITED, FSB
As part of a plan to simplify the Company's capital structure, the Company
commenced an offer in November 1993 to exchange 2.5 shares of its 9%
Noncumulative Perpetual Preferred Stock for each share of the Bank's
Noncumulative Preferred Stock, Series D, E, F and G ("BankUnited Preferred
Stock"). Upon the closing of the exchange offer, all shares of BankUnited
Preferred Stock that remained outstanding were redeemed at $25.00 per share
plus declared but unpaid dividends. The exchange closed on December 28, 1993.
A-73
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(12) MINORITY INTERESTS--PREFERRED STOCK OF BANKUNITED, FSB--(CONTINUED)
(13) STOCKHOLDERS' EQUITY
The Company has the following capital structure:
PREFERRED STOCK--issuable in series with rights and preferences to be
designated by the Board of Directors. As of September 30, 1996, 7,259,141
shares were authorized but not designated to a particular series.
NONCUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES A:
Effective September 30, 1995, pursuant to an Offer to Exchange Preferred
Stock, the holders of the Non-cumulative Convertible Preferred Stock, Series
A, agreed to exchange each of the 55,000 shares of the Series A Preferred
stock for one share of the Company's Non-cumulative Convertible Preferred
Stock, Series B. Because the dividend rate, redemption price, and the
liquidation preference for the Series B Preferred Stock are lower than those
for the Series A Preferred Stock, the Company agreed not to redeem the shares
of Series B Preferred Stock issued pursuant to the exchange offer for a
period of three years and for three years thereafter, such Series B Preferred
Stock shall only be redeemed at a 50% premium or $11.0625 per share.
NONCUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES B:
Authorized shares--200,000 shares.
Issued and outstanding shares--183,818 shares as of September 30, 1996 and
197,378 shares as of September 30, 1995.
Dividends--noncumulative cash dividends payable quarterly at the fixed
annual rate of $0.7375 per share.
Preference on liquidation--voluntary liquidation at the applicable
redemption price per share and involuntary liquidation at $7.375 per share.
Redemption--except for the shares converted from Series A discussed above,
at the option of the Company at $7.59625 per share at September 30, 1994,
declining thereafter at $.07375 per share during each year through January
31, 1998, and thereafter the redemption price remains at $7.375 per share.
Voting rights--two-and-one-half votes per share. If the Company fails to
pay dividends for six quarters, whether or not consecutive, the holders shall
have the right to elect two additional directors until dividends have been
paid for four consecutive quarters.
Convertibility--convertible into 1.50 shares (adjusted for all stock
dividends) of Class B Common Stock for each share of Noncumulative
Convertible Preferred Stock, Series B, surrendered for conversion, subject to
adjustment on the occurrence of certain events.
NONCUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES C:
Authorized shares--363,636 shares.
Issued and outstanding shares--363,636 shares.
A-74
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(13) STOCKHOLDERS' EQUITY--(CONTINUED)
Dividends--noncumulative cash dividends payable quarterly at the fixed
annual rate of $0.550 per share.
Preference on liquidation--voluntary liquidation at the applicable
redemption price per share and involuntary liquidation at $5.50 per share.
Redemption--at the option of the Company, at $5.50 per share.
Voting rights--nonvoting.
Convertibility--convertible into 1.45 shares (adjusted for all stock
dividends) of Class A Common Stock for each share of Noncumulative Preferred
Stock, Series C, surrendered for conversion, subject to adjustment on the
occurrence of certain events.
NONCUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES C-II:
Authorized shares--222,223 shares.
Issued and outstanding shares--222,223 shares.
Dividends--noncumulative cash dividends payable quarterly at the fixed
annual rate of $0.80 per share.
Preference on liquidation--voluntary liquidation at the applicable
redemption price per share and involuntary liquidation at $9.00 per share.
Redemption--at the option of the Company, at $9.00 per share.
Voting rights--nonvoting.
Convertibility--convertible into 1.32 shares (adjusted for all stock
dividends) of Class A Common Stock for each share of Noncumulative Preferred
Stock, Series C-II, surrendered for conversion, subject to adjustment on the
occurrence of certain events.
8% NONCUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES 1993:
Authorized shares--805,000 shares.
Issued and outstanding--744,870 shares as of September 30, 1996 and
745,870 shares as of September 30, 1995.
Dividends--noncumulative cash dividends payable quarterly at the fixed
annual rate of $.80 per share.
Preference on liquidation--voluntary liquidation at the applicable
redemption price per share and involuntary liquidation at $10.00 per share.
A-75
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(13) STOCKHOLDERS' EQUITY--(CONTINUED)
Redemption--not redeemable prior to July 1, 1998, unless certain criteria
are met, in which case the redemption price would be $10.00 per share;
subsequent to June 30, 1998, redemption is at the option of the Company at a
redemption price of $10.40 per share, declining thereafter at $0.08 per share
during each year through July 1, 2003, and thereafter the redemption price
remains $10.00 per share.
Voting rights--nonvoting. However, if the Company fails to pay dividends
for six quarters, whether or not consecutive, the holders shall have the
right to elect two additional directors until dividends have been paid for
four consecutive quarters.
Convertibility--convertible into one share of Class A Common Stock for
each share of non-cumulative Convertible Preferred Stock, Series 1993,
surrendered for conversion, subject to adjustment on the occurrence of
certain events.
9% NONCUMULATIVE PERPETUAL PREFERRED STOCK:
Authorized shares--1,150,000 shares.
Issued and outstanding--1,150,000 shares.
Dividends--noncumulative cash dividends payable quarterly at the fixed
annual rate of $0.90 per share.
Preference on liquidation--voluntary liquidation at the applicable
redemption price per share and involuntary liquidation at $10.00 per share.
Redemption--not redeemable prior to October 1, 1998; subsequent to
September 30, 1998, redemption is at the option of the Company at a
redemption price of $10.00 per share.
Voting rights--nonvoting. However, if the Company fails to pay dividends
for six quarters, whether or not consecutive, the holders shall have the
right to elect two additional directors until dividends have been paid for
four consecutive quarters.
Convertibility--none.
CLASS A COMMON STOCK:
Issuable in series with rights and preferences to be designated by the
Board of Directors:
As of September 30, 1996, 5,000,000 shares of Class A Common Stock were
authorized but not designated to a series.
SERIES I CLASS A COMMON STOCK:
Authorized shares--10,000,000.
Issued and outstanding--5,454,201 shares as of September 30, 1996 and
1,835,170 shares as of September 30, 1995.
A-76
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(13) STOCKHOLDERS' EQUITY--(CONTINUED)
Dividends--as declared by the Board in the case of a dividend on the Class
A Common Stock alone or not less than 110% of the amount per share of any
dividend declared on the Class B Common Stock.
Voting rights--one tenth of one vote per share.
CLASS B COMMON STOCK:
Authorized shares--3,000,000.
Issued and outstanding--251,515 shares as of September 30, 1996 and
232,324 shares as of September 30, 1995.
Dividends--as declared by the Board of Directors.
Voting rights--one vote per share.
Convertibility--convertible into one share of Class A Common Stock for
each share of Class B Common Stock surrendered for conversion, subject to
adjustment on the occurrence of certain events.
(14) STOCK BONUS PLAN, OPTION AGREEMENTS AND OTHER BENEFIT PLANS
Pursuant to stockholder approval in 1992, the Company maintains the 1992
Stock Bonus Plan. In January 1994, stockholders approved an amendment of this
plan to increase the amount of stock issuable under the plan to 125,000
shares and to allow directors of the Company who are not employees to
participate in the plan and receive stock in partial payment of their
director's fees. As of September 30, 1996, 22,252 shares of Class A Common
Stock and 54,779 shares of Class B Common Stock have been issued under the
1992 Stock Bonus Plan. As of September 30, 1996, there were 47,969 shares
available for grant under the 1992 Stock Bonus Plan.
Pursuant to stockholder approval in 1987, the Company maintains a
non-statutory stock option plan for certain officers, directors and employees
to receive options to purchase shares of Class A and Class B Common Stock.
The stockholders approved an increase in the total number of shares for which
options may be granted under the plan to 750,000 in January 1994. The Board
of Directors approved an increase in the total number of shares for which
options may be granted under the plan to 825,000 (a non-material increase) in
1996. The options are for a period of 10 years and are exercisable at the
fair market value of the stock at the grant date. As of September 30, 1996,
758,718 options have been granted under this plan and 66,412 options have
been exercised.
Pursuant to stockholder approval in January 1994, the Company also
maintains an incentive stock option plan under which options for up to
250,000 shares of Class A and Class B Common Stock may be granted. As of
September 30, 1996, 92,500 options have been granted under this plan.
During October 1984, BankUnited's Board of Directors approved several
non-qualified stock option agreements (the "Agreements") under which options
to purchase shares of Class B Common Stock were granted at the fair market
price of the Class B Common Stock on the date of the grant. The Agreements,
which originally expired on October 23, 1994, have been extended pursuant to
Stockholders' approval to October 23, 1999. As of September 30, 1996, the
Agreements are exercisable for a total of 155,367 shares at the exercise
price of $4.64 per share; none have been exercised.
A-77
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(14) STOCK BONUS PLAN, OPTION AGREEMENTS AND OTHER BENEFIT PLANS--(CONTINUED)
The following table presents additional data concerning the Company's
outstanding stock options:
<TABLE>
<CAPTION>
AGGREGATE
NUMBER OPTION PRICE OPTION
OF SHARES PER SHARE PRICE
------------ --------------- -------------
<S> <C> <C> <C>
Options outstanding, September 30, 1993 549,174 $3.11 -$10.98 $2,669,272
Options granted ........................ 113,088 7.00 -8.10 846,671
Options exercised ...................... (45,675) 3.21 -3.78 (154,371)
---------- -------------- ------------
Options outstanding, September 30, 1994 616,587 3.11 -10.98 3,361,572
Options granted ........................ 208,671 4.95 -7.95 1,139,902
Options exercised ...................... (6,695) 3.21 -5.73 (23,958)
---------- -------------- ------------
Options outstanding, September 30, 1995 818,563 3.11 -10.98 4,477,516
Options granted ........................ 121,610 7.24 -8.26 926,638
---------- -------------- ------------
Options outstanding, September 30, 1996 940,173 $3.11 -$10.98 $5,404,154
========== ============
</TABLE>
In 1992, the Company adopted a 401(k) savings plan pursuant to which
eligible employees are permitted to contribute up to 15% of their annual
salary to the savings plan. The Company will provide matching contributions
at a rate of 33% of such contributions, up to a maximum of 2% of an
employee's salary. The amount of such matching by the Company for the years
ended September 30, 1996, 1995 and 1994 totaled approximately $7,000,
$30,000, and $29,000, respectively. Employees are eligible to participate in
the plan after one year of service and become vested in the Company's
contribution after two years participation in the plan at the rate of 25% per
year up to 100%.
In September 1995, the Company's Board of Directors adopted a Profit
Sharing Plan. Under the terms of the plan, the Company, at the discretion of
the Board of Directors, may contribute Class A Common Stock to the plan. The
contributions are allocated to the account of eigible employees based upon
their salaries. Employees become eligible for the plan after one year of
service and become vested at the rate of 20% per year up to 100%. The Board
of Directors authorized a contribution of $100,000 and $75,000 in 1996 and
1995, respectively.
(15) INCOME TAXES
As discussed in Note 1, the Company adopted SFAS No. 109 as of October 1,
1993 resulting in a cumulative adjustment of $195,000 to 1994 earnings and
stockholders' equity.
A-78
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(15) INCOME TAXES--(CONTINUED)
The Company's effective tax rate differs from the statutory federal income
tax rate as follows:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
--------------------------------------------------------------
1996 1995 1994
------------------- ------------------- ---------------------
AMOUNT % AMOUNT % AMOUNT %
--------- -------- --------- -------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Tax at federal income tax rate ... $1,443 34.0% $3,394 34.0% $1,262 35.0%
Increase (decrease) resulting
from:
State tax ....................... 154 3.6 362 3.6 (46) (1.3)
Other, net ...................... 60 1.5 (15) (0.1) (83) (2.3)
-------- -------- --------- -------- --------- --------
Total .......................... $1,657 39.1% $3,741 37.5% $1,133 31.4%
======== ======== ========= ======== ========= ========
</TABLE>
The components of the provision for income taxes for the years ended
September 30, 1996, 1995 and 1994 as computed in accordance with SFAS No.
109, are as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
SEPTEMBER 30,
-------------------------------
1996 1995 1994
--------- --------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current--federal . $1,324 $3,590 $1,354
Current--state ... 227 620 (53)
Deferred--federal 90 (400) (151)
Deferred--state .. 16 (69) (17)
--------- --------- ---------
Total ............ $1,657 $3,741 $1,133
========= ========= =========
</TABLE>
The tax effects of significant temporary differences included in the net
deferred tax asset as of September 30, 1996 and 1995 were:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996 1995
------- -------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Deferred tax asset:
Non-accrual interest ......... $185 $178
Loan loss and other reserves 431 587
Fixed assets ................. 5 --
Deferrals and amortization .. 19 --
------ -------
Gross deferred tax asset ... 640 765
------ -------
Deferred tax liability:
FHLB Atlanta stock dividends 167 167
Fixed assets ................. -- 5
Deferrals and amortization .. -- 14
Other ........................ 13 13
------ -------
Gross deferred tax liability 180 199
------ -------
Net deferred tax asset ..... $460 $566
====== =======
</TABLE>
A-79
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(15) INCOME TAXES--(CONTINUED)
The components of deferred income tax provision (benefit) relate to the
following:
<TABLE>
<CAPTION>
YEARS ENDED SEPTEMBER 30,
-----------------------------
1996 1995 1994
-------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Differences in book/tax depreciation $(10) $ (21) $ (10)
Delinquent interest .................. (7) (80) --
FHLB Stock dividends ................. -- (144) 23
Loan fees ............................ -- -- 169
Loan loss and other reserves ......... 156 (164) (363)
Deferrals and amortization ........... (33) (60) 13
------ --------- --------
Total deferred taxes ................ $106 $(469) $(168)
====== ========= ========
</TABLE>
(16) COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Company enters into instruments that
are not recorded in the consolidated financial statements, but are required
to meet the financing needs of its customers and to reduce its own exposure
to fluctuations in interest rates. These financial instruments include
commitments to extend credit and standby letters of credit. Those instruments
involve, to varying degrees, elements of credit and interest rate risk in
excess of the amount recognized in the consolidated statements of financial
condition. The contract or notional amounts of those instruments reflect the
extent of involvement the Company has in particular classes of financial
instruments.
The Company's exposure to credit loss in the event of nonperformance by
the other party on the financial instrument for commitments to extend credit
and standby letters of credit by the other party is represented by the
contractual amount of those instruments. The Company uses the same credit
policies in making commitments and conditional obligations as it does for
on-balance-sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses and may require payment of a fee. Total commitments to extend credit
at September 30, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------------------------------------------------------
1996 1995
---------------------------------- -----------------------------------
FIXED VARIABLE FIXED VARIABLE
RATE RATE TOTAL RATE RATE TOTAL
--------- ----------- ---------- --------- ----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Commitments to fund loans ... $2,575 $ 7,057 $ 9,632 $3,801 $ 7,140 $10,941
Loans in process ............. 607 1,033 1,640 1,795 6,707 8,502
Letters of credit ............ 518 -- 518 45 -- 45
Commitments to purchase loans -- 12,260 12,260 -- -- --
-------- --------- --------- -------- --------- --------
Total ....................... $3,700 $20,350 $24,050 $5,641 $13,847 $19,488
======== ========= ========= ======== ========= ========
</TABLE>
The Company evaluates each customer's credit worthiness on a case-by-case
basis. The amount of collateral obtained, if deemed necessary by the Company,
upon extension of credit is based on
A-80
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(16) COMMITMENTS AND CONTINGENCIESS--(CONTINUED)
management's credit evaluation of the customer. Collateral varies but may
include accounts receivable, property, plant and equipment, residential real
estate, and income-producing commercial properties.
Standby letters of credit are conditional commitments issued by the
Company to guarantee the performance of a customer to a third party. Those
guarantees are primarily issued to support public and private borrowing
arrangements. The credit risk involved in issuing letters of credit is
essentially the same as that involved in extending loan facilities to
customers. The Company requires collateral to support those commitments.
The Company is a party to certain other claims and litigation arising in
the ordinary course of business. In the opinion of management, the resolution
of such claims and litigation will not materially affect the Company's
consolidated financial position or results of operations.
(17) RELATED PARTY TRANSACTIONS
The Company employs the services of a law firm, of which the Company's
Chairman of the Board and President is senior managing director and of which
another director of the Company is managing director; and the services of an
insurance company, of which a member of the Board of Directors is a vice
president. For the years ended September 30, 1996, 1995 and 1994, total fees
(a portion of which were capitalized) paid to this law firm totaled
approximately $986,000, $1.1 million, and $803,000, respectively, and amounts
paid to this insurance company totaled approximately $147,000, $129,000, and
$151,000, respectively.
(18) SUBSEQUENT EVENT
On November 15, 1996, the Company acquired Suncoast Savings & Loan
Association, FSA ("Suncoast"). The Company issued one share of its Class A
Common Stock for each share of Suncoast common stock of which 2,199,930 were
outstanding and one share of newly created 8% non-cumulative convertible
preferred stock, Series 1996 for each share of Suncoast preferred stock of
which 920,000 shares were outstanding. The newly created 8% non-cumulative
convertible preferred stock, Series 1996 has substantially the same terms and
conditions as the Suncoast preferred stock. The cost of the acquisition,
which will be accounted for as a purchase was $27.8 million, representing the
fair value of the consideration given to the Suncoast common and preferred
stockholders as well as the option and warrant holders. In addition, the
Company incurred approximately $925,000 of costs directly related to the
merger. The balance sheet and results of operations of Suncoast will be
included with those of BankUnited as of and for periods subsequent to
November 15, 1996.
A-81
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(18) SUBSEQUENT EVENTS--(CONTINUED)
The unaudited proforma combined condensed statements of financial
condition and operations as of and for the year ended September 30, 1996
after giving effect to certain proforma adjustments are as follows:
Proforma combined condensed Statement of Financial Condition as of
September 30, 1996 (in thousands):
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Loans receivable ................... $ 980,444
Other interest earning assets ..... 195,528
Goodwill and other intangibles .... 9,657
Other assets ....................... 53,282
-------------
$1,238,911
=============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Deposits ........................... $ 804,567
Other liabilities .................. 337,420
Stockholders' equity ............... 96,924
-------------
$1,238,911
=============
</TABLE>
Proforma combined condensed Statement of Operations for the year ended
September 30, 1996 (in thousands except per share data):
Interest income ........................... $81,752
Interest expense .......................... 52,423
Provision for loan losses ................. 45
Non-interest income ....................... 9,193
Non-interest expense ...................... 31,885
Income tax expense ........................ 2,654
----------
Net income before preferred stock
dividends .............................. 3,938
Preferred stock dividends ................. 3,249
----------
Net income after preferred stock
dividends .............................. $ 689
==========
Earnings per share
Primary .................................. $ .10
Fully-diluted ............................ $ .10
The proforma combined condensed statement of operations assumes the
acquisition occurred as of October 1, 1995.
A summary of the terms of the newly created 8% non-cumulative convertible
preferred stock, Series 1996 are as follows:
Authorized shares --1,000,000.
Issued and outstanding shares--920,000 shares as of November 15, 1996.
A-82
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(18) SUBSEQUENT EVENT--(CONTINUED)
Dividends--non-cumulative cash dividends payable quarterly at the fixed
annual rate of $1.20 per share.
Preference on liquidation--voluntary liquidation at the applicable
redemption price per share and involuntary liquidation at $15.00 per share.
Redemption--not redeemable prior to July, 1998, unless certain criteria
are met, in which case the redemption price would be $15.00 per share,
subsequent to June 30, 1998, redemption is at the option of the Company at a
redemption price of $16.20 per share, declining thereafter at $0.20 per share
during each year through July 1, 2003, and thereafter the redemption price
remains at $15.00 per share.
Voting rights--nonvoting except under certain circumstances.
Convertibility--convertible into 1.67 shares of Class A Common Stock for
each share of 8% non-cumulative convertible preferred stock, Series 1996,
surrendered for conversion, subject to adjustment on the occurrence of
certain events.
As part of the purchase of Suncoast, the Company issued warrants to
Suncoast's warrant holders to purchase 80,000 shares of the newly created 8%
non-cumulative convertible preferred stock, Series 1996, and assumed
Suncoast's outstanding stock options. The warrants are exercisable at a price
of $18.00 for each share of the 8% non-cumulative convertible preferred
stock, Series 1996 or each warrant could be exercised to purchase 1.67
shares, subject to adjustment, of Class A Common Stock at a per share price
of $10.80, also subject to adjustment under certain conditions. The warrants
expire on July 8, 1998. The Company assumed 119,000 of Suncoast's options
with option prices ranging from $3.00 to $7.38 per share of Class A Common
Stock with an aggregate exercise price of $610,000.
A-83
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(19) BANKUNITED FINANCIAL CORPORATION
The following summarizes the major categories of the Company's (parent
company only) financial statements:
CONDENSED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
----------------------
1996 1995
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Assets:
Cash ............................................................... $ 88 $ 48
FHLB overnight deposits ............................................ 7,889 37
Tax certificates ................................................... 312 457
Investments, net (market value of approximately $10 and $10 at
September 30, 1996 and 1995, respectively) ....................... 10 10
Investments available for sale ..................................... 155 --
Mortgage-backed securities, held to maturity (market value of
approximately $1,727 at September 30, 1995) ...................... -- 1,676
Mortgage-backed securities, available for sale ..................... 1,309 --
Accrued interest receivable ........................................ 132 252
Investment in the Bank ............................................. 59,443 43,062
Other assets ....................................................... 248 236
--------- ----------
Total ............................................................. $69,586 $45,778
========= ==========
Liabilities ......................................................... $ 475 $ 33
--------- ----------
Stockholders' equity:
Preferred stock ................................................... 27 27
Common stock ...................................................... 57 20
Paid-in capital ................................................... 62,055 38,835
Retained earnings ................................................. 7,279 6,838
Net unrealized gains on securities available for sale, net of
taxes ........................................................... (307) 25
--------- ----------
Total stockholders' equity ...................................... 69,111 45,745
--------- ----------
Total liabilities and stockholders' equity ...................... $69,586 $45,778
========= ==========
</TABLE>
A-84
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(19) BANKUNITED FINANCIAL CORPORATION--(CONTINUED)
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED SEPTEMBER
30,
------------------------------
1996 1995 1994
--------- --------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Interest income .............. $ 803 $ 307 $ 296
Interest expense ............. 17 36 24
Equity income of the Bank ... 2,406 6,587 2,443
Operating expenses ........... 491 818 529
-------- --------- --------
Income before income taxes .. 2,701 6,040 2,186
Income tax expense
(benefit) .................... 115 (200) (93)
-------- --------- --------
Net income ................. $2,586 $6,240 $2,279
======== ========= ========
</TABLE>
CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED SEPTEMBER 30,
------------------------------------
1996 1995 1994
----------- ---------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash flow from operating activities:
Net income ........................................... $ 2,586 $ 6,240 $ 2,279
Less: Undistributed income of the Bank ............... (406) (6,587) (901)
Other ................................................ 242 156 (1,682)
---------- ---------- -----------
Net cash provided by (used in) in operating
activities ............................................ 2,422 (191) (304)
---------- ---------- -----------
Cash from investing activities:
Equity contributions to the Bank ..................... (16,000) -- (10,447)
Purchase of investment securities .................... (155) -- (10)
Purchase of mortgage-backed securities ............... -- -- (1,960)
Proceeds from repayments of mortgage-backed
securities ......................................... 368 181 103
Net decrease (increase) in tax certificates ......... 145 732 (379)
---------- ---------- -----------
Net cash provided by (used in) investing activities . (15,642) 913 (12,693)
---------- ---------- -----------
Cash flow from financing activities:
Public offering of Company's 9% Preferred Stock ..... -- -- 10,625
Public offering of Company's Class A Common Stock ... 22,867 -- --
Net proceeds from issuance of common stock .......... 331 222 298
Dividends paid on preferred stock .................... (2,086) (2,010) (1,871)
Dividends paid on common stock ....................... -- -- (137)
---------- ---------- -----------
Net cash provided by (used in) financing activities . 21,112 (1,788) 8,915
Decrease (increase) in cash and cash equivalents .... 7,892 (1,066) (4,082)
Cash and cash equivalents at beginning of year ...... 85 1,151 5,233
---------- ---------- -----------
Cash and cash equivalents at end of year ............. $ 7,977 $ 85 $ 1,151
========== ========== ===========
</TABLE>
A-85
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(20) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The information set forth below provides disclosure of the estimated fair
value of the Company's financial instruments presented in accordance with the
requirements of SFAS No. 107 (and as amended by SFAS No. 119) issued by the
Financial Accounting Standards Board. Management has made estimates of fair
value discount rates that it believes to be reasonable. However, because
there is no market for many of these financial instruments, management has no
basis to determine whether the fair value presented would be indicative of
the value negotiated in an actual sale. The fair value estimates do not
consider the tax effect that would be associated with the disposition of the
assets or liabilities at their fair value estimates.
Fair values are estimated for loan portfolios with similar financial
characteristics. Loans are segregated by category, such as commercial,
commercial real estate, residential mortgage, second mortgages, and other
installment. Each loan category is further segmented into fixed and
adjustable rate interest terms and by performing and non-performing status.
The fair value of loans, except residential mortgage and adjustable rate
loans, is calculated by discounting scheduled cash flows through the
estimated maturity using estimated market discount rates that reflect the
credit and interest rate risk inherent in the loan. The estimate of average
maturity is based on historical experience with prepayments for each loan
classification, modified, as required, by an estimate of the effect of
current economic and lending conditions.
For residential mortgage loans, fair value is estimated by discounting
contractual cash flows adjusted for national historical prepayment estimates
using discount rates based on secondary market sources adjusted to reflect
differences in servicing and credit costs.
For adjustable-rate loans, the fair value is estimated at book value after
adjusting for credit risk inherent in the loan. The Company's interest rate
risk is considered insignificant since the majority of the Company's
adjustable rate loans are based on the average cost of funds for the Eleventh
District of the Federal Home Loan Bank System ("COFI") or one-year Constant
Maturity Treasuries ("CMT") rates and adjust monthly or at intervals
generally over a period not exceeding one year.
The fair value of the tax certificates is estimated at book value as these
investments historically have had relatively short lives and their yields
approximate market rates. The fair value of mortgage-backed securities and
investment securities is estimated based on bid prices available from
securities dealers.
Under SFAS No. 107, the fair value of deposits with no stated maturity,
such as non-interest-bearing demand deposits, savings and NOW accounts, and
money market accounts, is equal to the amount payable on demand. The fair
value of certificates of deposit is based on the discounted value of
contractual cash flows. The discount rate is estimated using the Company's
current rates for deposits of similar maturities adjusted for insurance
costs.
The fair value of subordinated notes is estimated by discounting
contractual cash flows using estimated market rates. The contract amounts and
related fees of the Company's commitments to extend credit approximate the
fair value of these commitments.
A-86
<PAGE>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 30, 1996
(20) ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENT--(CONTINUED)
The following table presents information for the Company's financial
instruments at September 30, 1996 and 1995:
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1996
-------------------------------
CARRYING VALUE FAIR VALUE
---------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Financial assets:
Cash and overnight investments ...... $ 34,136 $ 34,136
Tax certificates and other
investments ............................ 46,784 46,784
Mortgage-backed securities ........... 70,165 69,741
Loans receivable ..................... 646,385 646,507
Other interest-earning assets ....... 12,225 12,225
Financial liabilities:
Deposits ............................. $506,106 $506,025
Advances from the FHLB ............... 237,000 237,218
Subordinated notes ................... 775 859
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1995
------------------------------
CARRYING VALUE FAIR VALUE
--------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Financial assets:
Cash and overnight investments ....... $ 34,730 $ 34,730
Tax certificates and other investments 44,230 44,230
Mortgage-backed securities ............ 52,998 52,734
Loans receivable ...................... 453,350 458,681
Other interest-earning assets ........ 12,325 12,325
Financial liabilities:
Deposits .............................. $310,074 $311,424
Advances from the FHLB ................ 241,000 240,675
Subordinated notes .................... 775 899
</TABLE>
A-87
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Condensed Combined Statement of
Financial Condition as of September 30, 1996, and the Unaudited Pro Forma
Condensed Combined Statement of Operations for the year ended September 30,
1996 give effect to the Merger accounted for as a purchase of Suncoast by the
Company. Under the purchase method of accounting, all assets and liabilities
of Suncoast at September 30, 1996 have been adjusted to their current
estimated fair values and combined with the asset and liability book values
of the Company. The Unaudited Pro Forma Condensed Combined Statement of
Financial Condition assumes the Merger was effective on September 30, 1996.
The Unaudited Pro Forma Condensed Combined Statement of Operations give
effect to the Merger as if the Merger had occurred at the beginning of the
period presented.
The pro forma information is based on the historical consolidated
financial statements of the Company and of Suncoast, as adjusted, as set
forth in the accompanying Notes to the Unaudited Pro Forma Condensed Combined
Financial Statements. Suncoast's fiscal year-end is June 30, and thus
Suncoast's financial statements have been adjusted to reflect an unaudited
fiscal year ending September 30, 1996. The Unaudited Pro Forma Condensed
Combined Financial Statements do not give effect to any anticipated cost
savings or potential revenue enhancements in connection with the Merger.
The information shown below should be read in conjunction with the
consolidated historical financial statements of the Company and of Suncoast,
including the respective notes thereto, which are included or incorporated by
reference in this Annual Report on Form 10-K. The pro forma data is presented
for comparative purposes only and is not necessarily indicative of the
combined financial position or results of operations in the future or of the
combined financial position or results of operations which would have been
realized had the Merger been consummated during the periods or as of the
dates for which the pro forma data is presented.
Pro forma per share amounts for the Company giving effect to the Merger
are based on the exchange ratio of one share of the Company Class A Common
Stock for each share of the Suncoast common stock and the issuance of New
Company Preferred Stock having substantially similar terms as the Suncoast
preferred stock.
A-88
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF FINANCIAL CONDITION
SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
COMBINED
BANKUNITED SUNCOAST ADJUSTMENTS PRO FORMA
------------- ----------- -------------- -------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
ASSETS
Cash and due from banks .......................... $ 5,483 $ 4,588 $ -- $ 10,071
FHLB overnight deposits and federal funds sold .. 28,653 1,430 -- 30,083
Repurchase Agreements ............................ -- 15,000 -- 15,000
Tax certificates, net ............................ 40,088 -- -- 40,088
Investments, available for sale, at market ...... 6,696 -- -- 6,696
Mortgage-backed securities, held to maturity .... 14,698 -- -- 14,698
Mortgage-backed securities, available for sale,
at market ...................................... 55,467 18,196 -- 73,663
Loans receivable, net ............................ 646,385 330,781 (930)(1) 976,236
Mortgage loans held for sale ..................... -- 4,208 -- 4,208
Other interest earning assets .................... 12,225 3,075 -- 15,300
Loan servicing assets ............................ -- 11,454 (1,822)(1) 9,632
Office properties and equipment, net ............. 2,608 6,787 700 (1) 10,095
Real estate owned, net ........................... 632 245 -- 877
Accrued interest receivable ...................... 7,023 3,065 -- 10,088
Cost over fair value of net assets acquired and
other intangible assets ........................ 2,457 -- 7,200 (1) 9,657
Prepaid expenses and other assets ................ 1,945 10,574 -- 12,519
----------- ---------- ------------ ----------
Total assets ................................... $824,360 $409,403 $ 5,148 $1,238,911
=========== ========== ============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits ........................................ $506,106 $298,461 $ -- $ 804,567
Advances from FHLB and other borrowings ........ 237,000 73,310 -- 310,310
Subordinated notes .............................. 775 -- -- 775
Advance payments by borrowers for taxes
and insurance ................................. 4,292 4,063 -- 8,355
Accrued expenses and other liabilities ......... 7,076 8,899 3,200 (3) 17,980
(1,195)(6)
----------- ----------- -------------- ----------
Total liabilities .............................. $755,249 $384,733 $ 2,005 $1,141,987
----------- ----------- -------------- ----------
Stockholders' Equity:
Preferred stock ................................. $ 27 $ 4,600 $ (4,591)(2)$ 36
Class A Common Stock ............................ 54 2,418 (2,396)(2) 76
Class B Common Stock ............................ 3 -- -- 3
Additional paid-in capital ...................... 62,055 17,657 10,125 (2) 89,837
Retained earnings ............................... 7,279 301 (301)(2) 7,279
Net unrealized gains on securities
available for sale ............................ (307) (306) 306 (307)
----------- ----------- ----------- ----------
Total stockholders' equity ..................... 69,111 24,670 3,143 96,924
----------- ----------- ----------- ----------
Total liabilities and stockholders' equity .... $824,360 $409,403 $ 5,148 $1,238,911
=========== =========== ============ ==========
Book value per common share ...................... $ 7.85 $ 7.44
Tangible book value per common share ............. $ 7.42 $ 6.22
Fully converted tangible book value per share ... $ 7.13 $ 6.64
</TABLE>
A-89
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
COMBINED
BANKUNITED SUNCOAST ADJUSTMENTS(1) PRO FORMA
------------- ----------- --------------- --------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
OPERATIONS DATA:
Interest income .............................................. $ 52,132 $28,501 $ 1,119 (1) $ 81,752
Interest expense ............................................. 34,622 17,781 20 (1) 52,423
------------ ---------- -------------- ---------
Net interest income before provision for loan losses ........ 17,510 10,720 1,099 29,329
Provision for loan losses .................................... (120) 165 -- 45
------------ ---------- -------------- ---------
Net interest income after provision for loan losses ......... 17,630 10,555 1,099 29,284
------------ ---------- -------------- ---------
Non-interest income:
Loan servicing income, net .................................. -- 4,109 364 (1) 4,473
Gain on sale of assets ...................................... -- 2,870 -- 2,870
Other ....................................................... 649 1,201 -- 1,850
------------ ---------- -------------- ---------
Total non-interest income .................................. 649 8,180 364 9,193
------------ ---------- -------------- ---------
Non-interest expense:
Employee compensation and benefits .......................... 4,275 7,328 (300)(4) 11,303
Occupancy and equipment ..................................... 1,801 2,874 35 (1) 4,710
SAIF special assessment ..................................... 2,614 2,317 -- 4,931
Other operating expenses .................................... 5,346 5,215 280 (1) 10,941
100 (4)
------------ ---------- -------------- ---------
Total non-interest expenses ................................ 14,036 17,734 115 31,885
------------ ---------- -------------- ---------
Income before income taxes and preferred stock dividends .... 4,243 1,001 1,348 6,592
Provision for income taxes ................................... 1,657 371 626 (6) 2,654
------------ ---------- -------------- ---------
Net income before preferred stock dividends .................. 2,586 630 722 3,938
Preferred stock dividends .................................... 2,145 1,104 -- 3,249
------------ ---------- -------------- ---------
Net income after preferred stock dividends ................... $ 441 $ (474) $ 722 $ 689
============ ========== ============== =========
PER COMMON SHARE DATA:
Primary earnings per common share and common
equivalent share ........................................... $ .10 $ .10
Earnings per common share assuming full dilution ............ .10 .10
Weighted average number of common shares and common
equivalent shares assumed outstanding during the period:
Primary .................................................. 4,558,521 6,695,848
Fully diluted .............................................. 4,558,521 6,695,848
OPERATIONS DATA (EXCLUDING SAIF SPECIAL ASSESSMENT):
SAIF special assessment, net of tax ........................ $ 1,621 $1,437 -- $ 3,058
============ ========== ============== =========
Net income before preferred stock dividends and excluding
SAIF special assessment .................................... $ 4,207 $ 2,067 $ 722 $ 6,996
============ ========== ============== =========
Net income after preferred stock dividends and excluding SAIF
special assessment ......................................... $ 2,062 $ 963 $ 722 $ 3,747
============ ========== ============== =========
PER COMMON SHARE DATA (EXCLUDING SAIF SPECIAL ASSESSMENT): ..
Primary earnings per common share and common
equivalent share ......................................... $ .45 $ .56
Earnings per common share assuming full dilution ............ .45 .50
Weighted average number of common shares and common
equivalent shares assumed outstanding during the period:
Primary .................................................. 4,558,521 6,695,848
Fully diluted .............................................. 4,558,521 7,498,847
</TABLE>
A-90
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
(1) Adjustments to fair value for Suncoast's assets and liabilities are as
follows (dollars in thousands):
<TABLE>
<CAPTION>
AMORTIZATION ANNUAL IMPACT ON
ADJUSTMENTS PERIOD AND METHOD STATEMENT OF OPERATIONS
-------------- ------------------------ ------------------------
<S> <C> <C> <C>
Commercial loans .................. $(2,000) 18 months/straight line $1,333
Residential loans ................. 1,070 5 years/straight line (214)
-------------- ------------------------
Total loans ..................... (930) 1,119
Deposits premium .................. 200 10 years/straight line (20)
Loan servicing assets ............. (1,822) 5 years/straight line 364
Land and buildings ................ 700 20 years/straight line (35)
Cost over fair value of net assets
acquired (goodwill) ............. 7,000 25 years/straight line (280)
</TABLE>
(2) The purchase price of $27,590,000 represents the issuance of 2,199,930
shares of BankUnited Class A Common stock at a price of $7.00 per share
(the closing bid price on the day of the Merger Agreement) and the
issuance of 920,000 shares of New BankUnited Preferred stock having an
estimated value of $13.25 per share. Also, $223,000, representing the
fair value of Suncoast's outstanding stock options and warrants which
will be exchanged for BankUnited stock options and warrants having
similar terms and conditions, was credited to paid-in capital.
The following summarizes the entries to Stockholders' Equity (dollars in
thousands):
<TABLE>
<CAPTION>
ENTRY TO
ENTRIES TO ENTRIES TO RECORD STOCK
ELIMINATE SUNCOAST'S RECORD STOCK OPTIONS AND
EQUITY TO BE ISSUED WARRANTS TOTAL
--------------------- --------------- --------------- -----------
<S> <C> <C> <C> <C>
Preferred Stock ................... $ (4,600) $ 9 $ -- $(4,591)
Class A Common Stock .............. (2,418) 22 -- (2,396)
Class B Common Stock .............. -- -- -- --
Additional Paid-in Capital ........ (17,657) 27,559 223 10,125
Retained Earnings ................. (301) -- -- (301)
Net unrealized gains on securities
available for sale .............. 306 -- -- 306
--------------- ----------- --------- ---------
Total Stockholders' Equity ..... $(24,670) $27,590 $223 $ 3,143
=============== =========== ========= =========
</TABLE>
(3) The total purchase price includes $3.2 million of accrued liabilities as
follows:
/bullet/ $1.35 million in severance costs.
/bullet/ $1.85 million for direct acquisition costs such as legal,
accounting, investment banking and other professional fees and
expenses.
(4) The pro forma statements of operations include an annual reduction in
salary expense of $300,000 and an annual increase in professional fees of
$100,000 representing the change in status and compensation of Mr. Finch
in accordance with the terms of his change-of-control agreement.
(5) The pro forma adjustments do not include the effect of any potential
expense reductions, revenue enhancements or restructuring charges.
(6) The statutory income tax rate is assumed to be 38%. Amortization of the
cost over fair value of net assets acquired (goodwill) is not deductible
for tax purposes.
A-91
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
The information contained under the caption "Election of Directors" to
appear in the Company's definitive proxy statement relating to the Company's
1997 Annual Meeting of Stockholders, which definitive proxy statement will be
filed with the Securities and Exchange Commission not later than 120 days
after the end of the Company's fiscal year covered by this report on Form
10-K (hereinafter referred to as the "Annual Meeting Proxy Statement"), is
incorporated herein by reference. Information concerning the executive
officers of the Company is included in Part I of this Report on Form 10-K.
ITEM 11. EXECUTIVE COMPENSATION.
The information contained under the caption "Executive Compensation" to
appear in the Annual Meeting Proxy Statement is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information contained under the caption "Security Ownership of Certain
Beneficial Owners and Management" to appear in the Annual Meeting Proxy
Statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information contained under the captions "Compensation Committee
Interlocks and Insider Participation" and "Certain Relationships and Related
Transactions" to appear in the Annual Meeting Proxy Statement is incorporated
herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(A) THE FOLLOWING DOCUMENTS ARE FILED AS PART OF THIS REPORT:
(1) Financial Statements.
The following consolidated financial statements of the Company and the
report of the independent certified public accountants thereon have been
filed with this report:
Report of Independent Certified Public Accountants (Price
Waterhouse LLP).
Consolidated Statements of Financial Condition as of September
30, 1996 and 1995.
Consolidated Statements of Operations for the years September
30, 1996, 1995 and 1994.
Consolidated Statements of Stockholders' Equity for the years
ended September 30, 1996, 1995 and 1994.
A-92
<PAGE>
Consolidated Statements of Cash Flows for the years ended
September 30, 1996, 1995 and 1994.
Notes to Consolidated Financial Statements.
(2) Financial Statement Schedules.
Schedules are omitted because the conditions requiring their filing
are not applicable or because the required information is provided in
the Consolidated Financial Statements, including the Notes thereto.
(3) Exhibits.*
(3.1) Articles of Incorporation of the Company (Exhibit 3.1 to the
Company's Form 10-K Report for the year ended September 30, 1996).
(3.2) Statement of Designation of Series I Class A Common Stock and
Class B Common Stock of the Company, as amended (Exhibit 4.9 to the
Company's Form S-8 Registration Statement [File No. 333-43211]. as
filed with the Securities and Exchange Commission on November 14,
1996).
(3.3) Bylaws of the Company (Exhibit 4.5 to the Company's Form S-8
Registration Statement [File No. 333-43211], as filed with the
Securities and Exchange Commission on November 14, 1996).
(3.4) Statement of Designation of 8% Noncumulative Convertible
Preferred Stock, Series 1996 (Exhibit 4.8 to the Company's Form S-8
Registration Statement [File No. 333-43211], as filed with the
Securities and Exchange Commission on November 14, 1996).
(4.1) Agreement for Advances and Security Agreement with Blanket
Floating Lien dated as of September 25, 1992, between the Bank and
the FHLB of Atlanta (Exhibit 4.1 to the Bank's Form 10-K for the year
ended September 30, 1992, filed with the Securities and Exchange
Commission as an exhibit to the Company's Form 8-K dated March 25,
1993).
(4.2) Forms of Series 15A-F, Series 18E and Series 20A-F of
Subordinated Notes of the Bank (Exhibit 4.3 to the Company's Form S-4
Registration Statement, File No. 33-55232, as filed with the
Securities and Exchange Commission on December 2, 1992).
(10.1) Non-Statutory Stock Option Plan, as amended (Exhibit 4.9 to
the Company's Form S-8 Registration Statement [File No. 33-76882], as
filed with the Securities and Exchange Commission on March 24,
1994).**
(10.2) 1992 Stock Bonus Plan, as amended. (Exhibit 10.2 to the
Company's Form 10-K Report for the year ended September 30, 1994 [the
"1994 10-K"]).**
(10.3) 1994 Incentive Stock Option Plan. (Exhibit 10.3 to the 1994
10-K).**
(10.4) Profit Sharing Plan of the Bank (Exhibit 10.4 to the Company's
Form 10-K Report for the year ended September 30, 1995).
(10.5) 1996 Incentive Compensation and Stock Award Plan
(Exhibit 10.5 to the Company's Form 10-K Report for the year ended
September 30, 1996).**
(10.6) Purchase and Assumption Agreement dated March 20, 1995 by and
among the Company, the Bank, SouthTrust Corporation, SouthTrust of
Florida, Inc., and SouthTrust Bank of the Suncoast (Exhibit 10.1 to
the Company's Form 10-Q Report for the quarter ended March 31, 1995
[the "March 31, 1995 10-Q"]).
A-93
<PAGE>
(10.7) Purchase and Assumption Agreement dated March 20, 1995 by and
among the Company, the Bank, SouthTrust Corporation, SouthTrust of
Florida, Inc., and SouthTrust Bank of Southwest Florida, N.A.
(Exhibit 10.2 to the March 31, 1995 10-Q).
(10.8) First Amendment to Purchase and Assumption Agreement dated
July 27, 1995 by and among the Company, the Bank, SouthTrust
Corporation, SouthTrust of Florida, Inc., and SouthTrust Bank of the
Suncoast (Exhibit 10.1 to the Company's Form 10-Q Report for the
quarter ended June 30, 1995 [the "June 30, 1995 10-Q"]).
(10.9) First Amendment to Purchase and Assumption Agreement dated
July 27, 1995 by and among the Company, the Bank, SouthTrust
Corporation, SouthTrust of Florida, Inc., and SouthTrust of Southwest
Florida, N.A. (Exhibit 10.2 to the June 30, 1995 10-Q).
(10.10) Form of Employment Agreement between the Company and Alfred
R. Camner (Exhibit 10.10 to the Company's 10-K Report for the year
ended September 30, 1996).
(10.11) Form of Employment Agreement between the Company and Earline
G. Ford (Exhibit 10.11 to the Company's 10-K Report for the year
ended September 30, 1996).
(10.12) Form of Employment Agreement between the Company and certain
of its senior officers (Exhibit 10.12 to the Company's 10-K Report
for the year ended September 30, 1996).
(11.1) Statement regarding calculation of earnings per common share
(Exhibit 11.1 to the Company's 10-K Report for the year ended
September 30, 1996).
(12.1) Statement regarding calculation of ratios (Exhibit 12.1 to the
Company's 10-K Report for the year ended September 30, 1996).
(21.1) Subsidiaries of the Company (Exhibit 21.1 to the Company's
10-K Report for the year ended September 30, 1996).
(23.1) Consent of Price Waterhouse LLP.
(24.1) Power of Attorney (set forth on the signature page of the
Annual Report on Form 10-K filed for the year ended September 30,
1996).
- ----------------------
* Exhibits followed by a parenthetical reference are incorporated herein by
reference from the documents described therein.
** Exhibits 10.1--10.4 are compensatory plans or arrangements.
(B) REPORTS ON FORM 8-K.
During the quarter ended September 30, 1996, the Company filed a Current
Report on Form 8-K dated July 15, 1996 with the Securities and Exchange
Commission.
A-94
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report on Form 10-K
to be signed on its behalf by the undersigned, thereunto duly authorized on
December 23, 1996.
BANKUNITED FINANCIAL CORPORATION
By: /s/ ALFRED R. CAMNER
---------------------------------
Alfred R. Camner
Chairman of the Board,
President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Alfred R. Camner, Earline G. Ford and Marc
Jacobson and each of them, his true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any or all amendments to
this report on Form 10-K and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or his substitutes, may lawfully
do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on December 23, 1996 on behalf of the Registrant by
the following persons and in the capacities indicated.
<TABLE>
<CAPTION>
/S/ ALFRED R. CAMNER
- -------------------------------- CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE
ALFRED R. CAMNER OFFICER, PRESIDENT AND DIRECTOR
(PRINCIPAL EXECUTIVE OFFICER)
<S> <C>
/s/ EARLINE G. FORD
- -------------------------------- Executive Vice President, Treasurer and
Earline G. Ford Director
/s/ JAMES A. DOUGHERTY Executive Vice President and Director
- --------------------------------
James A. Dougherty
/s/ SAMUEL A. MILNE
- -------------------------------- Executive Vice President and Chief Financial
Samuel A. Milne Officer (Principal Financial Officer and
Principal Accounting Officer)
/s/ MARC D. JACOBSON Director
- --------------------------------
Marc D. Jacobson
/s/ ALLEN M. BERNKRANT Director
- --------------------------------
Allen M. Bernkrant
/s/ LAWRENCE H. BLUM Director
- --------------------------------
Lawrence H. Blum
A-95
<PAGE>
Director
- --------------------------------
Patricia L. Frost
Director
- --------------------------------
Sandra Goldstein
Director
- --------------------------------
Robert D. Lurie
/s/ ANNE W. SOLLOWAY Director
- --------------------------------
Anne W. Solloway
/s/ CHRISTINA CUERVO MIGOYA Director
- --------------------------------
Christina Cuervo Migoya
/s/ NEIL MESSINGER Director
- --------------------------------
Neil Messinger
Director
- --------------------------------
Bruce Friesner
Director
- --------------------------------
Albert J. Finch
Director
- --------------------------------
Irving P. Cohen
Director
- --------------------------------
Elia J. Giusti
Director
- --------------------------------
Norman E. Mains
/s/ MARC LIPSITZ Director
- --------------------------------
Marc Lipsitz
</TABLE>
A-96
<PAGE>
APPENDIX B
BANKUNITED FINANCIAL CORPORATION
MARCH 31, 1997
OPERATING RESULTS AND FINANCIAL INFORMATION
<PAGE>
<TABLE>
<CAPTION>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, September 30,
1997 1996
- --------------------------------------------------------------------------------------------------------------------------------
(Unaudited)
(Dollars in thousands, except per share amounts)
ASSETS
<S> <C> <C>
Cash and due from banks $ 20,598 $ 5,483
Federal funds sold and Federal Home Loan Bank overnight deposits 5,980 28,653
Tax certificates (net of reserves of $658 at March 31,1997
and $614 at September 30, 1996) 26,799 40,088
Investments held to maturity (market value of approximately $5,011 at
March 31, 1997 and $11 at September 30, 1996) 5,011 11
Investments, available for sale, at market 6,881 6,685
Mortgage-backed securities, held to maturity, (market
value of approximately $12,904 at March 31, 1997
and $14,274 at September 30, 1996) 13,155 14,698
Mortgage-backed securities available for sale, at market 100,219 55,467
Loans receivable, net 1,205,807 646,385
Other interest earning assets 11,246 12,225
Office properties and equipment, net 9,554 2,608
Accrued interest receivable 12,200 7,023
Mortgage servicing rights 4,397 --
Goodwill 12,727 2,457
Prepaid expenses and other assets 18,587 2,577
---------- ---------
Total assets $1,453,161 $824,360
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $1,011,475 $506,106
Advances from Federal Home Loan Bank 251,484 237,000
Subordinated notes 775 775
Accrued expenses and other liabilities 20,524 11,368
---------- ---------
Total liabilities 1,284,258 755,249
---------- ---------
Company Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trust Holding Solely Junior Subordinated Deferrable Interest
Debentures of the Company 70,000 --
---------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock, Series B,C,C-II, 1993, 1996 and 9%, $.01 par value. Authorized
shares - 10,000,000; issued and outstanding shares - 2,998,688 at March 31,
1997 and 2,664,547 at September 30, 1996 30 27
Class A Common Stock, $.01 par value. Authorized shares
30,000,000; issued and outstanding shares - 8,571,246
at March 31, 1997 and 5,454,201 at September 30, 1996 85 54
Class B Common Stock, $.01 par value. Authorized shares
3,000,000; issued and outstanding shares - 275,938 at
March 31, 1997 and 251,515 at September 30, 1996 3 3
Additional paid-in capital 90,608 62,055
Retained earnings 9,272 7,279
Net unrealized losses on securities available for sale, net of tax (1,095) (307)
---------- ----------
Total stockholders' equity 98,903 69,111
---------- ----------
Total liabilities and stockholders' equity $1,453,161 $824,360
========== ==========
</TABLE>
SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
B-1
<PAGE>
<TABLE>
<CAPTION>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED MARCH 31SIX MONTHS ENDED MARCH 31,
1997 1996 1997 1996
---- ---- ---- ----
(In thousands, except earnings per share)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $21,062 $9,432 $37,678 $18,198
Interest on mortgage-backed securities 1,551 898 2,860 1,787
Interest on short-term investments 667 846 1,134 1,449
Interest and dividends on long-term investments
and other earning assets 925 826 2,024 1,892
------- ------ ------ ------
Total interest income 24,205 12,002 43,696 23,326
------- ------ ------ ------
Interest expense:
Interest on deposits 11,887 4,809 20,769 9,032
Interest on borrowings 2,967 3,435 6,472 6,998
------ ------ ------ ------
Total interest expense 14,854 8,244 27,241 16,030
------ ------ ------ ------
Net interest income before provision (credit) for loan losses 9,351 3,758 16,455 7,296
Provision (credit) for loan losses 165 -- 415 (300)
------ ------- ------ -------
Net interest income after provision (credit) for loan losses 9,186 3,758 16,040 7,596
------ ------- ------ -------
Non-interest income:
Service fees, net 874 130 1,449 281
Other 127 (1) 152 6
------ ----- ----- ------
Total non-interest income 1,001 129 1,601 287
------ ----- ----- ------
Non-interest expenses:
Employee compensation and benefits 2,521 1,056 4,436 2,023
Occupancy and equipment 729 423 1,615 786
Insurance 110 243 471 469
Professional fees - legal and accounting 320 231 542 477
Preferred dividends of Trust Subsidiary 1,327 -- 1,355 --
Other operating expenses 2,094 811 3,515 1,537
------ ------ ------ -----
Total non-interest expenses 7,101 2,764 11,934 5,292
------ ------ ------ -----
Income before income taxes and preferred stock dividends 3,086 1,123 5,707 2,591
Income taxes 1,243 430 2,265 987
------ ------ ------ ------
Net income before preferred stock dividends 1,843 693 3,442 1,604
Preferred stock dividends of the Company 777 536 1,449 1,072
------ ------ ------ ------
Net income after preferred stock dividends $1,066 $157 $1,993 $ 532
====== ====== ====== ======
Earnings Per Share
Primary $ 0.12 $ 0.04 $ 0.25 $0.18
====== ====== ====== =====
Fully-diluted $ 0.12 $ 0.04 $ 0.25 $0.18
====== ====== ====== =====
Weighted average number of common share equivalents assumed
outstanding during the period:
Primary 8,869 3,676 7,952 3,022
===== ===== ===== =====
Fully diluted 8,901 3,717 8,674 3,035
===== ===== ===== =====
</TABLE>
SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
B-2
<PAGE>
<TABLE>
<CAPTION>
BANKUNITED FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX MONTHS ENDED MARCH 31,
1997 1996
---- ----
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 3,442 $1,604
Adjustments to reconcile net income to net cash used in
operating activities:
Provision (credit) for loan losses 415 (300)
Provision for losses on tax certificates 45 76
Depreciation and amortization 546 265
Amortization of discounts and premiums on investments 14 4
Amortization of discounts and premiums on mortgage-backed securities 95 64
Amortization of discounts and premiums on loans (46) (1,909)
Loans originated for sale (5,193) (3,213)
Increase in accrued interest receivable (2,224) (1,096)
(Decrease) increase in interest payable on deposits and FHLB advances (1,345) 142
Increase in accrued expenses 1,662 612
Increase (decrease) in accrued taxes 231 (3,350)
Decrease in deferred taxes (632) (469)
Decrease in other liabilities (23,033) (553)
Decrease (increase) in prepaid expenses and other assets 2,588 (975)
Proceeds from sale of loans 5,971 3,432
Recovery on loans 19 941
Loss (gain) on sales of loans 11 (3)
Loss (gain) on sales of real estate owned 373 (57)
Loss on sale of other assets -- 7
--------- -------
Net cash used in operating activities (17,061) (4,778)
--------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans (220,838) (98,847)
Proceeds from sale of real estate owned 1,252 1,114
Purchase of other earning assets (4,947) (400)
Purchase of investment securities (5,844) (1,511)
Purchase of mortgage-backed securities (33,768) (12,087)
Proceeds from repayments of mortgage-backed securities 7,861 4,046
Proceeds from repayments of other earning assets 9,176 750
Proceeds from repayments of investment securities 651 4,675
Purchases of premises and equipment (725) (340)
Net decrease in tax certificates 13,245 13,983
Purchase of Bank of Florida, net of acquired cash equivalents -- 1,521
Purchase of Suncoast's cash equivalents 32,803 --
--------- --------
Net cash used in investing activities (201,134) (87,096)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 181,632 86,206
Net decrease in other borrowings (37,016) (2,000)
Net proceeds from issuance of preferred stock 3 --
Net proceeds from issuance of common stock 771 23,187
Net proceeds from issuance of trust preferred securities 67,426 --
Dividends paid on the Company's preferred stock (1,449) (1,072)
Decrease in advances from borrowers for taxes and insurance (730) (2,060)
--------- --------
Net cash provided by financing activities 210,637 104,261
--------- --------
Increase (decrease) in cash and cash equivalents (7,558) 12,387
Cash and cash equivalents at beginning of period 34,136 34,730
--------- --------
Cash and cash equivalents at end of period $ 26,578 $ 47,117
========= ========
SUPPLEMENTAL DISCLOSURES:
Transfer from loans to real estate owned $ 1,633 $ 610
========= =========
Transfers from real estate owned to loans $ -- $ 184
========= =========
Transfers of mortgage-backed securities from held-to-maturity to
available for sale $ -- $ 31,780
========= =========
SEE CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
B-3
<PAGE>
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The accompanying unaudited consolidated financial statements have been prepared
in conformity with Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission and therefore do not include information or footnotes necessary for a
complete presentation of financial position, results of operations and cash
flows in conformity with generally accepted accounting principles ("GAAP").
However, all adjustments (consisting of normal recurring accruals) which, in the
opinion of management, are necessary for a fair presentation of the financial
statements of BankUnited Financial Corporation and its subsidiaries (the
"Company") have been included. Operating results for the three and six month
periods ended March 31, 1997 are not necessarily indicative of the results which
may be expected for the year ending September 30, 1997. For further information,
refer to the consolidated financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K/A for the fiscal year ended September
30, 1996, attached hereto as Appendix A to this Prospectus.
2. REGULATORY CAPITAL
The Office of Thrift Supervision ("OTS") requires that BankUnited, FSB (the
"Bank") meet minimum regulatory tangible, core and risk-based capital
requirements. Currently, the Bank exceeds all regulatory capital requirements.
The Bank's required, actual and excess regulatory capital levels as of March 31,
1997 were as follows:
<TABLE>
<CAPTION>
REQUIRED ACTUAL EXCESS
% OF % OF % OF
AMOUNT ASSETS AMOUNT ASSETS AMOUNT ASSETS
------ ------ ------ ------ ------ ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Tangible Capital $ 21,377 1.5% $ 119,618 8.4% $ 98,241 6.9%
Core Capital $ 42,755 3.0% $ 119,618 8.4% $ 76,863 5.4%
Risk-Based Capital $ 74,130 8.0% $ 123,601 13.3% $ 49,471 5.3%
</TABLE>
3. COMPANY OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF
SUBSIDIARY TRUST HOLDING SOLELY JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURES OF THE COMPANY
On December 30, 1996, a newly created trust subsidiary created under the laws of
Delaware, BankUnited Capital, issued $50 million of 10 1/4% Trust Preferred
Securities, Series A (the "Trust Preferred Securities") and $2 million of common
securities. The common securities are wholly owned by the Company. In connection
with this transaction, BankUnited Capital simultaneously purchased $52 million
of 10 1/4% Junior Subordinated Deferrable Interest Debentures, Series A issued
by BankUnited Financial Corporation with terms similar to those of the Trust
Preferred Securities.
On March 24, 1997, BankUnited Capital issued an additional $20 million of Trust
Preferred Securities and $800,000 of common securities, which common securities
are also wholly owned by the Company.
B-4
<PAGE>
BankUnited Capital simultaneously purchased an additional $20.8 million of 10
1/4% Junior Subordinated Deferrable Interest Debentures, Series A issued by
BankUnited Financial Corporation.
These securities mature December 31, 2026 and pay a preferential cumulative cash
distribution at an annual rate of 10 1/4%. The Company and BankUnited Capital
have the right to defer payment of interest for up to 5 years. BankUnited
Financial Corporation has guaranteed all of the obligations of the Trust
Preferred Securities subject to certain limitations.
4. ACQUISITION
On November 15, 1996, the Company acquired Suncoast Savings & Loan Association,
FSA ("Suncoast"). The Company issued one share of its Class A Common Stock for
each share of Suncoast common stock, of which 2,199,930 were outstanding, and
one share of newly created 8% noncumulative convertible preferred stock, Series
1996, for each share of Suncoast preferred stock, of which 920,000 shares were
outstanding. The newly created 8% noncumulative convertible preferred stock,
Series 1996, has substantially the same terms and conditions as the Suncoast
preferred stock. The cost of the acquisition, which was accounted for as a
purchase, was $27.8 million, representing the fair value of the consideration
given to the Suncoast common and preferred stockholders as well as the holders
of Suncoast's options and warrants holders. In addition, the Company incurred
approximately $1.3 million of costs directly related to the merger. At the date
of the acquisition, the fair value of the assets acquired (including goodwill of
approximately $10.4 million to be amortized over a period of 25 years) and
liabilities assumed totaled approximately $436 million and $408 million,
respectively.
The unaudited proforma combined condensed statements of operations for the three
and six month periods ended March 31, 1997 and 1996 assumes the acquisition had
occurred as of the beginning of the period presented and, after giving effect to
certain proforma adjustments, are as follows:
Proforma combined condensed Statement of Operations (in thousands except per
share data):
<TABLE>
<CAPTION>
Three Months Ended March 31, Six Months Ended March 31,
(Unaudited) (Unaudited)
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest Income $ 24,205 $ 19,185 $ 47,564 $ 37,413
Interest expense 14,854 12,648 29,549 24,619
Provision (credit) for loan losses 165 69 521 (109)
Non-interest income 1,001 1,833 2,255 3,425
Non-interest expense 7,101 6,770 13,746 13,322
Income tax provision 1,243 616 2,398 1,204
--------- --------- --------- --------
Net income before preferred
stock dividends 1,843 915 3,605 1,802
Preferred stock dividends 777 812 1,587 1,624
--------- --------- --------- ---------
Net income after preferred
stock dividends $ 1,066 $ 103 $ 2,018 $ 178
========= ========= ========= =========
Earnings per share
Primary $ 0.12 $ 0.02 $ 0.22 $ 0.03
Fully-diluted $ 0.12 $ 0.02 $ 0.22 $ 0.03
</TABLE>
B-5
<PAGE>
5. NEW ACCOUNTING PRONOUNCEMENTS
In June 1996, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 125 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities" and in
December 1996, the FASB issued a related Statement of Financial Accounting
Standards No. 127, "Deferral of the Effective Date of Certain Provisions of FASB
No. 125" (collectively "Statement No. 125"). Statement No. 125 provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishment of liabilities based on a financial components
approach that focuses on control. Portions of Statement No. 125 were effective
for transactions entered into after December 31, 1996 with the remaining
portions effective for transactions entered into after December 31, 1997. The
impact of adopting Statement No. 125 has not been nor is it currently expected
to be material to the Company's financial position or the results of operations.
In February 1997, FASB issued Statement of Financial Accounting Standards No.
128 "Earnings per Share" ("Statement No. 128"). Statement No. 128 specifies the
computation, presentation and disclosure requirements for earnings per share. It
replaces primary earnings per share and fully diluted earnings per share with
basic earnings per share and diluted earnings per share and is effective for
reporting periods ending after December 15, 1997. For the Company, the
computation for basic earnings per share is similar to primary earnings per
share except stock options are not considered when computing basic earnings per
share. Also, for the Company, diluted earnings per share and fully diluted
earnings per share are similar.
In February 1997, the FASB issued Statement of Financial Accounting Standards
No. 129 "Disclosure of Information about Capital Structure" ("Statement No.
129"). Statement No. 129 continues previous requirements to disclose certain
information about an entity's capital structure. The Company currently complies
with the disclosure requirements of Statement No. 129.
6. CONTINGENCIES
The Company is a party to certain claims and litigation arising in the ordinary
course of business. In the opinion of management, the resolution of such claims
and litigation will not materially affect the Company's consolidated financial
position or results of operations.
B-6
<PAGE>
APPENDIX C
Financial Statements of Suncoast Savings and Loan Association, FSA
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
Suncoast Savings and Loan Association, FSA
In our opinion, the accompanying consolidated statements of financial condition
and the related consolidated statements of income, of stockholders' equity and
of cash flows present fairly, in all material respects, the financial position
of Suncoast Savings and Loan Association, FSA and its subsidiaries ("Suncoast")
at June 30, 1996 and 1995, and the results of their operations and their cash
flows for each of the three years in the period ended June 30, 1996, in
conformity with generally accepted accounting principles. These financial
statements are the responsibility of Suncoast's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
As discussed in Note A to the consolidated financial statements, Suncoast
changed its method of accounting for mortgage servicing rights during 1996.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Miami, Florida
August 12, 1996
C-1
<PAGE>
<TABLE>
<CAPTION>
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
Consolidated Statements of Financial Condition June 30,
------------------------------
1996 1995
---------- -----------
<S> <C> <C>
ASSETS (In thousands)
Cash and cash equivalents:
Cash and amounts due from depository institutions $ 1,260 $ 157
Interest-earning deposits 622 43,613
---------- -----------
Total cash and cash equivalents 1,882 43,770
---------- -----------
Repurchase agreements 75,000
Federal Home Loan Bank Stock 3,875 3,758
Loans receivable:
In portfolio 320,828 129,786
Held for sale, sold under commitments 6,730 2,978
---------- -----------
Total loans receivable, net 327,558 132,764
---------- -----------
Mortgage-backed securities available for sale 18,391 136,856
Loan servicing assets:
Purchased mortgage servicing rights 9,525 8,572
Originated mortgage servicing rights 834
Premiums on the sale of loans 1,359 1,533
---------- -----------
Total loan servicing assets 11,718 10,105
---------- -----------
Accrued interest and dividends receivable 3,042 2,123
Real estate owned, net 261 523
Amounts due from purchasers of loans, loan
servicing rights and mortgage-backed securities 19,883 43,941
Office properties and equipment 6,640 6,285
Other assets 9,319 7,228
---------- -----------
$ 402,569 $ 462,353
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 301,201 $ 337,854
Advances by borrowers for taxes and insurance 3,138 1,642
Advances from Federal Home Loan Bank and other borrowings 68,500 88,623
Deferred income taxes 107 115
Principal and interest payable on loans serviced for others 274 576
Other liabilities 3,811 8,759
---------- -----------
Total liabilities 377,031 437,569
---------- -----------
Commitments and contingencies (Notes D, M and N)
Stockholders' equity:
Preferred stock - $5.00 par value; 1,000,000 shares authorized;
920,000 shares issued and outstanding 4,600 4,600
Common stock - $1.10 par value; 5,000,000 shares authorized; 1,996,930 shares
and 1,982,530 shares, respectively, issued and outstanding 2,197 2,181
Additional paid-in capital 17,295 17,252
Retained earnings 1,642 344
---------- -----------
25,734 24,377
Unrealized gain (loss) on mortgage-backed securities available
for sale, net of deferred income taxes (196) 407
---------- -----------
Total stockholders' equity 25,538 24,784
---------- -----------
$ 402,569 $ 462,353
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
C-2
<PAGE>
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Statements of Income Year Ended June 30,
------------------------------------
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Interest income: (In thousands, except per share data)
Loans $ 19,902 $ 9,359 $ 15,220
Mortgage-backed securities 5,276 16,731 1,575
Premiums on the sale of loans 127 145 155
Repurchase agreements and investments 1,463 1,344 941
Other 1,190 276 720
--------- --------- ---------
27,958 27,855 18,611
--------- --------- ---------
Interest expense:
Deposits 14,891 14,087 9,406
Short-term borrowings 2,982 4,931 1,504
Long-term borrowings 64
--------- --------- ---------
17,937 19,018 10,910
--------- --------- ---------
Net interest income before provision for loan losses 10,021 8,837 7,701
Provision for loan losses 153 95
--------- --------- ---------
Net interest income after provision for loan losses 9,868 8,742 7,701
--------- --------- ---------
Other income (expense):
Loan servicing fees 6,016 7,450 8,088
Amortization of loan servicing assets (1,617) (1,175) (3,508)
--------- --------- ---------
Loan servicing income 4,399 6,275 4,580
Gains on the sale of loans and loan servicing assets, net 925 560 14,963
Gains on the sale of mortgage-backed securities, net 2,950 1,388
Loan origination income 435 391 6,075
Other 817 1,316 1,555
--------- --------- ---------
9,526 9,930 27,173
--------- --------- ---------
Non-interest expenses:
Employee compensation and benefits 7,240 8,005 18,362
Occupancy and equipment 2,866 4,057 4,209
Provision for losses on real estate 95 68 150
Other 5,380 5,611 9,045
--------- --------- ---------
15,581 17,741 31,766
--------- --------- ---------
Income before taxes 3,813 931 3,108
Provision for income taxes 1,411 330 1,005
--------- --------- ---------
Net income $ 2,402 $ 601 $ 2,103
========= ========= =========
Net income $ 2,402 $ 601 $ 2,103
Preferred stock dividends 1,104 1,104 780
--------- --------- ---------
Earnings (loss) available to common stockholders $ 1,298 $ (503) $ 1,323
========= ========= =========
Earnings (loss) per common share:
Primary $ 0.61 $ (0.26) $ 0.63
Fully diluted (omitted in 1995 due to anti-dilution) $ 0.61 $ 0.59
Weighted-average common and common equivalent shares:
Primary 2,137,327 1,940,275 2,105,358
Fully diluted 3,674,730 3,652,457 3,588,620
</TABLE>
The accompanying notes are an integral part of these financial statements.
C-3
<PAGE>
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Unrealized
gain (loss)
on mortgage-
backed
Additional securities Total
Preferred Common paid-in Retained available Stockholders'
stock stock capital earnings for sale, net equity
---------- --------- ------------ --------- ------------- --------------
(In thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance, June 30, 1993 $ -- $ 2,085 $ 9,302 $ (476) $ -- $ 10,911
Issuance of common stock 27 42 69
Issuance of preferred stock 4,600 7,628 12,228
Tax benefit on disqualification of
stock options 35 35
Net income 2,103 2,103
Cash dividends on preferred stock (780) (780)
------- ------- --------- ------- --------- ---------
Balance, June 30, 1994 4,600 2,112 17,007 847 -- 24,566
Common stock issued in acquisition 33 143 176
Issuance of common stock 36 47 83
Tax benefit on disqualification of
stock options 55 55
Net income 601 601
Cash dividends on preferred stock (1,104) (1,104)
Net change in unrealized gain (loss) on
mortgage-backed securities available
for sale 407 407
------- ------- --------- ------- --------- ---------
Balance, June 30, 1995 4,600 2,181 17,252 344 407 24,784
Issuance of common stock 16 25 41
Tax benefit on disqualification of
stock options 18 18
Net income 2,402 2,402
Cash dividends on preferred stock (1,104) (1,104)
Net change in unrealized gain (loss) on
mortgage-backed securities available
for sale (603) (603)
------- ------- --------- ------- --------- ---------
Balance, June 30, 1996 $ 4,600 $ 2,197 $ 17,295 $ 1,642 $ (196) $ 25,538
======= ======= ========= ======= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
C-4
<PAGE>
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flow Year Ended June 30,
-------------------------------------
1996 1995 1994
----------- --------- ----------
<S> <C> <C> <C>
(In thousands)
Cash flows from operating activities:
Net income $ 2,402 $ 601 $ 2,103
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization of office properties and equipment 1,140 1,409 1,330
Provision for income taxes 1,411 330 1,005
Accretion of deferred loan fees (223) (178) (88)
Amortization of purchased and originated mortgage servicing rights 1,336 990 3,090
Amortization of premiums on the sale of loans 281 185 418
Amortization of discounts and premiums, net (488) (1,419) (18)
Net (increase) decrease in loans receivable held for sale (3,002) 21,039 98,494
Provision for loan losses 153 95
Provision for losses on real estate 95 68 150
Net decrease (increase) in amounts due from purchasers of loans,
loan servicing rights and mortgage-backed securities 24,058 (35,441) 8,329
Federal Home Loan Bank stock dividends (64)
Gains on the sale of loans and loan servicing assets, net (925) (560) (14,963)
Gains on the sale of mortgage-backed securities (2,950) (1,388)
Increase in accrued interest and dividends receivable (919) (460) (918)
(Increase) decrease in other assets (2,122) 4,627 (2,463)
(Decrease) increase in other liabilities (6,314) 5,121 (890)
Other 31 33
----------- -------- ----------
Net cash provided by (used in) operating activities 13,964 (4,948) 95,515
----------- -------- ----------
Cash flows from investing activities:
Net increase in loans receivable in portfolio (191,821) (29,089) (65,905)
Principal repayments of mortgage-backed securities 7,016 18,897 715
Purchase of mortgage-backed securities (244,701) (256,711) (162,846)
Proceeds from sales of mortgage-backed securities 358,630 266,560
Purchase of repurchase agreements (2,110,000) (307,000) (2,968,000)
Proceeds from maturities of repurchase agreements 2,185,000 252,000 2,948,000
Capital (expenditures) dispositions, net (1,495) 80 (1,927)
Increase in originated mortgage servicing rights (863)
Payments for purchased mortgage servicing rights (2,260) (51)
Proceeds from sales of purchased servicing rights and premiums on the
sale of loans 621 380 9,576
Proceeds from sale of real estate owned 463 650 469
Purchase of Federal Home Loan Bank stock (3,417) (3,075) (3,840)
Proceeds from redemption of Federal Home Loan Bank stock 3,300 2,867 1,731
----------- -------- ----------
Net cash provided by (used in) investing activities 473 (54,492) (242,027)
----------- -------- ----------
Cash flows from financing activities:
Net (decrease) increase in deposits (36,653) 77,419 49,350
Increase in advances by borrowers for taxes and insurance 1,496 335 39
Advances from Federal Home Loan Bank 43,500 69,000
Repayments of advances and other borrowings from Federal Home Loan Bank, net (44,000)
(Repayments of) proceeds from other borrowings, net (63,623) 63,623
Proceeds from issuance of common stock 59 138 104
Proceeds from issuance of preferred stock 12,228
Cash dividends paid on preferred stock (1,104) (1,104) (780)
----------- -------- ----------
Net cash (used in) provided by financing activities (56,325) 96,411 129,941
----------- -------- ----------
Net (decrease) increase in cash and cash equivalents (41,888) 36,971 (16,571)
Cash and cash equivalents at beginning of year 43,770 6,799 23,370
----------- -------- ----------
Cash and cash equivalents at end of year $ 1,882 $ 43,770 $ 6,799
=========== ======== ==========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 18,088 $ 18,683 $ 10,782
Cash paid for income taxes, net of refunds received 1,208 120 841
Supplemental non-cash activities:
REO obtained through foreclosure $ 199 $ 1,133 $ 537
</TABLE>
The accompanying notes are an integral part of these financial statements.
C-5
<PAGE>
Suncoast Savings and Loan Association, FSA and
Subsidiaries Notes To Consolidated Financial Statements
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies of Suncoast Savings and Loan Association, FSA
("Suncoast") conform to generally accepted accounting principles ("GAAP") and
to general practices within the savings and loan industry. The following
summarizes the most significant of those policies and procedures.
1. Principles of Consolidation--The consolidated financial
statements include the accounts of Suncoast and its wholly-owned subsidiaries.
All significant intercompany transactions and balances are eliminated in
consolidation.
In April, 1995, Suncoast issued common stock to acquire Intra-Coastal
Mortgage Company, Inc., a licensed lender/broker. The acquisition was
accounted for using the purchase method of accounting, and the effect of the
acquisition on the financial statements for the year ended June 30, 1995 was
not significant.
2. Cash and cash equivalents--Cash and amounts due from banks and
interest-earning deposits with original maturities of three months or less are
considered cash and cash equivalents for cash flow reporting purposes.
3. Repurchase Agreements, Mortgage-Backed Securities and
Investment Securities--On July 1, 1994, Suncoast adopted Statement of Financial
Accounting Standards No. 115 ("FAS 115"), "Accounting for Certain Investments
in Debt and Equity Securities". Under FAS 115, investments in debt and equity
securities which Suncoast has a positive intent and ability to hold to maturity
are classified as "securities held to maturity" and are carried at cost,
adjusted for discounts and premiums which are accreted or amortized to
estimated maturity under the interest method. In accordance with FAS 115, a
security cannot be classified as held to maturity if it might be sold in
response to changes in market interest rates, related changes in the security's
prepayment risk, liquidity needs, changes in the availability of and the yield
on alternative investments, and changes in funding sources and terms. Debt and
equity securities purchased or sold for the purpose of a short-term profit are
classified as "trading account securities" and are recorded at fair value, with
unrealized gains and losses reflected in operations. Suncoast does not have
trading account securities. Debt and equity securities not classified as held
to maturity or trading account securities are classified as "available for
sale". Debt and equity securities available for sale are carried at fair
value, with the related unrealized appreciation or depreciation, net of
deferred income taxes, reported as a separate component of stockholders'
equity. Realized gain or loss on sales of securities is based on the specific
identification method.
At June 30, 1996 and 1995, the portfolio of mortgage-backed securities
was classified as available for sale with an unrealized loss (net of taxes) of
$196,000 and an unrealized gain (net of taxes) of $407,000, respectively,
recorded as a separate component of stockholders' equity.
C-6
<PAGE>
The portfolio was classified as such because management restructured Suncoast's
assets in fiscal 1995 and sold its entire $138.7 million portfolio of fixed
rate securities, previously classified as held to maturity, realizing a gain of
approximately $486,000.
4. Mortgage Banking Activities--Suncoast originates mortgage
loans for portfolio investment or sale in the secondary market. Mortgage loans
are designated as either available for sale or held in portfolio. Mortgage
loans held in the portfolio are stated at unpaid principal balances, less the
allowance for loan losses, and net deferred loan origination fees and
discounts. Mortgage loans available for sale are carried at the lower of cost
or fair market value, determined on an aggregate basis, and net unrealized
losses, if any, are recognized in a valuation allowance with a corresponding
charge to income. Suncoast recognizes gains or losses on the sales of
servicing rights when the related sales contract has been executed and legal
title and substantially all risks and rewards of ownership of the servicing
asset has passed to the buyer. Gains or losses are computed by deducting any
associated deferred excess servicing rights, mortgage servicing rights, and
other related expenses from the sales proceeds.
Suncoast minimizes its interest rate risk on loan commitments
expected to close and the inventory of mortgage loans held for sale through
commitments to permanent investors.
Effective July 1, 1995, Suncoast adopted Statement of Financial
Accounting Standards No. 114, ("FAS 114") "Accounting by Creditors for
Impairment of a Loan", subsequently amended by FAS 118. Loans within the scope
of FAS 114 are measured for impairment based on (a) the present value of
expected future cash flows discounted at the loan's effective interest rate,
(b) the market price, or (c) if collateral dependent, the fair value of the
collateral. If the value of the loan so determined is less than the loan's
recorded value, Suncoast recognizes a loss for the difference by creating a
valuation allowance or adjusting an existing valuation allowance with a
corresponding charge to operations. FAS 118 amended certain income recognition
and disclosure provisions of FAS 114. The adoption of FAS 114 and FAS 118 did
not have any significant effect on Suncoast's financial condition and results
of operations, due to the composition of the loan portfolio and its policy for
establishing its allowance for loan losses.
At June 30, 1996, 1995 and 1994, Suncoast was servicing loans
amounting to approximately $1.5 billion, $1.6 billion and $2.0 billion,
respectively. Servicing loans generally consists of collecting mortgage
payments, maintaining custodial accounts, disbursing payments to investors and
foreclosure processing. Loan servicing income is recorded on the accrual basis
and includes servicing fees from investors and certain charges collected from
borrowers, such as late payment fees. In connection with loans serviced for
others, Suncoast held in non-interest or low-interest bearing deposit accounts
borrowers' custodial balances of approximately $24.2 million and $37.3 million
at June 30, 1996 and 1995, respectively. Suncoast makes a provision for
expected unreimbursed costs, which are incurred as a result of Suncoast's
responsibility as servicer of Federal Housing Administration (FHA) insured,
Veterans Administration (VA) guaranteed, and other loans for investors. The
provision is determined based on a number of variables, including the amount of
delinquent loans serviced for other investors, the length of delinquency, and
the amounts previously advanced on behalf of the borrower that Suncoast does
not expect to recover. Actual cost incurred may vary from Suncoast's estimate
due to a number of factors beyond Suncoast's control.
C-7
<PAGE>
Effective July 1, 1995, Suncoast adopted Statement of Financial
Accounting Standards No. 122 ("FAS 122") "Accounting for Mortgage Servicing
Rights." FAS 122 requires that rights to service mortgage loans for others
acquired through either purchase or origination of mortgage loans be recognized
as separate assets if the related mortgage loan is intended to be sold with
servicing retained. The adoption of FAS 122 resulted in aggregate realized net
gains of approximately $600,000 ($380,000, net of income taxes) on the sale of
loans during the year ended June 30, 1996. Purchased mortgage servicing rights
("PMSRs") represent the cost of acquiring the rights to service mortgage loans,
and such cost is capitalized and amortized in proportion to, and over the
period of, estimated net servicing income.
Premiums on the sale of loans represent the present value of the cash
flows associated with the portion of estimated future interest income retained
on loans sold (based upon certain prepayment rate and interest rate assumptions
and net of a normal servicing fee), which are recognized as gains on the sale
of loans at the time the sales occur. As the cash flows are collected, Suncoast
amortizes the premiums and recognizes a normal servicing fee and interest
income on the premiums at the rate assumed in determining the present value of
the premiums. Such premiums are amortized in proportion to and over the
estimated period such cash flows will be collected.
Suncoast periodically makes an assessment of capitalized mortgage
servicing rights for impairment based on the fair value of those rights. The
carrying values of Suncoast's servicing assets, and the amortization thereon,
are evaluated in relation to estimated future net servicing cash flows
(discounted) to be received and retained. Such carrying values are adjusted
for indicated impairments based on management's best estimate of remaining cash
flows. Such estimates may vary from the actual remaining cash flows due to
prepayments of the underlying mortgage loans and increases in servicing costs.
Changes in open market values do not directly affect the expected cash flows
used in determining the carrying values.
5. Office Properties and Equipment--Land is carried at cost.
Office properties and equipment are carried at cost less accumulated
depreciation. Depreciation and amortization are computed on the straight-line
method over the estimated useful lives of the related assets, which range from
3 to 30 years; amortization of leasehold improvements is computed over the
terms of the respective leases (including renewal periods which management
intends to exercise) or their estimated useful lives, whichever is shorter.
6. Loan Fees--Suncoast defers loan origination fees (after
offsetting certain direct costs of originating the loans) and recognizes these
fees using the interest method over the life of the loans as an adjustment of
the loans' yield. Loan origination fees received on loans sold are recorded as
income upon the sale of the loans. Loan commitment fees received are deferred
and recognized similarly over the life of the loan or at the expiration of the
commitment if the commitment expires unexercised.
7. Provisions for Losses--Provisions for loan losses and losses
on real estate owned (included in non- interest expenses) include charges to
adjust the recorded balances of loans receivable and real estate owned to their
estimated net realizable value, as applicable. Such provisions are
C-8
<PAGE>
based on management's estimate of fair market value of the collateral,
considering the current and anticipated future operating or sales conditions.
Recovery of the carrying value of such loans and real estate owned is dependent
to a great extent on economic, operating and other conditions that may be
beyond Suncoast's control. Suncoast also provides an allowance for loan losses
based upon historical loss experience, delinquency trends, the value of
underlying collateral, known and inherent risks in the assets, prepayment rates
and the general state of the real estate market.
8. Provision for Uncollected Interest--When a loan becomes ninety
days or more delinquent, Suncoast stops the accrual of interest income and
reverses any interest previously accrued but uncollected. Such interest, if
ultimately collected, is credited to income in the period of recovery.
9. Real Estate Owned--Real estate owned represents property
acquired by foreclosure or deed in lieu of foreclosure. Real estate owned is
initially recorded at the fair market value less estimated selling expenses of
the property at date of foreclosure. Subsequent adjustments to the fair market
value at date of foreclosure are recorded as an expense. Sales of real estate
are recorded under the accrual method of accounting. Under this method, a sale
is not recognized until payments received aggregate a specific required
percentage of the contract sales price. Until a contract qualifies as a sale,
all collections are recorded as deposits.
The ability of Suncoast to recover the carrying value of its
investment in real estate owned is based upon future sales. The ability to
complete such sales is subject to market conditions and other factors, all of
which are beyond Suncoast's control.
10. Income Taxes--Suncoast uses the asset and liability approach
to account for income taxes. Deferred tax assets and liabilities are
recognized for the expected future tax consequences attributable to differences
between the financial statement carrying amounts and the tax bases of assets
and liabilities.
11. Earnings (Loss) Per Share--Earnings (loss) per share is
computed on the basis of the weighted average number of shares of common stock
outstanding during the period plus common stock equivalents applicable to stock
options. When dilutive, fully diluted earnings per common share is derived as
follows: Earnings (loss) available to common stockholders are increased by
preferred dividends paid eliminated upon conversion of preferred shares to
common shares. This remainder is divided by the sum of the average number of
common shares outstanding for the period plus the added common shares that
would have been outstanding if: (a) all of the outstanding preferred shares
had been converted into common shares at the beginning of the period and (b)
all stock options granted that have economic value were exercised at the
beginning of the period, and the related funds that would have been received by
Suncoast upon such exercise were used to repurchase outstanding common shares.
12. Use of Estimates--The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and
C-9
<PAGE>
expenses during the reporting period. Actual results could differ from those
estimates. Estimates that are particularly susceptible to significant change
in the near term are the adequacy of reserves available for loan losses and the
present value of the estimated future cash flows utilized to calculate loan
servicing assets.
13. New Accounting Standards--In October 1995, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial Accounting
Standards No. 123 ("FAS 123"), "Accounting for Stock-Based Compensation." This
statement requires certain disclosures about stock-based employee compensation
arrangements, regardless of the method used to account for them, and defines a
fair value based method of accounting for an employee stock option or similar
equity instrument and encourages all entities to adopt that method of
accounting for all of their employee stock compensation plans. However, it
also allows an entity to continue to measure compensation cost for stock based
compensation plans using the intrinsic value method of accounting prescribed by
existing principles. Suncoast has elected to remain with the existing
principles and will make pro forma disclosures of net income and earnings per
share, as if the fair value method of accounting defined in FAS 123 had been
applied. Under the fair value method, compensation cost is measured at the
grant date based on the value of the award and is recognized over the service
period, which is usually the vesting period. Under the intrinsic value based
method, compensation cost is the excess, if any, of the quoted market price of
the stock at grant date or other measurement date over the amount an employee
must pay to acquire the stock. The disclosure requirements of FAS 123 are
effective for financial statements for Suncoast's fiscal years beginning after
June 30, 1996.
In June 1996, the FASB issued Statement of Financial Accounting
Standards No. 125 ("FAS 125"), "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." FAS 125 provides
accounting and reporting standards for transfers and servicing of financial
assets and extinguishment of liabilities based on a financial-components
approach that focuses on control. FAS 125 is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring
after December 31, 1996 and is to be prospectively applied. Management is
currently evaluating the impact of adoption of FAS 125 on its financial
position and results of operations.
14. Reclassifications--Certain amounts reported in prior periods'
financial statements have been reclassified to conform to current
classifications.
B. REGULATORY CAPITAL REQUIREMENTS
Under the regulatory capital regulations of the Office of Thrift
Supervision ("OTS"), Suncoast is required to maintain minimum levels of capital
as measured by three ratios. Savings institutions are currently required to
maintain tangible capital of at least 1.5% of tangible assets, core capital of
at least 3.0% of adjusted tangible assets and risk based capital of at least
8.0% of risk-weighted assets.
C-10
<PAGE>
At June 30, 1996 Suncoast exceeded all three of its current capital
requirements. The status of the capital requirements of Suncoast at June 30,
1996 is as follows (dollars are in thousands and are unaudited):
<TABLE>
<CAPTION>
Percentage Percentage Risk- Percentage of
Tangible of Core of based risk-based
capital assets(1) capital assets(1) capital assets (1)
-------- ---------- --------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stockholders' equity before adjustments $ 25,538 6.36% $ 25,538 6.36% $ 25,538 11.05%
Regulatory adjustments:
General valuation reserves 657 .28
Non-qualifying PMSRs (720) (.18) (720) (.18) (720) (.30)
Goodwill (47) (.01) (47) (.01) (47) (.02)
Unrealized loss on mortgage-backed
securities available for sale, net 196 .05 196 .05 196 .08
--------- ---- --------- ---- ---------- ----
Regulatory capital 24,967 6.22 24,967 6.22 25,624 11.09
Minimum capital requirement 6,024 1.50 12,048 3.00 18,486 8.00
--------- ---- --------- ---- ---------- ----
Regulatory capital excess $ 18,943 4.72% $ 12,919 3.22% $ 7,138 3.09%
========= ==== ========= ==== ========== ====
Assets for capital calculation $ 401,605 $ 401,605 $ 231,069
========= ========= ==========
</TABLE>
- - -------------------------------
(1) Tangible and core capital percentages are computed as a percentage of
tangible and adjusted tangible assets, respectively. The risk-based
capital percentage is computed as a percentage of risk-adjusted
assets.
Under current OTS capital rules, PMSRs and OMSRs (collectively,
"MSRs") may be included in regulatory capital only to the extent that, in the
aggregate, they do not exceed 50% of core capital. For purposes of calculating
core capital, MSRs are valued at the lesser of 90 percent of fair market value
or 100 percent of their book value (net of any valuation allowance). Any
excess amounts are deducted from assets and core capital. The estimated fair
market value of MSRs must be determined at least quarterly. Suncoast also uses
the services of an independent expert to perform an annual market valuation in
accordance with guidance issued by the OTS. The amount of MSRs that may be
included in tangible capital is the same as that permitted in core capital.
At June 30, 1996, Suncoast's book value of MSRs was $10.4 million, and based
upon a market valuation of MSRs at that date, a deduction from assets and
capital for regulatory capital purposes in the amount of $720,000 was
necessary.
The OTS amended risk-based capital rules to incorporate interest-rate
risk ("IRR") requirements which require a savings association to hold
additional capital if it is projected to experience an excessive decline in net
portfolio value in the event interest rates increase or decrease by two
percentage points. The additional capital required is equal to one-half of the
amount by which any decline in net portfolio value exceeds 2 percent of the
savings association's total net portfolio value. Suncoast does not expect the
interest-rate risk requirements to have a material impact on its required
capital levels at the present time.
The OTS rules establish the capital levels for which an insured
institution will be categorized as: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized or critically
undercapitalized. A well capitalized institution must have risk-based capital
of 10% or more, core capital of 5% or more and Tier 1 risk- based capital
(based on the ratio of core capital to risk-weighted assets ) of 6% or more and
may not be subject to any written agreement, order, capital directive or prompt
corrective action directive issued by the OTS. The
C-11
<PAGE>
OTS and other federal banking agencies are required to take prompt corrective
action to resolve the problems of critically undercapitalized financial
institutions. Suncoast is a well capitalized institution under the definitions
as adopted.
C. REPURCHASE AGREEMENTS AND FEDERAL HOME LOAN BANK STOCK
During the years ended June 30, 1996 and 1995, Suncoast invested in
repurchase agreements but had no such investment at June 30, 1996. These
investments were collateralized by U.S. Government securities through agency
agreements with a national brokerage firm (the "counter-party"). The
securities underlying the agreements are book- entry securities. The
securities were delivered by appropriate entry with a third-party custodian as
per agreement between Suncoast and the counter-party. Based on month-end
balances for the years ended June 30, 1996 and 1995 repurchase agreements
averaged $16.7 million and $21.3 million, respectively, the maximum amount
outstanding at any month-end in each year was $75.0 million, and the maximum
amount outstanding in each year with any single counter-party was $75.0
million. The market values of these agreements approximated their carrying
value.
Federal Home Loan Bank ("FHLB") stock ownership is required for
membership in the bank system. Its carrying value approximates market value.
D. LOANS RECEIVABLE
Loans receivable at June 30 are comprised of (in thousands):
<TABLE>
<CAPTION>
1996 1995
------------ -------------
<S> <C> <C>
Loans in portfolio:
Real estate loans:
Commercial, collateralized by--
Undeveloped land $ 3,115 $ 5,256
Office buildings 8,287 7,625
Hotel property 21,692 9,082
Retail stores 21,552 17,245
Multi-family residential and other 43,836 34,099
------------ -------------
Total commercial 98,482 73,307
Residential (one to four family) 215,044 55,449
Construction 8,491 7,085
Consumer loans 1,917 1,750
------------ -------------
323,934 137,591
Allowance for loan losses (657) (504)
Deferred loan fees, net (617) (493)
Undisbursed portion of loans in process (4,354) (7,137)
Premiums paid on loans held in portfolio 2,522 329
------------ -------------
$ 320,828 $ 129,786
============ =============
</TABLE>
C-12
<PAGE>
<TABLE>
<S> <C> <C>
Loans held for sale:
Residential real estate loans $ 6,675 $ 2,962
Deferred loan fees, net (31) (19)
Premiums paid on loans held for sale 86 35
------------ -------------
$ 6,730 $ 2,978
============ =============
Total loans receivable, net $ 327,558 $ 132,764
============ =============
</TABLE>
At June 30, 1996, Suncoast had pledged approximately $163.5 million of
first mortgage loans as collateral for FHLB advances (see Note L).
The commercial real estate loans are primarily in the State of Florida
and are considered by management to be of somewhat greater risk of
uncollectibility due to the dependency on income production or future
development of real estate. Loans not accruing interest were $853,000 and
$151,000 at June 30, 1996 and 1995, respectively. If non-accrual loans had been
accruing interest, interest income of $54,000, $10,000 and $42,000 would have
been recorded during the years ended June 30, 1996, 1995 and 1994,
respectively.
The OTS regulatory capital regulations require that the portion of
nonresidential construction and land loans in excess of 80% loan-to-value ratio
be deducted from total capital for purposes of the risk-based capital standard.
At June 30, 1996, Suncoast had no loans subject to this regulation.
Suncoast originates and purchases both adjustable and fixed interest
rate loans. At June 30, 1996, the composition of these loans was approximately
as follows (in thousands):
<TABLE>
<CAPTION>
Fixed-rate Adjustable-rate
- - ------------------------------------------- ----------------------------------------
<S> <C> <C> <C>
Term to Term to
maturity Carrying value rate adjustment Carrying value
- - -------- -------------- --------------- --------------
1mo.-1 yr. $ 353 1 mo.-1 yr. $ 217,509
1 yr.-3 yr. 3,138 1 yr.-3 yr. 65,967
3 yr.-5 yr. 4,261 3 yr.-5 yr 8,542
5 yr.-10 yr. 3,016
10 yr.-20 yr. 7,204
Over 20 years 13,944
----------- -----------
Total loans
in portfolio 31,916 292,018
Total loans held
for sale 6,480 195
----------- -----------
$ 38,396 $ 292,213
=========== ===========
</TABLE>
The adjustable-rate loans have interest rate adjustment limitations
and are generally indexed to U.S. Treasury Bill rates. Future market factors
may affect the correlation of the interest rate adjustment with the rates
Suncoast pays on the short-term deposits that have been primarily utilized to
fund these loans.
C-13
<PAGE>
The following summarizes the activity in the allowance for loan losses
for the years ended June 30 (in thousands):
<TABLE>
<S> <C> <C> <C>
1996 1995 1994
------ ----- ------
Balance, at beginning of year $504 $504 $521
Provision for loan losses 153 95
Chargeoffs and recoveries, net (95) (17)
------ ------ ------
Balance, at end of year $ 657 $ 504 $ 504
====== ====== ======
</TABLE>
At June 30, 1996, Suncoast had commitments to originate and purchase
loans, excluding the undisbursed portion of loans in process, of approximately
$3.7 million. These commitments are scheduled to be disbursed within one year.
Suncoast had also entered into commitments to sell loans of approximately $7.6
million at June 30, 1996 of which approximately $1.0 million are binding on the
investor but not on Suncoast. At June 30, 1996, Suncoast had no floating
market rate commitments outstanding.
Loans to executive officers, directors and principal holders of equity
securities were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable transactions
with other customers (unless they were in effect under regulations prior to
1989) and do not involve more than the normal risk of collectibility. The
activity regarding these loans is as follows (in thousands):
<TABLE>
<CAPTION>
Beginning New Ending
Year Ended June 30, Balance Loans Repayments Balance
- - ------------------- --------- ----- ---------- -------
<S> <C> <C> <C> <C>
1996 $2,199 $ 328 $ 336 $2,191
1995 1,083 1,365 249 2,199
1994 2,693 1,610 1,083
</TABLE>
E. MORTGAGE-BACKED SECURITIES
At June 30, 1996, mortgage-backed securities with an aggregate book
value of $11.8 million were pledged as collateral for FHLB advances (see Note
L). Summarized below are the amortized costs and market value of
mortgage-backed securities at June 30, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized unrealized unrealized Market
costs gains losses value
-------- ---------- ---------- --------
<S> <C> <C> <C> <C>
June 30, 1996:
Adjustable rate:
GNMA $ 14,659 $ - $ (312) $ 14,347
Private Issue 4,044 4,044
-------- --------- ------- --------
Total mortgage-backed
securities $ 18,703 $ - $ (312) $ 18,391
======== ========= ======= ========
</TABLE>
C-14
<PAGE>
<TABLE>
<CAPTION>
June 30, 1995:
<S> <C> <C> <C> <C>
FHLMC $ 59,015 $ 414 $ (80) $ 59,349
FNMA 51,069 363 (51) 51,381
FNMA Real Estate Mortgage
Investment Conduit 26,126 26,126
-------- -------- ------ --------
Total mortgage-backed
securities $136,210 $ 777 $ (131) $136,856
======== ======== ====== ========
</TABLE>
Mortgage-backed securities as of June 30, 1996 and 1995 were
adjustable-rate securities with a term to rate adjustment not exceeding one
year.
F. LOAN SERVICING ASSETS
1. Purchased mortgage servicing rights--The following table sets
forth the activities of Suncoast's PMSRs for the years ended June 30 (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- -------------
<S> <C> <C> <C>
Balance, at beginning of year $ 8,572 $ 9,511 $ 12,830
Cost of acquiring servicing rights 2,260 51
Sales of servicing rights (229)
Amortization charged against loan
servicing fee income (1,307) (990) (3,090)
----------- ------------ -------------
Balance, at end of year $ 9,525 $ 8,572 $ 9,511
=========== ============ =============
</TABLE>
2. Originated mortgage servicing rights ("OMSR")--The following
table sets forth the activities of Suncoast's OMSR's for the years ended June
30 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- ----------
<S> <C> <C> <C>
Balance, at beginning of year $ - $ - $ -
Servicing rights originated 863
Amortization charged against loan
servicing fee income ( 29)
----------- ----------- ----------
Balance, at end of year 834 $ - $ -
=========== =========== ==========
</TABLE>
The fair value of Suncoast's PMSRs and OMSRs is determined annually by
an independent firm which has the necessary expertise to perform such valuation
studies. At June 30, 1996, the fair value of Suncoast's PMSRs and OMSRs was
approximately $10.0 million and $949,000, respectively.
C-15
<PAGE>
Fair value has been estimated by using a discounted cash flow model,
the most significant assumptions of which are as follows:
Prepayment Rate--The average "Dealer Prepayment Estimates" as of July
8, 1996 as published by Bloomberg Financial Markets.
Discount Rate--A base rate of 10.5%, adjusted for loan type, size and
remaining term. Cost of Service--$45 incremental per loan per year.
Ancillary Income--Suncoast's actual ancillary income was utilized for
the portfolio purchased prior to 1995 and $10 annually per loan was
utilized on the portfolio purchased subsequent to 1995.
Escrow Balances--Determined using a twelve month weighted average
multiple calculated by state.
For purposes of evaluating and measuring PMSRs and OMSRs for
impairment, Suncoast stratifies the population by product type, investor type
and interest rate. No valuation allowance for the impairment of PMSRs or OMSRs
was required at June 30, 1996.
The ability of Suncoast to recover the carrying value of the PMSRs and
OMSRs is dependent upon certain factors including future prepayment experience,
which is influenced by economic and other conditions that may be beyond
Suncoast's control. If actual future prepayment experience exceeds the rate
anticipated in the valuation study, a reduction in the carrying value of the
PMSRs and OMSRs may be required.
3. Premiums on the sale of loans--The following table sets forth
the activities of Suncoast's premiums on the sale of loans for the years ended
June 30 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- ----------
<S> <C> <C> <C>
Balance, at beginning of year $ 1,533 $ 1,737 $ 2,169
Premium on sales 107 14
Sales of servicing rights (19) (28)
Amortization charged against loan
servicing fee income (281) (185) (418)
----------- ----------- ----------
Balance, at end of year $ 1,359 $ 1,533 $ 1,737
=========== =========== ==========
</TABLE>
Management has estimated the future constant prepayment rates ("CPRs")
used to determine the above premiums based upon an analysis of the actual
historical CPRs, comparative industry CPRs and market conditions. Suncoast
calculates premiums using the present value model, which calculates present
values based upon estimated annual cash inflows.
C-16
<PAGE>
G. ACCRUED INTEREST AND DIVIDENDS RECEIVABLE
Interest and dividends receivable at June 30 are accrued for (in
thousands):
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Loans receivable $ 2,782 $ 885
Mortgage-backed securities 164 1,041
Federal Home Loan Bank Stock 88 68
Repurchase agreements 121
Interest-earning deposits 8 8
----------- -----------
$ 3,042 $ 2,123
=========== ===========
</TABLE>
H. REAL ESTATE OWNED
At June 30, 1996, real estate owned consisted of one single-family
residence. The following summarizes the activity in the allowance for losses on
real estate owned for the years ended June 30 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- ------- --------
<S> <C> <C> <C>
Balance, at beginning of year $ - $ - $ -
Provision for losses on real estate 95 68 150
Chargeoffs and recoveries, net (15) (68) (150)
------- ------- --------
Balance, at end of year 80 $ - $ -
======= ======= ========
</TABLE>
I. OFFICE PROPERTIES AND EQUIPMENT
Office properties and equipment at June 30 are as follows (in
thousands):
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Land $ 1,204 $ 827
Buildings 3,971 3,630
Leasehold improvements 839 669
Furniture, fixtures and equipment 6,890 7,341
--------- ---------
12,904 12,467
Less accumulated depreciation and
amortization 6,264 6,182
--------- ---------
$ 6,640 $ 6,285
========= =========
</TABLE>
C-17
<PAGE>
J. OTHER ASSETS
Other assets at June 30 are comprised of (in thousands):
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Foreclosure advances $ 3,821 $ 1,633
Other receivables 2,978 1,404
Escrow advances on serviced loans 1,036 1,580
Prepaid income taxes 1,145 302
All other 339 2,309
--------- ---------
$ 9,319 $ 7,228
========= =========
</TABLE>
K. DEPOSITS
The nominal interest rates paid on deposits and related balances are as
follows (amounts in thousands):
<TABLE>
<CAPTION>
Weighted June 30, 1996 June 30, 1995
Average Rate at ------------------------ -----------------------
June 30, 1996 Amount Percent Amount Percent
--------------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Negotiable
order of
withdrawal
("NOW")
accounts 2.42% $ 17,751 5.9% $ 6,418 1.9%
Non-interest
bearing 874 0.3% 556 0.2
Money market 3.19% 11,805 3.9% 16,859 5.0
Passbook 4.08% 40,959 13.6% 48,605 14.3
-------- ------ -------- ------
71,389 23.7% 72,438 21.4
-------- ------ -------- ------
Custodial
accounts 0% 24,198 8.0% 37,275 11.0
-------- ------ -------- ------
Certificates of
deposit:
2.00%-2.99% 204 0.1%
3.00%-3.99% 4 411 0.1
4.00%-4.99% 29,464 9.8% 11,212 3.3
5.00%-5.99% 146,965 48.8% 104,003 30.8
6.00%-6.99% 26,194 8.7% 108,712 32.2
7.00%-7.99% 2,783 0.9% 3,801 1.1
8.00%-8.99% 2 0.1
--------- ------ -------- -----
Total certificates
of deposit 5.46% 205,614 68.3% 228,141 67.6%
--------- ------ -------- -----
4.55% $ 301,201 100.0% $337,854 100.0%
========= ====== ======== =====
</TABLE>
C-18
<PAGE>
The amounts of scheduled maturities of certificate accounts, including
those with balances exceeding $100,000, at June 30, 1996 for future fiscal
years ending June 30 are summarized below (in thousands):
<TABLE>
<CAPTION>
Certificates
Exceeding Total
$100,000 Certificates
----------- ------------
<S> <C> <C>
1997 $7,389 $176,957
1998 824 19,699
1999 209 2,955
2000 106 4,430
2001 101 1,573
------- --------
$8,629 $205,614
====== ========
</TABLE>
Interest on deposits for the years ended June 30 is summarized below
(in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
----------- ----------- ----------
<S> <C> <C> <C>
Certificate accounts $ 12,537 $ 11,893 $ 7,849
Money market accounts 565 420 748
NOW accounts 272 451 92
Passbook accounts 1,368 1,226 27
----------- ----------- ----------
Deposit accounts 14,742 13,990 8,716
----------- ----------- ----------
Interest on custodial accounts:
Escrow accounts 82 78 105
Serviced loans paid off 67 19 585
----------- ----------- ----------
149 97 690
----------- ----------- ----------
Total interest on deposits $ 14,891 $ 14,087 $ 9,406
=========== =========== ==========
</TABLE>
L. ADVANCES FROM FEDERAL HOME LOAN BANK AND OTHER BORROWINGS
Advances from the Federal Home Loan Bank and other borrowings at June
30 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
At June 30, 1996 During Year Ended June 30, 1996
--------------------------------------------------- -------------------------------
Average Maximum
Balance Weighted
Outstanding Average Rate Maturity Outstanding Outstanding
----------- ------------ -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Advances from FHLB
Short term $67,000 5.30% 7/96-2/97 $50,963 $117,000
Long term 1,500 6.65 12/05 1,000 1,500
Borrowings under reverse
repurchase agreements 850 10,199
Borrowings under fixed coupon
dollar reverse repurchase0
agreements 2,631 31,572
-------- ----
$ 68,500 5.30%
======== ====
</TABLE>
C-19
<PAGE>
<TABLE>
<CAPTION>
At June 30, 1995 During Year Ended June 30, 1995
----------------------------------------------------- --------------------------------
Average Maximum
Balance Weighted Balance Balance
Outstanding Average Rate Maturity Outstanding Outstanding
----------- ------------ -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Advances from
FHLB - short term $ 25,000 6.13% 5/96 $ 61,371 $ 108,000
Borrowings under
reverse
repurchase
agreements 32,051 6.09 7/95-8/95 20,821 62,766
Borrowings under
fixed coupon
dollar reverse
repurchase
agreements 31,572 5.77 7/95 10,025 35,148
-------- ----
$ 88,623 5.99%
======== ====
</TABLE>
At June 30, 1996, Suncoast is a party to two advance agreements with
the FHLB whereby the FHLB will provide borrowings as requested by Suncoast when
such borrowings are secured by specific collateral. Under the first agreement,
advances are secured by government securities and U.S. government agency
securities with a market value of 103% of the advance amount. Under the second
agreement, advances are secured by a blanket floating loan on eligible single
family residential mortgage loan collateral. In determining the amount of
advances available under the second agreement, the unpaid principal balance of
eligible collateral is discounted to 75% (see note D). The stock of the FHLB
owned by Suncoast is also pledged as collateral for advances under this
agreement. After meeting all of its collateral requirements, Suncoast had
excess qualifying assets eligible as collateral for additional borrowings under
this agreement of approximately $54.1 million at June 30, 1996.
Suncoast enters into sales of securities under agreements to
repurchase, which are treated as financings. The obligations to repurchase
securities sold are reflected as a liability and the carrying amount of the
securities underlying the agreements is included in mortgage-backed securities
available for sale in the Consolidated Statements of Financial Condition.
Mortgage-backed securities sold under reverse repurchase agreements are
delivered to the broker- dealers who arrange the transactions. The
broker-dealers may sell, loan, or otherwise dispose of such securities to other
parties in the normal course of their operation, and agree to resell to
Suncoast the identical securities at the maturities of the agreements. As of
June 30, 1996, no such financings were outstanding.
Suncoast also enters into fixed coupon dollar reverse repurchase
agreements, which are treated as financings. Under a fixed coupon dollar
reverse repurchase agreement, Suncoast sells a security and agrees to
repurchase another security which is substantially the same as the one sold.
These agreements are accounted for in the same manner as reverse repurchase
agreements. As of June 30, 1996, no such financings were outstanding.
During the period from July 1, 1993 to February 28, 1995, RFC, a
lender, provided Suncoast with a revolving warehouse credit facility for as
much as $100.0 million which bore interest either at the prime rate or at
tiered rates over the U.S. Dollar London Interbank Offered Rate. Suncoast drew
advances on this line of credit to fund its mortgage originations and the
advances were collateralized by specific mortgages originated and awaiting sale
by Suncoast.
C-20
<PAGE>
Commitment fees of $41,666 and $58,800 were paid during Fiscal 1995 and 1994,
respectively, to RFC by Suncoast to use the credit line. Upon expiration, this
credit line was not renewed by Suncoast.
Interest expense on borrowed funds for the years ended June 30 is
summarized below (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------- ------- --------
<S> <C> <C> <C>
Advances from:
FHLB $ 2,772 $ 3,155 $ 349
RFC 1,155
Reverse repurchase agreements 159 1,283
Dollar reverse repurchase agreements 115 493
--------- -------- --------
$ 3,046 $ 4,931 $ 1,504
========= ======== ========
</TABLE>
M. LEASES
Suncoast leases space for its administrative offices, two savings
branch offices, storage facilities and certain equipment. All office leases
have escalation clauses tied either to a fixed schedule or to increases in the
Consumer Price Index. The following is a schedule of approximate future minimum
payments required under these operating leases at June 30, 1996 for future
fiscal years ending June 30 (in thousands):
1997 $1,078
1998 906
1999 881
2000 610
2001 66
Thereafter -
------
3,541
Less:
Income from subleases 147
------
$3,394
======
Rent expense was $1.2 million, $2.0 million and $2.1 million for the
years ended June 30, 1996, 1995, and 1994, respectively.
N. STOCKHOLDERS' EQUITY
Suncoast has an incentive stock option plan approved by its Board of
Directors and stockholders. There are 467,500 total shares in the plan, and a
total of 349,760 shares of common stock are reserved and authorized for
issuance under this plan. Transactions relating to this stock option plan for
the three year period ended June 30, 1996 are as follows:
C-21
<PAGE>
<TABLE>
<CAPTION>
Options Option Price
Outstanding Per Share
----------- ------------
<S> <C> <C>
Balance, June 30, 1993 349,400 $ 2.00-3.00
Exercised (24,400) 2.00-3.00
Cancelled (8,200) 2.00-3.00
---------- ------------
Balance, June 30, 1994 316,800 2.00-3.00
Granted 84,000 7.19-7.38
Exercised (33,000) 2.00-3.00
Cancelled (11,600) 2.00-7.38
---------- ------------
Balance, June 30, 1995 356,200 2.00-7.38
Granted 7,000 6.94
Exercised (14,400) 2.00-3.00
Cancelled (26,800) 2.00-7.38
---------- ------------
Balance, June 30, 1996 322,000 $ 2.00-7.38
========== ============
</TABLE>
At June 30, 1996 and 1995, options for 284,600 and 274,800 shares were
exercisable at an average price per share of $3.26 and $3.12, respectively.
Suncoast has an Employee Stock Bonus/401K Plan (Stock Bonus Plan) for
the benefit of certain eligible employees of Suncoast. Contributions to the
Stock Bonus Plan by Suncoast are at the discretion of Suncoast's Board of
Directors. No contributions were made to the Stock Bonus Plan for the years
ended June 30, 1996 and 1995. Suncoast expensed $224,400 for contributions made
to the Stock Bonus Plan for the year ended June 30, 1994.
There are various regulatory limitations on the extent to which
Suncoast can pay dividends. Suncoast is required to comply with the OTS capital
distribution regulations, which condition Suncoast's ability to make certain
dividend distributions on Suncoast's capital level and supervisory condition.
The OTS has established a three-tiered qualification system, and gives savings
associations meeting their fully phased-in capital requirements greater
flexibility to pay dividends than associations that must build their capital
levels to reach the fully phased-in capital requirement. Even though Suncoast
presently meets its fully phased-in capital requirements, dividends cannot be
paid if Suncoast does not meet its capital requirements at a future date or if
payment of dividends would cause Suncoast not to meet its capital requirements.
The payment of dividends is also prohibited if after such payment Suncoast
would be considered undercapitalized. Moreover, the OTS has the authority to
prohibit the payment of dividends even if Suncoast meets its capital
requirements if such payments would affect the safety and soundness of the
institution.
On July 9, 1993, Suncoast issued 920,000 shares of its 8%
Noncumulative Convertible Preferred Stock, Series A (the "Preferred Stock") in
a public offering which added net proceeds of approximately $12.2 million to
stockholders' equity. The Preferred Stock is convertible by the holder into
Suncoast Common Stock at any time, unless previously redeemed by Suncoast, at a
conversion price of $9.00 per share of Common Stock. Suncoast can redeem the
Preferred Stock after July 1, 1995, at a redemption price of $15.00 per share
if the Common Stock is trading at a minimum price of $10.80 per share for 20 to
30 trading days prior to redemption.
C-22
<PAGE>
The Preferred Stock is otherwise redeemable from July 1, 1998 to June 30, 1999
at $16.20 per share and at declining premiums thereafter. Dividends on the
Preferred Stock are payable at an annual rate of $1.20 per share if, when and
as declared by Suncoast's Board of Directors. Dividends are not cumulative and
are payable quarterly in arrears. Dividends on the Preferred Stock were paid
each quarter after the issuance of the stock and amounted to $1.1 million in
each of the years ended June 30, 1996 and 1995. In connection with this stock
offering, Suncoast issued warrants to the offering underwriters to purchase an
aggregate of 80,000 shares of Preferred Stock. These warrants are exercisable
at a price per share of $18.00 in the case of Preferred Stock or at $10.80 in
the case of Common Stock for a period of four years after July 9, 1994. At
June 30, 1996, none of these warrants had been exercised and none of the
Preferred Stock had been converted or redeemed.
Suncoast has a deferred compensation plan to provide its President
with a supplemental retirement benefit. Under this plan, Suncoast funded an
irrevocable trust with a lump sum of $213,000, which has been invested in
corporate- owned life insurance. The President will be fully vested in the
plan in 1997. Suncoast recorded an expense of $49,000 and $108,000 under this
Plan in Fiscal 1996 and Fiscal 1995, respectively.
O. INCOME TAXES
The provision for income taxes for the years ended June 30 differs
from the amount of income tax determined by applying the applicable U.S.
statutory federal income tax rate to pretax income as a result of the following
differences (dollars in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
---------------------- -------------------- ---------------------
% Amount % Amount % Amount
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Statutory U.S.
tax rates 35.0 $1,335 35.0 $326 35.0 $1,088
Increase (decrease)
in rates resulting
from:
Benefit of Federal
surtax exemption (1.0) (31)
State tax (net of
Federal benefit) 3.7 141 3.7 34 3.2 100
Other (1.7) (65) (3.3) (30) (4.9) (152)
---- ------ ---- ---- ---- -------
37.0 $1,411 35.4 $330 32.3 $ 1,005
==== ====== ==== ==== ==== =======
</TABLE>
The components of the provision for income taxes for the years ended
June 30, 1996, 1995 and 1994 consist of (in thousands):
C-23
<PAGE>
<TABLE>
<CAPTION>
1996 1995 1994
---------- ----------- ----------
<S> <C> <C> <C>
Current:
Federal $ 950 $ 24 $ 555
State 95 61 153
----------- ----------- ----------
Total current 1,045 85 708
----------- ----------- ----------
Deferred:
Federal 326 209 267
State 22 (19) (5)
----------- ----------- ----------
Total deferred 348 190 262
----------- ----------- ----------
Tax benefit for disqualification of
stock options credited to stockholders'
equity 18 55 35
----------- ----------- ----------
Total provision 1,411 $ 330 $ 1,005
=========== =========== ==========
</TABLE>
The tax effects of temporary differences that give rise to significant
portions of deferred tax assets and liabilities as of June 30, 1996 and 1995
are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Deferred tax asset:
Capitalized servicing costs $ 375 $ 442
Deferred loan fees 243 191
Deferred gain on sale of servicing 38
Accrued vacation 76 81
Reserves 278 189
Unrealized loss on mortgage-backed
securities available for sale 117
Alternative minimum tax credit carryover 66
Other 87 40
-------- --------
Gross deferred tax asset 1,176 1,047
-------- --------
Deferred tax liability:
Deferred premium on loans sold 468 573
Deferred premium on loans in portfolio 230 123
Fixed assets 199 137
Book over tax basis for originated
mortgage servicing rights 312
Unrealized gain on mortgage-backed
securities available for sale 239
Other 74 90
-------- --------
Gross deferred tax liability 1,283 1,162
-------- --------
Deferred tax asset valuation allowance -- ---
-------- --------
Net deferred tax (liability) asset $ (107) $ (115)
======== ========
</TABLE>
C-24
<PAGE>
Management believes, based on Suncoast's earnings history and its
future expectations, that Suncoast will have sufficient taxable income in
future years to realize the net deferred income tax asset. In evaluating the
expectation of sufficient future taxable income, management considered future
reversal of temporary differences and available tax planning strategies that
could be implemented, if required. A valuation allowance was not required as of
June 30, 1996 and 1995 as it was management's assessment that, based on
available information, it is more likely than not that the deferred tax asset
will be realized. A valuation will be established if there is a change in
management's assessment of the amount of the net deferred tax asset that is
expected to be realized.
P. OTHER INCOME
The following is a computation of Suncoast's gains on the sale of
loans and loan servicing rights for the years ended June 30 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
----------- ---------- -----------
<S> <C> <C> <C>
Proceeds from sales of loans
and loan servicing rights $ 117,818 $ 79,873 $ 2,181,886
Carrying value of loans sold (117,000) (79,313) (2,166,937)
----------- ---------- -----------
Cash before premiums
on the sale of loans 818 560 14,949
Premiums on the sale of loans 107 14
----------- ---------- -----------
$ 925 $ 560 $ 14,963
=========== ========== ===========
</TABLE>
Other income for the years ended June 30 consists of (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C>
Loan processing and other
fees from RTC contracts $ 169 $ 573 $1,004
Rental income 306 310 180
Other 342 433 371
------ ------ ------
$ 817 $1,316 $1,555
====== ====== ======
</TABLE>
Q. OTHER EXPENSES
Other expenses for the years ended June 30 consists of (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------- -------- --------
<S> <C> <C> <C>
Loan expenses $ 375 $ 824 $ 2,162
Federal deposit insurance 859 773 772
Foreclosure expenses on servicing
portfolio 995 614 487
Data processing 645 535 634
Telephone 329 469 1,247
Business insurance 421 463 640
</TABLE>
C-25
<PAGE>
<TABLE>
<S> <C> <C> <C>
Professional and legal 356 381 294
Postage and overnight delivery 172 240 736
Stationery and supplies 240 210 502
Bank service charges and fees 109 95 207
Other 879 1,007 1,364
------- --------- --------
$ 5,380 $ 5,611 $ 9,045
======= ========= ========
</TABLE>
R. BUSINESS SEGMENTS
Suncoast's operations consist of activities in three principal
business segments: banking, mortgage banking and loan servicing. Revenues in
the banking segment consist primarily of interest on mortgage loans and
investment securities. Mortgage banking activities derive revenues primarily
from the interest on loans held for sale, sales of loans in the secondary
mortgage market, sale of loan servicing rights and loan origination income.
Loan servicing activities derive revenues primarily from the collection of fees
on loans serviced. During 1995, Suncoast shifted its primary business emphasis
from mortgage banking to banking. The following is segment information for the
fiscal years ended June 30 (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
BANKING
Revenues:
Interest income $ 23,949 $ 25,011 $ 9,358
Gains on the sale of
mortgage-backed securities 2,950 1,388
Other income 731 1,117 1,154
-------- -------- --------
27,630 27,516 10,512
-------- -------- --------
Expenses:
Interest expense 16,489 18,499 6,449
Employee compensation
and benefits 3,048 1,918 1,311
Depreciation 396 212 178
Provision for losses on real
estate 95 68 150
Provision for loan losses 153 95
Other expenses 2,700 2,318 1,557
-------- -------- --------
22,881 23,110 9,645
-------- -------- --------
Banking income before income
taxes $ 4,749 $ 4,406 $ 867
======== ======== ========
MORTGAGE BANKING
Revenues:
Interest income $ 1,654 $ 300 $ 5,526
Gains on the sale of loans and
loan servicing assets, net 304 560 14,963
Loan origination and other income 331 336 6,212
-------- -------- --------
2,289 1,196 26,701
-------- -------- --------
</TABLE>
C-26
<PAGE>
<TABLE>
<S> <C> <C> <C>
Expenses:
Interest expense 1,009 236 3,703
Employee compensation
and benefits 1,272 2,438 13,347
Depreciation 134 412 564
Other expenses 1,050 2,667 8,249
-------- -------- --------
3,465 5,753 25,863
-------- -------- --------
Mortgage banking income (loss)
before income taxes $ (1,176) $ (4,557) $ 838
======== ======== ========
LOAN SERVICING
Revenues:
Loan servicing fees $ 6,016 $ 7,450 $ 8,088
Amortization of loan
servicing assets (1,617) (1,175) (3,508)
-------- -------- --------
Loan servicing income 4,399 6,275 4,580
Interest income 2,355 2,544 3,727
Gain on sale of loans and
loan servicing assets, net 621
Other income 190 254 264
-------- -------- --------
7,565 9,073 8,571
-------- -------- --------
Expenses:
Interest expense 439 283 758
Employee compensation
and benefits 2,920 3,649 3,704
Depreciation 610 784 559
Other expenses 3,356 3,275 2,147
-------- -------- --------
7,325 7,991 7,168
-------- -------- --------
Loan servicing income (loss)
before income taxes $ 240 $ 1,082 $ 1,403
======== ======== ========
Assets:
Banking $372,861 $439,175 $297,926
Mortgage banking 8,844 6,356 43,827
Loan servicing 20,864 16,822 17,337
-------- -------- --------
$402,569 $462,353 $359,090
======== ======== ========
Capital dispositions
(expenditures), net:
Banking $ (447) $ 8 $ (81)
Mortgage banking (188) 64 (1,760)
Loan servicing (860) 8 (86)
-------- -------- --------
$ (1,495) $ 80 $ (1,927)
======== ======== ========
</TABLE>
C-27
<PAGE>
S. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable to
estimate fair value:
-- The book value was used as a reasonable estimate of fair value for
cash and amounts due from depository institutions, interest-bearing
deposits, variable rate loans and fixed rate loans with maturities
less than one year, demand and savings deposits, and short-term time
deposits.
-- The book value was used as a reasonable estimate of fair value for
stock issued by the Federal Home Loan Bank and short-term repurchase
agreements maturing within one month.
-- Fair values of fixed rate loans and certificates of deposit with
maturities greater than one year are estimated by discounting the
future cash flows using the current rates at which similar instruments
would be issued with comparable credit ratings and terms.
-- The fair values of commitments, letters of credit and guarantees are
equal to their contractual amount based on the assumptions that
Suncoast will be required to perform on all such instruments existing.
-- The fair value of loan servicing assets is determined by independent
valuation or discounted cash flow analysis as discussed in Note F.
Since the reported fair values of financial instruments are based on a
variety of factors, they may not represent actual values that could have been
realized or that will be realized in the future.
The estimated fair values of Suncoast's financial instruments for
which fair value differed from book value are as follows (in thousands):
<TABLE>
<CAPTION>
June 30, 1996 June 30, 1995
---------------------------- ----------------------------
Book Value Fair Value Book Value Fair Value
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Loans receivable in portfolio $ 31,563 $ 31,635 $ 16,568 $ 16,634
Loan servicing assets $ 11,718 $ 12,140 $ 10,105 $ 10,186
Certificates of deposit $ 28,657 $ 29,103 $ 40,458 $ 40,758
</TABLE>
T. CONTINGENCIES
In order to increase the Savings Association Insurance Fund ("SAIF")
of the Federal Deposit Insurance Corporation to its minimum required reserve
ratio of 1.25%, a proposal has been made to impose a special one-time
assessment of 65 to 90 basis points on all SAIF-insured deposits as of March
31, 1995. This one-time assessment may be payable in 1997 at which point the
Association's annual premium would thereafter be reduced. If the assessment is
made at the currently proposed rate, the effect on the Bank would be an
after-tax charge of approximately $1.9 million.
C-28
<PAGE>
U. SUBSEQUENT EVENT
On July 15, 1996, Suncoast entered into a definitive agreement to be
acquired by BankUnited Financial Corporation ("BankUnited"). Under terms of
the agreement one share of BankUnited Class A Common Stock will be issued for
each share of Suncoast Common Stock. Each share of Suncoast Preferred Stock
will be exchanged for a new issue of BankUnited Preferred Stock having
substantially similar terms as the Suncoast Preferred Stock. The transaction
is subject to stockholder and regulatory approvals and other conditions and is
expected to close by December 1996.
C-29
<PAGE>
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
- - -----------------------------------------------------------------------------
Consolidated Quarterly Results (Unaudited)
- - -----------------------------------------------------------------------------
The following table summarizes the quarterly results of operations for the
fiscal years ended June 30, 1996 and 1995 (in thousands, except per share data):
<TABLE>
<CAPTION>
First Quarter Second Quarter
Ended September 30, Ended December 31,
--------------------- ---------------------
1995 1994 1995 1994
------ ------ ------ -------
<S> <C> <C> <C> <C>
Income $9,510 $8,502 $9,333 $9,371
Expense 8,804 8,201 8,613 9,170
------ ------ ------ ------
Net income 706 301 720 201
Preferred stock dividends 276 276 276 276
------ ------ ------ ------
Earnings (loss) available to common stockholders $ 430 $ 25 $ 444 $ (75)
====== ====== ====== ======
Earnings (loss) per share - primary $ 0.20 $ 0.01 $ 0.21 $(0.04)
Earnings per share - fully diluted $ 0.19 * $ 0.20 *
====== ====== ====== ======
<CAPTION>
Third Quarter Fourth Quarter
Ended March 31, Ended June 30,
---------------------- ---------------------
1996 1995 1996 1995
------ ------- ------ -------
<S> <C> <C> <C> <C>
Income $9,136 $9,755 $9,505 $10,157
Expense 8,633 9,926 9,032 9,887
------ ------ ------ -------
Net income (loss) 503 (171) 473 270
Preferred stock dividends 276 276 276 276
------ ------ ------ -------
Earnings (loss) available to common stockholders $ 227 $ (447) $ 197 $ (6)
====== ====== ====== =======
Earnings (loss) per share - primary $ 0.10 $(0.23) $ 0.10 $ -
Earnings per share - fully diluted $ 0.10 * $ 0.10 *
====== ====== ====== =======
</TABLE>
* Omitted due to anti-dilution.
C-30
<PAGE>
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
SEPTEMBER 30, 1996
UNAUDITED FINANCIAL INFORMATION
<PAGE>
<TABLE>
<CAPTION>
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
SEPT. 30,
1996 JUNE 30,
(UNAUDITED) 1996
---------- ---------
ASSETS (In thousands)
<S> <C> <C>
Cash and cash equivalents:
Cash and amounts due from depository institutions $ 4,588 $ 1,260
Interest-earning deposits 1,430 622
---------- ---------
Total cash and cash equivalents 6,018 1,882
---------- ---------
Repurchase agreements 15,000
Federal Home Loan Bank Stock 3,075 3,875
Loans receivable:
In portfolio 330,781 320,828
Held for sale, sold under commitments 4,208 6,730
---------- ---------
Total loans receivable, net 334,989 327,558
---------- ---------
Mortgage-backed securities available for sale 18,196 18,391
Loan servicing assets:
Purchased mortgage servicing rights 9,396 9,525
Originated mortgage servicing rights 747 834
Premiums on the sale of loans 1,311 1,359
---------- ---------
Total loan servicing assets 11,454 11,718
---------- ---------
Accrued interest and dividends receivable 3,065 3,042
Real estate owned, net 245 261
Amounts due from purchasers of loans and loan servicing rights 128 19,883
Office properties and equipment 6,787 6,640
Other assets 10,446 9,319
---------- ---------
$ 409,403 $ 402,569
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 298,461 $ 301,201
Advances by borrowers for taxes and insurance 4,063 3,138
Advances from Federal Home Loan Bank and other borrowings 73,310 68,500
Deferred income taxes 0 107
Principal and interest payable on loans serviced for others 105 274
Other liabilities 8,794 3,811
---------- ---------
Total liabilities 384,733 377,031
---------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock - $5.00 par value; 1,000,000 shares authorized;
920,000 shares issued and outstanding 4,600 4,600
Common stock - $1.10 par value; 5,000,000 shares authorized; 2,197,930 shares
and 1,996,930 shares, respectively, issued and outstanding 2,418 2,197
Additional paid-in capital 17,657 17,295
Retained earnings 301 1,642
---------- ---------
24,976 25,734
Unrealized gain (loss) on mortgage-backed securities available for sale, net of
deferred income taxes (306) (196)
---------- ---------
Total stockholders' equity 24,670 25,538
---------- ---------
$ 409,403 $ 402,569
========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
C-31
<PAGE>
<TABLE>
<CAPTION>
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 30,
1996 1995
-------- --------
(In thousands, except per share data)
<S> <C> <C>
Interest income:
Loans $ 6,600 $ 3,138
Mortgage-backed securities 379 2,738
Repurchase agreements and investments 256 561
Premiums on the sale of loans 30 34
Other 48 299
-------- --------
7,313 6,770
-------- --------
Interest expense:
Deposits 3,442 3,981
Short-term borrowings 972 614
Long-term borrowings 25
-------- --------
4,439 4,595
-------- --------
Net interest income before provision for loan losses 2,874 2,175
Provision for loan losses 12
-------- --------
Net interest income after provision for loan losses 2,862 2,175
-------- --------
Other income (expense):
Loan servicing fees 1,412 1,536
Amortization of loan servicing assets (466) (300)
-------- --------
Loan servicing income 946 1,236
Gains on the sale of loans and loan servicing assets, net 222 14
Gains on the sale of mortgage-backed securities, net 1,213
Other 226 277
-------- --------
1,394 2,740
-------- --------
Non-interest expenses:
Employee compensation and benefits 1,715 1,627
Occupancy and equipment 739 731
Provision for losses on real estate 16
Other 1,161 1,437
Assessment to recapitalize Savings Association Insurance Fund 2,317
-------- --------
5,948 3,795
-------- --------
Income before taxes (1,692) 1,120
(Benefit from) provision for income taxes (626) 414
-------- --------
Net (loss) income $ (1,066) $ 706
======== ========
Net (loss) income (1,066) 706
Preferred stock dividends 276 276
-------- --------
(Loss) earnings available to common stockholders $(1,342) $ 430
======== ========
(Loss) earnings per common share:
Primary $ (0.62) $ 0.20
Fully diluted $ (0.62) $ 0.19
Weighted-average common and common equivalent shares:
Primary 2,160 2,140
Fully diluted 3,710 3,680
</TABLE>
The accompanying notes are an integral part of these financial statements.
C-32
<PAGE>
<TABLE>
<CAPTION>
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNUADITED)
Three months ended
September 30
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES: (In thousands)
<S> <C> <C>
Net (loss) income $ (1,065) $ 706
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization of office properties and equipment 296 283
(Benefit from) provision for income taxes (626) 414
Accretion of deferred loan fees (61) (45)
Amortization of purchased and originated mortgage servicing rights 379 255
Amortization of premiums on the sale of loans 48 45
Amortization of discounts and premiums, net 67 (136)
Net decrease (increase) in loans receivable held for sale 2,532 (2,304)
Provision for loan losses 12
Provision for losses on real estate 16
Net decrease in amounts due from purchasers of loans and loan servicing rights 19,755 254
Increase in amounts due for purchases of mortgage securities 48,634
Gains on the sale of loans and loan servicing assets, net (222) (14)
Gains on the sale of mortgage-backed securities (1,212)
Increase in accrued interest and dividends receivable (23) (496)
Increase in other assets ( 1,135) (231)
Increase (decrease) in other liabilities 5,398 (3,412)
Other 8 8
--------- ---------
Net cash provided by (used in) operating activities 25,379 42,749
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans receivable in portfolio (9,909) (34,379)
Principal repayments of mortgage-backed securities 20 4,361
Purchase of mortgage-backed securities (149,307)
Proceeds from sales of mortgage-backed securities 117,158
Purchase of repurchase agreements (15,000) (1,870,000)
Proceeds from maturities of repurchase agreements 1,935,000
Capital (expenditures) dispositions, net (443) (115)
(Decrease) increase in originated mortgage servicing rights 45 (68)
Payments for purchased mortgage servicing rights (208)
Proceeds from sales of purchased servicing rights and premiums on the sale of loans 150
Proceeds from sale of real estate owned 285
Purchase of Federal Home Loan Bank stock 2,900
Proceeds from redemption of Federal Home Loan Bank stock (2,100)
--------- ---------
Net cash provided by (used in) investing activities (24,545) 2,935
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in deposits (2,740) (21,529)
Increase in advances by borrowers for taxes and insurance 925 318
Advances from Federal Home Loan Bank 108,500
Repayments of advances and other borrowings from Federal Home Loan Bank, net (118,000)
Proceeds from (repayments of) other borrowings, NET 14,310 (63,623)
Proceeds from issuance of common stock 583 14
Cash dividends paid on preferred stock (276) (276)
--------- ---------
Net cash (used in) provided by financing activities 3,302 (85,096)
--------- ---------
Net (decrease) increase in cash and cash equivalents 4,136 (39,412)
Cash and cash equivalents at beginning of period 1,882 43,770
--------- ---------
Cash and cash equivalents at end of period $ 6,018 $ 4,358
--------- ---------
Supplemental disclosures of cash flow information:
Cash paid for interest $ 4,293 $ 4,867
Cash paid for income taxes, net of refunds received -0- 1
Supplemental non-cash activities:
REO obtained through foreclosure $ -0- $ -0-
</TABLE>
The accompanying notes are an integral part of these financial statements.
C-33
<PAGE>
SUNCOAST SAVINGS AND LOAN ASSOCIATION, FSA
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
( 1 ) ACCOUNTING PRINCIPLES
The unaudited interim consolidated financial statements of Suncoast
Savings and Loan Association, FSA ("Suncoast") presented herein should be read
in conjunction with the audited consolidated financial statements of Suncoast
for the fiscal year ended June 30, 1996 and the footnotes to such statements.
The Consolidated Statement of Financial Condition as of September
30, 1996 and the Consolidated Statements of Operations for the three months
ended September 30, 1996 and 1995 and the Consolidated Statements of Cash Flows
for the three months ended September 30, 1996 and 1995 are unaudited, but in the
opinion of management reflect all adjustments (none of which was other than a
normal recurring accrual) which are necessary to a fair statement of the results
for the interim periods presented. Interim results are not necessarily
indicative of the results to be expected for the entire year.
Certain amounts reported in prior periods' financial statements have
been reclassified to conform to classifications used for the period ended
September 30, 1996.
(2) EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) per share is computed on the basis of the weighted
average number of common shares outstanding during the period plus common stock
equivalents applicable to stock options. When dilutive, fully diluted earnings
(loss) per common share is derived as follows: Earnings (loss) available to
common shareholders are increased by preferred dividends paid eliminated upon
conversion of the preferred shares to common shares. This remainder is divided
by the sum of the average number of common shares outstanding for the period
plus the added common shares that would have been outstanding if: (a) all of the
outstanding preferred shares had been converted into common shares at the
beginning of the period and (b) all stock options granted that have economic
value were exercised at the beginning of the period, and the related funds that
would have been received by Suncoast upon such exercise were used to repurchase
outstanding common shares.
(3) ASSESSMENT TO RECAPITALIZE THE SAVINGS ASSOCIATION INSURANCE FUND ("SAIF")
On September 30, 1996, Congressional legislation was enacted to
recapitalize the SAIF and to merge the fund into the Bank Insurance Fund
("BIF"). Both SAIF and BIF are administered by the Federal Deposit Insurance
Corporation ("FDIC"). As a result of the legislation, Suncoast
C-34
<PAGE>
has been assessed $2,317,000 which has been accrued as an expense at September
30, 1996 and will be paid on November 27, 1996.
(4) PENDING MERGER
On July 15, 1996, Suncoast entered into a definitive agreement to be
acquired by BankUnited Financiai Corporation ("BankUnited"). Under terms of the
agreement one share of BankUnited Class A Common Stock will be issued for each
share of Suncoast Common Stock. Each share of Suncoast Preferred Stock will be
exchanged for a new issue of BankUnited Preferred Stock having substantially
similar terms as the Suncoast Preferred Stock. The transaction has now been
approved by stockholders of both Suncoast and BankUnited and has received all
regulatory approvals. The merger is expected to be effective on November 15,
1996.
C-35
<PAGE>
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 information and representations must
not be relied upon as having been authorized by the Company, the Trust Issuer or
the Underwriters. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company since the date hereof or that the
information contained herein is correct as of any time subsequent to the date
hereof. This Prospectus does not constitute an offer to sell or a solicitation
of an offer to buy any securities other than the registered securities to which
it relates. This Prospects 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
PAGE
----
Summary ................................................. 1
Summary Consolidated Financial Information and
Other Data............................................ 9, 28
Risk Factors............................................. 11
BankUnited Financial Corporation......................... 23
The Trust Issuer......................................... 25
Use of Proceeds.......................................... 26
Market for the Preferred Securities...................... 26
Accounting Treatment..................................... 26
Capitalization........................................... 27
Management's Discussion and Analysis of
March 31, 1997 Operating Results and
Financial Information................................. 30
Description of the Prefered Securities................... 44
Description of the Junior Subordinated Debentures........ 57
Description of the Guarantee............................. 69
Relationship Among the Preferred Securties,
the Junior Subordinated Debentures, the Expense
Agreement and the Guarantee............................ 72
Certain Federal Income Tax Consequences.................. 74
ERISA Considerations..................................... 78
Underwriting............................................. 79
Validity of Securities................................... 80
Experts ................................................ 80
Available Information.................................... 81
Incorporation of Certain Documents by Reference.......... 83
Appendix A - 1996 Annual Report on Form 10-K/A
of BankUnited Financial Corporation.................... A-1
Busines of BankUnited Corporation............... A-2
Regulation...................................... A-23
Taxation........................................ A-33
Management's Discussion and Analysis
of Financial Condition and
Results of Operations......................... A-43
Consolidated Financial Statements............... A-53
Unaudited Pro Forma Condensed
Combined Financial Statements................. A-88
Appendix B - BankUnited Financial Corporation
March 31, 1997 Operating Results and Financial
Information............................................ B-1
Appendix C - Financial Statements of
Suncoast Savings and Loan Association, FSA.............. C-1
1,600,000 PREFERRED SECURITIES
BANKUNITED CAPITAL II
__% Trust Preferred Securities
(Liquidation Amount
$25 per Preferred Security)
guaranteed, as described herein, by
BANKUNITED FINANCIAL CORPORATION
PROSPECTUS
RYAN, BECK & CO.
June __, 1997
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the offering of the securities
to which this Registration Statement relates which will be borne by BankUnited,
are as set forth below. With the exception of the Securities and Exchange
Commission ("SEC") and National Association of Securities Dealers, Inc. filing
fees, all amounts shown are estimates.
AMOUNT
SEC registration fee............................ $ 13,939.39
NASD filing fee................................. $ 5,100.00
NASDAQ listing fee.............................. $ 1,000.00
Trustee fees and expenses....................... $ 5,000.00
Legal fees and expenses......................... $225,000.00
Accounting fees and expenses.................... $ 35,000.00
Printing and mailing expenses................... $ 40,000.00
Blue Sky fees and expenses...................... $ 7,500.00
Miscellaneous................................... $__________
TOTAL......................................... $__________
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article IX of the Articles of Incorporation of BankUnited
provides that BankUnited shall indemnify its officers and directors to the
fullest extent permitted by law.
The Bylaws of BankUnited provide that BankUnited will
indemnify any person against whom an action is brought or threatened because
that person is or was a director, officer or employee of BankUnited for any
amount for which that person becomes liable under a judgment in such action and
reasonable costs and expenses, including attorneys' fees. Such indemnification
may only be made, however, if (i) final judgment on the merits is in his or her
favor or (ii) in case of settlement, final judgment against him or her or final
judgment in his or her favor, other than on the merits, if a majority of the
Board of Directors of BankUnited determines that he or she was acting in good
faith
II-1
<PAGE>
within the scope of his or her duties and for a purpose he or she could have
reasonably believed under the circumstances was in the best interests of
BankUnited.
Section 607.0831 of the Florida Business Corporation Act
provides, among other things, that a director is not personally liable for
monetary damages to a company or any other person for any statement, vote,
decision, or failure to act, by the director, regarding corporate management or
policy, unless the director breached or failed to perform his or her duties as a
director and such breach or failure constitutes (a) a violation of criminal law,
unless the director had reasonable cause to believe his or her conduct was
lawful or had no reasonable cause to believe his or her conduct was unlawful;
(b) a transaction from which the director derived an improper personal benefit;
(c) a circumstance under which the liability provisions of Section 607.0834 of
the Florida Business Corporation Act (relating to the liability of the directors
for improper distributions) are applicable; (d) willful misconduct or a
conscious disregard for the best interest of the company in the case of a
proceeding by or in the right of the company to procure a judgment in its favor
or by or in the right of a shareholder; or (e) recklessness or an act or
omission in bad faith or with malicious purpose or with wanton and willful
disregard of human rights, safety or property, in a proceeding by or in the
right of someone other than such company or a shareholder.
Section 607.0850 of the Florida Business Corporation Act
authorizes, among other things, BankUnited to indemnify any person who was or is
a party to any proceeding (other than an action by or in the right of
BankUnited) by reason of the fact that he is or was a director, officer,
employee or agent of BankUnited (or is or was serving at the request of
BankUnited in such a position for any entity) against liability incurred in
connection with such proceeding, if he or she acted in good faith and in a
manner reasonably believed to be in the best interests of BankUnited and, with
respect to criminal proceedings, had no reasonable cause to believe his or her
conduct was unlawful.
Florida law requires that a director, officer or employee be
indemnified for expenses (including attorneys' fees) to the extent that he or
she has been successful on the merits or otherwise in the defense of any
proceeding. Florida law also allows expenses of defending a proceeding to be
advanced by a company before the final disposition of the proceedings, provided
that the officer, director or employee undertakes to repay such advance if it is
ultimately determined that indemnification is not permitted.
Florida law states that the indemnification and advancement of
expenses provided pursuant to Section 607.0850 is not exclusive and that
indemnification may be provided by a company pursuant to other means, including
agreements or bylaw provisions. Florida law prohibits indemnification or
advancement of expenses, however, if a judgment or other final adjudication
establishes that the actions of a director, officer or employee constitute (i) a
violation of criminal law, unless he or she had reasonable cause to believe his
or her conduct was lawful or had no reasonable cause to believe his or her
conduct was unlawful; (ii) a transaction from which such person derived an
improper personal benefit; (iii) willful misconduct or conscious disregard for
the best interests of the company in the case of a derivative action or a
proceeding by or in the right of a shareholder, or (iv) in the case of a
director, a circumstance under which the liability provisions of Section
607.0834 of the Florida Business Corporation Act (relating to the liability of
directors for improper distributions) are applicable.
II-2
<PAGE>
BankUnited has purchased director and officer liability
insurance that insures directors and officers against liabilities in connection
with the performance of their duties.
Under the Trust Agreement of the Trust Issuer, BankUnited will
agree to indemnify each of the Trustees of the Trust Issuer or any predecessor
trustee for the Trust Issuer, and to hold harmless against, any loss, damage,
claim, 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, 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.
Item 16. EXHIBITS.*
The following is a list of Exhibits to this Registration
Statement:
1. Form of Underwriting Agreement.
2.1 Agreement and Plan of Merger, dated July 15, 1996, between
BankUnited Financial Corporation ("BankUnited") and Suncoast
Savings and Loan Association, FSA. (Exhibit 2.1 to
BankUnited's Form S-4 Registration Statement, File No.
333-13211, as filed with the Securities and Exchange
Commission on October 1, 1996).
4.1 Articles of Incorporation of BankUnited.
4.2 Bylaws of BankUnited.
4.3 Form of Indenture with respect to BankUnited's ____% Junior
Subordinated Debentures.
4.4 Form of Specimen __% Junior Subordinated Deferrable Interest
Debenture (included as an exhibit to the Form of Indenture
filed as Exhibit 4.3).
4.5 Certificate of Trust of BankUnited Capital II.
4.6 Trust Agreement of BankUnited Capital II.
4.7 Form of Amended and Restated Trust Agreement of BankUnited
Trust II.
4.8 Form of Certificate for ___% Trust Preferred Security of
BankUnited Capital II
(included as an exhibit to Exhibit 4.7)*
4.9 Form of Guarantee Agreement for BankUnited Capital II.
4.10 Form of Agreement as to Expenses and Liabilities (included as
an exhibit to Exhibit 4.7)*
II-3
<PAGE>
5.1 Opinion of Stuzin and Camner, P.A. as to the validity
of the issuance of the __% Junior Subordinated Deferrable
Interest Debentures to be issued by BankUnited.
5.2 Opinion of Richards, Layton & Finger, special Delaware
counsel, as to the validity of the issuance of the ___%
Cumulative Trust Preferred Securities to be issued by
BankUnited Capital II.
8.1 Tax Opinion of Kronish, Lieb, Weiner & Hellman LLP.
10.1 Non-Statutory Stock Option Plan, as amended (Exhibit 4.9 to
BankUnited's Form S-8 Registration Statement [File No.
33-76882], as filed with the Securities and Exchange
Commission on March 24, 1994).**
10.2 1992 Stock Bonus Plan, as amended. (Exhibit 10.2 to
BankUnited's Form 10-K Report for the year ended
September 30, 1994 [the "1994 10-K"]).**
10.3 1994 Incentive Stock Option Plan. (Exhibit 10.3 to the
1994 10-K).**
10.4 Profit Sharing Plan of the Bank (Exhibit 10.4 to BankUnited's
Form 10-K Report for the year ended September 30, 1995).
10.5 1996 Incentive Compensation and Stock Award Plan (Exhibit 10.5
to BankUnited's Form 10-K Report for the year ended September
30, 1996 [the "1996 10-K").**
10.6 Purchase and Assumption Agreement dated March 20, 1995 by and
among BankUnited, the Bank, SouthTrust Corporation, SouthTrust
of Florida, Inc., and SouthTrust Bank of the Suncoast (Exhibit
10.1 to BankUnited's Form 10-Q Report for the quarter ended
March 31, 1995 [the "March 31, 1995 10-Q"]).
10.7 Purchase and Assumption Agreement dated March 20, 1995 by and
among BankUnited, the Bank, SouthTrust Corporation, SouthTrust
of Florida, Inc., and SouthTrust Bank of Southwest Florida,
N.A. (Exhibit 10.2 to the March 31, 1995 10-Q).
10.8 First Amendment to Purchase and Assumption Agreement dated
July 27, 1995 by and among BankUnited, the Bank, SouthTrust
Corporation, SouthTrust of Florida, Inc. and SouthTrust Bank
of the Suncoast (Exhibit 10.1 to BankUnited's Form 10-Q Report
for the quarter ended June 30, 1995 [the "June 30, 1995
10-Q"]).
10.9 First Amendment to Purchase and Assumption Agreement dated
July 27, 1995 by and among BankUnited, the Bank, SouthTrust
Corporation, SouthTrust of Florida, Inc. and SouthTrust of
Southwest Florida, N.A. (Exhibit 10.2 to the June 30, 1995
10-Q).
II-4
<PAGE>
10.10 Form of Employment Agreement between BankUnited and Alfred R.
Camner (Exhibit 10.10 to the 1996 10-K).
10.11 Form of Employment Agreement between BankUnited and Earline G.
Ford (Exhibit 10.11 to the 1996 10-K).
10.12 Form of Employment Agreement between BankUnited and certain of
its senior officers (Exhibit 10.12 to the 1996 10-K).
12.1 Statement regarding calculation of ratios.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Stuzin and Camner, P.A. (set forth in Exhibit 5.1
to this Registration Statement).
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2
to this Registration Statement).
23.4 Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen &
Quentel, P.A.
24.1 Power of attorney (set forth on the signature page in Part II
of this Registration Statement).
25.1 Form T-1: Statement of Eligibility of The Bank of New York
to act as trustee under the Indenture.
25.2 Form T-1: Statement of Eligibility of The Bank of New York to
act as trustee under the Amended and Restated Trust Agreement.
25.3 Form T-1: Statement of Eligibility of The Bank of New York
to act as trustee under the Guarantee Agreement for BankUnited
Trust II.
- -----------------
* Exhibits containing a parenthetical reference in their description are
incorporated herein by reference from the documents described in the
parenthetical reference.
** Exhibits 10.1--10.5 are compensatory plans or arrangements.
II-5
<PAGE>
Item 17. UNDERTAKINGS.
Each of the undersigned Registrants hereby undertakes:
(a) that, for purposes of determining any liability under the
Securities Act of 1933, each filing of BankUnited's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrants pursuant to Item 15 of this Registration Statement,
or otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrants of expenses incurred or paid by a director, officer or
controlling person of the Registrants in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrants will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(c)(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrants 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.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new Registration Statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, BankUnited
Financial Corporation certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-2 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Coral Gables, State of Florida on May 22, 1997.
BANKUNITED FINANCIAL CORPORATION
By: /s/ ALFRED R. CAMNER
--------------------------------
Alfred R. Camner
Chairman of the Board, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, BankUnited
Capital II certifies that it has reasonable grounds to believe it meets all of
the requirements for filing on Form S-2 and has duly caused this Registration
Statement to be filed on its behalf by the undersigned, thereunto duly
authorized, in the City of Coral Gables, State of Florida on May 22, 1997.
BANKUNITED CAPITAL II
By: BANKUNITED FINANCIAL CORPORATION,
as Depositor
By: /s/ ALFRED R. CAMNER
--------------------------------
Alfred R. Camner
Chairman of the Board, President and
Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Alfred R. Camner and Earline G. Ford and
each of them, his true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments to this Registration
Statement and to file the same, with all exhibits thereto and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on May 22, 1997 by the following persons
in the capacities indicated.
/s/ ALFRED R. CAMNER
--------------------------- Chairman of the Board, Chief Executive
Alfred R. Camner Officer, President and Director
(Principal Executive Officer)
II-7
<PAGE>
Vice Chairman of the Board and Director
/s/ LAWRENCE H. BLEM
- -------------------------
Lawrence H. Blum
/s/ EARLINE G. FORD Executive Vice President, Treasurer and
- ------------------------- Director
Earline G. Ford
/s/ SAMUEL A. Milne Executive Vice President and Chief Financial
- ------------------------- Officer (Principal Financial Officer and
Samuel A Milne Principal Accounting Officer)
/s/ MARC D. JACOBSON Director
- -------------------------
Marc D. Jacobson
Director
/s/ ALLEN M. BERNKRANT
- -------------------------
Allen M. Bernkrant
Director
- -------------------------
Patricia L. Frost
/s/ NEIL MESSINGER Director
- -------------------------
Neil Messinger
MARC LIPSITZ Corporate Secretary and Director
- -------------------------
Marc Lipsitz
ANNE W. SOLLOWAY Director
- -------------------------
Anne W. Solloway
II-8
<PAGE>
Vice Chairman of the Board and Director
___________________________
Albert J. Finch
Director
___________________________
Norman Mains
Director
___________________________
Irving P. Cohen
Director
___________________________
E.J. Giusti
Director
___________________________
Bruce Friesner
/s/ CHRISTINA CUERVO MIGOYA Director
- ---------------------------
Christina Cuervo Migoya
/s/ JAMES A. DOUGHERTY Executive Vice President, Chief Operating
- --------------------------- Officer and Director
James A. Dougherty
II-9
<PAGE>
<TABLE>
<CAPTION>
BANKUNITED FINANCIAL CORPORATION
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
1. Form of Underwriting Agreement.
4.1 Articles of Incorporation of BankUnited.
4.2 Bylaws of BankUnited.
4.3 Form of Indenture with respect to BankUnited's ____% Junior Subordinated
Debentures.
4.4 Form of Specimen __% Junior Subordinated Deferrable Interest Debenture (included
as an exhibit to the Form of Indenture filed as Exhibit 4.3).*
4.5 Certificate of Trust of BankUnited Capital II.
4.6 Trust Agreement of BankUnited Capital II.
4.7 Form of Amended and Restated Trust Agreement of BankUnited Trust II.
4.8 Form of Certificate for ___% Trust Preferred Security of BankUnited Capital II
(included as an exhibit to Exhibit 4.7)*
4.9 Form of Guarantee Agreement for BankUnited Capital II.
4.10 Form of Agreement as to Expenses and Liabilities (included as an exhibit to
Exhibit 4.7)*
5.1 Opinion of Stuzin and Camner, P.A. as to the validity of the issuance of the __%
Junior Subordinated Deferrable Interest Debentures to be issued by BankUnited.***
5.2 Opinion of Richards, Layton & Finger, special Delaware counsel, as to the validity of
the issuance of the ___% Cumulative Trust Preferred Securities to be issued by
BankUnited Capital II.***
8.1 Tax Opinion of Kronish, Lieb, Weiner & Hellman LLP.***
12.1 Statement regarding calculation of ratios.
<PAGE>
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Stuzin and Camner, P.A. (set forth in Exhibit 5.1 to this Registration
Statement).***
23.3 Consent of Richards, Layton & Finger (included in Exhibit 5.2 to this Registration
Statement).***
23.4 Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.***
24.1 Power of attorney (set forth on the signature page in Part II of this Registration
Statement).
25.1 Form T-1: Statement of Eligibility of The Bank of New York to act as trustee under
the Indenture.***
25.2 Form T-1: Statement of Eligibility of The Bank of New York to act as trustee under
the Amended and Restated Trust Agreement.***
25.3 Form T-1: Statement of Eligibility of The Bank of New York to act as trustee under
the Guarantee Agreement for BankUnited Trust II.***
</TABLE>
- ----------------------------------------------------------
* Exhibits containing a parenthetical reference in their description are
incorporated herein by reference from the documents described in the
parenthetical reference.
** Exhibits 10.1 - 10.5 are compensatory plans or arrangements
*** To be filed by amendment.
EXHIBIT 1
BANKUNITED CAPITAL II
(a Delaware business trust)
1,600,000 Preferred Securities
[ ]% Cumulative Trust Preferred Securities
(Liquidation Amount $25 per Preferred Security)
UNDERWRITING AGREEMENT
May ____, 1997
Raymond James & Associates, Inc.
Ryan, Beck & Co.
c/o Ryan, Beck & Co
80 Main Street
West Orange, New Jersey 07052
Ladies and Gentlemen:
BankUnited Capital II (the "Trust"), a statutory business trust
organized under the Business Trust Act (the "Delaware Act") of the State of
Delaware (Chapter 38, Title 12, of the Delaware Business Code, 12 Del. C.
Section 3801 et seq.), and BankUnited Financial Corporation, a Florida
corporation (the "Company") as depositor of the Trust and as guarantor
(hereafter the Trust and the Company are referred to collectively as the
"Offerors"), hereby confirm their agreement (the "Agreement") with Raymond James
& Associates, Inc. and Ryan, Beck & Co. (collectively, the "Underwriters"), with
respect to the issue and sale by the Trust and the purchase by the Underwriters
in such amounts as are set forth in Schedule A hereto opposite the name of each
such Underwriter, of 1,600,000 (the "Initial Securities") of the Trust's _____%
Cumulative Trust Preferred Securities (the "Preferred Securities"). The Trust
also proposes to issue and sell to the Underwriters, at the Underwriters'
option, up to an additional 240,000 Preferred Securities (the "Option
Securities") as set forth herein. The term "Preferred Securities" as used
herein, unless indicated otherwise, shall mean the Initial Securities and the
Option Securities.
The Preferred Securities and the Common Securities (as defined herein)
are to be issued pursuant to the terms of an Amended and Restated Trust
Agreement dated as of May ___, 1997 (the "Trust Agreement"), among the Company,
as depositor, The Bank of New York ("BONY"), a New York banking corporation, as
property trustee (the "Property Trustee"), The Bank of New York (Delaware), a
Delaware banking corporation, as Delaware trustee (the "Delaware Trustee") and
the Administrative Trustees named therein (the "Administrators," and together
with the
<PAGE>
Property Trustee and the Delaware Trustee, the "Trustees") and the
holders from time to time of undivided interests in the assets of the Trust. The
Preferred Securities will be guaranteed by the Company, on a subordinated basis
and subject to certain limitations, with respect to distributions and payments
upon liquidation, redemption or otherwise (the "Guarantee") pursuant to the
Guarantee Agreement dated as of May ____, 1997 (the "Guarantee Agreement"),
between the Company and BONY, as guarantee trustee (the "Guarantee Trustee").
The assets of the Trust will consist of ____% junior subordinated deferrable
interest debentures due ____________, 2027 (the "Junior Subordinated
Debentures") of the Company which will be issued under the Indenture dated as of
____________, 1997 (the "Indenture"), between the Company and BONY, as trustee
(the "Indenture Trustee"). Under certain circumstances, the Junior Subordinated
Debentures will be distributable to the holders of undivided beneficial
interests in the assets of the Trust. The entire proceeds from the sale of the
Preferred Securities will be combined with the entire proceeds from the sale by
the Trust to the Company of the Trust's common securities (the "Common
Securities"), and will be used by the Trust to purchase an equivalent amount of
Junior Subordinated Debentures.
The initial public offering price for the Preferred Securities, the
purchase price to be paid by the Underwriters for the Preferred Securities, the
commission per Preferred Security to be paid by the Company to the Underwriters
and the rate of interest to be paid on the Preferred Securities shall be agreed
upon by the Company and the Underwriters, and such agreement shall be set forth
in a separate written instrument substantially in the form of Exhibit A hereto
(the "Price Determination Agreement"). The Price Determination Agreement may
take the form of an exchange of any standard form of written telecommunication
between the Company and the Underwriters and shall specify such applicable
information as is indicated in Exhibit A hereto. The offering of the Preferred
Securities will be governed by this Agreement, as supplemented by the Price
Determination Agreement. From and after the date of the execution and delivery
of the Price Determination Agreement, this Agreement shall be deemed to
incorporate, and all references herein to "this Agreement" shall be deemed to
include, the Price Determination Agreement.
The Offerors have prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-2 (File No.
333-_____) covering the registration of the Preferred Securities, the Guarantee
and the Junior Subordinated Debentures under the Securities Act of 1933, as
amended (the "1933 Act"), including the related preliminary prospectus, and, if
such registration statement has not become effective, the Company will prepare
and file, prior to the effective date of such registration statement, an
amendment to such registration statement, including a final prospectus. Each
prospectus used before the time such registration statement becomes effective is
herein called a "preliminary prospectus". Such registration statement, including
the exhibits thereto and the documents incorporated by reference therein
pursuant to Item 12 of Form S-2 under the 1933 Act, at the time it becomes
effective and including documents filed after such effective time under the
Securities Exchange Act of 1934, as amended (the "1934 Act") is herein called
the "Registration Statement," and the prospectus, including the documents
incorporated by reference therein pursuant to Item 12 of Form S-2 under the 1933
Act, included in the Registration Statement at the time it becomes effective is
herein
2
<PAGE>
called the "Prospectus" except that, if any revised prospectus provided to the
Underwriters by the Company for use in connection with the offering of the
Preferred Securities differs from the prospectus included in the Registration
Statement at the time it becomes effective (whether or not such prospectus is
required to be filed pursuant to Rule 424(b)), the term "Prospectus" shall refer
to such revised prospectus from and after the time it is first furnished to the
Underwriters for such use.
The Company understands that the Underwriters propose to make a public
offering of the Preferred Securities (the "Offering") as soon as possible after
the Registration Statement becomes effective. The Underwriters may assemble and
manage a selling group of broker-dealers that are members of the National
Association of Securities Dealers, Inc. ("NASD") to participate in the
solicitation of purchase orders for the Preferred Securities under a selected
dealer agreement, the form of which is set forth as Exhibit B to this Agreement.
Section 1. REPRESENTATIONS AND WARRANTIES.
(a) The Offerors jointly and severally represent and warrant
to and agree with each of the Underwriters that:
(i) The Company meets the requirements for use of Form
S-2 under the 1933 Act and when the Registration Statement on such form
shall become effective and at all times subsequent thereto up to the
Closing Time referred to below and with respect to Option Securities,
up to the Option Closing Date referred to below, (A) the Registration
Statement and any amendments and supplements thereto will comply in all
material respects with the requirements of the 1933 Act and the rules
and regulations of the Commission promulgated thereunder (the "1933 Act
Regulations"); (B) neither the Registration Statement nor any amendment
or supplement thereto will contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; and (C)
neither the Prospectus nor any amendment or supplement thereto will
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
except that this representation and warranty does not apply to
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Offerors by the Underwriters
expressly for use in the Registration Statement or the Prospectus, or
any information contained in any Form T-1 which is an exhibit to the
Registration Statement. The statements contained under the caption
"Underwriting" in the Prospectus constitute the only information
furnished to the Offerors in writing by the Underwriters expressly for
use in the Registration Statement or the Prospectus.
(ii) The documents incorporated by reference in the
Prospectus pursuant to Item 12 of Form S-2 under the 1933 Act, at the
time they were filed with the Commission, complied in all material
respects with the requirements of the 1934 Act, and the rules and
regulations of the Commission promulgated thereunder (the "1934 Act
Regulations") and, when read together and with the other information
contained in the
3
<PAGE>
Prospectus, at the time the Registration Statement becomes effective
and at all times subsequent thereto up to the Closing Time or the
Option Closing Date, as the case may be, will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein not misleading, in each case after excluding any statement that
does not constitute a part of the Registration Statement or the
Prospectus pursuant to Rule 412 of the 1933 Act Regulations.
(iii) Price Waterhouse LLP, who are reporting upon the
audited financial statements included or incorporated by reference in
the Registration Statement, are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(iv) This Agreement has been duly authorized, executed
and delivered by each of the Offerors and, when duly executed by the
Underwriters, will constitute the valid and binding agreement of the
Offerors enforceable against the Offerors in accordance with its terms,
except as enforcement thereof may be limited by bankruptcy, insolvency,
or reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable
principles. The Guarantee Agreement, the Junior Subordinated
Debentures, the Trust Agreement and the Indenture have each been duly
authorized and when validly executed and delivered by the Company and,
in the case of the Guarantee, by the Guarantee Trustee, in the case of
the Trust Agreement, by the Trustees, and in the case of the Indenture,
by the Indenture Trustee, will constitute valid and legally binding
obligations of the Company enforceable in accordance with their
respective terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, or reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally or general
equitable principles; the Junior Subordinated Debentures are entitled
to the benefits of the Indenture; and the Guarantee Agreement, the
Junior Subordinated Debentures, the Trust Agreement and the Indenture
conform to the descriptions thereof in the Prospectus. The Trust
Agreement, the Guarantee Agreement, and the Indenture have been duly
qualified under the Trust Indenture Act.
(v) The consolidated financial statements, audited and
unaudited (including the Notes thereto), of the Company and its
subsidiaries included or incorporated by reference in the Registration
Statement present fairly the consolidated financial position of the
Company and its subsidiaries as of the dates indicated and the
consolidated results of operations and cash flows of the Company and
its subsidiaries for the periods specified. The financial statements,
audited and unaudited (including the Notes thereto), of Suncoast
Savings and Loan Association, FSA ("Suncoast") included or incorporated
by reference in the Registration Statement present fairly the financial
position of Suncoast as of the dates indicated and the results of
operations and cash flows of Suncoast for the periods specified. All of
such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved, except as otherwise stated therein.
The financial
4
<PAGE>
statement schedules, if any, included in the Registration Statement
present fairly the information required to be stated therein. The
selected financial, pro forma and statistical data included in the
Prospectus are accurate in all material respects and present fairly the
information shown therein and have been compiled on a basis consistent
with that of the audited consolidated financial statements included or
incorporated by reference in the Registration Statement.
(vi) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Florida with the requisite corporate power and authority under such
laws to own, lease and operate its properties and conduct its business
as described in the Prospectus. The Company is duly qualified to
transact business as a foreign corporation and is in good standing in
each other jurisdiction in which it owns or leases property of a
nature, or transacts business of a type, that would make such
qualification necessary, except to the extent that the failure to so
qualify or be in good standing would not have a material adverse effect
on the condition, financial or otherwise, or earnings, business
affairs, assets or business prospects of the Company and its
subsidiaries, considered as one enterprise.
(vii) The Company is duly registered under the Bank
Holding Company Act of 1956, as amended; each subsidiary of the Company
that conducts business as a savings bank is duly authorized to conduct
such business in each jurisdiction in which such business is currently
conducted, except to the extent that the failure to be so authorized
would not have a material adverse effect on the Company and its
subsidiaries, considered as one enterprise; and the deposit accounts of
BankUnited, FSB (the "Bank") are insured by the Savings Association
Insurance Fund of the Federal Deposit Insurance Corporation ("FDIC"),
up to the maximum allowable limits thereof. The Offerors have all such
power, authority, authorization, approvals and orders as may be
required to enter into this Agreement, to carry out the provisions and
conditions hereof and to issue and sell the Preferred Securities.
(viii) The Bank is a federally chartered stock savings
bank duly organized and validly existing under the laws of the United
States with the requisite corporate power and authority under such laws
to own, lease and operate its properties and conduct its business; the
Bank is duly qualified to transact business as a foreign corporation
and is in good standing in each other jurisdiction in which it owns or
leases property of a nature, or transacts business of a type, that
would make such qualification necessary, except to the extent that the
failure to so qualify or be in good standing would not have a material
adverse effect on the Bank and its subsidiaries, if any, considered as
one enterprise. All of the outstanding shares of capital stock of the
Bank have been duly authorized and validly issued and are fully paid
and non-assessable and are owned by the Company, free and clear of any
pledge, lien, security interest, charge, claim, equity or encumbrance
of any kind.
5
<PAGE>
(ix) Except for the Bank, the only other significant
subsidiaries of the Company are the Trust and BankUnited Capital, a
Delaware trust.
(x) The Company had at the date indicated a duly
authorized and outstanding capitalization as set forth in the
Prospectus under the caption "Capitalization"; the capital stock of the
Company and the Preferred Securities conform in all material respects
to the description thereof contained or incorporated by reference in
the Prospectus and such description conforms to the rights set forth in
the instruments defining the same. Subsequent to such date, the Company
has not issued and, other than under the Company's existing option
plans, is not obligated to issue, any other shares of capital stock;
without limiting the generality of the foregoing and except for options
to purchase ________ shares of Common Stock granted pursuant to the
Company's ___________________ and except for options to purchase in the
aggregate ________ shares of Common Stock granted pursuant to the
Company's other option plans there are no options, warrants, calls,
employee benefit or other plans, preemptive rights or commitments of
any character relating to the authorized but unissued capital stock or
any other equity security of the Company or the Bank, except as
disclosed in Note ____ to the consolidated financial statements in the
Prospectus.
(xi) The Preferred Securities have been duly and validly
authorized by the Trust for issuance and sale to the Underwriters
pursuant to this Agreement and, when executed and authenticated in
accordance with the terms of the Trust Agreement and delivered by the
Trust to the Underwriters pursuant to this Agreement against payment of
the consideration set forth herein, will be validly issued and fully
paid and non-assessable. The Trust Agreement has been duly authorized
and, when executed by the proper officers of the Trust and delivered by
the Trust, will have been duly executed and delivered by the Trust and
will constitute the valid and legally binding instrument of the Trust,
enforceable in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency or other laws relating to or
affecting enforcement of creditors' rights generally or by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law). The Preferred Securities conform to
the statements relating thereto contained in the Prospectus and such
description conforms to the rights set forth in the instruments
defining the same; the holders of the Preferred Securities (the
"Securityholders") will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware;
and the issuance of the Preferred Securities is not subject to the
preemptive or other similar rights of any securityholder of the
Company.
(xii) The Common Securities have been duly and validly
authorized by the Trust and upon delivery by the Trust to the Company
against payment therefor as described in the Prospectus, will be duly
and validly issued and fully paid and non-assessable undivided
beneficial interests in the assets of the Trust and will conform to the
description thereof contained in the Prospectus; the issuance of the
Common Securities is not subject to preemptive or other similar rights;
and at the Closing Time and
6
<PAGE>
the Option Closing Date, as the case may be, all of the issued and
outstanding Common Securities of the Trust will be directly owned by
the Company free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity.
(xiii) The Trust has been duly created and is validly
existing as a statutory business trust in good standing under the
Delaware Act with the power and authority to own, lease and operate its
properties and conduct its business as described in the Prospectus, and
the Trust has conducted no business to date, and it will conduct no
business in the future that would be inconsistent with the description
of the Trust set forth in the Prospectus; the Trust is not a party to
or bound by any agreement or instrument other than this Agreement, the
Trust Agreement and the agreements and instruments contemplated by the
Trust Agreement or described in the Prospectus; the Trust has no
liabilities or obligations other than those arising out of the
transactions contemplated by this Agreement and the Trust Agreement and
described in the Prospectus; and the Trust is not a party to or subject
to any action, suit or proceeding of any nature.
(xiv) The issuance and sale of the Preferred Securities
and the Common Securities by the Trust, the compliance by the Trust
with all of the provisions of this Agreement, the purchase of the
Junior Subordinated Debentures by the Trust, and the consummation of
the transactions herein and therein contemplated will not conflict with
or result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, loan agreement, mortgage,
deed of trust or other agreement or instrument to which the Trust is a
party or by which the Trust is bound or to which any of the property or
assets of the Trust is subject, nor will such action result in any
violation of the provisions of the Trust Agreement or any statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Trust or any of its properties; and
no consent, approval, authorization, order, license, certificate,
permit, registration or qualification of or with any such court or
other governmental agency or body is required to be obtained by the
Trust for the issuance and sale of the Preferred Securities and the
Common Securities by the Trust, the purchase of the Junior Subordinated
Debentures by the Trust or the consummation by the Trust of the
transactions contemplated by this Agreement and the Trust Agreement,
except for such consents, approvals, authorizations, licenses,
certificates, permits, registrations or qualifications as have already
been obtained, or as may be required under the 1933 Act or the 1933 Act
Regulations, 1934 Act or 1934 Act Regulations, state securities laws or
under the Trust Indenture Act of 1939, as amended (the "TIA").
The issuance by the Company of the Guarantee and the Junior
Subordinated Debentures, the compliance by the Company with all of the
provisions of this Agreement, the execution, delivery and performance
by the Company of the Trust Agreement, the Junior Subordinated
Debentures, the Guarantee Agreement and the Indenture, and the
consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
loan agreement, mortgage, deed of trust, or other material
7
<PAGE>
agreement or instrument to which the Company is a party or by which the
Company is bound or to which any of the property or assets of the
Company is subject, nor will such action result in any violation of the
provisions of the Articles of Incorporation or by-laws of the Company
or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any
of its properties; and no consent, approval, authorization, order,
license, certificate, permit, registration or qualification of or with
any such court or other governmental agency or body is required for the
issuance of the Guarantee and the Junior Subordinated Debentures or the
consummation by the Company of the other transactions contemplated by
this Agreement, except for such consents, approvals, authorizations,
licenses, certificates, permits, registrations or qualifications as
have already been obtained, or as may be required under the 1933 Act or
the 1933 Act Regulations, 1934 Act or 1934 Act Regulations, state
securities laws or under the TIA.
(xv) The Trust is not, and after giving effect to the
offering and sale of the Preferred Securities will not be, an
"investment company," or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act of
1940, as amended (the "Investment Company Act").
(xvi) All of the outstanding shares of capital stock
of the Company have been duly authorized and validly issued and are
fully paid and non-assessable, and none of the outstanding shares of
capital stock were issued in violation of the preemptive rights of any
shareholder of the Company or, except as disclosed in writing to the
Underwriters, was offered or sold in violation of the 1933 Act.
(xvii) Since the respective dates as of which
information is given or incorporated by reference in the Registration
Statement and the Prospectus, except as otherwise stated therein, there
has not been (A) any material adverse change in the condition
(financial or otherwise), earnings, business affairs, assets or
business prospects of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of
business, (B) any transaction entered into by the Company or any
subsidiary, other than in the ordinary course of business, that is
material to the Company and its subsidiaries, considered as one
enterprise, or (C) any dividend or distribution of any kind declared,
paid or made by the Company on its capital stock, excluding regular
dividends paid on the Company's (i) 8% Noncumulative Convertible
Preferred Stock, Series 1996, (ii) 8% Noncumulative Convertible
Preferred Stock, Series 1993 and (iii) 9% Cumulative Perpetual
Preferred Stock. Neither the Company nor the Bank has any material
liability of any nature, contingent or otherwise, except as set forth
in the Prospectus.
(xviii) Neither the Company nor the Bank is in violation
of any provision of its charter or by-laws or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which it is
a
8
<PAGE>
party or by which it may be bound or to which any of its properties may
be subject, except for such defaults that would not have a material
adverse effect on the condition (financial or otherwise), earnings,
business affairs, assets or business prospects of the Company and its
subsidiaries, considered as one enterprise.
(xix) Except as disclosed in the Prospectus, there is
no action, suit or proceeding before or by any government, governmental
instrumentality or court, domestic or foreign, now pending or, to the
knowledge of the Company, threatened against the Company or the Bank
that is required to be disclosed in the Prospectus or that could
reasonably be expected to result in any material adverse change in the
condition (financial or otherwise), earnings, business affairs, assets
or business prospects of the Company and its subsidiaries, considered
as one enterprise, or that could reasonably be expected to materially
and adversely affect the properties or assets of the Company and its
subsidiaries, considered as one enterprise, or that could reasonably be
expected to materially and adversely affect the consummation of the
transactions contemplated in this Agreement; all pending legal or
governmental proceedings to which the Company or the Bank is a party
that are not described in the Prospectus or incorporated by reference
therein, including ordinary routine litigation incidental to its
business, if decided in a manner adverse to the Company, would not have
a material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and its
subsidiaries, considered as one enterprise.
(xx) There are no material contracts or documents of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described and filed as required.
(xxi) The Company and the Bank each has good and
marketable title to all its respective properties and assets described
in the Prospectus or any document incorporated by reference therein as
owned by it, free and clear of all liens, charges, encumbrances or
restrictions, except such as (A) are described in the Prospectus or in
any document incorporated by reference therein or (B) are neither
material in amount nor materially significant in relation to the
business of the Company and its subsidiaries, considered as one
enterprise; all of the leases and subleases material to the business of
the Company and its subsidiaries, considered as one enterprise, and
under which the Company or the Bank holds properties described in the
Prospectus or in any document incorporated by reference therein, are in
full force and effect, and neither the Company nor the Bank has any
notice of any material claim that has been asserted by anyone adverse
to the rights of the Company or the Bank under any of the leases or
subleases mentioned above, or affecting or questioning the rights of
such corporation to the continued possession of the leased or subleased
premises under any such lease or sublease.
(xxii) Each of the Company and the Bank owns, possesses
or has obtained all material governmental licenses, permits,
certificates, consents, orders, approvals and other authorizations
necessary to own or lease, as the case may be, and to
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operate its properties and to carry on its business as presently
conducted, and neither the Company nor the Bank has received any notice
of any restriction upon, or any notice of proceedings relating to
revocation or modification of, any such licenses, permits,
certificates, consents, orders, approvals or authorizations.
(xxiii) Except as disclosed in the Prospectus, no labor
problem exists with the employees of the Company or with the employees
of the Bank or any subsidiary of the Company or to the best knowledge
of the Company, is imminent that could materially adversely affect the
Company and its subsidiaries, considered as one enterprise, and the
Company is not aware of any existing or imminent labor disturbance by
the employees of any of its, the Bank's or any subsidiary's principal
suppliers, contractors or customers that could reasonably be expected
to materially adversely affect the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and its
subsidiaries, considered as one enterprise.
(xxiv) There are no persons with registration or other
similar rights to have any securities of the Company registered
pursuant to the Registration Statement or otherwise registered by the
Company under the 1933 Act.
(xxv) Except as disclosed in the Prospectus, the
Company, the Bank and each of the subsidiaries of the Company own or
possess all patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets or other unpatented and/or
unpatentable proprietary or confidential information systems or
procedures), trademarks, servicemarks and tradenames (collectively,
"patent and proprietary rights") currently employed by them in
connection with the business now operated by them except where the
failure to so own, possess or acquire such patent and proprietary
rights would not have a material adverse effect on the condition,
financial or otherwise, or the earnings, business affairs, assets or
business prospects of the Company and its subsidiaries considered as
one enterprise, and neither the Company, the Bank nor any subsidiary of
the Company has received any notice or is otherwise aware of any
infringement of or conflict with asserted rights of others with respect
to any patent or proprietary rights, and which infringement or conflict
(if the subject of any unfavorable decision, rule and refinement,
singly or in the aggregate) could reasonably be expected to result in
any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs, assets or business prospects of
the Company and its subsidiaries considered as one enterprise.
(xxvi) The Company and each subsidiary of the Company
have filed all Federal, state and local income, franchise or other tax
returns required to be filed and have made timely payments of all taxes
due and payable in respect of such returns and no material deficiency
has been asserted with respect thereto by any taxing authority.
(xxvii) The Company has filed with the NASD all
documents and notices required by the NASD of companies that have
issued securities that are traded in the over-the-counter market and
quotations for which are reported by the National Market of The Nasdaq
Stock Market, Inc. ("Nasdaq Stock Market").
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(xxviii) Neither the Trust nor the Company or any
subsidiary of the Company has taken or will take, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation, under the Exchange Act or otherwise, of
the price of the Preferred Securities.
(xxix) Neither the Company, the Bank nor any
subsidiary of the Company is or has been (by virtue of any action,
omission to act, contract to which it is a party or by which it is
bound, or any occurrence or state of facts whatsoever) in violation of
any applicable Federal, state, municipal, or local statutes, laws,
ordinances, rules, regulations and/or orders issued pursuant to
foreign, federal, state, municipal, or local statutes, laws,
ordinances, rules, or regulations (including those relating to any
aspect of banking, bank holding companies, environmental protection,
occupational safety and health, and equal employment practices)
heretofore or currently in effect, except such violation that has been
fully cured or satisfied without recourse or that is not reasonably
likely to have a material adverse effect.
(xxx) The Company and the Bank have no agreement or
understanding with any entity concerning the future acquisition by the
Company or the Bank of a controlling interest in any entity that is
required by the 1933 Act or the 1933 Act Regulations to be disclosed by
the Company that is not disclosed in the Prospectus; the Company and
the Bank have no agreement or understanding with any entity concerning
the future acquisition of a controlling interest in the Company or the
Bank by any entity that is required by the 1933 Act or the 1933 Act
Regulations to be disclosed by the Company that is not disclosed in the
Prospectus.
(b) Any certificate signed by any authorized officer of the
Company or the Bank and delivered to the Underwriters or to counsel for the
Underwriters pursuant to this Agreement shall be deemed a representation and
warranty by the Company to the Underwriters as to the matters covered thereby.
Section 2. SALE AND DELIVERY TO THE UNDERWRITERS; CLOSING
(a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, the Trust
agrees to sell to the Underwriters, and the Underwriters agree to purchase from
the Trust 1,600,000 Initial Securities at the purchase price and terms set forth
herein and in the Price Determination Agreement.
In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Trust
hereby grants an option to the Underwriters to purchase up to an additional
240,000 Option Securities in accordance with the terms set forth herein and in
the Price Determination Agreement. The option hereby granted will expire at 5:00
p.m. on the 30th day after the date the Registration Statement is declared
effective by the Commission (or at 5:00 p.m. on the next business day if such
30th day is not a business day) and may be exercised, on one occasion only,
solely for the purpose of covering over-allotments which
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may be made in connection with the offering and distribution of the Initial
Securities upon notice by you to the Company setting forth the number of Option
Securities as to which the Underwriters are exercising the option and the time,
date and place of payment and delivery for the Option Securities. Such time and
date of delivery (the "Option Closing Date") shall be determined by the
Underwriters but shall not be later than five full business days after the
exercise of said option, nor in any event prior to Closing Time, as hereinafter
defined, nor earlier than the second business day after the date on which the
notice of the exercise of the option shall have been given.
(b) Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of [Ryan,
Beck & Co.], or at such other place as shall be agreed upon by the Company and
the Underwriters, at 10:00 a.m. on the third full business day after the
effective date of the Registration Statement, or at such other time not more
than seven full business days thereafter as you and the Company shall determine
(such date and time of payment and delivery being herein called the "Closing
Time"). In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
office of [Ryan, Beck & Co.], or at such other place as shall be agreed upon by
the Company and the Underwriters, on the Option Closing Date as specified in the
notice from the Underwriters to the Company. Payment for the Initial Securities
and the Option Securities, if any, shall be made to the Company by wire transfer
of immediately available funds, against delivery to the Underwriters for the
account of the Underwriters of Preferred Securities to be purchased by them. The
purchase price may be paid by a single wire transfer from the Underwriters from
which the Underwriters deduct the Commissions and fees owed to the Underwriters,
which shall be deemed to be the equivalent of simultaneous wire transfers from
the various parties due hereunder.
(c) The Initial Securities shall be issued in the form of one or
more fully registered global securities (the "Global Securities") in book-entry
form in such denominations and registered in the name of the nominee of The
Depository Trust Company (the "DTC") or in such names as the Underwriters may
request in writing at least two business days before the Closing Time or the
Option Closing Date, as the case may be. The Global Securities representing the
Initial Securities or the Option Securities to be purchased will be made
available in [New York City] for examination by the Underwriters and counsel to
the Underwriters not later than 10:00 a.m. on the business day prior to the
Closing Time or the Option Closing Date, as the case may be.
Section 3. CERTAIN COVENANTS OF THE OFFERORS. Each of the Offerors
covenants jointly and severally with the Underwriters as follows:
(a) The Offerors will use their best efforts to cause the
Registration Statement to become effective and will notify the Underwriters
immediately, and confirm the notice in writing, (i) when the Registration
Statement, or any post-effective amendment to the Registration Statement, shall
have become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the
Commission or
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notice from the Commission that it will not review the Registration Statement
(iii) of any request of the Commission to amend the Registration Statement or
amend or supplement the Prospectus or for additional information and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the
Preferred Securities or capital stock, for offering or sale in any jurisdiction,
or of the institution or threatening of any proceedings for any of such
purposes. The Offerors will use every reasonable effort to prevent the issuance
of any such stop order or of any order preventing or suspending such use and, if
any such order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) The Offerors will not at any time file or make any amendment
to the Registration Statement, or any amendment or supplement if the Offerors
have elected to rely upon Rule 430A, to the Prospectus (including documents
incorporated by reference into such prospectus or to the Prospectus) of which
the Underwriters shall not have previously been advised and have previously been
furnished a copy, or to which the Underwriters or counsel for the Underwriters
shall reasonably object.
(c) The Offerors have furnished or will furnish to the
Underwriters as many signed and conformed copies of the Registration Statement
as originally filed and of each amendment thereto, whether filed before or after
the Registration Statement becomes effective, copies of all exhibits and
documents filed therewith (including documents incorporated by reference into
the Prospectus pursuant to Item 12 of Form S-2 under the 1933 Act) and signed
copies of all consents and certificates of experts as the Underwriters may
reasonably request.
(d) The Offerors will deliver or cause to be delivered to the
Underwriters, without charge, from time to time until the effective date of the
Registration Statement, as many copies of each preliminary prospectus as the
Underwriters may reasonably request, and the Offerors hereby consent to the use
of such copies for purposes permitted by the 1933 Act. The Offerors will deliver
or cause to be delivered to the Underwriters, without charge, as soon as the
Registration Statement shall have become effective (or, if the Offerors have
elected to rely upon Rule 430A, as soon as practicable after the Price
Determination Agreement has been executed and delivered) and thereafter from
time to time as requested during the period when the Prospectus is required to
be delivered under the 1933 Act, such number of copies of the Prospectus (as
supplemented or amended) as the Underwriters may reasonably request.
(e) The Company will comply with the 1933 Act and the 1933 Act
Regulations, and the 1934 Act and the 1934 Act Regulations, so as to permit the
completion of the distribution of the Preferred Securities as contemplated in
this Agreement and in the Prospectus. If, at any time when a Prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Preferred Securities, any event shall occur or condition exist as a result of
which it is necessary, in the reasonable opinion of counsel for the Underwriters
or counsel for the Offerors, to amend the Registration Statement or amend or
supplement the Prospectus in order that the Prospectus will not include an
untrue statement of a material fact or
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omit to state a material fact necessary in order to make the statements therein
not misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the reasonable opinion
of either such counsel, at any such time to amend the Registration Statement or
amend or supplement the Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will promptly prepare and
file with the Commission, subject to Section 3(b), such amendment or supplement
as may be necessary to correct such untrue statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements.
(f) The Offerors will use their best efforts, in cooperation with
the Underwriters, to qualify the Preferred Securities and the Junior
Subordinated Debentures, for offering and sale under the applicable securities
laws of such states and other jurisdictions as the Underwriters may designate
and to maintain such qualifications in effect for a period of not less than one
year from the effective date of the Registration Statement; PROVIDED HOWEVER,
that the Company shall not be obligated to file any general consent to service
of process or to qualify as a foreign corporation or as a dealer in securities
in any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject. The Company will file such statements and reports as may
be required by the laws of each jurisdiction in which the Preferred Securities
have been qualified as above provided.
(g) The Company will make generally available (within the meaning
of Rule 158 of the 1933 Act Regulations) to its securityholders, the
Underwriters and the Securityholders as soon as practicable, but not later than
90 days after the close of the period covered thereby, an earnings statement of
the Company and its subsidiaries (in form complying with the provisions of Rule
158 of the 1933 Act Regulations) covering a period of at least 12 months
beginning after the effective date of the Registration Statement but not later
than the first day of the Company's fiscal quarter next following such effective
date.
(h) The Trust shall apply the proceeds from its sale of the
Preferred Securities, combined with the entire proceeds from the issuance by the
Trust to the Company of the Trust's Common Securities, to purchase an equivalent
amount of Junior Subordinated Debentures. The Company and the Bank will use the
net proceeds received by them from the sale of the Junior Subordinated
Debentures in the manner specified in the Prospectus under the caption "Use of
Proceeds".
(i) The Offerors, during the period when the Prospectus is
required to be delivered under the 1933 Act, will file promptly all documents
required to be filed with the Commission pursuant to Section 13 or 14 of the
1934 Act subsequent to the time the Registration Statement becomes effective.
(j) For a period of five years after the Closing Time, the Company
will furnish to the Underwriters, copies of all annual reports, quarterly
reports and current reports filed with the Commission on Forms 10-K, 10-Q and
8-K, or such other similar forms as may be designated
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by the Commission, and such other documents, reports, Proxy Statements, and
information as shall be furnished by the Company to its shareholders generally.
(k) The Offerors will file with the Nasdaq Stock Market all
documents and notices required by the Nasdaq Stock Market of companies that have
issued securities that are traded in the over-the-counter market and quotations
for which are reported by the Nasdaq Stock Market.
(l) The Company shall pay for the legal fees and related filing
fees of counsel to the Underwriters to prepare one or more "blue sky" surveys
(each, a "Blue Sky Survey") for use in connection with the offering of the
Preferred Securities as contemplated by the Prospectus and a copy of such Blue
Sky Survey or surveys shall be delivered to each of the Company and the
Underwriters.
(m) If, at the time the Registration Statement becomes effective,
any information shall have been omitted therefrom in reliance upon Rule 430A of
the 1933 Act Regulations, then the Offerors will prepare, and file or transmit
for filing with the Commission in accordance with such Rule 430A and Rule
424(b), copies of an amended Prospectus, or, if required by such Rule 430A, a
post-effective amendment to the Registration Statement (including an amended
Prospectus), containing all information so omitted.
(n) The Company will, at its expense, subsequent to the issuance
of the Preferred Securities, prepare and distribute to each of the Underwriters
and counsel to the Underwriters, a hard-bound copy of the documents used in
connection with the issuance of the Preferred Securities.
(o) The Offerors will not, prior to the Option Closing Date or
thirty (30) days after the date of this Agreement, whichever occurs first, incur
any material liability or obligation, direct or contingent, or enter into any
material transaction, other than in the ordinary course of business, or any
transaction with a related party which is required to be disclosed in the
Prospectus pursuant to Item 404 of Regulation S-K promulagated under the 1933
Act, except as contemplated by the Prospectus.
(p) During a period of forty-five days from the date of the
Prospectus, neither the Trust nor the Company will, without the prior written
consent of the Underwriters, directly or indirectly, offer, sell, offer to sell,
or otherwise dispose of any Preferred Securities, any other beneficial interests
in the assets of the Trust, or any preferred securities or other securities of
the Trust or the Company which are substantially similar to the Preferred
Securities, including any guarantee of such securities. The foregoing sentence
shall not apply to any of the Preferred Securities to be sold hereunder.
Section 4. PAYMENT OF EXPENSES.
(a) The Company will pay and bear all costs and expenses incident
to the performance of its and the Trust's obligations under this Agreement,
including (a) the preparation,
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printing and filing of the Registration Statement (including financial
statements and exhibits), as originally filed and as amended, the preliminary
prospectuses and the Prospectus and any amendments or supplements thereto, and
the cost of furnishing copies thereof to the Underwriters, (b) the preparation,
printing and distribution of this Agreement, the Preferred Securities and the
Blue Sky Survey, (c) the issuance and delivery of the Preferred Securities to
the Underwriters, including any transfer taxes payable upon the sale of the
Preferred Securities to the Underwriters, (d) the fees and disbursements of the
Company's counsel and accountants, (e) NASD filing fees, (f) fees and
disbursements of the Underwriters' counsel in connection with the Blue Sky
Survey, (g) the qualification of the Preferred Securities under the applicable
securities laws in accordance with Section 3(f) and any filing fee for review of
the offering with the NASD, (h) the legal fees and expenses of the Underwriters'
counsel (such counsel's fees shall not exceed $65,000 (exclusive of
out-of-pocket expenses of counsel) and general out-of-pocket expenses of the
Underwriters not to exceed $______, (i) the fees and expenses of the Indenture
Trustee, including the fees and disbursements of counsel for the Indenture
Trustee, in connection with the Indenture and the Junior Subordinated
Debentures; (j) the fees and expenses of the Property Trustee and Delaware
Trustee, including the fees and disbursements of counsel for the Property
Trustee and the Delaware Trustee, in connection with the Trust Agreement and the
Certificate of Trust, and (k) all other costs incident to the performance of the
Offerors' obligations hereunder.
If (i) the Closing Time does not occur on or before December 31, 1997,
(ii) the Company abandons or terminates the offering, or (iii) this Agreement is
terminated by the Underwriters in accordance with the provisions of Section 5 or
9(a) hereof, the Company shall reimburse the Underwriters for all their
reasonable out-of-pocket expenses, as set forth in this Section 4, including the
reasonable fees and disbursements of counsel for the Underwriters.
Section 5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters to purchase and pay for the Preferred Securities that they have
respectively agreed to purchase pursuant to this Agreement are subject to the
accuracy of the representations and warranties of the Offerors contained herein
or in certificates of the officers or trustees of the Offerors or any subsidiary
delivered pursuant to the provisions hereof, to the performance by the Offerors
of their obligations hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 5:30 P.M. on the date of this Agreement or, with your consent, at a
later time and date not later, however, than 5:30 P.M. on the first business day
following the date hereof, or at such later time or on such later date as you
may agree to in writing; at the Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act and no proceedings for that purpose shall have been instituted or shall
be pending or, to the Underwriters' knowledge or the knowledge of the Offerors
shall be contemplated by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
satisfaction of counsel for the Underwriters. If the Offerors have elected to
rely upon Rule 430A, a prospectus containing the Rule 430A Information shall
have been filed with the Commission in accordance with Rule 424(b) (or a
post-effective amendment
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providing such information shall have been filed and declared effective in
accordance with the requirements of Rule 430A).
(b) At the Closing Time, the Underwriters shall have received:
(i) The favorable opinion, dated as of Closing Time, of
Stuzin and Camner, P.A., counsel for the Company, in form and substance
reasonably satisfactory to counsel for the Underwriters, substantially
in the form set forth in Exhibit C.
(ii) The favorable opinion, dated as of Closing Time, of
Richards, Layton & Finger, special Delaware counsel for the Offerors,
in form and substance satisfactory to counsel for the Underwriters,
substantially in the form set forth in Exhibit D.
(iii) The favorable opinion, dated as of Closing Time, of
Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A., counsel for
the Underwriters, in form and substance satisfactory to the
Underwriters.
(iv) The favorable opinion, dated as of Closing Time, of
Kronish, Lieb, Weiner & Hellman LLP, special tax counsel for the
Offerors, in form and substance satisfactory to the Underwriters.
In giving such opinion, such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the federal law of the United
States, upon opinions of other counsel, who shall be counsel satisfactory to
counsel for the Underwriters (the Underwriters agree and acknowledge that Stuzin
and Camner, P.A. and Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.
will rely on the opinion of Richards, Layton & Finger with respect to matters of
Delaware law), in which case the opinion shall state that counsel believes that
you and your counsel are entitled to so rely. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company, the Bank
and the Trust and certificates of public officials.
(c) At the Closing Time and again at the Option Closing Date, (i)
the Registration Statement and the Prospectus, as they may then be amended or
supplemented, shall contain all statements that are required to be stated
therein under the 1933 Act and the 1933 Act Regulations and in all material
respects shall conform to the requirements of the 1933 Act and the 1933 Act
Regulations, the Offerors shall have complied in all material respects with Rule
430A (if they shall have elected to rely thereon) and neither the Registration
Statement nor the Prospectus, as they may then be amended or supplemented, shall
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) there shall not have been, since the respective dates as of
which information is given in the Registration Statement, any material adverse
change in the condition (financial or otherwise), earnings, business affairs,
assets or business prospects of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of business, (iii)
no action, suit or proceeding at law or in equity shall be pending or, to the
knowledge of the Offerors, threatened against the Company or any subsidiary or
the Trust that would be required to be set forth in the Prospectus other than as
set forth therein and no proceedings shall be pending or, to the
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knowledge of the Offerors, threatened against the Offerors or any subsidiary
before or by any federal, state or other commission, board or administrative
agency wherein an unfavorable decision, ruling or finding could reasonably be
expected to materially and adversely affect the condition (financial or
otherwise), earnings, business affairs, assets or business prospects of the
Company and its subsidiaries, considered as one enterprise, other than as set
forth in the Prospectus, (iv) each of the Offerors shall have complied with all
agreements and satisfied all conditions on its part to be performed or satisfied
at or prior to the Closing Time, (v) the other representations and warranties of
the Offerors set forth in Section l(a) shall be accurate in all material
respects as though expressly made at and as of the Closing Time, and (vi) no
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceeding for that purpose been initiated or to the best
knowledge of the Offerors threatened by the Commission. At the Closing Time, the
Underwriters shall have received a certificate of the Chairman or the President,
and the Chief Financial Officer or Controller, of the Company, dated as of the
Closing Time, to such effect.
(d) At the time that this Agreement is executed by the Company,
you shall have received from Price Waterhouse LLP a letter or letters, dated
such date, in form and substance satisfactory to you, confirming that they are
independent certified public accountants with respect to the Company (and
Suncoast, as applicable) within the meaning of the 1933 Act and the published
1933 Act Regulations, and stating in effect that:
With respect to the Company:
(i) in their opinion, the consolidated financial statements
as of September 30, 1996 and 1995, and for each of the years in the
three year period ended September 30, 1996 and the related financial
statement schedules, if any, included or incorporated by reference in
the Registration Statement and the Prospectus and covered by their
opinions included therein comply as to form in all material respects
with the applicable accounting requirements of the 1933 Act and the
published 1933 Act Regulations;
(ii) on the basis of a reading of the minutes of all meetings
of the shareholders of the Company and the Bank, of the Board of
Directors of the Company and the Bank and of the Audit and Executive
Committees of the Board of Directors of the Bank since September 30,
1996, inquiries of certain officials of the Company and its
subsidiaries responsible for financial and accounting matters, and such
other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) at a specified date not more than three days prior
to the date of this Agreement, there was any increase in notes or
subordinated debentures payable, real estate owned, or allowance
for loan losses of the Company and its consolidated subsidiaries
or any decrease in total assets, total deposits or
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stockholders' equity of the Company and its consolidated
subsidiaries or any increase in the number of outstanding shares
of capital stock of the Company and its consolidated subsidiaries,
in each case as compared with amounts shown in the financial
statements at September 30, 1996 included in the Registration
Statement; or
(B) for the period from March 31, 1997 to a specified
date not more than three days prior to the date of this Agreement,
there was any decrease in consolidated net interest income,
non-interest income or net income or the total or fully diluted
per share amounts of net income or any increase in the
consolidated provision for loan losses or non-interest expense, in
each case as compared with the comparable period in the preceding
year.
(iii) in addition to the procedures referred to in clause
(ii) above, they have performed other specified procedures, not
constituting an audit, with respect to certain amounts, percentages,
numerical data and financial information appearing in the Registration
Statement (including the Selected Consolidated Financial Data) (having
compared such items with, and have found such items to be in agreement
with, the financial statements of the Company or general accounting
records of the Company, as applicable, which are subject to the
Company's internal accounting controls or other data and schedules
prepared by the Company from such records).
(iv) on the basis of a review of schedules provided to them
by the Company, nothing came to their attention that caused them to
believe that the pro forma information, set forth in the Prospectus
under the headings "Capitalization" on page _____ had not been
correctly calculated on the basis described therein.
With respect to Suncoast:
(i) in their opinion, the consolidated financial statements
as of June 30, 1996 and 1995, and for each of the years in the
three year period ended June 30, 1996 and the related financial
statement schedules, if any, included or incorporated by reference
in the Registration Statement and the Prospectus and covered by
their opinions included therein comply as to form in all material
respects with the applicable accounting requirements of the 1933
Act and the published 1933 Act Regulations;
(e) At the Closing Time, the Underwriters shall have received from
Price Waterhouse LLP letters, in form and substance satisfactory to the
Underwriters and dated as of the Closing Time, to the effect that they reaffirm
the statements made in the letter(s) furnished pursuant to Section 5(d), except
that the inquiries specified in Section 5(d) shall be made based upon the latest
available unaudited interim consolidated financial statements and the specified
date referred to shall be a date not more than two days prior to the Closing
Time.
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(f) At the Closing Time, counsel for the Underwriters shall have
been furnished with all such documents, certificates and opinions as they may
request for the purpose of enabling them to pass upon the issuance and sale of
the Preferred Securities as contemplated in this Agreement and the matters
referred to in Section 5(c) and in order to evidence the accuracy and
completeness of any of the representations, warranties or statements of the
Offerors, the performance of any of the covenants of the Offerors, or the
fulfillment of any of the conditions herein contained; all proceedings taken by
the Company at or prior to the Closing Time in connection with the
authorization, issuance and sale of the Preferred Securities and the Junior
Subordinated Debentures as contemplated in this Agreement shall be satisfactory
in form and substance to the Underwriters and to counsel for the Underwriters.
(g) Between the date of this Agreement and the Closing Time, (i)
no downgrading shall have occurred in the rating accorded any securities of the
Company or any deposit instruments of the Bank by any "nationally recognized
statistical rating organization," as that term is defined by the Commission for
purposes of Rule 436(g) (2) under the 1933 Act and (ii) no such organization
shall have given any notice of any intended or potential downgrading or of any
surveillance or review, with possible negative implications, of its rating of
any of the Company's securities or any deposit instruments of the Bank.
(h) The Company shall have paid, or made arrangements satisfactory
to the Underwriters for the payment of, all such expenses as may be required by
Section 4 hereof.
(i) In the event the Underwriters exercise their option provided
in Section 2 hereof to purchase all or any portion of the Option Securities, the
obligations of the Underwriters to purchase the Option Securities that it has
agreed to purchase shall be subject to the accuracy of the representations and
warranties of the Offerors contained herein and of the statements in any
certificates furnished by the Offerors hereunder as of such Option Closing Date
(as if made on such date), to the performance by the Offerors of their
obligations hereunder and to the receipt by you on the Option Closing Date of:
(1) A certificate, dated the Option Closing Date, of the
Chairman or the President and the Chief Financial Officer or
Controller of the Company confirming that the certificate
delivered on the Closing Time pursuant to Section 5(c) hereof
remains true as of the Option Closing Date;
(2) The favorable opinion of Stuzin and Camner, P.A., counsel
for the Company, addressed to you and dated the Option Closing
Date, in form satisfactory to Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel, P.A., your counsel, relating to the Option
Securities and otherwise to the same effect as the opinion
required by Section 5(b) hereof;
(3) The favorable opinion of Richards, Layton & Finger,
special Delaware counsel for the Offerors and counsel for the
Indenture Trustee, addressed to you and dated the Option Closing
Date, in form satisfactory to Greenberg, Traurig, Hoffman, Lipoff,
Rosen & Quentel, P.A., your
20
<PAGE>
counsel, relating to the Option Securities and otherwise to the
same effect as the opinion required by Section 5(b) hereof.
(4) The favorable opinion of Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A., dated the Option Closing Date,
relating to the Option Shares and otherwise to the same effect as
the opinion required by Section 5(b) hereof; and
(5) Letters from Price Waterhouse LLP addressed to the
Underwriters and dated the Option Closing Date, in form and
substance satisfactory to the Underwriters and substantially the
same in form and substance as the letters furnished to the
Underwriters pursuant to Section 5(d) hereof.
(j) The Preferred Securities, the Guarantee and the Junior
Subordinated Debentures shall have been qualified or registered for sale, or
subject to an available exemption from such qualification or registration, under
the Blue Sky Laws of such jurisdictions as shall have been reasonably specified
by the Underwriters and the offering contemplated by this Agreement shall have
been cleared by the NASD.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by the Underwriters on notice to the Offerors at any
time at or prior to the Closing Time, and such termination shall be without
liability of any party to any other Party, except as provided in Section 4.
Notwithstanding any such termination, the provisions of Sections 6, 7, and 9
shall remain in effect.
Section 6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the
Underwriters, officers, directors, employees, agents, and counsel of the
Underwriters, and each person, if any, who controls the Underwriters within the
meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against
any loss, liability, claim, damage, and expense whatsoever (which shall include,
but not be limited to amounts incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim or investigation
whatsoever and any and all amounts paid in settlement of any claim or
litigation), as and when incurred, arising out of, based upon, or in connection
with (i) any untrue statement or alleged untrue statement of a material fact or
any omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, contained in
(A) any Preliminary Prospectus, the Registration Statement, or the Prospectus
(as from time to time amended and supplemented), or any amendment or supplement
thereto or in any document incorporated by reference therein or required to be
delivered with any Preliminary Prospectus or the Prospectus or (B) in any
application or other document or communication (collectively called an
"application") executed by or on behalf of the Company or based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to qualify the Preferred Securities under the "blue sky" or securities
laws thereof or filed with the Commission or any securities exchange;
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unless such statement or omission or alleged statement or omission was made in
reliance upon and in conformity with written information concerning the
Underwriters, the Underwriting Agreement or the compensation of the Underwriters
furnished to the Company by or on behalf of the Underwriters expressly for
inclusion in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or in any application, as
the case may be, or (ii) any breach of any representation, warranty, covenant,
or agreement of the Company contained in the Underwriting Agreement. The
foregoing indemnification with respect to any preliminary prospectus shall not
inure to the benefit of the Underwriters if the person asserting any such
losses, claims, damages or liabilities purchased Preferred Securities and a copy
of the Prospectus (as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of the Underwriters to such person, if such is required by law, in
connection with the written confirmation of the sale of such Preferred
Securities to such person and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or
liability, provided that the Company delivered the Prospectus, as amended or
supplemented, to the Underwriters on a timely basis to permit such delivery or
sending. For purposes of this section, the term "expense" shall include, but not
be limited to, counsel fees and costs, court costs, out-of-pocket costs and
compensation for the time spent by the Underwriters' directors, officers,
employees and counsel according to his or her normal hourly billing rates. The
indemnification provisions shall also extend to all affiliates of the
Underwriters, their respective directors, officers, employees, legal counsel,
agents and controlling persons within the meaning of the federal securities
laws. The foregoing agreement to indemnify shall be in addition to any liability
the Company may otherwise have to the Underwriters or the persons entitled to
the benefit of these indemnification provisions.
(b) The Underwriters agree to indemnify and hold harmless the
Offerors, their directors, officers who signed the Registration Statement, and
each person, if any, who controls the Offerors within the meaning of Section 15
of the 1933 Act or Section 20(a) of the 1934 Act, against any and all loss,
liability, claim, damage and expense described in the indemnity contained in
subsection (a) above, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or any Preliminary Prospectus or the
Prospectus (or any amendment or supplement thereto) or any application in
reliance upon and in conformity with written information about the Underwriters,
the Underwriting Agreement, or the compensation of the Underwriters, furnished
to either of the Offerors by the Underwriters expressly for use in the
Registration Statement (or any amendment thereto) or such Preliminary Prospectus
or the Prospectus (or any amendment or supplement thereto) or in any
application.
(c) An indemnified party shall give prompt notice to the
indemnifying party if any action, suit, proceeding or investigation is commenced
in respect of which indemnity may be sought hereunder, but failure to so notify
an indemnifying party shall not relieve the indemnifying party from its
obligations to indemnify hereunder, except to the extent that the indemnifying
party has been prejudiced in any material respect by such failure. If it so
elects within a reasonable time after receipt of such notice, an indemnifying
party may assume the defense of such action, including the employment of counsel
satisfactory to the indemnified parties and payment of all
22
<PAGE>
expenses of the indemnified party in connection with such action. Such
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless the employment of such
counsel shall have been authorized in writing by the indemnifying party in
connection with the defense of such action or the indemnifying party shall not
have promptly employed counsel satisfactory to such indemnified party or parties
or such indemnified party or parties shall have reasonably concluded that there
may be one or more legal defenses available to it or them or to other
indemnified parties which are different from or additional to those available to
one or more of the indemnifying parties, in any of which events such fees and
expenses shall be borne by the indemnifying party and the indemnifying party
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties. The Company shall be liable for any settlement of
any claim against the Underwriters (or its directors, officers, employees,
affiliates or controlling persons), made with the Company's written consent,
which consent shall not be unreasonably withheld. The Company shall not, without
the written consent of the Underwriters, settle or compromise any claim against
it based upon circumstances giving rise to an indemnification claim against the
Company hereunder unless such settlement or compromise provides that the
Underwriters and the other indemnified parties shall be unconditionally and
irrevocably released from all liability in respect to such claim.
(d) In order to provide for just and equitable contribution, if a
claim for indemnification pursuant to these indemnification provisions is made
but it is found in a final judgment by a court that such indemnification may not
be enforced in such case, even though the express provisions hereof provide for
indemnification in such case, then the Company, on the one hand, and the
Underwriters, on the other hand, shall contribute to the amount paid or payable
by such indemnified persons as a result of such loss, liability, claim, damage
and expense in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriters, on the
other hand, from the underwriting, and also the relative fault of the Company,
on the one hand, and the Underwriters, on the other hand, in connection with the
statements, acts or omissions which resulted in such loss, liability claim,
damage and expense, and any other relevant equitable considerations shall also
be considered. No person found liable for a fraudulent misrepresentation or
omission shall be entitled to contribution from any person who is not also found
liable for such fraudulent misrepresentation or omission. Notwithstanding the
foregoing, the Underwriters shall not be obligated to contribute any amount
hereunder that exceeds the amount of the underwriting commission paid by the
Company to the Underwriters with respect discount retained by it applicable to
the Preferred Securities purchased by the Underwriters.
(e) The indemnity and contribution agreements contained herein are
in addition to any liability which the Company may otherwise have to the
Underwriters.
(f) Neither termination nor completion of the engagement of the
Underwriters nor any investigation made by or on behalf of the Underwrite shall
effect the indemnification obligations of the Company or the Underwriters
hereunder, which shall remain and continue to be operative and in full force and
effect.
23
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Section 7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. The representations, warranties, indemnities, agreements and other
statements of the Offerors or its officers or trustees set forth in or made
pursuant to this Agreement will remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Offerors or the
Underwriters or any controlling person and will survive delivery of and payment
for the Preferred Securities.
Section 8. OFFERING BY THE UNDERWRITERS. The Trust and the Company are
advised by the Underwriters that the Underwriters propose to make a public
offering of the Preferred Securities, on the terms and conditions set forth in
the Registration Statement from time to time as and when the Underwriters deem
advisable after the Registration Statement becomes effective. Because the NASD
is expected to view the Preferred Securities as interests in a direct
participation program, the offering of the Preferred Securities is being made in
compliance with the applicable provisions of Rule 2810 of the NASD's Conduct
Rules.
Section 9. TERMINATION OF AGREEMENT.
(a) You may terminate this Agreement, by notice to the Offerors,
at any time at or prior to the Closing Time (i) if there has been, since the
respective dates as of which information is given in the Registration Statement,
any material adverse change in the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its subsidiaries,
considered as one enterprise, whether or not arising in the ordinary course of
business, or (ii) if there has occurred any outbreak or escalation of existing
hostilities or other national or international calamity or crisis the effect of
which on the financial markets of the United States is such as to make it, in
the Underwriters' reasonable judgment, impracticable to market the Preferred
Securities or enforce contracts for the sale of the Preferred Securities, or
(iii) if trading in any securities of the Company has been suspended by the
Commission or the National Association of Securities Dealers, Inc., or if
trading generally on the New York Stock Exchange or in the over-the-counter
market has been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities have been required, by such
exchange or by order of the Commission, the National Association of Securities
Dealers, Inc. or any other governmental authority with appropriate jurisdiction
over such matters, or (iv) if a banking moratorium has been declared by either
federal or State of Florida authorities, or (v) if there shall have been such
material and substantial change in the market for securities in general or in
political, financial or economic conditions as in your reasonable judgment makes
it inadvisable to proceed with the offering, sale and delivery of the Preferred
Securities on the terms contemplated by the Prospectus, or (vi) if you
reasonably determine (which determination shall be in good faith) that there has
not been satisfactory disclosure of all relevant financial information relating
to the Offerors in the Offerors' disclosure documents and that the sale of the
Preferred Securities is unreasonable given such disclosures.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 4. Notwithstanding any such termination, the
provisions of Sections 6 and 7 shall remain in effect.
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<PAGE>
Section 10. NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices shall be addressed as follows:
If to the Underwriters: Ryan, Beck & Co.
80 Main Street
West Orange, New Jersey 07052
Attention: Bruce G. Miller,
Senior Vice President
Raymond James & Associates
880 Carillon Parkway
St. Petersburg, Florida 33716
Attention: Van C. Sayler,
Senior Vice President
with a copy to: Gary Epstein, Esq.
Greenberg, Traurig, Hoffman,
Lipoff, Rosen & Quentel, P.A.
1221 Brickell Avenue
Miami, Florida 33131
If to the Company or the Trust: BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
with a copy to: Marshal D. Bilzin, Esq.
Stuzin and Camner, P.A.
550 Biltmore Way, Suite 700
Coral Gables, Florida 33134
Section 11. PARTIES. This Agreement is made solely for the benefit of
the Underwriters, and the officers, directors, employees, agents and counsel of
the Underwriters specified in Section 6, the Trust and the Company and, to the
extent expressed, any person controlling the Trust, the Company or the
Underwriters, and the directors of the Company, or trustees of the Trust, their
respective officers who have signed the Registration Statement, and their
respective executors, administrators, successors and assigns and no other person
shall acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser, as such purchaser,
from the Underwrite of the Preferred Securities.
Section 12. ARBITRATION. Any claims, controversies, demands, disputes
or differences between or among the parties hereto or any persons bound hereby
arising out of, or by virtue of, or in connection with, or otherwise relating to
this Agreement shall be submitted to and settled by arbitration conducted in
Newark, New Jersey before one or three arbitrators, each of whom shall be
knowledgeable in the field of securities law and investment banking. Such
arbitration shall otherwise be conducted in accordance with the rules then
obtaining of the American Arbitration
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Association. The parties hereto agree to share equally the responsibility for
all fees of the arbitrators, abide by any decision rendered as final and
binding, and waive the right to appeal the decision or otherwise submit the
dispute to a court of law for a jury or nonjury trial. The parties hereto
specifically agree that neither party may appeal or subject to the award or
decision of any such arbitrator to appeal or review in any court of law or in
equity or in any other tribunal, arbitration system or otherwise. Judgment upon
any award granted by such arbitrator may be enforced in any court having
jurisdiction thereof
Section 13. GOVERNING LAW AND TIME. This Agreement shall be governed by
the laws of the State of New Jersey. Specified times of the day refer to New
York City time.
Section 14. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, and when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
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<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company and the
Underwriters in accordance with its terms.
Very truly yours,
BANKUNITED CAPITAL II
By:____________________________
Name:__________________________
Title: Administrative Trustee
BANKUNITED FINANCIAL CORPORATION
By:_____________________________
Name: Alfred R. Camner
Title: Chairman of the Board
Confirmed and accepted as of the date first
above written:
RAYMOND JAMES & ASSOCIATES, INC.
RYAN, BECK & CO.
BY: RYAN, BECK & CO.
By:_________________________
Name: Bruce G. Miller
Title: Senior Vice President
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EXHIBIT A
BANKUNITED CAPITAL II
(a Delaware business trust)
1,600,000 Preferred Securities
[ ]% Cumulative Trust Preferred Securities
(Liquidation Amount $25 per preferred Security)
PRICE DETERMINATION AGREEMENT
_________,1997
Raymond James & Associates, Inc.
Ryan, Beck & Co.
c/o Ryan, Beck & Co.
80 Main Street
West Orange, New Jersey 07052
Ladies and Gentlemen:.
Reference is made to the Underwriting Agreement dated the date hereof
(the "Underwriting Agreement") among BankUnited Capital 11, a Delaware business
trust, (the "Trust"), BankUnited Financial Corporation (the "Company" and
together with the Trust, the "Offerors") and the Underwriters named above (the
"Underwriters"). The Underwriting Agreement provides for the purchase by the
Underwriters from the Trust, subject to the terms and conditions set forth
therein, of 1,600,000 shares, subject to a 240,000 adjustment (to cover
over-allotments, if any), of the ____% Cumulative Trust Preferred Securities of
the Trust (the "Preferred Securities"). This Agreement is the Price
Determination, Agreement referred to in the Underwriting Agreement.
Pursuant to Section 2 of the Underwriting Agreement, the Offerors agree
with the Underwriters as follows:
1. The public offering price per Preferred Security shall be $________.
2. The purchase price for the Preferred Securities to be paid by the
Underwriters shall be $____ per Preferred Security.
3. The commission per Preferred Security to be paid by the Company to
the Underwriters for their commitments hereunder shall be $______
per Preferred Security.
4. The interest rate on the Preferred Securities shall be ____% per
annum.
The Offerors represent and warrant to each of the Underwriters that the
representations and warranties of the Offerors set forth in Section l(a) of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
<PAGE>
This Agreement shall be governed by the laws of the State of New
Jersey
If the foregoing is in accordance with the understanding of the
Underwriters of the agreement between the Underwriters and the Offerors, please
sign and return to the Company a counterpart hereof, whereupon this instrument,
along with all counterparts and together with the Underwriting Agreement, shall
be a binding agreement between the Underwriters and the Offerors in accordance
with its terms and the terms of the Underwriting Agreement.
Very truly yours,
BANKUNITED CAPITAL II
By:
-----------------------
Name:
Title: Administrative Trustee
BANKUNITED FINANCIAL CORPORATION
By:
-----------------------
Chairman of the Board
Chief Executive Officer
Confirmed and accepted as of
the date first above written:
RAYMOND JAMES & ASSOCIATES, INC.
RYAN, BECK & CO.
By: RYAN BECK & CO.
By:
--------------------------
Bruce G. Miller
Senior Vice President
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EXHIBIT C
The opinion of counsel to the Company to be delivered pursuant to
Section 5(b)(i) of the Underwriting Agreement shall be substantially to the
effect that:
1. The Company is a corporation existing and in good standing under the laws of
the State of Florida, with requisite corporate power and authority to own
its properties and conduct its business as described in the Prospectus.
2. The Company is qualified to transact business as a foreign corporation and
is in good standing in each jurisdiction in which it owns or leases property
of a nature, or transact, business of a type, that would make such
qualification necessary, except to the extent that the failure to so qualify
or be in good standing would not have a material adverse effect on the
Company and its subsidiary, considered as one enterprise.
3. The Bank is a federally chartered stock savings bank duly organized and
validly existing under the laws of the United States, with corporate power
and authority under such laws to own, lease and operate its properties and
conduct its business as now being conducted.
4. The deposit accounts of the Bank are insured by the Savings Association
Insurance Fund of the FDIC up to the maximum amount allowable under
applicable law.
5. To such counsel's knowledge, the Bank is qualified to transact business as a
foreign corporation in each other jurisdiction in which it owns or leases
property of a nature, or transacts business of a type, that would make such
qualification necessary, except to the extent that the failure to so qualify
would not have a material adverse effect on the Company and its
subsidiaries, considered as one enterprise.
6. The Company is registered as a bank holding company under the Bank Holding
Company Act of 1956, as amended.
7. None of the outstanding shares of capital stock of the Company and none of
the Securities was issued in violation of the preemptive rights of any
stockholder of the Company.
8. The authorized capital stock of the Company at March 31, 1997 is as set
forth, in the Prospectus under the heading "Capitalization".
9. To such counsel's knowledge, all of the outstanding shares of capital stock
of the Bank have been authorized and validly issued and are fully paid and
non-assessable; all of such shares are owned by the Company, to such
counsel's knowledge, free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind and none of such shares was
issued in violation of the preemptive rights of any stockholder of the Bank.
<PAGE>
10. The Company and the Trust each has full corporate power and authority to
execute, deliver, and perform the Underwriting Agreement and to issue, sell,
and deliver the Preferred Securities to be sold by it to the Underwriters,
as provided herein, the Underwriting Agreement has been duly authorized,
executed and delivered by the Company and the Trust, and constitutes a
legal, valid, and binding obligation of each of the Company and the Trust
and is enforceable against each of the Company and the Trust in accordance
with its terms, except as enforceability of this Agreement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting creditors' rights generally, and by equitable principles limiting
the right to specific performance or other equitable relief and except as
the obligations of the Company under the indemnification and contribution
provisions of Section 6 of the Agreement may be limited by laws or
unenforceable as against public policy, as to which no opinion is expressed,
and an implied covenant of good faith and fair dealing.
11. The Trust Agreement has been duly authorized, executed and delivered by the
Company, and is a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, readjustment of debt, moratorium, fraudulent
conveyance or similar laws relating to or affecting creditors' rights
generally, general equity principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
12. The Guarantee Agreement has been duly authorized, executed and delivered by
the Company and is a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, readjustment of debt, moratorium, fraudulent
conveyance or similar laws relating to or affecting creditors' rights
generally, general equity principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing.
13. The Indenture has been duly authorized, executed and delivered by the
Company, has been duly qualified under the Trust Indenture Act, and is a
valid and binding agreement of the Company, enforceable against the Company
in accordance with its terms, except as such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, receivership,
readjustment of debt, moratorium, fraudulent conveyance or similar laws
affecting creditors' rights generally, general equity principles (whether
considered in a proceeding in equity or at law).
14. The Junior Subordinated Debentures have been duly authorized, executed and
delivered by the Company and when duly authenticated in accordance with the
Indenture and delivered and paid for in accordance with the Underwriting
Agreement, will be valid and binding obligations of the Company, entitled to
the benefits of the Indenture and enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization,
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receivership, readjustment of debt, moratorium, fraudulent conveyance or
similar laws affecting creditors' rights generally, general equity
principles (whether considered in a proceeding in equity or at law).
15. The Trust is not an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in Investment Company Act of
1940, as amended.
16. The statements set forth in the Registration Statement "Description of the
Preferred Securities, Description of the Junior Subordinated Debentures,"
"Description of the Guarantee" and "Relationship Among the Preferred
Securities, the Junior Subordinated Debentures, the Expense Agreement and
the Guarantee," to the extent that they constitute matters of law or legal
conclusions, have been reviewed by such counsel and are correct in all
material respects.
17. The statements of law or legal conclusions and opinions set forth in the
Registration Statement under the caption "Certain Federal Income Tax
Consequences," subject to the assumptions and conditions described therein,
constitute such counsel's opinion.
18. The Registration Statement is effective under the, 1933 Act, any required
filing of the Prospectus or any supplement thereto pursuant to Rule 424(b)
has been made in the manner and within the time period required by Rule
424(b) and, to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
threatened under the 1933 Act,
19. The Registration Statement (including the Rule 430A Information, if
applicable) and the Prospectus and any amendment or supplement thereto
(except for the financial statements and other financial and statistical
data included therein or omitted therefrom, as to which such counsel need
express no opinion), as of their respective effective or issue dates, comply
or complied as to form in all material respects to the applicable
requirements of the 1933 Act and the 1933 Act Regulations.
20. To such counsel's knowledge, there are no pending or threatened legal or
governmental proceedings, required under the 1993 Act and the 1933 Act
Regulations to be described in the Prospectus that are not described as
required other than litigation, incidental to the business of the Company or
the Bank which is, considered in the aggregate, not material to the Company
and its subsidiaries, considered as one enterprise, and to such counsel's
knowledge, there are no material contracts or documents of a character
required to be described or referred to in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that are
not described, referred to or filed as required.
21. Such counsel knows of no contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described in the
Registration Statement or to be filed as exhibits thereto other than those
described therein or filed or incorporated by
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reference as exhibits thereto, and such instruments as are summarized in the
Registration Statement are fairly summarized in all material respects,
22. No approval, authorization, consent, registration, qualification, or other
order of any public board or body is required in connection with the
execution and delivery of this Agreement, the Trust Agreement, the Guarantee
Agreement, and the Indenture or the issuance and sale of the Preferred
Securities or the consummation by the Company of the other transactions
contemplated by this Agreement, the Trust Agreement, the Guarantee
Agreement, or the Indenture, except such as have been obtained under the
Securities Act, the Exchange Act and the Trust Indenture Act or such as may
be required under the blue sky or securities laws of various states in
connection with the offering and sale of the Preferred Securities (as to
which such counsel need express no opinion).
23. The execution and delivery of this Agreement, the Trust Agreement, the
Guarantee Agreement, and the Indenture, the issuance and sale of the
Preferred Securities and the Junior Subordinated Debentures, the compliance
by the Company with the provisions of the Preferred Securities, the Junior
Subordinated Debentures, the Indenture and this Agreement and the
consummation of the transactions herein and therein contemplated will not
conflict with or constitute a breach of, or default under, the articles of
incorporation or by-laws of the Company or a breach or default under any
contract, Indenture, mortgage, loan agreement, note, lease or other
instrument known to such counsel to which either the Company or any
Subsidiary is a party or by which either of them or any of their respective
properties may be bound except for such breaches as would not have a
material adverse effect on the Company and its Subsidiaries considered as
one enterprise, nor will such action result in a violation on the part of
the Company or any Subsidiary of any applicable law or regulation or of any
administrative, regulatory or court decree known to such counsel.
Counsel will supplementally provide a written statement that such counsel
has participated in the preparation of the Registration Statement and
Prospectus and has reviewed the documents incorporated by reference in the
Prospectus and no facts have come to the attention of such counsel to lead it to
believe (A) that the Registration Statement (including the Rule 430A
Information, if applicable) or any amendment thereto (except for the financial
statements and other financial or statistical data included therein or omitted
therefrom, as to which such counsel need express no opinion), at the time the
Registration Statement or any such amendment became effective, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or (B) that the Prospectus or any amendment or supplement thereto (except for
the financial statements and other financial or statistical data included
therein or omitted therefrom, as to which such counsel need express no opinion),
at the time the Prospectus was issued, at the time any such amended or
supplemented prospectus was issued or at the Closing Time, included or includes
an untrue statement of a material fact or omitted or omits to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading or (C) that the
documents incorporated by reference in the Prospectus (except for the
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financial Statements and other financial or statistical data contained therein
or omitted therefrom, as to which such counsel need express no opinion, and
except to the extent that any statement therein is modified or superseded in the
Prospectus), as of the dates they were filed with the Commission, contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading.
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EXHIBIT D
The opinion of counsel, as special Delaware counsel to the Company and the
Trust to be delivered pursuant to Section 5(b)(ii) of the Underwriting Agreement
shall be substantially to the effect 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 Act"), and all filings required under the laws
of the State of Delaware with respect to the creation, and valid existence
of the Trust as a business trust have been made.
2. Under the Delaware Act and Trust Agreement the Trust has the trust power and
authority to own its property and to its conduct its business, all as
described in the Prospectus.
3. The Trust Agreement constitutes a valid and binding obligation of the
Company and the Property Trustee and the Delaware Trustee, and is
enforceable against the Company and the Trustees, in accordance with its
terms.
4. Under the Delaware Act and the Trust Agreement, the Trust has the trust
power and authority to execute and deliver, and to perform its obligations
under, the Underwriting Agreement and to issue and perform its obligations
under the Preferred Securities and the Common Securities.
5. Under the Delaware Act and the Trust Agreement, the execution and delivery
by the Trust of the Underwriting Agreement, and the performance by the Trust
of its obligations thereunder, have been duly authorized by all necessary
trust action on the part of the Trust.
6. The Preferred Securities have been duly authorized by the Trust Agreement
and are duly and validly issued and, subject to the qualifications set forth
herein, fully paid and nonassessable undivided beneficial interests in the
assets of the Trust and are entitled to the benefits of the Trust Agreement.
The Holders, as beneficial owners of the Trust, will be entitled to the same
limitations of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the
State of Delaware. We note that the Holders may be obligated pursuant to the
Trust Agreement (i) to provide indemnity and/or security in connection with
and pay taxes or governmental charges arising from transfers or exchanges of
Preferred Securities Certificates and the issuance of replacement Preferred
Securities Certificates, and (ii) to provide security or indemnity in
connection with requests of or directions to the Property Trustee to
exercise its rights and powers under the Trust Agreement.
7. Under the Delaware Act and the Trust Agreement, the issuance of the
Preferred Securities and Common Securities is not subject to preemptive
rights.
<PAGE>
8. The Common Securities have been duly authorized by the Trust Agreement
and are duly and validly issued undivided beneficial interests in the assets
of the Trust and are entitled to the benefits of the Trust Agreement.
9. The issuance and sale by the Trust of the Preferred Securities and Common
Securities, the purchase by the Trust of the Junior Subordinated Debentures,
the execution, delivery and performance by the Trust of the Underwriting
Agreement, the consummation by the Trust of the transactions contemplated by
the Underwriting Agreement and the compliance by the Trust with its
obligations thereunder will not violate (i) any of the provisions of the
Certificate of Trust or the Trust Agreement or (ii) any applicable Delaware
law or administrative regulation.
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EXHIBIT E
The opinion of counsel to the Trust to be delivered pursuant to Section
5(b)(iii) of the Underwriting Agreement shall be substantially to the effect
that:
1. The Trust Company is duly incorporated and is validly existing in good
standing as a banking corporation with trust powers under the laws of the
State of Delaware.
2. The Indenture Trustee has the requisite power and authority to execute,
deliver and perform its obligations under the Indenture, and has taken all
necessary corporate action to authorize the execution, delivery and
performance by it of the Indenture.
3. The Guarantee Trustee has the requisite power and authority to execute,
deliver and perform its obligations under the Guarantee Agreement, and has
taken all necessary corporate action to authorize the execution, delivery
and performance by it of the Guarantee Agreement.
4. The Property Trustee has the requisite power and authority to execute and
deliver the Trust Agreement, and has taken all necessary corporate action to
authorize the execution and delivery of the Trust Agreement.
5. Each of the Indenture and the Guarantee Agreement has been duly executed
and delivered by the Indenture Trustee and the Guarantee Trustee,
respectively, and constitute, a legal, valid and binding obligation of the
Indenture Trustee and the Guarantee Trustee, respectively, enforceable
against the Indenture Trustee and the Guarantee Trustee, respectively in
accordance with its respective terms, except that certain payment
obligations may be enforceable solely against the assets of the Trust and
except that such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, liquidation, fraudulent conveyance and transfer
or other similar laws affecting the enforcement of creditors' rights
generally, and by general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing (regardless of whether such enforceability is considered in a
proceeding in equity or at law), and by the effect of applicable public
policy on the enforceability of provisions relating to indemnification or
contribution.
6. The Junior Subordinated Debentures delivered on the date hereof have been
duty authenticated by the Indenture Trustee in accordance with the terms of
the Indenture.
ARTICLES OF INCORPORATION OF
BANKUNITED FINANCIAL CORPORATION
(as amended)
ARTICLE I
NAME
The name of the corporation is "BANKUNITED FINANCIAL CORPORATION" (the
"Corporation").
ARTICLE II
PRINCIPAL OFFICE
The principal office and mailing address of the Corporation is 255
Alhambra Circle, Coral Gables, Florida 33134.
ARTICLE III
REGISTERED OFFICE AND AGENT
The street address of the Corporation's initial registered office is
255 Alhambra Circle, Coral Gables, Florida 33134. The name of its registered
agent at such address is Nancy L. Ashton.
ARTICLE IV
TERM OF CORPORATE EXISTENCE
The duration of this Corporation is to be perpetual.
ARTICLE V
PURPOSE
The Corporation is a financial institution holding company and may
engage in any activity or business permitted under the laws of the State of
Florida.
ARTICLE VI
CAPITAL STOCK
The total number of shares of all classes of stock that the Corporation
is authorized to issue is 43,000,000 shares, of which 30,000,000 shall be Class
A Common Stock, $.01 par value (the "Class A Common Stock"), 3,000,000 shall be
Class B Common Stock, $.01 par value (the "Class B Common Stock"), and
10,000,000 shall be Preferred Stock, $.01 par value (the "Preferred Stock"). No
holder of the Corporation's stock shall have any preemptive right to acquire the
Corporation's securities.
CLASS A COMMON STOCK. The maximum number of shares of Class A
Common Stock that the Corporation is authorized to have outstanding is
30,000,000 shares at a par value of $.01 per share. The Class A Common
Stock shall be a special class of stock issuable from time to time in
one or more series as specified in Section 607.0602 of the Florida
Business Corporation Act (or in such other manner as may be permitted
by law), as determined from time to time by the Board of Directors and
stated in the resolution or resolutions providing for the issuance of
such series of Class A Common Stock adopted by the Board of Directors
pursuant to authority hereby vested in it, each such series to be
appropriately designated, prior to the issuance of any shares thereof,
by some distinguishing letter, number, or title. The Board of Directors
is hereby expressly granted authority to fix the authorized number of
shares of each series of common stock, and to fix the terms of such
series, including, but not limited to, the following:
(a) the rate or manner of payment of dividends;
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(b) whether shares may be redeemed and, if so, the
redemption price and the terms and conditions of redemption;
(c) the amount payable upon shares in the event of
voluntary or involuntary liquidation;
(d) sinking fund provisions, if any, for the
redemption or purchase of shares;
(e) the terms and conditions, if any, on which shares
may be converted;
(f) voting rights, if any; and
(g) the other special rights, if any, and the
qualifications, limitations or restrictions thereof, of the shares of
such series.
The designation of each particular series of Class A Common Stock and
its terms in respect of the foregoing particulars shall be fixed and
determined by the Board of Directors in any manner permitted by law and
stated in the resolution or resolutions providing for the issuance of
such shares adopted by the Board of Directors pursuant to authority
hereby vested in it, before any shares of such series are issued. The
Board of Directors may from time to time increase (but not above the
total number of authorized shares of the class) the number of shares of
any series of Class A Common Stock already created by providing that
any unissued Class A Common Stock shall constitute part of such series,
or may decrease (but not below the number of shares thereof then
outstanding) the number of shares of any series of Class A Common Stock
already created by providing that any unissued shares previously
assigned to such series shall no longer constitute part thereof. The
Board of Directors is hereby empowered to classify or reclassify any
unissued Class A Common Stock by fixing or altering the terms thereof
in respect of the above-mentioned particulars and by assigning the same
to an existing or newly created series from time to time before the
issuance of such shares.
For purposes of determining whether a non-voting series of
Class A Common Stock shall be entitled to vote as a class pursuant to
Section 607.1004 of the Florida Business Corporation Act (or any
successor section or statute hereinafter enacted) on an amendment to
the Corporation's Articles of Incorporation, an amendment that
increases the total number of authorized shares of Class A Common Stock
shall not be considered to be an adverse change to the terms of any
individual series of Class A Common Stock and shall not require a vote
or the consent of the holders of any such series of Class A Common
Stock.
Set forth in Appendix A hereto is the Statement of Designation
setting forth the terms of the Series I Class A Common Stock.
CLASS B COMMON STOCK. The maximum number of shares of Class B
Common Stock that the Corporation is authorized to have outstanding is
3,000,000 shares at a par value of $.01 per share. Holders of Class B
Common Stock are entitled to vote on all questions required by law on
the basis of one vote per share and there shall be no cumulative
voting. The shares of Class B Common Stock shall be convertible into
shares of other classes of capital stock of the Corporation in such
manner as may be provided by the Board of Directors by resolution.
Set forth in Appendix A hereto is the Statement of Designation
setting forth the conversion rights of the Class B Common Stock.
PREFERRED STOCK. The maximum number of shares of Preferred
Stock that the Corporation is authorized to have outstanding is
10,000,000 shares at a par value of $.01 per share. The Preferred Stock
may be issued from time to time in one or more series as specified in
Section 607.0602 of the Florida Business Corporation Act (or in such
other manner as may be permitted by law), as determined from time to
time by the Board of Directors and stated in the resolution or
resolutions providing for the issuance of such series of Preferred
Stock adopted by the Board of Directors pursuant to authority hereby
vested in
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<PAGE>
it, each such series to be appropriately designated, prior to the
issuance of any shares thereof, by some distinguishing letter, number,
or title. The Board of Directors is hereby expressly granted authority
to fix the authorized number of shares of each series of Preferred
Stock, and to fix the terms of such series, including, but not limited
to, the following:
(a) the rate or manner of payment of dividends;
(b) whether shares may be redeemed and, if so, the
redemption price and the terms and conditions of redemption;
(c) the amount payable upon shares in the event of
voluntary or involuntary liquidation;
(d) sinking fund provisions, if any, for the redemption
or purchase of shares;
(e) the terms and conditions, if any, on which shares may
be converted;
(f) voting rights, if any; and
(g) the other special rights, if any, and the
qualifications, limitations or restrictions thereof, of the shares of
such series.
The designation of each particular series of Preferred Stock and its
terms in respect of the foregoing particulars shall be fixed and
determined by the Board of Directors in any manner permitted by law and
stated in the resolution or resolutions providing for the issuance of
such shares adopted by the Board of Directors pursuant to authority
hereby vested in it, before any shares of such series are issued. The
Board of Directors may from time to time increase (but not above the
total number of authorized shares of the class) the number of shares of
any series of Preferred Stock already created by providing that any
unissued Preferred Stock shall constitute part of such series, or may
decrease (but not below the number of shares thereof then outstanding)
the number of shares of any series of Preferred Stock already created
by providing that any unissued shares previously assigned to such
series shall no longer constitute part thereof. The Board of Directors
is hereby empowered to classify or reclassify any unissued Preferred
Stock by fixing or altering the terms thereof in respect of the
above-mentioned particulars and by assigning the same to an existing or
newly created series from time to time before the issuance of such
shares.
For purposes of determining whether a non-voting series of
Preferred Stock shall be entitled to a vote as a class pursuant to
Section 607.1004 of the Florida Business Corporation Act (or any
successor section or statute hereinafter enacted) on an amendment to
the Corporation's Articles of Incorporation, an amendment that
increases the total number of authorized shares of Preferred Stock
shall not be considered to be an adverse change to the terms of any
individual series of Preferred Stock and shall not require a vote or
the consent of the holders of any such series of Preferred Stock.
Set forth in Appendices B, C, D, E, F and G hereto are the
Statements of Designation setting forth the terms of the Noncumulative
Convertible Preferred Stock, Series A; Noncumulative Convertible
Preferred Stock, Series B; Noncumulative Convertible Preferred Stock,
Series C; Noncumulative Convertible Preferred Stock, Series C-II; 8%
Noncumulative Convertible Preferred Stock, Series 1993; and 9%
Noncumulative Perpetual Preferred Stock, respectively."
ARTICLE VII
DISTRIBUTIONS TO STOCKHOLDERS
The Board of Directors may authorize and the Corporation may make
distributions to its stockholders subject to (a) the other provisions of these
Articles of Incorporation, and (b) except as the following otherwise provides,
the law currently in effect or hereinafter enacted:
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No distribution may be made if, after giving it effect:
(i) The Corporation would not be able to pay its
debts as they become due in the usual course of business; or
(ii) The Corporation's total assets would be less than the sum of
its total liabilities plus, unless the Board of Directors
determines otherwise, the amount that would be needed, if the
Corporation were to be dissolved at the time of distribution,
to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights are superior to those
receiving the distribution.
ARTICLE VIII
DIRECTORS
The number of directors constituting the Board of Directors shall be
such number, equal to or greater than one, as may be fixed from time to time in
the bylaws of the Corporation.
Except as may be set forth in Statements of Designation creating series
of Class A Common Stock and Preferred Stock, the Board of Directors shall be
divided into three classes of directors of as nearly equal numbers as is
possible, designated Class I, Class II and Class III, respectively, serving
staggered three-year terms, with the term of a class expiring at each Annual
Meeting of Stockholders. At each Annual Meeting of Stockholders a number of
directors equal to the number of directors of the class whose term expires at
such meeting (or the number of directors properly nominated and qualified for
election) shall be elected to hold office until the third succeeding Annual
Meeting of Stockholders after their election. In all cases, each director shall
serve until a successor has been elected and qualified or until such director's
earlier resignation (including, without limitation, as may be provided by the
terms of an employment agreement), removal from office, death or disability.
ARTICLE IX
LIMITATION OF LIABILITY
The Corporation shall indemnify and may insure its officers and
directors to the fullest extent permitted by law currently in effect or
hereinafter enacted.
ARTICLE X
AMENDMENT
These Articles of Incorporation may be amended in the manner authorized
by law at the time of amendment.
ARTICLE XI
ACTION BY STOCKHOLDERS WITHOUT A MEETING
No action required or permitted to be taken at an Annual Meeting of
Stockholders or at a Special Meeting of Stockholders may be taken without a
meeting. The power of the stockholders to consent in writing, without a meeting,
to the taking of any action is expressly denied hereby.
ARTICLE XII
AFFILIATED TRANSACTIONS AND CONTROL-SHARE ACQUISITIONS
The Corporation shall not be governed by the Affiliated Transactions
and Control-Share Acquisitions sections (Sections 607.0901 through 607.0903) of
the Florida Business Corporation Act or any successor sections or statutes
hereinafter enacted.
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ARTICLE XIII
INCORPORATOR
The name and address of the incorporator of the Corporation is Maria E.
Chang, 1221 Brickell Avenue, 25th Floor, Miami, Florida 33131.
The undersigned incorporator has executed these Articles of
Incorporation this 10th day of January, 1995.
/S/ MARIA E. CHANG
-----------------------------------
Maria E. Chang, Incorporator
IN WITNESS WHEREOF, I, Nancy L. Ashton, having been named Registered
Agent and to accept service of process for BankUnited Financial Corporation at
the place designated in these Articles of Incorporation, hereby accept the
appointment as Registered Agent and agree to act in this capacity. I further
agree to comply with the provisions of all statutes relating to the proper and
complete performance of my duties, and I am familiar with and accept the
obligations of my position as Registered Agent this 10th day of January, 1995.
/S/ NANCY L. ASHTON
---------------------------------
Nancy L. Ashton, Registered Agent
STATE OF FLORIDA )
)SS:
COUNTY OF DADE )
The foregoing instrument was acknowledged before me this ____ day of
January, 1995 by Nancy L. Ashton, who is personally known to me and who did take
an oath.
_________________________________
Notary Public
State of Florida
Printed Name:____________________
Commission No.:__________________
My Commission Expires:
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APPENDIX A
STATEMENT OF DESIGNATION
OF
SERIES I CLASS A COMMON STOCK
AND
CLASS B COMMON STOCK
OF
BANKUNITED FINANCIAL CORPORATION
WHEREAS, pursuant to Article VI of the Articles of Incorporation of
BankUnited Financial Corporation (the "Corporation") as in effect on the date
hereof and Section 607.0602 of the Florida Business Corporation Act, the Board
of Directors of the Corporation is authorized, within limitations set forth
therein, (i) to divide the Corporation's Class A Common Stock, par value $.01
per share ("Class A Common Stock"), into series and fix and determine the
relative rights and preferences of the shares of any series so established, and
(ii) to fix and determine certain rights of the Corporation's Class B Common
Stock, par value $.01 per share ("Class B Stock"); and
WHEREAS, the Board of Directors desires to (i) establish a series of the
Class A Common Stock, designating such series "Series I Class A Common Stock,"
(ii) allocate 10,000,000 shares of the authorized Class A Common Stock to the
Series I Class A Common Stock, (iii) fix and determine the relative rights and
preferences of the shares of the Series I Class A Common Stock, and (iv) fix and
determine the conversion rights of the Class B Stock;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors (i) hereby
allocates a portion of the Class A Common Stock to a series thereof designated
Series I Class A Common Stock, and fixes and determines the relative rights and
preferences of the Series I Class A Common Stock, as set forth in Section I
below, and (ii) hereby sets forth in Section II below the conversion rights of
the Class B Stock.
I. DESIGNATION, ALLOCATION AND RIGHTS OF SERIES I CLASS A COMMON
STOCK.
(1) DESIGNATION AND ALLOCATION. 20,000,000 of the 30,000,000
shares of Class A Common Stock authorized by the Articles of Incorporation
of the Corporation hereby are determined to be and shall be of a series
designated as Series I Class A Common Stock (herein called "Series I Class
A Stock")."
(2) DIVIDENDS. The holders of shares of the Series I Class A
Common Stock shall be entitled to receive, when, as, and if declared by the
Board of Directors and out of the assets of the Corporation which are by
law available for the payment of dividends to the holders of common stock,
a per share dividend equal to 110% of the amount per share of any dividend
declared on Class B Stock (the "Dividend Rate"). The Dividend Rate shall be
subject to adjustment as provided by the formula set forth in subsection
I(3) of this resolution.
(3) DIVIDEND RATE ADJUSTMENTS. The Dividend Rate shall be subject
to adjustment from time to time as follows:
(a) If the Corporation shall (i) pay a dividend in and on
shares of its Series I Class A Common Stock or Class B Stock, (ii)
subdivide its outstanding shares of Series I Class A Common Stock
or Class B Stock into a greater number of shares, (iii) combine
its outstanding shares of Series I Class A Common Stock or Class B
Stock into a smaller number of shares, or (iv) issue by
reclassification of its shares of Series I Class A Common Stock or
Class B Stock any shares of its capital stock, then the Dividend
Rate in effect immediately prior thereto shall be adjusted so that
the holder of Series I Class A Common Stock or Class B Stock
entitled to receive a dividend upon his or her Series I Class A
Common Stock or Class B Stock after the record date fixing
stockholders to be affected by such event shall be entitled to
receive upon declaration of a dividend on common stock such
dividend which such holder would have been entitled to receive
after the happening of such event had such dividend been declared
and paid immediately prior to such record date. Such adjustment
shall be made whenever any of such events shall happen, and shall
also be effective retroactively as to the happening of any such
event between such record date and the payment of dividends on the
common stock of the Corporation.
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(b) (i) If the Corporation has issued Series I Class A
Common Stock which is not listed on a national securities
exchange or traded over-the-counter by a nationally
recognized securities firm or association and the
Corporation shall issue rights or warrants to the holders
of any of its capital stock entitling them to subscribe
for or purchase shares of common stock at a price per
share less than the Book Value Per Share (as defined in
subsection II(4)(b)(iii) of this resolution) of such
common stock at the record date mentioned below; or
(ii) If the Corporation has issued Series I Class
A Common Stock which is listed on a national securities
exchange or traded over-the-counter by a nationally
recognized securities firm or association, and the
Corporation shall issue rights or warrants to the holders
of its capital stock entitling them to subscribe for or
purchase shares of common stock at a price per share less
than the current market price per share (as defined in
subsection II(4)(e) of this resolution) of such common
stock at the record date mentioned below; then, in either
of the above events, the Dividend Rate shall be adjusted
by multiplying the Dividend Rate existing immediately
prior to such event by a fraction as provided below:
(A) If the Class B Stock may be
subscribed for or purchased at less than the Book Value
Per Share or the current market price per share, as the
case may be, then the numerator of such fraction shall be
the number of shares of Class B Stock outstanding on the
date of issuance of such rights or warrants plus the
number of additional shares of Class B Stock offered for
subscriptions or purchase, and the denominator of which
shall be the number of shares of Class B Stock outstanding
on the date of issuance of such rights or warrants plus
the number of shares of Class B Stock which the aggregate
offering price of the total number of shares of Class B
Stock so offered would purchase based on current Book
Value Per Share at the record date mentioned below or
current market price per share (as defined in subsection
II(4)(e) of this resolution), as the case may be.
(B) If the Series I Class A Common Stock
may be subscribed for or purchased at less than the Book
Value Per Share or the current market price per share, as
the case may be, then the numerator of such fraction shall
be the number of shares of Series I Class A Common Stock
outstanding on the date of issuance of such rights or
warrants plus the number of shares of Series I Class A
Common Stock which the aggregate offering price of the
total number of shares of Series I Class A Common Stock so
offered would purchase based on Book Value Per Share at
the record date mentioned below or current market price
per share (as defined in subsection II(4)(e) of this
resolution), as the case may be, and the denominator of
which shall be the number of shares of Series I Class A
Common Stock outstanding on the date of issuance of such
rights or warrants plus the number of additional shares of
Series I Class A Common Stock offered for subscription or
purchase.
(iii) An adjustment to the Dividend Rate as
provided in subsections I(3)(b)(ii)(A) or (B), above,
shall be made whenever such rights or warrants are issued,
and also shall be effective retroactively as to dividends
declared on the common stock of the Corporation between
the record date for the determination of stockholders
entitled to receive such rights or warrants and the date
such rights or warrants are issued.
(c) No adjustment in the Dividend Rate shall be required
unless such adjustment would require an increase or decrease of at
least 2% in such Dividend Rate; provided, however, that any
adjustments which by reason of this subsection I(3)(c) are not
required to be made, and are not made, shall be carried forward
and taken into account in any subsequent adjustment.
(4) VOTING.
(a) Except as otherwise provided in the Articles of
Incorporation of the Corporation, or as provided in any resolution
of the Board of Directors or the stockholders of the Corporation,
the Series I Class A Common Stock, the Class B Stock, and the
Preferred Stock shall vote together as a single class on all
matters submitted to the stockholders of the Corporation for a
vote. In any such vote, each share of Series I Class A Common
Stock is entitled to cast 1/10 of the vote that each share of
Class B Stock is entitled to cast.
(b) Notwithstanding the provision contained in subsection
I(4)(a) above, in the event of any consolidation of the
Corporation with or merger of the Corporation into another
corporation, or in the event of any sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other
consideration) of
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all or substantially all of the property or assets of the
Corporation to another corporation, then, in any such
consolidation, merger, sale, conveyance, exchange or transfer, if
the consideration per share (as adjusted consistent with the
provisions of Sections I and II hereof) to be received for the
shares of Series I Class A Common Stock differs in any substantial
kind or amount from the per share (as adjusted consistent with the
provisions of Sections I and II hereof) consideration to be
received for Class B Stock, the majority of the holders of the
outstanding Series I Class A Common Stock, by a separate vote of
the holders of the Series I Class A Common Stock, must approve
such consolidation, merger, sale, conveyance, exchange or
transfer; provided, however, that nothing in this subsection
I(4)(b) shall in any way grant any rights to the holders of the
Series I Class A Common Stock in connection with the sale of any
shares of the capital stock of the Corporation by a stockholder of
the Corporation to any person or entity other than the
Corporation. Notwithstanding any other provision of this
subsection I(4)(b), the receipt by the holders of the Series I
Class A Common Stock of limited voting stock in an acquiring
company shall not be deemed to be consideration which differs in
any substantial respect from that received by the holders of the
Class B Stock, provided such limited voting common stock bears
substantially the same relative rights and privileges to the
acquiring company's voting stock as the Series I Class A Common
Stock bears to the Class B Stock.
II. CONVERSION RIGHTS OF CLASS B STOCK.
(1) CONVERSION. Subject to and upon compliance with the provisions
of this resolution, the holder of any shares of Class B Stock may
at such holder's option convert any such shares of Class B Stock
into such number of fully paid and non-assessable shares of Series
I Class A Common Stock as are issuable pursuant to the formula set
forth in subsections II(3), (4) and (5) of this resolution.
No adjustment shall be made for dividends on any Series I
Class A Common Stock that shall be issuable because of the
conversion of shares of Class B Stock, but all dividends accrued
and unpaid on any Class B Stock up to and including the dividend
payment date immediately preceding the date of conversion shall
constitute a debt of the Corporation payable to the converting
holder.
(2) MECHANICS OF CONVERSION. The surrender of any Class B Stock
for conversion shall be made by the holder thereof to the
Corporation at its principal office and such holder shall give
written notice to the Corporation at said office that such holder
elects to convert such Class B Stock in accordance with the
provisions hereof. Such notice also shall state the name or names
(with addresses) in which the certificate or certificates for
Series I Class A Common Stock, which shall be issuable on such
conversion, shall be issued. Subject to the provisions of
subsection II(1) hereof, every such notice of election to convert
shall constitute a contract between the holder of such shares and
the Corporation, whereby such holder shall be deemed to subscribe
for the number of shares of Series I Class A Common Stock which
such holder will be entitled to receive upon such conversion and,
in payment and satisfaction of such subscription, to surrender
such Class B Stock and to release the Corporation from all
obligations thereon, and whereby the Corporation shall be deemed
to agree that the surrender of such Class B Stock and the
extinguishment of its obligations thereon shall constitute full
payment for the Series I Class A Common Stock so subscribed for
and to be issued upon such conversion.
As soon as practicable after the receipt of such notice
and the shares of Class B Stock, the Corporation shall issue and
shall deliver to the person for whose account such shares of Class
B Stock were so surrendered, or on such holder's written order, a
certificate or certificates for the number of full shares of
Series I Class A Common Stock issuable upon the conversion of such
shares of Class B Stock and a check or cash for the payment (if
any) to which such person is entitled pursuant to subsection II(5)
hereof, together with a certificate or certificates representing
the shares of Class B Stock, if any, which are not to be
converted, but which constituted part of the Class B Stock
represented by the certificates or certificates surrendered by
such person. Such conversion shall be deemed to have been effected
on the date on which the Corporation shall have received such
notice and such Class B Stock, and the person or persons in whose
name or names any certificate or certificates for Series I Class A
Common Stock shall be issuable upon such conversion shall be
deemed to have become on said date the holder or holders of record
of the shares represented thereby.
(3) BASIC CONVERSION RATE. The initial rate at which holders may
convert Class B Stock into Series I Class A Common Stock
("Conversion Rate") shall be one share of Series I Class A Common
Stock for each share of Class B Stock surrendered for conversion.
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(4) CONVERSION RATE ADJUSTMENT. The Conversion Rate shall be
subject to adjustment from time to time as follows:
(a) If the Corporation shall (i) pay a dividend in and on
shares of its Series I Class A Common Stock or its Class B Stock,
(ii) subdivide its outstanding shares of Series I Class A Common
Stock or its Class B Stock into a greater number of shares, (iii)
combine its outstanding shares of Series I Class A Common Stock or
its Class B Stock into a smaller number of shares, or (iv) issue
by reclassification of its shares of Series I Class A Common Stock
or its Class B Stock any shares of its capital stock, then the
Conversion Rate in effect immediately prior thereto shall be
adjusted so that the holder of Class B Stock surrendered for
conversion after the record date fixing stockholders to be
affected by such event shall be entitled to receive upon
conversion the number of such shares of the Corporation which such
holder would have been entitled to receive after the happening of
such event had such shares been converted immediately prior to
such record date. Such adjustment, if applicable, shall be made
whenever any of such events shall happen, and shall also be
effective retroactively as to shares converted between such record
date and the date of the happening of any such event.
(b) (i) If the Series I Class A Common Stock is not listed
on a national securities exchange or traded over-the-counter by a
nationally recognized securities firm or association, and the
Corporation issues rights or warrants (a) to the holders of its
Series I Class A Common Stock entitling them to subscribe for or
purchase shares of Series I Class A Common Stock or (b) to the
holders of its Class B Stock entitling them to subscribe for or
purchase shares of Class B Stock, in either case at a price per
share less than the Book Value Per Share (as defined below) of
Series I Class A Common Stock at the record date mentioned below;
or
(ii) If the Series I Class A Common Stock is listed on a
national securities exchange or traded over-the-counter by a
nationally recognized securities firm or association, and the
Corporation issued rights or warrants (a) to the holders of its
Series I Class A Common Stock entitling them to subscribe for or
purchase shares of Series I Class A Common Stock or (b) to the
holders of its Class B Stock entitling them to subscribe for or
purchase shares of Class B Stock, in either case at a price per
share less than the current market price per share of Series I
Class A Common Stock (as defined in subsection II(4)(e) of this
resolution) at the record date mentioned below;
then, in either of the above events in which the Series I Class A
Common Stock rights or warrants are issued at a price per share
below Book Value Per Share or current market price per share, as
the case may be, the number of shares of Series I Class A Common
Stock into which each share of Class B Stock shall thereafter be
convertible shall be determined by multiplying the number of
shares of Series I Class A Common Stock into which such shares of
Class B Stock were theretofore convertible by a fraction, the
numerator of which shall be the number of shares of Series I Class
A Common Stock outstanding on the date of issuance of such rights
or warrants plus the number of additional shares of Series I Class
A Common Stock offered for subscription or purchase, and the
denominator of which shall be the number of shares of Series I
Class A Common Stock outstanding on the date of issuance of such
rights or warrants plus the number of shares of Series I Class A
Common Stock which the aggregate offering price of the total
number of shares so offered would purchase based on Book Value Per
Share at the record date mentioned below or current market price
per share (as defined in subsection II(4)(e) of this resolution),
as the case may be. If the Corporation issues Class B Stock rights
or warrants at a price per share below Book Value Per Share or
current market price per share, as the case may be, then the above
formula shall be used except that when calculating the fraction in
such formula, Class B Stock shall be substituted for Series I
Class A Common Stock. Such adjustment shall be made whenever such
rights or warrants are issued, and shall also be effective
retroactively as to shares of Class B Stock converted between the
record date for the determination of stockholders entitled to
receive such rights or warrants and the date such rights or
warrants are issued.
(iii) The term "Book Value Per Share," as used herein,
shall mean such amount which is determined by (a) reducing total
stockholders' equity by the amount contributed to capital in
exchange for all classes of stock other than common stock,
adjusted to reflect any proportion of the Corporation's net income
or loss from operations since payment for such shares of stock
other than common stock (such adjustment arrived at by adding all
shares of outstanding stock, adjusted to reflect any conversion
ratios, the resulting number to be the denominator of a fraction
the numerator of which is to be the number of shares of the
Corporation's stock other than common stock, adjusted to reflect
conversion ratios, the resulting fractions to be multiplied by the
net income or loss from the Corporation's operations since payment
for the stock other than common stock); and (b) dividing the
resulting amount by the number of shares of common stock
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outstanding, adjusted to compensate for any common stock to common
stock conversion ratio other than one to one.
(c) If the Corporation shall distribute to the holders of
its Series I Class A Common Stock or Class B Stock evidence of its
indebtedness or assets (excluding cash dividends or distributions
made out of current or retained earnings) or rights or warrants to
subscribe other than as referred to in subsection II(4)(b) of this
resolution, then, when such distribution is made to the holders of
Series I Class A Common Stock the number of shares of Series I
Class A Common Stock into which each share of Class B Stock shall
thereafter be convertible shall be determined by multiplying the
number of shares of Series I Class A Common Stock into which such
shares of Class B Stock was theretofore convertible by a fraction,
the numerator of which shall be the Book Value Per Share of Series
I Class A Common Stock at the record date mentioned below or, if
the Series I Class A Common Stock is listed on a national
securities exchange or traded over-the-counter by a nationally
recognized securities firm or association, the market price per
share of Series I Class A Common Stock (as defined in subsection
II(4)(e) of this resolution) on the date of such distribution, and
the denominator of which shall be such Book Value Per Share of the
Series I Class A Common Stock at the record date mentioned below
or such current market price per share of the Series I Class A
Common Stock, as the case may be, less the then fair market value
(as determined by the Board of Directors of the Corporation, whose
determination shall be conclusive) of the portion of the assets,
evidence of indebtedness, subscription rights or warrants so
distributed applicable to one share of the Series I Class A Common
Stock. If the Corporation distributes such evidence of
indebtedness or assets to the holders of the Class B Stock, the
above formula shall be used except that when calculating the
fraction in such formula, Class B Stock shall be substituted for
Series I Class A Common Stock. Such adjustment shall be made
whenever any such distribution is made, and shall also be
effective retroactively as to the shares converted between the
record date for the determination of stockholders entitled to
receive such distribution and the date such distribution is made.
(d) In the event of any consolidation of the Corporation
with, or the merger of the Corporation into, another corporation,
or in the event of any sale, conveyance, exchange or transfer (for
cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the Corporation
to another corporation, or in the case of any reorganization of
the Corporation, the holder of each share of Class B Stock then
outstanding shall have the right thereafter to convert such share
into the kind and amount of shares of stock and other securities
and property, including cash, which would have been deliverable to
such holder upon such consolidation, merger, sale, conveyance,
exchange, transfer or reorganization if such holder had converted
such holder's shares of Class B Stock into Series I Class A Common
Stock immediately prior to such consolidation, merger, sale,
conveyance, exchange, transfer or reorganization. In any such
event, effective provision shall be made in the instrument
effecting or providing for such consolidation, merger, sale,
conveyance, exchange, transfer or reorganization so that the
provisions set forth herein for the protection of the conversion
rights of the shares of Class B Stock shall thereafter be
applicable, as nearly as may be practicable, in relation to any
shares of stock or other securities or property, including cash,
deliverable after such consolidation, merger, sale, conveyance,
exchange, transfer or reorganization upon the conversion. The
provisions of this subsection II(4)(d) shall similarly apply to
successive consolidations, mergers, sales, conveyances, exchanges,
transfers and reorganizations.
(e) For purposes of computation under Sections I and II of
this resolution, the current market price per share of Series I
Class A Common Stock at any date shall be deemed to be the average
of the daily closing prices for the 20 consecutive business days
immediately prior to the day in question. The closing price for
each day shall be the last reported sales price, regular way, on
the principal national securities exchange upon which the Series I
Class A Common Stock is listed, or in case no such reported sale
takes place on such day, the average of the reported closing bid
and asked prices, regular way, on such national securities
exchange, or if the Series I Class A Common Stock is not then
listed on a national securities exchange, the average of the
closing prices or, if applicable, closing bid and asked prices in
the over-the-counter market as furnished by the nationally
recognized securities firm or association selected from time to
time by the Corporation for that purpose.
(f) No adjustments in the Conversion Rate shall be
required unless such adjustment would require an increase or
decrease of at least 2% in such Conversion Rate; provided,
however, that any adjustments which by reason of this subsection
II(4)(f) are not required to be made, and are not made, shall be
carried forward and taken into account in any subsequent
adjustment. All calculations under this subsection II(4)(f) shall
be made to the nearest cent or one-hundredth of a share, as the
case may be.
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(5) FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of any
shares. If more than one share shall be surrendered for conversion
at one time by the same holder, the number of full shares issuable
upon conversion thereof shall be computed on the basis of the
aggregate number of such shares so surrendered. If the conversion
of any shares results in a fraction, an amount equal to such
fraction multiplied by the current market price (determined as
provided in subsection II(4)(e) of this resolution) of the Series
I Class A Common Stock on the business day next preceding the date
of conversion shall be paid to such holder in cash by the
Corporation; or if the Series I Class A Common Stock is not listed
on a national securities exchange or traded over-the-counter by a
nationally recognized securities firm, an amount equal to such
fraction multiplied by the Book Value Per Share of the Class B
Stock on the business day next preceding the date of conversion
shall be paid to such holder in cash by the Corporation.
(6) TAX. The issue of stock certificates on conversion of shares
shall be made free of any tax in respect of such issue. The
Corporation shall not, however, be required to pay any tax which
may be payable in respect of any transfer involved in the issue
and delivery of stock in a name other than that of the holder of
the shares converted, and the Corporation shall not be required to
issue or deliver any such stock certificates unless and until the
person or persons requesting the issuance thereof shall have paid
to the Corporation the amount of any such tax or shall have
established to the satisfaction of the Corporation that such tax
has been paid.
(7) POWER RESERVED BY THE BOARD OF DIRECTORS. If in any case a
state of facts occurs wherein in the opinion of the Board of
Directors, the other provisions of this Section II are not
strictly applicable, or if strictly applicable, would not fairly
protect the conversion rights of the Class B Stock in accordance
with the essential intent and principles of such provisions, then
the Board of Directors shall make an adjustment in the application
of such provisions in accordance with such essential intent and
principles so as to protect such conversion rights as aforesaid.
(8) RESERVATION OF SHARES. The Corporation shall at all times
reserve and keep available out of its authorized Series I Class A
Common Stock the full number of shares of Series I Class A Common
Stock deliverable upon the conversion of all outstanding shares of
Class B Stock and shall take all such corporate action as may be
required from time to time in order that it may validly and
legally issue fully paid and non-assessable shares of Series I
Class A Common Stock upon conversion of the Class B Stock.
(9) STATUS OF CONVERTED SHARES. Shares of Class B Stock converted
shall assume the status of authorized but unissued shares of Class
B Stock of the Corporation.
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APPENDIX B
STATEMENT OF DESIGNATION
OF
NONCUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES A
OF
BANKUNITED FINANCIAL CORPORATION
WHEREAS, pursuant to Article VI of the Articles of Incorporation of
BankUnited Financial Corporation (the "Corporation") and Section 607.0602 of the
Florida Business Corporation Act, the Board of Directors of the Corporation is
authorized to divide the Corporation's authorized Preferred Stock into series
and, within the limitations set forth therein, fix and determine the relative
rights and preferences of the shares of any series so established; and
WHEREAS, the Board of Directors desires to (i) establish a series of
Preferred Stock, designating such series "Noncumulative Convertible Preferred
Stock, Series A," (ii) allocate 55,000 shares of the authorized Preferred Stock
to the Noncumulative Convertible Preferred Stock, Series A, and (iii) fix and
determine the relative rights and preferences of the shares of the Noncumulative
Convertible Preferred Stock, Series A;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby
designates the following as the relative rights of the Noncumulative Convertible
Preferred Stock, Series A;
RESOLVED, that 55,000 of the 10,000,000 shares of Preferred Stock
authorized by the Articles of Incorporation of the Corporation be and hereby are
determined to be and shall be a series designated as Noncumulative Convertible
Preferred Stock, Series A (the "Series A Preferred Stock"), and that the
following is a statement fixing and determining the variations in the relative
rights and preferences of the Series A Preferred Stock pursuant to authority
vested in the Board of Directors by the Articles of Incorporation of the
Corporation:
1. PARITY. The Series A Preferred Stock is of the same class as and shall
be on a parity with the Corporation's currently outstanding Noncumulative
Convertible Preferred Stock, Series B, C and C-II (the "Outstanding Parity
Stock"), except as provided elsewhere herein.
2. DIVIDENDS. The holders of the Series A Preferred Stock shall be entitled
to receive, when, as, and if declared by the Board of Directors and out of
the assets of the Corporation which are by law available for the payment of
dividends, preferential cash dividends payable quarterly on the last day of
February, May, August and November of each year unless such day is a
non-business day, in which event, on the next business day, at the fixed
annual rate of $1.00 per share and no more.
So long as any Series A Preferred Stock remains outstanding:
(a) no dividend whatsoever shall be declared or paid upon
or set apart for payment, and no distribution shall be ordered or
made in respect of: (i) the Class B Common Stock, par value $.01
per share (the "Class B Common Stock") or the Corporation's Series
I Class A Common Stock, par value $.01 per share (the "Class A
Common Stock") or any other outstanding common stock of the
Corporation or (ii) any other class of stock or series thereof
ranking junior to the Series A Preferred Stock in the payment of
dividends;
(b) no shares of Class B Common Stock or Class A Common
Stock and no shares of any other class of stock or series thereof
ranking junior to the Series A Preferred Stock in the payment of
dividends shall be redeemed or purchased by the Corporation or any
subsidiary thereof; and
(c) no moneys, funds or other assets shall be paid to or
made available for a sinking fund for the redemption or purchase
of any shares of: (i) Class B Common Stock or Class A Common
Stock; or (ii) any other class of stock or series thereof ranking
junior to the Series A Preferred Stock in the payment of
dividends;
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unless, in each instance, full dividends on all outstanding shares
of Series A Preferred Stock for the then current calendar quarter
shall have been paid or declared and set aside for payment.
In addition, so long as any Series A Preferred Stock
remains outstanding, no dividend whatsoever shall be declared or
paid upon or set apart for payment, and no distribution shall be
ordered or made in respect of, any share or shares of any class of
stock or series thereof ranking on a parity with the Series A
Preferred Stock (including the Outstanding Parity Stock) in the
payment of dividends, unless, for the applicable calendar quarter:
(a) full dividends shall be paid or declared and set apart
for payment on all shares of: (i) the Series A Preferred Stock;
and (ii) any class of stock or series thereof ranking on a parity
with the Series A Preferred Stock (including the Outstanding
Parity Stock) in the payment of dividends; or
(b) in the event all such dividends for the applicable
calendar quarter are not or cannot be paid or declared and set
apart for payment in full, a pro rata portion of the full
dividends shall be paid or declared and set apart for payment on
all shares of: (i) the Series A Preferred Stock; and (ii) any
class of stock or series thereof ranking on a parity with the
Series A Preferred Stock (including the Outstanding Parity Stock)
in the payment of dividends. Such pro rata portion shall be
calculated based on the ratio that the total amount available for
the payment of all required dividends on the Series A Preferred
Stock and such parity stock for the applicable calendar quarter
bears to the total required dividends on the Series A Preferred
Stock and such parity stock for such calendar quarter.
3. PREFERENCE ON LIQUIDATION. In the event of any dissolution, liquidation
or winding up of the affairs of the Corporation, after payment or provision
for payment of any debts and other liabilities of the Corporation, the
holders of the Series A Preferred Stock shall be entitled to receive the
following amounts out of the net assets of the Corporation, and before any
distribution shall be made to the holders of any common stock or to the
holders of any other class of stock or series thereof ranking junior to the
Series A Preferred Stock in the distribution of assets:
(a) if such dissolution, liquidation or winding up is
voluntary, the applicable redemption price per share determined as
provided in Section 4 of these resolutions;
(b) if such dissolution, liquidation or winding up is
involuntary, $10.00 per share;
and no more. If upon such voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Corporation, the net assets of the
Corporation shall be insufficient to permit payment in full of the amounts
required to be paid to the holders of the Series A Preferred Stock and to
the holders of any class of stock or series thereof ranking on a parity
with the Series A Preferred Stock (including the Outstanding Parity Stock)
in respect of the distribution of assets, then a pro rata portion of the
full amount required to be paid upon such dissolution, liquidation or
winding up shall be paid to: (i) the holders of Series A Preferred Stock;
and (ii) the holders of any class of stock or series thereof ranking on a
parity with the Series A Preferred Stock (including the Outstanding Parity
Stock) in respect of the distribution of assets. Such pro rata portion
shall be calculated based on the ratio that the total amount available for
distribution to such holders bears to the total distribution required to be
made on the Series A Preferred Stock and such parity stock.
Nothing herein contained shall be deemed to prevent redemption of
Series A Preferred Stock by the Corporation in the manner provided in
Section 4 of these resolutions. Neither the merger nor consolidation of the
Corporation into or with any other corporation, nor the merger or
consolidation of any other corporation into or with the Corporation, nor a
sale, transfer or lease of all or any part of the assets of the Corporation
shall be deemed to be a dissolution, liquidation or winding up of the
Corporation within the meaning of this Section 3.
Written notice of any voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation, stating a
payment date and the place where the distribution amounts shall be payable
and containing a statement of or reference to the conversion right set
forth in Section 6 of these resolutions, shall be given by mail, postage
prepaid, at least 30 days but not more than 60 days prior to the payment
date stated therein, to the holders of record of the Series A Preferred
Stock at their respective addresses as the same shall appear on the books
of the Corporation.
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4. REDEMPTION. The Corporation shall have the right, at its option and by
resolution of the Board of Directors, to redeem at any time and from time
to time the Series A Preferred Stock, in whole or in part, upon payment in
cash in respect of each share redeemed, if redeemed during the twelve month
period ending July 31, 1995, $10.15, or if redeemed after July 31, 1995,
$10.00.
If less than all of the outstanding shares of the Series A
Preferred Stock shall be redeemed, the particular shares to be redeemed
shall be allocated among the respective holders of Series A Preferred Stock
pro rata or by lot, as the Board of Directors may determine.
Notice of any redemption specifying the date fixed for said
redemption and the place where the amount to be paid upon redemption is
payable and containing a statement of or reference to the conversion right
set forth in Section 6 of these resolutions shall be mailed, postage
prepaid, at least 30 days but not more than 60 days prior to said
redemption date to the holders of record of the Series A Preferred Stock to
be redeemed at their respective addresses as the name shall appear on the
books of the Corporation. If such notice of redemption shall have been so
mailed, and if on or before the redemption date specified in such notice
all funds necessary for such redemption shall have been set aside by the
Corporation separate and apart from its other funds, in trust for the
account of the holders of the shares so to be redeemed, so as to be and
continue to be available therefor, then, on and after said redemption date,
notwithstanding that any certificate for shares of the Series A Preferred
Stock so called for redemption shall not have been surrendered for
cancellation, the shares represented thereby so called for redemption shall
be deemed to be no longer outstanding, the right to receive dividends
thereon shall cease to accrue, and all rights with respect to such shares
of the Series A Preferred Stock so called for redemption shall forthwith
cease and terminate, except only the right of the holders thereof to
receive out of the funds so set aside in trust the amount payable on
redemption thereof, but without interest.
Shares of Series A Preferred Stock redeemed or otherwise purchased
or acquired by the Corporation shall not be reissued as shares of Series A
Preferred Stock but shall assume the status of authorized but unissued
shares of Preferred Stock of the Corporation.
5. VOTING RIGHTS. The holders of the Series A Preferred Stock shall have
two and one-half votes per share on all matters requiring the vote of
stockholders, and additionally if the voting rights of the Class B Common
Stock are increased, then the voting rights of the Series A Preferred Stock
shall be increased by an amount which will maintain the two and one-half to
one proportion between the voting rights of the Class B Common Stock and
the Series A Preferred Stock as is hereby established.
Additionally, if at any time the equivalent of six or more full
quarterly dividends (whether or not consecutive) payable on the Series A
Preferred Stock shall not be paid, the number of directors constituting the
Board of Directors of the Corporation shall be increased by two, and the
holders of the Series A Preferred Stock (whether or not the payment of
quarterly dividends shall not be paid on other Preferred Stock outstanding)
shall have the exclusive right, voting together as a class, to elect two
directors to fill such newly-created directorships. This right shall remain
vested until dividends on the Series A Preferred Stock have been paid for
four consecutive quarters, at which time: (i) the right shall terminate
(subject to revesting in the case of any subsequent failure to pay of the
kind described above); (ii) the term of the directors then in office
elected by the holders of the Series A Preferred Stock as a class shall
terminate; and (iii) the number of directors constituting the Board of
Directors of the Corporation shall be reduced by two.
Whenever such right shall vest, it may be exercised initially
either at a special meeting of holders of the Series A Preferred Stock or
at any annual stockholders' meeting, but thereafter it shall be exercised
only at annual stockholders' meetings. Any director who shall have been
elected by the holders of the Series A Preferred Stock as a class pursuant
to this Section 5 shall hold office for a term expiring (subject to the
earlier payment of dividends) at the next annual meeting of stockholders,
and during such term may be removed at any time, either for or without
cause, by, and only by, the affirmative votes of the holders of record of a
majority of the outstanding shares of the Series A Preferred Stock given at
a special meeting of such stockholders called for such purpose, and any
vacancy created by such removal may also be filled at such meeting. Any
vacancy caused by the death or resignation of a director who shall have
been elected by the holders of the Series A Preferred Stock as a class
pursuant to this Section 5 may be filled by the remaining director elected
by the holders of the Series A Preferred Stock then in office.
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Whenever a meeting of the holders of Series A Preferred Stock is
permitted or required to be held pursuant to this Section 5, such meeting
shall be held at the earliest practicable date and the Secretary of the
Corporation shall call such meeting, providing written notice to all
holders of record of Series A Preferred Stock in accordance with law, upon
the earlier of the following:
(a) as soon as reasonably practicable following the
occurrence of the event or events permitting or requiring such
meeting hereunder; or
(b) within 20 days following receipt by said Secretary of
a written request for such a meeting, signed by the holders of
record of at least 20% of the shares of Series A Preferred Stock
then outstanding.
If such meeting shall not be called by the proper
corporate officer within 20 days after the receipt of such request
by the Secretary of the Corporation, or within 25 days after the
mailing of the same within the United States of America by
registered mail addressed to the Secretary of the Corporation at
its principal office, then the holders of record of at least 20%
of the shares of Series A Preferred Stock then outstanding may
designate one of their members to call such a meeting at the
expense of the Corporation, and such meeting may be called by such
person in the manner and at the place provided in this Section 5.
Any holder of Series A Preferred Stock so designated to call such
meeting shall have access to the stock books of the Corporation
for the purpose of causing a meeting of such stockholders to be so
called.
Notwithstanding any provision of this Section 5, no
special meeting of the holders of shares of Series A Preferred
Stock: (i) shall be held during the 90 day period next preceding
the date fixed for the annual meeting of stockholders of the
Corporation; or (ii) shall be required to be called or held in
violation of any law, rule or regulation.
Any meeting of the holders of all outstanding Series A
Preferred Stock entitled to vote as a class for the election of
directors shall be held at the place at which the last annual
meeting of stockholders was held. At such meeting, the presence in
person or by proxy of the holders of a majority of the outstanding
shares of the Series A Preferred Stock shall be required to
constitute a quorum; in the absence of a quorum, a majority of the
holders present, in person or by proxy, shall have the power to
adjourn the meeting from time to time without notice, other than
an announcement at the meeting, until a quorum shall be present.
6. CONVERTIBILITY. Shares of the Series A Preferred Stock
(hereinafter in this Section 6 called the "Shares") shall be convertible
into Class B Common Stock on the following terms and conditions:
(a) Subject to and upon compliance with the provisions of
this Section 6, the holder of any Shares may, at such holder's
option, convert any such Shares into such number of fully paid and
non-assessable shares of Class B Common Stock as are issuable
pursuant to the formula set forth in subsections (c) and (d) of
this Section 6. No adjustment shall be made for dividends on any
Class B Common Stock that shall be issuable upon the conversion of
such Shares.
(b) The surrender of any Shares for conversion shall be
made by the holder thereof to the Corporation at its principal
office and such holder shall give written notice to the
Corporation at said office that such holder elects to convert such
Shares in accordance with the provisions thereof and this Section
6. Such notice also shall state the name or names (with addresses)
in which the certificate or certificates for Class B Common Stock,
which shall be issuable on such conversion, shall be issued.
Subject to the provisions of subsection (a) of this Section 6,
every such notice of election to convert shall constitute a
contract between the holder of such shares and the Corporation,
whereby such holder shall be deemed to subscribe for the number of
shares of Class B Common Stock which such holder will be entitled
to receive upon such conversion and, in payment and satisfaction
of such subscription, to surrender such Shares and to release the
Corporation from all obligations thereon, and whereby the
Corporation shall be deemed to agree that the surrender of such
Shares and the extinguishment of its obligations thereon shall
constitute full payment for the Class B Common Stock so subscribed
for and to be issued upon such conversion.
B-4
<PAGE>
As soon as practicable after the receipt of such notice
and Shares, the Corporation shall issue and shall deliver to the
person for whose account such Shares were so surrendered, or on
such holder's written order, a certificate or certificates for the
number of full shares of Class B Common Stock issuable upon the
conversion of such Shares and a check or cash for the payment (if
any) to which such person is entitled pursuant to subsection (e)
of this Section 6, together with a certificate or certificates
representing the Shares, if any, which are not to be converted,
but which constituted part of the Shares represented by the
certificate or certificates surrendered by such person. Such
conversion shall be deemed to have been effected on the date on
which the Corporation shall have received such notice and such
Shares, and the person or persons in whose name or names any
certificate or certificates for Class B Common Stock shall be
issuable upon such conversion shall be deemed to have become on
said date the holder or holders of record of the shares
represented thereby.
(c) The Conversion Rate shall be 1.495919425 shares of
Class B Common Stock for each share of Series A Preferred Stock
surrendered for conversion.
(d) The Conversion Rate shall be subject to adjustment
from time to time as follows:
(1) If the Corporation shall (i) pay a dividend
in shares of its Class B Common Stock, (ii) subdivide its
outstanding shares of Class B Common Stock into a greater
number of shares, (iii) combine its outstanding shares of
Class B Common Stock into a smaller number of shares, or
(iv) issue by reclassification of its shares of Class B
Common Stock any shares of its capital stock, then the
Conversion Rate in effect immediately prior thereto shall
be adjusted so that the holder of a Share surrendered for
conversion after the record date fixing stockholders to be
affected by such event shall be entitled to receive upon
conversion the number of such shares of the Corporation
which such holder would have been entitled to receive
after the happening of such event had such shares been
converted immediately prior to such record date. Such
adjustment shall be made whenever any of such events shall
happen, and shall also be effective retroactively as to
shares converted between such record date and the date of
the happening of any such event.
(2) If the Corporation shall issue rights or
warrants to the holders of its Class B Common Stock
entitling them to subscribe for or purchase shares of
Class B Common Stock, at a price per share less than the
current market price per share of the Class A Common Stock
(as defined in subsection (d)(5) of this Section 6) at the
record date mentioned below, then the number of shares of
Class B Common Stock into which each share shall
thereafter be convertible shall be determined by
multiplying the number of shares of Class B Common Stock
into which such share was theretofore convertible by a
fraction, the numerator of which shall be the number of
shares of the Class B Common Stock outstanding on the date
of issuance of such rights or warrants plus the number of
additional shares of the Class B Common Stock offered for
subscription or purchase, and the denominator of which
shall be the number of shares of the Class B Common Stock
outstanding on the date of issuance of such rights or
warrants plus the number of shares of the Class B Common
Stock which the aggregate offering price of the total
number of shares so offered would purchase based on
current market price per share (as defined in subsection
(d)(5) of this Section 6). Such adjustment shall be made
whenever such rights or warrants are issued, and shall
also be effective retroactively as to shares converted
between the record date for the determination of
stockholders entitled to receive such rights or warrants
and the date such rights or warrants are issued.
(3) If the Corporation shall distribute to the
holders of its Class B Common Stock evidence of its
indebtedness or assets (excluding cash dividends or
distributions made out of current or retained earnings) or
rights or warrants to subscribe other than as referred to
in subsection (d)(2) of this Section 6, then in each such
case the number of shares of Class B Common Stock into
which each share shall thereafter be convertible shall be
determined by multiplying the number of shares of Class B
Common Stock into which such share was theretofore
convertible by a fraction, the numerator of which shall be
the current market price per share of Class A Common Stock
(as defined in subsection (d)(5) of Section 6) on the date
of such distribution, and the denominator of which shall
be such current market price per share of the Class A
Common Stock, as the case may be, less the then fair
market value (as determined by the Board of Directors of
the Corporation, whose determination
B-5
<PAGE>
shall be conclusive) of the portion of the assets,
evidence of indebtedness, subscription rights or warrants
so distributed applicable to one share of Class B Common
Stock. Such adjustment shall be made whenever any such
distribution is made, and shall also be effective
retroactively as to the shares converted between the
record date for the determination of stockholders entitled
to receive such distribution and the date such
distribution is made.
(4) In the event of any consolidation of the
Corporation with or merger of the Corporation into another
corporation, or in the event of any sale, conveyance,
exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially
all of the property or assets of the Corporation to
another corporation, or in the case of any reorganization
of the Corporation, the holder of each share then
outstanding shall have the right thereafter to convert
such shares into the kind and amount of shares of stock
and other securities and property, including cash, which
would have been deliverable to such holder upon such
consolidation, merger, sale, conveyance, exchange,
transfer or reorganization if such holder had converted
such holder's shares into Class B Common Stock immediately
prior to such consolidation, merger, sale, conveyance,
exchange, transfer or reorganization. In any such event,
effective provision shall be made in the instrument
effecting or providing for such consolidation, merger,
sale, conveyance, exchange, transfer or reorganization so
that the provisions set forth herein for the protection of
the conversion rights of the Shares shall thereafter be
applicable, as nearly as may be practicable, in relation
to any shares of stock or other securities or property
including cash, deliverable after such consolidation,
merger, sale, conveyance, exchange, transfer or
reorganization upon the conversion of the Series A
Preferred Stock, or such other securities as shall have
been issued to the holders thereof in lieu thereof or in
exchange therefor. The provisions of this subsection
(d)(4) shall similarly apply to successive consolidations,
mergers, sales, conveyances, exchanges, transfers and
reorganizations.
(5) For purposes of computation under subsections
(d)(2) and (d)(3) of this Section 6, the current market
price per share of Class A Common Stock at any date shall
be deemed to be the average of the daily closing prices
for the 20 consecutive business days immediately prior to
the day in question, if the Class B Common Stock is
convertible into Class A Common Stock on a one-for-one
basis, and if the Class B Common Stock is not convertible
into Class A Common Stock on a one-for-one basis, then the
current market price per share of Class A Common Stock at
any date shall be deemed to be such average multiplied by
the then current conversion rate of Class B Common Stock
into Class A Common Stock. The closing price for each day
shall be the last reported sales price, regular way, on
the principal national securities exchange upon which the
Class A Common Stock is listed, or in case no such
reported sales take place on such day, the average of the
reported closing bid and asked prices, regular way, on
such national securities exchange, or if the Class A
Common Stock is not then listed on a national securities
exchange, the average of the closing prices or, if
applicable, closing bid and asked prices in the
over-the-counter market as furnished by the nationally
recognized securities firm or association selected from
time to time by the Corporation for that purpose.
(6) No adjustment in the Conversion Rate shall be
required unless such adjustment would require an increase
or decrease of at least 2% in the Conversion Rate;
provided, however, that any adjustments which by reason of
this subsection (d)(6) are not required to be made, and
are not made, shall be carried forward and taken into
account in any subsequent adjustment. All calculations
under this subsection (d)(6) shall be made to the nearest
cent or one-hundredth of a share, as the case may be.
(e) Receipt by a holder of Series A Preferred Stock of a
notice of redemption pursuant to Section 4 of these resolutions
shall not terminate the conversion rights set forth in this
Section 6, but rather such conversion rights shall continue until
the redemption date set forth in the notice of redemption.
(f) No fractional shares or scrip representing fractional
shares shall be issued upon the conversion of any shares. If more
than one share shall be surrendered for conversion at one time by
the same holder, the
B-6
<PAGE>
number of full shares issuable upon conversion thereof shall be
computed on the basis of the aggregate number of such shares so
surrendered. If the conversion of any shares results in a
fraction, an amount equal to such fraction multiplied by the
current market price (determined as provided in subsection (d)(5)
of this Section 6) of the Class A Common Stock on the business day
next preceding the date of conversion shall be paid to such holder
in cash by the Corporation.
(g) The issue of stock certificates on conversion of
shares shall be made free of any tax in respect of such issue. The
Corporation shall not, however, be required to pay any tax which
may be payable in respect of any transfer involved in the issue
and delivery of stock in a name other than that of the holder of
the shares converted, and the Corporation shall not be required to
issue or deliver any such stock certificates unless and until the
person or persons requesting the issuance thereof shall have paid
to the Corporation the amount of any such tax or shall have
established to the satisfaction of the Corporation that such tax
has been paid.
(h) If in any case a state of facts occurs wherein in the
opinion of the Board of Directors, the other provisions of this
Section 6 are not strictly applicable, or if strictly applicable,
would not fairly protect the conversion rights of the Series A
Preferred Stock in accordance with the essential intent and
principles of such provisions, then the Board of Directors shall
make an adjustment in the application of such provisions in
accordance with such essential intent and principles so as to
protect such conversion rights as aforesaid.
(i) The Corporation shall at all times reserve and keep
available out of its authorized Class B Common Stock the full
number of shares of Class B Common Stock deliverable upon the
conversion of all outstanding shares of Series A Preferred Stock
and shall take all such corporate action as may be required from
time to time in order that it may validly and legally issue fully
paid and non-assessable shares of Class B Common Stock upon
conversion of the Series A Preferred Stock.
(j) Shares of Series A Preferred Stock converted shall not
be reissued as shares of Series A Preferred Stock but shall assume
the status of authorized but unissued shares of Preferred Stock of
the Corporation.
B-7
<PAGE>
APPENDIX C
STATEMENT OF DESIGNATION
OF
NONCUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES B
OF
BANKUNITED FINANCIAL CORPORATION
WHEREAS, pursuant to Article VI of the Articles of Incorporation of
BankUnited Financial Corporation (the "Corporation"), and Section 607.0602 of
the Florida Business Corporation Act, the Board of Directors of the Corporation
is authorized to divide the Corporation's authorized Preferred Stock into series
and, within the limitations set forth therein, fix and determine the relative
rights and preferences of the shares of any series so established; and
WHEREAS, the Board of Directors of the Corporation desires to (i) establish
a second series of its class of Preferred Stock, designating such series
"Noncumulative Convertible Preferred Stock, Series B," (ii) allocate 200,000
shares of the authorized Preferred Stock to the Noncumulative Convertible
Preferred Stock, Series B, and (iii) fix and determine the relative rights and
preferences of the shares of the Noncumulative Convertible Preferred Stock,
Series B;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby
designates the following as the relative rights of the Noncumulative Convertible
Preferred Stock, Series B:
RESOLVED, that 200,000 of the 10,000,000 shares of the class of Preferred
Stock authorized by the Articles of Incorporation of the Corporation be and
hereby are determined to be and shall be of a series designated as Noncumulative
Convertible Preferred Stock, Series B (the "Series B Preferred Stock") and that
the following is a statement fixing and determining the variations in the
relative rights and preferences of the Series B Preferred Stock pursuant to
authority vested in the Board of Directors by the Articles of Incorporation of
the Corporation:
1. PARITY. The Series B Preferred Stock is of the same class as and shall
be on a parity with the Corporation's currently outstanding Noncumulative
Convertible Preferred Stock, Series A, C and C-II (the "Outstanding Parity
Stock"), except as provided elsewhere herein.
2. DIVIDENDS. The holders of the Series B Preferred Stock shall be entitled
to receive, when, as, and if declared by the Board of Directors and out of
the assets of the Corporation which are by law available for the payment of
dividends, preferential cash dividends payable quarterly on the last day of
February, May, August and November of each year unless such day is a
non-business day, in which event on the next business day, at the fixed
annual rate of $0.7375 per share and no more.
So long as any Series B Preferred Stock remains outstanding:
(a) no dividend whatsoever shall be declared or paid upon or set
apart for payment, and no distribution shall be ordered or made in
respect of: (i) the Class B Common Stock, par value $.01 per share
("Class B Common Stock") or the Corporation's Series I Class A
Common Stock, par value $.01 per share (the "Class A Common
Stock") or any other outstanding common stock of the Corporation,
or (ii) any other class of stock or series thereof ranking junior
to the Series B Preferred Stock in the payment of dividends;
(b) no shares of the Class B Common Stock or the Class A Common
Stock and no shares of any other class of stock or series thereof
ranking junior to the Series B Preferred Stock in the payment of
dividends shall be redeemed or purchased by the Corporation or any
subsidiary thereof; and
(c) no moneys, funds or other assets shall be paid to or made
available for a sinking fund for the redemption or purchase of any
shares of: (i) the Class B Common Stock or the Class A Common
Stock, or (ii) any other class of stock or series thereof ranking
junior to the Series B Preferred Stock in the payment of
dividends;
C-1
<PAGE>
unless, in each instance, full dividends on all outstanding shares
of Series B Preferred Stock for the then current calendar quarter
shall have been paid or declared and set aside for payment.
In addition, so long as any Series B Preferred Stock
remains outstanding, no dividend whatsoever shall be declared or
paid upon or set apart for payment, and no distribution shall be
ordered or made in respect of, any share or shares of any class of
stock or series thereof ranking on a parity with the Series B
Preferred Stock (including the Outstanding Parity Stock) in the
payment of dividends, unless, for the applicable calendar quarter:
(a) full dividends shall be paid or declared and set apart for
payment on all shares of: (i) the Series B Preferred Stock, and
(ii) any class of stock or series thereof ranking on a parity with
the Series B Preferred Stock (including the Outstanding Parity
Stock) in the payment of dividends; or
(b) in the event all such dividends for the applicable calendar
quarter are not or cannot be paid or declared and set apart for
payment in full, a pro rata portion of the full dividends shall be
paid or declared and set apart for payment on all shares of: (i)
the Series B Preferred Stock, and (ii) any class of stock or
series thereof ranking on a parity with the Series B Preferred
Stock (including the Outstanding Parity Stock) in the payment of
dividends. Such pro rata portion shall be calculated based on the
ratio that the total amount available for the payment of all
required dividends on the Series B Preferred Stock and such parity
stock for the applicable calendar quarter bears to the total
required dividends on the Series B Preferred Stock and such parity
stock for such calendar quarter.
3. PREFERENCE ON LIQUIDATION. In the event of any dissolution, liquidation
or winding up of the affairs of the Corporation, after payment or provision
for payment of any debts and other liabilities of the Corporation, the
holders of the Series B Preferred Stock shall be entitled to receive the
following amounts out of the net assets of the Corporation, and before any
distribution shall be made to the holders of any common stock or to the
holders of any other class of stock or series thereof ranking junior to the
Series B Preferred Stock in the distribution of assets:
(a) if such dissolution, liquidation or winding up is voluntary,
the applicable redemption price per share determined as provided
in Section 4 of these resolutions;
(b) if such dissolution, liquidation or winding up is involuntary,
$7.375 per share;
and no more. If upon such voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation, the
net assets of the Corporation shall be insufficient to permit
payment in full of the amounts required to be paid to the holders
of the Series B Preferred Stock and to the holders of any class of
stock or series thereof ranking on a parity with the Series B
Preferred Stock (including the Outstanding Parity Stock) in
respect of the distribution of assets, then a pro rata portion of
the full amount required to be paid upon such dissolution,
liquidation or winding up shall be paid to: (i) the holders of
Series B Preferred Stock, and (ii) the holders of any class of
stock or series thereof ranking on a parity with the Series B
Preferred Stock (including the Outstanding Parity Stock) in
respect of the distribution of assets. Such pro rata portion shall
be calculated based on the ratio that the total amount available
for distribution to such holders bears to the total distribution
required to be made on the Series B Preferred Stock and such
parity stock.
Nothing herein contained shall be deemed to prevent
redemption of Series B Preferred Stock by the Corporation in the
manner provided in Section 4 of these resolutions. Neither the
merger nor consolidation of the Corporation into or with any other
corporation, nor the merger or consolidation of any other
corporation into or with the Corporation, nor a sale, transfer or
lease of all or any part of the assets of the Corporation shall be
deemed to be a dissolution, liquidation or winding up of the
Corporation within the meaning of this Section 3.
Written notice of any voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the
Corporation, stating a payment date and the place where the
distribution amounts shall be payable and containing a statement
of or reference to the conversion right set forth in Section 6 of
these resolutions, shall be given by mail, postage prepaid, at
least 30 days but not more than 60 days prior to the payment date
stated
C-2
<PAGE>
therein, to the holders of record of the Series B Preferred Stock
at their respective addresses as the same shall appear on the
books of the Corporation.
4. REDEMPTION. the Corporation shall have the right, at its option
and by resolution of its Board of Directors, to redeem at any time and from
time to time the Series B Preferred Stock, in whole or in part, upon
payment in cash in respect of each share redeemed at the then applicable
redemption price set forth below:
<TABLE>
<CAPTION>
<S> <C> <C>
If redeemed during the twelve month period ending January 31, 1995 $7.67
If redeemed during the twelve month period ending January 31, 1996 $7.59625
If redeemed during the twelve month period ending January 31, 1997 $7.5225
If redeemed during the twelve month period ending January 31, 1998 $7.44875
If redeemed after January 31, 1998 $7.375
</TABLE>
If less than all of the outstanding shares of the Series B
Preferred Stock shall be redeemed, the particular shares to be redeemed
shall be allocated among the respective holders of Series B Preferred
Stock, pro rata or by lot, as the Board of Directors may determine.
Notice of any redemption specifying the date fixed for said
redemption and the place where the amount to be paid upon redemption is
payable and containing a statement of or reference to the conversion right
set forth in Section 6 of these resolutions shall be mailed, postage
prepaid, at least 30 days but not more than 60 days prior to said
redemption date to the holders of record of the Series B Preferred Stock to
be redeemed at their respective addresses as the same shall appear on the
books of the Corporation. If such notice of redemption shall have been so
mailed, and if on or before the redemption date specified in such notice,
all funds necessary for such redemption shall have been set aside by the
Corporation separate and apart from its other funds, in trust for the
account of the holders of the shares so to be redeemed, so as to be and
continue to be available therefor, then, on and after said redemption date,
notwithstanding that any certificate for shares of the Series B Preferred
Stock so called for redemption shall not have been surrendered for
cancellation, the shares represented thereby so called for redemption shall
be deemed to be no longer outstanding and all rights with respect to such
shares of the Series B Preferred Stock so called for redemption shall
forthwith cease and terminate, except only the right of the holders thereof
to receive out of the funds so set aside in trust the amount payable on
redemption thereof, but without interest.
Shares of Series B Preferred Stock redeemed or otherwise purchased
or acquired by the Corporation shall not be reissued as shares of Series B
Preferred Stock but shall assume the status of authorized but unissued
shares of Preferred Stock of the Corporation.
5. VOTING RIGHTS. The holders of the Series B Preferred Stock shall have
two and one-half votes per share on all matters requiring the vote of
stockholders, and additionally, if the voting rights of the Class B Common
Stock are increased, then the voting rights of the Series B Preferred Stock
shall be increased by an amount which will maintain the two and one-half to
one proportion between the voting rights of the Class B Common Stock and
the Series B Preferred Stock as is hereby established.
Additionally, if at any time the equivalent of six or more full
quarterly dividends (whether or not consecutive) payable on the Series B
Preferred Stock shall not be paid, the number of directors constituting the
Board of Directors of the Corporation shall be increased by two, and the
holders of the Series B Preferred Stock (whether or not the payment of
quarterly dividends shall not be paid on other Preferred Stock outstanding)
shall have the exclusive right, voting together as a class, to elect two
directors to fill such newly created directorships. This right shall remain
vested until dividends on the Series B Preferred Stock have been paid for
four consecutive quarters, at which time: (i) the right shall terminate
(subject to revesting in the case of any subsequent failure to pay of the
kind described above); (ii) the term of the directors then in office
elected by the holders of the Series B Preferred Stock as a class shall
terminate; and (iii) the number of directors constituting the Board of
Directors of the Corporation shall be reduced by two.
C-3
<PAGE>
Whenever such right shall vest, it may be exercised initially
either at a special meeting of holders of the Series B Preferred Stock or
at any annual stockholders' meeting, but thereafter it shall be exercised
only at annual stockholders' meetings. Any director who shall have been
elected by the holders of the Series B Preferred Stock as a class pursuant
to this Section 5 shall hold office for a term expiring at the next annual
meeting of stockholders, and during such term may be removed at any time,
either for or without cause, by, and only by, the affirmative votes of the
holders of record of a majority of the outstanding shares of the Series B
Preferred Stock given at a special meeting of such stockholders called for
such purpose, and any vacancy created by such removal may also be filled at
such meeting. Any vacancy caused by the death or resignation of a director
who shall have been elected by the holders of the Series B Preferred Stock
as a class pursuant to this Section 5 may be filled only by the remaining
director elected by the holders of the Series B Preferred Stock then in
office.
Whenever a meeting of the holders of Series B Preferred Stock is
permitted or required to be held pursuant to this Section 5, such meeting
shall be held at the earliest practicable date and the Secretary of the
Corporation shall call such meeting, providing written notice to all
holders of record of Series B Preferred Stock, in accordance with law, upon
the earlier of the following:
(a) as soon as reasonably practicable following the occurrence of
the event or events permitting or requiring such meeting
hereunder; or
(b) within 20 days following receipt by said Secretary of a
written request for such a meeting, signed by the holders of
record of at least 20% of the shares of Series B Preferred Stock
then outstanding.
If such meeting shall not be called by the proper
corporate officer within 20 days after the receipt of such request
by the Secretary of the Corporation, or within 25 days after the
mailing of the same within the United States of America by
registered mail addressed to the Secretary of the Corporation at
its principal office, then the holders of record of at least 20%
of the shares of Series B Preferred Stock then outstanding may
designate one of their members to call such a meeting at the
expense of the Corporation, and such meeting may be called by such
person in the manner and at the place provided in this Section 5.
Any holder of Series B Preferred Stock so designated to call such
meeting shall have access to the stock books of the Corporation
for the purpose of causing a meeting of such stockholders to be so
called.
Notwithstanding any provision of this Section 5 to the
contrary, no special meeting of the holders of shares of Series B
Preferred Stock: (i) shall be held during the 90-day period next
preceding the date fixed for the annual meeting of stockholders of
the Corporation; or (ii) shall be required to be called or held in
violation of any law, rule or regulation.
Any meeting of the holders of all outstanding Series B
Preferred Stock entitled to vote as a class for the election of
directors shall be held at the place at which the last annual
meeting of stockholders was held. At such meeting, the presence in
person or by proxy of the holders of a majority of the outstanding
shares of the Series B Preferred Stock shall be required to
constitute a quorum; in the absence of a quorum, a majority of the
holders present, in person or by proxy, shall have the power to
adjourn the meeting from time to time without notice, other than
an announcement at the meeting, until a quorum shall be present.
6. CONVERTIBILITY. Shares of the Series B Preferred Stock
(hereinafter in this Section 6 called the "Shares") shall be convertible
into Class B Common Stock on the following terms and conditions:
(a) Subject to and upon compliance with the provisions of this
Section 6, the holder of any Shares may at such holder's option
convert any such Shares into such number of fully paid and
non-assessable shares of Class B Common Stock as are issuable
pursuant to the formula set forth in subsections (c) and (d) of
this Section 6. No adjustment shall be made for dividends on any
Class B Common Stock that shall be issuable upon the conversion of
such Shares.
(b) The surrender of any Shares for conversion shall be made by
the holder thereof to the Corporation at its principal office and
such holder shall give written notice to the Corporation at said
office that such holder elects to convert such Shares in
accordance with the provisions thereof and this Section 6. Such
notice also
C-4
<PAGE>
shall state the name or names (with addresses) in which the
certificate or certificates for the Class B Common Stock, which
shall be issuable on such conversion, shall be issued. Subject to
the provisions of subsection (a) of this Section 6, every such
notice of election to convert shall constitute a contract between
the holder of such shares and the Corporation, whereby such holder
shall be deemed to subscribe for the number of shares of Class B
Common Stock which such holder will be entitled to receive upon
such conversion and, in payment and satisfaction of such
subscription, to surrender such Shares and to release the
Corporation from all obligations thereon, and whereby the
Corporation shall be deemed to agree that the surrender of such
Shares and the extinguishment of its obligations thereon shall
constitute full payment for the Class B Common Stock so subscribed
for and to be issued upon such conversion.
As soon as practicable, after the receipt of such notice
and Shares, the Corporation shall issue and shall deliver to the
person for whose account such Shares were so surrendered, or on
such holder's written order, a certificate or certificates for the
number of full shares of Class B Common Stock issuable upon the
conversion of such Shares and a check or cash for the payment (if
any) to which such person is entitled pursuant to subsection (e)
of this Section 6, together with a certificate or certificates
representing the Shares, if any, which are not to be converted,
but which constituted part of the Shares represented by the
certificate or certificates surrendered by such person. Such
conversion shall be deemed to have been effected on the date on
which the Corporation shall have received such notice and such
Shares, and the person or persons in whose name or names any
certificate or certificates for Class B Common Stock shall be
issuable upon such conversion shall be deemed to have become on
said date the holder or holders of record of the shares
represented thereby.
(c) The Conversion Rate shall be 1.495919425 shares of Class B
Common Stock for each share of Series B Preferred Stock
surrendered for conversion.
(d) The Conversion Rate shall be subject to adjustment from time
to time as follows:
(1) If the Corporation shall (i) pay a dividend in shares
of its Class B Common Stock, (ii) subdivide the outstanding shares
of Class B Common Stock into a greater number of shares, (iii)
combine its outstanding shares of the Class B Common Stock into a
smaller number of shares, or (iv) issue by reclassification of its
shares of Class B Common Stock any shares of its capital stock,
then the Conversion Rate in effect immediately prior thereto shall
be adjusted so that the holder of a Share surrendered for
conversion after the record date fixing stockholders to be
affected by such event shall be entitled to receive upon
conversion the numbers of such shares of the Corporation which
such holder would have been entitled to receive after the
happening of such event had such shares been converted immediately
prior to such record date. Such adjustment shall be made whenever
any of such events shall happen, and shall also be effective
retroactively as to shares converted between such record date and
the date of the happening of any such event.
(2) If the Corporation shall issue rights or warrants to
the holders of its Class B Common Stock entitling them to
subscribe for or purchase shares of Class B Common Stock, at a
price per share less than the current market price per share of
the Class A Common Stock (as defined in subsection (d)(5) of this
Section 6) at the record date mentioned below, then the number of
shares of Class B Common Stock into which each share shall
thereafter be convertible shall be determined by multiplying the
number of shares of Class B Common Stock into which such share was
theretofore convertible by a fraction, the numerator of which
shall be the number of shares of the Class B Common Stock
outstanding on the date of issuance of such rights or warrants
plus the number of additional shares of the Class B Common Stock
offered for subscription or purchase, and the denominator of which
shall be the number of shares of the Class B Common Stock
outstanding on the date of issuance of such rights or warrants
plus the number of shares of the Class B Common Stock which the
aggregate offering price of the total number of shares so offered
would purchase based on current market price per share (as defined
in subsection (d)(5) of this Section 6). Such adjustment shall be
made whenever such rights or warrants are issued, and shall also
be effective retroactively as to shares converted between the
record date for the determination of stockholders entitled to
receive such rights or warrants and the date such rights or
warrants are issued.
(3) If the Corporation shall distribute to the holders of the
Class B Common Stock evidence of its indebtedness or assets
(excluding cash dividends or distributions made out of current or
retained earnings) or
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<PAGE>
rights or warrants to subscribe other than as referred to in
subsection (d)(2) of this Section 6, then in each such case the
number of shares of the Class B Common Stock into which each share
shall thereafter be convertible shall be determined by multiplying
the number of shares of the Class B Common Stock into which such
share was theretofore convertible by a fraction, the numerator of
which shall be the current market price per share of the Class A
Common Stock (as defined in subsection (d)(5) of this Section 6)
on the date of such distribution, and the denominator of which
shall be such current market price per share of the Class A Common
Stock, as the case may be, less the then fair market value (as
determined by the Board of Directors of the Corporation, whose
determination shall be conclusive) of the portion of the assets,
evidence of indebtedness, subscription rights or warrants so
distributed applicable to one share of the Class B Common Stock.
Such adjustment shall be made whenever any such distribution is
made, and shall also be effective retroactively as to the shares
converted between the record date for the determination of
stockholders entitled to receive such distribution and the date
such distribution is made.
(4) In the event of any consolidation of the Corporation
with or merger of the Corporation into another corporation, or in
the event of any sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or
substantially all of the property or assets of the Corporation to
another corporation, or in the case of any reorganization of the
Corporation, the holder of each share then outstanding shall have
the right thereafter to convert such shares into the kind and
amount of shares of stock and other securities and property,
including cash, which would have been deliverable to such holder
upon such consolidation, merger, sale, conveyance, exchange,
transfer or reorganization if such holder had converted such
holder's shares into the Class B Common Stock immediately prior to
such consolidation, merger, sale, conveyance, exchange, transfer
or reorganization. In any such event, effective provision shall be
made in the instrument effecting or providing for such
consolidation, merger, sale, conveyance, exchange, transfer or
reorganization so that the provisions set forth herein for the
protection of the conversion rights of the Shares shall thereafter
be applicable, as nearly as may be practicable, in relation to any
shares of stock or other securities or property including cash,
deliverable after such consolidation, merger, sale, conveyance,
exchange, transfer or reorganization upon the conversion of the
Series B Preferred Stock, or such other securities as shall have
been issued to the holders thereof in lieu thereof or in exchange
therefor. The provisions of this subsection (d)(4) shall similarly
apply to successive consolidations, mergers, sales, conveyances,
exchanges, transfers and reorganizations.
(5) For purposes of computation under subsections (d)(2)
and (d)(3) of this Section 6, the current market price per share
of the Class A Common Stock at any date shall be deemed to be the
average of the daily closing prices for the 20 consecutive
business days immediately prior to the day in question, if the
Class B Common Stock is convertible into Class A Common Stock on a
one-for-one basis, and if the Class B Common Stock is not
convertible into Class A Common Stock on a one-for-one basis, then
the current market price per share of Class A Common Stock at any
date shall be deemed to be such average multiplied by the then
current conversion rate of the Class B Common Stock into the Class
A Common Stock. The closing price for each day shall be the last
reported sales price, regular way, on the principal national
securities exchange upon which the Class A Common Stock is listed,
or in case no such reported sale take place on such day, the
average of the reported closing bid and asked prices, regular way,
on such national securities exchange, or if the Class A Common
Stock is not then listed on a national securities exchange, the
average of the closing prices or, if applicable, closing bid and
asked prices in the over-the-counter market as furnished by the
nationally recognized securities firm or association selected from
time to time by the Corporation for that purpose.
(6) No adjustment in the Conversion Rate shall be required
unless such adjustment would require an increase or decrease of at
least 2% in the Conversion Rate; provided, however, that any
adjustments which by reason of this subsection (d)(6) are not
required to be made, and are not made, shall be carried forward
and taken into account in any subsequent adjustment. All
calculations under this subsection (d)(6) shall be made to the
nearest cent or one-hundredth of a share, as the case may be.
<PAGE>
(e) Receipt by a holder of Series B Preferred Stock of a notice of
redemption pursuant to Section 4 of these resolutions shall not
terminate the conversion rights set forth in this Section 6, but
rather such conversion rights shall continue until the redemption
date set forth in the notice of redemption.
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<PAGE>
(f) No fractional shares or scrip representing fractional shares
shall be issued upon the conversion of any shares. If more than
one share shall be surrendered for conversion at one time by the
same holder, the number of full shares issuable upon conversion
thereof shall be computed on the basis of the aggregate number of
such shares so surrendered. If the conversion of any shares
results in a fraction, an amount equal to such fraction multiplied
by the current market price (determined as provided in subsection
(d)(5) of this Section 6) of the Class A Common Stock on the
business day next preceding the date of conversion shall be paid
to such holder in cash by the Corporation.
(g) The issue of stock certificates on conversion of shares shall
be made free of any tax in respect of such issue. The Corporation
shall not, however, be required to pay any tax which may be
payable in respect to any transfer involved in the issue and
delivery of stock in a name other than that of the holder of the
shares converted, and the Corporation shall not be required to
issue or deliver any such stock certificates unless and until the
person or persons requesting the issuance thereof shall have paid
to the Corporation the amount of any such tax or shall have
established to the satisfaction of the Corporation that such tax
has been paid.
(h) If in any case a state of facts occurs wherein the opinion of
the Board of Directors and the other provisions of this Section 6
are not strictly applicable, or if strictly applicable, would not
fairly protect the conversion rights of the Series B Preferred
Stock in accordance with the essential intent and principles of
such provisions, then the Board of Directors shall make an
adjustment in the application of such provisions in accordance
with such essential intent and principles so as to protect such
conversion rights as aforesaid.
(i) The Corporation shall at all times reserve and keep available
out of its authorized Class B Common Stock the full number of
shares of the Class B Common Stock deliverable upon the conversion
of all outstanding shares of Series B Preferred Stock and shall
take all such corporate action as may be required from time to
time in order that it may validly and legally issue fully paid and
non-assessable shares of Class B Common Stock upon conversion of
the Series B Preferred Stock.
(j) Shares of Series B Preferred Stock converted shall not be
reissued as shares of Series B Preferred Stock but shall assume
the status of authorized but unissued shares of Preferred Stock of
the Corporation.
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<PAGE>
APPENDIX D
STATEMENT OF DESIGNATION
OF
NONCUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES C
OF
BANKUNITED FINANCIAL CORPORATION
WHEREAS, pursuant to Article VI of the Articles of Incorporation of
BankUnited Financial Corporation (the "Corporation") and Section 607.0602 of the
Florida Business Corporation Act, the Board of Directors of the Corporation is
authorized to divide the Corporation's authorized Preferred Stock into series
and, within the limitations set forth therein, fix and determine the relative
rights and preferences of the shares of any series so established;
WHEREAS, the Board of Directors desires to (i) establish a series of the
Preferred Stock, designating such series "Noncumulative Convertible Preferred
Stock, Series C," (ii) allocate 363,636 shares of the authorized Preferred Stock
to the Noncumulative Convertible Preferred Stock, Series C, and (iii) fix and
determine the relative rights and preferences of the Noncumulative Convertible
Preferred Stock, Series C;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby
allocates a portion of the Preferred Stock to a series designated Noncumulative
Convertible Preferred Stock, Series C and fixes and determines the relative
rights and preferences of the Noncumulative Convertible Preferred Stock, Series
C, as set forth below:
1. DESIGNATION AND ALLOCATION. Of the 10,000,000 shares of Preferred Stock
authorized by the Articles of Incorporation of the Corporation, 363,636 shares
are hereby determined to be and shall be of a series designated as Noncumulative
Convertible Preferred Stock, Series C ("Series C Preferred Stock").
2. PARITY. The Series C Preferred Stock is of the same class as and shall
be on a parity with the Corporation's currently outstanding Noncumulative
Convertible Preferred Stock, Series A, B and C-II (the "Outstanding Parity
Stock"), except as may be provided elsewhere herein.
3. DIVIDENDS. The holders of the Series C Preferred Stock shall be entitled
to receive, when, as, and if declared by the Board of Directors and out of the
assets of the Corporation which are by law available for the payment of
dividends, preferential cash dividends payable quarterly on the last day of
February, May, August and November of each year unless such day is a
non-business day, in which event on the next business day, at the fixed annual
rate of $0.55 per share and no more.
So long as any Series C Preferred Stock remains outstanding:
(a) no dividend whatsoever shall be declared or paid upon or set
apart for payment, and no distribution shall be ordered or made in respect of:
(i) the Corporation's Series I Class A Common Stock, par value $.01 per share
(the "Class A Common Stock"), or the Class B Common Stock, par value $.01 per
share (the "Class B Common Stock"), or any other outstanding common stock of the
Corporation, or (ii) any other class of stock or series thereof ranking junior
to the Series C Preferred Stock in the payment of dividends; and
(b) no shares of the Class A Common Stock or the Class B Common
Stock and no shares of any other class of stock or series thereof ranking junior
to the Series C Preferred Stock in the payment of dividends shall be redeemed or
purchased by the Corporation or any subsidiary thereof; and
(c) no moneys, funds or other assets shall be paid to or made
available for a sinking fund for the redemption or purchase of any shares of:
(i) the Class A Common Stock or the Class B Common Stock; or (ii) any other
class of stock or series thereof ranking junior to the Series C Preferred Stock
in the payment of dividends;
unless, in each instance, full dividends on all outstanding shares of Series C
Preferred Stock for the then current calendar quarter shall have been paid or
declared and set aside for payment.
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<PAGE>
In addition, so long as any Series C Preferred Stock remains outstanding,
no dividend whatsoever shall be declared or paid upon or set apart for payment,
and no distribution shall be ordered or made in respect of, any share or shares
of any class of stock or series thereof ranking on a parity with the Series C
Preferred Stock (including the Outstanding Parity Stock) in the payment of
dividends, unless, for the applicable calendar quarter:
(a) full dividends shall be paid or declared and set apart for
payment on all shares of: (i) the Series C Preferred Stock; and (ii) any class
of stock or series thereof ranking on a parity with the Series C Preferred Stock
(including the Outstanding Parity Stock) in the payment of dividends; or
(b) in the event all such dividends for the applicable calendar
quarter are not or cannot be paid or declared and set apart for payment in full,
a pro rata portion of the full dividends shall be paid or declared and set apart
for payment on all shares of: (i) the Series C Preferred Stock; and (ii) any
class of stock or series thereof ranking on a parity with the Series C Preferred
Stock (including the Outstanding Parity Stock) in the payment of dividends. Such
pro rata portion shall be calculated based on the ratio that the total amount
available for the payment of all required dividends on the Series C Preferred
Stock and such parity stock for the applicable calendar quarter bears to the
total required dividends on the Series C Preferred Stock and such parity stock
for such calendar quarter.
4. PREFERENCE ON LIQUIDATION. In the event of any dissolution, liquidation
or winding up of the affairs of the Corporation, after payment or provision for
payment of any debts and other liabilities of the Corporation, the holders of
the Series C Preferred Stock shall be entitled to receive the following amounts
out of the net assets of the Corporation, and before any distribution shall be
made to the holders of any common stock or to the holders of any other class of
stock or series thereof ranking junior to the Series C Preferred Stock in the
distribution of assets:
(a) if such dissolution, liquidation or winding up is voluntary,
the applicable redemption price per share determined as provided in section 5 of
these resolutions;
(b) if such dissolution, liquidation or winding up is involuntary,
$5.50 per share;
and no more. If upon such voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Corporation the net assets of the Corporation
shall be insufficient to permit payment in full of the amounts required to be
paid to the holders of the Series C Preferred Stock and to the holders of any
class of stock or series thereof ranking on a parity with the Series C Preferred
Stock (including the Outstanding Parity Stock) in respect of the distribution of
assets, then a pro rata portion of the full amount required to be paid upon such
dissolution, liquidation or winding up shall be paid to: (i) the holders of
Series C Preferred Stock; and (ii) the holders of any class of stock or series
thereof ranking on a parity with the Series C Preferred Stock (including the
Outstanding Parity Stock) in respect of the distribution of assets. Such pro
rata portion shall be calculated upon the ratio that the total amount available
for distribution to such holders bears to the total distribution required to be
made on the Series C Preferred Stock and such parity stock.
Neither the merger nor consolidation of the Corporation into or with any
other corporation, nor the merger or consolidation of any other corporation into
or with the Corporation, nor a sale, transfer or lease of all or any part of the
assets of the Corporation shall be deemed to be a dissolution, liquidation or
winding up of the Corporation within the meaning of this section 4.
Written notice of any voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Corporation, stating a payment date and the
place where the distribution amounts shall be payable, shall be given by mail,
postage prepaid, at least 30 days but not more than 60 days prior to the payment
date stated therein, to the holders of record of the Series C Preferred Stock at
their respective addresses as the same shall appear on the books of the
Corporation.
5. REDEMPTION. The Corporation shall have the right, at its option and by
resolution of its Board of Directors, to redeem at any time and from time to
time the Series C Preferred Stock in whole or in part, upon payment in cash in
respect of each share redeemed at the redemption price of $5.50.
If less than all of the outstanding shares of the Series C Preferred Stock
shall be redeemed, the particular shares to be redeemed shall be allocated among
the respective holders of Series C Preferred Stock pro rata or by lot, as the
Board of Directors may determine.
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<PAGE>
Notice of any redemption specifying the date fixed for said redemption and
the place where the amount to be paid upon redemption is payable and containing
a statement of, or reference to, the conversion right set forth in section 7 of
these resolutions shall be mailed, postage prepaid, at least 30 days but not
more than 60 days prior to said redemption date to the holders of record of the
Series C Preferred Stock, to be redeemed at their respective addresses as the
same shall appear on the books of the Corporation. If such notice of redemption
shall have been so mailed, and if on or before the redemption date specified in
such notice, all funds necessary for such redemption shall have been set aside
by the Corporation separate and apart from its other funds, in trust for the
account of the holders of the shares so to be redeemed, so as to be and continue
to be available therefor, then, on and after said redemption date,
notwithstanding that any certificate for shares of the Series C Preferred Stock
so called for redemption shall not have been surrendered for cancellation, the
shares represented thereby so called for redemption shall be deemed to be no
longer outstanding, the right to receive dividends thereon shall cease, and all
rights with respect to such shares of the Series C Preferred Stock so called for
redemption shall forthwith cease and terminate, except only the right of the
holders thereof to receive out of the funds so set aside in trust the amount
payable on redemption thereof, but without interest.
Shares of Series C Preferred Stock redeemed or otherwise purchased or
acquired by the Corporation shall not be reissued as shares of Series C
Preferred Stock but shall assume the status of authorized but unissued shares of
Preferred Stock of the Corporation.
6. VOTING RIGHTS. Except as may be otherwise provided by
applicable law, the Series C Preferred Stock shall be non-voting
7. CONVERTIBILITY. Shares of the Series C Preferred Stock
(hereinafter in this section 7 called the "Shares") shall be convertible into
the Corporation's Class A Common Stock on the following terms and conditions:
(a) CONVERSION. Subject to and upon compliance with the provisions
of this section 7, the holder of any Shares may, at such holder's option,
convert any such Shares into such number of fully paid and non-assessable shares
of the Class A Common Stock as are issuable pursuant to the formula set forth in
subsections 7(b), (c) and (d) of this section 7 by surrendering any Shares for
conversion to the Corporation at its principal office and by furnishing written
notice to the Corporation at said office that such holder elects to convert in
accordance with the provisions hereof. Such notice also shall state the name or
names (with addresses) in which the certificate or certificates for Class A
Common Stock which shall be issuable on such conversion shall be issued. Every
such notice of election to convert shall constitute a contract between the
holder and the Corporation, whereby such holder shall be deemed to subscribe for
the number of shares of Class A Common Stock which such holder will be entitled
to receive upon such conversion and, in payment and satisfaction of such
subscription, to surrender such Shares and to release the Corporation from all
obligations thereon, and whereby the Corporation shall be deemed to agree that
the surrender of such Shares and the extinguishment of its obligations thereon
shall constitute full payment for the Class A Common Stock so subscribed for and
to be issued upon such conversion.
As soon as practicable after the receipt of such notice and Shares, the
Corporation shall issue and shall deliver to the holder for whose account such
Shares were so surrendered, or on such holder's written order, a certificate or
certificates for the number of full shares of Class A Common Stock issuable upon
the conversion of such Shares and a check or cash for the payment (if any) to
which such person is entitled pursuant to subsection 7(d) hereof, together with
a certificate or certificates representing the Shares, if any, which are not to
be converted, but which constituted part of the Shares represented by the
certificate or certificates surrendered by such holder. Such conversion shall be
deemed to have been effected on the date on which the Corporation shall have
received such notice and such Shares, and the person or persons in whose name or
names any certificate or certificates for Class A Common Stock shall be issuable
upon such conversion shall be deemed to have become on said date the holder or
holders of record of the shares represented thereby.
(b) BASIC CONVERSION RATE. The rate at which the holder of any
Shares may convert such Shares into Class A Common Stock (the "Conversion Rate")
shall be 1.45475 shares of Class A Common Stock for each Share which is
surrendered for conversion, subject to adjustment as provided in subsection 7(c)
hereinbelow.
(c) CONVERSION RATE ADJUSTMENT. The Conversion Rate shall be
subject to adjustment from time to time as follows:
(1) If the Corporation shall (i) pay a stock dividend in
and on shares of its Class A Common Stock, (ii) subdivide its outstanding shares
of Class A Common Stock into a greater number of shares, (iii) combine its
outstanding
D-3
<PAGE>
shares of Class A Common Stock into a smaller number of shares, or (iv) issue by
reclassification of its shares of Class A Common Stock any shares of its capital
stock, then the Conversion Rate in effect immediately prior thereto shall be
adjusted so that the holder of any Shares surrendered for conversion after the
record date fixing stockholders to be affected by such event shall be entitled
to receive upon conversion the number of such shares of Class A Common Stock
which such holder would have been entitled to receive after the happening of
such event had such Shares been converted immediately prior to such record date.
Such adjustment, if applicable, shall be made whenever any of such events shall
happen, and shall also be effective retroactively as to the Shares converted
between such record date and the date of the happening of any such event.
(2) In the event of any consolidation of the Corporation
with or merger of the Corporation into another corporation, or in the event of
any sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the Corporation to another corporation, or in the case of any
reorganization of the Corporation, the Corporation or the surviving entity shall
have the right to require that if the holder of such Shares shall thereafter
convert such Shares such conversion shall be into the kind and amount of shares
of stock and other securities and property, including cash, which would have
been deliverable to such holder upon such consolidation, merger, sale,
conveyance, exchange, transfer or reorganization if such holder had converted
such holder's Shares into Class A Common Stock immediately prior to such
consolidation, merger, sale, conveyance, exchange, transfer or reorganization.
In any such event, effective provision shall be made in the instrument effecting
or providing for such consolidation, merger, sale, conveyance, exchange,
transfer or reorganization so that the provisions set forth herein for the
conversion rights of the holder of Shares shall thereafter be applicable, as
nearly as may be practicable, in relation to any shares of stock or other
securities or property, including cash, deliverable after such consolidation,
merger, sale, conveyance, exchange, transfer or reorganization upon the
conversion. The provisions of this subsection 7(c)(2) shall similarly apply to
successive consolidations, mergers, sales, conveyances, exchanges, transfers and
reorganizations.
The Corporation shall provide written notice of any action contemplated
pursuant to this subsection 7(c)(2) at least 10 days prior to the record date of
such action, to the holders of record of the Series C Preferred Stock to their
respective addresses as the same shall appear on the books of the Corporation.
The Corporation shall also provide the holders of record of the Series C
Preferred Stock with written notice at least 10 days prior to the record date
set for the consideration of any other extraordinary business matters (provided,
however, that any routine business matters including, but not limited to, the
setting of record dates for (i) the declaration of regular dividends and (ii)
annual stockholders' meetings that do not require the filing of a preliminary
proxy statement with the Securities and Exchange Commission or its successor
shall be excluded from such notice provisions).
(3) No adjustment in the Conversion Rate shall be required
unless such adjustment would require an increase or decrease of at least 2% in
such Conversion Rate; provided, however, that any adjustments which by reason of
this subsection 7(c)(3) are not required to be made, and are not made, shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this subsection 7(c)(3) shall be made to the nearest cent or
one-hundredth of a share, as the case may be.
(d) FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of any Shares. If more
than one Share shall be surrendered for conversion at one time by the same
holder, the number of full shares issuable upon conversion thereof shall be
computed on the basis of the aggregate face amount of such Shares so
surrendered. If the conversion of any Shares results in a fraction, an amount
equal to such fraction multiplied by the Conversion Rate, subject to adjustment
as provided in subsection (c) hereof, shall be paid to such holder in cash by
the Corporation.
(e) TAX. The Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of stock in the name other than that of the holder of the Shares
converted, and the Corporation shall not be required to issue or deliver any
such stock certificates unless and until the person or persons requesting the
issuance thereof shall have paid to the Corporation the amount of any such tax
or shall have established to the satisfaction of the Corporation that such tax
has been paid.
(f) RESERVATION OF SHARES. The Corporation shall at all times
reserve and keep available out of its authorized Class A Common Stock the full
number of shares of Class A Common Stock deliverable upon the conversion of all
outstanding Shares and shall take all such corporate action as may be required
from time to time in order that it may validly and legally issue fully paid and
non-assessable shares of Class A Common Stock upon conversion of the Shares.
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<PAGE>
APPENDIX E
STATEMENT OF DESIGNATION
OF
NONCUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES C-II
OF
BANKUNITED FINANCIAL CORPORATION
WHEREAS, pursuant to Article VI of the Articles of Incorporation of the
Corporation, the Board of Directors of the Corporation is authorized to divide
the Corporation's authorized Preferred Stock, $.01 par value (the "Preferred
Stock"), into series and, within the limitations set forth therein, fix and
determine the relative rights and preferences of the shares of any series so
established;
WHEREAS, the Board of Directors desires to (i) establish a series of the
Preferred Stock, designating such series "Noncumulative Convertible Preferred
Stock, Series C-II," (ii) allocate 222,223 shares of the authorized Preferred
Stock to the Noncumulative Convertible Preferred Stock, Series C-II, and (iii)
fix and determine the relative rights and preferences of the Noncumulative
Convertible Preferred Stock, Series C-II;
NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors hereby
allocates a portion of the Preferred Stock to a series designated Noncumulative
Convertible Preferred Stock, Series C-II (the "Series C-II Preferred Stock"),
and fixes and determines the relative rights and preferences of the Series C-II
Preferred Stock, as set forth below:
1. DEFINITIONS
(a) Articles of Incorporation - the Articles of
Incorporation, as amended, of the Corporation as filed with the Florida
Secretary of State.
(b) Board of Directors - the Board of Directors of the
Corporation.
(c) The Corporation - BankUnited Financial Corporation.
(d) Common Stock - the Corporation's Series I Class A Common
Stock, $.01 par value, and Class B Common Stock, $.01 par value.
(e) Dividend Payment Date - the last day of each quarter during
which a dividend on the Series C-II Preferred Stock is declared by the Board of
Directors, unless such day is a non-business day, in which event such Dividend
Payment Date shall be the next business day.
(f) Dividend Payment Period - a Dividend Period for which a
dividend on the Series C-II Preferred Stock is declared by the Board of
Directors.
(g) Dividend Period - a quarterly period for which a dividend is
due and payable on the Series C-II Preferred Stock when, as and if declared by
the Board of Directors, commencing on and including the first day of a quarter
for which a dividend is due and payable and ending on and including the last day
of such quarter, unless such day is a non-business day, in which event on the
next business day.
(h) Junior Stock - the Common Stock and such other classes and/or
series of equity securities which, as designated by the Board of Directors in
its sole discretion, rank junior to the Series C-II Preferred Stock with respect
to any one or more of the following: (i) dividend rights, (ii) rights upon
liquidation, dissolution or winding up of the Corporation, (iii) redemption
rights or (iv) any other rights specified by the Board of Directors.
(i) Parity Stock - any classes and/or series of equity securities
which, as designated by the Board of Directors in its sole discretion, rank on a
parity with the Series C-II Preferred Stock with respect to any one or more of
the following: (i) dividend rights, (ii) rights upon liquidation, dissolution or
winding up of the Corporation, (iii) redemption rights
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<PAGE>
or (iv) any other rights specified by the Board of Directors, whether or not the
dividend rates, dividend periods, or liquidation prices per share thereof are
different from those of the Series C-II Preferred Stock.
(j) Passed Dividend - a dividend for a Dividend Period which the
Board of Directors omits or fails to declare or determines not to declare
whether or not dividends are declared on any future Dividend Payment Periods.
(k) Preferred Stock - the Corporation's Preferred Stock, $.01
par value.
(l) Senior Stock - any classes and/or series of equity securities
of the Corporation in which, as designated by the Board of Directors in its sole
discretion, the holders of such classes and/or series shall be entitled to any
one or more of the following: (i) dividend rights, (ii) rights upon liquidation,
dissolution or winding up of the Corporation, (iii) redemption rights or (iv)
any other rights specified by the Board of Directors, in preference or priority
to the holders of Series C-II Preferred Stock.
(m) Series A Preferred Stock - the Corporation's Noncumulative
Convertible Preferred Stock, Series A.
(n) Series B Preferred Stock - the Corporation's Noncumulative
Convertible Preferred Stock, Series B.
(o) Series C Preferred Stock - the Corporation's Noncumulative
Convertible Preferred Stock, Series C.
2. DESIGNATION AND ALLOCATION. Of the 10,000,000 shares of Preferred Stock
authorized by the Articles of Incorporation of the Corporation, 222,223 shares
are hereby determined to be and shall be of a series designated as Noncumulative
Convertible Preferred Stock, Series C-II.
3. RANK. The Series C-II Preferred Stock shall rank, with respect to
dividend rights and rights upon liquidation, dissolution or winding up of the
Corporation, senior to the Common Stock. The Series C-II Preferred Stock shall
rank, as to dividend rights, rights upon liquidation and dissolution or winding
up of the Corporation, on a parity with the Series A, Series B and Series C
Preferred Stock.
The Series C-II Preferred Stock shall be subject to the future
authorization and issuance of additional classes and/or series of equity
securities ranking junior to, on a parity with, or senior to the Series C-II
Preferred Stock with respect to any one or more of the following: (i) dividend
rights, (ii) rights upon liquidation, dissolution or winding up of the
Corporation, (iii) redemption rights or (iv) any other rights specified by the
Board of Directors, including, without limitation, series of Preferred Stock
that are cumulative as to dividends. The Board of Directors shall, in its sole
discretion, determine whether any such additional classes and/or series of
equity securities shall be designated as Junior Stock, Parity Stock or Senior
Stock.
4. DIVIDENDS
(a) RATE AND PAYMENTS. Holders of shares of the Series C-II
Preferred Stock shall be entitled to receive, when, as, and if declared by the
Board of Directors out of the funds legally available for payment, noncumulative
cash dividends, payable quarterly, from the date of issue thereof at the annual
rate of 8.9% ($0.801 per share). Dividends on the Series C-II Preferred Stock,
when declared by the Board of Directors, shall be payable quarterly on each
Dividend Payment Date.
The amount of dividends payable for any period other than a full
Dividend Payment Period shall be computed on the basis of a 365-day year and the
actual number of days elapsed in the period. Dividends payable for each full
Dividend Period shall be computed by dividing the annual dividend rate by four.
Each declared dividend shall be payable to holders of record as
they appear at the close of business on the stock books of the Corporation on
such record dates, not more than 20 calendar days and not less than 10 calendar
days preceding the payment dates therefor, as are determined by the Board of
Directors.
(b) NONCUMULATIVE DIVIDENDS. Dividends on the shares of Series
C-II Preferred Stock shall be noncumulative, that is, if the Board of Directors
omits or fails to declare or determines, in its sole discretion, not to declare
a dividend for any Dividend Period, then the Corporation shall have no
obligation to pay such Passed Dividend and the
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holders of the Series C-II Preferred Stock will have no right to, or a prior
claim or preference to, the Passed Dividend, whether or not funds are or
subsequently become available for the payment of such Passed Dividend.
The Board of Directors may determine, in its sole discretion, that
the Corporation shall pay less than the stated amount of dividends on the Series
C-II Preferred Stock for any Dividend Period notwithstanding that funds are or
subsequently become available for the payment of such dividend. Any portion of a
dividend for a Dividend Period not declared shall be deemed a Passed Dividend
and treated as described above.
(c) PARITY AND JUNIOR STOCK RIGHTS. No full dividends shall be
declared and paid, or declared and set apart for payment, on any stock ranking,
as to dividend rights, on a parity with the Series C-II Preferred Stock, unless
full dividends shall have been or contemporaneously are declared and paid, or
declared and set apart for payment, on all shares of the Series C-II Preferred
Stock.
If at any time with respect to any Dividend Period, dividends are
declared in part and paid in part, or declared in part and set apart for payment
in part, on the Series C-II Preferred Stock, a pro rata portion shall be
declared and paid, or declared and set apart for payment, on all shares of the
Series C-II Preferred Stock together with any stock ranking, as to dividend
rights, on a parity with the Series C-II Preferred Stock. Such pro rata portion
shall be calculated based on the ratio that the total amount available for the
payment of dividends on the Series C-II Preferred Stock plus such stock ranking,
as to dividend rights, on a parity with the Series C-II Preferred Stock bears to
the total payment of full dividends on the Series C-II Preferred Stock together
with such stock ranking, as to dividend rights, on a parity with the Series C-II
Preferred Stock.
Unless full dividends have been declared and paid, or declared and
set apart for payment, on all outstanding shares of Series C-II Preferred Stock
for the applicable Dividend Period, the Corporation shall not (i) declare any
dividends on any stock ranking, as to dividend rights, junior to the Series C-II
Preferred Stock (other than in other Junior Stock), (ii) redeem, purchase or
otherwise acquire any stock ranking, as to dividend rights, on a parity with or
junior to the Series C-II Preferred Stock, for any consideration except by
conversion into or exchange for Junior Stock or (iii) pay or make available any
monies, funds or other assets for any sinking fund for the redemption or
purchase of any stock ranking, as to dividend rights, on a parity with or junior
to the Series C-II Preferred Stock.
Holders of the Series C-II Preferred Stock shall not be entitled
to any dividends, whether payable in cash, property or stock, in excess of the
dividends actually declared by the Board of Directors.
Except as expressly otherwise limited herein, and to the extent
permitted by applicable law, the Board of Directors: (i) may declare and the
Corporation may pay or set apart for payment dividends on any Junior Stock or
Parity Stock, (ii) may make any payment on account of or set apart payment for a
sinking fund or other similar fund or agreement for the purchase or other
acquisition, redemption, retirement or other requirement of, or with respect to,
any Junior Stock or Parity Stock or any warrants, rights, calls or options
exercisable or exchangeable for or convertible into any Junior Stock or Parity
Stock, (iii) may make any distribution with respect to any Junior Stock or
Parity Stock or any warrants, rights, calls or options exercisable or
exchangeable for or convertible into any Junior Stock or Parity Stock, whether
directly or indirectly, and whether in cash, obligations or securities of the
Corporation or other property and (iv) may purchase or otherwise acquire, redeem
or retire any Junior Stock or Parity Stock or any warrants, rights, calls or
options exercisable or exchangeable for or convertible into any Junior Stock or
Parity Stock; and the holders of the Series C-II Preferred Stock shall not be
entitled to share or participate therein.
5. PREFERENCE ON LIQUIDATION. In the event of any liquidation, dissolution
or winding up of the Corporation, voluntary or involuntary, after payment or
provision for payment of any debts and other liabilities of the Corporation as
required by law, the holders of the Series C-II Preferred Stock shall be
entitled to receive $9.00 per share out of the assets of the Corporation
available for distribution to stockholders, before any distribution of assets is
made to the holders of any stock ranking junior to the Series C-II Preferred
Stock in the distribution of assets. If, upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, the assets of the
Corporation legally available for distribution to stockholders shall be
insufficient to permit payment in full of the amounts required to be paid to the
holders of the Series C-II Preferred Stock together with the holders of any
stock ranking on a parity with the Series C-II Preferred Stock in the
distribution of assets, then a pro rata portion of the full amount required to
be paid upon such liquidation, dissolution or winding up shall be paid to the
holders of the Series C-II Preferred Stock together with any stock ranking on a
parity with the Series C-II Preferred Stock in the distribution of assets. Such
pro rata portion shall be calculated based on the ratio that
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the total amount available for distribution to such holders bears to the total
distribution required to be made on the Series C-II Preferred Stock together
with any stock ranking on a parity with the Series C-II Preferred Stock in the
distribution of assets. After payment of the full amount of the liquidating
distribution to which they are entitled, the holders of the Series C-II
Preferred Stock will not be entitled to any further participation in any
distribution of assets of the Corporation.
Neither the merger nor consolidation of the Corporation into or
with any other entity or entities, nor the merger or consolidation of any other
entity or entities into or with the Corporation, nor a sale, transfer, lease or
exchange (for cash, securities or other consideration) of all or any part of the
assets of the Corporation shall be deemed to be a liquidation, dissolution or
winding up of the Corporation within the meaning of this Section 5, unless such
sale, transfer, lease or exchange shall be in connection with and intended to be
a plan of complete liquidation, dissolution or winding up of the Corporation.
Written notice of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, stating a payment date and the
place where the distribution amounts shall be payable, shall be given by mail,
postage prepaid, at least 30 days but not more than 60 days prior to the payment
date stated therein, to the holders of record of the Series C-II Preferred Stock
at their respective addresses as the same shall appear on the books of the
Corporation.
6. OPTIONAL REDEMPTION. The Series C-II Preferred Stock is redeemable at
the option of the Corporation for cash, in whole or in part, at any time and
from time to time upon payment in cash with respect to each share redeemed at
$9.00 per share plus any dividends that have been declared but are unpaid as of
the date of redemption to the extent that the Corporation has funds legally
available therefor.
Subject to any limitations provided herein and to the extent
permitted by law, the Corporation may, at its option, redeem the Series C-II
Preferred Stock at any time without regard to whether or not shares of any other
series of Preferred Stock are also being redeemed. If less than all of the
outstanding shares of Series C-II Preferred Stock shall be redeemed, the
particular shares to be redeemed shall be allocated among the respective holders
of the Series C-II Preferred Stock, pro rata or by lot, as the Board of
Directors may determine. The Corporation may, in its sole discretion, also
determine to redeem other series of Preferred Stock without redeeming any shares
of the Series C-II Preferred Stock.
Notice of any redemption specifying the date fixed for said
redemption and the place where the amount to be paid upon redemption is payable
shall be mailed, postage prepaid, at least 30 days but not more than 60 days
prior to said redemption date, to the holders of record of the Series C-II
Preferred Stock to be redeemed at their respective addresses as the same shall
appear on the books of the Corporation. If such notice of redemption shall have
been so mailed, unless default shall be made by the Corporation in providing for
the payment of the redemption price, and if on or before the redemption date
specified in such notice all funds necessary for such redemption shall have been
set aside by the Corporation separate and apart from its other funds, in trust
for the account of the holders of the shares so to be redeemed, so as to be and
continue to be available therefor, then, on and after said redemption date,
notwithstanding that any certificate for shares of the Series C-II Preferred
Stock so called for redemption shall not have been surrendered for cancellation,
the shares represented thereby so called for redemption shall be deemed to be no
longer outstanding, the right to receive dividends thereon shall cease, and all
rights with respect to such shares of the Series C-II Preferred Stock so called
for redemption shall forthwith cease and terminate, except only the right of the
holders thereof to receive out of the funds so set aside in trust the amount
payable on redemption thereof, including any dividends that have been declared
but are unpaid as of the date of redemption.
Shares of Series C-II Preferred Stock redeemed or otherwise
purchased or acquired by the Corporation shall not be reissued as shares of
Series C-II Preferred Stock, but shall assume the status of authorized but
unissued shares of Preferred Stock of the Corporation, without designation as to
series until such shares are once more designated as part of a particular series
by the Board of Directors.
7. VOTING RIGHTS. Except as required by applicable law, the
holders of the Series C-II Preferred Stock will not be entitled to vote for any
purpose.
8. SINKING FUND. No sinking fund shall be provided for the
purchase or redemption of shares of the Series C-II Preferred Stock.
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9. CONVERTIBILITY. Shares of the Series C-II Preferred Stock
(hereinafter in this section 9 called the "Shares") shall be convertible into
the Corporation's Class A Common Stock on the following terms and conditions:
(a) CONVERSION. Subject to and upon compliance with the provisions
of this section 9, the holder of any Shares may at such holder's option, convert
any such Shares into such number of fully paid and non-assessable shares of the
Class A Common Stock as are issuable pursuant to the formula set forth in
subsections 9(b), (c) and (d) of this section 9 by surrendering any Shares for
conversion to the Corporation at its principal office and by furnishing written
notice to the Corporation at said office that such holder elects to convert in
accordance with the provisions hereof. Such notice also shall state the name or
names (with addresses) in which the certificate or certificates for Class A
Common Stock which shall be issuable on such conversion shall be issued. Every
such notice of election to convert shall constitute a contract between the
holder and the Corporation, whereby such holder shall be deemed to subscribe for
the number of shares of Class A Common Stock which such holder will be entitled
to receive upon such conversion and, in payment and satisfaction of such
subscription, to surrender such Shares and to release the Corporation from all
obligations thereon, and whereby the Corporation shall be deemed to agree that
the surrender of such Shares and the extinguishment of its obligations thereon
shall constitute full payment for the Class A Common Stock so subscribed for and
to be issued upon such conversion.
As soon as practicable after the receipt of such notice and
Shares, the Corporation shall issue and shall deliver to the holder for whose
account such Shares were so surrendered, or on such holder's written order, a
certificate or certificates for the number of full shares of Class A Common
Stock issuable upon the conversion of such Shares and a check or cash for the
payment (if any) to which such person is entitled pursuant to subsection 9(d)
hereof, together with a certificate or certificates representing the Shares, if
any, which are not to be converted, but which constituted part of the Shares
represented by the certificate or certificates surrendered by such holder. Such
conversion shall be deemed to have been effected on the date on which the
Corporation shall have received such notice and such Shares, and the person or
persons in whose name or names any certificate or certificates for Class A
Common Stock shall be issuable upon such conversion shall be deemed to have
become on said date the holder or holders of record of the shares represented
thereby.
(b) BASIC CONVERSION RATE. The rate at which the holder of any
Shares may convert such Shares into Class A Common Stock (the "Conversion Rate")
shall be 1.3225 shares of Class A Common Stock for each Share which is
surrendered for conversion, subject to adjustment as provided in subsection 9(c)
hereinbelow.
(c) CONVERSION RATE ADJUSTMENT. The Conversion Rate shall be
subject to adjustment from time to time as follows:
(1) If the Corporation shall (i) pay a stock dividend in
and on shares of its Class A Common Stock, (ii) subdivide its outstanding shares
of Class A Common Stock into a greater number of shares, (iii) combine its
outstanding shares of Class A Common Stock into a smaller number of shares, or
(iv) issue by reclassification of its shares of Class A Common Stock any shares
of its capital stock, then the Conversion Rate in effect immediately prior
thereto shall be adjusted so that the holder of any Shares surrendered for
conversion after the record date fixing stockholders to be affected by such
event shall be entitled to receive upon conversion the number of such shares of
Class A Common Stock which such holder would have been entitled to receive after
the happening of such event had such Shares been converted immediately prior to
such record date. Such adjustment, if applicable, shall be made whenever any of
such events shall happen, and shall also be effective retroactively as to the
Shares converted between such record date and the date of the happening of any
such event.
(2) In the event of any consolidation of the Corporation
with or merger of the Corporation into another corporation, or in the event of
any sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the Corporation to another corporation, or in the case of any
reorganization of the Corporation, the Corporation or the surviving entity shall
have the right to require that if the holder of such Shares shall thereafter
convert such Shares such conversion shall be into the kind and amount of shares
of stock and other securities and property, including cash, which would have
been deliverable to such holder upon such consolidation, merger, sale,
conveyance, exchange, transfer or reorganization if such holder had converted
such holder's Shares into Class A Common Stock immediately prior to such
consolidation, merger, sale, conveyance, exchange, transfer or reorganization.
In any such event, effective provision shall be made in the instrument effecting
or providing for such consolidation, merger, sale, conveyance, exchange,
transfer or reorganization so that the provisions set forth herein for the
conversion rights of the holder of Shares shall thereafter be applicable, as
nearly as may be practicable, in relation to any shares of stock or other
securities or property, including cash, deliverable after such consolidation,
merger, sale, conveyance,
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exchange, transfer or reorganization upon the conversion. The provisions of this
subsection 9(c)(2) shall similarly apply to successive consolidations, mergers,
sales, conveyances, exchanges, transfers and reorganizations.
The Corporation shall provide written notice of any action
contemplated pursuant to this subsection 9(c)(2) at least 10 days prior to the
record date of such action, to the holders of record of the Series C-II
Preferred Stock to their respective addresses as the same shall appear on the
books of the Corporation. The Corporation shall also provide the holders of
record of the Series C-II Preferred Stock with written notice at least 10 days
prior to the record date set for the consideration of any other extraordinary
business matters (provided, however, that any routine business matters
including, but not limited to, the setting of record dates for (i) the
declaration of regular dividends and (ii) annual stockholders' meetings that do
not require the filing of a preliminary proxy statement with the Securities and
Exchange Commission or its successor shall be excluded from such notice
provisions).
(3) No adjustment in the Conversion Rate shall be required
unless such adjustment would require an increase or decrease of at least 2% in
such Conversion Rate; provided, however, that any adjustments which by reason of
this subsection 9(c)(3) are not required to be made, and are not made, shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this subsection 9(c)(3) shall be made to the nearest cent or
one-hundredth of a share, as the case may be.
(d) FRACTIONAL SHARES. No fractional shares or scrip representing
fractional shares shall be issued upon the conversion of any Shares. If more
than one Share shall be surrendered for conversion at one time by the same
holder, the number of full shares issuable upon conversion thereof shall be
computed on the basis of the aggregate face amount of such Shares so
surrendered. If the conversion of any Shares results in a fraction, an amount
equal to such fraction multiplied by the Conversion Rate, subject to adjustment
as provided in subsection (c) hereof, shall be paid to such holder in cash by
the Corporation.
(f) TAX. The Corporation shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of stock in the name other than that of the holder of the Shares
converted, and the Corporation shall not be required to issue or deliver any
such stock certificates unless and until the person or persons requesting the
issuance thereof shall have paid to the Corporation the amount of any such tax
or shall have established to the satisfaction of the Corporation that such tax
has been paid.
(g) RESERVATION OF SHARES. The Corporation shall at all times
reserve and keep available out of its authorized Class A Common Stock the full
number of shares of Class A Common Stock deliverable upon the conversion of all
outstanding Shares and shall take all such corporate action as may be required
from time to time in order that it may validly and legally issue fully paid and
non-assessable shares of Class A Common Stock upon conversion of the Shares.
11. NO OTHER RIGHTS. The shares of Series C-II Preferred Stock
shall not have any preferences, voting powers or relative, participating,
optional or other special rights except as set forth above and in the Articles
of Incorporation or as otherwise required by law.
12. AMENDMENTS. The Board of Directors reserves the right to amend
these resolutions in accordance with applicable law.
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APPENDIX F
STATEMENT OF DESIGNATION
OF
8% NONCUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES 1993
OF
BANKUNITED FINANCIAL CORPORATION
BankUnited Financial Corporation (the "Corporation"), a corporation
organized and existing under the Florida Business Corporation Act, in accordance
with the provisions of Section 607.0602 thereof and Article VI the Corporation's
Articles of Incorporation, DOES HEREBY CERTIFY:
That pursuant to authority conferred upon the Board of Directors by the
Articles of Incorporation of the Corporation, said Board of Directors acting at
a meeting thereof adopted resolutions providing for the issuance of 1,610,000
shares of the Corporation's Preferred Stock, $.01 par value, designated "8%
Noncumulative Convertible Preferred Stock, Series 1993," which resolutions are
as follows:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by the Articles of Incorporation, the Board of
Directors does hereby provide for and authorize the issuance of 1,610,000
shares of the Preferred Stock, $.01 par value, of the Corporation, of the
presently authorized but unissued shares of Preferred Stock (the "Preferred
Stock") to be designated "8% Noncumulative Convertible Preferred Stock,
Series 1993" (the "Series 1993 Preferred Stock"). The voting powers,
designations, preferences, and relative, participating, optional or other
special rights of the Series 1993 Preferred Stock authorized hereunder and
the qualifications, limitations and restrictions of such preferences and
rights are as follows:
1. DIVIDENDS.
(a) The holders of the Series 1993 Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of
Directors out of funds of the Corporation legally available for
payment, noncumulative cash dividends, payable quarterly in
arrears, at the rate of $.80 per share per annum. Dividends, when
declared on the Series 1993 Preferred Stock, shall have accrued
from the date of issuance or thereafter, from the most recent date
on which dividends were payable and be payable quarterly on March
31, June 30, September 30 and December 31 of each year (each a
"Dividend Payment Date"), commencing on September 30, 1993;
PROVIDED, HOWEVER, that if any such day is a non-business day, the
Dividend Payment Date will be the next business day. Each declared
dividend shall be payable to holders of record as they appear at
the close of business on the stock books of the Corporation on
such record dates, not more than 30 calendar days and not less
than 10 calendar days preceding the Dividend Payment Date
therefor, as determined by the Board of Directors (each of such
dates a "Record Date"). Quarterly dividend periods (each a
"Dividend Period") shall commence on and include the first day of
January, April, July and October of each year and shall end on and
include the day next preceding the next following Dividend Payment
Date.
(b) No full dividends shall be declared or paid or set
apart for payment on any series of Preferred Stock or other
capital stock of any series ranking, as to dividends or
liquidation preference, on a parity ("Parity Stock") with the
Series 1993 Preferred Stock during any calendar quarter unless
full dividends on the Series 1993 Preferred Stock for the Dividend
Period ending during such calendar quarter have been or contempo
raneously are declared and paid or declared and a sum sufficient
for the payment thereof is set apart for such payment. When
dividends are not so paid in full (or a sum sufficient for such
full payment is not so set apart) upon the Series 1993 Preferred
Stock and any other Parity Stock, dividends upon the Series 1993
Preferred Stock and dividends on such other Parity Stock payable
during such calendar quarter shall be declared pro rata so that
the amount of such dividends so payable per share on the Series
1993 Preferred Stock and such other Parity Stock shall in all
cases bear to each other the same ratio that full dividends for
the then-current calendar quarter on the shares of Series 1993
Preferred Stock (which shall not include any accumulation in
respect of unpaid dividends for prior Dividend Periods) and full
dividends, including required or permitted accumulations,
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if any, on shares of such other Parity Stock, bear to each other.
If full dividends on the Series 1993 Preferred Stock have not been
declared and paid or set apart for payment for the Dividend
Payment Date falling in the then-current Dividend Period, then,
with respect to such then-current Dividend Period, the following
restrictions shall be applicable: (i) no dividend or distribution,
other than in shares of capital stock ranking junior to the Series
1993 Preferred Stock as to dividends or liquidation preference
("Junior Stock"), may be declared, set aside or paid on any shares
of Junior Stock, (ii) the Corporation may not repurchase, redeem
or otherwise acquire any shares of its Junior Stock (except by
conversion into or exchange for Junior Stock) and (iii) the
Corporation may not, directly or indirectly, repurchase, redeem or
otherwise acquire (except by conversion into or exchange for
Junior Stock) any shares of any class or series of Junior Stock or
warrants, calls, options or other rights to acquire capital stock
of the Corporation or other security exercisable or exchangeable
into capital stock of the Corporation, otherwise than pursuant to
pro rata offers to purchase or a concurrent redemption of all, or
a pro rata portion, of the outstanding shares of Series 1993
Preferred Stock. Holders of the Series 1993 Preferred Stock shall
not be entitled to any dividends, whether payable in cash,
property or stock, in excess of declared noncumulative dividends,
as herein provided, on the Series 1993 Preferred Stock. No
interest or sum of money in lieu of interest shall be payable in
respect of any declared dividend payment or payments on the Series
1993 Preferred Stock which may be in arrears. As used herein, the
phrase "set apart" in respect of the payment of dividends shall
require deposit of any funds in a bank or trust company in a
separate deposit account maintained for the benefit of the holders
of the Series 1993 Preferred Stock.
2. REDEMPTION.
(a) The shares of Series 1993 Preferred Stock shall be
redeemable by the Corporation, in whole or in part, at any time
and from time to time from and after July 1, 1998. The shares of
Series 1993 Preferred Stock shall be redeemable by the
Corporation, in whole, or in part, at any time and from time to
time prior to July 1, 1998 only if the Corporation's Series I
Class A Common Stock, $.01 par value (the "Class A Common Stock"),
shall have a closing bid price which is at least 140% of the
Conversion Price (as defined below) for any 20 consecutive trading
days ending within five trading days of the giving of notice of
redemption as provided for below. The Series 1993 Preferred Stock
shall be redeemable by the Corporation at a price of $10.00 per
share until June 30, 1998 and thereafter at the following per
share prices during the twelve month period beginning July 1:
YEAR REDEMPTION PRICE
---- ----------------
1998..................... $10.40
1999..................... 10.32
2000..................... 10.24
2001..................... 10.16
2002..................... 10.08
2003 and thereafter...... 10.00
plus, in each case, an amount equal to all accrued but unpaid
dividends (whether or not declared) for the then-current Dividend
Period immediately preceding the date fixed for redemption (the
"Redemption Date"). For purposes of this Section 2, the Conversion
Price shall not give effect to adjustment for missed dividend
payments pursuant to Section 3(d)(v) hereof.
(b) The Series 1993 Preferred Stock shall be redeemable by
the Corporation, in accordance with applicable law, in whole or in
part, upon not less than 30 nor more than 60 calendar days' prior
written notice by mail.
(c) In the event that fewer than all the outstanding
shares of the Series 1993 Preferred Stock are to be redeemed as
permitted by this Section (2), the number of shares to be redeemed
shall be determined by the Board of Directors and the shares to be
redeemed shall be determined by lot or PRO RATA as may be
determined by the Board of Directors or by such other method as
may be approved by the Board of Directors that is required to
conform to any rule or regulation of any stock exchange or
automated quotation system upon which the shares of the Series
1993 Preferred Stock may at the time be listed.
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(d) Notice of redemption of the Series 1993 Preferred
Stock, specifying the Redemption Date and place of redemption,
shall be given by first class mail to each holder of record of the
shares to be redeemed, at his or her address of record, not less
than 30 nor more than 60 calendar days prior to the Redemption
Date. In the event of a redemption prior to July 1, 1998, such
notice shall be given not more than five business days following
the expiration of the 20 consecutive trading day period specified
in Section 2(a). Each such notice shall also specify the
redemption price applicable to the shares to be redeemed. If less
than all the shares owned by such holder are then to be redeemed,
the notice shall also specify the number of shares thereof which
are to be redeemed and the fact that a new certificate or
certificates representing any unredeemed shares shall be issued
without cost to such holder.
(e) Notice of redemption of shares of the Series 1993
Preferred Stock having been given as provided in Section 2(d),
then unless the Corporation shall have defaulted in providing for
the payment of the redemption price and all accrued and unpaid
dividends (whether or not declared) for the then-current Dividend
Period immediately preceding the Redemption Date, all rights of
the holders thereof (except the right to receive the redemption
price and all accrued and unpaid dividends, whether or not
declared, for the then-current Dividend Period immediately
preceding the Redemption Date) shall cease with respect to such
shares and such shares shall not, after the Redemption Date, be
deemed to be outstanding and shall not have the status of
Preferred Stock. In case fewer than all the shares represented by
any such certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without cost to the
holder thereof.
(f) Any shares of Series 1993 Preferred Stock which shall
at any time have been redeemed or converted shall, after such
redemption or conversion, have the status of authorized but
unissued shares of Preferred Stock, without designation as to
series until such shares are once more designated as part of a
particular series by the Board of Directors.
(g) Shares of the Series 1993 Preferred Stock are not
subject or entitled to the benefit of a sinking fund.
(h) Notwithstanding the foregoing, if notice of redemption
shall have been given pursuant to this Section 2 and any holder of
the Series 1993 Preferred Stock shall, prior to the close of
business on the date three business days next preceding the
Redemption Date, give written notice to the Corporation pursuant
to Section 3 hereof of the conversion of any or all of the shares
held by the holder (accompanied by a certificate or certificates
for such shares, duly endorsed or assigned to the Corporation),
then the redemption shall not become effective as to such shares
and the conversion shall become effective as provided in Section 3
below."
3. CONVERSION.
(a) Subject to and upon compliance with the provisions of
this Section 3, the holder of any shares of the Series 1993
Preferred Stock shall have the right, at his or her option, at any
time, to convert the shares into a number of fully paid and
nonassessable shares (calculated as to each conversion to the
nearest 1/100th of a share) of the Corporation's Series I Class A
Common Stock, $.01 par value (the "Class A Common Stock"), equal
to $10.00 for each share surrendered for conversion divided by the
Conversion Price (as defined in Section 3(d) below); PROVIDED,
HOWEVER, that if the Corporation shall have called the Series 1993
Preferred Stock for redemption, such right shall terminate on the
close of business on the third business day preceding the
Redemption Date unless the Corporation has defaulted in making the
payment due on the Redemption Date.
(b) (i) In order to exercise the conversion privilege, the
holder of each share of the Series 1993 Preferred Stock to
be converted shall surrender the certificate representing
such share to the Corporation's transfer agent for the
Series 1993 Preferred Stock with the Notice of Election to
Convert on the back of said certificate duly completed and
signed. Unless the shares issuable on conversion are to be
issued in the same name as the name in which the shares of
the Series 1993 Preferred Stock are registered, each share
surrendered for conversion shall be accompanied by
instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or his or her
duly authorized attorney and by funds in an amount
sufficient to pay any transfer or
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<PAGE>
similar tax. The holders of shares of the Series 1993
Preferred Stock at the close of business on a Record Date
shall be entitled to receive any dividend declared payable
on those shares for the corresponding Dividend Period on
the applicable Dividend Payment Date, notwithstanding the
conversion of the shares after the Record Date.
(ii) As promptly as practicable after the
surrender by a holder of the certificates for shares of
the Series 1993 Preferred Stock in accordance with Section
3, the Corporation shall issue and shall deliver at the
office of the transfer agent to the holder, or on his or
her written order, a certificate or certificates for the
number of full shares of Class A Common Stock issuable
upon the conversion of those shares in accordance with the
provisions of this Section 2, and any fractional interest
in respect of a share of Class A Common Stock arising upon
the conversion shall be settled as provided in Section
3(c) below.
(iii) Each conversion shall be deemed to have
been effected immediately prior to the close of business
on the date on which all of the conditions specified in
Section 3(b) hereof shall have been satisfied, and, the
person or persons in whose name or names any certificate
or certificates for shares of Class A Common Stock shall
be issuable upon such conversion shall be deemed to have
become the holder or holders of record of the shares of
Class A Common Stock represented by those certificates at
such time on such date and such conversion shall be at the
Conversion Price in effect at such time on such date,
unless the stock transfer books of the Corporation shall
be closed on that date, in which event such person or
persons shall be deemed to have become such holder or
holders of record at the close of business on the next
succeeding day on which such stock transfer books are
open, but such conversion shall be at the Conversion Price
in effect on the date upon which all of the conditions
specified in Section 3(b) hereof shall have been
satisfied. All shares of Class A Common Stock delivered
upon conversion of the Series 1993 Preferred Stock will
upon delivery be duly and validly issued and fully paid
and nonassessable, free of all liens and charges and not
subject to any preemptive rights. Upon the surrender of
certificates representing shares of the Series 1993
Preferred Stock to be converted, the shares shall no
longer be deemed to be outstanding and all rights of a
holder with respect to the shares surrendered for
conversion shall immediately terminate except the right to
receive the Class A Common Stock or other securities, cash
or other assets as herein provided.
(c) No fractional shares or securities representing
fractional shares of Class A Common Stock shall be issued upon
conversion of the Series 1993 Preferred Stock. Any fractional
interest in a share of Class A Common Stock resulting from
conversion of a share of the Series 1993 Preferred Stock shall be
paid in cash (computed to the nearest cent) based on the Current
Market Price (as defined in Section 3(d)(iv) below) of the Class A
Common Stock on the Trading Day (as defined in Section 3(d)(iv)
below) next preceding the day of conversion. If more than one
share shall be surrendered for conversion at one time by the same
holder, the number of whole shares of Class A Common Stock
issuable upon the conversion shall be computed on the basis of the
aggregate Liquidation Preference (as such term is defined in
Section 6 below) of the shares of the Series 1993 Preferred Stock
so surrendered.
(d) The "Conversion Price" per share of the Series 1993
Preferred Stock shall be $10.00, subject to adjustment from time
to time as follows:
<PAGE>
(i) In case the Corporation shall (1) pay a
dividend or make a distribution on its Class A Common
Stock in shares of its Class A Common Stock, (2) subdivide
its outstanding Class A Common Stock into a greater number
of shares, or (3) combine its outstanding Class A Common
Stock into a smaller number of shares, the Conversion
Price in effect immediately prior to such event shall be
proportionately adjusted so that the holder of any share
of the Series 1993 Preferred Stock thereafter surrendered
for conversion shall be entitled to receive the number and
kind of shares of Class A Common Stock of the Corporation
which he would have been entitled to receive had the share
been converted immediately prior to the happening of such
event. An adjustment made pursuant to this Section 3(d)(i)
shall become effective immediately after the Record Date
in the case of a dividend or distribution except as
provided in Section 3(d)(viii)
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<PAGE>
below, and shall become effective immediately after the
effective date in the case of a subdivision or
combination. If any dividend or distribution is not paid
or made, the Conversion Price then in effect shall be
appropriately readjusted.
(ii) In case the Corporation shall issue rights
or warrants to all holders of its Class A Common Stock
entitling them (for a period expiring within 45 days after
the record date mentioned below) to subscribe for or
purchase Class A Common Stock at a price per share less
than the Current Market Price (as defined in Section
3(d)(iv) below) of the Class A Common Stock at the record
date for the determination of stockholders entitled to
receive the rights or warrants, the Conversion Price in
effect immediately prior to the issuance of such rights or
warrants shall be adjusted so that it shall equal the
price determined by multiplying the Conversion Price in
effect immediately prior to the date of issuance of the
rights or warrants by a fraction of which the numerator
shall be the number of shares of Class A Common Stock
outstanding on the date of the issuance of the rights or
warrants plus the number of shares of Class A Common Stock
which the aggregate offering price of the total number of
shares of Class A Common Stock so offered for subscription
or purchase would purchase at the Current Market Price at
that record date, and of which the denominator shall be
the number of shares of Class A Common Stock outstanding
on the date of issuance of the rights or warrants plus the
number of additional shares of Class A Common Stock for
subscription or purchase. The adjustment provided for in
this Section 3(d)(ii) shall be made successively whenever
any such rights or warrants are issued, and shall become
effective immediately, except as provided in Section
3(d)(viii) below after such record date. In determining
whether any rights or warrants entitle the holder of the
Class A Common Stock to subscribe for or purchase shares
of Class A Common Stock at less than the Current Market
Price, and in determining the aggregate offering price of
the shares of Class A Common Stock so offered, there shall
be taken into account any consideration received by the
Corporation for such rights or warrants, the value of such
consideration, if other than cash, to be determined by the
Board (whose determination, if made in good faith, shall
be conclusive). If any or all of such rights or warrants
are not so issued or expire or terminate without having
been exercised, the Conversion Price then in effect shall
be appropriately readjusted.
(iii) In case the Corporation shall distribute to
all holders of its Class A Common Stock any shares of
capital stock of the Corporation (other than Class A
Common Stock) or evidences of indebtedness or assets
(excluding cash dividends or distributions paid from
retained earnings of the Corporation) or rights or
warrants to subscribe for or purchase any of its
securities (excluding those referred to in Section
3(d)(ii) above), then, in each such case, the Conversion
Price shall be adjusted so that it shall equal the price
determined by multiplying the Conversion Price in effect
immediately prior to the date of the distribution by a
fraction, the numerator of which shall be the Current
Market Price of the Class A Common Stock on the record
date mentioned below less the then fair market value (as
determined by the Board, whose determination, if made in
good faith, shall be conclusive) of that portion of the
capital stock or assets or evidences of indebtedness so
distributed, or of the rights or warrants so distributed,
applicable to one share of Class A Common Stock, and the
denominator of which shall be the Current Market Price of
the Class A Common Stock on the record date. Such
adjustment shall become effective immediately, except as
provided in Section 3(d)(viii) below, after the record
date for the determination of stockholders entitled to
receive such distribution. If any such distribution is not
made or if any or all of such rights or warrants expire or
terminate without having been exercised, the Conversion
Price then in effect shall be appropriately readjusted.
Notwithstanding the foregoing, in the event that the
Corporation shall distribute rights or warrants (other
than those referred to in Section 3(d)(ii) above)
("Rights") pro rata to holders of Class A Common Stock,
the Corporation may, in lieu of making any adjustment
pursuant to this Section 3(d)(iii), make proper provision
so that each holder of the Series 1993 Preferred Stock who
converts such Series 1993 Preferred Stock (or any portion
thereof) after the record date for such distribution and
prior to the expiration or redemption of the Rights shall
be entitled to receive upon such conversion, in addition
to the shares of Class A Common Stock issuable upon such
conversion (the "Conversion Shares"), a number of Rights
to be determined as follows: (1) if such conversion
F-5
<PAGE>
occurs on or prior to the date for the distribution to the
holders of Rights of separate certificates evidencing such
Rights (the "Distribution Date"), the same number of
Rights to which a holder of a number of shares of Class A
Common Stock equal to the number of Conversion Shares is
entitled at the time of such conversion in accordance with
the terms and provisions of and applicable to the Rights;
and (2) if such conversion occurs after the Distribution
Date, the same number of shares of Class A Common Stock
into which the number of shares of this Series 1993
Preferred Stock so converted was convertible immediately
prior to the Distribution Date would have been entitled on
the Distribution Date in accordance with the terms and
provisions of and applicable to the Rights.
(iv) For the purpose of any computation under
this Section 3, the "Current Market Price" of the Class A
Common Stock at any date shall be the average of the last
reported sale prices per share for the ten consecutive
Trading Days (as defined below) preceding the date of such
computation. The last reported sale price for each day
shall be (1) the last reported sale price of the Class A
Common Stock on the Nasdaq National Market, or any similar
system of automated dissemination of quotations of
securities prices then in common use, if so quoted, or (2)
if not quoted as described in clause (1), the mean between
the high bid and low asked quotations for the Class A
Common Stock as reported by the National Quotation Bureau
Incorporated if at least two securities dealers have
inserted both bid and asked quotations for the Class A
Common Stock on at least five of the ten preceding days,
or (3) if the Class A Common Stock is listed or admitted
for trading on any national securities exchange, the last
sale price, or the closing bid price if no sale occurred,
of the Class A Common Stock on the principal securities
exchange on which the Class A Common Stock is listed. If
the Class A Common Stock is quoted on a national
securities or central market system, in lieu of a market
or quotation system described above, the last reported
sale price shall be determined in the manner set forth in
clause (2) of the preceding sentence if bid and asked
quotations are reported but actual transactions are not,
and in the manner set forth in clause (3) of the preceding
sentence if actual transactions are reported. If none of
the conditions set forth above is met, he last reported
sale price of the Class A Common Stock on any day or the
average of such last reported sale prices for any period
shall be the fair market value of such class of stock as
determined by a member firm of the New York Stock
Exchange, Inc. selected by the Corporation. As used
herein, the term "Trading Days" means (1) if the Class A
Common Stock is quoted on the Nasdaq National Market or
any similar system of automated dissemination of
quotations of securities prices, days on which trades may
be made on such system, or (2) if not quoted as described
in clause (1), days on which quotations are reported by
the National Quotation Bureau Incorporated, or (3) if the
Class A Common Stock is listed or admitted for trading on
any national securities exchange, days on which such
national securities exchange is open for business.
(v) In the event that the Corporation shall fail
to declare and pay a dividend on the Series 1993 Preferred
Stock for more than three Dividend Periods (a "Dividend
Default") in any five-year period, then the Conversion
Price shall be reduced by an amount equal to 75% of the
first three missed dividend payments and 100% of any
dividend which is not declared and paid for any subsequent
Dividend Period. Notwithstanding the foregoing, if at any
time subsequent to an adjustment in the Conversion Price
pursuant to this Section 3(d)(v), the Corporation declares
and pays dividends on the Series 1993 Preferred Stock for
each Dividend Period in the five-year period commencing on
the date of the adjustment, then no further adjustment in
the Conversion Price pursuant to this Section 3(d)(v)
shall be made until a new Dividend Default shall have
occurred.
<PAGE>
(vi) No adjustment in the Conversion Price shall
be required unless such adjustment would require a change
of at least one percent in the Conversion Price; PROVIDED,
HOWEVER, that any adjustments which by reason of this
Section 3(d)(vi) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment; and PROVIDED, FURTHER, that adjustment shall
be required and made in accordance with the provisions of
this Section 3(d) (other than this Section 3(d)(vi)) not
later than three years of the date of the event requiring
the
F-6
<PAGE>
adjustment. All calculations under this Section 3(d) shall
be made to the nearest cent or the nearest one hundredth
of a share, as the case may be. Notwithstanding anything
in this Section 3(d) to the contrary, the Corporation
shall be entitled to make such reductions in the
Conversion Price, in addition to those required by this
Section 3(d), as it, in its discretion, shall determine to
be advisable in order that any stock dividend, subdivision
or combination of shares, distribution of capital stock or
rights or warrants to purchase stock or securities, or
distribution of evidence of indebtedness or assets (other
than cash dividends or distributions paid from retained
earnings) hereinafter made by the Corporation to its
stockholders shall be a tax free distribution for federal
income tax purposes.
(vii) Whenever the Conversion Price is adjusted,
as herein provided, the Corporation shall promptly file
with its transfer agent an officers' certificate setting
forth the Conversion Price after the adjustment and
setting forth a brief statement of the facts requiring the
adjustment, which certificate shall be conclusive evidence
of the correctness of the adjustment. Promptly after
delivery of the certificate, the Corporation shall prepare
a notice of the adjustment of the Conversion Price setting
forth the adjusted Conversion Price and the date on which
the adjustment becomes effective and shall mail the notice
of such adjustment of the Conversion Price to the holders
of the Series 1993 Preferred Stock at their addresses as
shown on the stock books of the Corporation.
(viii) In any case in which this Section 3(d)
provides that an adjustment shall become effective
immediately after a record date for an event, the
Corporation may defer until the occurrence of the event
(1) issuing to the holder of any share of the Series 1993
Preferred Stock converted after the record date and before
the occurrence of the event, the additional shares of
Class A Common Stock issuable upon the conversion by
reason of the adjustment required by the event over and
above the Class A Common Stock issuable upon such
conversion before giving effect to the adjustment and (2)
paying to the holder any amount in cash in lieu of any
fractional share pursuant to Section 3(c) above.
(e) If:
(i) the Corporation shall authorize the granting
to the holders of the Class A Common Stock or rights or
warrants to subscribe for or purchase any shares of any
class or any other rights or warrants; or
(ii) there shall be any reclassification of the
Class A Common Stock (other than a subdivision or
combination of the outstanding Class A Common Stock and
other than a change in the par value, or from par value to
no par value, or from no par value to par value), or any
consolidation, merger, or statutory share exchange to
which the Corporation is a party, and for which approval
of any stockholders of the Corporation is required, or any
sale or transfer of all or substantially all the assets of
the Corporation; or
(iii) there shall be a voluntary or an
involuntary dissolution, liquidation or winding up of the
Corporation;
then the Corporation shall cause to be filed with the
transfer agent, and shall cause to be mailed to the
holders of shares of the Series 1993 Preferred Stock at
their addresses as shown on the stock books of the
Corporation, at least 15 days prior to the applicable date
hereinafter specified, a notice stating (1) the date on
which a record is to be taken for the purpose of the
dividend, distribution or rights or warrants, or, if a
record is not to be taken, the date as of which the
holders of Class A Common Stock of record to be entitled
to the dividend, distribution or rights or warrants are to
be determined or (2) the date on which the
reclassification, consolidation, merger, statutory share
exchange, sale, transfer, dissolution, liquidation or
winding up is expected to become effective, and the date
as of which it is expected that holders of Class A Common
Stock of record shall be entitled to exchange their shares
of Class A Common Stock for securities or other property
deliverable upon the
F-7
<PAGE>
reclassification, consolidation, merger, statutory share
exchange, sale, transfer, dissolution, liquidation or
winding up. Failure to give any such notice or any defect
in the notice shall not affect the legality or validity of
the proceedings described in this Section 3(e).
(f) (i) The Corporation covenants that it will at all
times reserve and keep available, free from preemptive
rights, out of the aggregate of its authorized but
unissued shares of Class A Common Stock or its issued
shares of Class A Common Stock held by its treasury, or
both, for the purpose of effective conversions of the
Series 1993 Preferred Stock the full number of shares of
Class A Common Stock deliverable upon the conversion of
all outstanding shares of the Series 1993 Preferred Stock
not theretofore converted. For purposes of this Section
3(f), the number of shares of Class A Common Stock which
shall be deliverable upon the conversion of all
outstanding shares of the Series 1993 Preferred Stock
shall be computed as if at the time of computation all the
outstanding shares were held by a single holder.
(ii) Before taking any action which would cause
an adjustment reducing the Conversion Price below the then
par value (if any) of the shares of Class A Common Stock
deliverable upon conversion of the Series 1993 Preferred
Stock, the Corporation will take any corporate action
which may, in the opinion of its counsel, be necessary in
order that the Corporation may validly and legally issue
fully paid and nonassessable shares of Class A Common
Stock at the adjusted Conversion Price.
(iii) The Corporation will endeavor to list the
shares of Class A Common Stock or other securities
required to be delivered upon conversion of the Series
1993 Preferred Stock, prior to the delivery, upon each
national securities exchange or the Nasdaq National
Market, if any, upon which the outstanding Class A Common
Stock or other securities are listed at the time of
delivery.
(iv) Prior to the delivery of any Class A Common
Stock or other securities which the Corporation shall be
obligated to deliver upon conversion of the Series 1993
Preferred Stock, the Corporation will endeavor, in good
faith and as expeditiously as possible, to take all
reasonable measures to comply with all federal and state
laws and regulations thereunder requiring the registration
of those securities with, or any approval of or consent to
the delivery thereof by, any governmental authority.
(g) The Corporation will pay any and all documentary stamp
or similar issue or transfer taxes payable in respect of the issue
or delivery of shares of Class A Common Stock or other securities
on conversion of the Series 1993 Preferred Stock pursuant hereto;
PROVIDED, HOWEVER, that the Corporation shall not be required to
pay any tax which may be payable in respect of any transfer
involved in the issue or delivery of shares of Class A Common
Stock or other securities in a name other than that of the holder
of the Series 1993 Preferred Stock to be converted and no such
issue or delivery shall be made unless and until the person
requesting the issue or delivery has paid to the Corporation the
amount of any such tax or has established, to the satisfaction of
the Corporation, that the tax has been paid.
(h) In case of any reclassification or similar change of
outstanding shares of Class A Common Stock (other than change in
par value, or as a result of subdivision or combination), or in
case of any consolidation of the Corporation with, or merger of
the Corporation with or into, any other entity that results in a
reclassification, change, conversion, exchange or cancellation of
outstanding shares of Class A Common Stock or any sale or transfer
of all or substantially all of the assets of the Corporation, each
holder of shares of the Series 1993 Preferred Stock then
outstanding shall have the right thereafter to convert the shares
of the Series 1993 Preferred Stock held by the holder into the
kind and amount of securities, cash and other property which the
holder would have been entitled to receive upon such
reclassification, change, consolidation, merger, sale or transfer
if the holder had held the Class A Common Stock issuable upon the
conversion of the shares of the Series 1993 Preferred Stock
immediately prior to the reclassification, change, consolidation,
merger, sale or transfer.
F-8
<PAGE>
4. PREEMPTIVE RIGHTS. Shares of the Series 1993 Preferred Stock
are not entitled to any preemptive rights to acquire any unissued shares of
any capital stock of the Corporation, now or hereafter authorized, or any
other securities of the Corporation, whether or not convertible into shares
of capital stock of the Corporation or carrying a right to subscribe to or
acquire any such shares of capital stock.
5. VOTING. Except as required by law, the shares of the Series
1993 Preferred Stock shall not have any voting powers, either general or
special, except as follows:
(a) So long as any shares of the Series 1993 Preferred
Stock are outstanding, if the Corporation shall have failed to
declare and pay dividends on all outstanding shares of the Series
1993 Preferred Stock for six Dividend Periods, whether or not
consecutive, the number of directors of the Corporation shall
automatically be increased by two and the holders of the Series
1993 Preferred Stock shall have the right, voting together as a
class and separately from all other classes and series, to elect
such two additional directors. The right of the holders of the
Series 1993 Preferred Stock to elect such members of the Board of
Directors as aforesaid shall continue until dividends have been
declared and paid on the Series 1993 Preferred Stock for four
consecutive Dividend Periods. If at any time thereafter should the
Corporation fail to declare and pay dividends on all outstanding
shares of the Series 1993 Preferred Stock for four Dividend
Periods, whether or not consecutive, the voting right described in
this Section 5(a) shall vest until dividends shall have been
declared and paid on the Series 1993 Preferred Stock for four
consecutive Dividend Periods. Whenever the voting right described
in this Section 5(a) shall have vested in the holders of the
Series 1993 Preferred Stock, the right may be exercised initially
either at a special meeting of the holders of the Series 1993
Preferred Stock, called as hereinafter provided, or at any annual
meeting of stockholders held for the purpose of electing directors
and thereafter at each successive annual meeting.
(b) At any time when the voting right of the Series 1993
Preferred Stock provided in Section 5(a) above shall have become
operative and shall not have been exercised, or for the purpose of
the removal of a director as set forth in Section 5(d) below, a
proper officer of the Corporation shall, upon the written request
of the holders of record of at least 10% of the shares of the
Series 1993 Preferred Stock then outstanding addressed to the
Secretary of the Corporation, call a special meeting of the
holders of the Series 1993 Preferred Stock for the purpose of
electing the additional directors to be elected by the holders of
the Series 1993 Preferred Stock or removing any such director, as
the case may be. Such meeting shall be held at the earliest
practicable date upon the notice (and at the place) required for
annual meetings of stockholders. Such notice shall comply with the
requirements of all applicable laws and shall set forth the
purposes of such meeting. If such meeting shall not be called by
the proper officer of the Corporation within 20 days after the
personal service of such written request upon the Secretary of the
Corporation, or within 20 days after mailing the same within the
United States by registered or certified mail enclosed in a
postage-paid envelope addressed to the Secretary of the
Corporation at its principal office, then the holders of record of
at least 10% of the shares of the Series 1993 Preferred Stock then
outstanding may designate in writing one of their number to call
such meeting at the expense of the Corporation, and such meeting
may be called by the person so designated upon the notice (and at
the place) required for annual meetings of stockholders.
(c) Unless otherwise required by law, directors elected by
the holders of the Series 1993 Preferred Stock shall not become
members of any of the three classes of directors otherwise
required by the Articles of Incorporation and Bylaws of the
Corporation with respect to the remaining directors elected by
other classes or series of stock entitled to vote therefor, but
shall, subject to Section 5(e) below, serve until the next annual
meeting or until their respective successors shall be elected and
shall qualify. All rights of the holders of the Series 1993
Preferred Stock to elect such directors shall continue in effect
until the Corporation has declared and paid dividends for four
consecutive Dividend Periods as provided in Section 5(b) above. At
such time as such condition has been met, the voting rights of the
holders of the Series 1993 Preferred Stock shall, without further
action, terminate, subject to revesting in the event of each and
every subsequent failure of the Corporation to declare and pay
such dividends for the requisite number of Dividend Periods
described above.
(d) The term of office of all directors elected by the
holders of the Series 1993 Preferred Stock in office at any time
when the aforesaid voting right is vested in such holders shall
terminate upon the election of their successors at any meeting of
stockholders held for the purpose of selecting directors,
provided,
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<PAGE>
however, without further action, and unless required by law, any
director that shall have been elected by holders of the Series
1993 Preferred Stock as provided herein may be removed at any
time, either with or without cause, by affirmative vote of the
holders of record of a majority of outstanding shares of the
Series 1993 Preferred Stock, voting separately as one class, at a
duly held meeting of the holders of the Series 1993 Preferred
Stock called pursuant to the provisions set forth in Section 5(b).
(e) Upon the later of any termination of the aforesaid
voting right in accordance with the foregoing provisions or the
expiration of the minimum term of office required by law, the term
of office of all directors elected by the holders of the Series
1993 Preferred Stock pursuant thereto then in office shall,
without further action, thereupon terminate unless otherwise
required by law. Upon such termination, the number of directors
constituting the Board of Directors of the Corporation shall,
without further action, be reduced by two, subject always to the
increase of the number of directors pursuant to the provisions of
this Section 5(e) in the case of the future right of such holders
of the Series 1993 Preferred Stock to elect directors as provided
herein.
(f) Unless otherwise required by law, in case of any
vacancy occurring among the directors so elected, the remaining
director may appoint a successor to hold office for the unexpired
term of the director whose place shall be vacant, and if all
directors so elected shall cease to serve as directors before
their term shall expire, the holders of the Series 1993 Preferred
Stock then outstanding may, at a meeting of such holders duly
held, elect successors to hold office for the unexpired terms of
the directors whose places shall be vacant.
(g) The directors elected by the holders of the Series
1993 Preferred Stock in accordance with the provisions of this
Section 5 shall be entitled to one vote per director on any
matter, and otherwise to same rights and privileges as all other
directors of the Corporation.
(h) So long as any shares of the Series 1993 Preferred
Stock are outstanding, the Articles of Incorporation and Bylaws of
the Corporation shall contain provisions ensuring that the number
of directors of the Corporation shall at all times be such that
the exercise by the holder of shares of the Series 1993 Preferred
Stock of the right to elect directors under the circumstances
provided in this Section 5 will not contravene any provisions of
the Corporation's Articles of Incorporation or Bylaws.
(i) Unless the vote or consent of the holders of a greater
number of shares is required by law, the consent of the holders of
at least a majority of all of the shares of the Series 1993
Preferred Stock at the time outstanding given in person or by
proxy, either in writing or by a vote at a meeting called for that
purpose, on which matter the holders of shares of the Series 1993
Preferred Stock shall vote together as a separate class, shall be
necessary to authorize, effect or validate any amendment,
alteration or repeal of any of the provisions of the Articles of
Incorporation of the Corporation or of any certificate, amendatory
or supplemental thereto, which amendment, alteration or repeal
would, if effected, adversely affect the powers, preferences,
rights or privileges of the Series 1993 Preferred Stock.
(j) Unless the vote or consent of the holders of a greater
number of shares is required by law, the consent of the holders of
at least 66-2/3% of all of the shares of the Series 1993 Preferred
Stock at the time outstanding given in person or by proxy, either
in writing or by a vote at a meeting called for that purpose, on
which matter the holders of shares of the Series 1993 Preferred
Stock shall vote together as a separate class, shall be necessary
to create, authorize, issue or increase the authorized or issued
amount of any class or series of any equity securities of the
Corporation, or any warrants, options or other rights convertible
or exchangeable into any class or series of any equity securities
of the Corporation, ranking senior to the Series 1993 Preferred
Stock either as to payment of dividends or rights upon
liquidation.
<PAGE>
(k) Notwithstanding anything to the contrary set forth
herein, the creation or issuance of Parity Stock or Junior Stock
with respect to the payment of dividends or rights upon
liquidation, a merger, consolidation, reorganization or other
business combination in which the Corporation is not the surviving
entity, or an amendment that increases the number of authorized
shares of Preferred Stock or increases the number of authorized
shares of a series of Preferred Stock constituting Junior Stock or
Parity Stock shall not be considered to be an adverse change to
the terms of the Series 1993 Preferred Stock and shall not require
a vote or the consent of the holders of the Series 1993 Preferred
Stock.
F-10
<PAGE>
6. LIQUIDATION RIGHTS.
(a) Upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of the
shares of the Series 1993 Preferred Stock shall be entitled to
receive out of the assets of the Corporation available for
distribution to stockholders under applicable law, before any
payment or distribution of assets shall be made on the Class A
Common Stock or on any other class or series of capital stock of
the Corporation ranking junior to the Series 1993 Preferred Stock
upon liquidation, the amount of $10.00 per share, in the event of
an involuntary liquidation and the applicable redemption price as
set forth in Section 2 hereof, in the event of a voluntary
liquidation (the "Liquidation Preference"), plus a sum equal to
all dividends accrued on such shares (whether or not declared) for
and unpaid for the then current Dividend Period. The sale,
conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all the
property and assets of the Corporation shall not be deemed a
dissolution, liquidation or winding up of the Corporation for the
purposes of this Section 6, nor shall the merger or consolidation
of the Corporation into or with any other corporation or
association or the merger or consolidation of any other
corporation or association into or with the Corporation, be deemed
to be a dissolution, liquidation or winding up of the Corporation
for the purposes of this Section 6.
(b) After the payment in cash (in New York Clearing House
funds or its equivalent) to the holders of the shares of the
Series 1993 Preferred Stock of the full preferential amounts for
the shares of the Series 1993 Preferred Stock, as set forth in
Section 6(a) above, the holders of the Series 1993 Preferred Stock
as such shall have no further right or claim to any of the
remaining assets of the Corporation.
(c) In the event the assets of the Corporation available
for distribution to the holders of shares of the Series 1993
Preferred Stock upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation shall be insufficient
to pay in full all amounts to which such holders are entitled
pursuant to Section 6(a) above, no distribution shall be made on
account of any shares of any other series of Preferred Stock or
any other class of capital stock of the Corporation ranking on a
parity with the shares of the Series 1993 Preferred Stock upon
such liquidation, dissolution or winding up unless proportionate
amounts shall be paid on account of the shares of the Series 1993
Preferred Stock, ratably, in proportion to the full amounts to
which holders of all such shares which are on a parity with the
shares of the Series 1993 Preferred Stock are respectively
entitled upon such dissolution, liquidation or winding up.
7. RANK. The Series 1993 Preferred Stock shall rank senior as to
payment of dividends and rights upon liquidation to all classes
and series of capital stock of the Corporation outstanding as of
May 24, 1993. Unless the Corporation shall have obtained the
consent of the holders as provided in Section 6 above, the
Corporation shall not issue any other series of Preferred Stock
ranking senior to the Series 1993 Preferred Stock as to the
payment of dividends or rights upon liquidation or any other
series of any equity securities ranking senior to the Series 1993
Preferred Stock as to the payment of dividends or rights upon
liquidation. The Corporation may issue shares of Preferred Stock
or other capital stock ranking junior to or on a parity with the
Series 1993 Preferred Stock as to the payment of dividends or
rights upon liquidation. For purposes of this statement of
designation, any capital stock of any series or class of the
Corporation shall be deemed to rank:
(a) senior to the shares of the Series 1993 Preferred
Stock, as to dividends or upon liquidation, if the holders of such
series or class shall be entitled to the receipt of dividends or
of amounts distributable upon dissolution, liquidation or winding
up of the Corporation, as the case may be, in preference or
priority to the holders of the shares of the Series 1993 Preferred
Stock;
<PAGE>
(b) on a parity with shares of the Series 1993 Preferred
Stock, as to dividends or upon liquidation, whether or not the
dividend rates, dividend payment dates or redemption or
liquidation prices per share or sinking fund provisions, if any,
be different from those of the Series 1993 Preferred Stock, if the
holders of such stock shall be entitled to the receipt of
dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, as the case may be,
in proportion to their respective dividend rates or liquidation
prices, without preference or priority, one over the other, as
between the holders of such stock and the holders of shares of the
Series 1993 Preferred Stock; and
F-11
<PAGE>
(c) junior to shares of the Series 1993 Preferred Stock,
as to dividends or upon liquidation, if such stock shall be Class
A Common Stock or if the holders of shares of the Series 1993
Preferred Stock shall be entitled to receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up
of the Corporation, as the case may be, in preference or priority
to the holders of shares of such series or class.
8. REPORTS AND NOTICES. So long as any shares of the Series 1993
Preferred Stock shall be outstanding, the Corporation shall provide to the
holder or holders of such shares copies of all annual, quarterly and other
reports of the Corporation and copies of all stockholder notices of the
Corporation when and as furnished to the holders of the Class A Common
Stock.
F-12
<PAGE>
APPENDIX G
STATEMENT OF DESIGNATION
OF
9% NONCUMULATIVE PERPETUAL Preferred Stock
OF
BANKUNITED FINANCIAL CORPORATION
BankUnited Financial Corporation (the "Corporation"), a corporation
organized and existing under the Florida Business Corporation Act, in accordance
with the provisions of Section 607.0602 thereof and Article VI of the
Corporation's Articles of Incorporation, DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by the
Articles of Incorporation of the Corporation, said Board of Directors acting at
a meeting thereof adopted resolutions providing for the issuance of 2,300,000
shares of the Corporation's Preferred Stock, $.01 par value, designated "9%
Noncumulative Perpetual Preferred Stock," which resolutions are as follows:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by the Articles of Incorporation, the Board of
Directors does hereby provide for and authorize the issuance of 2,300,000
shares of the Preferred Stock, $.01 par value, of the Corporation, of the
presently authorized but unissued shares of Preferred Stock (the "Preferred
Stock") to be designated "9% Noncumulative Perpetual Preferred Stock" (the
"Perpetual Preferred Stock"). The voting powers, designations, preferences,
and relative, participating, optional or other special rights of the
Perpetual Preferred Stock authorized hereunder and the qualifications,
limitations and restrictions of such preferences and rights are as follows:
1. DIVIDENDS.
(a) The holders of the Perpetual Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of
Directors out of funds of the Corporation legally available for
payment, noncumulative cash dividends, payable quarterly in
arrears, at the rate of $.90 per share per annum. Dividends, when
declared on the Perpetual Preferred Stock, shall have accrued from
the date of issuance or thereafter, from the most recent date on
which dividends were payable and shall be payable quarterly on
March 31, June 30, September 30 and December 31 of each year (each
a "Dividend Payment Date"), commencing on March 31, 1994;
PROVIDED, HOWEVER, that if any such day is a non-business day, the
Dividend Payment Date will be the next business day. Each declared
dividend shall be payable to holders of record as they appear at
the close of business on the stock books of the Corporation on
such record dates, not more than 30 calendar days and not less
than 10 calendar days preceding the Dividend Payment Date
therefor, as determined by the Board of Directors (each of such
dates a "Record Date"). Quarterly dividend periods (each a
"Dividend Period") shall commence on and include the first day of
January, April, July and October of each year and shall end on and
include the day next preceding the next following Dividend Payment
Date.
(b) No full dividends shall be declared or paid or set
apart for payment on any series of Preferred Stock or other
capital stock of any series ranking, as to dividends or
liquidation preference, on a parity ("Parity Stock") with the
Perpetual Preferred Stock during any calendar quarter unless full
dividends on the Perpetual Preferred Stock for the Dividend Period
ending during such calendar quarter have been or contemporaneously
are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for such payment. When dividends are
not so paid in full (or a sum sufficient for such full payment is
not so set apart) upon the Perpetual Preferred Stock and any other
Parity Stock, dividends upon the Perpetual Preferred Stock and
dividends on such other Parity Stock payable during such calendar
quarter shall be declared pro rata so that the amount of such
dividends so payable per share on the Perpetual Preferred Stock
and such other Parity Stock shall in all cases bear to each other
the same ratio that full dividends for the then-current calendar
quarter on the shares of Perpetual Preferred Stock (which shall
not include any accumulation in respect of unpaid dividends for
prior Dividend Periods) and full dividends, including required or
permitted accumulations, if any, on shares
G-1
<PAGE>
of such other Parity Stock, bear to each other. If full dividends
on the Perpetual Preferred Stock have not been declared and paid
or set aside for payment for the Dividend Payment Date falling in
the then-current Dividend Period, then, with respect to such
then-current Dividend Period, the following restrictions shall be
applicable: (i) no dividend or distribution, other than in shares
of capital stock ranking junior to the Perpetual Preferred Stock
as to dividends or liquidation preference ("Junior Stock"), may be
declared, set aside or paid on any shares of Junior Stock, (ii)
the Corporation may not repurchase, redeem or otherwise acquire
any shares of its Junior Stock (except by conversion into or
exchange for Junior Stock) and (iii) the Corporation may not,
directly or indirectly, repurchase, redeem or otherwise acquire
(except by conversion into or exchange for Junior Stock) any
shares of any class or series of Junior Stock or warrants, calls,
options or other rights to acquire capital stock of the
Corporation or other security exercisable or exchangeable into
capital stock of the Corporation, otherwise than pursuant to pro
rata offers to purchase or a concurrent redemption of all, or a
pro rata portion, of the outstanding shares of Perpetual Preferred
Stock. Holders of the Perpetual Preferred Stock shall not be
entitled to any dividends, whether payable in cash, property or
stock, in excess of declared noncumulative dividends, as herein
provided, on the Perpetual Preferred Stock. No interest or sum of
money in lieu of interest shall be payable in respect of any
declared dividend payment or payments on the Perpetual Preferred
Stock which may be in arrears. As used herein, the phrase "set
apart" in respect of the payment of dividends shall require
deposit of any funds in a bank or trust Corporation in a separate
deposit account maintained for the benefit of the holders of the
Perpetual Preferred Stock.
2. REDEMPTION.
(a) The shares of Perpetual Preferred Stock shall be
redeemable by the Corporation, in whole or in part, at any time
and from time to time from and after September 30, 1998 at a price
of $10.00 per share plus an amount equal to all accrued but unpaid
dividends (whether or not declared) for the then current Dividend
Period immediately preceding the date fixed for redemption (the
"Redemption Date").
(b) The Perpetual Preferred Stock shall be redeemable by
the Corporation, in accordance with applicable law, in whole or in
part, upon not less than 30 nor more than 60 calendar days' prior
written notice by mail.
(c) In the event that fewer than all the outstanding
shares of the Perpetual Preferred Stock are to be redeemed as
permitted by this Section 2, the number of shares to be redeemed
shall be determined by the Board of Directors and the shares to be
redeemed shall be determined by lot or PRO RATA as may be
determined by the Board of Directors or by such other method as
may be approved by the Board of Directors that is required to
conform to any rule or regulation of any stock exchange or
automated quotation system upon which the shares of the Perpetual
Preferred Stock may at the time be listed.
(d) Notice of redemption of the Perpetual Preferred Stock,
specifying the Redemption Date and place of redemption, shall be
given by first class mail to each holder of record of the shares
to be redeemed, at his or her address of record, not less than 30
nor more than 60 calendar days prior to the Redemption Date. If
less than all the shares owned by such holder are then to be
redeemed, the notice shall also specify the number of shares
thereof which are to be redeemed and the fact that a new
certificate or certificates representing any unredeemed shares
shall be issued without cost to such holder.
(e) Notice of redemption of shares of the Perpetual
Preferred Stock having been given as provided in Section 2(d),
then unless the Corporation shall have defaulted in providing for
the payment of the redemption price and all accrued and unpaid
dividends (whether or not declared) for the then-current Dividend
Period immediately preceding the Redemption Date, all rights of
the holders thereof (except the right to receive the redemption
price and all accrued and unpaid dividends, whether or not
declared, for the then-current Dividend Period immediately
preceding the Redemption Date) shall cease with respect to such
shares and such shares shall not, after the Redemption Date, be
deemed to be outstanding and shall not have the status of
Perpetual Preferred Stock. In case fewer than all the shares
represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares
without cost to the holder thereof.
G-2
<PAGE>
(f) Any shares of Perpetual Preferred Stock which shall at
any time have been redeemed shall, after such redemption, have the
status of authorized but unissued shares of Preferred Stock,
without designation as to series until such shares are once more
designated as part of a particular series by the Board of
Directors.
(g) Shares of the Perpetual Preferred Stock are not
subject or entitled to the benefit of a sinking fund."
3. PREEMPTIVE RIGHTS. Holders of the Perpetual Preferred Stock are
not entitled to any preemptive rights to acquire any unissued shares of any
capital stock of the Corporation, now or hereafter authorized, or any other
securities of the Corporation, whether or not convertible into shares of
capital stock of the Corporation or carrying a right to subscribe to or
acquire any such shares of capital stock.
4. VOTING. Except as required by law, the shares of the Perpetual
Preferred Stock shall not have any voting powers, either general or
special, except as follows:
(a) So long as any shares of the Perpetual Preferred Stock
are outstanding, if the Corporation shall have failed to declare
and pay dividends on all outstanding shares of the Perpetual
Preferred Stock for six Dividend Periods, whether or not
consecutive, the number of directors of the Corporation shall
automatically be increased by two and the holders of the Perpetual
Preferred Stock shall have the right, voting separately as a class
(together with the holders of shares of Parity Stock, if any, upon
which like voting rights have been conferred and are exercisable),
to elect such two additional directors. The right of the holders
of the Perpetual Preferred Stock (and Parity Stock, if any, with
parity voting rights) to elect such members of the Board of
Directors as aforesaid shall continue until dividends have been
declared and paid on the Perpetual Preferred Stock for four
consecutive Dividend Periods. If at any time thereafter should the
Corporation fail to declare and pay dividends on all outstanding
shares of the Perpetual Preferred Stock for four Dividend Periods,
whether or not consecutive, the voting right described in this
Section 4(a) shall vest until dividends shall have been declared
and paid on the Perpetual Preferred Stock for four consecutive
Dividend Periods. Whenever the voting right described in this
Section 4(a) shall have vested in the holders of the Perpetual
Preferred Stock, the right may be exercised initially either at a
special meeting of the holders of the Perpetual Preferred Stock
(and Parity Stock, if any, with parity voting rights), called as
hereinafter provided, or at any annual meeting of stockholders
held for the purpose of electing directors and thereafter at each
successive annual meeting.
(b) At any time when the voting right of the Perpetual
Preferred Stock provided in Section 4(a) above shall have become
operative and shall not have been exercised, or for the purpose of
the removal of a director as set forth in Section 4(d) below, a
proper officer of the Corporation shall, upon the written request
of the holders of record of at least 10% of the shares of the
Perpetual Preferred Stock (and Parity Stock, if any, with parity
voting rights) then outstanding addressed to the Secretary of the
Corporation, call a special meeting of the holders of the
Perpetual Preferred Stock (and Parity Stock, if any, with parity
voting rights) for the purpose of electing the additional
directors to be elected by such holders or removing any such
director, as the case may be. Such meeting shall be held at the
earliest practicable date upon the notice (and at the place)
required for annual meetings of stockholders. Such notice shall
comply with the requirements of all applicable laws and shall set
forth the purposes of such meeting. If such meeting shall not be
called by the proper officer of the Corporation within 20 days
after the personal service of such written request upon the
Secretary of the Corporation, or within 20 days after mailing the
same within the United States by registered or certified mail
enclosed in a postage-paid envelope addressed to the Secretary of
the Corporation at its principal office, then the holders of
record of at least 10% of the shares of the Perpetual Preferred
Stock (and Parity Stock, if any, with parity voting rights) then
outstanding may designate in writing one of their members to call
such meeting at the expense of the Corporation, and such meeting
may be called by the person so designated upon the notice (and at
the place) required for annual meetings of stockholders.
<PAGE>
(c) Unless otherwise required by law, directors elected by
the holders of the Perpetual Preferred Stock (and Parity Stock, if
any, with parity voting rights) shall not become members of any of
the three classes of directors otherwise required by the Articles
of Incorporation and Bylaws of the Corporation with respect to the
remaining directors elected by other classes or series of stock
entitled to vote therefor, but shall, subject to Section 4(e)
below, serve until the next annual meeting or until their
respective successors shall be elected
G-3
<PAGE>
and shall qualify. All rights of the holders of the Perpetual
Preferred Stock (and Parity Stock, if any, with parity voting
rights) to elect such directors shall continue in effect until the
Corporation has declared and paid dividends for four consecutive
Dividend Periods as provided in Section 4(b) above. At such time
as such condition has been met, the voting rights of such holders
shall, without further action, terminate, subject to revesting in
the event of each and every subsequent failure of the Corporation
to declare and pay such dividends for the requisite number of
Dividend Periods described above.
(d) The term of office of all directors elected by the
holders of the Perpetual Preferred Stock (and Parity Stock, if
any, with parity voting rights) in office at any time when the
aforesaid voting right is vested in such holders shall terminate
upon the election of their successors at any meeting of
stockholders held for the purpose of selecting directors;
provided, however, without further action, and unless required by
law, any director that shall have been elected by such holders as
provided herein may be removed at any time, either with or without
cause, by affirmative vote of the holders of record of a majority
of outstanding shares of the Perpetual Preferred Stock (and Parity
Stock, if any, with parity voting rights), voting separately as
one class, at a duly held meeting of such holders called pursuant
to the provisions set forth in Section 4(b).
(e) Upon the later of any termination of the aforesaid
voting right in accordance with the foregoing provisions or the
expiration of the minimum term of office required by law, the term
of office of all directors elected by the holders of the Perpetual
Preferred Stock (and Parity Stock, if any, with parity voting
rights) pursuant thereto then in office shall, without further
action, thereupon terminate unless otherwise required by law. Upon
such termination, the number of directors constituting the Board
of Directors of the Corporation shall, without further action, be
reduced by two, subject always to the increase of the number of
directors pursuant to the provisions of this Section 4(e) in the
case of the future right of such holders to elect directors as
provided herein.
(f) Unless otherwise required by law, in case of any
vacancy occurring among the directors so elected, the remaining
director may appoint a successor to hold office for the unexpired
term of the director whose place shall be vacant, and if all
directors so elected shall cease to serve as directors before
their term shall expire, the holders of the Perpetual Preferred
Stock then outstanding (and any Parity Stock, if any, with parity
voting rights) may, at a meeting of such holders duly held, elect
successors to hold office for the unexpired terms of the directors
whose places shall be vacant.
(g) The directors elected by the holders of the Perpetual
Preferred Stock (and any Parity Stock, if any, with parity voting
rights) in accordance with the provisions of this Section 4 shall
be entitled to one vote per director on any matter, and otherwise
to same rights and privileges as all other directors of the
Corporation.
(h) So long as any shares of the Perpetual Preferred Stock
are outstanding, the Articles of Incorporation and Bylaws of the
Corporation shall contain provisions ensuring that the number of
directors of the Corporation shall at all times be such that the
exercise by the holders of shares of the Perpetual Preferred Stock
of the right to elect directors under the circumstances provided
in this Section 4 will not contravene any provisions of the
Corporation's Articles of Incorporation or Bylaws.
(i) Unless the vote or consent of the holders of a greater
number of shares is required by law, the consent of the holders of
at least a majority of all of the shares of the Perpetual
Preferred Stock at the time outstanding given in person or by
proxy, either in writing or by a vote at a meeting called for that
purpose, on which matter the holders of shares of the Perpetual
Preferred Stock shall vote together as a separate class, shall be
necessary to authorize, effect or validate any amendment,
alteration or repeal of any of the provisions of the Articles of
Incorporation of the Corporation or of any certificate, amendatory
or supplemental thereto, which amendment, alteration or repeal
would, if effected, adversely affect the powers, preferences,
rights or privileges of the Perpetual Preferred Stock.
<PAGE>
(j) Unless the vote or consent of the holders of a greater
number of shares is required by law, the consent of the holders of
at least 66-2/3% of all of the shares of the Perpetual Preferred
Stock at the time outstanding given in person or by proxy, either
in writing or by a vote at a meeting called for that purpose, on
which matter the holders of shares of the Perpetual Preferred
Stock shall vote together as a separate class
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<PAGE>
(together with the holders of shares of Parity Stock, if any, upon
which like voting rights have been conferred and are exercisable),
shall be necessary to create, authorize, issue or increase the
authorized or issued amount of any class or series of any equity
securities of the Corporation, or any warrants, options or other
rights convertible or exchangeable into any class or series of any
equity securities of the Corporation, ranking senior to the
Perpetual Preferred Stock either as to payment of dividends or
rights upon liquidation.
(k) Notwithstanding anything to the contrary set forth
herein, the creation or issuance of Parity Stock or Junior Stock
with respect to the payment of dividends or rights upon
liquidation, a merger, consolidation, reorganization or other
business combination in which the Corporation is not the surviving
entity, or an amendment that increases the number of authorized
shares of Preferred Stock or increases the number of authorized
shares of a series of Preferred Stock constituting Junior Stock or
Parity Stock shall not be considered to be an adverse change to
the terms of the Perpetual Preferred Stock and shall not require a
vote or the approval of the holders of the Perpetual Preferred
Stock.
5. LIQUIDATION RIGHTS.
(a) Upon the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the holders of the
shares of the Perpetual Preferred Stock shall be entitled to
receive out of the assets of the Corporation available for
distribution to stockholders under applicable law, before any
payment or distribution of assets shall be made on any class or
series of capital stock of the Corporation ranking junior to the
Perpetual Preferred Stock upon liquidation, the amount of $10.00
per share, in the event of a voluntary or involuntary liquidation
(the "Liquidation Preference"), plus a sum equal to all dividends
declared but unpaid for the then-current Dividend Period. For
purposes of this Section 5, the merger or consolidation of the
Corporation into or with any other corporation or association, the
merger or consolidation of any other corporation or association
into or with the Corporation, or the sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all the property and assets
of the Corporation shall not be deemed a dissolution, liquidation
or winding up of the Corporation, unless such sale, conveyance,
exchange or transfer shall be in connection with and intended to
be a plan of complete liquidation, dissolution or winding up of
the Corporation.
(b) After the payment in cash (in New York Clearing House
funds or its equivalent) to the holders of the shares of the
Perpetual Preferred Stock of the full preferential amounts for the
shares of the Perpetual Preferred Stock, as set forth in Section
5(a) above, the holders of the Perpetual Preferred Stock as such
shall have no further right or claim to any of the remaining
assets of the Corporation.
(c) In the event the assets of the Corporation available
for distribution to the holders of shares of the Perpetual
Preferred Stock upon any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation shall be insufficient
to pay in full all amounts to which such holders are entitled
pursuant to Section 5(a) above, no distribution shall be made on
account of any shares of any other series of Preferred Stock or
any other class of capital stock of the Corporation ranking on a
parity with the shares of the Perpetual Preferred Stock upon such
liquidation, dissolution or winding up unless proportionate
amounts shall be paid on account of the shares of the Perpetual
Preferred Stock, ratably, in proportion to the full amounts to
which holders of all such shares which are on a parity with the
shares of the Perpetual Preferred Stock are respectively entitled
upon such dissolution, liquidation or winding up.
<PAGE>
6. RANK. The Perpetual Preferred Stock shall rank on a parity with
the 8% Noncumulative Convertible Preferred Stock, Series 1993 and senior to
the Class A Common Stock, Class B Common Stock, Noncumulative Convertible
Preferred Stock, Series A, Noncumulative Convertible Preferred Stock,
Series B, Noncumulative Convertible Preferred Stock, Series C and
Noncumulative Convertible Preferred Stock, Series C-II of the Corporation
as to payment of dividends and rights upon liquidation. Unless the
Corporation shall have obtained the consent of the holders as provided in
Section 4 above, the Corporation shall not issue any other series of
Preferred Stock ranking senior to the Perpetual Preferred Stock as to the
payment of dividends or rights upon liquidation or any other series of any
equity securities ranking senior to the Perpetual Preferred Stock as to the
payment of dividends or rights upon liquidation. The Corporation may issue
shares of Preferred Stock or other capital stock ranking junior to or on a
parity with the Perpetual Preferred Stock as to the payment of dividends or
rights upon liquidation without the consent of the holders of the
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<PAGE>
Perpetual Preferred Stock. For purposes of this Section 6, any capital
stock of any series or class of the Corporation shall be deemed to rank:
(a) senior to the shares of the Perpetual Preferred Stock,
as to dividends or upon liquidation, if the holders of such series
or class shall be entitled to the receipt of dividends or of
amounts distributable upon dissolution, liquidation or winding up
of the Corporation, as the case may be, in preference or priority
to the holders of the shares of the Perpetual Preferred Stock;
(b) on a parity with shares of the Perpetual Preferred
Stock, as to dividends or upon liquidation, whether or not the
dividend rates, dividend payment dates or redemption or
liquidation prices per share or sinking fund provisions, if any,
be different from those of the Perpetual Preferred Stock, if the
holders of such stock shall be entitled to the receipt of
dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, as the case may be,
in proportion to their respective dividend rates or liquidation
prices, without preference or priority, one over the other, as
between the holders of such stock and the holders of shares of the
Perpetual Preferred Stock; and
(c) junior to shares of the Perpetual Preferred Stock, as
to dividends or upon liquidation, if the holders of shares of the
Perpetual Preferred Stock shall be entitled to receipt of
dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, as the case may be,
in preference or priority to the holders of shares of such series
or class.
G-6
<PAGE>
APPENDIX H
STATEMENT OF DESIGNATION
OF
8% NONCUMULATIVE CONVERTIBLE PREFERRED STOCK, SERIES 1996
OF
BANKUNITED FINANCIAL CORPORATION
BankUnited Financial Corporation (the "Corporation"), a corporation
organized and existing under the Florida Business Corporation Act, in accordance
with the provisions of Section 607.0602 thereof and Article VI the Corporation's
Articles of Incorporation, DOES HEREBY CERTIFY:
That pursuant to authority conferred upon the Board of Directors by the
Articles of Incorporation of the Corporation, said Board of Directors acting at
a meeting thereof adopted resolutions providing for the issuance of 1,000,000
shares of the Corporation's Preferred Stock, $.01 par value, "8% Noncumulative
Convertible Preferred Stock, Series 1996," which resolutions are as follows:
RESOLVED, that pursuant to the authority vested in the Board of Directors
of the Corporation by the Articles of Incorporation, the Board of Directors does
hereby provide for and authorize the issuance of 1,000,000 shares of the
Preferred Stock, $.01 par value, of the Corporation, of the presently authorized
but unissued shares of Preferred Stock (the "Preferred Stock") to be designated
"8% Noncumulative Convertible Preferred Stock, Series 1996" (the "Series 1996
Preferred Stock"). The number of shares constituting the Series 1996 Preferred
Stock may be increased or decreased from time to time by a vote of not less than
a majority of the Board of Directors of the Corporation then in office;
PROVIDED, that no decrease shall reduce the number of shares of the Series 1996
Preferred Stock to a number less than the number of shares then outstanding plus
the number of shares reserved for issuance upon the exercise of any outstanding
options, rights or warrants to purchase Series 1996 Preferred Stock or upon the
conversion of any outstanding securities issued by the Corporation convertible
into shares of the Series 1996 Preferred Stock. The voting powers, designations,
preferences, and relative, participating, optional or other special rights of
the Series 1996 Preferred Stock authorized hereunder and the qualifications,
limitations and restrictions of such preferences and rights are as follows:
1. DIVIDENDS.
(a) The holders of the Series 1996 Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of Directors out
of funds of the Corporation legally available for payment, noncumulative
cash dividends, payable quarterly in arrears, at the rate of $1.20 per
share per annum. Dividends, when declared on the Series 1996 Preferred
Stock, shall have accrued from the date of issuance or thereafter, from the
most recent date on which dividends were payable and be payable quarterly
on March 31, June 30, September 30 and December 31 of each year (each a
"Dividend Payment Date"), commencing on December 31, 1996; PROVIDED,
HOWEVER, that if any such day is a non-business day, the Dividend Payment
Date will be the next business day. Each declared dividend shall be payable
to holders of record as they appear at the close of business on the stock
books of the Corporation on such record dates, not more than 30 calendar
days and not less than 10 calendar days preceding the Dividend Payment Date
therefor, as determined by the Board of Directors (each of such dates a
"Record Date"). Quarterly dividend periods (each a "Dividend Period") shall
commence on and include the first day of January, April, July and October
of each year and shall end on and include the day next preceding the next
following Dividend Payment Date. Dividends payable on the Series 1996
Preferred Stock for any period greater or less than a full Dividend Period
shall be computed on the basis of a 360-day year consisting of twelve
30-day months. Dividends payable on the Series 1996 Preferred Stock for
each full Dividend Period shall be computed by dividing the annual dividend
rate by four.
(b) No full dividends shall be declared, paid or set apart for
payment on any series of Preferred Stock or other capital stock of any
series ranking, as to dividends or liquidation preference, on a parity
("Parity Stock") with the Series 1996 Preferred Stock during any calendar
quarter unless full dividends on the Series 1996 Preferred Stock for the
Dividend Period ending during such calendar quarter have been or
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contemporaneously are declared and paid or declared and a sum sufficient
for the payment thereof is set apart for such payment. When dividends are
not so paid in full (or a sum sufficient for such full payment is not so
set apart) upon the Series 1996 Preferred Stock and any other Parity Stock,
dividends upon the Series 1996 Preferred Stock and dividends on such other
Parity Stock payable during such calendar quarter shall be declared pro
rata so that the amount of such dividends so payable per share on the
Series 1996 Preferred Stock and such other Parity Stock shall in all cases
bear to each other the same ratio that full dividends for the then-current
calendar quarter on the shares of Series 1996 Preferred Stock (which shall
not include any accumulation in respect of unpaid dividends for prior
Dividend Periods) and full dividends, including required or permitted
accumulations, if any, on shares of such other Parity Stock, bear to each
other. The Corporation shall not declare, pay or set apart funds for any
dividend or other distribution, other than in shares of capital stock
ranking junior to the Series 1996 Preferred Stock as to dividends or
liquidation preference ("Junior Stock"), on any shares of Junior Stock or
repurchase, redeem or otherwise acquire through a sinking fund or
otherwise, or set apart funds for the repurchase, redemption or other
acquisition of, any shares of Junior Stock (except by conversion into or
exchange for Junior Stock), unless (i) all declared and unpaid dividends
with respect to the Series 1996 Preferred Stock have been paid, or funds
have been set apart for payment of such dividends and (ii) the Corporation
has declared a cash dividend on the Series 1996 Preferred Stock at the
annual dividend rate for the then-current Dividend Period and sufficient
funds have been set apart for payment of such dividends. Holders of the
Series 1996 Preferred Stock shall not be entitled to any dividends, whether
payable in cash, property or stock, in excess of declared noncumulative
dividends, as herein provided, on the Series 1996 Preferred Stock. No
interest or sum of money in lieu of interest shall be payable in respect of
any declared dividend payment or payments on the Series 1996 Preferred
Stock which may be in arrears. As used herein, the phrase "set apart" in
respect of the payment of dividends shall require deposits of any funds in
a bank or trust company in a separate deposit account maintained for the
benefit of the holders of the Series 1996 Preferred Stock.
2. REDEMPTION.
(a) The shares of Series 1996 Preferred Stock shall be redeemable
by the Corporation, in whole, or in part, at any time and from time to time
at a price of $15.00 per share, plus an amount equal to declared but unpaid
dividends, if any, with respect to Dividend Periods preceding the date
fixed for redemption (the "Redemption Date"), if the Corporation's Series I
Class A Common Stock, $.01 par value (the "Class A Common Stock"), shall
have a closing price which is at least 120% of the Conversion Price (as
defined below) for any 20 out of 30 consecutive trading days ending within
five days of the giving of notice of redemption as provided for below. In
addition, the Series 1996 Preferred Stock shall be redeemable by the
Corporation in whole or in part, at any time and from time to time on or
after July 1, 1998 at the following per share prices during the twelve
month period beginning July 1:
YEAR REDEMPTION PRICE
---- ----------------
1998 $16.20
1999 15.96
2000 15.72
2001 15.48
2002 15.24
2003 and thereafter 15.00
plus, in each case, an amount equal to any declared but unpaid dividends,
if any, with respect to Dividend Periods preceding the Redemption Date.
(b) In the event that fewer than all the outstanding shares of the
Series 1996 Preferred Stock are to be redeemed as permitted by this Section
2, the number of shares to be redeemed shall be determined by the Board of
Directors and the shares to be redeemed shall be determined by lot or PRO
RATA as may be determined by the Board of Directors or by such other method
as may be approved by the Board of Directors that is
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required to conform to any rule or regulation of any stock exchange or
automated quotation system upon which the shares of the Series 1996
Preferred Stock may at the time be listed.
(c) Notice of redemption of the Series 1996 Preferred Stock,
specifying the Redemption Date, the redemption price and the place of
redemption, shall be given by first class mail to each holder of record of
the shares to be redeemed at his or her address of record and by
publication in THE WALL STREET JOURNAL. In the case of a redemption in
whole, notice will be given once, not less than 30 nor more than 60
calendar days prior to the Redemption Date. In the case of a partial
redemption, the notice shall also specify the aggregate number of shares of
the Series 1996 Preferred Stock to be redeemed and the aggregate number of
shares of the Series 1996 Preferred Stock that shall be outstanding after
such partial redemption and the mailed notice shall specify the fact that a
new certificate or certificates representing any unredeemed shares shall be
issued without cost to a holder. The notice of partial redemption shall be
given twice: the first notice shall be given not more than 75 days nor less
than 60 days prior to the Redemption Date; and the second notice shall be
given at least 20 days after the first notice but not less than 30 days
prior to the Redemption Date.
(d) Notice of redemption of shares of the Series 1996 Preferred
Stock having been given as provided in Section 2(c), then unless the
Corporation shall have defaulted in providing for the payment of the
redemption price and all declared and unpaid dividends with respect to
Dividend Periods preceding the Redemption Date, all rights of the holders
thereof (except the right to receive the redemption price and all declared
and unpaid dividends with respect to Dividend Periods preceding the
Redemption Date) shall cease with respect to such shares and such shares
shall not, after the Redemption Date, be deemed to be outstanding and shall
not have the status of Preferred Stock. In case fewer than all the shares
represented by any such certificate are redeemed, a new certificate shall
be issued representing the unredeemed shares without cost to the holder
thereof.
(e) Any shares of Series 1996 Preferred Stock which shall at any
time have been redeemed or converted shall, after such redemption or
conversion, have the status of authorized but unissued shares of Preferred
Stock, without designation as to series until such shares are once more
designated as part of a particular series by the Board of Directors.
(f) Shares of the Series 1996 Preferred Stock are not subject or
entitled to the benefit of a sinking fund.
3. CONVERSION.
(a) Subject to and upon compliance with the provisions of this
Section 3, the holder of any shares of the Series 1996 Preferred Stock
shall have the right, at his or her option, at any time and from time to
time prior to redemption, to convert the shares into a number of fully paid
and nonassessable shares (calculated as to each conversion to the nearest
1/100th of a share) of the Corporation's Series I Class A Common Stock,
$.01 par value (the "Class A Common Stock"), equal to $15.00 for each share
surrendered for conversion divided by the Conversion Price (as defined in
Section 3(d) below).
(b) (i) In order to exercise the conversion privilege, the holder
of each share of the Series 1996 Preferred Stock to be converted shall
surrender the certificate representing such share to the Corporation's
transfer agent for the Series 1996 Preferred Stock with the Notice of
Election to Convert on the back of said Certificate duly completed and
signed. Unless the shares issuable on conversion are to be issued in the
same name as the name in which the shares of the Series 1996 Preferred
Stock are registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or his or her duly authorized
attorney and by funds in an amount sufficient to pay any transfer or
similar tax. The holders of shares of the Series 1996 Preferred Stock at
the close of business on a Record Date shall be entitled to receive any
dividend declared payable on those shares for the corresponding Dividend
Period on the applicable Dividend Payment Date, notwithstanding the
conversion of the shares after the Record Date.
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(ii) As promptly as practicable after the surrender by a
holder of the certificates for shares of the Series 1996 Preferred Stock in
accordance with this Section 3, the Corporation shall issue and shall
deliver to the holder at the office of the transfer agent, or otherwise
upon such holder's written order, a certificate or certificates for the
number of full shares of Class A Common Stock issuable upon the conversion
of those shares in accordance with the provisions of this Section 3, and
any fractional interest in respect of a share of Class A Common Stock
arising upon the conversion shall be settled as provided in Section 3(c)
below. In case less than all of the shares of the Series 1996 Preferred
Stock represented by a certificate are to be converted by a holder, upon
such conversion the Corporation shall issue and deliver to the holder at
the office of the transfer agent, or otherwise upon such holder's written
order, a certificate or certificates for the shares of Series 1996
Preferred Stock not converted.
(iii) Each conversion shall be deemed to have been
effected immediately prior to the close of business on the date on which
all of the conditions specified in Section 3(b) hereof shall have been
satisfied, and, the person or persons in whose name or names any
certificate or certificates for shares of Class A Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder or
holders of record of the shares of Class A Common Stock represented by
those certificates at such time on such date and such conversion shall be
at the Conversion Price in effect at such time on such date, unless the
stock transfer books of the Corporation shall be closed on that date, in
which event such person or persons shall be deemed to have become such
holder or holders of record at the close of business on the next succeeding
day on which such stock transfer books are open, but such conversion shall
be at the Conversion Price in effect on the date upon which all of the
conditions specified in Section 3(b) hereof shall have been satisfied. All
shares of Class A Common Stock delivered upon conversion of the Series 1996
Preferred Stock will upon delivery be duly and validly issued and fully
paid and nonassessable, free of all liens and charges and not subject to
any preemptive rights. Upon the surrender of certificates representing
shares of the Series 1996 Preferred Stock to be converted, the shares shall
no longer be deemed to be outstanding and all rights of a holder with
respect to the shares surrendered for conversion shall immediately
terminate except the right to receive the Class A Common Stock or other
securities, cash or other assets as herein provided.
(c) No fractional shares or securities representing fractional
shares of Class A Common Stock shall be issued upon conversion of the
Series 1996 Preferred Stock. Any fractional interest in a share of Class A
Common Stock resulting from conversion of a share of the Series 1996
Preferred Stock shall be paid in cash (computed to the nearest cent) based
on the Current Market Price (as defined in Section 3(d)(iv) below) of the
Class A Common Stock on the Trading Day (as defined in Section 3(d)(iv)
below) next preceding the day of conversion. If more than one share shall
be surrendered for conversion at one time by the same holder, the number of
whole shares of Class A Common Stock issuable upon the conversion shall be
computed on the basis of the aggregate Liquidation Preference (as such term
is defined in Section 6 below) of the shares of the Series 1996 Preferred
Stock so surrendered.
(d) The "Conversion Price" per share of the Series 1996 Preferred
Stock shall be $9.00, subject to adjustment from time to time as follows:
(i) In case the Corporation shall (1) pay a dividend or
make a distribution on its Class A Common Stock in shares of its Class A
Common Stock, (2) subdivide its outstanding Class A Common Stock into a
greater number of shares, or (3) combine its outstanding Class A Common
Stock into a smaller number of shares, the Conversion Price in effect
immediately prior to such event shall be proportionately adjusted so that
the holder of any share of the Series 1996 Preferred Stock thereafter
surrendered for conversion shall be entitled to receive the number and kind
of shares of capital stock of the Corporation which he would have been
entitled to receive had the share been converted immediately prior to the
record date for such action, or, if no record date has been established in
connection with such event, the effective date for such action. An
adjustment made pursuant to this Section 3(d)(i) shall become effective
immediately after the record date in the case of a dividend or distribution
except as provided in Section 3(d)(vii) below, and shall become effective
immediately after the effective date in the case of a subdivision or
combination. If, as a result of an adjustment made pursuant to this Section
3(d)(i), the holder of any shares of Series 1996 Preferred Stock thereafter
surrendered for conversion shall become entitled to receive shares of two
or more classes of capital stock of the Corporation, the Board of Directors
of the Corporation (whose determination shall be conclusive and shall
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be described in a resolution adopted thereto) shall determine the
allocation of the adjusted Conversion Price between or among shares of such
classes of capital stock. If any dividend or distribution is not paid or
made, the Conversion Price then in effect shall be appropriately
readjusted.
(ii) In case the Corporation shall issue rights or
warrants to all holders of its Class A Common Stock entitling them (for a
period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase Class A Common Stock at a price per share less
than the Current Market Price (as defined in Section 3(d)(iv) below) of the
Class A Common Stock at the record date for the determination of
stockholders entitled to receive the rights or warrants, the Conversion
Price in effect immediately prior to such record date shall be adjusted so
that it shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the record date by a fraction of which
the numerator shall be the number of shares of Class A Common Stock
outstanding on the record date plus the number of shares of Class A Common
Stock which the aggregate offering price of the total number of shares of
Class A Common Stock so offered for subscription or purchase would purchase
at the Current Market Price at that record date, and of which the
denominator shall be the number of shares of Class A Common Stock
outstanding on the record date plus the number of additional shares of
Class A Common Stock for subscription or purchase. The adjustment provided
for in this Section 3(d)(ii) shall be made successively whenever any such
rights or warrants are issued, and shall become effective immediately,
except as provided in Section 3(d)(vii) below, after such record date. In
determining whether any rights or warrants entitle the holder of the Class
A Common Stock to subscribe for or purchase shares of Class A Common Stock
at less than the Current Market Price, and in determining the aggregate
offering price of the shares of Class A Common Stock so offered, there
shall be taken into account any consideration received by the Corporation
for such rights or warrants, the value of such consideration, if other than
cash, to be determined by the Board (whose determination, if made in good
faith, shall be conclusive). If any or all of such rights or warrants are
not so issued or expire or terminate without having been exercised, the
Conversion Price then in effect shall be appropriately readjusted.
(iii) In case the Corporation shall distribute to all
holders of its Class A Common Stock any shares of capital stock of the
Corporation (other than Class A Common Stock) or evidences of indebtedness
or assets (excluding cash dividends or distributions paid from retained
earnings of the Corporation) or rights or warrants to subscribe for or
purchase any of its securities (excluding those referred to in Section
3(d)(ii) above), then, in each such case, the Conversion Price shall be
adjusted so that it shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the date of the
distribution by a fraction, the numerator of which shall be the Current
Market Price of the Class A Common Stock on the record date mentioned below
less the then fair market value (as determined by the Board, whose
determination, if made in good faith, shall be conclusive) of that portion
of the capital stock or assets or evidences of indebtedness so distributed,
or of the rights or warrants so distributed, applicable to one share of
Class A Common Stock, and the denominator of which shall be the Current
Market Price of the Class A Common Stock on the record date. Such
adjustment shall become effective immediately, except as provided in
Section 3(d)(vii) below, after the record date for the determination of
stockholders entitled to receive such distribution. If any such
distribution is not made or if any or all of such rights or warrants expire
or terminate without having been exercised, the Conversion Price then in
effect shall be appropriately readjusted.
(iv) For the purpose of any computation under this Section
3, the "Current Market Price" of the Class A Common Stock at any date shall
be the average of the last reported sale prices per share for the 30
consecutive Trading Days (as defined below) commencing 35 Trading Days
before date of such computation. The last reported sale price for each day
shall be (1) the last reported sale price of the Class A Common Stock on
the Nasdaq National Market, or any similar system of automated
dissemination of quotations of securities prices then in common use, if so
quoted, or (2) if not quoted as described in clause (1), the closing bid
notation for the Class A Common Stock as reported by the National Quotation
Bureau Incorporated if at least two securities dealers have inserted both
bid and asked quotations for the Class A Common Stock on at least five of
the ten preceding days, or (3) if the Class A Common Stock is listed or
admitted for trading on any national securities exchange, the last sale
price, or the closing bid price if no sale occurred, of the Class A Common
Stock on the principal securities exchange on which the Class A Common
Stock is listed. If the Class A Common Stock is quoted on a national
securities or central market system, in lieu of a market or quotation
system described above, the last reported sale price shall be determined in
the manner set forth in clause (2)
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of the preceding sentence if bid and asked quotations are reported but
actual transactions are not, and in the manner set forth in clause (3) of
the preceding sentence if actual transactions are reported. If none of the
conditions set forth above is met, the last reported sale price of the
Class A Common Stock on any day or the average of such last reported sale
prices for any period shall be the fair market value of such class of stock
as determined by a member firm of the New York Stock Exchange, Inc.
selected by the Corporation. As used herein the term "Trading Days" means
(1) if the Class A Common Stock is quoted on the Nasdaq National Market or
any similar system of automated dissemination of quotations of securities
prices, days on which trades may be made on such system, or (2) if not
quoted as described in clause (1), days on which quotations are reported by
the National Quotation Bureau, Incorporated, or (3) if the Class A Common
Stock is listed or admitted for trading on any national securities
exchange, days on which such national securities exchange is open for
business.
(v) No adjustment in the Conversion Price shall be
required unless such adjustment would require a change of at least one
percent in the Conversion Price; PROVIDED, HOWEVER, that any adjustments
which by reason of this Section 3(d)(v) are not required to be made shall
be carried forward and taken into account in any subsequent adjustment. All
calculations under this Section 3(d) shall be made to the nearest cent or
the nearest one hundredth of a share, as the case may be.
(vi) Whenever the Conversion Price is adjusted, as herein
provided, the Corporation shall promptly file with its transfer agent and
with the principal securities exchange, if any, on which the Series 1996
Preferred Stock is traded or, if traded over-the-counter, with the Nasdaq
National Market System an officers' certificate setting forth the
Conversion Price after the adjustment and setting forth a brief statement
of the facts requiring the adjustment, which certificate shall be
conclusive evidence of the correctness of the adjustment. Promptly after
delivery of the certificate, the Corporation shall prepare a notice of the
adjustment of the Conversion Price setting forth the adjusted Conversion
Price, the number of additional shares of Class A Common Stock issuable
upon conversion and the type and amount, if any, of other property which
would be received upon conversion of the Series 1996 Preferred Stock, the
facts upon which the adjustment is based and the date on which the
adjustment becomes effective and shall mail the notice of such adjustment
of the Conversion Price to the holders of the Series 1996 Preferred Stock
at their addresses as shown on the stock books of the Corporation.
(vii) In any case in which this Section 3(d) provides that
an adjustment shall become effective immediately after a record date for an
event, the Corporation may defer until the occurrence of the event (1)
issuing to the holder of any share of the Series 1996 Preferred Stock
converted after the record date and before the occurrence of the event, the
additional shares of Class A Common Stock issuable upon the conversion by
reason of the adjustment required by the event over and above the Class A
Common Stock issuable upon such conversion before giving effect to the
adjustment and (2) paying to the holder any amount in cash in lieu of any
fractional share pursuant to Section 3(c) above.
(e) (i) The Corporation covenants that it will at all times
reserve and keep available, free from preemptive rights and all liens and
charges with respect to the issue or delivery thereof, out of the aggregate
of its authorized but unissued shares of Class A Common Stock or its issued
shares of Class A Common Stock held by its treasury, or both, for the
purpose of effective conversions of the Series 1996 Preferred Stock the
full number of shares of Class A Common Stock deliverable upon the
conversion of all outstanding shares of the Series 1996 Preferred Stock not
theretofore converted. For purposes of this Section 3(e), the number of
shares of Class A Common Stock which shall be deliverable upon the
conversion of all outstanding shares of the Series 1996 Preferred Stock
shall be computed as if at the time of computation all of the outstanding
shares were held by a single holder.
(ii) Before taking any action which would cause an
adjustment reducing the Conversion Price below the then par value (if any)
of the shares of Class A Common Stock deliverable upon conversion of the
Series 1996 Preferred Stock, the Corporation will take any corporate action
which may, in the opinion of its counsel, be necessary in order that the
Corporation may validly and legally issue fully paid and nonassessable
shares of Class A Common Stock at the adjusted Conversion Price.
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(f) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery
of shares of Class A Common Stock or other securities on conversion of the
Series 1996 Preferred Stock pursuant hereto; PROVIDED, HOWEVER, that the
Corporation shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of shares of
Class A Common Stock or other securities in a name other than that of the
holder of the Series 1996 Preferred Stock to be converted and no such issue
or delivery shall be made unless and until the person requesting the issue
or delivery has paid to the Corporation the amount of any such tax or has
established, to the satisfaction of the Corporation, that the tax has been
paid.
(g) In case of any reclassification or similar change of
outstanding shares of Class A Common Stock (other than a change in par
value, or as a result of a subdivision or combination), or in case of any
consolidation of the Corporation with, or merger of the Corporation with or
into, any other entity that results in a reclassification, change,
conversion, exchange or cancellation of outstanding shares of Class A
Common Stock or any sale or transfer of all or substantially all of the
assets of the Corporation, each holder of shares of the Series 1996
Preferred Stock then outstanding shall have the right thereafter to convert
the shares of the Series 1996 Preferred Stock held by the holder into the
kind and amount of securities, cash and other property which the holder
would have been entitled to receive upon such reclassification, change,
consolidation, merger, sale or transfer if the holder had held the Class A
Common Stock issuable upon the conversion of the shares of the Series 1996
Preferred Stock immediately prior to the reclassification, change,
consolidation, merger, sale or transfer and had such holder elected to
receive the consideration in the form and manner elected by the plurality
of the persons entitled to vote thereon. These provisions shall apply to
successive reclassifications, changes, consolidations, mergers, sales or
conveyances.
4. PREEMPTIVE RIGHTS. Shares of the Series 1996 Preferred Stock are not
entitled to any preemptive rights to acquire any unissued shares of any
capital stock of the Corporation, now or hereafter authorized, or any other
securities of the Corporation, whether or not convertible into shares of
capital stock of the Corporation or carrying a right to subscribe to or
acquire any such shares of capital stock. To the extent preemptive rights
are granted by the Corporation to the Parity Stock, the Junior Stock or the
Class A Common Stock, the Series 1996 Preferred Stock shall be entitled to
similar rights.
5. VOTING. Except as required by law, the shares of the Series 1996
Preferred Stock shall not have any voting powers, either general or
special, except as follows:
(a) Unless the vote or consent of the holders of a greater number
of shares is required by law, the approval of the holders of at least
66-2/3% of all of the shares of the Series 1996 Preferred Stock at the time
outstanding given in person or by proxy, either in writing or by a vote at
a meeting called for that purpose, on which matter the holders of shares of
the Series 1996 Preferred Stock shall vote together as a separate class,
shall be necessary to (i) authorize, effect or validate any amendment,
alteration or repeal of or otherwise change any of the provisions of the
Articles of Incorporation of the Corporation or of any certificate,
amendatory or supplemental thereto, which amendment, alteration or repeal
would, if effected, materially and adversely affect the powers,
preferences, rights or privileges of the Series 1996 Preferred Stock or
(ii) create, authorize, issue or increase the authorized or issued amount
of any class or series of any equity securities of the Corporation, or any
warrants, options or other rights convertible or exchangeable into any
class or series of any equity securities of the Corporation, ranking senior
to the Series 1996 Preferred Stock either as to payment of dividends or
rights upon liquidation, winding-up or dissolution of the Corporation.
(b) Notwithstanding anything to the contrary set forth herein, the
creation or issuance of Parity Stock or Junior Stock with respect to the
payment of dividends or distribution of assets upon liquidation or an
amendment that increases the number of authorized shares of Series 1996
Preferred Stock or increases the number of authorized shares of a series of
Preferred Stock constituting Junior Stock or Parity Stock shall not be
considered to be a material and adverse change to the terms of the Series
1996 Preferred Stock and shall not require a vote or the consent of the
holders of the Series 1996 Preferred Stock pursuant to Section 5(a) above.
Amendments considered to be an adverse change requiring a vote of the
holders of Series 1996 Preferred Stock pursuant to Section 5(a) above shall
include, but not be limited to, those: which reduce the dividend rate on
the Series 1996 Preferred Stock, cancel declared and unpaid dividends or
change the relative
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seniority rights of the holders of the Series 1996 Preferred Stock as to
the payment of dividends in relation to the holders of any other capital
stock of the Corporation; which reduce the amount payable to the holders of
Series 1996 Preferred Stock upon liquidation or change the relative
seniority of the liquidation preferences of the holders of the Series 1996
Preferred Stock to the rights upon liquidation of the holders of any other
capital stock of the Corporation; or which cancel or modify the conversion
rights of the Series 1996 Preferred Stock.
(c) The holders of Series 1996 Preferred Stock, if any Series 1996
Preferred Stock shall be outstanding, shall be entitled to vote with the
holders of the shares of Class A Common Stock, and not as a separate class,
to the same extent as the holders of the shares of Class A Common Stock on
any consolidation, merger, sale of all or substantially all of the assets
of the Corporation, reclassification, capital reorganization or
liquidation; PROVIDED that each share of Series 1996 Preferred Stock shall
be entitled to the same number of votes that the holder would have had if
such holder had converted his shares of Series 1996 Preferred Stock into
shares of Class A Common Stock as of the record date for such meeting or
solicitation of consents in lieu of a meeting.
6. LIQUIDATION RIGHTS.
(a) Upon the voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of the shares of the Series 1996
Preferred Stock shall be entitled to receive out of the assets of the
Corporation available for distribution to stockholders under applicable
law, before any payment or distribution of assets shall be made on the
Class A Common Stock or on any other class or series of capital stock of
the Corporation ranking junior to the Series 1996 Preferred Stock upon
liquidation and subject to the rights of the holders of any class or series
of stock having preference with respect to distributions upon liquidation
(created pursuant to Section 5(a) above) and the Corporation's general
creditors, the amount of $15.00 per share (the "Liquidation Preference"),
plus an amount equal to all dividends declared and unpaid, without
interest. The sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of
the property and assets of the Corporation shall not be deemed a
dissolution, liquidation or winding up of the Corporation for the purposes
of this Section 6, nor shall the merger or consolidation of the Corporation
into or with any other corporation or association or the merger or
consolidation of any other corporation or association into or with the
Corporation, be deemed to be a dissolution, liquidation or winding up of
the Corporation for the purposes of this Section 6; PROVIDED, HOWEVER, that
if the aggregate amount of cash that may be received in exchange for or
upon conversion of the Series 1996 Preferred Stock in connection with a
cash merger or other cash transaction would be less than the aggregate
liquidation preference of the Series 1996 Preferred Stock, then the holders
of the Series 1996 Preferred Stock shall be entitled to the Liquidation
Preference in place of the aggregate amount of cash that may be received in
exchange for or upon conversion of the Series 1996 Preferred Stock in
connection with the cash merger or other cash transaction; and PROVIDED
FURTHER, that such cash merger or transaction shall not be considered a
liquidation, dissolution or winding up of the Corporation subject otherwise
to this Section 6(a).
(b) After the payment in cash (in New York Clearing House funds or
its equivalent) to the holders of the shares of the Series 1996 Preferred
Stock of the full preferential amounts for the shares of the Series 1996
Preferred Stock, as set forth in Section 6(a) above, the holders of the
Series 1996 Preferred Stock as such shall have no further right or claim to
any of the remaining assets of the Corporation.
(c) In the event the assets of the Corporation available for
distribution to the holders of shares of the Series 1996 Preferred Stock
upon any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation shall be insufficient to pay in full all amounts to which
such holders are entitled pursuant to Section 6(a) above, no distribution
shall be made on account of any shares of any other series of Preferred
Stock or any other class of capital stock of the Corporation ranking on a
parity with the shares of the Series 1996 Preferred Stock upon such
liquidation, dissolution or winding up unless proportionate amounts shall
be paid on account of the shares of the Series 1996 Preferred Stock,
ratably, in proportion to the full amounts to which holders of all such
shares which are on a parity with the shares of the Series 1996 Preferred
Stock are respectively entitled upon such dissolution, liquidation or
winding up.
H-8
<PAGE>
(d) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, the Corporation shall, within
10 days after the date the Board of Directors approves such action, at
least 20 days prior to any shareholders' meeting called to approve such
action or within 20 days after the commencement of any involuntary
proceeding, whichever is earliest, give each holder of the Series 1996
Preferred Stock written notice of the proposed action. Such written notice
shall describe the material terms and conditions of the proposed action.
The Corporation shall not consummate any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation before the
expiration of 30 days after the mailing of such written notice; PROVIDED,
that any such 30 day period may be shortened upon the written consent of
the holders of all of the outstanding shares of the Series 1996 Preferred
Stock.
(e) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation that will involve the
distribution of assets other than cash, the Corporation shall promptly
engage competent independent appraisers to determine the value of the
assets to be distributed to the holders of shares of the Series 1996
Preferred Stock and the holders of Class A Common Stock. The Corporation
shall, upon receipt of such appraiser's valuation, give prompt written
notice to each holder of shares of the Series 1996 Preferred Stock of the
appraiser's valuation.
7. RANK. The Series 1996 Preferred Stock shall rank, with respect to
classes and series of capital stock of the Corporation outstanding as of
the date of the filing of this resolution with the Florida Department of
State, on a parity with the 8% Noncumulative Convertible Preferred Stock,
Series 1993 and the 9% Noncumulative Perpetual Preferred Stock and senior
to the Class A Common Stock, the Class B Common Stock, the Noncumulative
Convertible Preferred Stock, Series B, the Noncumulative Convertible
Preferred Stock, Series C and the Noncumulative Convertible Preferred
Stock, Series C-II of the Corporation as to payment of dividends and rights
upon liquidation, dissolution or winding up of the Corporation. Unless the
Corporation shall have obtained the consent of the holders as provided in
Section 5 above, the Corporation shall not issue any other series of
Preferred Stock ranking senior to the Series 1996 Preferred Stock as to the
payment of dividends or rights upon liquidation, dissolution or winding up
of the Corporation or any other series of any equity securities ranking
senior to the Series 1996 Preferred Stock as to the payment of dividends or
rights upon liquidation, dissolution or winding up of the Corporation. The
Corporation may issue shares of Preferred Stock or other capital stock
ranking junior to or on a parity with the Series 1996 Preferred Stock as to
the payment of dividends or rights upon liquidation, dissolution or winding
up of the Corporation. For purposes of this statement of designation, any
capital stock of any series or class of the Corporation shall be deemed to
rank:
(a) senior to the shares of the Series 1996 Preferred Stock, as to
dividends or upon liquidation, if the holders of such series or class shall
be entitled to the receipt of dividends or of amounts distributable upon
dissolution, liquidation or winding up of the Corporation, as the case may
be, in preference or priority to the holders of the shares of the Series
1996 Preferred Stock;
(b) on a parity with shares of the Series 1996 Preferred Stock, as
to dividends or upon liquidation, whether or not the dividend rates,
dividend payment dates or redemption or liquidation prices per share or
sinking fund provisions, if any, be different from those of the Series 1996
Preferred Stock, if the holders of such stock shall be entitled to the
receipt of dividends or of amounts distributable upon dissolution,
liquidation or winding up of the Corporation, as the case may be, in
proportion to their respective dividend rates or liquidation prices,
without preferences or priority, one over the other, as between the holders
of such stock and the holders of shares of the Series 1996 Preferred Stock;
and
(c) junior to shares of the Series 1996 Preferred Stock, as to
dividends or upon liquidation, if the holders of shares of the Series 1996
Preferred Stock shall be entitled to receipt of dividends or of amounts
distributable upon dissolution, liquidation or winding up of the
Corporation, as the case may be, in preference or priority to the holders
of shares of such series or class.
H-9
<PAGE>
8. NOTICE OF CERTAIN EVENTS. If:
(a) the Corporation shall declare a dividend (other than a cash
dividend) or distribution on its Class A Common Stock or any Junior Stock;
or
(b) the Corporation shall authorize the issuance to the holders of
the Class A Common Stock or any Junior Stock of rights or warrants to
subscribe for or purchase any shares of Class A Common Stock or of any
other subscription rights or warrants; or
(c) there shall be any reclassification of the Class A Common
Stock or any consolidation or merger, to which the Corporation is a party,
or any sale or transfer of all or substantially all the assets of the
Corporation; or
(d) there shall be a voluntary or an involuntary dissolution,
liquidation or winding up of the Corporation; or
(e) there shall be a redemption of the Series 1996 Preferred
Stock, in whole or in part, pursuant to Section 2 above;
then the Corporation shall cause to be filed with the transfer agent, if
any, and shall cause to be mailed to the holders of shares of the Series
1996 Preferred Stock at their addresses as shown on the stock books of the
Corporation, except as otherwise provided in Section 2(c) above or Section
6(d) above, at least 10 days prior to the applicable date hereinafter
specified, a notice stating (1) the date on which a record is to be taken
for the purpose of the dividend, distribution or rights or warrants, or, if
a record is not to be taken, the date as of which the holders of Class A
Common Stock of record to be entitled to the dividend, distribution or
rights or warrants are to be determined, (2) the date on which the
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective, and the date as
of which it is expected that holders of Class A Common Stock of record
shall be entitled to exchange their shares of Class A Common Stock for
cash, securities or other property deliverable upon the reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding
up or (iii) the Redemption Date and redemption price pursuant to Section 2
above. Failure to give any such notice or any defect in the notice shall
not affect the legality or validity of the proceedings described in this
Section 8.
9. REPORTS AND NOTICES. So long as any shares of the Series 1996 Preferred
Stock shall be outstanding, the Corporation shall provide to the holder or
holders of such shares copies of all annual, quarterly and other reports of
the Corporation and copies of all stockholder notices of the Corporation
when and as furnished to the holders of the Class A Common Stock.
H-10
BYLAWS
OF
BANKUNITED FINANCIAL CORPORATION
AS AMENDED ON
MAY 12, 1997
<PAGE>
BYLAWS
OF
BANKUNITED FINANCIAL CORPORATION
ARTICLE ONE
MEETINGS OF STOCKHOLDERS
1.1 ANNUAL MEETING OF STOCKHOLDERS. The annual meeting of stockholders
of BankUnited Financial Corporation (the "Corporation") shall be held during the
first four months after the end of each fiscal year of the Corporation at such
time and place, within or without the State of Florida, as may from time to time
be fixed by the Board of Directors; provided, however, that failure to hold the
annual meeting shall not work a forfeiture or affect otherwise valid corporate
acts.
1.2 SPECIAL MEETINGS OF STOCKHOLDERS. Special meetings of the
stockholders may be called at any time by the Board of Directors, the Chairman
of the Board, if any, the President, or any holder or holders of as much as 10%
of all shares of the Corporation entitled to vote at the meeting. Special
meetings of the stockholders shall be held at such time and place, within or
without the State of Florida, as may be determined by the person or persons
calling the meeting.
1.3 NOTICE. The Secretary or the officer or persons calling the meeting
shall deliver a written notice of the place, day and hour of all meetings of
stockholders, not less than 10 nor more than 60 days before the date of the
meeting, either personally or by first class mail, to each stockholder of record
entitled to vote at such meeting. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail with first class postage
thereon prepaid, addressed to the stockholder at his address as it appears on
the stock transfer books of the Corporation. The notice of any special meeting
of stockholders shall state the purpose or purposes for which the meeting is
called. Notice of any meeting of stockholders need not be given to any
stockholder who signs a waiver of notice, either before or after the meeting.
Attendance of a stockholder at a meeting, either in person or by proxy, shall of
itself constitute waiver of notice of such meeting and waiver of any and all
objections to the place of the meeting, the time of the meeting, or the manner
in which it has been called or convened, except when a stockholder attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or
convened.
If a meeting is adjourned for more than 30 days, or if after
the adjournment a new record date is fixed for the adjourned meeting, a notice
of the adjourned meeting shall be given to each stockholder of record entitled
to vote at the meeting.
1.4 FIXING OF RECORD DATE. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or stockholders entitled to receive payment of any
dividend, or in order to make a determination of stockholders for any other
proper purpose, the Board of Directors shall fix in advance a date as the record
date for any such determination of stockholders. Such date in any case shall be
not more than 60 days, and in case of a meeting of stockholders, not less than
10 days prior to the date on which the particular action requiring such
determination of stockholders is to be taken. When a determination of
stockholders entitled to vote at any meeting of stockholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
1.5 VOTING; PRESIDING OFFICER. At all meetings of the stockholders,
each holder of shares of the capital stock of the Corporation shall be entitled
to cast such vote as he or she may have, either in person or by written
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proxy, for each share standing in his or her name on the books of the
Corporation. The Chairman of the Board, or if there is no such officer, the
President, shall preside at all meetings of the stockholders, unless he or she
delegates such authority.
1.6 PROXIES. At all meetings of stockholders, a stockholder may vote by
proxy executed in writing by the stockholder or by his or her duly authorized
attorney-in-fact. Proxies solicited on behalf of the management shall be voted
as directed by the stockholder or, in the absence of such direction, as
determined by a majority of the Board of Directors. No proxy shall be valid
after three years from the date of its execution unless otherwise provided in
the proxy.
1.7 VOTING OF SHARES IN THE NAME OF TWO OR MORE PERSONS. When shares
stand of record in the name of two or more persons, whether fiduciaries, members
of a partnership, joint tenants, tenants in common, tenants by the entirety or
otherwise, or if two or more persons have the same fiduciary relationship
respecting the same shares, in the absence of written directions to the
Corporation to the contrary, their acts with respect to voting, in person or by
proxy, shall have the following effect: (a) if only one votes, his or her act
binds all; (b) if more than one vote, the act of the majority so voting binds
all; and (c) if more than one vote, but the vote is evenly split on any
particular matter, each faction may vote the securities in question
proportionally, or any person voting the shares, or a beneficiary, if any, may
apply to the appropriate Florida court or such other court as may have
jurisdiction to appoint an additional person to act with the persons so voting
the shares, which shall then be voted as determined by a majority of such
persons and the person appointed by the court. If the instrument so filed shows
that any such tenancy is held by unequal interests, a majority or even split for
the purpose of this subsection shall be a majority or even split in interest.
1.8 VOTING OF SHARES BY CERTAIN HOLDERS. Persons holding stock in a
fiduciary capacity shall be entitled to vote the shares so held. Persons whose
stock is pledged shall be entitled to vote, unless in the transfer by the
pledgor on the books of the Corporation he or she has expressly empowered the
pledgee to vote thereon, in which case only the pledgee, or his or her proxy,
may represent such stock and vote thereon.
Neither treasury shares of its own stock held by the
Corporation, nor shares held by another corporation, if a majority of the shares
entitled to vote for the election of directors of such other corporation are
held by the Corporation, shall be voted at any meeting or counted in determining
the total number of outstanding shares at any given time for purposes of any
meeting.
1.9 QUORUM; ADJOURNMENT. At all meetings of stockholders, a majority of
the shares of the Corporation entitled to vote, represented in person or by
proxy, shall constitute a quorum for the transaction of business, and, except as
otherwise required by law, all matters acted upon at such meeting shall require
the affirmative vote of a majority of the shares represented at the meeting and
entitled to vote. Directors shall be elected by a plurality of the votes of the
shares, present in person or by proxy, at the meeting and entitled to vote on
the election of directors. Where a separate vote by a class or classes is
required, a majority of the outstanding shares of such class or classes, present
in person or by proxy, shall constitute a quorum entitled to take action with
respect to that vote on that matter and the affirmative vote of the majority of
shares of such class or classes, present in person or by proxy, at the meeting
shall be the act of such class. The holders of a majority of the shares
represented at a meeting, whether or not a quorum is present, may adjourn such
meeting from time to time.
ARTICLE TWO
DIRECTORS
2.1 POWERS OF THE BOARD. Subject to the Florida Business Corporation
Act and the Corporation's Articles of Incorporation, the full and entire
management of the affairs and business of the Corporation shall be vested in the
Board of Directors, which shall have and may exercise all of the powers that may
be exercised or performed by the Corporation.
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<PAGE>
2.2 NUMBER OF DIRECTORS; CONDUCT OF MEETINGS. The Board of Directors
shall consist of not less than five nor more than 20 members, such number within
these parameters to be set by the Board of Directors by resolution. Except with
respect to any directors elected by holders of one or more series of stock or of
preferred stock as set forth in the Articles of Incorporation or the resolutions
providing for the issuance of such stock, the Board of Directors shall be
divided into three classes of directors of as nearly equal numbers as is
possible, designated Class I, Class II and Class III, respectively, serving
staggered three-year terms, with the term of a class expiring at each annual
meeting of stockholders. Reflecting the Corporation's Reincorporation in Florida
in 1995, the terms of office of directors of Class III shall expire at the
annual meeting of stockholders in 1996, that of the directors of Class I at the
1997 meeting, and that of the directors of Class II at the 1998 meeting, and the
Board of Directors shall initially appoint the members of each class. At each
annual meeting of stockholders, a number of directors equal to the number of
directors of the class whose term expires at such meeting (or the number of
directors properly nominated and qualified for election) shall be elected to
hold office until the third succeeding annual meeting of stockholders after
their election. In all cases, each director shall serve until his successor is
elected and qualified, or until his earlier death, resignation or removal.
A majority of said directors shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors. Except as
otherwise provided in these Bylaws, all resolutions adopted and all business
transacted by the Board of Directors shall require the affirmative vote of a
majority of the directors present at the meeting.
The Chairman of the Board, or if there is no Chairman of the
Board, then the Vice Chairman of the Board shall preside at all meetings of the
Board of Directors, unless he delegates such authority. If there is no Chairman
of the Board and the Vice Chairman of the Board is not a director, the directors
shall select a chairman for each meeting from their members.
2.3 VACANCIES. Except with respect to any directors elected by holders
of one or more series of stock or of preferred stock as set forth in the
Articles of Incorporation or the resolutions providing for the issuance of such
stock, vacancies and newly created directorships resulting from an increase in
the authorized number of directors may be filled by the affirmative vote of a
majority of the remaining directors though less than a quorum of the Board of
Directors. As to any director elected by holders of one or more series of stock
or of preferred stock as set forth in the Articles of Incorporation or the
resolutions providing for the issuance of such stock, vacancies and newly
created directorships resulting from an increase in the authorized number of
directors may be filled by the affirmative vote of the holders of such series of
stock or preferred stock that elected such director, such action to be taken at
a meeting called for such purpose. The directors elected to fill a vacancy or a
newly created directorship resulting from an increase in the number of
directors, shall hold office until the next annual election of directors by the
stockholders and the election and qualification of his successor.
2.4 MEETING OF THE BOARD OF DIRECTORS; NOTICE. The directors shall meet
annually immediately following the annual meeting of the stockholders; provided,
however, that the failure to hold the annual meeting shall not work a forfeiture
or affect otherwise valid corporate acts. Special meetings of the directors may
be called at any time by the Chairman of the Board or President, or by any two
directors, on two days' notice, which may be given personally or by first class
mail, telegram or cablegram and shall be deemed given when mailed or when the
telegram or cablegram is sent, addressed to the director at his address as it
appears on the stockholder records of the Corporation or, if he is not a
stockholder, to his business address. Notice of any such meeting may be waived
by an instrument in writing. Attendance of a director at a meeting shall
constitute a waiver of notice of such meeting and waiver of any and all
objections to the place of the meeting, the time of the meeting, or the manner
in which it has been called or convened, except when a director states, at the
beginning of the meeting, any such objection or objections to the transaction of
business. Any meeting of the Board of Directors may be held within or without
the State of Florida at such place as may be determined by the person or persons
calling the meeting.
Members of the Board of Directors, or any committee designated
by the Board of Directors, may participate in a meeting thereof by means of
conference telephone or similar communications equipment by means
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<PAGE>
of which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this by law shall constitute presence in
person at such meeting.
2.5 DIRECTOR ACTION WITHOUT A MEETING. Any action required to be taken
at a meeting of the directors, or any action that may be taken at a meeting of
the directors, may be taken without a meeting if a consent in writing, setting
forth the action so to be taken and signed by all the directors, is filed with
the minutes of the proceedings of the directors.
2.6 RESIGNATION. Any director may resign at any time by sending a
written notice of such resignation to the principal office of the Corporation
addressed to the Chairman of the Board or the President. Unless otherwise
specified therein, such resignation shall take effect upon receipt thereof by
the Chairman of the Board or the President.
2.7 COMPENSATION. The Board of Directors shall have the authority to
fix the compensation of directors, which compensation may include reasonable
expenses of attendance, if any. The Board of Directors shall also have the
authority to compensate members of either standing or special committees for
their attendance at committee meetings.
2.8 PRESUMPTION OF ASSENT. A director of the Corporation who is present
at a meeting of the Board of Directors at which action on any corporate matter
is taken shall be presumed to have assented to the action taken unless his or
her dissent or abstention shall be entered in the minutes of the meeting or
unless he or she shall file his or her written dissent to such action with the
person acting as the Secretary of the meeting before the adjournment thereof or
shall forward such dissent by registered mail to the Secretary of the
Corporation within five days after the date he or she receives a copy of the
minutes of the meeting. Such right to dissent shall not apply to a director who
voted in favor of such action.
ARTICLE THREE
EXECUTIVE AND OTHER COMMITTEES
3.1 APPOINTMENT. The Board of Directors, by resolution adopted by a
majority of the full Board, may designate the Chief Executive Officer and two or
more of the other directors to constitute an Executive Committee. The
designation of any committee pursuant to this Article III and the delegation of
authority thereto shall not operate to relieve the Board of Directors, or any
director, of any responsibility imposed by law or regulation.
3.2 AUTHORITY. The Executive Committee, when the Board of Directors is
not in session, shall have and may exercise all of the authority of the Board of
Directors in the management and affairs of the Corporation, except to the extent
that such authority shall be limited by the Articles of Incorporation, these
Bylaws, or laws of the State of Florida.
3.3 TENURE. Subject to the provisions of Section 3.8, each member of
the Executive Committee shall hold office until the next regular annual meeting
of the Board of Directors following his or her designation and until his or her
successor is designated as a member of the Executive Committee.
3.4 MEETINGS. Regular meetings of the Executive Committee may be held
without notice at such times and places as the Executive Committee may fix from
time to time by resolution. Special meetings of the Executive Committee may be
called by any member thereof upon not less than one day's notice stating the
place, date and hour of the meeting, which notice may be written or oral. Any
member of the Executive Committee may waive notice of any meeting and no notice
of any meeting need be given to any member thereof who attends in person. The
notice of a meeting of the Executive Committee need not state the business
proposed to be transacted at the meeting.
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<PAGE>
3.5 QUORUM. A majority of the members of the Executive Committee shall
constitute a quorum for the transaction of business at any meeting thereof, and
action of the Executive Committee must be authorized by the affirmative vote of
a majority of the members present at a meeting at which a quorum is present.
3.6 ACTION WITHOUT A MEETING. Any action required or permitted to be
taken by the Executive Committee at a meeting may be taken without a meeting if
a consent in writing, setting forth the action so taken, shall be signed by all
of the members of the Executive Committee.
3.7 VACANCIES. In the absence or disqualification of a member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or she or they constitute a quorum,
may unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
3.8 RESIGNATIONS AND REMOVAL. Any member of the Executive Committee may
be removed at any time with or without cause by resolution adopted by a majority
of the full Board of Directors. Any member of the Executive Committee may resign
from the Executive Committee at any time by giving written notice to the
President or Secretary of the Corporation. Unless otherwise specified thereon,
such resignation shall take effect upon receipt. The acceptance of such
resignation shall not be necessary to make it effective.
3.9 PROCEDURE. The Executive Committee shall elect a presiding officer
from its members and may fix its own rules of procedure which shall not be
inconsistent with these Bylaws. It shall keep regular minutes of its proceedings
and report the same to the Board of Directors for its information at the meeting
thereof held next after the proceedings shall have been taken.
3.10 OTHER COMMITTEES. The Board of Directors may, by resolution,
establish an Audit Committee or other committees composed of directors as they
may determine to be necessary or appropriate for the conduct of the business of
the Corporation and may prescribe the duties, constitution and procedures
thereof.
ARTICLE FOUR
OFFICERS
4.1 OFFICERS; ELECTION. The Board of Directors shall elect a President,
a Secretary and a Treasurer and may elect a Chairman of the Board, one or more
Vice Chairmen of the Board, one or more Vice Presidents, and such assistant
officers as the Executive Committee shall recommend. Any two or more offices may
be held by the same person.
4.2 CHAIRMAN OF THE BOARD. The Board of Directors may elect from its
members a Chairman of the Board, who shall preside at all meetings of the Board
of Directors and stockholders as provided herein. The Chairman of the Board
shall be the chief executive officer of the Corporation and shall have the
authority to execute bonds, mortgages or other contracts under the seal of the
Corporation. The Chairman of the Board shall perform such other duties as may be
prescribed by the Board of Directors.
4.3 VICE CHAIRMEN OF THE BOARD. The Board of Directors may elect from
its members one or more Vice Chairmen of the Board. In the absence of the
Chairman of the Board, the Vice Chairman of the Board having the longest tenure
on the Board, among those Vice Chairmen present, shall preside at any meeting of
the Board of Directors or stockholders. Each Vice Chairman shall at all times
report to and remain under the direction of the Chairman of the Board, or the
Board of Directors, unless specific executive authority is otherwise delegated.
Each Vice Chairman of the Board shall perform such other duties as may be
prescribed by the Board of Directors.
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4.4 PRESIDENT. The President shall be responsible for administration of
the affairs of the Corporation, including general supervision of the policies
and financial affairs of the Corporation. He or she shall have the authority to
execute bonds, mortgages or other contracts or agreements under the seal of the
Corporation. If the Board of Directors shall not have elected a Chairman of the
Board, or if the Chairman of the Board is not available to serve, the President
shall preside at all meetings of the stockholders and, if he or she is a
director, at all meetings of the Board of Directors of the Corporation. The
President shall have the authority to institute or defend legal proceedings when
the directors are deadlocked.
4.5 SECRETARY. The Secretary shall keep minutes of all meetings of the
stockholders and directors and have charge of the minute books, stockholder
records and seal of the Corporation and shall perform such other duties and have
such other powers as may from time to time be delegated to him or her by the
President or the Board of Directors.
4.6 TREASURER. The Treasurer shall be charged with the management of
the financial affairs of the Corporation. He or she shall in general perform all
of the duties incident to the office of treasurer and such other duties as may
from time to time be assigned to him or her by the President or the Board of
Directors.
4.7 VICE PRESIDENTS. The Vice Presidents, if any, shall perform such
duties as are generally performed by vice presidents with equivalent
restrictions on title, if any, and shall perform such other duties and exercise
such other powers as the President or majority of the Board of Directors shall
request or delegate. In the absence of the President or in the event of his
death or inability to act, the Vice President shall perform the duties of the
President, and when so acting, shall have all the powers of and be subject to
all the restrictions upon the President; provided, however, that if there is
more than one Vice President, any Vice President shall have the authority to
execute bonds, mortgages or other contracts or agreements under the seal of the
Corporation, subject to all the restrictions upon the President relating to such
functions, but all other duties of the President shall be performed by the Vice
President designated at the time of his election, or in the absence of any
designation, then in order of election (or if more than one Vice President is
elected at the same meeting, in the order in which they are listed in the
resolution electing them), and when so acting shall have all the powers of and
be subject to all the restrictions upon the President.
4.8 OTHER OFFICERS. The Board of Directors or the President may
appoint such other officers, assistant officers and agents as the Board of
Directors or the President may determine. Any Vice President so appointed shall
perform such duties as are generally performed by elected Vice Presidents with
equivalent restrictions on title, if any. Any other officers or assistant
officers so appointed shall perform such duties as are generally performed by
the elected officers or assistant officers having the same title.
4.9 REMOVAL OF OFFICERS. Any officer, assistant officer or agent
elected or appointed by the Board of Directors may be removed by the Board
whenever, in its judgment, the best interests of the Corporation will be served
thereby. Any officer or assistant officer appointed by the President may be
removed by the President or the Board of Directors whenever in his or its
judgment the best interests of the Corporation will be served thereby.
4.10 VACANCIES. Any vacancy, however occurring, in any office may be
filled by the Board of Directors.
ARTICLE FIVE
SEAL
5.1 SEAL. The seal of the Corporation shall be in such form as the
Board of Directors may from time to time determine. In the event it is
inconvenient to use such a seal at any time, the words "Corporate Seal" or the
word "Seal" in parentheses or scroll accompanying the signature of an officer
signing for and on behalf of the Corporation shall be the seal of the
Corporation. The seal shall be in the custody of the Secretary and affixed by
7
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him or her on the stock certificates and such other papers as may be directed by
law, by these Bylaws or by the Board of Directors.
ARTICLE SIX
CONTRACTS AND CHECKS
6.1 CONTRACTS. To the extent permitted by applicable state
regulations, and except as otherwise prescribed by these Bylaws with respect to
certificates for shares, the Board of Directors may authorize any officer,
employee, or agent of the Corporation to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the Corporation. Such
authority may be general or confined to specific instances.
6.2 CHECKS, DRAFTS, ETC. All checks, drafts or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the Corporation shall be signed by one or more officers, employees or agents of
the Corporation in such manner as shall from time to time be determined by the
Board of Directors.
ARTICLE SEVEN
CERTIFICATES FOR SHARES AND THEIR TRANSFER
7.1 CERTIFICATES FOR SHARES. Certificates representing shares of
capital stock of the Corporation shall be in such form as shall be determined by
the Board of Directors. Such certificates shall be signed by the Chairman of the
Board, Vice Chairman of the Board, President or by any Vice President of the
Corporation authorized by the Board of Directors and by the Treasurer or an
assistant treasurer, or the Secretary or an assistant secretary, and sealed with
the corporate seal or a facsimile thereof. The signatures of such officers upon
a certificate may be facsimiles if the certificate is manually signed on behalf
of a transfer agent or a registrar, other than the Corporation itself or one of
its employees. Each certificate for shares of capital stock shall be
consecutively numbered or otherwise identified. The name and address of the
person to whom the shares are issued, with the number of shares and date of
issue, shall be entered on the stock transfer books of the Corporation. All
certificates surrendered to the Corporation for transfer shall be cancelled and
no new certificate shall be issued until the former certificate for the like
number of shares shall have been surrendered and cancelled except that in the
case of a lost or destroyed certificate, a new certificate may be issued upon
such terms and indemnity to the Corporation as the Board of Directors may
prescribe.
7.2 LOST, STOLEN OR DESTROYED STOCK CERTIFICATES; ISSUANCE OF NEW
CERTIFICATES. The Corporation may issue a new certificate of stock in the place
of any certificate theretofore issued by it, alleged to have been lost, stolen
or destroyed, and the Corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the Corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate.
7.3 TRANSFER OF SHARES. To the extent permitted by applicable state
statutes or regulations: (a) transfer of shares of capital stock of the
Corporation shall be made only on its stock transfer books; (b) authority for
such transfer shall be given only by the holder of record thereof or by his
legal representative, who shall furnish proper evidence of such authority, or by
his attorney thereunto authorized by power of attorney duly executed and filed
with the Corporation; (c) such transfer shall be made only on surrender for
cancellation of the certificate for such shares; and (d) the person in whose
name shares of capital stock stand on the books of the Corporation shall be
deemed by the Corporation to be the owner thereof for all purposes.
8
<PAGE>
ARTICLE EIGHT
FISCAL YEAR; ANNUAL AUDIT
The fiscal year of the Corporation shall end on the 30th day of
September of each year. The Corporation shall be subject to an annual audit as
of the end of its fiscal year by independent public accountants appointed by and
responsible to the Board of Directors.
ARTICLE NINE
DIVIDENDS
Dividends upon the stock of the Corporation, subject to the provisions
of the Articles of Incorporation, may be declared by the Board of Directors at
any regular or special meeting, pursuant to law. Dividends may be paid in cash,
in property or in stock.
ARTICLE TEN
INDEMNIFICATION AND INSURANCE
10.1 GENERAL. The Corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation) by
reason of the fact that he or she is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the Corporation's request as a
director, officer, employee or agent of another corporation or other enterprise,
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he or she 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, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
10.2 DERIVATIVE ACTIONS. The Corporation shall indemnify any 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 Corporation to
procure a judgment in its favor by reason of the fact that he or she is or was a
director, officer, employee or agent of the Corporation, or is or was serving at
the Corporation's request as a director, officer, employee or agent of another
corporation or other enterprise against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection with the defense or
settlement of such action or suit if he or she 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 and except that no indemnification shall be made
under this Section if such person shall be adjudged to be liable to the
Corporation, unless and only to the extent that the applicable Florida court 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 the appropriate Florida court or such other
court shall deem proper.
10.3 EXPENSES. To the extent that a director, officer, employee or
agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections 10.1 and 10.2,
or in defense of any claim, issue or matter therein, he or she shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection therewith.
10.4 REQUIREMENTS. Indemnification under Sections 10.1 and 10.2
(unless ordered by a court) shall be made by the Corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in Sections 10.1 and 10.2.
Such determination shall be made:
9
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(1) by the Board of Directors by a majority vote of a
quorum consisting of directors who were not parties to such action,
suit or proceeding;
(2) if such a quorum is not obtainable, or even if
obtainable, by majority vote of a committee duly designated by the
Board consisting solely of two or more disinterested directors;
(3) by independent legal counsel in a written opinion; or
(4) by the stockholders.
10.5 ADVANCEMENT OF EXPENSES. Expenses (including attorneys' fees)
incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such officer or
director to repay such amount if it shall ultimately be determined that he or
she is not entitled to be indemnified by the Corporation as authorized by this
Article. Such expenses (including attorneys' fees) incurred by other employees
and agents may be so paid upon such terms and conditions, if any, as the Board
of Directors deems appropriate.
10.6 NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by
this Article 10 shall not be exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under these
Bylaws, agreement, the vote of stockholders or disinterested directors, the
Articles of Incorporation, statute or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding such
office.
10.7 ADDITIONAL INDEMNIFICATION. Notwithstanding this Article 10, but
in addition thereto, each person who is or was a director, officer, employee or
agent of the Corporation (including the heirs, executors, administrators and
estate of such person), or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation or other
enterprise, shall be indemnified by the Corporation as of right to the fullest
extent permitted or authorized by the present and future laws of Florida and any
other applicable laws against any liability, cost, payment or expense asserted
against, or paid or incurred by, him or her in his or her capacity as such a
director, officer, employee or agent.
10.8 INSURANCE. The Corporation shall purchase and maintain insurance,
if such insurance is reasonably available to the Corporation, on behalf of any
person who is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, or arising out of his or her status as such, whether or not the
Corporation would have the power to indemnify him or her against such liability
under the provisions of this Article 10.
ARTICLE ELEVEN
AMENDMENTS
These Bylaws may be amended at any time by either the Board of
Directors or the stockholders, but the Board of Directors may not amend or
repeal any bylaw adopted by the stockholders if the stockholders specifically
provide that such bylaw is not subject to amendment or repeal by the directors.
ARTICLE TWELVE
CONTROL SHARE ACQUISITIONS
10
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Section 607.0902 of the Florida Business Corporation Act shall not
apply to control share acquisitions (as that term is defined in such section) of
shares of the Corporation.
11
EXHIBIT 4.3
BANKUNITED FINANCIAL CORPORATION
AND
THE BANK OF NEW YORK,
AS TRUSTEE
INDENTURE
___% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
DUE ___________, 2027
DATED AS OF _________, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS.....................................................2
SECTION 1.1 DEFINITIONS OF TERMS........................................2
ARTICLE II ISSUE, DESCRIPTION, TERMS, CONDITIONS REGISTRATION AND
EXCHANGE OF THE DEBENTURES......................................9
SECTION 2.1 DESIGNATION AND PRINCIPAL AMOUNT............................9
SECTION 2.2 MATURITY....................................................9
SECTION 2.3 FORM AND PAYMENT...........................................10
SECTION 2.4 INTEREST...................................................10
SECTION 2.5 EXECUTION AND AUTHENTICATIONS..............................11
SECTION 2.6 REGISTRATION OF TRANSFER AND EXCHANGE......................12
SECTION 2.7 TEMPORARY DEBENTURES.......................................13
SECTION 2.8 MUTILATED, DESTROYED, LOST OR STOLEN DEBENTURES............13
SECTION 2.9 CANCELLATION...............................................14
SECTION 2.10 BENEFIT OF INDENTURE.......................................14
SECTION 2.11 AUTHENTICATION AGENT.......................................15
SECTION 2.12 RIGHT OF SET-OFF...........................................15
ARTICLE III REDEMPTION OF DEBENTURES.......................................16
SECTION 3.1 REDEMPTION.................................................16
SECTION 3.2 SPECIAL EVENT REDEMPTION...................................16
SECTION 3.3 OPTIONAL REDEMPTION BY COMPANY.............................16
SECTION 3.4 NOTICE OF REDEMPTION.......................................17
SECTION 3.5 PAYMENT UPON REDEMPTION....................................18
SECTION 3.6 NO SINKING FUND............................................18
ARTICLE IV EXTENSION OF INTEREST PAYMENT PERIOD...........................19
SECTION 4.1 EXTENSION OF INTEREST PAYMENT PERIOD.......................19
SECTION 4.2 NOTICE OF EXTENSION........................................19
SECTION 4.3 LIMITATION ON TRANSACTIONS.................................20
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ARTICLE V PARTICULAR COVENANTS OF THE COMPANY............................20
SECTION 5.1 PAYMENT OF PRINCIPAL AND INTEREST..........................20
SECTION 5.2 MAINTENANCE OF AGENCY......................................21
SECTION 5.3 PAYING AGENTS..............................................21
SECTION 5.4 APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE...........22
SECTION 5.5 COMPLIANCE WITH CONSOLIDATION PROVISIONS...................22
SECTION 5.6 LIMITATION ON TRANSACTIONS.................................23
SECTION 5.7 COVENANTS AS TO THE TRUST..................................23
SECTION 5.8 COVENANTS AS TO PURCHASES..................................23
ARTICLE VI DEBENTUREHOLDERS' LISTS AND REPORTS BY THE COMPANY AND
THE TRUSTEE....................................................24
SECTION 6.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
DEBENTURE MOLDERS..........................................24
SECTION 6.2 PRESERVATION OF INFORMATION COMMUNICATIONS WITH
DEBENTUREHOLDERS...........................................24
SECTION 6.3 REPORTS BY THE COMPANY.....................................24
SECTION 6.4 REPORTS BY THE TRUSTEE.....................................25
ARTICLE VII REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS ON EVENT
OF DEFAULT.....................................................25
SECTION 7.1 EVENTS OF DEFAULT..........................................26
SECTION 7.2 COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE.....................................27
SECTION 7.3 APPLICATION OF MONEYS COLLECTED............................29
SECTION 7.4 LIMITATION ON SUITS........................................29
SECTION 7.5 RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION
NOT WAIVER.................................................30
SECTION 7.6 CONTROL BY DEBENTUREHOLDERS................................31
SECTION 7.7 UNDERTAKING TO PAY COSTS...................................31
SECTION 7.8 DIRECT ACTION BY HOLDERS OF PREFERRED SECURITIES...........32
ARTICLE VIII FORM OF DEBENTURE AND ORIGINAL ISSUE.........................32
SECTION 8.1 FORM OF DEBENTURE..........................................32
SECTION 8.2 ORIGINAL ISSUE OF DEBENTURES...............................32
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ARTICLE IX CONCERNING THE TRUSTEE.........................................32
SECTION 9.1 CERTAIN DUTIES AND RESPONSIBILITIES........................32
SECTION 9.2 NOTICE OF DEFAULTS.........................................34
SECTION 9.3 CERTAIN RIGHTS OF TRUSTEE..................................34
SECTION 9.4 TRUSTEE NOT RESPONSIBLE FOR RECITALS, ETC..................35
SECTION 9.5 MAY MOLD DEBENTURES........................................36
SECTION 9.6 MONEYS HELD IN TRUST.......................................36
SECTION 9.7 COMPENSATION AND REIMBURSEMENT.............................36
SECTION 9.8 RELIANCE ON OFFICERS' CERTIFICATE..........................36
SECTION 9.9 DISQUALIFICATION: CONFLICTING INTERESTS....................37
SECTION 9.10 CORPORATE TRUSTEE REQUIRED ELIGIBILITY.....................37
SECTION 9.11 RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR..................................................37
SECTION 9.12 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.....................39
SECTION 9.13 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS...................................................39
SECTION 9.14 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY......40
ARTICLE X CONCERNING THE DEBENTUREHOLDERS................................40
SECTION 10.1 EVIDENCE OF ACTION BY HOLDERS..............................40
SECTION 10.2 PROOF OF EXECUTION BY DEBENTUREHOLDERS.....................41
SECTION 10.3 WHO MAY BE DEEMED OWNERS...................................41
SECTION 10.4 CERTAIN DEBENTURES OWNED BY COMPANY DISREGARDED............41
SECTION 10.5 ACTIONS BINDING ON FUTURE DEBENTUREHOLDERS.................42
ARTICLE XI SUPPLEMENTAL INDENTURES........................................42
SECTION 11.1 SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF
DEBENTUREHOLDERS...........................................42
SECTION 11.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF DEBENTUREHOLDERS...43
SECTION 11.3 EFFECT OF SUPPLEMENTAL INDENTURES..........................44
SECTION 11.4 DEBENTURES AFFECTED BY SUPPLEMENTAL INDENTURES.............44
SECTION 11.5 EXECUTION OF SUPPLEMENTAL INDENTURES.......................44
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ARTICLE XII SUCCESSOR CORPORATION.........................................45
SECTION 12.1 COMPANY MAY CONSOLIDATE, ETC..............................45
SECTION 12.2 SUCCESSOR CORPORATION SUBSTITUTED.........................46
SECTION 12.3 EVIDENCE OF CONSOLIDATION, ETC. TO TRUSTEE................46
ARTICLE XIII SATISFACTION AND DISCHARGE....................................46
SECTION 13.1 SATISFACTION AND DISCHARGE OF INDENTURE...................46
SECTION 13.2 DISCHARGE OF OBLIGATIONS..................................47
SECTION 13.3 DEPOSITED MONEYS TO BE HELD IN TRUST......................47
SECTION 13.4 PAYMENT OF MONIES HELD BY PAYING AGENTS...................47
SECTION 13.5 REPAYMENT TO COMPANY......................................48
ARTICLE XIV IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS.............................................48
SECTION 14.1 NO RECOURSE...............................................48
ARTICLE XV MISCELLANEOUS PROVISIONS......................................48
SECTION 15.1 EFFECT ON SUCCESSORS AND ASSIGNS..........................49
SECTION 15.2 ACTIONS BY SUCCESSOR......................................49
SECTION 15.3 SURRENDER OF COMPANY POWERS...............................49
SECTION 15.4 NOTICES...................................................49
SECTION 15.5 GOVERNING LAW.............................................49
SECTION 15.6 TREATMENT OF DEBENTURES AS DEBT...........................50
SECTION 15.7 COMPLIANCE CERTIFICATES AND OPINIONS......................50
SECTION 15.8 PAYMENTS ON BUSINESS DAYS.................................50
SECTION 15.9 CONFLICT WITH TRUST INDENTURE ACT.........................50
SECTION 15.10 COUNTERPARTS..............................................51
SECTION 15.11 SEPARABILITY..............................................51
SECTION 15.12 ASSIGNMENT................................................51
SECTION 15.13 ACKNOWLEDGMENT OF RIGHTS..................................51
ARTICLE XVI SUBORDINATION OF DEBENTURES...................................51
SECTION 16.1 AGREEMENT TO SUBORDINATE..................................52
SECTION 16.2 DEFAULT ON SENIOR DEBT OR SUBORDINATED DEBT...............52
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SECTION 16.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY......................52
SECTION 16.4 SUBROGATION...............................................54
SECTION 16.5 TRUSTEE TO EFFECTUATE SUBORDINATION.......................55
SECTION 16.6 NOTICE BY THE COMPANY.....................................55
SECTION 16.7 RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR
INDEBTEDNESS..............................................57
SECTION 16.8 SUBORDINATION MAY NOT BE IMPAIRED.........................57
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<PAGE>
CROSS-REFERENCE TABLE
SECTION OF TRUST INDENTURE
ACT OF 1939, AS AMENDED SECTION OF INDENTURE
-------------------------- --------------------
310(a) 9.10
310(b) 9.9
9.11
310(c) N/A
311(a) 9.14
311(b) 9.14
311(c) N/A
312(a) 6.1
6.2(a)
312(b) 6.2(c)
312(c) 6.2(c)
313(a) 6.4(a)
313(b) 6.4(b)
313(c) 6.4(a)
6.4(b)
313(d) 6.4(c)
314(a) 6.3(a)
314(b) N/A
314(c) 15.7
314(d) N/A
314(e) 15.7
314(f) N/A
315(a) 9.1(a)
9.3
315(b) 9.2
315(c) 9.1(a)
315(d) 9.1(b)
315(e) 7.7
316(a) 1.1
7.6
316(b) 7.4(b)
316(c) 10.1(b)
317(a) 7.2
317(b) 5.3
318(a) 15.9
Note: This Cross-Reference Table does not constitute part of this Indenture and
shall not affect the interpretation of any of its terms or provisions.
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<PAGE>
INDENTURE
INDENTURE, dated as of ___________, 1997, between BANKUNITED FINANCIAL
CORPORATION, a Florida corporation (the "Company"), and THE BANK OF NEW YORK, a
New York banking corporation (the "Trustee");
RECITALS
WHEREAS, for its lawful corporate purposes, the Company has duly authorized the
execution and delivery of this Indenture to provide for the issuance of
unsecured securities to be known as its ___% Junior Subordinated Deferrable
Interest Debentures due 2027 (hereinafter referred to as the "Debentures"), the
form and substance of such Debentures and the terms, provisions and conditions
thereof to be set forth as provided in this Indenture; and
WHEREAS, BankUnited Capital II, a Delaware statutory business trust (the
"Trust"), has offered to the public $46,000,000 aggregate liquidation amount of
its Preferred Securities (as defined herein) and proposes to invest the proceeds
from such offering, together with the proceeds of the issuance and sale by the
Trust to the Company of $1,840,000 aggregate liquidation amount of its Common
Securities (as defined herein), in $47,840,000 aggregate principal amount of the
Debentures; and
WHEREAS, the Company has requested that the Trustee execute and deliver this
Indenture; and
WHEREAS, all requirements necessary to make this Indenture a valid instrument in
accordance with its terms, and to make the Debentures, when executed by the
Company and authenticated and delivered by the Trustee, the valid obligations of
the Company, have been performed, and the execution and delivery of this
Indenture have been duly authorized in all respects, and
WHEREAS, to provide the terms and conditions upon which the Debentures are to be
authenticated, issued and delivered, the Company has duly authorized the
execution of this Indenture; and
WHEREAS, all things necessary to make this Indenture a valid agreement of the
Company, in accordance with its terms, have been done.
NOW, THEREFORE, in consideration of the premises and the purchase of the
Debentures by the holders thereof, it is mutually covenanted and agreed as
follows for the equal and ratable benefit of the holders of the Debentures and
intending to be legally bound hereby:
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS OF TERMS.
The terms defined in this Section 1.1 (except as in this Indenture otherwise
expressly provided or unless the context otherwise requires) for all purposes of
this Indenture and of any indenture supplemental hereto shall have the
respective meanings specified in this Section 1.1 and shall include the plural
as well as the singular. All other terms used in this Indenture that are defined
in the Trust Indenture Act, or that are by reference in the Trust Indenture Act
defined in the Securities Act (except as herein otherwise expressly provided or
unless the context otherwise requires), shall have the meanings assigned to such
terms in the Trust Indenture Act and in the Securities Act as in force at the
date of the execution of this instrument. All accounting terms used herein and
not expressly defined shall have the meanings assigned to such terms in
accordance with Generally Accepted Accounting Principles as in effect at the
time of computation.
"Accelerated Maturity Date" means if the Company elects to accelerate the
Maturity Date in accordance with Section 2.2(b), the date selected by the
Company which is prior to the Scheduled Maturity Date, but is after __________,
2002.
"Additional Interest" shall have the meaning set forth in Section 2.4.
"Administrative Trustees" shall have the meaning set forth in the Trust
Agreement.
"Affiliate" means, with respect to a specified Person, (a) any Person directly
or indirectly owning, controlling or holding with power to vote 10% or more of
the outstanding voting securities or other ownership interests of the specified
Person; (b) any Person 10% or more of whose outstanding voting securities or
other ownership interests are directly or indirectly owned, controlled or held
with power to vote by the specified Person; (c) any Person directly or
indirectly controlling, controlled by, or under common control with the
specified Person; (d) a partnership in which the specified Person is a general
partner; (e) any officer or director of the specified Person; and (f) if the
specified Person is an individual, any entity of which the specified Person is
an officer, director or general partner.
"Authenticating Agent" means an authenticating agent with respect to the
Debentures appointed by the Trustee pursuant to Section 2.11.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or state law
for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or any duly
authorized committee of such Board.
"Board Resolution" means 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.
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<PAGE>
"Business Day" means, with respect to the Debentures, any day other than a
Saturday or a Sunday or a day on which federal or state banking institutions in
the Borough of Manhattan, The City of New York, or the State of Florida are
authorized or required by law, executive order or regulation to close, or a day
on which the Corporate Trust Office of the Trustee or the Property Trustee is
closed for business.
"Capital Treatment Event" means the reasonable determination by the Company
that, as a result of any amendment to, or change (including any proposed change)
in, the laws (or any regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such proposed change pronouncement, action or decision is announced on or after
the date of original issuance of the Preferred Securities under the Trust
Agreement, there is more than an insubstantial risk that the Company will not be
entitled to treat an amount equal to the Liquidation Amount of such Preferred
Securities as "Tier 1 Capital" (or the then equivalent thereof) for purposes of
the capital adequacy guidelines of the Federal Reserve (or any successor
regulatory authority with jurisdiction over bank holding companies), or any
capital adequacy guidelines as then in effect and applicable to the Company.
"Certificate" means a certificate signed by the principal executive officer, the
principal financial officer, the principal accounting officer, the treasurer or
any vice president of the Company. The Certificate need not comply with the
provisions of Section 15.7.
"Change in 1940 Act Law" shall have the meaning set forth in the definition of
"Investment Company Event."
"Commission" means the Securities and Exchange Commission, as from time to time
constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties on such date.
"Common Securities" means undivided beneficial interests in the assets of the
Trust which rank pari passu with the Preferred Securities; provided, however,
that upon the occurrence of an Event of Default, the rights of holders of Common
Securities to payment in respect of (i) distributions, and (ii) payments upon
liquidation, redemption and otherwise are subordinated to the rights of holders
of Preferred Securities.
"Company" means BankUnited Financial Corporation, a corporation duly organized
and existing under the laws of the State of Florida, and, subject to the
provisions of Article XII, shall also include its successors and assigns.
"Compounded Interest" shall have the meaning set forth in Section 4.1.
"Corporate Trust Office" means the office of the Trustee at which, at any
particular time, its corporate trust business shall be principally administered,
which office at the date hereof is located
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<PAGE>
at 101 Barclay Street, Floor 21 West, New York, New York 10286, Attention:
Corporate Trust Trustee Administration.
"Coupon Rate" shall have the meaning set forth in Section 2.4.
"Custodian" means any receiver, trustee, assignee, liquidator, or similar
official under any Bankruptcy Law.
"Debentures" shall have the meaning set forth in the Recitals hereto.
"Debentureholder," "holder of Debentures," "registered holder," or other similar
term, means the Person or Persons in whose name or names a particular Debenture
shall be registered on the books of the Company or the Trustee kept for that
purpose in accordance with the terms of this Indenture.
"Debenture Register" shall have the meaning set forth in Section 2.6(b).
"Debt" means with respect to any Person, whether recourse is to all or a portion
of the assets of such Person and whether or not contingent, (i) every obligation
of such Person for money borrowed; (ii) every obligation of such Person
evidenced by bonds, debentures, notes or other similar instruments, including
obligations incurred in connection with the acquisition of property, assets or
businesses; (iii) every reimbursement obligation of such Person with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of such Person; (iv) every obligation of such Person issued or assumed
as the deferred purchase price of property or services (but excluding trade
accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; and (vi) every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.
"Default" means any event, act or condition that with notice or lapse of time,
or both, would constitute an Event of Default.
"Deferred Interest" shall have the meaning set forth in Section 4.1.
"Dissolution Event" means that as a result of the occurrence and continuation of
a Special Event, the Trust is to be dissolved in accordance with the Trust
Agreement and the Debentures held by the Property Trustee are to be distributed
to the holders of the Trust Securities issued by the Trust pro rata in
accordance with the Trust Agreement.
"Event of Default" means, with respect to the Debentures, any event specified in
Section 7.1 , which has continued for the period of time, if any, and after the
giving of the notice, if any, therein designated.
"Exchange Act" means the Securities Exchange Act of 1934, and any statute
successor thereto, in each case as amended from time to time.
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"Extended Interest Payment Period" shall have the meaning set forth in Section
4.1.
"Federal Reserve" means the Board of Governors of the Federal Reserve System.
"Generally Accepted Accounting Principles" means such accounting principles as
are generally accepted at the time of any computation required hereunder.
"Governmental Obligations" means securities that are (i) direct obligations of
the United States of America for the payment of which its full faith and credit
is pledged; or (ii) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America, the
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America that, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such Governmental
Obligation or a specific payment of principal of or interest on any such
Governmental Obligation held by such custodian for the account of the holder of
such depositary receipt; provided, however, that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depositary receipt from any amount received by the
custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such
depositary receipt.
"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.
"Indenture" means this instrument as originally executed or as it may from time
to time be supplemented or amended by one or more indentures supplemental hereto
entered into in accordance with the terms hereof.
"Interest Payment Date," when used with respect to any installment of interest
on the Debentures, means the date specified in the Debenture or in a Board
Resolution or in an indenture supplemental hereto with respect to the Debentures
as the fixed date on which an installment of interest with respect to the
Debentures is due and payable.
"Investment Company Act" means the Investment Company Act of 1940, and any
statute successor thereto, in each case as amended from time to time.
"Investment Company Event" means the receipt by the Trust of an Opinion of
Counsel, rendered by a law firm experienced in such matters, to the effect that,
as a result of the occurrence of a 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 (a "Change in 1940 Act Law"),
the Trust is or shall be considered an "investment company" that is required to
be registered under the Investment Company Act, which Change in 1940 Act Law
becomes effective on or after the date of original issuance of the Preferred
Securities under the Trust Agreement.
"Maturity Date" means the date on which the Debentures mature and on which the
principal shall be due and payable together with all accrued and unpaid interest
thereon including Compounded Interest and Additional Interest, if any.
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"Ministerial Action" shall have the meaning set forth in Section 3.2.
"Officers' Certificate" means a certificate signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Controller or an
Assistant Controller or the Secretary or an Assistant Secretary, of the Company,
and delivered to the Trustee. Any Officers' Certificate delivered with respect
to compliance with a condition or covenant provided for in this Indenture shall
include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the
Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means an opinion in writing of legal counsel, who may be an
employee of or counsel for the Company, that is delivered to the Trustee in
accordance with the terms hereof.
"Outstanding," when used with reference to the Debentures, means, subject to the
provisions of Section 10.4, as of any particular time, all Debentures
theretofore authenticated and delivered by the Trustee under this Indenture,
except (a) Debentures theretofore canceled by the Trustee or any paying agent,
or delivered to the Trustee or any paying agent for cancellation or that have
previously been canceled; (b) Debentures or portions thereof for the payment or
redemption of which moneys or Governmental Obligations in the necessary amount
shall have been deposited in trust with the Trustee or with any paying agent
(other than the Company) or shall have been set aside and segregated in trust by
the Company (if the Company shall act as its own paying agent); provided,
however, that if such Debentures or portions of such Debentures are to be
redeemed prior to the maturity thereof, notice of such redemption shall have
been given as provided in Article III or provision satisfactory to the Trustee
shall have been made for giving such notice; and (c) Debentures in lieu of or in
substitution for which other Debentures shall have been authenticated and
delivered pursuant to the terms of Section 2.6.
"Person" means any individual, corporation, partnership, joint-venture, trust,
joint-stock company, unincorporated organization or government or any agency or
political subdivision thereof.
"Place of Payment" means the place or places where the principal of and interest
on the Debentures are payable in accordance with the terms of this Indenture.
"Predecessor Debenture" means every previous Debenture evidencing all or a
portion of the same debt as that evidenced by such particular Debenture; and,
for the purposes of this definition, any
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Debenture authenticated and delivered under Section 2.8 in lieu of a lost,
destroyed or stolen Debenture shall be deemed to evidence the same debt as the
lost, destroyed or stolen Debenture.
"Preferred Securities" means undivided beneficial interests in the assets of the
Trust which rank pari passu with Common Securities issued by the Trust;
provided, however, that upon the occurrence of an Event of Default, the rights
of holders of Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise are subordinated to the
rights of holders of Preferred Securities.
"Preferred Securities Guarantee" means any guarantee that the Company may enter
into with the Trustee or other Persons that operate directly or indirectly for
the benefit of holders of Preferred Securities.
"Property Trustee" has the meaning set forth in the Trust Agreement.
"Responsible Officer" when used with respect to the Trustee means the Chairman
of the Board of Directors, the President, any Vice President, the Secretary, the
Treasurer, any trust officer, any corporate trust officer or any other officer
or assistant officer of the Trustee customarily performing functions similar to
those performed by the Persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred because of his
or her knowledge of and familiarity with the particular subject.
"Scheduled Maturity Date" means June 30, 2027.
"Securities Act," means the Securities Act of 1933, and any statute successor
thereto, in each case as amended from time to time.
"Senior Debt" means the principal of (and premium, if any) and interest, if any
(including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,
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 Debentures or to other Debt which is pari
passu with, or subordinated to, the Debentures; provided, however, that Senior
Debt shall not be deemed to include (i) any Debt 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 Debt of the Company to any of its subsidiaries; and (iii) any
Debt to any employee of the Company.
"Senior Indebtedness" shall have the meaning set forth in Section 16.1.
"Special Event" means a Tax Event, an Investment Company Event or a Capital
Treatment Event.
"Subordinated Debt" means the principal of (and premium, if any) and interest,
if any (including interest accruing on or after the filing of any petition in
bankruptcy or for reorganization relating to the Company whether or not such
claim for post-petition interest is allowed in such proceeding), on Debt,
whether incurred on or prior to the date of this Indenture or thereafter
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incurred, which is by its terms expressly provided to be junior and subordinate
to other Debt of the Company (other than the Debentures).
"Subsidiary" means, with respect to any Person, (i) any corporation at least a
majority of whose outstanding Voting Stock shall at the time be 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, trust 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.
"Tax Event" means the receipt by the Trust of an Opinion of Counsel, rendered by
a law firm experienced in such matters, to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
which pronouncement or decision is announced on or after the date of issuance of
the Preferred Securities under the Trust Agreement, there is more than an
insubstantial risk that (i) the Trust is, or shall be within 90 days after the
date of such Opinion of Counsel, subject to United States federal income tax
with respect to income received or accrued on the Debentures; (ii) interest
payable by the Company on the Debentures is not, or within 90 days after the
date of such Opinion of Counsel, shall not be, deductible by the Company, in
whole or in part, for United States federal income tax purposes; or (iii) the
Trust is, or shall be within 90 days after the date of such Opinion of Counsel,
subject to more than a de minimis amount of other taxes, duties, assessments or
other governmental charges. The Trust or the Company shall request and receive
such Opinion of Counsel with regard to such matters within a reasonable period
of time after the Trust or the Company shall have become aware of the possible
occurrence of any of the events described in clauses (i) through (iii) above.
"Trust" means BankUnited Capital II, a Delaware statutory business trust.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated May __,
1997, of the Trust, as amended, modified or supplemented from time to time,
among the trustees of the trust named therein, the Company, as depositor, and
the holders from time to time of undivided beneficial ownership interests in the
assets of the Trust.
"Trustee" means The Bank of New York and, subject to the provisions of Article
IX, shall also include its successors and assigns, and, if at any time there is
more than one Person acting in such capacity hereunder, "'Trustee" shall mean
each such Person.
"Trust Indenture Act," means the Trust Indenture Act of 1939, as amended,
subject to the provisions of Sections 11.1, 11.2, and 12.1 and any statute
successor thereto, in each case as amended from time to time.
"Trust Securities" means the Common Securities and Preferred Securities,
collectively.
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"Voting Stock," as applied to stock of any Person, means shares, interests,
participations or other equivalents in the equity interest (however designated)
in such Person having ordinary voting power for the election of a majority of
the directors (or the equivalent) of such Person, other than shares, interests,
participations or other equivalents having such power only by reason of the
occurrence of a contingency.
ARTICLE II
ISSUE, DESCRIPTION, TERMS, CONDITIONS REGISTRATION AND EXCHANGE
OF THE DEBENTURES
SECTION 2.1 DESIGNATION AND PRINCIPAL AMOUNT.
There is hereby authorized Debentures designated the "_____% Junior Subordinated
Deferrable Interest Debentures due ________, 2027," limited in aggregate
principal amount to $47,840,000 which amount shall be as set forth in any
written order of the Company for the authentication and delivery of Debentures
pursuant to Section 2.5.
SECTION 2.2 MATURITY.
(a) The Maturity Date shall be either:
(i) the Scheduled Maturity Date; or
(ii) if the Company elects to accelerate the Maturity Date to be
a date prior to the Scheduled Maturity Date in accordance
with Section 2.2(b), the Accelerated Maturity Date.
(b) The Company may at any time before the day which is 90 days before
the Scheduled Maturity Date and after ________, 2002, elect to
shorten the Maturity Date only once to the Accelerated Maturity
Date provided that the Company has received prior regulatory
approval if then required under applicable capital guidelines or
regulatory policies.
(c) if the Company elects to accelerate the Maturity Date in
accordance with Section 2.2(b), the Company shall give notice to
the registered holders of the Debentures, the Property Trustee and
the Trust of the acceleration of the Maturity Date and the
Accelerated Maturity Date at least 90 days and no more than 180
days before the Accelerated Maturity Date.
SECTION 2.3 FORM AND PAYMENT.
The Debentures shall be issued in fully registered certificated form without
interest coupons. Principal and interest on the Debentures issued in
certificated form shall be payable, the transfer of such Debentures shall be
registrable and such Debentures shall be exchangeable for Debentures bearing
identical terms and provisions at the office or agency of the Trustee; provided,
however, that payment of interest may be made at the option of the Company by
check mailed to the holder at such address as shall appear in the Debenture
Register or by wire transfer to an account
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maintained by the holder as specified in the Debenture Register, provided that
the holder provides proper transfer instructions by the regular record date.
Notwithstanding the foregoing, so long as the holder of any Debentures is the
Property Trustee, the payment of the principal of and interest (including
Compounded Interest and Additional Interest, if any) on such Debentures held by
the Property Trustee shall be made at such place and to such account as may be
designated by the Property Trustee.
SECTION 2.4 INTEREST.
(a) Each Debenture shall bear interest at the rate of ______% per
annum (the "Coupon Rate") from the original date of issuance until
the principal thereof becomes due and payable, and on any overdue
principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of
interest at the Coupon Rate, compounded quarterly, payable
(subject to the provisions of Article IV) quarterly in arrears on
March 31, June 30, September 30, and December 31 of each year
(each, an "Interest Payment Date," commencing on [JUNE 30, 1997]),
to the Person in whose name such Debenture or any Predecessor
Debenture is registered, at the close of business on the regular
record date for such interest installment, which shall be the
fifteenth day of the last month of the calendar quarter.
(b) The amount of interest payable for any period shall be computed on
the basis of a 360-day year of twelve 30-day months. Except as
provided in the following sentence, the amount of interest payable
for any period shorter than a full quarterly period for which
interest is computed, shall be computed on the basis of the actual
number of days elapsed in such period. In the event that any date
on which interest is payable on the Debentures is not a Business
Day, then payment of interest payable on such date shall 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 Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and
effect as if made on the date such payment was originally payable.
(c) If, at any time while the Property Trustee is the holder of any
Debentures, the Trust or the Property Trustee is required to pay
any taxes, duties, assessments or governmental charges of whatever
nature (other than withholding taxes) imposed by the United
States, or any other taxing authority, then, in any case, the
Company shall pay as additional interest ("Additional Interest")
on the Debentures held by the Property Trustee, such additional
amounts as shall be required so that the net amounts received and
retained by the Trust and the Property Trustee after paying such
taxes, duties, assessments or other governmental charges shall be
equal to the amounts the Trust and the Property Trustee would have
received had no such taxes, duties, assessments or other
governmental charges been imposed.
SECTION 2.5 EXECUTION AND AUTHENTICATIONS.
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(a) The Debentures shall be signed on behalf of the Company by its
Chief Executive Officer, President or one of its Vice Presidents,
under its corporate seal attested by its Secretary or one of its
Assistant Secretaries. Signatures may be in the form of a manual
or facsimile signature. The Company may use the facsimile
signature of any Person who shall have been a Chief Executive
Officer, President or Vice President thereof, or of any Person who
shall have been a Secretary or Assistant Secretary thereof,
notwithstanding the fact that at the time the Debentures shall be
authenticated and delivered or disposed of such Person shall have
ceased to be the Chief Executive Officer, President or a Vice
President, or the Secretary or an Assistant Secretary, of the
Company. The seal of the Company may be in the form of a facsimile
of such seal and may be impressed, affixed, imprinted or otherwise
reproduced on the Debentures. The Debentures may contain such
notations, legends or endorsements required by law, stock exchange
rule or usage. Each Debenture shall be dated the date of its
authentication by the Trustee.
(b) A Debenture shall not be valid until authenticated manually by an
authorized signatory of the Trustee, or by an Authenticating
Agent. Such signature shall be conclusive evidence that the
Debenture so authenticated has been duly authenticated and
delivered hereunder and that the holder is entitled to the
benefits of this Indenture.
(c) At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Debentures executed by
the Company to the Trustee for authentication, together with a
written order of the Company for the authentication and delivery
of such Debentures signed by its Chief Executive Officer,
President or any Vice President and its Secretary or any Assistant
Secretary, and the Trustee in accordance with such written order
shall authenticate and deliver such Debentures.
(d) In authenticating such Debentures and accepting the additional
responsibilities under this Indenture in relation to such
Debentures, the Trustee shall be entitled to receive, and (subject
to Section 9.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the form and terms thereof have
been established in conformity with the provisions of this
Indenture.
(e) The Trustee shall not be required to authenticate such Debentures
if the issue of such Debentures pursuant to this Indenture shall
affect the Trustee's own rights, duties or immunities under the
Debentures and this Indenture or otherwise in a manner that is not
reasonably acceptable to the Trustee.
SECTION 2.6 REGISTRATION OF TRANSFER AND EXCHANGE.
(a) Debentures may be exchanged upon presentation thereof at the
office or agency of the Company designated for such purpose, for
other Debentures and for a like aggregate principal amount, upon
payment of a sum sufficient to cover any tax or other governmental
charge in relation thereto, all as provided in this Section 2.6.
In
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respect of any Debentures so surrendered for exchange, the Company
shall execute, the Trustee shall authenticate and such office or
agency shall deliver in exchange therefor the Debenture or
Debentures that the Debenture holder making the exchange shall be
entitled to receive, bearing numbers not contemporaneously
outstanding.
(b) The Company shall keep, or cause to be kept, at its office or
agency designated for such purpose or such other location
designated by the Company a register or registers (herein referred
to as the "Debenture Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall
register the Debentures and the transfers of Debentures as in this
Article II provided and which at all reasonable times shall be
open for inspection by the Trustee. The registrar for the purpose
of registering Debentures and transfer of Debentures as herein
provided shall be appointed as authorized by Board Resolution (the
"Debenture Registrar"). Upon surrender for transfer of any
Debenture at the office or agency of the Company designated for
such purpose, the Company shall execute, the Trustee shall
authenticate and such office or agency shall deliver in the name
of the transferee or transferees a new Debenture or Debentures for
a like aggregate principal amount. All Debentures presented or
surrendered for exchange or registration of transfer, as provided
in this Section 2.6, shall be accompanied (if so required by the
Company or the Debenture Registrar) by a written instrument or
instruments of transfer, in form satisfactory to the Company or
the Debenture Registrar, duly executed by the registered holder or
by such holder's duly authorized attorney in writing.
(c) No service charge shall be made for any exchange or registration
of transfer of Debentures, or issue of new Debentures in case of
partial redemption, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge in
relation thereto, other than exchanges pursuant to Section 2.7,
Section 3.5(b) and Section 11.4 not involving any transfer.
(d) The Company shall not be required (i) to issue, exchange or
register the transfer of any Debentures during a period beginning
at the opening of business 15 days before the day of the mailing
of a notice of redemption of less than all the Outstanding
Debentures and ending at the close of business on the day of such
mailing; nor (ii) to register the transfer of or exchange any
Debentures or portions thereof called for redemption.
SECTION 2.7 TEMPORARY DEBENTURES.
Pending the preparation of definitive Debentures, the Company may execute, and
the Trustee shall authenticate and deliver, temporary Debentures (printed,
lithographed, or typewritten). Such temporary Debentures shall be substantially
in the form of the definitive Debentures in lieu of which they are issued, but
with such omissions, insertions and variations as may be appropriate for
temporary Debentures, all as may be determined by the Company. Every temporary
Debenture shall be executed by the Company and be authenticated by the Trustee
upon the same conditions
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and in substantially the same manner, and with like effect, as the definitive
Debentures. Without unnecessary delay the Company shall execute and shall
furnish definitive Debentures and thereupon any or all temporary Debentures may
be surrendered in exchange therefor (without charge to the holders), at the
office or agency of the Company designated for such purpose, and the Trustee
shall authenticate and such office or agency shall deliver in exchange for such
temporary Debentures an equal aggregate principal amount of definitive
Debentures, unless the Company advises the Trustee to the effect that definitive
Debentures need not be executed and furnished until further notice from the
Company. Until so exchanged, the temporary Debentures shall be entitled to the
same benefits under this Indenture as definitive Debentures authenticated and
delivered hereunder.
SECTION 2.8 MUTILATED, DESTROYED, LOST OR STOLEN DEBENTURES.
(a) In case any temporary or definitive Debenture shall become
mutilated or be destroyed, lost or stolen, the Company (subject to
the next succeeding sentence) shall execute, and upon the
Company's request the Trustee (subject as aforesaid) shall
authenticate and deliver, a new Debenture bearing a number not
contemporaneously outstanding, in exchange and substitution for
the mutilated Debenture, or in lieu of and in substitution for the
Debenture so destroyed, lost or stolen. In every case the
applicant for a substituted Debenture shall furnish to the Company
and the Trustee such security or indemnity as may be required by
them to save each of them harmless, and, in every case of
destruction, loss or theft, the applicant shall also furnish to
the Company and the Trustee evidence to their satisfaction of the
destruction, loss or theft of the applicant's Debenture and of the
ownership thereof. The Trustee may authenticate any such
substituted Debenture and deliver the same upon the written
request or authorization of any officer of the Company. Upon the
issuance of any substituted Debenture, the Company may require the
payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee)
connected therewith. In case any Debenture that has matured or is
about to mature shall become mutilated or be destroyed, lost or
stolen, the Company may, instead of issuing a substitute
Debenture, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated Debenture) if
the applicant for such payment shall furnish to the Company and
the Trustee such security or indemnity as they may require to save
them harmless, and, in case of destruction, loss or theft,
evidence to the satisfaction of the Company and the Trustee of the
destruction, loss or theft of such Debenture and of the ownership
thereof.
(b) Every replacement Debenture issued pursuant to the provisions of
this Section 2.8 shall constitute an additional contractual
obligation of the Company whether or not the mutilated, destroyed,
lost or stolen Debenture shall be found at any time, or be
enforceable by anyone, and shall be entitled to all the benefits
of this Indenture equally and proportionately with any and all
other Debentures duly issued hereunder. All Debentures shall be
held and owned upon the express condition that the foregoing
provisions are exclusive with respect to the replacement or
payment
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of mutilated, destroyed, lost or stolen Debentures, and shall
preclude (to the extent lawful) any and all other rights or
remedies, notwithstanding any law or statute existing or hereafter
enacted to the contrary with respect to the replacement or payment
of negotiable instruments or other securities without their
surrender.
SECTION 2.9 CANCELLATION.
All Debentures surrendered for the purpose of payment, redemption, exchange or
registration of transfer shall, if surrendered to the Company or any paying
agent, be delivered to the Trustee for cancellation, or, if surrendered to the
Trustee, shall be canceled by it, and no Debentures shall be issued in lieu
thereof except as expressly required or permitted by any of the provisions of
this Indenture. On request of the Company at the time of such surrender, the
Trustee shall deliver to the Company canceled Debentures held by the Trustee. In
the absence of such request the Trustee may dispose of canceled Debentures in
accordance with its standard procedures and deliver a certificate of disposition
to the Company. If the Company shall otherwise acquire any of the Debentures,
however, such acquisition shall not operate as a redemption or satisfaction of
the indebtedness represented by such Debentures unless and until the same are
delivered to the Trustee for cancellation.
SECTION 2.10 BENEFIT OF INDENTURE.
Nothing in this Indenture or in the Debentures, express or implied, shall give
or be construed to give to any Person, other than the parties hereto and the
holders of the Debentures (and, with respect to the provisions of Article XVI,
the holders of Senior Indebtedness) any legal or equitable right, remedy or
claim under or in respect of this Indenture, or under any covenant, condition or
provision herein contained; all such covenants, conditions, and provisions being
for the sole benefit of the parties hereto and of the holders of the Debentures
(and, with respect to the provisions of Article XVI, the holders of Senior
Indebtedness).
SECTION 2.11 AUTHENTICATION AGENT.
(a) So long as any of the Debentures remain Outstanding there may be
an Authenticating Agent for any or all such Debentures, which the
Trustee shall have the right to appoint. Said Authenticating Agent
shall be authorized to act on behalf of the Trustee to
authenticate Debentures issued upon exchange, transfer or partial
redemption thereof, and Debentures so authenticated shall be
entitled to the benefits of this Indenture and shall be valid and
obligatory for all purposes as if authenticated by the Trustee
hereunder. All references in this Indenture to the authentication
of Debentures by the Trustee shall be deemed to include
authentication by an Authenticating Agent. Each Authenticating
Agent shall be acceptable to the Company and shall be a
corporation that has a combined capital and surplus, as most
recently reported or determined by it, sufficient under the laws
of any jurisdiction under which it is organized or in which it is
doing business to conduct a trust business, and that is otherwise
authorized under such laws to conduct such business and is subject
to supervision or examination by federal or
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state authorities. If at any time any Authenticating Agent shall
cease to be eligible in accordance with these provisions, it shall
resign immediately.
(b) 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 (and upon request by the Company shall)
terminate the agency of any Authenticating Agent by giving written
notice of termination to such Authenticating Agent and to the
Company. Upon resignation, termination or cessation of eligibility
of any Authenticating Agent, the Trustee may appoint an eligible
successor Authenticating Agent acceptable to the Company. Any
successor Authenticating Agent, upon acceptance of its appointment
hereunder, shall become vested with all the rights, powers and
duties of its predecessor hereunder as if originally named as an
Authenticating Agent pursuant hereto.
SECTION 2.12 RIGHT OF SET-OFF.
With respect to the Debentures initially issued to the Trust,
notwithstanding anything to the contrary herein, the Company shall have the
right to set-off any payment it is otherwise required to make in respect of any
such Debenture to the extent the Company has theretofore made, or is
concurrently on the date of such payment making, a payment under the Preferred
Securities Guarantee relating to such Debenture or to a holder of Preferred
Securities pursuant to an action undertaken under Section 7.8 of this Indenture.
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ARTICLE III
REDEMPTION OF DEBENTURES
SECTION 3.1 REDEMPTION.
Subject to the Company having received prior regulatory approval, if then
required under applicable capital guidelines or regulatory policies, the Company
may redeem the Debentures issued hereunder on and after the dates set forth in
and in accordance with the terms of this Article III.
SECTION 3.2 SPECIAL EVENT REDEMPTION.
Subject to the Company having received prior regulatory approval, if then
required under applicable capital guidelines or regulatory policies, if a
Special Event has occurred and is continuing, then, notwithstanding Section 3.3,
the Company shall have the right upon not less than 30 days nor more than 60
days notice to the holders of the Debentures to redeem the Debentures, in whole
but not in part, for cash within 180 days following the occurrence of such
Special Event (the "180-Day Period") at a redemption price equal to 100% of the
principal amount to be redeemed plus any accrued and unpaid interest thereon to
the date of such redemption (the "Redemption Price"), provided that if at the
time there is available to the Company the opportunity to eliminate, within the
180-Day Period, a Tax Event by taking some ministerial action (a "Ministerial
Action"), such as filing a form or making an election, or pursuing some other
similar reasonable measure which has no adverse effect on the Company, the Trust
or the holders of the Trust Securities issued by the Trust, the Company shall
pursue such Ministerial Action in lieu of redemption, and, provided further,
that the Company shall have no right to redeem the Debentures while the Trust is
pursuing any Ministerial Action pursuant to its obligations under the Trust
Agreement. The Redemption Price shall be paid prior to 12:00 noon, New York
time, on the date of such redemption or such earlier time as the Company
determines, provided that the Company shall deposit with the Trustee an amount
sufficient to pay the Redemption Price by 10:00 a.m., New York time, on the date
such Redemption Price is to be paid.
SECTION 3.3 OPTIONAL REDEMPTION BY COMPANY.
Except as otherwise may be specified in this Indenture, the Company shall have
the right to redeem the Debentures, in whole or in part, from time to time, on
or after __________, 2002, at a Redemption Price equal to 100% of the principal
amount to be redeemed plus any accrued and unpaid interest thereon to the date
of such redemption. Any redemption pursuant to this Section 3.3 shall be made
upon not less than 30 days nor more than 60 days notice to the holder of the
Debentures, at the Redemption Price. If the Debentures are only partially
redeemed pursuant to this Section 3.3, the Debentures shall be redeemed pro rata
or by lot or in such other manner as the Trustee shall deem appropriate and fair
in its discretion. The Redemption Price shall be paid prior to 12:00 noon, New
York time, on the date of such redemption or at such earlier time as the Company
determines provided that the Company shall deposit with the Trustee an amount
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sufficient to pay the Redemption Price by 10:00 a.m., New York time, on the date
such Redemption Price is to be paid.
SECTION 3.4 NOTICE OF REDEMPTION.
(a) In case the Company shall desire to exercise such right to redeem
all or a portion of the Debentures in accordance with the right
reserved so to do, the Company shall, or shall cause the Trustee
to, upon receipt of 45 days written notice from the Company, give
notice of such redemption to holders of the Debentures to be
redeemed by mailing, first class postage prepaid, a notice of such
redemption not less than 30 days and not more than 60 days before
the date fixed for redemption to such holders at their last
addresses as they shall appear upon the Debenture Register unless
a shorter period is specified in the Debentures to be redeemed.
Any notice that is mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the
registered holder receives the notice. In any case, failure duly
to give such notice to the holder of any Debenture designated for
redemption in whole or in part, or any defect in the notice, shall
not affect the validity of the proceedings for the redemption of
any other Debentures. In the case of any redemption of Debentures
prior to the expiration of any restriction on such redemption
provided in the terms of such Debentures or elsewhere in this
Indenture, the Company shall furnish the Trustee with an Officers'
Certificate evidencing compliance with any such restriction. Each
such notice of redemption shall specify the date fixed for
redemption and the Redemption Price and shall state that payment
of the Redemption Price shall be made at the office or agency of
the Company or at the Corporate Trust Office, upon presentation
and surrender of such Debentures, that interest accrued to the
date fixed for redemption shall be paid as specified in said
notice and that from and after said date interest shall cease to
accrue. If less than all the Debentures are to be redeemed, the
notice to the holders of the Debentures shall specify the
particular Debentures to be redeemed. If the Debentures are to be
redeemed in part only, the notice shall state the portion of the
principal amount thereof to be redeemed and shall state that on
and after the redemption date, upon surrender of such Debenture, a
new Debenture or Debentures in principal amount equal to the
unredeemed portion thereof shall be issued.
(b) If less than all the Debentures are to be redeemed, the Company
shall give the Trustee at least 45 days notice in advance of the
date fixed for redemption as to the aggregate principal amount of
Debentures to be redeemed, and thereupon the Trustee shall select,
by lot or in such other manner as it shall deem appropriate and
fair in its discretion, the portion or portions (equal to $25 or
any integral multiple thereof) of the Debentures to be redeemed
and shall thereafter promptly notify the Company in writing of the
numbers of the Debentures to be redeemed, in whole or in part. The
Company may, if and whenever it shall so elect pursuant to the
terms hereof, by delivery of instructions signed on its behalf by
its President or any Vice President, instruct the Trustee or any
paying agent to call all or any part of the Debentures for
redemption and to give notice of redemption in the manner set
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forth in this Section 3.4, such notice to be in the name of the
Company or its own name as the Trustee or such paying agent may
deem advisable. In any case in which notice of redemption is to be
given by the Trustee or any such paying agent, the Company shall
deliver or cause to be delivered to, or permit to remain with, the
Trustee or such paying agent, as the case may be, such Debenture
Register, transfer books or other records, or suitable copies or
extracts therefrom, sufficient to enable the Trustee or such
paying agent to give any notice by mail that may be required UNDER
the provisions of this Section 3.4.
SECTION 3.5 PAYMENT UPON REDEMPTION.
(a) If the giving of notice of redemption shall have been completed as
above provided, the Debentures or portions of Debentures to be
redeemed specified in such notice shall become due and payable on
the date and at the place stated in such notice at the applicable
Redemption Price, and interest on such Debentures or portions of
Debentures shall cease to accrue on and after the date fixed for
redemption, unless the Company shall default in the payment of
such Redemption Price with respect to any such Debenture or
portion thereof. On presentation and surrender of such Debentures
on or after the date fixed for redemption at the place of payment
specified in the notice, said Debentures shall be paid and
redeemed at the Redemption Price (but if the date fixed for
redemption is an interest payment date, the interest installment
payable on such date shall be payable to the registered holder at
the close of business on the applicable record date pursuant to
Section 2.4).
(b) Upon presentation of any Debenture that is to be redeemed in part
only, the Company shall execute and the Trustee shall authenticate
and the office or agency where the Debenture is presented shall
deliver to the holder thereof, at the expense of the Company, a
new Debenture of authorized denomination in principal amount equal
to the unredeemed portion of the Debenture so presented.
SECTION 3.6 NO SINKING FUND.
The Debentures are not entitled to the benefit of any sinking fund.
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ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
SECTION 4.1 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
Debentures, to defer payments of interest by extending the interest payment
period of such Debentures for a period not exceeding 20 consecutive quarters
(the "Extended Interest Payment Period"), during which Extended Interest Payment
Period no interest shall be due and payable; provided that no Extended Interest
Payment Period may extend beyond the Maturity Date. Interest, the payment of
which has been deferred because of the extension of the interest payment period
pursuant to this Section 4.1, shall bear interest thereon at the rate of _____%
per annum, compounded quarterly during the Extended Interest Payment Period (the
"Compounded Interest"). At the end of the Extended Interest Payment Period, the
Company shall calculate (and deliver such calculation to the Trustee) and pay
all interest accrued and unpaid on the Debentures, including any Additional
Interest and Compounded Interest (together, "Deferred Interest") that shall be
payable to the holders of the Debentures in whose names the Debentures are
registered in the Debenture Register on the first record date after the end of
the Extended Interest Payment Period. Before the termination of any Extended
Interest Payment Period, the Company may further extend such period, provided
that such period together with all such further extensions thereof shall not
exceed 20 consecutive quarters, or extend beyond the Maturity Date of the
Debentures. Upon the termination of any Extended Interest Payment Period and
upon 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 4.2 NOTICE OF EXTENSION.
(a) If the Property Trustee is the only registered holder of the
Debentures 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 one
Business Day before the earlier of (i) the next succeeding date on
which Distributions on the Trust Securities issued by the Trust
are payable; or (ii) the date the Trust is required to give notice
of the record date or the date such Distributions are payable, to
The Nasdaq Stock Market's National Market or other applicable
self-regulatory organization or to holders of the Preferred
Securities issued by the Trust, but in any event at least one
Business Day before such record date.
(b) If the Property Trustee is not the only holder of the Debentures
at the time the Company selects an Extended Interest Payment
Period, the Company shall give the holders of the Debentures and
the Trustee written notice of its selection of such Extended
Interest Payment Period at least one Business Day before the
earlier of
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(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 The Nasdaq Stock Market's
National Market or other applicable self-regulatory organization
or to holders of the Debentures.
(c) The quarter in which any notice is given pursuant to paragraphs
(a) or (b) of this Section 4.2 shall be counted as one of the 20
quarters permitted in the Minimum Extended Interest Payment Period
permitted under Section 4.1.
SECTION 4.3 LIMITATION ON TRANSACTIONS.
If (i) the Company shall exercise its right to defer payment of interest as
provided in Section 4.1; or (ii) there shall have occurred any Event of Default,
then (a) the Company may not, and may not permit any Subsidiary to, 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 (1) the reclassification of any class of the Company's capital stock into
another class of its capital stock; (2) dividends or distributions payable in
any class of the Company's common stock, (3) any declaration of a dividend in
connection with the implementation of a shareholder 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, (4) payments under the Preferred Securities
Guarantee and (5) purchases of the Company's common stock related to the rights
under any of the Company's benefit plans for its or its subsidiaries' directors,
officers or employees); (b) the Company may not, and may not permit any
Subsidiary to, make any payment of interest, principal or premium, if any, or
repay, repurchase or redeem any debt securities issued by the Company which rank
pari passu with or junior to the Debentures or make any guarantee payments with
respect to any guarantee by the Company of the debt securities of any Subsidiary
of the Company if such guarantee ranks pari passu with or junior to the
Debentures; provided, however, that notwithstanding the foregoing the Company
may make payments pursuant to its obligations under the Preferred Securities
Guarantee; and (c) the Company shall not redeem, purchase or acquire less than
all of the outstanding Debentures or any of the Preferred Securities.
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
SECTION 5.1 PAYMENT OF PRINCIPAL AND INTEREST.
The Company shall duly and punctually pay or cause to be paid the principal of
and interest on the Debentures at the time and place and in the manner provided
herein.
SECTION 5.2 MAINTENANCE OF AGENCY.
So long as any of the Debentures remain Outstanding, the Company shall maintain
an office or agency in the Place of Payment where (i) Debentures may be
presented for payment; (ii) Debentures may be presented as hereinabove
authorized for registration of transfer and exchange; and (iii) notice and
demands to or upon the company in respect of the Debentures and this Indenture
may be given or served, such designation to continue with respect to such office
or
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agency until the Company shall, by written notice signed by its President or a
Vice President and delivered to the Trustee, designate some other office or
agency for such purposes or any of them. If at any time the Company shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, notices and demands may be
made or served at the Corporate Trust Office of the Trustee, and the Company
hereby appoints the Trustee as its agent to receive all such presentations,
notices and demands. In addition to any such office or agency, the Company may
from time to time designate one or more offices or agencies where the Debentures
may be presented for registration or transfer and for exchange in the manner
provided herein, 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 Place of Payment for
such purposes. The Company shall give the Trustee prompt written notice of any
such designation or rescission thereof.
SECTION 5.3 PAYING AGENTS.
(a) If the Company shall appoint one or more paying agents for the
Debentures, other than the Trustee, the Company shall cause each
such paying agent to execute and deliver to the Trustee an
instrument in which such agent shall agree with the Trustee,
subject to the provisions of this Section 5.3:
(i) that it shall hold all sums held by it as such agent for the
payment of the principal of or interest on the Debentures
(whether such sums have been paid to it by the Company or by
any other obligor of such Debentures) in trust for the
benefit of the Persons entitled thereto;
(ii) that it shall give the Trustee notice of any failure by the
Company (or by any other obligor of such Debentures) to make
any payment of the principal of or interest on the
Debentures when the same shall be due and payable;
(iii) that it shall, at any time during the continuance of any
failure referred to in the preceding paragraph (a)(ii)
above, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such paying
agent; and
(iv) that it shall perform all other duties of paying agent as
set forth in this Indenture.
(b) If the Company shall act as its own paying agent with respect to
the Debentures, it shall on or before each due date of the
principal of or interest on such Debentures, set aside, segregate
and hold in trust for the benefit of the Persons entitled thereto
a sum sufficient to pay such principal or interest so becoming due
on Debentures until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and shall promptly notify
the Trustee of such action, or any failure (by it or any other
obligor on such Debentures) to take such action. Whenever the
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Company shall have one or more paying agents for the Debentures,
it shall, prior to each due date of the principal of or interest
on any Debentures, deposit with the paying agent a sum sufficient
to pay the principal or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such
principal or interest, and (unless such paying agent is the
Trustee) the Company shall promptly notify the Trustee of this
action or failure so to act.
(c) Notwithstanding anything in this Section 5.3 to the contrary, (i)
the agreement to hold sums in trust as provided in this Section
5.3 is subject to the provisions of Section 13.3 and 13.4; and
(ii) the Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other
purpose, pay, or direct any paying agent to pay, to the Trustee
all sums held in trust by the Company or such paying agent, such
sums to be held by the Trustee upon the same terms and conditions
as those upon which such sums were held by the Company or such
paying agent; and, upon such payment by any paying agent to the
Trustee, such paying agent shall be released from all further
liability with respect to such money.
SECTION 5.4 APPOINTMENT TO FILL VACANCY IN OFFICE OF TRUSTEE.
The Company, whenever necessary to avoid or fill a vacancy in the office of
Trustee, shall appoint, in the manner provided in Section 9.10, a Trustee, so
that there shall at all times be a Trustee hereunder.
SECTION 5.5 COMPLIANCE WITH CONSOLIDATION PROVISIONS.
The Company shall not, while any of the Debentures remain outstanding,
consolidate with, or merge into, or merge into itself, or convey, transfer or
lease all or substantially all of its property and assets to any other entity
and no entity shall consolidate with or merger into the Company or convey,
transfer or lease substantially all of its properties and assets to the Company,
unless the provisions of Article XII hereof are complied with.
SECTION 5.6 LIMITATION ON TRANSACTIONS.
If Debentures are issued to the Trust or a trustee of the Trust in connection
with the issuance of Trust Securities by the Trust and (i) there shall have
occurred any event that would constitute an Event of Default; (ii) the Company
shall be in default with respect to its payment of any obligations under the
Preferred Securities Guarantee relating to the Trust; or (iii) the Company shall
have given notice of its election to defer payments of interest on such
Debentures by extending the interest payment period as provided in this
Indenture and such period, or any extension thereof, shall be continuing, then
(a) the Company may not, and may not permit any Subsidiary to, declare or pay
any dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
(other than (1) the reclassification of any class of the Company's capital stock
into another class of capital stock, (2) dividends or distributions payable in
any class of the Company's common stock, (3) any declaration of a dividend in
connection with the implementation of a shareholder rights
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plan, or the issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto, (4) payments under
the Preferred Securities Guarantee and (5) purchases of the Company's common
stock related to the rights under any of the Company's benefit plans for its or
its subsidiaries' directors, officers or employees); (b) the Company shall not
make any payment of interest, principal or premium, if any, or repay, repurchase
or redeem any debt securities issued by the Company which rank pari passu with
or junior to the Debentures; provided, however, that the Company may make
payments pursuant to its obligations under the Preferred Securities Guarantee;
and (c) the Company shall not redeem, purchase or acquire less than all of the
outstanding Debentures or any of the Preferred Securities.
SECTION 5.7 COVENANTS AS TO THE TRUST.
For so long as such Trust Securities of the Trust remain outstanding, the
Company shall (i) maintain 100% direct or indirect ownership of the Common
Securities of the Trust; provided, however, that any permitted successor of the
Company under this Indenture may succeed to the Company's ownership of the
Common Securities; (ii) not voluntarily terminate, wind up or liquidate the
Trust, except upon prior regulatory approval if then so required under
applicable capital guidelines or regulatory policies and use its reasonable
efforts to cause the Trust (a) to remain a business trust, except in connection
with a distribution of Debentures, the redemption of all of the Trust Securities
of the Trust or certain mergers, consolidations or amalgamations, each as
permitted by the Trust Agreement; and (b) to otherwise continue not to be
treated as an association taxable as a corporation or partnership for United
States federal income tax purposes; and (iii) use its reasonable efforts to
cause each holder of Trust Securities to be treated as owning an individual
beneficial interest in the Debentures. In connection with the distribution of
the Debentures to the holders of the Preferred Securities issued by the Trust
upon a Dissolution Event, the Company shall use its best efforts to list such
Debentures on The Nasdaq Stock Market's National Market or on such other
exchange as the Preferred Securities are then listed.
SECTION 5.8 COVENANTS AS TO PURCHASES.
Prior to _______, 2002, the Company shall not purchase any Debentures, in whole
or in part, from the Trust.
ARTICLE VI
DEBENTUREHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
SECTION 6.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF
DEBENTURE MOLDERS
The Company shall furnish or cause to be furnished to the Trustee (a) on a
monthly basis on each regular record date (as described in Section 2.4) a list,
in such form as the Trustee may reasonably require, of the names and addresses
of the holders of the Debentures as of such regular record date, provided that
the Company shall not be obligated to furnish or cause to furnish such list at
any time that the list shall not differ in any respect from the most recent list
furnished to the Trustee by the Company; and (b) at such other times as the
Trustee may request in writing within
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30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished; provided, however, that, in either case, no such list need be
furnished if the Trustee shall be the Debenture Registrar.
SECTION 6.2 PRESERVATION OF INFORMATION COMMUNICATIONS WITH DEBENTUREHOLDERS
(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 Debentures contained in the most recent list furnished
to it as provided in Section 6.1 and as to the names and addresses
of holders of Debentures received by the Trustee in its capacity
as registrar for the Debentures (if acting in such capacity).
(b) The Trustee may destroy any list furnished to it as provided in
Section 6.1 upon receipt of a new list so furnished.
(c) Debentureholders may communicate as provided in Section 312(b) of
the Trust Indenture Act with other Debentureholders with respect
to their rights under this Indenture or under the Debentures.
SECTION 6.3 REPORTS BY THE COMPANY.
(a) The Company covenants and agrees to file with the Trustee, within
15 days after the Company is required to file the same with the
Commission, copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and
regulations prescribe) that the Company may be required to file
with the Commission pursuant to Section 13 or Section 15(d) of the
Exchange Act; or, if the Company is not required to file
information, documents or reports pursuant to either of such
sections, then to file with the Trustee and the Commission, in
accordance with the rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic
information, documents and reports that may be required pursuant
to Section 13 of the Exchange Act in respect of a security listed
and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations.
(b) The Company covenants and agrees to file with the Trustee and the
Commission, in accordance with the rules and regulations
prescribed from to time by the Commission, such additional
information, documents and reports with respect to compliance by
the Company with the conditions and covenants provided for in this
Indenture as may be required from time to time by such rules and
regulations.
(c) The Company covenants and agrees to transmit by mail, first class
postage prepaid, or reputable over-night delivery service that
provides for evidence of receipt, to the Debentureholders, as
their names and addresses appear upon the Debenture Register,
within 30 days after the filing thereof with the Trustee, such
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summaries of any information, documents and reports required to be
filed by the Company pursuant to subsections (a) and (b) of this
Section 6.3 as may be required by rules and regulations prescribed
from time to time by the Commission.
SECTION 6.4 REPORTS BY THE TRUSTEE.
(a) On or before July 15 in each year in which any of the Debentures
are Outstanding, the Trustee shall transmit by mail, first class
postage prepaid, to the Debentureholders, as their names and
addresses appear upon the Debenture Register, a brief report dated
as of the preceding May 15, if and to the extent required under
Section 313(a) of the Trust Indenture Act.
(b) The Trustee shall comply with Section 313(b) and 313(c) of the
Trust Indenture Act.
(c) A copy of each such report shall, at the time of such transmission
to Debentureholders, be filed by the Trustee with the Company,
with each stock exchange upon which any Debentures are listed (if
so listed) and also with the Commission. The Company agrees to
notify the Trustee when any Debentures become listed on any stock
exchange.
ARTICLE VII
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
ON EVENT OF DEFAULT
SECTION 7.1 EVENTS OF DEFAULT.
(a) Whenever used herein with respect to the Debentures, "Event of
Default" means any one or more of the following events that has
occurred and is continuing:
(i) the Company defaults in the payment of any installment of
interest upon any of the Debentures, as and when the same
shall become 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 of this Indenture shall not
constitute a default in the payment of interest for this
purpose;
(ii) the Company defaults in the payment of the principal on the
Debentures as and when the same shall become due and payable
whether at maturity, upon redemption, by declaration or
otherwise;
(iii) the Company fails to observe or perform any other of its
covenants or agreements with respect to the Debentures for a
period of 90 days after the date on which written notice of
such failure, requiring the same to be remedied and stating
that such notice is a "Notice of Default" hereunder, shall
have been given to the Company by the Trustee, by registered
or
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certified mail, or to the Company and the Trustee by the
holders of at least 25% in principal amount of the
Debentures at the time Outstanding;
(iv) the Company pursuant to or within the meaning of any
Bankruptcy Law (i) commences a voluntary case; (ii) consents
to the entry of an order for relief against it in an
involuntary case; (iii) consents to the appointment of a
Custodian of it or for all or substantially all of its
property; or (iv) makes a general assignment for the benefit
of its creditors;
(v) a court of competent jurisdiction enters an order under any
Bankruptcy Law that (i) is for relief against the Company in
an involuntary case; (ii) appoints a Custodian of the
Company for all or substantially all of its property; or
(iii) orders the liquidation of the Company, and the order
or decree remains unstayed and in effect for 60 days; or
(vi) the Trust shall have voluntarily or involuntarily dissolved,
wound-up its business or otherwise terminated its existence
except in connection with (i) the distribution of Debentures
to holders of Trust Securities in liquidation of their
interests in the Trust; (ii) the redemption of all of the
outstanding Trust Securities of the Trust; or (iii) certain
mergers, consolidations or amalgamations, each as permitted
by the Trust Agreement.
(b) In each and every such case, unless the principal of all the
Debentures shall have already become due and payable, either the
Trustee or the holders of not less than 25% in aggregate principal
amount of the Debentures then Outstanding hereunder, by notice in
writing to the Company (and to the Trustee if given by such
Debentureholders) may declare the principal of all the Debentures
to be due and payable immediately, and upon any such declaration
the same shall become and shall be immediately due and payable,
notwithstanding anything contained in this Indenture or in the
Debentures.
(c) At any time after the principal of the Debentures 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, the holders of a majority in aggregate
principal amount of the Debentures then Outstanding hereunder, by
written notice to the Company and the Trustee, may rescind and
annul such declaration and its consequences if: (i) the Company
has paid or deposited with the Trustee a sum sufficient to pay all
matured installments of interest upon all the Debentures and the
principal of any and all Debentures that shall have become due
otherwise than by acceleration (with interest upon such principal,
and upon overdue installments of interest, at the rate per annum
expressed in the Debentures to the date of such payment or
deposit) and the amount payable to the Trustee under Section 9.6;
and (ii) any and all Events of Default under this Indenture, other
than the nonpayment of principal on Debentures that shall not have
become due by their terms, shall have been remedied or waived as
provided in Section 7.6. No such rescission and annulment
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shall extend to or shall affect any subsequent default or impair
any right consequent thereon.
(d) In case the Trustee shall have proceeded to enforce any right with
respect to Debentures 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 and the Trustee shall be restored respectively to
their former positions and rights hereunder, and all rights,
remedies and powers of the Company and the Trustee shall continue
as though no such proceedings had been taken.
SECTION 7.2 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
(a) The Company covenants that (1) in case it shall default in the
payment of any installment of interest on any of the Debentures,
and such default shall have continued for a period of 90 Business
Days; or (2) in case it shall default in the payment of the
principal of any of the Debentures when the same shall have become
due and payable, whether upon maturity of the Debentures or upon
redemption or upon declaration or otherwise, then, upon demand of
the Trustee, the Company shall pay to the Trustee, for the benefit
of the holders of the Debentures, the whole amount that then shall
have been become due and payable on all such Debentures for
principal or interest, or both, as the case may be, with interest
upon the overdue principal and (if the Debentures are held by the
Trust or a trustee of the Trust, without duplication of any other
amounts paid by the Trust or trustee in respect thereof) upon
overdue installments of interest at the rate per annum expressed
in the Debentures; and, in addition thereto, such further amount
as shall be sufficient to cover the costs and expenses of
collection, and the amount payable to the Trustee under Section
9.7.
(b) If the Company shall fail to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any action 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 other obligor upon the
Debentures and collect the moneys adjudged or decreed to be
payable in the manner provided by law out of the property of the
Company or other obligor upon the Debentures, wherever situated.
(c) In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, readjustment, arrangement, composition or judicial
proceedings affecting the Company or the creditors or property of
either, the Trustee shall have power to intervene in such
proceedings and take any action therein that may be permitted by
the court and shall (except as may be otherwise provided by law)
be entitled to file
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such proofs of claim and other papers and documents as may be
necessary or advisable in order to have the claims of the Trustee
and of the holders of the Debentures allowed for the entire amount
due and payable by the Company under this Indenture at the date of
institution of such proceedings and for any additional amount that
may become due and payable by the Company after such date, and to
collect and receive any moneys or other property payable or
deliverable on any such claim, and to distribute the same after
the deduction of the amount payable to the Trustee under Section
9.7; and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of the holders of the
Debentures to make such payments to the Trustee, and, in the event
that the Trustee shall consent to the making of such payments
directly to such Debentureholders, to pay to the Trustee any
amount due it under Section 9.7.
(d) All rights of action and of asserting claims under this Indenture,
or under any of the terms established with respect to Debentures,
may be enforced by the Trustee without the possession of any of
such Debentures, or the production thereof at any trial or other
proceeding relating 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,
after provision for payment to the Trustee of any amounts due
under Section 9.7, be for the ratable benefit of the holders of
the Debentures. In case of an Event of Default hereunder, 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 at law or in equity or 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. Nothing contained herein shall be deemed to
authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Debentureholder any plan of reorganization,
arrangement, adjustment or composition affecting the Debentures or
the rights of any holder thereof or to authorize the Trustee to
vote in respect of the claim of any Debentureholder in any such
proceeding.
SECTION 7.3 APPLICATION OF MONEYS COLLECTED.
Any moneys collected by the Trustee pursuant to this Article VII with respect to
the Debentures shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such moneys on account
of principal or interest, upon presentation of the Debentures, and notation
thereon the payment, if only partially paid, and upon surrender thereof if fully
paid:
FIRST: To the payment of costs and expenses of collection and of all
amounts payable to the Trustee under Section 9.7;
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SECOND: To the payment of all Senior Indebtedness of the Company if and
to the extent required by Article XVI; and
THIRD: To the payment of the amounts then due and unpaid upon the
Debentures for principal and interest, in respect of which or for the
benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and
payable on such Debentures for principal and interest, respectively.
SECTION 7.4 LIMITATION ON SUITS.
(a) No holder of any Debenture shall have any right by virtue 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 (i) 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 Debentures specifying such Event of Default, as hereinbefore
provided; (ii) the holders of not less than 25% in aggregate
principal amount of the Debentures then Outstanding shall have
made written request upon the Trustee to institute such action,
suit or proceeding in its own name as trustee hereunder; (iii)
such holder or holders 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 (iv) 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; and (v) during such 60 day period, the
holders of a majority in principal amount of the Debentures do not
give the Trustee a direction inconsistent with the request.
(b) Notwithstanding anything contained herein to the contrary or any
other provisions of this Indenture, the right of any holder of the
Debentures to receive payment of the principal of and interest on
the Debentures, as therein provided, on or after the respective
due dates expressed in such Debenture (or in the case of
redemption, on the redemption date), or to institute suit for the
enforcement of any such payment on or after such respective dates
or redemption date, shall not be impaired or affected without the
consent of such holder and by accepting a Debenture hereunder it
is expressly understood, intended and covenanted by the taker and
holder of every Debenture with every other such taker and holder
and the Trustee, that no one or more holders of Debentures 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 of such Debentures, 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 Debentures. For the protection
and enforcement of the provisions of this Section 7.4, each and
every Debentureholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.
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SECTION 7.5 RIGHTS AND REMEDIES CUMULATIVE; DELAY OR OMISSION NOT WAIVER.
(a) Except as otherwise provided in Section 2.8, all powers and
remedies given by this Article VII to the Trustee or to the
Debentureholders 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 Debentures, 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 such
Debentures.
(b) No delay or omission of the Trustee or of any holder of any of the
Debentures 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 7.4, every power and remedy given by this
Article VII or by law to the Trustee or the Debentureholders may
be exercised from time to time, and as often as shall be deemed
expedient, by the Trustee or by the Debentureholders.
SECTION 7.6 CONTROL BY DEBENTUREHOLDERS.
The holders of a majority in aggregate principal amount of the Debentures at the
time Outstanding, determined in accordance with Section 10.4, 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 such direction shall not be in conflict
with any rule of law or with this Indenture. Subject to the provisions of
Section 9.1, the Trustee shall have the right to decline to follow any such
direction if the Trustee in good faith shall, by a Responsible Officer or
Officers of the Trustee, determine that the proceeding so directed would involve
the Trustee in personal liability. The holders of a majority in aggregate
principal amount of the Debentures at the time Outstanding affected thereby,
determined in accordance with Section 10.4, may on behalf of the holders of all
of the Debentures waive any past default in the performance of any of the
covenants contained herein and its consequences, except (i) a default in the
payment of the principal of or interest on, any of the Debentures as and when
the same shall become due by the terms of such Debentures otherwise than by
acceleration (unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal has been deposited with the
Trustee (in accordance with Section 7.1(c)); (ii) a default in the covenants
contained in Section 5.6; or (iii) in respect of a covenant or provision hereof
which cannot be modified or amended without the consent of the holder of each
Outstanding Debenture affected; provided, however, that if the Debentures are
held by the Trust or a trustee of the Trust, such waiver or modification to such
waiver shall not be effective until the holders of a majority in liquidation
preference of Trust Securities of the Trust shall have consented to such waiver
or modification to such waiver; provided further, that if the consent of the
holder of each Outstanding Debenture is required, such waiver shall not be
effective until each holder of the Trust Securities of the Trust shall have
consented to such waiver. Upon any such waiver, the default covered thereby
shall be deemed to be cured for all purposes of
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this Indenture and the Company, the Trustee and the holders of the Debentures
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.
SECTION 7.7 UNDERTAKING TO PAY COSTS.
All parties to this Indenture agree, and each holder of any Debentures by such
holder's acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any action
taken or omitted by it as Trustee, the filing by any party litigant in such suit
of an undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 7.7 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Debentureholder, or group of
Debentureholders holding more than 10% in aggregate principal amount of the
Outstanding Debentures, or to any suit instituted by any Debentureholder for the
enforcement of the payment of the principal of or interest on the Debentures, on
or after the respective due dates expressed in such Debenture or established
pursuant to this Indenture.
SECTION 7.8 DIRECT ACTION BY HOLDERS OF PREFERRED SECURITIES.
Any registered holder of the Preferred Securities issued by the Trust shall have
the right, upon the occurrence of an Event of Default described in Section
7.1(a)(i) or 7.1(a)(ii), to institute a suit directly against the Company for
enforcement of payment to such holder of principal of and (subject to Sections
2.4 and 4.1) interest (including any Additional Interest) on the Debentures
having a principal amount equal to the aggregate Liquidation Amount (as defined
in the Trust Agreement) of such Preferred Securities held by such holder. The
Company may not amend this Indenture to remove this right to institute a suit
directly against the Company without the prior consent of the holders of all the
Preferred Securities.
ARTICLE VIII
FORM OF DEBENTURE AND ORIGINAL ISSUE
SECTION 8.1 FORM OF DEBENTURE.
The Debenture and the Trustee's Certificate of Authentication to be endorsed
thereon are to be substantially in the forms contained as Exhibit A attached
hereto and incorporated herein by reference.
SECTION 8.2 ORIGINAL ISSUE OF DEBENTURES.
Debentures in the aggregate principal amount of up to $47,840,000 may, upon
execution of this Indenture, be executed by the Company and delivered to the
Trustee for authentication, and the Trustee shall thereupon authenticate and
deliver said Debentures to or upon the written order of the Company, signed by
its Chairman, its Vice Chairman, its President, or any Vice President and its
Treasurer or an Assistant Treasurer, without any further action by the Company.
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ARTICLE IX
CONCERNING THE TRUSTEE
SECTION 9.1 CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing of all Events of Default that may have occurred,
shall undertake to perform with respect to the Debentures such
duties and only such duties as are specifically set forth in this
Indenture, and no implied covenants shall be read into this
Indenture against the Trustee. In case an Event of Default has
occurred that has not been cured or waived, the Trustee shall
exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b)) 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:
(1) prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default that may have occurred:
(i) the duties and obligations of the Trustee shall, with
respect to the Debentures, be determined solely by the
express provisions of this Indenture, and the Trustee shall
not be liable with respect to the Debentures except for the
performance of such duties and obligations as are
specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture
against the Trustee; and
(ii) in the absence of bad faith on the part of the Trustee, the
Trustee may with respect to the Debentures 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 that by any provision hereof are
specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of
this Indenture;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the
Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts;
(3) 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 holders of not less than a majority in principal
amount of the Debentures at the time outstanding
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relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Indenture
with respect to the Debentures; and
(4) 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 9.2 NOTICE OF DEFAULTS.
Within 90 days after actual knowledge by a Responsible Officer of the Trustee of
the occurrence of any default hereunder with respect to the Debentures, the
Trustee shall transmit by mail to all holders of the Debentures, as their names
and addresses appear in the Debenture Register, notice of such default, unless
such default shall have been cured or waived; provided, however, that, except in
the case of any default in the payment of the principal or interest (including
any Additional Interest) on any Debenture, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee or a trust committee of the directors and/or Responsible Officers of
the Trustee determines in good faith that the withholding of such notice is in
the interests of the holders of such Debentures; and provided, further, that in
the case of any default of the character specified in section 7.1(a)(iii), no
such notice to holders of Debentures need be sent until at least 30 days after
the occurrence thereof. For the purposes of this Section 9.2, the term "default"
means any event which is, or after notice or lapse of time or both, would
become, an Event of Default with respect to the Debentures.
SECTION 9.3 CERTAIN RIGHTS OF TRUSTEE.
Except as otherwise provided in Section 9.1:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, approval, bond, security or other paper or document
believed by it to be genuine and to have been signed or presented
by the proper party or parties;
(b) Any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by a Board Resolution or an
instrument signed in the name of the Company by the President or
any Vice President and by the Secretary or an Assistant Secretary
or the Treasurer or an Assistant Treasurer thereof (unless other
evidence in respect thereof is specifically prescribed herein);
(c) The Trustee shall not be deemed to have knowledge of a default or
an Event of Default, other than an Event of Default specified in
Section 7.1(a)(i) or (ii), unless and until it receives
notification of such Event of Default from the Company or by
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holders of at least 25% of the aggregate principal amount of the
Debentures at the time Outstanding;
(d) The Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted hereunder in good faith and in reliance
thereon;
(e) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request,
order or direction of any of the Debentureholders, pursuant to the
provisions of this Indenture, unless such Debentureholders shall
have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities that may be incurred
therein or thereby; nothing contained herein shall, however,
relieve the Trustee of the obligation, upon the occurrence of an
Event of Default (that has not been cured or waived) to exercise
with respect to the Debentures 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 liable for any action taken or omitted to
be taken 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;
(g) 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, security, or other papers or documents, but the
Trustee tin its discretion may make such inquiry or investigation
into such facts or matters as it may see fit, and, if the Trustee
shall determine to make such inquiry or investigation, it shall be
entitled to examine the books, records and premises of the
Company, personally or by agent or attorney; and
(h) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
SECTION 9.4 TRUSTEE NOT RESPONSIBLE FOR RECITALS, ETC.
(a) The Recitals contained herein and in the Debentures, except the
certificates of authentication, shall be taken as the statements
of the Company, and the Trustee assumes no responsibility for the
correctness of the same.
(b) The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Debentures.
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(c) The Trustee shall not be accountable for the use or application by
the Company of any of the Debentures or of the proceeds of such
Debentures, or for the use or application of any moneys paid over
by the Trustee in accordance with any provision of this Indenture,
or for the use or application of any moneys received by any paying
agent other than the Trustee.
SECTION 9.5 MAY HOLD DEBENTURES.
The Trustee or any paying agent or registrar for the Debentures, in its
individual or any other capacity, may become the owner or pledgee of Debentures
and, subject to Sections 9.9 and 9.14, may otherwise deal with the Company with
the same rights it would have if it were not Trustee, paying agent or Debenture
Registrar.
SECTION 9.6 MONEYS HELD IN TRUST.
Subject to the provisions of Section 13.5, all moneys received by the Trustee
shall, until used or applied as herein provided, be held in trust for the
purposes for which they were received, but need not be segregated from other
funds except to the extent required by law. The Trustee shall be under no
liability for interest on any moneys received by it hereunder except such as it
may agree with the Company to pay thereon.
SECTION 9.7 COMPENSATION AND REIMBURSEMENT.
The Company covenants and agrees to pay to the Trustee, and the Trustee shall be
entitled to, such reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust), as the Company and the Trustee may from time to time agree in writing,
for all services rendered by it in the execution of the trusts hereby created
and in the exercise and performance of any of the powers and duties hereunder of
the Trustee, and, except as otherwise expressly provided herein, the Company
shall 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
the Trustee (and its officers, agents, directors and employees) for, and to hold
it harmless against, any loss, liability or expense 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.
SECTION 9.8 RELIANCE ON OFFICERS' CERTIFICATE.
Except as otherwise provided in Section 9.1, 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 suffering or
omitting to take any action hereunder, such matter (unless other evidence in
respect thereof be 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
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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, suffered or
omitted to be taken by it under the provisions of this Indenture upon the faith
thereof.
SECTION 9.9 DISQUALIFICATION: CONFLICTING INTERESTS.
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 9.10 CORPORATE TRUSTEE REQUIRED ELIGIBILITY.
There shall at all times be a Trustee with respect to the Debentures issued
hereunder which 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 $50,000,000, 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 9.10, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. The Company may not, nor may any Person
directly or indirectly controlling, controlled by, or under common control with
the Company, serve as Trustee. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 9.10, the Trustee
shall resign immediately in the manner and with the effect specified in Section
9.11.
SECTION 9.11 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) The Trustee or any successor hereafter appointed, may at any time
resign by giving written notice thereof to the Company and by
transmitting notice of resignation by mail, first class postage
prepaid, to the Debentureholders, as their names and addresses
appear upon the Debenture Register. Upon receiving such notice of
resignation, the Company shall promptly appoint a successor
trustee with respect to Debentures by written instrument, in
duplicate, executed by order of the Board of Directors, one copy
of which instrument shall be delivered to the resigning Trustee
and one copy to the successor trustee. If no successor trustee
shall have been so appointed and have accepted appointment within
30 days after the mailing of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor trustee with respect to
Debentures, or any Debentureholder who has been a bona fide holder
of a Debenture or Debentures for at least six months may, subject
to the provisions of Section 9.9, 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
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such notice, if any, as it may deem proper and prescribe, appoint
a successor trustee.
(b) In case at any time any one of the following shall occur
(i) the Trustee shall fail to comply with the provisions of
Section 9.9 after written request therefor by the Company or
by any Debentureholder who has been a bona fide holder of a
Debenture or Debentures for at least six months; or
(ii) the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.10 and shall fail to resign
after written request therefor by the Company or by any such
Debentureholder; or
(iii) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or commence a voluntary
bankruptcy proceeding, or a receiver of the Trustee or of
its property shall be appointed or consented to, 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 with respect
to all Debentures and appoint a successor trustee by written
instrument, in duplicate, executed by order of the Board of
Directors, 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 9.9,
unless the Trustee's duty to resign is stayed as provided
herein, any Debentureholder who has been a bona fide holder
of a Debenture or Debentures for at least six months may, on
behalf of that holder 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
Debentures at the time Outstanding may at any time remove the
Trustee by so notifying the Trustee and the Company and may
appoint a successor Trustee with the consent of the Company.
(d) No resignation or removal of the Trustee and no appointment of a
successor trustee with respect to the Debentures pursuant to any
of the provisions of this Section 9.11 shall become effective
until acceptance of appointment by the successor trustee as
provided in Section 9.12.
SECTION 9.12 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor trustee with
respect to the Debentures, every successor trustee so appointed
shall execute, acknowledge and
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deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such
successor trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on the request of the Company or the
successor trustee, such retiring Trustee shall, upon payment of
its charges, execute and deliver an instrument transferring to
such successor trustee all the rights, powers, and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to
such successor trustee all property and money held by such
retiring Trustee hereunder.
(b) Upon request of any successor trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in
and confirming to such successor trustee all such rights, powers
and trusts referred to in paragraph (a) of this Section 9.12.
(c) No successor trustee shall accept its appointment unless at the
time of such acceptance such successor trustee shall be qualified
and eligible under this Article IX.
(d) Upon acceptance of appointment by a successor trustee as provided
in this Section 9.12, the Company shall transmit notice of the
succession of such trustee hereunder by mail, first class postage
prepaid, to the Debentureholders, as their names and addresses
appear upon the Debenture Register. If the Company fails to
transmit such notice within ten days after acceptance of
appointment by the successor trustee, the successor trustee shall
cause such notice to be transmitted at the expense of the Company.
SECTION 9.13 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or with which
it may be consolidated, or any corporation resulting from any merger, conversion
or consolidation to which the Trustee shall be a party, or any corporation
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided that such corporation shall be
qualified under the provisions of Section 9.9 and eligible under the provisions
of Section 9.10, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. In case any Debentures shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Debentures so authenticated with the same effect as if such
successor Trustee had itself authenticated such Debentures.
SECTION 9.14 PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE COMPANY.
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The Trustee shall comply with Section 3Il(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.
ARTICLE X
CONCERNING THE DEBENTUREHOLDERS
SECTION 10.1 EVIDENCE OF ACTION BY HOLDERS.
(a) Whenever in this Indenture it is provided that the holders of a
majority or specified percentage in aggregate principal amount of
the Debentures 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 majority or specified
percentage have joined therein may be evidenced by any instrument
or any number of instruments of similar tenor executed by such
holders of Debentures in Person or by agent or proxy appointed in
writing.
(b) If the Company shall solicit from the Debentureholders 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 Debentureholders 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 Debentureholders of
record at the close of business on the record date shall be
computed to be Debentureholders for the purposes of determining
whether Debentureholders of the requisite proportion of
Outstanding Debentures have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent,
waiver or other action, and for that purpose the Outstanding
Debentures shall be computed as of the record date; provided,
however, that no such authorization, agreement or consent by such
Debentureholders 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 10.2 PROOF OF EXECUTION BY DEBENTUREHOLDERS.
Subject to the provisions of Section 9.1, proof of the execution of any
instrument by a Debentureholder (such proof shall not require notarization) or
his agent or proxy and proof of the holding by any Person of any of the
Debentures shall be sufficient if made in the following manner:
(a) The fact and date of the execution by any such Person of any
instrument may be proved in any reasonable manner acceptable to
the Trustee.
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(b) The ownership of Debentures shall be proved by the Debenture
Register of such Debentures or by a certificate of the Debenture
Registrar thereof.
(c) The Trustee may require such additional proof of any matter
referred to in this Section 10.2 as it shall deem necessary.
SECTION 10.3 WHO MAY BE DEEMED OWNERS.
Prior to the due presentment for registration of transfer of any Debenture, the
Company, the Trustee, any paying agent, any Authenticating Agent and any
Debenture Registrar may deem and treat the Person in whose name such Debenture
shall be registered upon the books of the Company as the absolute owner of such
Debenture (whether or not such Debenture shall be overdue and notwithstanding
any notice of ownership or writing thereon made by anyone other than the
Debenture Registrar) for the purpose of receiving payment of or on account of
the principal of and interest on such Debenture (subject to Section 2.3) and for
all other purposes; and neither the Company nor the Trustee nor any paying agent
nor any Authenticating Agent nor any Debenture Registrar shall be affected by
any notice to the contrary.
SECTION 10.4 CERTAIN DEBENTURES OWNED BY COMPANY DISREGARDED.
In determining whether the holders of the requisite aggregate principal amount
of Debentures have concurred in any direction, consent or waiver under this
Indenture, the Debentures that are owned by the Company or any other obligor on
the Debentures or by any Person directly or indirectly controlling or controlled
by, or under common control with the Company or any other obligor on the
Debentures shall be disregarded and deemed not to be Outstanding for the purpose
of any such determination, except that for the purpose of determining whether
the Trustee shall be protected in relying on any such direction, consent or
waiver, only Debentures that the Trustee actually knows are so owned shall be so
disregarded. The Debentures so owned that have been pledged in good faith may be
regarded as Outstanding for the purposes of this Section 10.4, if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Debentures and that the pledgee is not a Person directly or
indirectly, controlling or controlled by, or under direct or indirect common
control with the Company or any such other obligor. In case of a dispute as to
such right, any decision by the Trustee taken upon the advice of counsel shall
be full protection to the Trustee.
SECTION 10.5 ACTIONS BINDING ON FUTURE DEBENTUREHOLDERS.
At any time prior to (but not after) the evidencing to the Trustee, as provided
in Section 10.1, of the taking of any action by the holders of the majority or
percentage in aggregate principal amount of the Debentures specified in this
Indenture in connection with such action, any holder of a Debenture that is
shown by the evidence to be included in the Debentures the holders of which have
consented to such action may, by filing written notice with the Trustee, and
upon proof of holding as provided in Section 10.2, revoke such action so far as
concerns such Debenture. Except as aforesaid any such action taken by the holder
of any Debenture shall be conclusive and binding upon such holder and upon all
future holders and owners of such Debenture, and of any
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Debenture issued in exchange therefor, on registration of transfer thereof or in
place thereof, irrespective of whether or not any notation in regard thereto is
made upon such Debenture. Any action taken by the holders of the majority or
percentage in aggregate principal amount of the Debentures specified in this
Indenture in connection with such action shall be conclusively binding upon the
Company, the Trustee and the holders of all the Debentures.
ARTICLE XI
SUPPLEMENTAL INDENTURES
SECTION 11.1 SUPPLEMENTAL INDENTURES WITHOUT THE CONSENT OF DEBENTUREHOLDERS.
In addition to any supplemental indenture otherwise authorized by this
Indenture, the Company and the Trustee may from time to time and at any time
enter into an indenture or indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as then in effect), without the
consent of the Debentureholders, for one or more of the following purposes:
(a) to cure any ambiguity, defect, or inconsistency herein, in the
Debentures;
(b) to comply with Article X;
(c) to provide for uncertificated Debentures in addition to or in
place of certificated Debentures;
(d) to add to the covenants of the Company for the benefit of the
holders of all or any of the Debentures or to surrender any right
or power herein conferred upon the Company;
(e) to evidence the succession of another corporation to the Company,
and the assumption by any such successor of the covenants of the
Company herein and in the Debentures contained;
(f) to convey, transfer, assign, mortgage or pledge to or with the
Trustee any property or assets which the Company may desire to
convey, transfer, assign, mortgage or pledge;
(g) to add to, delete from, or revise the conditions, limitations, and
restrictions on the authorized amount, terms, or purposes of
issue, authentication, and delivery of Debentures, as herein set
forth;
(h) to make any change that does not adversely affect the rights of
any Debentureholder in any material respect;
(i) to provide for the issuance of and establish the form and terms
and conditions of the Debentures, to establish the form of any
certifications required to be furnished pursuant to the terms of
this Indenture or of the Debentures, or to add to the rights of
the holders of the Debentures; or
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(j) qualify or maintain the qualification of this Indenture under the
Trust Indenture Act.
The Trustee is hereby authorized to join with the Company in the execution of
any such supplemental indenture, and to make any further appropriate agreements
and stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into any such supplemental indenture that affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section 11.1 may
be executed by the Company and the Trustee without the consent of the holders of
any of the Debentures at the time Outstanding, notwithstanding any of the
provisions of Section 11.2.
SECTION 11.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF DEBENTUREHOLDERS.
With the consent (evidenced as provided in Section 10.1) of the holders of not
less than a majority in aggregate principal amount of the Debentures at the time
Outstanding, the Company, when authorized by Board Resolutions, and the Trustee
may from time to time and at any time enter into an indenture or indentures
supplemental hereto (which shall conform to the provisions of the Trust
Indenture Act as then in effect) for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
of any supplemental indenture or of modifying in any manner not covered by
Section 11.1 the rights of the holders of the Debentures under this Indenture;
provided, however, that no such supplemental indenture shall without the consent
of the holders of each Debenture then Outstanding and affected thereby, (i)
extend the fixed maturity of any Debentures, reduce the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon
(other than the Company's right to defer interest pursuant to this Indenture),
without the consent of the holder of each Debenture so affected; or (ii) reduce
the aforesaid percentage of Debentures, the holders of which are required to
consent to any such supplemental indenture; provided further, that if the
Debentures are held by the Trust or a trustee of the Trust, such supplemental
indenture shall not be effective until the holders of a majority in liquidation
preference of Trust Securities of the Trust shall have consented to such
supplemental indenture; provided further, that if the consent of the holder of
each Outstanding Debenture is required, such supplemental indenture shall not be
effective until each holder of the Trust Securities of the Trust shall have
consented to such supplemental indenture. It shall not be necessary for the
consent of the Debentureholders affected thereby under this Section 11.2 to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such consent shall approve the substance thereof.
SECTION 11.3 EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture pursuant to the provisions of
this Article XI, 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 Debentures 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.
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SECTION 11.4 DEBENTURES AFFECTED BY SUPPLEMENTAL INDENTURES.
Debentures affected by a supplemental indenture, authenticated and delivered
after the execution of such supplemental indenture pursuant to the provisions of
this Article XI, may bear a notation 1n form approved by the Company, provided
such form meets the requirements of any exchange upon which the Debentures may
be listed, as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Debentures so modified as to conform, in the
opinion of the Board of Directors of the Company, to any modification of this
Indenture contained in any such supplemental indenture may be prepared by the
Company, authenticated by the Trustee and delivered in exchange for the
Debentures then Outstanding.
SECTION 11.5 EXECUTION OF SUPPLEMENTAL INDENTURES.
(a) Upon the request of the Company, accompanied by their Board
Resolutions authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustee of evidence of the
consent of Debentureholders required to consent thereto 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. The Trustee, subject to the provisions of
Section 9.1, may receive an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant to this
Article XI is authorized or permitted by, and conforms to, the
terms of this Article XI and that it is proper for the Trustee
under the provisions of this Article XI to join in the execution
thereof.
(b) Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section
11.5, the Trustee shall transmit by mail, first class postage
prepaid, a notice, setting forth in general terms the substance of
such supplemental indenture, to the Debentureholders as their
names and addresses appear upon the Debenture 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.
ARTICLE XII
SUCCESSOR CORPORATION
SECTION 12.1 COMPANY MAY CONSOLIDATE, ETC.
Nothing contained in this Indenture or in any of the Debentures shall prevent
any consolidation or merger of the Company with or into any other corporation or
corporations (whether or not affiliated with the Company, as the case may be),
or successive consolidations or mergers in which the Company, as the case may
be, or its successor or successors shall be a party or parties, or shall prevent
any sale, conveyance, transfer or other disposition of the property of the
Company, as the case may be, or its successor or successors as an entirety, or
substantially as an entirety, to any other corporation (whether or not
affiliated with the Company, as the case may
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be, or its successor or successors) authorized to acquire and operate the same;
provided, however, the Company hereby covenants and agrees that, (i) upon any
such consolidation, merger, sale, conveyance, transfer or other disposition, the
due and punctual payment, in the case of the Company, of the principal of and
interest on all of the Debentures, 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 as the case may be, shall be
expressly assumed, by supplemental indenture (which shall conform to the
provisions of the Trust Indenture Act, as then in effect) satisfactory in form
to the Trustee executed and delivered to the Trustee by the entity formed by
such consolidation, or into which the Company, as the case may be, shall have
been merged, or by the entity which shall have acquired such property; (ii) in
case the Company consolidates with or merges into another Person or conveys or
transfers its properties and assets substantially then as an entirety to any
Person, the successor Person is organized under the laws of the United States or
any state or the District of Columbia; and (iii) immediately after giving effect
thereto, no Event of Default, and no event which, after notice or lapse of time
or both, would become an Event of Default, shall have occurred and be
continuing.
SECTION 12.2 SUCCESSOR CORPORATION SUBSTITUTED.
(a) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition 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, in the case of the Company, the due and punctual payment of
the principal of and interest on all of the Debentures Outstanding
and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, as
the case may be, such successor corporation shall succeed to and
be substituted for the Company, with the same effect as if it had
been named as the Company herein, and thereupon the predecessor
corporation shall be relieved of all obligations and covenants
under this Indenture and the Debentures.
(b) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition such changes in phraseology and form
(but not in substance) may be made in the Debentures thereafter to
be issued as may be appropriate.
(c) Nothing contained in this Indenture or in any of the Debentures
shall prevent the Company from merging into itself or acquiring by
purchase or otherwise all or any part of the property of any other
Person (whether or not affiliated with the Company).
SECTION 12.3 EVIDENCE OF CONSOLIDATION, ETC. TO TRUSTEE.
The Trustee, subject to the provisions of Section 9.1, may receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale,
conveyance, transfer or other disposition, and any such assumption, comply with
the provisions of this Article XII.
ARTICLE XIII
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SATISFACTION AND DISCHARGE
SECTION 13.1 SATISFACTION AND DISCHARGE OF INDENTURE.
If at any time: (a) the Company shall have delivered to the Trustee for
cancellation all Debentures theretofore authenticated (other than any Debentures
that shall have been destroyed, lost or stolen and that shall have been replaced
or paid as provided in Section 2.8) and Debentures for whose payment money or
Governmental Obligations have theretofore been deposited in trust or segregated
and held in trust by the Company (and thereupon repaid to the Company or
discharged from such trust, as provided in Section 13.5); or (b) all such
Debentures not theretofore 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 or cause to be deposited with the Trustee as trust funds
the entire amount in moneys or Governmental Obligations sufficient or a
combination thereof, sufficient in the opinion of a nationally recognized firm
of independent public accountants expressed in written certification thereof
delivered to the Trustee, to pay at maturity or upon redemption all Debentures
not theretofore delivered to the Trustee for cancellation, including principal
and interest due or to become due to such date of maturity or date fixed for
redemption, as the case may be, and if the Company shall also pay or cause to be
paid all other sums payable hereunder by the Company; then this Indenture shall
thereupon cease to be of further effect except for the provisions of Sections
2.3, 2.6, 2.8, 5.1, 5.2, 5.3 and 9.10, that shall survive until the date of
maturity or redemption date, as the case may be, and Sections 9.6 and 13.5, that
shall survive to such date and thereafter, and the Trustee, on demand of the
Company and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture.
SECTION 13.2 DISCHARGE OF OBLIGATIONS.
If at any time all Debentures not heretofore delivered to the Trustee for
cancellation or that have not become due and payable as described in Section
13.1 shall have been paid by the Company by depositing irrevocably with the
Trustee as trust funds moneys or an amount of Governmental Obligations
sufficient to pay at maturity or upon redemption all Debentures not theretofore
delivered to the Trustee for cancellation, including principal and interest due
or to become due to such date of maturity or date fixed for redemption, as the
case may be, and if the Company shall also pay or cause to be paid all other
sums payable hereunder by the Company, then after the date such moneys or
Governmental Obligations, as the case may be, are deposited with the Trustee,
the obligations of the Company under this Indenture shall cease to be of further
effect except for the provisions of Sections 2.3, 2.6, 2.8, 5.1, 5.2, 5.3, 9.6,
9.10 and 13.5 hereof that shall survive until such Debentures shall mature and
be paid. Thereafter, Sections 9.6 and 13.5 shall survive.
SECTION 13.3 DEPOSITED MONEYS TO BE HELD IN TRUST.
All monies or Governmental Obligations deposited with the Trustee pursuant to
Sections 13.1 or 13.2 shall be held in trust and shall be available for payment
as due, either directly or through any paying agent (including the Company
acting as its own paying agent), to the holders of the
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Debentures for the payment or redemption of which such moneys or Governmental
Obligations have been deposited with the Trustee.
SECTION 13.4 PAYMENT OF MONIES HELD BY PAYING AGENTS.
In connection with the satisfaction and discharge of this Indenture, all moneys
or Governmental Obligations then held by any paying agent under the provisions
of this Indenture shall, upon demand of the Company, be paid to the Trustee and
thereupon such paying agent shall be released from all further liability with
respect to such moneys or Governmental Obligations.
SECTION 13.5 REPAYMENT TO COMPANY.
Any monies or Governmental Obligations deposited with any paying agent or the
Trustee, or then held by the Company in trust, for payment of principal of or
interest on the Debentures that are not applied but remain unclaimed by the
holders of such Debentures for at least two years after the date upon which the
principal of or interest on such Debentures shall have respectively become due
and payable, shall be repaid to the Company, as the case may be, on May 31 of
each year or (if then held by the Company) shall be discharged from such trust;
and thereupon the paying agent and the Trustee shall be released from all
further liability, with respect to such money's or Governmental Obligations, and
the holder of any of the Debentures entitled to receive such payment shall
thereafter, as an unsecured general creditor, look only to the Company for the
payment thereof.
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 14.1 NO RECOURSE.
No recourse under or upon any obligation, covenant or agreement of this
Indenture, or of the Debentures, or for any claim based thereon or otherwise in
respect thereof, shall be had against any incorporator, stockholder, officer or
director, past, present or future as such, of the Company or of any predecessor
or successor corporation, either directly or through the Company or any such
predecessor or successor corporation, 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 this Indenture and the obligations
issued hereunder are solely corporate obligations, and that no such personal
liability whatever shall attach to, or is or shall be incurred by, the
incorporators, stockholders, officers or directors as such, of the Company or of
any predecessor or successor corporation, or any of them, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the Debentures or implied therefrom; and that any and all such personal
liability of every name and nature, either at common law or in equity or by
constitution or statute, of, and any and all such rights and claims against,
every such incorporator, stockholder, officer or director as such, because of
the creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or in any of
the
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Debentures or implied therefrom, are hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issuance of such Debentures.
ARTICLE XV
MISCELLANEOUS PROVISIONS
SECTION 15.1 EFFECT ON SUCCESSORS AND ASSIGNS.
All the covenants, stipulations, promises and agreements in this Indenture
contained by or on behalf of the Company shall bind their respective successors
and assigns, whether so expressed or not.
SECTION 15.2 ACTIONS BY SUCCESSOR.
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 corresponding
board, committee or officer of any corporation that shall at the time be the
lawful sole successor of the Company.
SECTION 15.3 SURRENDER OF COMPANY POWERS.
The Company by instrument in writing executed by appropriate authority of its
Board of Directors and delivered to the Trustee may surrender any of the powers
reserved to the Company, and thereupon such power so surrendered shall terminate
both as to the Company, as the case may be, and as to any successor corporation.
SECTION 15.4 NOTICES.
Except as otherwise expressly provided herein any notice or demand that by any
provision of this Indenture is required or permitted to be given or served by
the Trustee or by the holders of Debentures to or on the Company may be given or
served by being deposited first class postage prepaid in a post-office letter
box addressed(until another address is filed in writing by the Company with the
Trustee), as follows: BankUnited Financial Corporation, 255 Alhambra Circle,
Coral Gables, Florida 33134, Attention: Secretary. Any notice, election, request
or demand by the Company or any Debentureholder 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 Corporate Trust Office of the Trustee.
SECTION 15.5 GOVERNING LAW.
This Indenture and each Debenture shall be deemed to be a contract made under
the internal laws of the State of New York and for all purposes shall be
construed in accordance with the laws of said State without regard to conflicts
of law principals.
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SECTION 15.6 TREATMENT OF DEBENTURES AS DEBT.
It is intended that the Debentures shall be treated as indebtedness and not as
equity for federal income tax purposes. The provisions of this Indenture shall
be interpreted to further this intention.
SECTION 15.7 COMPLIANCE CERTIFICATES AND OPINIONS.
(a) 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 all conditions precedent 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,
except that in the case of any such application or demand as to
which the furnishing of such documents is specifically required by
any provision of this Indenture relating to such particular
application or demand, no additional certificate or opinion need
be furnished.
(b) Each certificate or opinion of the Company provided for in this
Indenture and delivered to the Trustee with respect to compliance
with a-condition or covenant in this Indenture shall include (1) a
statement that the Person making such certificate or opinion has
read such covenant or condition; (2) a brief statement as to the
nature and scope of the examination or investigation upon which
the statements or opinions contained in such certificate or
opinion are based; (3) a statement that, in the opinion of such
Person, he has made such examination or investigation as, in the
opinion of such Person, 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 15.8 PAYMENTS ON BUSINESS DAYS.
In any case where the date of maturity of interest or principal of any Debenture
or the date of redemption of any Debenture shall not be a Business Day, then
payment of interest or principal may (subject to Section 2.4) be made on the
next succeeding Business Day with the same force and effect as if made on the
nominal date of maturity or redemption, and no interest shall accrue for the
period after such nominal date.
SECTION 15.9 CONFLICT WITH TRUST INDENTURE ACT.
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 15.10 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.
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<PAGE>
SECTION 15.11 SEPARABILITY.
In case any one or more of the provisions contained in this Indenture or in the
Debentures 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 Debentures, but this Indenture
and the Debentures shall be construed as if such invalid or illegal or
unenforceable provision had never been contained herein or therein.
SECTION 15.12 ASSIGNMENT.
The Company shall 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 shall remain liable for all such obligations. Subject to the
foregoing, this Indenture is binding upon and inures to the benefit of the
parties hereto and their respective successors and assigns. This Indenture may
not otherwise be assigned by the parties hereto.
SECTION 15.13 ACKNOWLEDGMENT OF RIGHTS.
The Company acknowledges that, with respect to any Debentures held by the Trust
or a trustee of the Trust, if the Property Trustee fails to enforce its rights
under this Indenture as the holder of the Debentures held as the assets of the
Trust, any holder of Preferred Securities may institute legal proceedings
directly against the Company to enforce such Property Trustee's rights under
this Indenture without first instituting any legal proceedings against such
Property Trustee or any other person or entity. Notwithstanding the foregoing,
if an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Company to pay interest or principal on the
Debentures on the date such interest or principal is otherwise payable (or in
the case of redemption, on the redemption date), the Company acknowledges that a
holder of Preferred Securities may directly institute a proceeding for
enforcement of payment to such holder of the principal of or interest on the
Debentures having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such holder on or after the respective due date
specified in the Debentures.
ARTICLE XVI
SUBORDINATION OF DEBENTURES
SECTION 16.1 AGREEMENT TO SUBORDINATE.
The Company covenants and agrees, and each holder of Debentures issued hereunder
by such holder's acceptance thereof likewise covenants and agrees, that all
Debentures shall be issued subject to the provisions of this Article XVI; and
each holder of a Debenture, 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 on all Debentures issued
hereunder shall, to the extent and in the manner hereinafter set forth, be
subordinated and junior in right of payment to the prior payment in full of all
Senior Debt and Subordinated Debt (collectively, "Senior Indebtedness") to the
extent provided herein, whether outstanding at the
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date of this Indenture or thereafter incurred. No provision of this Article XVI
shall prevent the occurrence of any default or Event of Default hereunder.
SECTION 16.2 DEFAULT ON SENIOR DEBT OR SUBORDINATED DEBT.
In the event and during the continuation of any default by the Company in the
payment of principal, premium, interest or any other payment due on any Senior
Indebtedness of the Company, or in the event that the maturity of any Senior
Indebtedness of the Company 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 Debentures. In
the event that, notwithstanding the foregoing, any payment shall be received by
the Trustee when such payment is prohibited by the preceding sentence of this
Section 16.2, 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 Company or the Trustee in writing within 90 days of such payment of
the amounts then due and owing on the Senior Indebtedness and only the amounts
specified in such notice to the Trustee shall be paid to the holders of Senior
Indebtedness.
SECTION 16.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY.
(a) 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 amounts due upon all Senior Indebtedness of the
Company shall first be paid in full, or payment thereof provided
for in money in accordance with its terms, before any payment is
made by the Company on account of the principal or interest on the
Debentures; and upon any such dissolution or winding-up or
liquidation or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the holders of
the Debentures or the Trustee would be entitled to receive from
the Company, except for the provisions of this Article XVI, 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 holders of the Debentures or by the
Trustee under this 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
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
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<PAGE>
Indebtedness, before any payment or distribution is made to the
holders of Debentures or to the Trustee.
(b) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities, prohibited by the
foregoing, shall be received by the Trustee before all Senior
Indebtedness of the Company 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
Indebtedness of the Company, as the case may be, remaining unpaid
to the extent necessary to pay 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.
(c) For purposes of this Article XVI, 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 XVI with respect to the
Debentures to the payment of all Senior Indebtedness of the
Company, as the case may be, 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
corporation or the liquidation or dissolution of the Company
following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation
upon the terms and conditions provided for in Article XII shall
not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 16.3 if such other
corporation shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in
Article XII. Nothing in Section 16.2 or in this Section 16.3 shall
apply to claims of, or payments to, the Trustee under or pursuant
to Section 9.7.
SECTION 16.4 SUBROGATION.
(a) Subject to the payment in full of all Senior Indebtedness of the
Company, the rights of the holders of the Debentures 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 Debentures shall be
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<PAGE>
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
holders of the Debentures or the Trustee would be entitled except
for the provisions of this Article XVI, and no payment over
pursuant to the provisions of this Article XVI to or for the
benefit of the holders of such Senior Indebtedness by holders of
the Debentures or the Trustee, shall, as between the Company, its
creditors other than holders of Senior Indebtedness of the
Company, and the holders of the Debentures, 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
XVI are and are intended solely for the purposes of defining the
relative rights of the holders of the Debentures, on the one hand,
and the holders of such Senior Indebtedness on the other hand.
(b) Nothing contained in this Article XVI or elsewhere in this
Indenture or in the Debentures 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
Debentures, the obligation of the Company, which is absolute and
unconditional, to pay to the holders of the Debentures the
principal of and interest on the Debentures 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 Debentures and creditors of the Company, as the case may be,
other than the holders of Senior Indebtedness of the Company, nor
shall anything herein or therein prevent the Trustee or the holder
of any Debenture from exercising all remedies otherwise permitted
by applicable law upon default under this Indenture, subject to
the rights, if any, under this Article XVI 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.
(c) Upon any payment or distribution of assets of the Company referred
to in this Article XVI, the Trustee, subject to the provisions of
Article IX, and the holders of the Debentures 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 holders of the
Debentures, 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 XVI.
SECTION 16.5 TRUSTEE TO EFFECTUATE SUBORDINATION.
Each holder of Debentures by such holder's acceptance thereof authorizes and
directs the Trustee on such holder's behalf to take such action as may be
necessary or appropriate to effectuate the
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<PAGE>
subordination provided in this Article XVI and appoints the Trustee such
holder's attorney-in-fact for any and all such purposes.
SECTION 16.6 NOTICE BY THE COMPANY.
(a) The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company that would
prohibit the making of any payment of monies to or by the Trustee
in respect of the Debentures pursuant to the provisions of this
Article XVI. Notwithstanding the provisions of this Article XVI or
any other provisions 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 Debentures pursuant to the provisions of this
Article XVI, unless and until a Responsible Office 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 Section 9.1, shall not 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 16.6 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 on any Debenture),
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.
(b) The Trustee, subject to the provisions of Section 9.1, 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) 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 XVI, 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 XVI, 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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<PAGE>
SECTION 16.7 RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS.
(a) The Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article XVI 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. The
Trustee's right to compensation and reimbursement of expenses as
set forth in Section 9.7 shall not be subject to the subordination
provisions of the Article XVI.
(b) 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 XVI, 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
have any fiduciary duty to the holders of such Senior Indebtedness
and, subject to the provisions of Section 9.1, the Trustee shall
not be liable to any holder of such Senior Indebtedness if it
shall in good faith mistakenly pay over or deliver to holders of
Debentures, 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 XVI or otherwise.
SECTION 16.8 SUBORDINATION MAY NOT BE IMPAIRED.
(a) 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 or by any act
or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof
that any such holder may have or otherwise be charged with.
(b) 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 holders of the Debentures, without
incurring responsibility to the holders of the Debentures and
without impairing or releasing the subordination provided in this
Article XVI or the obligations hereunder of the holders of the
Debentures 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
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<PAGE>
of such Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
BANKUNITED FINANCIAL CORPORATION
By:_____________________________
Name:___________________________
Title:__________________________
Attest:_______________________
THE BANK OF NEW YORK, as trustee
By:_____________________________
Name:___________________________
Title:__________________________
Attest:_______________________
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<PAGE>
EXHIBIT A
(FORM OF FACE OF DEBENTURE)
No.________________________________ $__________________________
CUSIP No.__________________________
BANKUNITED FINANCIAL CORPORATION
_____% SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE ____________, 2027
BankUnited Financial Corporation, a Florida corporation (the "Company," which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to, or registered assigns, the
principal sum of Dollars ($______ ) on ________, 2027 (the "Stated Maturity"),
and to pay interest on said principal sum 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 March 31, June 30, September 30 and
December 31 of each year commencing _______, 1997, at the rate of ___% per annum
until the principal hereof shall have become due and payable, and on any overdue
principal and (without duplication) on any overdue installment of interest at
the rate of _____% 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. In the event that any date on which interest is
payable on this Debenture is not a business day, then payment of interest
payable on such date shall be made on the next succeeding day that is a business
day (and without any interest or other payment in respect of any such delay),
except that, if such business day is in the next succeeding calendar year, such
payment shall be made on the preceding business day, in each case with the same
force and effect as if made on such date. The interest installment so payable,
and punctually, paid or duly provided for, on any Interest Payment Date shall,
as provided in the Indenture, be paid to the person in whose name this Debenture
(or one or more Predecessor Debentures, as defined in said Indenture) is
registered at the close of business on the regular record date for such interest
installment, which shall be the close of business on the business day next
preceding such Interest Payment Date unless otherwise provided in the Indenture.
Any such interest installment not punctually paid or duly provided for shall
forthwith cease to be payable to the registered holders on such regular record
date and may be paid to the Person in whose name this Debenture (or one or more
Predecessor Debentures) 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 registered holders of the
Debentures 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 Debentures 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 the interest on this Debenture
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
Exhibit A-1
<PAGE>
of public and private debts; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the registered holder at
such address as shall appear in the Debenture Register. Notwithstanding the
foregoing, so long as the holder of this Debenture is the Property Trustee, the
payment of the principal of and interest on this Debenture shall be made at such
place and to such account as may be designated by the Trustee.
The Stated Maturity may be shortened at any time by the Company to any date not
earlier than ________, 2002, subject to the Company having received prior
regulatory approval if then required under applicable capital guidelines or
regulatory policies.
The indebtedness evidenced by this Debenture 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 Debenture is issued subject to the
provisions of the Indenture with respect thereto. Each holder of this Debenture,
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 Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Debenture are continued on the reverse side hereof and
such continued provisions shall for all purposes have the same effect as though
fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed.
BANKUNITED FINANCIAL CORPORATION
By:_____________________________
Name:___________________________
Title:__________________________
Attest:_______________________
By:___________________________
Name:_________________________
Title:________________________
Exhibit A-2
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures described in the within-mentioned Indenture.
Dated:
THE BANK OF NEW YORK as Trustee _________________________________
or Authentication Agent
By____________________________ By_______________________________
Authorized Signatory
Exhibit A-3
<PAGE>
[FORM OF REVERSE OF DEBENTURE]
____% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
(CONTINUED)
This Debenture is one of the subordinated debentures of the Company (herein
sometimes referred to as the "Debentures"), specified in the Indenture, all
issued or to be issued under and pursuant to an Indenture dated as of _______,
1997 (the "Indenture") duly executed and delivered between the Company and The
Bank of New York, as Trustee (the "Trustee"), to which Indenture reference is
hereby made for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the holders of
the Debentures. The Debentures are limited in aggregate principal amount as
specified in the Indenture.
The Company has the right to redeem this Debenture at the option of the Company,
without premium or penalty (i) at any time on or after _______, 2002 in whole or
in part, or (ii) at any time in certain circumstances in whole (but not in part)
upon the occurrence of a Special Event, in each case at a Redemption Price equal
to 100% of the principal amount plus any accrued but unpaid interest, to the
date of such redemption (the "Redemption Price"). The Redemption Price shall be
paid prior to 12:00 noon, Eastern Standard Time, time, on the date of such
redemption or at such earlier time as the Company determines. Any redemption
pursuant to this paragraph shall be made upon not less than 30 days nor more
than 60 days notice, at the Redemption Price. If the Debentures are only
partially redeemed by the Company, the Debentures shall be redeemed pro rata or
by lot or by any other method utilized by the Trustee.
In the event of redemption of this Debenture in part only, a new Debenture or
Debentures for the unredeemed portion hereof shall be issued in the name of the
holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have occurred
and be continuing, the principal of all of the Debentures 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 not less than a majority in aggregate principal
amount of the Debentures 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 any supplemental indenture or of modifying in any manner the rights of the
holders of the Debentures; provided, however, that no such supplemental
indenture shall (i) extend the fixed maturity of the Debentures except as
provided in the Indenture, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon (except for deferrals of
interest as described below), without the consent of the holder of each
Debenture so affected; or (ii). reduce the aforesaid percentage of Debentures,
the holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Debenture then outstanding and
affected thereby. The Indenture also contains provisions permitting the holders
of a majority in aggregate principal amount of the Debentures at
Exhibit A-4
<PAGE>
the time outstanding, on behalf of all of the holders of the Debentures, 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
Debentures. Any such consent or waiver by the registered holder of this
Debenture (unless revoked as provided in the Indenture) shall be conclusive and
binding upon such holder and upon all future holders and owners of this
Debenture and of any Debenture issued in exchange herefor or in place hereof
(whether by registration of transfer or otherwise or whether any notation of
such consent or waiver is made upon this Debenture).
No reference herein to the Indenture and no provision of this Debenture or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal and interest on this Debenture
at the time and place and at the rate and in the money herein prescribed.
The Company shall have the right at any time during the term of the Debentures
and from time to time to extend the interest payment period of such Debentures
for up to 20 consecutive quarters (each, an "Extended Interest Payment Period"),
at the end of which period the Company shall pay all interest then accrued and
unpaid (together with interest thereon at the rate specified for the Debentures
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 extend such Extended Interest Payment Period, provided that
such Extended Interest Payment Period together with all such further extensions
thereof shall not exceed 20 consecutive quarters. At the termination of any such
Extended Interest Payment Period and upon the payment of all accrued and unpaid
interest and any additional amounts then due, the Company may commence a new
Extended Interest Payment Period.
As provided in the Indenture and subject to certain limitations therein set
forth, this Debenture is transferable by the registered holder hereof on the
Debenture Register of the Company, upon surrender of this Debenture for
registration of transfer at the office or agency of the Trustee accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the registered holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Debentures of
authorized denominations and for the same aggregate principal amount shall be
issued to the designated transferee or transferees. No service charge shall be
made for any such transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this Debenture, the
Company, the Trustee, any paying agent and the Debenture Registrar may deem and
treat the registered holder hereof as the absolute owner hereof (whether or not
this Debenture shall be overdue and notwithstanding any notice of ownership or
writing hereon made by anyone other than the Debenture Registrar) for the
purpose of receiving payment of or on account of the principal hereof and
interest due hereon and for all other purposes, and neither the Company nor the
Trustee nor any paying agent nor any Debenture Registrar shall be affected by
any notice to the contrary.
Exhibit A-5
<PAGE>
No recourse shall be had for the payment of the principal of or the interest on
this Debenture, or for any claim based hereon, or otherwise in respect of the
Indenture, against any incorporator, stockholder, officer or director, past,
present or future, as such, of the Company or any predecessor or successor
corporation, 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.
The Debentures are issuable only in registered form without coupons in
denomination of $25 and any integral multiple thereof.
All terms used in this Debenture that are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
Exhibit A-6
CERTIFICATE OF TRUST
OF
BANKUNITED CAPITAL II
THIS Certificate of Trust of BankUnited Capital II (the "Trust"), dated
as of May 19, 1997, is being duly executed and filed by the undersigned, as
trustees, to form a business trust under the Delaware Business Trust Act (12
DEL. C. ss.3801, ET SEQ.).
1. NAME. The name of the business trust formed hereby is
BankUnited Capital II.
2. DELAWARE TRUSTEE. The name and business address of the
trustee of the Trust with a principal place of business in the State of Delaware
are The Bank of New York (Delaware), White Clay Center, Route 273, Newark,
Delaware 19711.
3. EFFECTIVE DATE. This Certificate of Trust shall be
effective upon filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust,
have executed this Certificate of Trust as of the date first-above written.
THE BANK OF NEW YORK (DELAWARE),
as Trustee
By:/S/ MARY JANE MORRISSEY
----------------------------
Name: MARY JANE MORRISSEY
Title:AUTHORIZED SIGNATORY
JAMES A. DOUGHERTY, as Trustee
/S/ JAMES A. DOUGHERTY
-------------------------------
NANCY L. ASHTON, as Trustee
/S/ NANCY L. ASHTON
-------------------------------
TRUST AGREEMENT
OF
BANKUNITED CAPITAL II
This TRUST AGREEMENT, dated as of May 19, 1997, is made among
BankUnited Financial Corporation, a Florida corporation, as "Depositor" and
James A. Dougherty and Nancy L. Ashton as "Administrative Trustees" and The Bank
of New York (Delaware) as "Trustee" (the Trustee and the Administrative Trustees
together, the "Trustees"). The Depositor and the Trustees hereby agree as
follows:
1. The trust created hereby shall be known as BankUnited Capital II, in
which name the Trustees, or the Depositor to the extent provided herein, may
conduct the business of the Trust, make and execute contracts, and sue and be
sued.
2. The Depositor hereby assigns, transfers, conveys and sets over to
the Trustees the sum of $100. The Trustees hereby acknowledge receipt of such
amount in trust from the Depositor, which amount shall constitute the initial
trust estate. The Trustees hereby declare that they will hold the trust estate
in trust for the Depositor. It is the intention of the parties hereto that the
Trust created hereby constitute a business trust under Chapter 38 of Title 12 of
the Delaware Code, 12 DEL. C. ss. 3801 ET SEQ. (the "Business Trust Act"), and
that this document constitute the governing instrument of the Trust. The
Trustees are hereby authorized and directed to execute and file a certificate of
trust with the Delaware Secretary of State in accordance with the provisions of
the Business Trust Act.
3. The Depositor and the Trustee (or Trustees, as applicable at such
time) are hereby empowered to enter into an amended and restated Trust
Agreement, satisfactory to each such party, to provide for the contemplated
operation of the Trust created hereby and the issuance of the Preferred
Securities and Common Securities of the Trust. Prior to the execution and
delivery of such amended and restated Trust Agreement, the Trustee (or Trustees,
as may be applicable) shall not have any duty or obligation hereunder or with
respect to the trust estate, except as otherwise required by applicable law or
as may be necessary to obtain prior to such execution and delivery any licenses,
consents or approvals required by applicable law or otherwise.
4. The Depositor and the Administrative Trustees hereby authorize the
Depositor, as the sponsor of the Trust and at its sole discretion, (i) to file
with the Securities and Exchange Commission (the "Commission") and to execute,
in the case of the 1933 Act Registration Statement (as herein defined) and 1934
Act Registration Statement (as herein defined), on behalf of the Trust, (a) a
Registration Statement, on an appropriate form (the "1993 Registration
Statement") (including pre-effective or post-effective amendments to such
Registration Statement), relating to the registration under the Securities Act
of 1933, as amended (the "1933 Act"), of the Preferred Securities of the Trust,
(b) any preliminary prospectus or prospectus supplement thereto relating to the
Preferred Securities required to be filed under the 1933 Act, and (c) a
Registration Statement on Form 8-A or other appropriate form (the "1934 Act
Registration Statement") (including all pre-effective and post-effective
amendments thereto) relating to the registration of the Preferred Securities of
the Trust under the Securities Exchange Act of 1934, as amended; (ii) to file
with The Nasdaq Stock Market, Inc. or with any other exchange or trading
facility located in the United States of America or abroad (each, an "Exchange")
and execute on behalf of the Trust a registration or listing application or
applications and all other applications, statements, certificates, agreements
and other instruments as shall be necessary or desirable to cause the Preferred
Securities to be registered or listed on any Exchange; (iii) to file and execute
on behalf of the Trust such applications, reports, surety bonds, irrevocable
consents, appointments of attorney for service of process and other papers and
documents as the Depositor, on behalf of the Trust, may deem necessary or
desirable; (iv) to execute on behalf of the
<PAGE>
Trust such underwriting agreements with the Depositor and one or more
underwriters relating to the offering of the Preferred Securities as the
Depositor, on behalf of the Trust, may deem necessary or desirable; and (v) to
take or cause to be taken any and all acts that the Depositor, in its sole
discretion, may deem necessary or advisable to carry out the purpose of the
Trust. In the event that any filing referred to in clauses (i) - (iii) above is
required, by the rules and regulations of any Exchange, state securities or Blue
Sky laws, or any applicable federal or state laws or regulations, to be executed
on behalf of the Trust by a Trustee, the Depositor and any Trustee appointed
pursuant to Section 6 hereof are hereby authorized to join in any such filing
and to execute on behalf of the Trust any and all of the foregoing.
5. This Trust Agreement may be executed in one or more counterparts.
6. The number of Trustees initially shall be three (3) 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 Depositor which may increase or decrease
the number of Trustees; provided, however, that to the extent required by the
Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity which
has its principal place of business in the State of Delaware and otherwise meets
the requirements of applicable Delaware law. Subject to the foregoing, the
Depositor is entitled to appoint or remove without cause any Trustee at any
time. The Trustees may resign upon thirty days' prior notice to the Depositor
PROVIDED, HOWEVER, such notice shall not be required if it is waived by the
Depositor.
7. This Trust Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware (without regard to conflict
of laws principles).
[Remainder of Page Intentionally Blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed as of the day and year first above written.
BANKUNITED FINANCIAL CORPORATION,
as Depositor
By:_____________________________________
Samuel A. Milne,
Executive Vice President and Chief
Financial Officer
THE BANK OF NEW YORK (DELAWARE)
as Trustee
By:_____________________________________
Name:
Title:
JAMES A. DOUGHERTY,
as Administrative Trustee
________________________________________
NANCY L. ASHTON,
as Administrative Trustee
________________________________________
EXHIBIT 4.7
AMENDED AND RESTATED TRUST AGREEMENT
AMONG
BANKUNITED FINANCIAL CORPORATION, AS DEPOSITOR
THE BANK OF NEW YORK, AS PROPERTY TRUSTEE
THE BANK OF NEW YORK (DELAWARE), AS DELAWARE TRUSTEE
AND
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF ________, 1997
BANKUNITED CAPITAL II
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINED TERMS......................................................2
SECTION 101. DEFINITIONS...................................................2
ARTICLE II ESTABLISHMENT OF THE TRUST......................................10
SECTION 201. NAME.........................................................10
SECTION 202. OFFICE OF THE PROPERTY TRUSTEE; PRINCIPAL PLACE OF BUSINESS..10
SECTION 203. INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL
EXPENSES...................................................10
SECTION 204. ISSUANCE OF THE PREFERRED SECURITIES.........................10
SECTION 205. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND
PURCHASE OF DEBENTURES.....................................11
SECTION 206. DECLARATION OF TRUST.........................................11
SECTION 207. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS.............12
SECTION 208. ASSETS OF TRUST..............................................15
SECTION 209. TITLE TO TRUST PROPERTY......................................15
ARTICLE III PAYMENT ACCOUNT.................................................16
SECTION 301. PAYMENT ACCOUNT..............................................16
ARTICLE IV DISTRIBUTIONS; REDEMPTION........................................16
SECTION 401. DISTRIBUTIONS................................................16
SECTION 402. REDEMPTION...................................................17
SECTION 403. SUBORDINATION OF COMMON SECURITIES...........................19
i
<PAGE>
SECTION 404. PAYMENT PROCEDURES...........................................20
SECTION 405. TAX RETURNS AND REPORTS......................................20
SECTION 406. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST..................20
SECTION 407. PAYMENTS UNDER INDENTURE.....................................20
ARTICLE V TRUST SECURITIES CERTIFICATES.....................................21
SECTION 501. INITIAL OWNERSHIP............................................21
SECTION 502. THE TRUST SECURITIES CERTIFICATES............................21
SECTION 503. EXECUTION AND DELIVERY OF TRUST SECURITIES CERTIFICATES......21
SECTION 504. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED SECURITIES
CERTIFICATES...............................................21
SECTION 505. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES
CERTIFICATES...............................................23
SECTION 506. PERSONS DEEMED SECURITYHOLDERS...............................23
SECTION 507. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES.......23
SECTION 508. MAINTENANCE OF OFFICE OR AGENCY..............................24
SECTION 509. APPOINTMENT OF PAYING AGENT..................................24
SECTION 510. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR..................24
SECTION 511. PREFERRED SECURITIES CERTIFICATES............................25
SECTION 512. [Intentionally Deleted]............Error! Bookmark not defined.
SECTION 513. [Intentionally Deleted]......................................26
SECTION 514. RIGHTS OF SECURITYHOLDERS....................................26
ARTICLE VI ACTS OF SECURITYHOLDERS; MEETINGS; VOTING........................27
SECTION 601. LIMITATIONS ON VOTING RIGHTS.................................27
ii
<PAGE>
SECTION 602. NOTICE OF MEETINGS...........................................28
SECTION 603. MEETINGS OF PREFERRED SECURITYHOLDERS........................28
SECTION 604. VOTING RIGHTS................................................29
SECTION 605. PROXIES, ETC.................................................29
SECTION 606. SECURITYHOLDER ACTION BY WRITTEN CONSENT.....................29
SECTION 607. RECORD DATE FOR VOTING AND OTHER PURPOSES....................30
SECTION 608. ACTS OF SECURITYHOLDERS......................................30
SECTION 609. INSPECTION OF RECORDS........................................31
ARTICLE VII REPRESENTATIONS AND WARANTIES...................................31
SECTION 701. REPRESENTATIONS AND WARRANTIES OF THE BANK AND THE PROPERTY
TRUSTEE....................................................31
SECTION 702. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR..................32
ARTICLE VIII TRUSTEES.......................................................33
SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES..........................33
SECTION 802. CERTAIN NOTICES..............................................35
SECTION 803. CERTAIN RIGHTS OF PROPERTY TRUSTEE...........................35
SECTION 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.......37
SECTION 805. MAY HOLD SECURITIES..........................................37
SECTION 806. COMPENSATION; INDEMNITY; FEES................................37
SECTION 807. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF
TRUSTEES...................................................38
SECTION 808. CONFLICTING INTERESTS........................................39
SECTION 809. CO-TRUSTEES AND SEPARATE TRUSTEE.............................39
SECTION 810. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR............41
iii
<PAGE>
SECTION 811. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.......................42
SECTION 812. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS..43
SECTION 813. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR
TRUST......................................................43
SECTION 814. REPORTS BY PROPERTY TRUSTEE..................................43
SECTION 815. REPORTS TO THE PROPERTY TRUSTEE..............................44
SECTION 816. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.............44
SECTION 817. NUMBER OF TRUSTEES...........................................44
SECTION 818. DELEGATION OF POWER..........................................45
SECTION 819. VOTING.......................................................45
ARTICLE IX TERMINATION, LIQUIDATION AND MERGER..............................45
SECTION 901. TERMINATION UPON EXPIRATION DATE.............................45
SECTION 902. EARLY TERMINATION............................................45
SECTION 903. TERMINATION..................................................46
SECTION 904. LIQUIDATION..................................................46
SECTION 905. MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE
TRUST.....................................................48
ARTICLE X MISCELLANEOUS PROVISIONS..........................................49
SECTION 1001. LIMITATION OF RIGHTS OF SECURITYHOLDERS.....................49
SECTION 1002. AMENDMENT...................................................49
SECTION 1003. SEPARABILITY................................................50
SECTION 1004. GOVERNING LAW...............................................51
SECTION 1005. PAYMENTS DUE ON NON-BUSINESS DAY............................51
iv
<PAGE>
SECTION 1006. SUCCESSORS..................................................51
SECTION 1007. HEADINGS....................................................51
SECTION 1008. REPORTS, NOTICES AND DEMANDS................................51
SECTION 1009. AGREEMENT NOT TO PETITION...................................52
SECTION 1010. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT......52
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
INDENTURE.................................................53
Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depository Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Expense Agreement
Exhibit E Form of Preferred Securities Certificate
v
<PAGE>
CROSS-REFERENCE TABLE
SECTION OF SECTION OF AMENDED
TRUST INDENTURE ACT AND RESTATED
OF 1939, AS AMENDED TRUST AGREEMENT
------------------- ------------------
310(a)(1) 807
310(a)(2) 807
310(a)(3) 807
310(a)(4) 207(a)(ii)
310(b) 808
311(a) 813
311(b) 813
312(a) 507
312(b) 507
312(c) 507
313(a) 814(a)
313(a)(4) 814(b)
313(b) 814(b)
313(c) 1008
313(d) 814(c)
314(a) 815
314(b) Not Applicable
314(c)(1) 816
314(c)(2) 816
314(c)(3) Not Applicable
314(d) Not Applicable
314(e) 101,816
315(a) 801(a), 803(a)
315(b) 802, 1008
315(c) 801(a)
315(d) 801, 803
316(a)(2) Not Applicable
316(b) Not Applicable
316(c) 607
317(a)(1) Not Applicable
317(a)(2) Not Applicable
317(b) 509
318(a) 1010
Note: This Cross-Reference Table does not constitute part of this Agreement and
shall not affect any interpretation of any of its terms or provisions.
vi
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT
AMENDED AND RESTATED TRUST AGREEMENT, dated as of _____, 1997, among (i)
BankUnited Financial Corporation, a Florida corporation (including any
successors or assigns, the "Depositor"), (ii) The Bank of New York, a banking
corporation duly organized and existing under the laws of the State of New York,
as property trustee (in such capacity, the "Property Trustee" and, in its
separate corporate capacity and not in its capacity as Property Trustee, the
"Bank"), (iii) The Bank of New York (Delaware), a banking corporation organized
under the laws of the State of Delaware, as Delaware Trustee (the "Delaware
Trustee"), (iv) ______________, an individual, ___________, an individual, and
_______________, an individual, each of whose address is c/o BankUnited
Financial Corporation, 255 Alhambra Circle, Coral Gables, Florida 33134 (each an
"Administrative Trustee" and collectively the "Administrative Trustees") (the
Property Trustee, the Delaware Trustee and the Administrative Trustees referred
to collectively as the "Trustees"), and (v) the several Holders (as hereinafter
defined).
RECITALS
WHEREAS, the Depositor, the Property Trustee and the Delaware Trustee have
heretofore duly declared and established a business trust, BankUnited Capital
II, pursuant to the Delaware Business Trust Act by the entering into of that
certain Trust Agreement, dated as of May __, 1997 (the "Original Trust
Agreement"), and by the execution and filing by the Delaware Trustee, the
Depositor and the Administrative Trustees with the Secretary of State of the
State of Delaware of the Certificate of Trust, filed on May __, 1997, the form
of which is attached as Exhibit A; and
WHEREAS, the Depositor and the Trustees desire to amend and restate the Original
Trust Agreement in its entirety as set forth herein to provide for, among other
things, (i) the issuance of the Common Securities (as defined herein) by the
Trust (as defined herein) to the Depositor; (ii) the issuance and sale of the
Preferred Securities (as defined herein) by the Trust pursuant to the
Underwriting Agreement (as defined herein); (iii) the acquisition by the Trust
from the Depositor of all of the right, title and interest in the Debentures (as
defined herein); and (iv) the appointment of the Administrative Trustees;
NOW THEREFORE, in consideration of the agreements and obligations set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party for the benefit of the
other parties and for the benefit of the Securityholders (as defined herein)
hereby amends and restates the Original Trust Agreement in its entirety and
agrees as follows.
<PAGE>
ARTICLE I
DEFINED TERMS
SECTION 101. DEFINITIONS.
For all purposes of this Trust Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article I have the meanings assigned to them
in this Article I and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned
to them therein;
(c) unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of
this Trust Agreement; and
(d) the words "herein", "hereof and "hereunder" and other words of similar
import refer to this Trust Agreement as a whole and not to any particular
Article, Section or other subdivision.
"Act" has the meaning specified in Section 608.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of additional interest
accrued on interest in arrears and paid by the Depositor on a Like Amount of
Debentures for such period.
"Additional Interest" has the meaning specified in Section 1.1 of the Indenture.
"Administrative Trustee" means each of the Persons identified as an
"Administrative Trustee" in the preamble to this Trust Agreement solely in such
Person's capacity as Administrative Trustee of the Trust formed and continued
hereunder and non in such Person's individual capacity, or such Administrative
Trustee's successor in interest in such capacity, or any successor trustee
appointed as herein provided.
"Affiliate" means, with respect to a specified Person, (a) any Person directly
or indirectly owning, controlling or holding with power to vote 10% or more of
the outstanding voting securities or other ownership interests of the specified
Person; (b) any Person 10% or more of whose outstanding voting securities or
other ownership interests are directly or indirectly owned, controlled or held
with power to vote by the specified Person; (c) any Person directly or
indirectly controlling, controlled by, or under common control with the
specified Person; (d) a partnership in which the specified person is a general
partner; (e) any officer or director of the specified Person; and (f) if the
specified Person is an individual, any entity of which the specified Person is
an officer, director or general partner.
2
<PAGE>
"Bank" has the meaning specified in the Preamble to this Trust Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in the
premises adjudging such Person a bankrupt or insolvent, or approving as
properly filed a petition seeking liquidation or reorganization of or in
respect of such Person under the United States Bankruptcy Code of 1978, as
amended, or any other similar applicable federal or state law, and the
continuance of any such decree or order unvacated and unstayed for a
period of 90 days; or the commencement of an involuntary case under the
United States Bankruptcy Code of 1978, as amended, in respect of such
Person, which shall continue undismissed for a period of 90 days or entry
of an order for relief in such case; or the entry of a decree or order of
a court having jurisdiction in the premises for the appointment on the
ground of insolvency or bankruptcy of a receiver, custodian, liquidator,
trustee or assignee in bankruptcy or insolvency of such Person or of its
property, or for the winding up or liquidation of its affairs, and such
decree or order shall have remained in force unvacated and unstayed for a
period of 60 consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated a
voluntary bankrupt, or the consent by such Person to the filing of a
bankruptcy proceeding against it, or the filing by such Person of a
petition or answer or consent seeking liquidation or reorganization under
the United States Bankruptcy Code of 1978, as amended, or other similar
applicable Federal or State law, or the consent by such Person to the
filing of any such petition or to the appointment on the ground of
insolvency or bankruptcy of a receiver or custodian or liquidator or
trustee or assignee in bankruptcy or insolvency of such Person or of its
property, or shall make a general assignment for the benefit of creditors.
"Bankruptcy Laws" has the meaning specified in Section 1009.
"Board Resolution" means a copy of a resolution certified by the Secretary or an
Assistant Secretary of the Depositor to have been duly adopted by the
Depositor's Board of Directors, or such committee of the Board of Directors or
officers of the Depositor to which authority to act on behalf of the Board of
Directors has been delegated, and to be in full force and effect on the date of
such certification, and delivered to the appropriate Trustee.
"Business Day" means a day other than a Saturday or Sunday, a day on which
banking institutions in The City of New York are authorized or required by law,
executive order or regulation to remain closed, or a day on which the Property
Trustee's Corporate Trust Office or the Corporate Trust Office of the Debenture
Trustee is closed for business.
"Capital Treatment Event" has the meaning specified in Section 1.1 of the
Indenture.
3
<PAGE>
"Certificate of Trust" means the certificate of trust filed with the Secretary
of State of the State of Delaware with respect to the Trust, as amended or
restated from time to time.
"Change in 1940 Act Law" shall have the meaning set forth in the definition of
"Investment Company Event."
"Closing Date" means the date of execution and delivery of this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, or any successor statute, in
each case as amended from time to time.
"Commission" means the Securities and Exchange Commission, as from time to time
constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such dudes at such time.
"Common Security" means an undivided beneficial interest in the assets of the
Trust, having a Liquidation Amount of $____ and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing ownership of
Common Securities, substantially in the form attached as Exhibit C.
"Corporate Trust Office" means (i) when used with respect to the Property
Trustee, the principal corporate trust office of the Property Trustee located in
New York, New York, and (ii) when used with respect to the Debenture Trustee,
the principal corporate trust office of the Debenture Trustee located in New
York, New York.
"Debenture Event of Default" means an "Event of Default" as defined in Section
7.1 of the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to be redeemed
under the Indenture, the date fixed for redemption under the Indenture.
"Debenture Tax Event" means a "Tax Event" as specified in Section 1.1 of the
Indenture.
"Debenture Trustee" means The Bank of New York, a banking corporation organized
under the laws of the State of New York, and any successor thereto.
"Debentures" means the aggregate principal amount of the Depositor's _____%
Junior Subordinated Deferrable Interest Debentures due 2027, issued pursuant to
the Indenture.
4
<PAGE>
"Definitive Preferred Securities Certificates" means the Preferred Securities
Certificates issued in certificated, fully registered form as provided in
Section 513.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Delaware Code Sections 3801 et seq. as it may be amended from time to time.
"Delaware Trustee" means the Person identified as the "Delaware Trustee" in the
preamble to this Trust Agreement solely in its capacity as Delaware Trustee of
the Trust created and continued hereunder and not in its individual capacity, or
its successor in interest in such capacity, or any successor Trustee appointed
as herein provided.
"Depositor" has the meaning specified in the Preamble to this Trust Agreement.
"Distribution Date" has the meaning specified in Section 401(a).
"Distributions" means amounts payable in respect of the Trust Securities as
provided in Section 401(a).
"Event of Default" means any one of the following events (whatever the reason
for such Event of Default and whether it shall be voluntary or involuntary or be
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Trust or the Property Trustee in the payment of any
Distribution when it becomes due and payable, and continuation of such
default for a period of 30 days; or
(c) default by the Trust or the Property Trustee in the payment of any
Redemption Price of any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect, of any
covenant or warranty of the Trustees in this Trust Agreement (other than a
covenant or warranty a default in the performance of which or the breach
of which is dealt with in clause (b) or (c), above) and continuation of
such default or breach for a period of 60 days after there has been given,
by registered or certified mail, to the defaulting Trustee or Trustees by
the Holders of at least 25% in aggregate liquidation preference of the
Outstanding Preferred Securities a written notice specifying such default
or breach and requiring it to be remedied and stating that such notice is
a "Notice of Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the Property
Trustee and the failure by the Depositor to appoint a successor property
Trustee within 60 days thereof
5
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, or any successor
statute, in each case as amended from time to time.
"Expense Agreement" means the Agreement as to Expenses and Liabilities between
the Depositor and the Trust, substantially in the form attached as Exhibit D, as
amended from time to time.
"Expiration Date" has the meaning specified in Section 901.
"Extended Interest Payment Period" has the meaning specified in Section 4.1 of
the Indenture.
"Guarantee" means the Preferred Securities Guarantee Agreement executed and
delivered by the Depositor, as guarantor, and The Bank of New York, as trustee,
contemporaneously with the execution and delivery of this Trust Agreement, for
the benefit of the Holders of the Preferred Securities, as amended from time to
time.
"Indenture" means the Indenture, dated as of ________, 1997 between the
Depositor and the Debenture Trustee, as trustee, as amended or supplemented from
time to time.
"Investment Company Act," means the Investment Company Act of 1940, or any
successor statute, in each case as amended from time to time.
"Investment Company Event" has the meaning specified in Section 1.1 of the
Indenture.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of trust,
adverse ownership interest, hypothecation, assignment, security interest or
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust Securities, Trust
Securities having a Liquidation Amount equal to the principal amount of
Debentures to be contemporaneously redeemed in accordance with the Indenture and
the proceeds of which shall be used to pay the Redemption Price of such Trust
Securities; and (b) with respect to a distribution of Debentures to Holders of
Trust Securities in connection with a termination or liquidation of the Trust,
Debentures having a principal amount equal to the Liquidation Amount of the
Trust Securities of the Holder to whom such Debentures are distributed. Each
Debenture distributed pursuant to clause (b) above shall carry with it
accumulated interest in an amount equal to the accumulated and unpaid interest
then due on such Debentures.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Liquidation Date" means the date on which Debentures are to be distributed to
Holders of Trust Securities in connection with a termination and liquidation of
the Trust pursuant to Section 904(a).
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"Liquidation Distribution" has the meaning specified in Section 904(d).
"Officers' Certificate" means a certificate signed by the President or a Vice
President and by the Treasurer or an Assistant Treasurer or the Controller or an
Assistant Controller or the Secretary or an Assistant Secretary, of the
Depositor, and delivered to the appropriate Trustee. One of the officers signing
an Officers' Certificate given pursuant to Section 816 shall be the principal
executive, financial or accounting officer of the Depositor. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Opinion of Counsel" means an opinion in writing of legal counsel, who may be
counsel for the Trust, the Property Trustee, or the Depositor, but not an
employee of any thereof, and who shall be reasonably acceptable to the Property
Trustee.
"Original Trust Agreement" has the meaning specified in the Recitals to this
Trust Agreement.
"Outstanding", when used with respect to Preferred Securities, means, as of the
date of determination, all Preferred Securities theretofore executed and
delivered under this Trust Agreement, except:
(a) Preferred Securities theretofore canceled by the Property Trustee or
delivered to the Property Trustee for cancellation;
(b) Preferred Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee
or any Paying Agent for the Holders of such Preferred Securities; provided
that, if such Preferred Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Trust Agreement; and
(c) Preferred Securities which have been paid or in exchange for or in
lieu of which other Preferred Securities have been executed and delivered
pursuant to Sections 504, 505 and 511; provided, however, that in
determining whether the Holders of the requisite Liquidation
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Amount of the Outstanding Preferred Securities have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Preferred Securities owned by the Depositor, any Trustee or any Affiliate
of the Depositor or any Trustee shall be disregarded and deemed not to be
Outstanding, except that (a) in determining whether any Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Preferred Securities that such
Trustee knows to be so owned shall be so disregarded and (b) the foregoing
shall not apply at any time when all of the outstanding Preferred
Securities are owned by the Depositor, one or more of the Trustees and/or
any such Affiliate. Preferred Securities so owned which have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to
the satisfaction of the Administrative Trustees the pledgee's right so to
act with respect to such Preferred Securities and that the pledgee is not
the Depositor or any Affiliate of the Depositor.
"Paying Agent" means any paying agent or co-paying agent appointed pursuant to
Section 509 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee with the Bank in its trust department
for the benefit of the Securityholders in which all amounts paid in respect of
the Debentures shall be held and from which the Property Trustee shall make
payments to the Securityholders in accordance with Sections 401 and 102.
"Person" means any individual, corporation, partnership, joint venture, trust,
limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Security" means an undivided beneficial interest in the assets of the
Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Preferred Securities Certificate", means a certificate evidencing ownership of
Preferred Securities, substantially in the form attached as Exhibit E.
"Property Trustee" means the Person identified as the "Property Trustee," in the
Preamble to this Trust Agreement solely in its capacity as Property Trustee of
the Trust heretofore formed and continued hereunder and not in its individual
capacity, or its successor in interest in such capacity, or any successor
property trustee appointed as herein provided.
"Redemption Date" means, with respect to any Trust Security to be redeemed, the
date fixed for such redemption by or pursuant to this Trust Agreement; provided
that each Debenture Redemption Date and the stated maturity of the Debentures
shall be a Redemption Date for a Like Amount of Trust Securities.
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"Redemption Price" means, with respect to any Trust Security, the Liquidation
Amount of such Trust Security, plus accumulated and unpaid Distributions to the
Redemption Date, paid by the Depositor upon the concurrent redemption of a Like
Amount of Debentures, allocated on a pro rata basis (based on Liquidation
Amounts) among the Trust Securities.
"Relevant Trustee" shall have the meaning specified in Section 810.
"Securities Register" and "Securities Registrar" have the respective meanings
specified in Section 504.
"Securityholder" or "Holder" means a Person in whose name a Trust Security or
Securities is registered in the Securities Register; any such Person is a
beneficial owner within the meaning of the Delaware Business Trust Act.
"Trust" means the Delaware business trust created and continued hereby and
identified on the cover page to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as the same
may be modified, amended or supplemented in accordance with the applicable
provisions hereof, including all exhibits hereto, including, for all purposes of
this Trust Agreement and any such modification, amendment or supplement, the
provisions of the Trust Indenture Act that are deemed to be a part of and govern
this Trust Agreement and any such modification, amendment or supplement,
respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939, as amended, is amended after
such date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures; (b) the rights of the Property
Trustee under the Guarantee; (c) any cash on deposit in, or owing to, the
Payment Account; and (d) all proceeds and rights in respect of the foregoing and
any other property and assets for the time being held or deemed to be held by
the Property Trustee pursuant to the trusts of this Trust Agreement.
"Trust Security" means any one of the Common Securities or the Preferred
Securities.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trustees" means, collectively, the Property Trustee, the Delaware Trustee and
the Administrative Trustees.
"Underwriting Agreement" means the Underwriting Agreement, dated as of _______,
1997, among the Trust, the Depositor and the Underwriters named therein.
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ARTICLE II
ESTABLISHMENT OF THE TRUST
SECTION 201. NAME.
The Trust created and continued hereby shall be known as "BankUnited Capital
II," as such name may be modified from time to time by the Administrative
Trustees following written notice to the Holders of Trust Securities and the
other Trustees, in which name the Trustees may engage in the transactions
contemplated hereby, make and execute contracts and other instruments on behalf
of the Trust and sue and be sued.
SECTION 202. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE OF BUSINESS.
The address of the Property Trustee in the State of Delaware is c/o The Bank of
New York (Delaware), White Clay Center, Route 273, Newark, Delaware 197111,
Attention: Corporate Trust Department, or such other address in the State of
Delaware as the Delaware Trustee may designate by written notice to the
Securityholders and the Depositor. The principal executive office of the Trust
is c/o BankUnited Financial Corporation, 255 Alhambra Circle, Coral Gables,
Florida 33134.
SECTION 203. INITIAL CONTRIBUTION OF TRUST PROPERTY; ORGANIZATIONAL EXPENSES.
The Trustees acknowledge receipt in trust from the Depositor in connection with
the Original Trust Agreement of the sum of $10, which constituted the initial
Trust Property. The Depositor shall pay organizational expenses of the Trust as
they arise or shall, upon request of any Trustee, promptly reimburse such
Trustee for any such expenses paid by such Trustee. The Depositor shall make no
claim upon the Trust Property for the payment of such expenses.
SECTION 204. ISSUANCE OF THE PREFERRED SECURITIES.
On ______, 1997, the Depositor and an Administrative Trustee, on behalf of the
Trust and pursuant to the Original Trust Agreement, executed and delivered the
Underwriting Agreement. Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 502 and deliver in accordance with the
Underwriting ____ Agreement, ____ Preferred Securities Certificates, registered
in the name of the Persons entitled thereto, in an aggregate amount of 1,600,000
Preferred Securities having an aggregate Liquidation Amount of $40,000,000
against receipt of the aggregate purchase price of such Preferred Securities of
$40,000,000, which amount such Administrative Trustee shall promptly deliver to
the Property Trustee. If the underwriters exercise their Option and there is an
Option Closing Date (as such terms are defined in the Underwriting Agreement),
then an Administrative Trustee, on behalf of
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the Trust, shall execute in accordance with Section 502 and deliver in
accordance with the Underwriting Agreement, Preferred Securities Certificates,
registered in the name of the Persons entitled thereto, in an aggregate amount
of up to 240,000 Preferred Securities having an aggregate Liquidation Amount of
up to $6,000,000 against receipt of the aggregate purchase price of such
Preferred Securities of $6,000,000, which amount such Administrative Trustee
shall promptly deliver to the Property Trustee.
SECTION 205. ISSUANCE OF THE COMMON SECURITIES; SUBSCRIPTION AND PURCHASE OF
DEBENTURES.
(a) Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 502 and deliver to the Depositor,
Common Securities Certificates, registered in the name of the Depositor in
an aggregate amount of Common Securities having an aggregate Liquidation
Amount of $1,600,000 against payment by the Depositor of such amount.
Contemporaneously therewith, an Administrative Trustee on behalf of the
Trust, shall subscribe to and purchase from the Depositor Debentures,
registered in the name of the Property Trustee on behalf of the Trust and
having an aggregate principal amount equal to $41,600,000, and, in
satisfaction of the purchase price for such Debentures, the Property
Trustee, on behalf of the Trust, shall deliver to the Depositor the sum of
$41,600,000.
(b) If the underwriters exercise the Option and there is an Option Closing
Date, then an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 502 and deliver to the Depositor,
Common Securities Certificates, registered in the name of the Depositor,
in an aggregate amount of Common Securities having an aggregate
Liquidation Amount of up to $240,000 against payment by the Depositor of
such amount. ____ Contemporaneously ____ therewith, ____ an Administrative
Trustee, on behalf of the Trust, shall subscribe to and purchase from the
Depositor, Debentures, registered in the name of the Trust and having an
aggregate principal amount of up to $240,000, and, in satisfaction of the
purchase price of such Debentures, the Property Trustee, on behalf of the
Trust, shall deliver to the Depositor the amount received from one of the
Administrative Trustees pursuant to the last sentence of Section 204
(being the sum of the amounts delivered to the Property Trustee pursuant
to (i) the third sentence of Section 204; and (ii) the first sentence of
this Section 205(b)).
SECTION 206. DECLARATION OF TRUST.
The exclusive purposes and functions of the Trust are (a) to issue and sell
Trust Securities and use the proceeds from such sale to acquire the Debentures;
and (b) to engage in those activities necessary, convenient or incidental
thereto. The Depositor hereby appoints the Trustees as trustees of the Trust, to
have all the rights, powers and duties to the extent set forth herein, and the
Trustees hereby accept such appointment. The Property Trustee hereby declares
that it shall hold the Trust Property in trust upon
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and subject to the conditions set forth herein for the benefit of the
Securityholders. The Administrative Trustees shall have all rights, powers and
duties set forth herein and in accordance with applicable law with respect to
accomplishing the purposes of the Trust.
SECTION 207. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS.
(a) The Trustees shall conduct the affairs of the Trust in accordance with
the terms of this Trust Agreement. Subject to the limitations set forth in
paragraph (b) of this Section 207 and Article VIII, and in accordance with
the following provisions (i) and (ii), the Administrative Trustees shall
have the authority to enter into all transactions and agreements
determined by the Administrative Trustees to be appropriate in exercising
the authority, express or implied, otherwise granted to the Administrative
Trustees under this Trust Agreement, and to perform all acts in
furtherance thereof, including without limitation, the following:
(i) As among the Trustees, each Administrative Trustee, acting
singly or jointly, shall have the power and authority to act on
behalf of the Trust with respect to the following matters:
(A) the issuance and sale of the Trust Securities;
(B) to cause the Trust to enter into, and to execute, deliver
and perform on behalf of the Trust, the Expense Agreement and
such other agreements or documents as may be necessary or
desirable in connection with the purposes and function of the
Trust;
(C) assisting in the registration of the Preferred Securities
under the Securities Act of 1933, as amended, and under state
securities or blue sky laws, and the qualification of this
Trust Agreement as a trust indenture under the Trust Indenture
Act;
(D) assisting in the listing of the Preferred Securities upon
The Nasdaq Stock Market's National Market or such securities
exchange or exchanges as shall be determined by the Depositor
and the registration of the Preferred Securities under the
Exchange Act, and the preparation and filing of all periodic
and other reports and other documents pursuant to the
foregoing;
(E) the sending of notices (other than notices of default) and
other information regarding the Trust Securities and the
Debentures to the Securityholders in accordance with this
Trust Agreement;
(F) the appointment of a Paying Agent, authenticating agent
and Securities Registrar in accordance with this Trust
Agreement;
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(G) to the extent provided in this Trust Agreement, the
winding up of the affairs of and liquidation of the Trust and
the preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of
Delaware;
(H) to take all action that may be necessary or appropriate
for the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory
business trust under the laws of the State of Delaware and of
each other jurisdiction in which such existence is necessary
to protect the limited liability of the Holders of the
Preferred Securities or to enable the Trust to effect the
purposes for which the Trust was created; and
(I) the taking of any action incidental to the foregoing as
the Administrative Trustees may from time to time determine is
necessary or advisable to give effect to the terms of this
Trust Agreement for the benefit of the Securityholders
(without consideration of the effect of any such action on any
particular Securityholder).
(ii) As among the Trustees, the Property Trustee shall have the
power, duty and authority to act on behalf of the Trust with respect
to the following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other
payments made in respect of the Debentures in the Payment
Account;
(D) the distribution of amounts owed to the Securityholders in
respect of the Trust Securities in accordance with the terms
of this Trust Agreement;
(E) the exercise of all of the rights, powers and privileges
of a holder of the Debentures;
(F) the sending of notices of default and other information
regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in accordance with
the terms of this Trust Agreement;
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(H) to the extent provided in this Trust Agreement, the
winding up of the affairs of and liquidation of the Trust;
(I) after an Event of Default, the taking of any action
incidental to the foregoing as the Property Trustee may from
time to time determine is necessary or advisable to give
effect to the terms of this Trust Agreement and protect and
conserve the Trust Property for the benefit of the
Securityholders (without consideration of the effect of any
such action on any particular Securityholder);
(J) registering transfers of the Trust Securities in
accordance with this Trust Agreement; and
(K) except as otherwise provided in this Section 207(a)(ii),
the Property Trustee shall have none of the duties,
liabilities, powers or the authority of the Administrative
Trustees set forth in Section 207(a)(i).
(b) So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or
contemplated hereby. In particular, the Trustees shall not (i) acquire any
investments or engage in any activities not authorized by this Trust
Agreement; (ii) sell, assign, transfer, exchange, mortgage, pledge, setoff
or otherwise dispose of any of the Trust Property or interests therein,
including to Securityholders, except as expressly provided herein; (iii)
take any action that would cause the Trust to fail or cease to qualify as
a "grantor trust" for United States federal income tax purposes; (iv)
incur any indebtedness for borrowed money or issue any other debt; or (v)
take or consent to any action that would result in the placement of a Lien
on any of the Trust Property. The Administrative Trustees shall defend all
claims and demands of all Persons at any time claiming any Lien on any of
the Trust Property adverse to the interest of the Trust or the
Securityholders in their capacity as Securityholders.
(c) In connection with the issuance and sale of the Preferred Securities,
the Depositor shall have the right and responsibility to assist the Trust
with respect to, or effect on behalf of the Trust, the following (and any
actions taken by the Depositor in furtherance of the following prior to
the date of this Trust Agreement are hereby ratified and confirmed in all
respects):
(i) the preparation and filing by the Trust with the Commission and
the execution on behalf of the Trust of a registration statement on
the appropriate form in relation to the Preferred Securities and the
Debentures, including any amendments thereto;
(ii) the determination of the states in which to take appropriate
action to qualify or, register for sale all or part of the Preferred
Securities and to do any and all such acts, other than actions which
must be taken by or on behalf of the Trust, and advise the Trustees
of actions they must take on behalf of the Trust, and prepare for
execution and
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filing any documents to be executed and filed by the Trust or on
behalf of the Trust, as the Depositor deems necessary or advisable
in order to comply with the applicable laws of any such States;
(iii) the preparation for filing by the Trust and execution on
behalf of the Trust of an application to The Nasdaq Stock Market's
National Market or a national stock exchange or other organizations
for listing upon notice of issuance of any Preferred Securities and
to file or cause an Administrative Trustee to file thereafter with
such exchange or organization such notifications and documents as
may be necessary from time to time;
(iv) the preparation for filing by the Trust with the Commission and
the execution on behalf of the Trust of a registration statement on
Form 8-A relating to the registration of the Preferred Securities
under Section 12(b) or 12(g) of the Exchange Act, including any
amendments thereto;
(v) the negotiation of the terms of, and the execution and delivery
of, the Underwriting Agreement providing for the sale of the
Preferred Securities; and
(vi) the taking of any other actions necessary or desirable to carry
out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees are authorized and directed to conduct the affairs of the Trust
and to operate the Trust so that the Trust shall not be deemed to be an
"investment company" required to be registered under the Investment
Company Act, shall be classified as a "grantor trust" and not as an
association taxable as a corporation for United States federal income tax
purposes and so that the Debentures shall be treated as indebtedness of
the Depositor for United States federal income tax purposes. In this
connection, subject to Section 1002, the Depositor and the Administrative
Trustees are authorized to take any action, not inconsistent with
applicable law or this Trust Agreement, that each of the Depositor and the
Administrative Trustees determines in their discretion to be necessary or
desirable for such purposes.
SECTION 208. ASSETS OF TRUST.
The assets of the Trust shall consist of the Trust Property.
SECTION 209. TITLE TO TRUST PROPERTY.
Legal title to all Trust Property shall be vested at all times in the Property
Trustee (in its capacity as such) and shall be held and administered by the
Property Trustee for the benefit of the Securityholders in accordance with this
Trust Agreement.
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ARTICLE III
PAYMENT ACCOUNT
SECTION 301. PAYMENT ACCOUNT.
(a) On or prior to the Closing Date, the Property Trustee shall establish
the Payment Account. The Property Trustee and any agent of the Property
Trustee shall have exclusive control and sole right of withdrawal with
respect to the Payment Account for the purpose of making deposits and
withdrawals from the Payment Account in accordance with this Trust
Agreement. All monies and other property deposited or held from time to
time in the Payment Account shall be held by the Property Trustee in the
Payment Account for the exclusive benefit of the Securityholders and for
distribution as herein provided, including (and subject to) any priority
of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures. Amounts held in the
Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
SECTION 401. DISTRIBUTIONS.
The Trust Securities represent undivided beneficial interests in the Trust
Property, and Distributions (including Additional Amounts) will be made on the
Trust Securities at the rate and on the dates that payments of interest
(including of Additional Interest, as defined in the Indenture) are made on the
Debentures. Accordingly:
(a) Distributions on the Trust Securities shall be cumulative, and shall
accumulate whether or not there are funds of the Trust available for the
payment of Distributions. Distributions shall accumulate from
_________,1997, and, except during any Extended Interest Payment Period
with respect to the Debentures, shall be payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year, commencing
on _________, 1997. If any date on which a Distribution is otherwise
payable on the Trust Securities is not a Business Day, then the payment of
such Distribution shall be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding
calendar year, payment of such Distribution 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 this Section 401(a), a "Distribution Date.).
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(b) Assuming payments of interest on the Debentures are made when due (and
before giving effect to Additional Amounts, if applicable), Distributions
on the Trust Securities shall be payable at a rate of ___% per annum of
the Liquidation Amount of the Trust Securities. The amount of
Distributions payable for any full period shall be computed on the basis
of a 360 day year of twelve 30-day months. The amount of Distributions for
any partial period shall be computed on the basis of the number of days
elapsed in a 360 day year of twelve 30 day months. During any Extended
Interest Payment Period with respect to the Debentures, Distributions on
the Preferred Securities shall be deferred for a period equal to the
Extended Interest Payment Period. The amount of Distributions payable for
any period shall include the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made by the Property
Trustee solely from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Trust has funds then on hand
and immediately available in the Payment Account for the payment of such
Distributions.
(d) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities on the relevant record date,
which shall be 15th day of the month in which the Distribution is payable.
SECTION 402. REDEMPTION.
(a) On each Debenture Redemption Date and on the stated maturity of the
Debentures the Trust shall be required to redeem a Like Amount of Trust
Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than
60 days prior to the Redemption Date to each Holder of Trust Securities to
be redeemed, at such Holder's address appearing in the Securities
Register. The Property Trustee shall have no responsibility for the
accuracy of any CUSIP number contained in such notice. All notices of
redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the identification and the aggregate Liquidation Amount of
the particular Trust Securities to be redeemed;
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(v) that, on the Redemption Date, the Redemption Price shall become
due and payable upon each such Trust Security to be redeemed and
that Distributions thereon shall cease to accumulate on and after
said date with respect to each such Trust Security; and
(vi) the place or places where the Trust Securities are to be
surrendered for the payment of the Redemption Price.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the proceeds from the
contemporaneous redemption of Debentures. Redemptions of the Trust
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Trust has immediately
available funds then on hand and available in the Payment Account for the
payment of such Redemption Price.
(d) If the Property Trustee gives a notice of redemption in respect of any
Preferred Securities, then, by 10:00 a.m., New York City time, on the
Redemption Date, subject to Section 402(c), the Property Trustee shall
deposit with the Paying Agent funds sufficient to pay the applicable
Redemption Price and shall give the Paying Agent irrevocable instructions
and authority to pay the Redemption Price to the Holders thereof upon
surrender of their Preferred Securities Certificates. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for
any Trust Securities called for redemption shall be payable to the Holders
of such Trust Securities as they appear on the Register for the Trust
Securities on the relevant record dates for the related Distribution
Dates. If notice of redemption shall have been given and funds deposited
as required, then upon the date of such deposit, all rights of
Securityholders holding Trust Securities so called for redemption shall
cease, accept the right of such Securityholders to receive the Redemption
Price and any Distribution payable on or prior to the Redemption Date, but
without interest, and such Securities shall cease to be Outstanding. In
the event that any date on which any Redemption Price is payable is not a
Business Day, then payment of the Redemption Price payable on such date
shall be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay),
except that, if such Business Day falls in the next calendar year, such
payment shall be made on the immediately preceding Business Day, in each
case, with the same force and effect as if made on such date. In the event
that payment of the Redemption Price in respect of any Trust Securities
called for redemption is improperly withheld or refused and not paid
either by the Trust or by the Depositor pursuant to the Guarantee,
Distributions on such Trust Securities shall continue to accumulate, at
the then applicable rate, from the Redemption Date originally established
by the Trust for such Trust Securities to the date such Redemption Price
is actually paid, in which case the actual payment date shall be the date
fixed for redemption for purposes of calculating the Redemption Price.
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(e) Payment of the Redemption Price on the Trust Securities shall be made
to the record holders thereof as they appear on the Securities Register
for the Trust Securities on the relevant record date, which shall be the
date 15 days prior to the relevant Redemption Date.
(f) Subject to Section 403(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the aggregate
Liquidation Amount of Trust Securities to be redeemed shall be allocated
on a pro rata basis (based on Liquidation Amounts) among the Common
Securities and the Preferred Securities. The particular Preferred
Securities to be redeemed shall be selected not more than 60 days prior to
the Redemption Date by the Property Trustee from the outstanding Preferred
Securities not previously called for redemption, by such method
(including, without limitation, by lot) 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 of $25 in
excess thereof), of the Liquidation Amount of Preferred Securities of a
denomination larger than $25. The Property Trustee shall promptly notify
the Securities Registrar in writing of the Preferred Securities selected
for redemption and, in the case of any Preferred Securities selected for
partial redemption, the Liquidation Amount thereof to be redeemed. For all
purposes of this Trust Agreement, unless the context otherwise requires,
all provisions relating to the redemption of Preferred Securities shall
relate, in the case of any Preferred Securities redeemed or to be redeemed
only in part, to the portion of the Liquidation Amount of Preferred
Securities which has been or is to be redeemed.
SECTION 403. SUBORDINATION OF COMMON SECURITIES.
(a) Payment of Distributions (including Additional Amounts, if applicable)
on, and the Redemption Price of, the Trust Securities, as applicable,
shall be made, subject to Section 482(f), pro rata among the Common
Securities and the Preferred Securities based on the Liquidation Amount of
the Trust Securities, provided, however, that if on any Distribution Date
or Redemption Date any Event of Default resulting from a Debenture Event
of Default shall have occurred and be continuing, no payment of any
Distribution (including Additional Amounts, if applicable) on, or
Redemption Price of, any Common Security, and no other payment on account
of the redemption, liquidation or other acquisition of Common Securities,
shall be made unless payment in full in cash of all accumulated and unpaid
Distributions (including Additional Amounts, if applicable) on all
Outstanding Preferred Securities for all Distribution periods terminating
on or prior thereto, or in the case of payment of the Redemption Price the
full amount of such Redemption Price on all Outstanding Preferred
Securities then called for redemption, shall have been made or provided
for, and all funds immediately available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions
(including Additional Amounts, if applicable) on, or the Redemption Price
of, Preferred Securities then due and payable.
(b) In the case of the occurrence of any Event of Default resulting from a
Debenture Event of Default, the Holder of Common Securities shall be
deemed to have waived any right to act
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with respect to any such Event of Default under this Trust Agreement until
the effect of all such Events of Default with respect to the Preferred
Securities shall have been cured, waived or otherwise eliminated. Until
any such Event of Default under this Trust Agreement with respect to the
Preferred Securities shall have been so cured, waived or otherwise
eliminated, the Property Trustee shall act solely on behalf of the Holders
of the Preferred Securities and not the Holder of the Common Securities,
and only the Holders of the Preferred Securities shall have the right to
direct the Property Trustee to act on their behalf.
SECTION 404. PAYMENT PROCEDURES.
Payments of Distributions (including Additional Amounts, if applicable) in
respect of the Preferred Securities shall be made by check mailed to the address
of the Person entitled thereto as such address shall appear on the Securities
Register. Payments in respect of the Common Securities shall be made in such
manner as shall be mutually agreed between the Property Trustee and the Common
Securityholder.
SECTION 405. TAX RETURNS AND REPORTS.
The Administrative Trustees shall prepare (or cause to be prepared), at the
Depositor's expense, and file all United States federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Trust. In this regard, the Administrative Trustees shall (a) prepare and file
(or cause to be prepared and filed) the appropriate Internal Revenue Service
Form required to be filed in respect of the Trust in each taxable year of the
Trust; and (b) prepare and furnish (or cause to be prepared and furnished) to
each Securityholder the appropriate Internal Revenue Service form required to be
furnished to such Securityholder or the information required to be provided on
such form. The Administrative Trustees shall provide the Depositor with a copy
of all such returns and reports promptly after such filing or furnishing. The
Property Trustee shall comply with United States federal withholding and backup
withholding tax laws and information reporting requirements with respect to any
payments to Securityholders under the Trust Securities.
SECTION 406. PAYMENT OF TAXES, DUTIES, ETC. OF THE TRUST.
Upon receipt under the Debentures of Additional Interest (as defined in Section
1.1 of the Indenture), the Property Trustee, at the direction of an
Administrative Trustee or the Depositor, shall promptly pay any taxes, duties or
governmental charges of whatsoever nature (other than withholding taxes) imposed
on the Trust by the United States or any other taxing authority.
SECTION 407. PAYMENTS UNDER INDENTURE.
Any amount payable hereunder to any Holder or Preferred Securities shall be
reduced by the amount of any corresponding payment such Holder has directly
received under the Indenture pursuant to Section 514(b) or (c) hereof.
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ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 501. INITIAL OWNERSHIP.
Upon the creation of the Trust and the contribution by the Depositor pursuant to
Section 203 and until the issuance of the Trust Securities, and at any time
during which no Trust Securities are outstanding, the Depositor shall be the
sole beneficial owner of the Trust.
SECTION 502. THE TRUST SECURITIES CERTIFICATES.
The Preferred Securities Certificates shall be issued in minimum denominations
of $25 Liquidation Amount and integral multiples of $25 in excess thereof, and
the Common Securities Certificates shall be issued in denominations of $25
Liquidation Amount and integral multiples thereof. The Trust Securities
Certificates shall be executed on behalf of the Trust by manual, facsimile or
imprinted signature of at least one Administrative Trustee. Trust Securities
Certificates bearing the signatures of individuals who were, at the time when
such signatures shall have been affixed, authorized to sign on behalf of the
Trust, shall be validly issued and entitled to the benefits of this Trust
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such Trust
Securities Certificates. A transferee of a Trust Securities Certificate shall
become a Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Sections 504 and
511.
SECTION 503. EXECUTION AND DELIVERY OF TRUST SECURITIES CERTIFICATES.
On the Closing Date and on the date on which the Underwriters exercise the
option to purchase additional Preferred Securities, as applicable (the "Option
Closing Date"), the Administrative Trustees shall cause Trust Securities
Certificates, in an aggregate Liquidation Amount as provided in Sections 204 and
205, to be executed on behalf of the Trust by at least one of the Administrative
Trustees and delivered to the Property Trustee and upon such delivery, the
Property Trustee shall countersign and register such Trust Securities
Certificates and deliver such Trust Securities Certificates upon the written
order of the Depositor, executed by its Chief Executive Officer or President or
any Vice President and the Treasurer or an Assistant Treasurer or Secretary or
Assistant Secretary without further corporate action by the Depositor, in
authorized denominations.
SECTION 504. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED SECURITIES
CERTIFICATES
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(a) The Property Trustee shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 508, a register or registers for the
purpose of registering Trust Securities Certificates and transfers and
exchanges of Preferred Securities Certificates (herein referred to as the
"Securities Register") in which the registrar and transfer agent (the
"Securities Registrar"), subject to such reasonable regulations as it may
prescribe, shall provide for the registration of Preferred Securities
Certificates and Common Securities Certificates (subject to Section 510 in
the case of the Common Securities Certificates) and registration of
transfers and exchanges of Preferred Securities Certificates as herein
provided. The Property Trustee shall be the initial Securities Registrar.
(b) Upon surrender for registration of transfer of any Preferred
Securities Certificate at the office or agency maintained pursuant to
Section 508, the Administrative Trustees or any one of them and the
Property Trustee shall execute and deliver, in the name of the designated
transferee or transferees, one or more new Preferred Securities
Certificates in authorized denominations of a like aggregate Liquidation
Amount dated the date of execution by such Administrative Trustee or
Trustees. The Securities Registrar shall not be required to register the
transfer of any Preferred Securities that have been called for redemption.
At the option of a Holder, Preferred Securities Certificates may be
exchanged for other Preferred Securities Certificates in authorized
denominations of the same class and of a like aggregate Liquidation Amount
upon surrender of the Preferred Securities Certificates to be exchanged at
the office or agency maintained pursuant to Section 508.
(c) Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Property Trustee and
the Securities Registrar duly executed by the Holder or his attorney duly
authorized in writing. Each Preferred Securities Certificate surrendered
for registration of transfer or exchange shall be canceled and
subsequently disposed of by the Property Trustee in accordance with its
customary practice. The Trust shall not be required to (i) issue, register
the transfer of, or exchange any Preferred Securities during a period
beginning at the opening of business 15 calendar days before the date of
mailing of a notice of redemption of any Preferred Securities called for
redemption and ending at the close of business on the day of such mailing;
or (ii) register the transfer of or exchange any Preferred Securities so
selected for redemption, in whole or in part, except the unredeemed
portion of any such Preferred Securities being redeemed in part.
(d) No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Preferred Securities Certificates.
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SECTION 505. MUTILATED, DESTROYED, LOST OR STOLEN TRUST SECURITIES CERTIFICATES.
If (a) any mutilated Trust Securities certificate shall be surrendered to the
Securities Registrar, or if the Securities Registrar shall receive evidence to
its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate, and (b) there shall be delivered to the Securities Registrar and
the Administrative Trustees such security or indemnity as may be required by
them to save each of them harmless, then in the absence of notice that such
Trust Securities Certificate shall have been acquired by a bona fide purchaser,
the Administrative Trustees, or any one of them, on behalf of the Trust shall
execute and make available for delivery, and the Property Trustee shall
countersign, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Trust Securities Certificate, a new Trust Securities Certificate of
like class, tenor and denomination. In connection with the issuance of any new
Trust Securities Certificate under this Section 505, the Administrative Trustees
or the Securities Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Trust Securities Certificate issued pursuant to this
Section 505 shall constitute conclusive evidence of an undivided beneficial
interest in the assets of the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Trust Securities Certificate shall be found at any
time.
SECTION 506. PERSONS DEEMED SECURITYHOLDERS.
The Trustees, the Paying Agent and the Securities Registrar shall treat the
Persons in whose name any Trust Securities are issued as the owner of such Trust
Securities Certificate for the purpose of receiving Distributions and for all
other purposes whatsoever, and neither the Trustees nor the Securities Registrar
shall be bound by any notice to the contrary.
SECTION 507. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES.
At any time when the Property Trustee is not also acting as the Securities
Registrar, the Administrative Trustees or the Depositor shall furnish or cause
to be furnished to the Property Trustee a list, in such form as the Property
Trustee may reasonably require, of the names and addresses of the
Securityholders as of the most recent record date (a) semi-annually on or before
January 15 and July 15 in each year; and (b) promptly after receipt by any
Administrative Trustee or the Depositor of a request therefor from the Property
Trustee in order to enable the Property Trustee to discharge its obligations
under this Trust Agreement, in each case to the extent such information is in
the possession or control of the Administrative Trustees or the Depositor and is
not identical to a previously supplied list or has not otherwise been received
by the Property Trustee in its capacity as Securities Registrar. The rights of
Securityholders to communicate with other Securityholders with respect to their
rights under this Trust Agreement or under the Trust Securities, and the
corresponding rights of the Trustee shall be as provided in the Trust Indenture
Act. Each Holder and each owner shall be deemed to have agreed not to hold the
Depositor, the Property Trustee or the Administrative Trustees accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
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SECTION 508. MAINTENANCE OF OFFICE OR AGENCY.
The Property Trustee shall designate, with the consent of the Administrative
Trustees, which consent shall not be unreasonably withheld, an office or offices
or agency or agencies where Preferred Securities Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Trustees in respect of the Trust Securities Certificates may be served.
The Property Trustee initially designates its corporate trust office at 101
Barclay Street, New York, New York Attn: Corporate Trust Trustee Administration,
as the principal corporate trust office for such purposes. The Property Trustee
shall give prompt written notice to the Depositor, the Administrative Trustees
and to the Securityholders of any change in the location of the Securities
Register or any such office or agency.
SECTION 509. APPOINTMENT OF PAYING AGENT.
The Paying Agent shall make Distributions to Securityholders from the Payment
Account and shall report the amounts of such Distributions to the Property
Trustee and the Administrative Trustees. Any Paying Agent shall have the
revocable power to withdraw funds from the Payment Account for the purpose of
making the Distributions referred to above. The Property Trustee may revoke such
power and remove the Paying Agent if such Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligation
under this Trust Agreement in any material respect. 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
Depositor. Any Person acting as Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' written notice to the Administrative Trustee and the
Property Trustee. In the event that the Property Trustee shall no longer be the
Paying Agent or a successor Paying Agent shall resign or its authority to act be
revoked, the Property Trustee shall appoint a successor that is reasonably
acceptable to the Administrative Trustees to act as Paying Agent to execute and
deliver to the Trustees an instrument in which such successor Paying Agent or
additional Paying Agent shall agree with the Trustees that as Paying Agent, such
successor Paying Agent or additional Paying Agent shall hold all sums, if any,
held by it for payment to the Securityholders in trust for the benefit of the
Securityholders entitled thereto until such sums shall be paid to such
Securityholders. The Paying Agent shall return all unclaimed funds to the
Property Trustee and, upon removal of a Paying Agent, such Paying Agent shall
also return all funds in its possession to the Property Trustee. The provisions
of Sections 801, 803 and 806 shall apply to the Property Trustee also in its
role as Paying Agent, for so long as the Property Trustee shall act as Paying
Agent and, to the extent applicable, to any other paying agent appointed
hereunder. Any reference in this Agreement to the Paying Agent shall include any
co-paying agent unless the context requires otherwise.
SECTION 510. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR.
On the Closing Date, the Depositor shall acquire and retain beneficial and
record ownership of the Common Securities. To the fullest extent permitted by
law, any attempted transfer of the Common
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Securities (other than a transfer in connection with a merger or consolidation
of the Depositor into another corporation pursuant to Section 12.1 of the
Indenture) shall be void. The Administrative Trustees shall cause each Common
Securities Certificate issued to the Depositor to contain a legend stating "THIS
CERTIFICATE IS NOT TRANSFERABLE", among other legends.
SECTION 511. PREFERRED SECURITIES CERTIFICATES.
(a) Each Holder shall receive a Preferred Securities Certificate
representing such owner's interest in such Preferred Securities. Upon the
issuance of Definitive Preferred Securities Certificates, the Trustees
shall recognize the record holders of the Definitive Preferred Securities
Certificates as Securityholders. The Definitive Preferred Securities
Certificates shall be printed, lithographed or engraved or may be produced
in any other manner as is reasonably acceptable to the Administrative
Trustees, as evidenced by the execution thereof by the Administrative
Trustees or any one of them.
(b) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive
Common Securities Certificate.
(c) A Trust Securities Certificate shall not be valid unless signed by the
manual signature of at least one Administrative Trustee or by the
facsimile or imprinted signature of at least one Administrative Trustee
and countersigned and registered by the manual signature of an authorized
signatory of the Property Trustee. These signatures shall be conclusive
evidence that the Trust Security has been validly issued under this Trust
Agreement.
SECTION 512. RIGHTS OF SECURITYHOLDERS.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 209,
and the Securityholders shall not have any right or title therein other
than the undivided beneficial interest in the assets of the Trust
conferred by their Trust Securities and they shall have no right to call
for any partition or division of property, profits or rights of the Trust
except as described below. The Trust Securities shall be personal property
giving only the rights specifically set forth therein and in this Trust
Agreement. The Trust Securities shall have no preemptive or similar
rights. When issued and delivered to Holders of the Preferred Securities
against payment of the purchase price therefor, the Preferred Securities
shall be fully paid and nonassessable interests in the Trust. The Holders
of the Preferred Securities, in their capacities as such, shall be
entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware.
(b) For so long as any Preferred Securities remain Outstanding, if, upon a
Debenture Event of Default, the Debenture Trustee fails or the holders of
not less than 25 % in principal amount of the outstanding Debentures fail
to declare the principal of all of the Debentures to be
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immediately due and payable, the Holders of at least 25% in Liquidation
Amount of the Preferred Securities then Outstanding shall have such right
by a notice in writing to the Depositor and the Debenture Trustee; and
upon any such declaration such principal amount of and the accrued
interest on all of the Debentures shall become immediately due and
payable, provided that the payment of principal and interest on such
Debentures shall remain subordinated to the extent provided in the
Indenture.
(c) For so long as any Preferred Securities remain outstanding, if, upon a
Debenture Event of Default arising from the failure to pay interest or
principal on the Debentures, any Holders of Preferred Securities then
Outstanding shall, to the fullest extent permitted by law and subject to
the terms of this Trust Agreement and the Indenture, have the right to
institute a proceeding directly against the Depositor for enforcement of
payment to such Holder of principal of or interest on the Debentures
having a principal amount equal to the Liquidation Amount of the Preferred
Securities of such Holder.
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 601. LIMITATIONS ON VOTING RIGHTS.
(a) Except as provided in this Section 601, in Sections 514, 810 and 1002
and in the Indenture and as otherwise required by law, no Holder of
Preferred Securities shall have any right to vote or in any manner
otherwise control the administration, operation and management of the
Trust or the obligations of the parties hereto, nor shall anything herein
set forth, or contained in the terms of the Trust Securities Certificates,
be construed so as to constitute the Securityholders from time to time as
partners or members of an association.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing
any trust or power conferred on the Debenture Trustee with respect to such
Debentures; (ii) waive any past default which is waivable under Article
VII of the Indenture; (iii) exercise any right to rescind or annul a
declaration that the principal of all the Debentures shall be due and
payable; or (iv) consent to any amendment, modification or termination of
the Indenture or the Debentures, where such consent shall be required,
without, in each case, obtaining the prior approval of the Holders of at
least 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 Outstanding Debentures
affected thereby, no such consent shall be given by the Property Trustee
without the prior written consent of each holder of Preferred Securities.
The Trustees shall not revoke any action previously authorized or approved
by a vote of the Holders of the Outstanding Preferred Securities, except
by a subsequent vote of the Holders of the Outstanding Preferred
Securities. The Property Trustee shall notify each Holder of Outstanding
Preferred Securities of any notice
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of default received from the Debenture Trustee with respect to the
Debentures. In addition to obtaining the foregoing approvals of the
Holders of the Preferred Securities, prior to taking any of the foregoing
actions, the Trustees shall, at the expense of the Depositor, obtain an
Opinion of Counsel experienced in such matters to the effect that the
Trust shall continue to be classified as a grantor trust and not as an
association taxable as a corporation for United States federal income tax
purposes on account of such action.
(c) If any proposed amendment to the Trust Agreement provides for, or the
Trustees otherwise propose to effect, (i) any action that would adversely
affect in any material respect the powers, preferences or special rights
of the Preferred Securities, whether by way of amendment to the Trust
Agreement or otherwise; or (ii) the dissolution, winding-up or termination
of the Trust, other than pursuant to the terms of this Trust Agreement,
then the Holders of Outstanding Preferred Securities as a class shall be
entitled to vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of the Holders of
at least a majority in Liquidation Amount of the Outstanding Preferred
Securities. No amendment to this Trust Agreement may be made if, as a
result of such amendment, the Trust would cease to be classified as a
grantor trust or would be classified as an association taxable as a
corporation for United States federal income tax purposes.
SECTION 602. NOTICE OF MEETINGS.
Notice of all meetings of the Preferred Securityholders, stating the time, place
and purpose of the meeting, shall be given by the Property Trustee pursuant to
Section 1008 to each Preferred Securityholder of record, at his registered
address, at least 15 days and not more than 90 days before the meeting. At any
such meeting, any business properly before the meeting may be so considered
whether or not stated in the notice of the meeting. Any adjourned meeting may be
held as adjourned without further notice.
SECTION 603. MEETINGS OF PREFERRED SECURITYHOLDERS.
(a) No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Securityholders
to vote on any matter in respect of which Preferred Securityholders are
entitled to vote upon the written request of the Preferred Securityholders
of 25% of the Outstanding Preferred Securities (based upon their aggregate
Liquidation Amount) and the Administrative Trustees or the Property
Trustee may, at any time in their discretion, call a meeting of Preferred
Securityholders to vote on any matters as to which the Preferred
Securityholders are entitled to vote.
(b) Preferred Securityholders of record of 50% of the Outstanding
Preferred Securities (based upon their aggregate Liquidation Amount),
present in person or by proposal shall constitute a quorum at any meeting
of Securityholders.
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(c) If a quorum is present at a meeting, an affirmative vote by the
Preferred Securityholders of record present, in person or by proxy,
holding more than a majority of the Preferred Securities (based upon their
aggregate Liquidation Amount) held by the Preferred Securityholders of
record present, either in person or by proxy, at such meeting shall
constitute the action of the Securityholders unless this Trust Agreement
requires a greater number of affirmative votes.
SECTION 604. VOTING RIGHTS.
Securityholders shall be entitled to one vote for each $25 of Liquidation Amount
represented by their Trust Securities in respect of any matter as to which such
Securityholders are entitled to vote.
SECTION 605. PROXIES, ETC.
At any meeting of Securityholders, any Securityholder entitled to vote thereat
may vote by proxy, provided that no proxy shall be voted at any meeting unless
it shall have been placed on file with the Administrative Trustees, or with such
other officer or agent of the Trust as the Administrative Trustees may direct,
for verification prior to the time at which such vote shall be taken. When Trust
Securities are held jointly by several persons, any one of them may vote at any
meeting in person or by proxy in respect of such Trust Securities, but if more
than one of them shall be present at such meeting in person or by proxy, and
such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Trust Securities. A
proxy purporting to be executed by or on behalf of a Securityholder shall be
deemed valid unless challenged at or prior to its exercise, and, the burden of
proving invalidity shall rest on the challenger. No proxy shall be valid more
than three years after its date of execution.
SECTION 606. SECURITYHOLDER ACTION BY WRITTEN CONSENT.
Any action which may be taken by Securityholders at a meeting may be taken
without a meeting if Securityholders holding more than a majority of all
Outstanding Trust Securities (based upon their aggregate Liquidation Amount)
entitled to vote in respect of such action (or such larger proportion thereof as
shall be required by any express provision of this Trust Agreement) shall
consent to the action in writing (based upon their aggregate Liquidation
Amount).
SECTION 607. RECORD DATE FOR VOTING AND OTHER PURPOSES.
For the purposes of determining the Securityholders who are entitled to notice
of and to vote at any meeting or by written consent, or to participate in any
Distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrative Trustees may from time to time fix a date, not more
than 90 days prior to the date of any meeting of Securityholders or the payment
of any Distribution or other action as the
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case may be, as a record date for the determination of the identity of the
Securityholders of record for such purposes.
SECTION 608. ACTS OF SECURITYHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Trust Agreement to be given,
made or taken by Securityholders may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed by such
Securityholders in person or by an agent duly appointed in writing, and,
except as otherwise expressly provided herein, such action shall become
effective when such instrument or instruments are delivered to an
Administrative Trustee. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Securityholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this
Trust Agreement and (subject to Section 801) conclusive in favor of the
Trustees, if made in the manner provided in this Section 608.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or affidavit
shall also constitute sufficient proof of his authority. The fact and date
of the execution of any such instrument or writing, or the authority of
the Person executing the same, may also be proved in any other manner
which any Trustee receiving the same deems sufficient.
(c) The ownership of Preferred Securities shall be proved by the
Securities Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Securityholder of any Trust Security shall bind every
future Securityholder of the same Trust Security and the Securityholder of
every Trust Security issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustees or the Trust in reliance
thereon, whether or not notation of such action is made upon such Trust
Security.
(e) Without limiting the foregoing, a Securityholder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may
do so with regard to all or any part of the Liquidation Amount of such
Trust Security or by one or more duly appointed agents each of which may
do so pursuant to such appointment with regard to all or any part of such
liquidation amount.
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(f) A Securityholder may institute a legal proceeding directly against the
Depositor under the Guarantee to enforce its rights under the Guarantee
without first instituting a legal proceeding against the Guarantee Trustee
(as defined in the Guarantee), the Trust or any Person.
SECTION 609. INSPECTION OF RECORDS.
Upon reasonable notice to the Administrative Trustees and the Property Trustee,
the records of the Trust shall be open to inspection and copying by
Securityholders and their authorized representatives during normal business
hours for any purpose reasonably related to such Securityholder's interest as a
Securityholder.
ARTICLE VII
REPRESENTATIONS AND WARANTIES
SECTION 701. REPRESENTATIONS AND WARRANTIES OF THE PROPERTY TRUSTEE AND
THE DELAWARE TRUSTEE.
The Property Trustee and the Delaware Trustee, each severally on behalf of and
as to itself, as of the date hereof, hereby represents and warrants for the
benefit of the Depositor and the Securityholders that:
(a) the Property Trustee is a state banking association, duly organized,
validly existing and in good standing under the laws of the State of New
York;
(b) the Property Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust
Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;
(c) the Delaware Trustee is a Delaware banking corporation duly organized,
validly existing and in good standing in the State of Delaware;
(d) the Debenture Trustee has full corporate power, authority and legal
right to execute, deliver and perform its obligations under this Trust
Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;
(e) this Trust Agreement has been duly authorized, executed and delivered
by the Property Trustee and the Delaware Trustee and constitutes the valid
and legally binding agreement of the Property Trustee and the Delaware
Trustee enforceable against each of them in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors, rights and to general equity principles;
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(f) the execution, delivery and performance by the Property Trustee and
the Delaware Trustee of this Trust Agreement has been duly authorized by
all necessary corporate or other action on the part of the Property
Trustee and Delaware Trustee and does not require any approval of
stockholders of the Property Trustee or the Delaware Trustee and such
execution delivery and performance shall not (i) violate the charter or
by-laws of the Property Trustee or the Delaware Trustee; (ii) violate any
provision of, or constitute, with or without notice or lapse of time, a
default under, or result in the creation or imposition of, any Lien on any
properties included in the Trust Property pursuant to the provisions of
any indenture, mortgage, credit agreement, license or other agreement or
instrument to which the Property Trustee or the Delaware Trustee is a
party or by which it is bound; or (iii) violate any law, governmental rule
or regulation of the United States or the State of Delaware, as the case
may be, governing the banking or trust powers of the Property Trustee or
the Delaware Trustee (as appropriate in context) or any order, judgment or
decree applicable to the Property Trustee or the Delaware Trustee;
(g) neither the authorization, execution or delivery by the Property
Trustee or the Delaware Trustee of this Trust Agreement nor the
consummation of any of the transactions by the Property Trustee or the
Delaware Trustee contemplated herein or therein requires the consent or
approval of, the giving of notice to, the registration with or the taking
of any other action with respect to any governmental authority or agency
under any existing federal law governing the banking or trust powers of
the Property Trustee or the Delaware Trustee, as the case may be, under
the laws of the United States or the State of Delaware; and
(h) there are no proceedings pending or, to the best of each of the
Property Trustee's and the Delaware Trustee's knowledge, threatened
against or affecting the Property Trustee or the Delaware Trustee in any
court or before any governmental authority, agency or arbitration board or
tribunal which, individually or in the aggregate, would materially and
adversely affect the Trust or would question the right, power and
authority of the Property Trustee or the Delaware Trustee , as the case
may be, to enter into or perform its obligations as one of the Trustees
under this Trust Agreement.
SECTION 702. REPRESENTATIONS AND WARRANTIES OF DEPOSITOR.
The Depositor hereby represents and warrants for the benefit of the
Securityholders that:
(a) the Trust Securities Certificates issued on the Closing Date or the
Option Closing Date, if applicable, on behalf of the Trust have been duly
authorized and, shall have been, duly and validly executed, issued and
delivered by the Administrative Trustees pursuant to the terms and
provisions of, and in accordance with the requirements of, this Trust
Agreement and the Securityholders shall be, as of such date, entitled to
the benefits of this Trust Agreement; and
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(b) there are no taxes, fees or other governmental charges payable by the
Trust (or the Trustees on behalf of the Trust) under the laws of the State
of Delaware or any political subdivision thereof in connection with the
execution, delivery and performance by the Bank or the Property Trustee,
as the case may be, of this Trust Agreement.
ARTICLE VIII
TRUSTEES
SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The duties and responsibilities of the Trustees shall be as provided
by this Trust Agreement and, in the case of the Property Trustee, by the
Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Trust Agreement shall require the Trustees to expend or risk their own
funds or otherwise incur any financial liability in the performance of any
of their duties hereunder, or in the exercise of any of their rights or
powers, if they shall have reasonable grounds for believing that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it. No Administrative Trustee shall be liable for
its act or omissions hereunder except as a result of its own gross
negligence or willful misconduct. The Property Trustee's liability shall
be determined under the Trust Indenture Act. Whether or not therein
expressly so provided, every provision of this Trust Agreement relating to
the conduct or affecting the liability of or affording protection to the
Trustees shall be subject to the provisions of this Section 801. To the
extent that, at law or in equity, an Administrative Trustee has duties
(including fiduciary duties) and liabilities relating thereto to the Trust
or to the Securityholders, such Administrative Trustee shall not be liable
to the Trust or to any Securityholder for such Trustee's good faith
reliance on the provisions of this Trust Agreement. The provisions of this
Trust Agreement, to the extent that they restrict the duties and
liabilities of the Administrative Trustees otherwise existing at law or in
equity, are agreed by the Depositor and the Securityholders to replace
such other duties and liabilities of the Administrative Trustees.
(b) All payments made by the Property Trustee or a Paying Agent in respect
of the Trust Securities shall be made only from the revenue and proceeds
from the Trust Property and only to the extent that there shall be
sufficient revenue or proceeds from the Trust Property to enable the
Property Trustee or a Paying Agent to make payments in accordance with the
terms hereof. With respect to the relationship of each Securityholder and
the Trustee, each Securityholder, by its acceptance of a Trust Security,
agrees that it shall look solely to the revenue and proceeds from the
Trust Property to the extent legally available for distribution to it as
herein provided and that the Trustees are not personally liable to it for
any amount distributable in respect of any Trust Security or for any other
liability in respect of any Trust Security. This Section 801(b) does not
limit the liability of the Trustees expressly set forth elsewhere in this
Trust Agreement or, in the case of the Property Trustee, in the Trust
Indenture Act.
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(c) No provision of this Trust Agreement shall be construed to relieve the
Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) the property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(ii) 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 Trust Securities relating to
the time, method and place of conducting any proceeding for any
remedy available to the Property Trustee, or exercising any trust or
power conferred upon the Property Trustee under this Trust
Agreement;
(iii) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the
Payment Account shall be to deal with such Property in a similar
manner as the Property Trustee deals with similar property for its
own account, subject to the protections and limitations on liability
afforded to the Property Trustee under this Trust Agreement and the
Trust Indenture Act;
(iv) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree with the
Depositor and money held by the Property Trustee need not be
segregated from other funds held by it except in relation to the
Payment Account maintained by the Property Trustee pursuant to
Section 301 and except to the extent otherwise required by law; and
(v) the Property Trustee shall not be responsible for monitoring the
compliance by the Administrative Trustees or the Depositor with
their respective duties under this Trust Agreement, nor shall the
Property Trustee be liable for the negligence, default or misconduct
of the Administrative Trustees or the Depositor.
SECTION 802. CERTAIN NOTICES.
(a) Within 90 days after the occurrence of any Event of Default actually
known to the Property Trustee, the Property Trustee shall transmit, in the
manner and to the extent provided in Section 1008, notice of such Event of
Default to the Securityholders, the Administrative Trustees and the
Depositor, unless such Event of Default shall have been cured or waived.
(b) The Administrative Trustees shall transmit, to the Securityholders in
the manner and to the extent provided in Section 1008, notice of the
Depositor's election to begin or further extend an Extended Interest
Payment Period on the Debentures (unless such election shall have been
revoked) within the
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time specified for transmitting such notice to the holders of the Debentures
pursuant to the Indenture as originally executed.
SECTION 803. CERTAIN RIGHTS OF PROPERTY TRUSTEE.
Subject to the provisions of Section 801:
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of
Counsel, certificate, written representation of a Holder or transferee,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(b) if (i) in performing its duties under this Trust Agreement the
Property Trustee is required to decide between alternative courses of
action; or (ii) in construing any of the provisions of this Trust
Agreement the Property Trustee finds the same ambiguous or inconsistent
with other provisions contained herein; or (iii) the Property Trustee is
unsure of the application of any provision of this Trust Agreement, then,
except as to any matter as to which the Preferred Securityholders are
entitled to vote under the terms of this Trust Agreement, the Property
Trustee shall deliver a notice to the Depositor requesting written
instructions of the Depositor as to the course of action to be taken and
the Property Trustee shall take such action, or refrain from taking such
action, as the Property Trustee shall be instructed in writing to take, or
to refrain from taking, by the Depositor, provided, however, that if the
Property Trustee does not receive such instructions of the Depositor
within 10 Business Days after it has delivered such notice, or such
reasonably shorter period of time set forth in such notice (which to the
extent practicable shall not be less than 2 Business Days), it may, but
shall be under no duty to, take or refrain from taking such action not
inconsistent with this Trust Agreement as it shall deem advisable and in
the best interests of the Securityholders, in which event the Property
Trustee shall have no liability except for its own bad faith, negligence
or willful misconduct;
(c) any direction or act of the Depositor or the Administrative Trustees
contemplated by this Trust Agreement shall be sufficiently evidenced by an
Officers' Certificate;
(d) whenever in the administration of this Trust Agreement, the Property
Trustee shall deem it desirable that a matter be established before
undertaking, 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 Officer's Certificate which, upon receipt of such request, shall be
promptly delivered by the Depositor or the Administrative Trustees;
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(e) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including any financing or
continuation statement) or any filing under tax or securities laws or any
re-recording, refilling, or reregistration thereof;
(f) the Property Trustee may consult with counsel of its choice (which
counsel may be counsel to the Depositor or any of its Affiliates) and the
advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon and in accordance with
such advice, the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from
any court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request
or direction of any of the Securityholders pursuant to this Trust
Agreement, unless such Securityholders shall have offered to the Property
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request
or direction;
(h) the Property Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, debenture, note or other evidence of indebtedness or other paper or
document, unless requested in writing to do so by one or more
Securityholders, but the Property Trustee may make such further inquiry or
investigation into such facts or matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through its
agents or attorneys, provided that the Property Trustee shall be
responsible for its own negligence or recklessness with respect to
selection of any agent or attorney appointed by it hereunder;
(j) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder the
Property Trustee (i) may request instructions from the Holders of the
Trust Securities which instructions may only be given by the Holders of
the same proportion in Liquidation Amount of the Trust Securities as would
be entitled to direct the Property Trustee under the terms of the Trust
Securities in respect of such remedy, right or action; (ii) may refrain
from enforcing such remedy or right or taking such other action until such
instructions are received; and (iii) shall be protected in acting in
accordance with such instructions; and
(k) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Trust Agreement. No
provision of this Trust Agreement shall be deemed to impose any
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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 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The Recitals contained herein and in the Trust Securities Certificates shall be
taken as the statements of the Trust, and the Trustees do not assume any
responsibility for their correctness. The Trustees shall not be accountable for
the use or application by the Depositor of the proceeds of the Debentures.
SECTION 805. MAY HOLD SECURITIES.
Any Trustee or any other agent of any Trustee or the Trust, in its individual or
any other capacity, may become the owner or pledgee of Trust Securities and,
subject to Sections 808 and 813 and except as provided in the definition of the
term "Outstanding" in Article I, may otherwise deal with the Trust with the same
rights it would have if it were not a Trustee or such other agent.
SECTION 806. COMPENSATION; INDEMNITY; FEES.
The Depositor agrees:
(a) to pay to the Trustees from time to time reasonable compensation for
all services rendered by them hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and
advances incurred or made by the Trustees in accordance with any provision
of this Trust Agreement (including the reasonable compensation and the
expenses and disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to such Trustee's
negligence, bad faith or willful misconduct (or, in the case of the
Administrative Trustees, any such expense, disbursement or advance as may
be attributable to its, his or her gross negligence, bad faith or willful
misconduct); and
(c) to indemnify each of the Trustees or any predecessor Trustee for, and
to hold the Trustees harmless against, any loss, damage, claim, liability,
penalty or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of
this Trust Agreement, including the costs and expenses of defending itself
against any claim or liability in connection with the exercise or
performance of any of its
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powers or duties hereunder, except any such expense, disbursement or
advance as may be attributable to such Trustee's negligence, bad faith or
willful misconduct (or, in the case of the Administrative Trustees, any
such expense, disbursement or advance as may be attributable to its, his
or her gross negligence, bad faith or willful misconduct).
The provisions of this Section 806 shall survive the termination of this Trust
Agreement or the earlier resignations or removal of any Trustee.
No Trustee may claim any Lien or charge on any Trust Property as a result of any
amount due pursuant to this Section 806.
SECTION 807. CORPORATE PROPERTY TRUSTEE REQUIRED; ELIGIBILITY OF TRUSTEES.
(a) There shall at all times be a Property Trustee hereunder with respect
to the Trust Securities. The Property Trustee shall be a Person that is
eligible pursuant to the Trust Indenture Act to act as such and has a
combined capital and surplus of at least $50,000,000. If any such Person
publishes reports of condition at least annually, pursuant to law or to
the requirements of its supervising or examining authority, then for the
purposes of this Section 807, the combined capital and surplus of such
Person shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the
Property Trustee with respect to the Trust Securities shall cease to be
eligible in accordance with the provisions of this Section 807, it shall
resign immediately in the manner and with the effect hereinafter specified
in this Article VIII.
(b) There shall at all times be one or more Administrative Trustees
hereunder with respect to the Trust Securities. Each Administrative
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 persons authorized to
bind that entity.
(c) There shall at all times be a Delaware Trustee with respect to the
Trust Securities. The Delaware Trustee shall either be (i) a natural
person who is at least 21 years of age and a resident of the State of
Delaware; or (ii) a legal entity with its principal place of business in
the State of Delaware and that otherwise meets the requirements of
applicable Delaware law that shall act through one or more persons
authorized to bind such entity.
SECTION 808. CONFLICTING INTERESTS.
If the Property Trustee has or shall acquire a conflicting interest within the
meaning of the Trust Indenture Act, the Property Trust shall either eliminate
such interest or resign, to the extent and in the manner provided by, and
subject to the provisions of, the Trust Indenture Act and this Trust Agreement.
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SECTION 809. CO-TRUSTEES AND SEPARATE TRUSTEE.
(a) Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of
the Trust Indenture Act or of any jurisdiction in which any part of the
Trust Property may at the time be located, the Depositor shall have power
to appoint, and upon the written request of the Property Trustee, the
Depositor shall for such purpose join with the Property Trustee in the
execution, delivery and performance of any instruments and agreements
necessary or proper to appoint, one or more Persons approved by the
Property Trustee either to act as co-trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to the extent
required by law to act as separate trustee of any such property, in either
case with such powers as may be provided in the instrument of appointment,
and to vest in such Person or Persons in the capacity aforesaid, any
property, title, right or power deemed necessary or desirable, subject to
the other provisions of this Section 809. If the Depositor does not join
in such appointment within 15 days after the receipt by it of a request so
to do, or in case a Debenture Event of Default has occurred and is
continuing, the Property Trustee alone shall have power to make such
appointment. Any co-trustee or separate trustee appointed pursuant to this
Section 809 shall either be (i) a natural person who is at least 21 years
of age and a resident of the United States; or (ii) a legal entity with
its principal place of business in the United States that shall act
through one or more persons authorized to bind such entity.
(b) Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to
such co-trustee or separate trustee such property, title, right, or power,
any and all such instruments shall, on request, be executed, acknowledged,
and delivered by the Depositor.
(c) Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(i) The Trust Securities shall be executed and delivered and all
rights, powers, duties and obligations hereunder in respect of the
custody of securities, cash and other personal property held by, or
required to be deposited or pledged with, the Trustees specified
hereunder, shall be exercised, solely by such Trustees and not by
such co-trustee or separate trustee.
(ii) The rights, powers, duties and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered
by such appointment shall be conferred or imposed upon and exercised
or performed by the Property Trustee or by the Property Trustee and
such co-trustee or separate trustee jointly, as shall be provided in
the instrument appointing such co-trustee or separate trustee,
except to the extent that under any law of any jurisdiction in which
any particular act is to be performed, the
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Property Trustee shall be incompetent or unqualified to perform such
act, in which event such rights, powers, duties and obligations
shall be exercised and performed by such co-trustee or separate
trustee.
(iii) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may
accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section 809, and, in case a Debenture
Event of Default has occurred and is continuing, the Property
Trustee shall have the power to accept the resignation of, or
remove, any such co-trustee or separate trustee without the
concurrence of the Depositor. Upon the written request of the
Property Trustee, the Depositor shall join with the Property Trustee
in the execution, delivery and performance of all instruments
necessary or proper to effectuate such resignation or removal. A
successor to any co-trustee or separate trustee so resigned or
removed may be appointed in the manner provided in this Section 809.
(iv) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Property
Trustee or any other trustee hereunder.
(v) The Property Trustee shall not be liable by reason of any
act of a co-trustee or separate trustee.
(vi) Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate
trustee.
SECTION 810. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of any Trustee (the "Relevant Trustee") a6 d
no appointment of a successor Trustee pursuant to this Article VIII shall
become effective until the acceptance of appointment by the successor
Trustee in accordance with the applicable requirements of Section 811.
(b) Subject to the immediately preceding paragraph, the Relevant Trustee
may resign at any time with respect to the Trust Securities by giving
written notice thereof to the Securityholders. If the instrument of
acceptance by the successor Trustee required by Section 811 shall not have
been delivered to the Relevant Trustee within 30 days after the giving of
such notice of resignation, the Relevant Trustee may petition, at the
expense of the Depositor, any court of competent jurisdiction for the
appointment of a successor Relevant Trustee with respect to the Trust
Securities.
(c) Unless a Debenture Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by act of the Common
Securityholder. If a Debenture Event of Default shall have occurred and be
continuing, the Property Trustee or the Delaware
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Trustee, or both of them, may be removed at such time by Act of the
Holders of a majority in Liquidation Amount of the Preferred Securities,
delivered to the Relevant Trustee (in its individual capacity and on
behalf of the Trust). An Administrative Trustee may be removed by the
Common Securityholder at any time. 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 Common Securityholder.
(d) If any Trustee shall resign, be removed or become incapable of acting
as Trustee, or if a vacancy shall occur in the office of any Trustee for
any cause, at a time when no Debenture Event of Default shall have
occurred and be continuing, the Common Securityholder, by act of the
Common Securityholder delivered to the retiring Trustee, shall promptly
appoint a successor Trustee or Trustees with respect to the Trust
Securities and the Trust, and the successor Trustee shall comply with the
applicable requirements of Section 811. If the Property Trustee shall
resign, be removed or become incapable of continuing to act as the
Property Trustee at a time when a Debenture Event of Default shall have
occurred and is continuing, the Preferred Securityholders, by Act of the
Securityholders of a majority in Liquidation Amount of the Preferred
Securities then Outstanding delivered to the retiring Relevant Trustee,
shall promptly appoint a successor Relevant Trustee or Trustees with
respect to the Trust Securities and the Trust, and such successor Trustee
shall comply with the applicable requirements of Section 8 11. If an
Administrative Trustee shall resign, be removed or become incapable of
acting as Administrative Trustee, at a time when a Debenture Event of
Default shall have occurred and be continuing, the Common Securityholder,
by Act of the Common Securityholder delivered to an Administrative
Trustee, shall promptly appoint a successor Administrative Trustee or
Administrative Trustees with respect to the Trust Securities and the
Trust, and such successor Administrative Trustee or Administrative
Trustees shall comply with the applicable requirements of Section 811. If
no successor Relevant Trustee with respect to the Trust Securities shall
have been so appointed by the Common Securityholder or the Preferred
Securityholders and accepted appointment in the manner required by Section
811, any Securityholder who has been a Security holder of Trust Securities
on behalf of himself and all others similarly situated may petition a
court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Trust Securities.
(e) The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 1008 and shall give
notice to the Depositor. Each notice shall include the name of the
successor Relevant Trustee and the address of its Corporate Trust office
if it is the Property Trustee.
(f) Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee who is a natural person
dies or becomes, in the opinion of the Depositor, incompetent or
incapacitated, the vacancy created by such death, incompetence or
incapacity may be filled by (a) the unanimous act of the remaining
Administrative Trustees if
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there are at least two of them; or (b) otherwise by the Depositor (with
the successor in each case being a Person who satisfies the eligibility
requirement for Administrative Trustees as forth in Section 807).
SECTION 811. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Relevant Trustee
with respect to the Trust Securities and the Trust, the retiring Relevant
Trustee and each successor Relevant Trustee with respect to the Trust
Securities shall execute and deliver an instrument hereto wherein each
successor Relevant Trustee shall accept such appointment and which shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the
rights, powers, trusts and dudes of the retiring Relevant Trustee with
respect to the Trust Securities and the Trust and, upon the execution and
delivery of such instrument, the resignation or removal of the retiring
Relevant Trustee shall become effective to the extent provided therein and
each such successor Relevant Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Relevant Trustee with respect to the Trust
Securities and the Trust, but, on request of the Trust or any successor
Relevant Trustee such rearing Relevant Trustee shall duly assign, transfer
and deliver to such successor Relevant Trustee all Trust Property, all
proceeds thereof and money held by such retiring Relevant Trustee
hereunder with respect to the Trust Securities and the Trust.
(b) Upon request of any such successor Relevant Trustee, the Trust shall
execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Relevant Trustee all such rights, powers
and trusts referred to in the immediately preceding paragraph, as the case
may be.
(c) No successor Relevant Trustee shall accept its appointment unless at
the time of such acceptance such successor Relevant Trustee shall be
qualified and eligible under this Article VIII.
SECTION 812. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any Person into which the Property Trustee or the Debenture Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Relevant
Trustee shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of such Relevant Trustee, shall be the
successor of such Relevant Trustee hereunder, provided such Person shall be
otherwise qualified and eligible under this Article VIII, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto.
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SECTION 813. PREFERENTIAL COLLECTION OF CLAIMS AGAINST DEPOSITOR OR TRUST.
If and when the Property Trustee shall be or become a creditor of the Depositor
or the Trust (or any other obligor upon the Debentures or the Trust Securities),
the Property Trustee shall be subject to and shall take all actions necessary in
order to comply with the provisions of the Trust Indenture Act regarding the
collection of claims against the Depositor or Trust (or any such other obligor).
SECTION 814. REPORTS BY PROPERTY TRUSTEE.
(a) Not later than July 15 of each year commencing with July 15, 1997, the
Property Trustee shall, if required by the Trust Indenture Act, transmit
to all Securityholders in accordance with Section 1008, and to the
Depositor, a brief report dated as of such July 15 with respect to:
(i) its eligibility under Section 807 or, in lieu thereof, if to the
best of its knowledge it has continued to be eligible under said
Section, a written statement to such effect;
(ii) a statement that the Property Trustee has complied with all of
its obligations under this Trust Agreement during the twelve-month
period (or, in the case of the initial report, the period since the
Closing Date) ending with such July 15 or, if the Property Trustee
has not complied in any material respect with such obligations, a
description of such noncompliance; and
(ii) any change in the property and funds in its possession as
Property Trustee since the date of its last report and any action
taken by the Property Trustee in the performance of its duties
hereunder which it has not previously reported and which in its
opinion materially affects the Trust Securities.
(b) In addition the Property Trustee shall transmit to Securityholders
such reports concerning the Property Trustee and its actions under this
Trust Agreement as may be required pursuant to the Trust Indenture Act at
the times and in the manner provided pursuant thereto.
(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Property Trustee with The Nasdaq Stock Market's
National Market, and each national securities exchange or other
organization upon which the Trust Securities are listed, and also with the
Commission and the Depositor.
SECTION 815. REPORTS TO THE PROPERTY TRUSTEE.
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The Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314(a) of the Trust Indenture Act in the form in
the manner and at the times required by Section 314 of the Trust Indenture Act.
SECTION 816. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Depositor and the Administrative Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Trust Agreement that relate
to any of the matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) of the Trust Indenture Act shall be given in the form of an
Officers' Certificate.
SECTION 817. NUMBER OF TRUSTEES.
(a) The number of Trustees shall be [FOUR], provided that the Holder of
all of the Common Securities by written instrument may increase or
decrease the number of Administrative Trustees. The Property Trustee and
the Delaware Trustee may be the same Person.
(b) If a Trustee ceases to hold office for any reason and the number of
Administrative Trustees is not reduced pursuant to Section 817(a), or if
the number of Trustees is increased pursuant to Section 817(a), a vacancy
shall occur. The vacancy shall be filled with a Trustee appointed in
accordance with Section 810.
(c) The death, resignation, retirement, removal, bankruptcy, incompetence
or incapacity to perform the duties of a Trustee shall not operate to
annul the Trust. Whenever a vacancy in the number of Administrative
Trustees shall occur, until such vacancy is filled by the appointment of
an Administrative Trustee in accordance with Section 810, the
Administrative Trustees in office, regardless of their number (and
notwithstanding any other provision of this Agreement), shall have all the
powers granted to the Administrative Trustees and shall discharge all the
duties imposed upon the Administrative Trustees by this Trust Agreement.
SECTION 818. 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 207(a); and
(b) The Administrative Trustees shall have power to delegate from time to
time to such of their number or to the Depositor 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
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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 819. VOTING.
Except as otherwise provided in this Trust Agreement, the consent or approval of
the Administrative Trustees shall require consent or approval by not less than a
majority of the Administrative Trustees, unless there are only two, in which
case both must consent.
ARTICLE IX
TERMINATION, LIQUIDATION AND MERGER
SECTION 901. TERMINATION UPON EXPIRATION DATE.
Unless earlier dissolved, the Trust shall automatically dissolve on ________2028
(the "Expiration Date") subject to distribution of the Trust Property in
accordance with Section 904.
SECTION 902. EARLY TERMINATION.
The first to occur of any of the following events is an "Early Termination
Event:"
(a) the occurrence of a Bankruptcy Event in respect of, or the dissolution
or liquidation of, the Depositor;
(b) delivery of written direction to the Property Trustee by the Depositor
at any time (which direction is wholly optional and within the discretion
of the Depositor) to dissolve the Trust and distribute the Debentures to
Securityholders in exchange for the Preferred Securities in accordance
with Section 904;
(c) the redemption of all of the Preferred Securities in connection with
the redemption of all of the Debentures; and
(d) an order for dissolution of the Trust shall have been entered by a
court of competent jurisdiction.
SECTION 903. TERMINATION.
The respective obligations and responsibilities of the Trustees and the Trust
created and continued hereby shall terminate upon the latest to occur of the
following: (a) the distribution by the Property Trustee to Securityholders upon
the liquidation of the Trust pursuant to Section 904, or upon the redemption of
all of the Trust Securities pursuant to Section 402, of all amounts required to
be distributed hereunder upon the final payment of the Trust Securities; (b) the
payment of any expenses
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<PAGE>
owed by the Trust; (c) the discharge of all administrative duties of the
Administrative Trustees, including the performance of any tax reporting
obligations with respect to the Trust or the Securityholders; and (d) the filing
of a Certificate of Cancellation by the Administrative Trustee under the
Business Trust Act.
SECTION 904. LIQUIDATION.
(a) If an Early Termination Event specified in clause (a), (b), or (d) of
Section 902 occurs or upon the Expiration Date, the Trust shall be
liquidated by the Trustees as expeditiously as the Trustees determine to
be possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to each
Securityholder a Like Amount of Debentures, subject to Section 904(d).
Notice of liquidation shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not later than 30 nor more than
60 days prior to the Liquidation Date to each Holder of Trust Securities
at such Holder's address appearing in the Securities Register. All notices
of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the Trust
Securities shall no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange shall be deemed
to represent a Like Amount of Debentures;
(iii) provide such information with respect to the mechanics by
which Holders may exchange Trust Securities Certificates for
Debentures, or, if Section 904(d) applies, receive a Liquidation
Distribution, as the Administrative Trustees or the Property Trustee
shall deem appropriate; and
(iv) state the CUSIP number.
(b) Except where Section 902(c) or 904(d) applies, in order to effect the
liquidation of the Trust and distribution of the Debentures to
Securityholders, the Property Trustee shall establish record date for such
distribution (which shall be not more than 45 days prior to the
Liquidation Date) and, either itself acting as exchange agent or through
the appointment of a separate exchange agent, shall establish such
procedures as it shall deem appropriate to effect the distribution of
Debentures in exchange for the Outstanding Trust Securities Certificates.
(c) Except where Section 902(c) or 904(d) applies, after the Liquidation
Date, (i) the Trust Securities shall no longer be deemed to be
outstanding; (ii) certificates representing a Like Amount of Debentures
shall be issued to holders of Trust Securities Certificates upon surrender
of such certificates to the Administrative Trustees or their agent for
exchange; (iii) the Depositor shall use its reasonable efforts to have the
Debentures listed on The Nasdaq Stock Market's National Market or SmallCap
Market or on such other securities exchange or
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other organization as the Preferred Securities are then listed or traded;
(iv) any Trust Securities Certificates not so surrendered for exchange
shall be deemed to represent a Like Amount of Debentures, accruing
interest at the rate provided for in the Debentures from the last
Distribution Date on which a Distribution was made on such Trust
Securities Certificates until such certificates are so surrendered (and
until such certificates are so surrendered, no payments of interest or
principal shall be made to holders of Trust Securities Certificates with
respect to such Debentures): and (v) all rights of Securityholders holding
Trust Securities shall cease, except the right of such Securityholders to
receive Debentures upon surrender of Trust Securities Certificates.
(d) In the event that, notwithstanding the other provisions of this
Section 904, whether because of an order for dissolution entered by a
court of competent jurisdiction or otherwise, distribution of the
Debentures in the manner provided herein is determined by the Property
Trustees not to be practical, the Trust Property shall be liquidated, and
the Trust shall be dissolved, wound-up or terminated, by the Property
Trustee in such manner as the Property Trustee determines. In such event,
on the date of the dissolution, winding-up or other termination of the
Trust, Securityholders shall be entitled to receive out of the assets of
the Trust available for distribution to Securityholders, after
satisfaction of liabilities to creditors of the Trust as provided by
applicable law, an amount equal to the Liquidation Amount per Trust
Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"). If, upon any
such dissolution, winding-up or termination, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets
available to pay in full the aggregate Liquidation Distribution, then,
subject to the next succeeding sentence, the amounts payable by the Trust
on the Trust Securities shall be paid on a pro rata basis (based upon
Liquidation Amounts). The holder of the Common Securities shall be
entitled to receive Liquidation Distributions upon any such dissolution,
winding-up or termination pro rata (determined as aforesaid) with Holders
of Preferred Securities, except that, if a Debenture Event of Default has
occurred and is continuing, the Preferred Securities shall have a priority
over the Common Securities.
SECTION 905. 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 substantially as an
entirety to any corporation or other Person, except pursuant to this Section
905. At the request of the Depositor, with the consent of the Administrative
Trustees and without the consent of the holders of the Preferred Securities, the
Property Trustee or the Delaware Trustee, the Trust may merge with or into,
consolidate, amalgamate, be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety 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
Preferred Securities; or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities (the
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<PAGE>
"Successor Securities") so long as the Successor Securities rank the same as the
Preferred Securities rank in priority with respect to distributions and payments
upon liquidation, redemption and otherwise; (ii) the Depositor expressly
appoints a trustee of such successor entity possessing substantially the same
powers and duties as the Property Trustee as the holder of the Debentures; (iii)
the Successor Securities are registered or listed, or any Successor Securities
shall be registered or listed upon notification of issuance, on any national
securities exchange or other organization on which the Preferred Securities are
then listed (including, if applicable, the Nasdaq Stock Market's National
Market), if any; (iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Preferred Securities (including
any Successor Securities) to be downgraded by any nationally recognized
statistical rating organization, (v) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Preferred Securities (including
any Successor Securities) in any material respect; (vi) such successor entity
has a purpose substantially identical to that of the Trust, (vii) prior to such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease,
the Depositor has received an Opinion of Counsel to the effect that (a) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not adversely affect the rights, preferences and privileges of the holders
of the Preferred Securities (including any Successor Securities) in any material
respect: and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such successor
entity shall be required to register as an "investment company" under the
Investment Company Act, and (viii) the Depositor 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 Preferred Securities, consolidate, amalgamate, merge
with or into, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to any other Person or permit any other
Person to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger or replacement would cause the Trust or the
successor entity to be classified as other than a grantor trust for United
States federal income tax purposes.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 1001. LIMITATION OF RIGHTS OF SECURITYHOLDERS.
The death or incapacity of any Person having an interest, beneficial or
otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement, nor entitle the legal representatives or heirs of such person or any
Securityholder for such Person, to claim an accounting, take any action or bring
any proceeding in any court for a partition or winding-up of the arrangements
contemplated hereby, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
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SECTION 1002. AMENDMENT.
(a) This Trust Agreement may be amended from time to time by the Trustees
and the Depositor, without the consent of any Securityholders, (i) as
provided in Section 811 with respect to acceptance of appointment by a
successor Trustee; (ii) to cure any ambiguity, correct or supplement any
provision herein or therein which may be inconsistent with any other
provision herein or therein, or to make any other provisions with respect
to matters or questions arising under this Trust Agreement, that shall not
be inconsistent with the other provisions of this Trust Agreement; or
(iii) to modify, eliminate or add to any provisions of this Trust
Agreement to such extent as shall be necessary to ensure that the Trust
shall be classified for United States federal income tax purposes as a
grantor trust at all times that any Trust Securities are outstanding or to
ensure that the Trust shall not be required to register as an "investment
company" under the Investment Company Act; provided, however, that in the
case of clause (ii), such action shall not adversely affect in any
material respect the interests of any Securityholder, and any amendments
of this Trust Agreement shall become effective when notice thereof is
given to the Securityholders.
(b) Except as provided in Section 601(c) or Section 1002(c) hereof, any
provision of this Trust Agreement may be amended by the Trustees and the
Depositor (i) with the consent of Trust Securityholders representing not
less than a majority (based upon Liquidation Amounts) of the Trust
Securities then Outstanding; and (ii) upon receipt by the Trustees of an
Opinion of Counsel to the effect that such amendment or the exercise of
any power granted to the Trustees in accordance with such amendment shall
not affect the Trust's status as a grantor trust for United Status federal
income tax purposes or the Trust's exemption from status of an "investment
company" under the Investment Company Act.
(c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Securityholder (such
consent being obtained in accordance with Section 603 or 606 hereof), this
Trust Agreement may not be amended to (i) change the amount or timing of
any Distribution on the Trust Securities or otherwise adversely affect the
amount of any Distribution required to be made in respect of the Trust
Securities as of a specified date; or (ii) restrict the right of a
Securityholder to institute suit for the enforcement of any such payment
on or after such date; notwithstanding any other provision herein, without
the unanimous consent of the Securityholders (such consent being obtained
in accordance with Section 603 or 606 hereof), this paragraph (c) of this
Section 1002 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Trustee shall enter into or consent to any amendment to this Trust
Agreement which would cause the Trust to fail or cease to qualify for the
exemption from status of an "investment company" under the Investment
Company Act or to fail or cease to be classified as a grantor trust for
United States federal income tax purposes.
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(e) In the event that any amendment to this Trust Agreement is made, the
Administrative Trustees shall promptly provide to the Depositor a copy of
such amendment.
(f) Neither the Property Trustee nor the Debenture Trustee shall not be
required to enter into any amendment to this Trust Agreement which affects
its own rights, duties or immunities under this Trust Agreement. The
Property Trustee shall be entitled to receive an Opinion of Counsel and an
Officers' Certificate stating that any amendment to this Trust Agreement
is in compliance with this Trust Agreement.
SECTION 1003. SEPARABILITY.
In case any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 1004. GOVERNING LAW.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT
AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES).
SECTION 1005. PAYMENTS DUE ON NON-BUSINESS DAY.
If the date fixed for any payment on any Trust Security shall be a day that is
not a Business Day, then such payment need not be made on such date but may be
made on the next succeeding day which is a Business Day (except as otherwise
provided in Sections 401(a) and 402(d)), with the same force and effect as
though made on the date fixed for such payment, and no distribution shall
accumulate thereon for the period after such date.
SECTION 1006. SUCCESSORS.
This Trust Agreement shall be binding upon and shall inure to the benefit of any
successor to the Depositor, the Trust or the Relevant Trustee(s), including any
successor by operation of law. Except in connection with a consolidation, merger
or sale involving the Depositor that is permitted under Article XII of the
Indenture and pursuant to which the assignee agrees in writing to perform the
Depositor's obligations hereunder, the Depositor shall not assign its
obligations hereunder.
SECTION 1007. HEADINGS.
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The Article and Section headings are for convenience only and shall not affect
the construction of this Trust Agreement.
SECTION 1008. REPORTS, NOTICES AND DEMANDS.
Any report, notice, demand or other communication which by any provision of this
Trust Agreement is required or permitted to be given or served to or upon any
Securityholder or the Depositor may be given or served in writing by deposit
thereof, first-class postage prepaid, in the United States mail, hand delivery
or facsimile transmission, in each case, addressed, (a) in the case of a
Preferred Securityholder, to such Preferred Securityholder as such
Securityholder's name and address may appear on the Securities Register; and (b)
in the case of the Common Securityholder or the Depositor, to BankUnited
Financial Corporation, 255 Alhambra Circle, Coral Gables, Florida 33134,
Attention: Chief Financial Officer, facsimile no.: (305) 569-2057. Any notice to
Preferred Securityholders shall also be given to such owners as have, within two
years preceding the giving of such notice, filed their names and addresses with
the Property Trustee for that purpose. Such notice, demand or other
communication to or upon a Securityholder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission.
Any notice, demand or other communication which by any provision of this Trust
Agreement is required or permitted to be given or served to or upon the Trust,
the Property Trustee or the Administrative Trustees shall be given in writing
addressed (until another address is published by the Trust) as follows: (a) with
respect to the Property Trustee to The Bank of New York, 101 Barclay Street,
21W, New York, New York 10286, Attention: Corporate Trust Trustee
Administration; (b) with respect to the Delaware Trustee, to The Bank of New
York (Delaware), White Clay Center, Route 273, Newark, Delaware 19711; and (c)
with respect to the Administrative Trustees, to them at the address above for
notices to the Depositor, marked "Attention: Administrative Trustees of
BankUnited Capital II." Such notice, demand or other communication to or upon
the Trust or the Property Trustee shall be deemed to have been sufficiently
given or made only upon actual receipt of the writing by the Trust or the
Property Trustee.
SECTION 1009. AGREEMENT NOT TO PETITION.
Each of the Trustees and the Depositor agree for the benefit of the
Securityholders that, until at least one year and 1 day after the Trust has been
terminated in accordance with Article IX, they shall not file, or join in the
filing of, a petition against the Trust under any bankruptcy, insolvency,
reorganization or other similar law (including, without limitation, the United
States Bankruptcy Code of 1978, as amended) (collectively, "Bankruptcy Laws" or
otherwise join in the commencement of any proceeding against the Trust under any
Bankruptcy Law. In the event the Depositor takes action in violation of this
Section 1009, the Property Trustee agrees, for the benefit of Securityholders,
that at the expense of the Depositor (which expense shall be paid prior to the
filing), it shall file an answer with the bankruptcy court or otherwise properly
contest the filing of such petition by the Depositor against the Trust or the
commencement of such action and raise the defense that the Depositor has agreed
in writing not to take
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such action and should be stopped and precluded therefrom. The provisions of
this Section 1009 shall survive the termination of this Trust Agreement.
SECTION 1010. TRUST INDENTURE ACT; CONFLICT WITH TRUST INDENTURE ACT.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement 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 any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement
by any of the provisions of the Trust Indenture Act, such required
provision shall control. If any provision of this Trust Agreement modifies
or excludes any provision of the Trust Indenture Act which may be so
modified or excluded, the latter provision shall be deemed to apply to
this Trust Agreement as so modified or to be excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 1011. ACCEPTANCE OF TERMS OF TRUST AGREEMENT, GUARANTEE AND
INDENTURE.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR ON
BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST
SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND AGREEMENT
TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE
INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER
AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE
BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER
AND SUCH OTHERS.
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BANKUNITED FINANCIAL CORPORATION., as
Depositor
By:_____________________________________
Name: Alfred Camner
Title: Chairman of the Board
THE BANK OF NEW YORK, as Property
Trustee
By:_____________________________________
Name:
Title:
THE BANK OF NEW YORK (DELAWARE), as
Delaware Trustee
By:_____________________________________
Name:
Title:
By:_____________________________________
Name:
Title: As Administrative Trustee
By:_____________________________________
Name:
Title: As Administrative Trustee
52
- --------------------------------------------------------------------------------
GUARANTEE AGREEMENT
BETWEEN
BANKUNITED FINANCIAL CORPORATION
(AS GUARANTOR)
AND
THE BANK OF NEW YORK
(AS TRUSTEE)
DATED AS OF
MAY __, 1997
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE*
SECTION OF
SECTION OF TRUST INDENTURE ACT OF 1939, AS AMENDED GUARANTEE AGREEMENT
<S> <C>
310(a)....................................................................... 4.1(a)
310(b)....................................................................... 4.1(c), 2.8
310(c)....................................................................... Inapplicable
311(a)....................................................................... 2.2(b)
311(b)....................................................................... 2.2(b)
311(c)....................................................................... Inapplicable
312(a)....................................................................... 2.2(a)
312(b)....................................................................... 2.2(b)
313.......................................................................... 2.3
314(a)....................................................................... 2.4
314(b)....................................................................... Inapplicable
314(c)....................................................................... 2.5
314(d)....................................................................... Inapplicable
314(e)....................................................................... 1.1, 2.5, 3.2
314(f)....................................................................... 2.1, 3.2
315(a)....................................................................... 3.1(d)
315(b)....................................................................... 2.7
315(c)....................................................................... 3.1
315(d)....................................................................... 3.1(d)
316(a)....................................................................... 1.1, 2.6, 5.4
316(b)....................................................................... 5.3
316(c)....................................................................... 8.2
317(a)....................................................................... Inapplicable
317(b)....................................................................... Inapplicable
318(a)....................................................................... 2.1(b)
318(b)....................................................................... 2.1
318(c)....................................................................... 2.1(a)
</TABLE>
- --------------
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms
or provisions.
i
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
----
<S> <C>
ARTICLE I. DEFINITIONS............................................................................1
Section 1.1 Definitions............................................................................1
ARTICLE II. TRUST INDENTURE ACT....................................................................4
Section 2.1 Trust Indenture Act; Application.......................................................4
Section 2.2 List of Holders........................................................................4
Section 2.3 Reports by the Guarantee Trustee.......................................................5
Section 2.4 Periodic Reports to the Guarantee Trustee..............................................5
Section 2.5 Evidence of Compliance with Conditions Precedent.......................................5
Section 2.6 Events of Default; Waiver..............................................................5
Section 2.7 Event of Default; Notice...............................................................6
Section 2.8 Conflicting Interests..................................................................6
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE
TRUSTEE...............................................................................6
Section 3. Powers and Duties of the Guarantee Trustee.............................................6
Section 3.2 Certain Rights of Guarantee Trustee....................................................8
Section 3.3 Indemnity..............................................................................8
ARTICLE IV. GUARANTEE TRUSTEE.....................................................................10
Section 4.1 Guarantee Trustee; Eligibility........................................................10
Section 4.2 Appointment, Removal and Resignation of the Guarantee Trustee.........................10
ARTICLE V. GUARANTEE.............................................................................11
Section 5.1 Guarantee.............................................................................11
Section 5.2 Waiver of Notice and Demand...........................................................11
Section 5.3 Obligations Not Affected..............................................................11
Section 5.4 Rights of Holders.....................................................................12
Section 5.5 Guarantee of Payment..................................................................12
Section 5.6 Subrogation...........................................................................12
Section 5.7 Independent Obligations...............................................................13
ARTICLE VI. COVENANTS AND SUBORDINATION...........................................................13
Section 6.1 Subordination.........................................................................13
Section 6.2 PARI PASSU Guarantees.................................................................13
ARTICLE VII. TERMINATION...........................................................................13
Section 7.1 Termination...........................................................................13
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ARTICLE VIII. MISCELLANEOUS.........................................................................14
Section 8.1 Successors and Assigns................................................................14
Section 8.2 Amendments............................................................................14
Section 8.3 Notices...............................................................................14
Section 8.4 Benefit...............................................................................15
Section 8.5 Interpretation........................................................................15
Section 8.6 Governing Law.........................................................................16
</TABLE>
iii
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GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of May __, 1997, is executed and
delivered by BANKUNITED FINANCIAL CORPORATION, a Florida corporation (the
"Guarantor"), having its principal office at 255 Alhambra Circle, Coral Gables,
Florida 33134, and THE BANK OF NEW YORK, a New York banking corporation, as
trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Preferred Securities (as defined herein) of
BankUnited Capital II, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to a Trust Agreement, dated as of May __, 1997 (the
"Trust Agreement"), among the Guarantor, as Depositor, the Property Trustee and
the Delaware Trustee named therein and the Holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing $40,000,000 aggregate Liquidation Amount (as defined in the Trust
Agreement) of its ___% Cumulative Trust Preferred Securities, Liquidation Amount
$25.00 per preferred security) (the "Preferred Securities") representing
preferred undivided beneficial interests in the assets of the Issuer and having
the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer and the
proceeds thereof, together with the proceeds from the issuance of the Issuer's
Common Securities (as defined below), will be invested in the Subordinated
Debentures (as defined in the Trust Agreement) of the Guarantor which will be
deposited with THE BANK OF NEW YORK, as Property Trustee under the Trust
Agreement, as trust assets; and
WHEREAS, as incentive for the Holders to purchase Preferred Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth herein, to pay to the Holders of the Preferred Securities the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee Agreement for
the benefit of the Holders from time to time of the Preferred Securities.
ARTICLE I. DEFINITIONS
Section 1.1. Definitions
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings. Capitalized
or otherwise defined terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Trust Agreement as in effect on the date
hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person; provided, however, that an Affiliate of the
Guarantor shall not be deemed to be an Affiliate of the Issuer. For the purposes
of this definition, "control" when used with respect to any specified Person
means the
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power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Board of Directors" means either the board of directors of the
Guarantor or any committee of that board duly authorized to act hereunder.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Debt" means with respect to any Person, whether recourse is to all or
a portion of the assets of such Person and whether or not contingent: (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; (vi) all
indebtedness of such person whether incurred on or prior to the date of the
Indenture or thereafter incurred, for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements; and (vii) every obligation of the
type referred to in clauses (i) through (vi) of another Person and all dividends
of another Person the payment of which, in either case, such Person has
guaranteed or is responsible or liable, directly or indirectly, as obligor or
otherwise.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement; provided, however,
that, except with respect to a default in payment of any Guarantee Payments, the
Guarantor shall have received notice of default and shall not have cured such
default within 60 days after receipt of such notice.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Preferred Securities, to the extent the Issuer shall have funds on hand
available therefor at such time, (ii) the redemption price, including all
accrued and unpaid Distributions to the date of redemption (the "Redemption
Price"), with respect to any Preferred Securities called for redemption by the
Issuer, to the extent the Issuer shall have funds on hand available therefor at
such time, or (iii) upon a voluntary or involuntary dissolution, winding-up or
liquidation of the Issuer, unless Subordinated Debentures are distributed to the
Holders, the lesser of (a) the aggregate of the Liquidation Amount of $25.00 per
Preferred Security plus accrued and unpaid Distributions on the Preferred
Securities to the date of payment and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer (in
either case, the "Liquidation Distribution").
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"Guarantee Trustee " means THE BANK OF NEW YORK, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement, and thereafter means each such
Successor Guarantee Trustee.
"Holder " means any holder, as registered on the books and records of
the Issuer, of any Preferred Securities; provided, however, that in determining
whether the holders of the requisite percentage of Preferred Securities have
given any request, notice, consent or waiver hereunder, "Holder" shall not
include the Guarantor, the Guarantee Trustee, or any Affiliate of the Guarantor
or the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of May __,
1997, as supplemented and amended between the Guarantor and THE BANK OF NEW
YORK, as trustee.
"List of Holders" has the meaning specified in Section 2.2(a).
"Majority in Liquidation Amount of the Securities" means, except as
provided by the Trust Indenture Act, a vote by the Holder(s), voting separately
as a class, of more than 50% of the Liquidation Amount of all then outstanding
Preferred Securities issued by the Issuer.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman or a Vice Chairman of the Board of Directors
of such Person or the President or a Vice President of such Person, and by the
Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of
such Person, and delivered to the Guarantee Trustee. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Guarantee Agreement shalt include:
(a) a statement that each officer signing the
Officers' Certificate has read the covenant or condition and the
definitions relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each 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
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee, any
Senior Vice President, any Vice President, any Assistant Vice President, the
Secretary, the Treasurer, any Trust Officer or any other officer of the
corporate trust department of the Guarantee Trustee and also
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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.
"Senior Debt" means the principal of (and premium, if any) and
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Guarantor whether
or not such claim for post-petition interest is allowed in such proceeding), on
Debt, 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 Subordinated Debentures or to other Debt
which is PARI PASSU with, or subordinated to, the Subordinated Debentures;
provided, however, that Senior Debt shall not be deemed to include: (i) any Debt
of the Guarantor which when incurred and without respect to any election 1111(b)
of the United States Bankruptcy Code of 1978, as amended, was without recourse
to the Guarantor, (ii) any Debt of the Guarantor to any of its subsidiaries and
(iii) Debt to any employee of the Guarantor.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II. TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application.
(a) This Guarantee Agreement is subject to the provisions of
the Trust Indenture Act that are required to be part of this Guarantee
Agreement and shall, to the extent applicable, be governed by such
provisions.
(b) If and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by
Sections 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
Section 2.2. List of Holders.
(a) The Guarantor shall furnish or cause to be furnished to
the Guarantee Trustee semi-annually, on or before June 30, and December
31 of each year, a list, in such form as the Guarantee Trustee may
reasonably require, of the names and addresses of the Holders ("List of
Holders") as of a date not more than 15 days prior to the delivery
thereof, and (b) at such other times as the Guarantee Trustee may
request in writing, within 30 days after the receipt by the Guarantor
of any such request, a List of Holders as of a date not more than 15
days prior to the time such list is furnished, in each case to the
extent such information is in the possession or control of the
Guarantor and is not identical to a previously supplied list of Holders
or has not otherwise been received by the Guarantee Trustee in its
capacity as such. The Guarantee Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
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(b) The Guarantee Trustee shall comply with its obligations
under Section 311(a), Section 311(b) and Section 312(b) of the Trust
Indenture Act.
Section 2.3. Reports by the Guarantee Trustee.
Not later than July 15 of each year, commencing July 15, 1997, the
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 Guarantee Trustee shall
also comply with the requirements of Section 313(d) of the Trust Indenture Act.
Section 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, the Securities
and Exchange Commission and the Holders such documents, reports and information,
if any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act, in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.
Delivery of such reports, information and documents to the Guarantee Trustee is
for informational purposes only and the Guarantee Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained herein, including the Guarantor's
compliance with any of its covenants hereunder (as to which the 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 Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
Section 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote, on behalf of the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Guarantee Agreement, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent therefrom.
Section 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class
postage prepaid, to the Holders, notices of all Events of Default
actually known to the Guarantee Trustee, unless such defaults have been
cured before the giving of such notice, provided, that, except in the
case of a default in the payment of a Guarantee Payment, the Guarantee
Trustee shall be protected in withholding such notice
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if and so long as the Board of Directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the
Guarantee Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Guarantee Trustee shall
have received written notice, or a Responsible Officer charged with the
administration of this Guarantee Agreement shall have obtained written
notice, of such Event of Default.
Section 2.8 Conflicting Interests.
The Trust Agreement shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III. POWERS, DUTIES AND RIGHTS OF
THE GUARANTEE TRUSTEE
Section 3.1 Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee
Trustee for the benefit of the Holders, and the Guarantee Trustee shall
not transfer this Guarantee Agreement to any Person except a Holder
exercising his or her rights pursuant to Section 5.4(iv) or to a
Successor Guarantee Trustee on acceptance by such Successor Guarantee
Trustee of its appointment to act as Successor Guarantee Trustee. The
right, title and interest of the Guarantee Trustee shall automatically
vest in any Successor Guarantee Trustee, upon acceptance by such
Successor Guarantee Trustee of its appointment hereunder, and such
vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the
benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event
of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are
specifically set forth in this Guarantee Agreement, and no implied
covenants shall be read into this Guarantee Agreement against the
Guarantee Trustee. In case an Event of Default has occurred (that has
not been cured or waived pursuant to Section 2.6), the Guarantee
Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in
its exercise thereof, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs.
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(d) No provision of this Guarantee Agreement shall be
construed to relieve the Guarantee Trustee from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of Default
that may have occurred:
(A) the duties and obligations of the
Guarantee Trustee shall be determined solely by the
express provisions of this Guarantee Agreement, and
the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement;
and
(B) in the absence of bad faith on the part
of the Guarantee Trustee, the Guarantee Trustee may
conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished
to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the
case of any such certificates or opinions that by any
provision hereof or of the Trust Indenture Act are
specifically required to be furnished to the
Guarantee Trustee, the Guarantee Trustee shall be
under a duty to examine the same to determine whether
or not they conform to the requirements of this
Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer of the Guarantee Trustee, unless it shall be proved
that the Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in
good faith in accordance with the written direction of the
Holders of not less than a Majority in Liquidation Amount of
the Preferred Securities relating to the time, method and
place of conducting any proceeding for any remedy available to
the Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee
Agreement; and
(iv) no provision of this Guarantee Agreement shall
require the Guarantee Trustee to expend or risk its own funds
or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of
its rights or powers, if the Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate indemnity
against such risk or liability is not reasonably assured to
it.
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Section 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may rely and shall be fully
protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document reasonably believed by it to be genuine and to
have been signed, sent or presented by the proper party or
parties.
(ii) Any direction or act of the Guarantor
contemplated by this Guarantee Agreement shall be sufficiently
evidenced by an Officers' Certificate unless otherwise
prescribed herein.
(iii) Whenever, in the administration of this
Guarantee Agreement, the Guarantee Trustee shall deem it
desirable that a matter be proved or established before
taking, suffering or omitting to take any action hereunder,
the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officers' Certificate
which, upon receipt of such request from the Guarantee
Trustee, shall be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal
counsel of its selection, and the advice or opinion of such
legal counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action
taken, suffered or omitted to be taken by it hereunder in good
faith and in accordance with such advice or opinion. Such
legal counsel may be legal counsel to the Guarantor or any of
its Affiliates and may be one of its employees. The Guarantee
Trustee shall have the right at any time to seek instructions
concerning the administration of this Guarantee Agreement from
any court of competent jurisdiction.
(v) The Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Guarantee Agreement at the request or direction of
any Holder, unless such Holder shall have provided to the
Guarantee Trustee such adequate security and indemnity as
would satisfy a reasonable person in the position of the
Guarantee Trustee, against the costs, expenses (including
attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Guarantee Trustee; provided that, nothing contained in this
Section 3.2(a)(v) shall be taken to relieve the Guarantee
Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by
this Guarantee Agreement.
(vi) The Guarantee Trustee shall not be bound to make
any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other
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evidence of indebtedness or other paper or document, but the
Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may
see fit.
(vii) The Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder
either directly or by or through its agents or attorneys, and
the Guarantee Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent or
attorney appointed with due care by it hereunder.
(viii) Whenever in the administration of this
Guarantee Agreement the Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing
any remedy or right or taking any other action hereunder, the
Guarantee Trustee (A) may request written instructions from
the Holders, (B) may refrain from enforcing such remedy or
right or taking such other action until such written
instructions are received, and (C) shall be protected in
acting in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed
to impose any duty or obligation on the Guarantee Trustee to perform
any act or acts or exercise any right, power, duty or obligation
conferred or imposed on it in any jurisdiction in which it shall be
illegal, or in which the Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act
or acts or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Guarantee Trustee shall
be construed to be a duty to act in accordance with such power and
authority.
Section 3.3. Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on the part of the Guarantee Trustee, arising out of or
in connection with the acceptance or administration of this Guarantee Agreement,
including the 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 hereunder. The Guarantee Trustee will not claim or exact any lien or
charge on any Guarantee Payments as a result of any amount due to it under this
Guarantee Agreement.
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ARTICLE IV. GUARANTEE TRUSTEE
Section 4.1 Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the
Trust Indenture Act to act as such and has a combined capital
and surplus of at least $50,000,000, and shall be a
corporation meeting the requirements of Section 310(a) of the
Trust Indenture Act. If such corporation publishes reports of
condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority, then,
for the purposes of this Section and to the extent permitted
by the Trust Indenture Act, the combined capital and surplus
of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section
4.2(c).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Guarantee Trustee and Guarantor shall in all
respects comply with the provisions of Section 310(b) of the Trust
Indenture Act.
Section 4.2. Appointment, Removal and Resignation of the Guarantee Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed until a
Successor Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor Guarantee
Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed hereunder shall hold
office until a Successor Guarantee Trustee shall have been appointed or
until its removal or resignation. The Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a
Successor Guarantee Trustee has been appointed and has accepted such
appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning
Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery to the Guarantor of an instrument of
resignation or notice of removal, the Guarantee Trustee resigning or
being
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removed may petition, at the expense of the Guarantor, any court of
competent jurisdiction for appointment of a Successor Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Guarantee Trustee.
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 or on behalf of the Issuer), as and when due, regardless of any defense,
right of set-off or counterclaim which 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 the Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, 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 Guarantee Agreement shall in no way be affected or impaired by reason
of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer 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 (other than an extension of time
for payment of Distributions that results from the extension of any
interest payment period on the Subordinated Debentures as provided in
the Indenture), Redemption Price, Liquidation Distribution or any other
sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders
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pursuant to the terms of the Preferred Securities, or any action on the
part of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, organization, 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; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.3 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain the
consent of, the Guarantor with respect to the happening of any of the foregoing.
Section 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Guarantee Agreement
will be deposited with the Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Guarantee Trustee has the right to enforce this Guarantee
Agreement on behalf of the Holders; (iii) the Holders of a Majority in
Liquidation Amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) any Holder may institute a legal proceeding directly against
the Guarantor to enforce its rights under this Guarantee Agreement, without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
or any other Person.
Section 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment of
the Guarantee Payments in full (without duplication of amounts theretofore paid
by the Issuer) or upon distribution of Subordinated Debentures to Holders as
provided in the Trust Agreement.
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 the Holders by the
Guarantor under this Guarantee Agreement and shall have the right to waive
payment by the Issuer pursuant to Section 5.1; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to
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enforce or exercise any rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Guarantee Agreement, if, at the time of any such payment, any amounts
are due and unpaid under this Guarantee Agreement. If any amount shall be paid
to the Guarantor in violation of the preceding sentence, the Guarantor agrees to
hold such amount in trust for the Holders and to pay over such amount to the
Holders.
Section 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in subsections
(a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI. COVENANTS AND SUBORDINATION
Section 6.1. Subordination.
The obligations of the Guarantor under this Guarantee Agreement will
constitute unsecured obligations of the Guarantor and will rank subordinate and
junior in right of payment to all Senior Debt of the Guarantor except those made
PARI PASSU or subordinate to such obligations expressly by their terms.
Section 6.2. PARI PASSU Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall
rank PARI PASSU with the obligations of the Guarantor under any similar
Guarantee Agreements issued by the Guarantor on behalf of the holders of
preferred securities issued by any BankUnited Capital Trust (as defined in the
Indenture).
ARTICLE VII. TERMINATION
Section 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force and
effect upon (i) full payment of the Redemption Price of all Preferred
Securities, (ii) full payment of the amounts payable in accordance with the
Trust Agreement upon liquidation of the Issuer or (iii) the distribution of
Subordinated Debentures to the Holders in exchange for all of the Preferred
Securities. Notwithstanding the foregoing, this Guarantee Agreement will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid with respect to Preferred
Securities or this Guarantee Agreement.
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<PAGE>
ARTICLE VIII. MISCELLANEOUS
Section 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then outstanding. Except in connection with a consolidation, merger
or sale involving the Guarantor that is permitted under Article VIII of the
Indenture and pursuant to which the successor or assignee agrees in writing to
perform the Guarantor's obligations hereunder, the Guarantor shall not assign
its obligations hereunder.
Section 8.2. Amendments.
Except with respect to any changes which do not adversely affect the
rights of the Holders in any material respect (in which case no consent of the
Holders will be required), this Guarantee Agreement may be amended only with the
prior approval of the Holders of not less than a Majority in Liquidation Amount
of all the outstanding Preferred Securities. The provisions of Article VI of the
Trust Agreement concerning meetings of the Holders shall apply to the giving of
such approval.
Section 8.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address set forth below
or such other address, facsimile number or to the attention of such
other Person as the Guarantor may give notice to the Holders:
BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
Facsimile No.: (305) 569-2057
Attention: Treasurer
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(b) if given to the Issuer, in care of the Guarantee Trustee,
at the Issuer's (and the Guarantee Trustee's) address set forth below
or such other address as the Guarantee Trustee on behalf of the Issuer
may give notice to the Holders:
BankUnited Capital
c/o BankUnited Financial Corporation
255 Alhambra Circle
Coral Gables, Florida 33134
Facsimile No.: (305) 569-2057
Attention: Treasurer
with a copy to:
THE BANK OF NEW YORK 101 Barclay Street
Floor 21 West New York, New York 10286
Facsimile No.: (212) 815-5915
Attention: Corporate Trust Trustee
Administration
(c) if given to any Holder, at the address set forth on
the books and records of the Issuer.
All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
Section 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders,
subject to Section 3.1(a), and is not separately transferable from the Preferred
Securities.
Section 8.5. Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement
but not defined in the preamble hereto have the respective meanings
assigned to them in Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement
has the same meaning throughout;
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<PAGE>
(c) all references to "the Guarantee Agreement" or
"this Guarantee Agreement" are to this Guarantee Agreement as modified,
supplemented or amended from time to time;
(d) all references in this Guarantee Agreement to
Articles and Sections are to Articles and Sections of this Guarantee
Agreement unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the
same meaning when used in this Guarantee Agreement unless otherwise
defined in this Guarantee Agreement or unless the context otherwise
requires;
(f) a reference to the singular includes the plural
and vice versa; and
(g) the masculine, feminine or neuter genders used
herein shall include the masculine, feminine and neuter genders.
Section 8.6. Governing Law.
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE CONFLICT OF LAW PRINCIPLES THEREOF.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
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<PAGE>
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
BANKUNITED FINANCIAL CORPORATION
By:_______________________
Name:_____________________
Title:____________________
THE BANK OF NEW YORK
as Guarantee Trustee
By:_______________________
Name:_____________________
Title:____________________
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<TABLE>
<CAPTION>
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
FOR THE SIX MONTHS
ENDED MARCH 31,
1997 1996
---- ----
<S> <C> <C>
Fixed charges (excluding interest on deposits):
Interest on Borrowings.............................................................. $ 6,427 $ 1,998
Rent (33%).......................................................................... 245 140
--------- ---------
Total fixed charges............................................................ 6,717 7,138
Income before income taxes and extraordinary items.................................. 5,707 2,591
--------- ---------
Earnings....................................................................... $ 12,424 $ 9,729
========= =========
Total fixed charges................................................................. $ 6,717 $ 7,138
Preferred stock dividends on a pretax basis......................................... 2,337 1,729
--------- ---------
Combined fixed charges and preferred stock dividends........................... $ 9,054 $ 8,867
========= =========
Ratio of earnings to combined fix charges
and preferred stock dividends.................................................. 1.37:1 1.10:1
========= =========
Fixed charges (including interest on deposits):
Interest on Deposits................................................................ $ 20,769 $ 9,032
Interest on Borrowings.............................................................. 6,472 6,998
Rent (33%).......................................................................... 245 140
--------- ---------
Total fixed charges............................................................ 27,488 16,170
Income before income taxes and extraordinary items.................................. 5,707 2,591
--------- ---------
Earnings....................................................................... $ 33,193 $ 18,761
========= =========
Total fixed charges................................................................. $ 27,486 $ 16,170
Preferred stock dividends on a pretax basis......................................... 2,337 1,729
--------- ---------
Combined fixed charges and preferred stock dividends........................... $ 29,823 $ 17,899
========= =========
Ratio of earnings to combined fixed charges
an preferred stock dividends................................................... 1.11:1 1.05:1
========= =========
</TABLE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-2 of our report dated November 4, 1996, except
as to Note 18, which is as of November 15, 1996, relating to the financial
statements of BankUnited Financial Corporation, and our report dated August 12,
1996 relating to the financial statements of Suncoast Savings and Loan
Association, FSA, which reports are included in the appendices to such
Prospectus. We also consent to the reference to us under the heading "Experts"
in such Prospectus.
PRICE WATERHOUSE LLP
Miami, Florida
May 21, 1997
