<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 24, 1997
REGISTRATION NOS. 333-20111
333-20111-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------------
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------
JEFFBANKS, INC.
JBI CAPITAL TRUST I
(EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
<TABLE>
<S> <C>
PENNSYLVANIA 23-2189480
DELAWARE TO BE APPLIED FOR
(STATE OR OTHER JURISDICTION OF INCORPORATION OR
ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
</TABLE>
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1609 WALNUT STREET
PHILADELPHIA, PENNSYLVANIA 19103
(215) 564-5040
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
------------------------
PAUL FRENKIEL
CHIEF FINANCIAL OFFICER
1609 WALNUT STREET
PHILADELPHIA, PENNSYLVANIA 19103
(215) 564-5040
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
WITH COPIES TO:
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<S> <C>
J. BAUR WHITTLESEY, ESQ. STEVEN KAPLAN, ESQ.
LEDGEWOOD LAW FIRM, P.C. ARNOLD & PORTER
1521 LOCUST STREET, 8TH FLOOR 555 12TH STREET, N.W.
PHILADELPHIA, PENNSYLVANIA 19102 WASHINGTON, D.C. 20004
(215) 735-0663 (202) 942-5998
</TABLE>
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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 the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
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<S> <C> <C>
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PROPOSED
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE
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% Preferred Securities of JBI Capital Trust I.......................... $25,300,000 $7,667(4)
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% Junior Subordinated Debentures of JeffBanks, Inc..................... (2) --
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Guarantee of JeffBanks, Inc. of certain obligations under the Preferred
Securities(3)................................................................. --
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee,
exclusive of accrued interest and dividends, if any.
(2) The Junior Subordinated Debentures will be purchased by JBI Capital Trust I
with the proceeds of the sale of the Preferred Securities. Such securities
may later be distributed for no additional consideration to the holders of
the Preferred Securities upon the dissolution of the Trust and the
distribution of its assets.
(3) This Registration Statement is deemed to cover the Guarantee. Pursuant to
Rule 457(n) under the Securities Act, no separate registration fee is
payable for the Guarantee.
(4) $6,667 was previously paid in connection with the filing of the original
Registration Statement on Form S-3 on January 22, 1997. $1,000 is paid
herewith.
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<PAGE> 2
EXPLANATORY NOTE
The prospectus contained in this Registration Statement will be used in
connection with the offering of the following securities: (1) % Preferred
Securities of JBI Capital Trust I; (2) % Junior Subordinated Debentures of
JeffBanks, Inc.; (3) a Guarantee of JeffBanks, Inc. of certain obligations under
the Preferred Securities.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES
MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROSPECTUS SUBJECT TO COMPLETION,
DATED JANUARY 24, 1997
JEFFBANKS LOGO
$22,000,000
JBI Capital Trust I
___ % PREFERRED SECURITIES
(Liquidation Amount $25 per Preferred Security)
fully and unconditionally guaranteed, as described herein, by
JeffBanks, Inc.
------------------
The Preferred Securities offered hereby represent preferred undivided
beneficial interests in the assets of JBI Capital Trust I, a statutory business
trust created under the laws of the State of Delaware (the "Issuer Trust").
JeffBanks, Inc. (the "Company") will initially be the holder of all of the
beneficial interests represented by common securities of the Issuer Trust (the
"Common
(Continued on next page)
------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 7 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE PREFERRED SECURITIES.
------------------
THE SECURITIES OFFERED HEREBY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF A BANK
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
INSURER OR GOVERNMENT AGENCY.
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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<S> <C> <C> <C>
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</TABLE>
<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING ISSUER TRUST
PUBLIC(1) DISCOUNT(2) (3)(4)
<S> <C> <C> <C>
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Per Preferred Security....................... $ (4) $
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Total(5)..................................... $ (4) $
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</TABLE>
(1) Plus accrued Distributions, if any, from , 1997.
(2) The Company and the Issuer Trust have each agreed to indemnify the
Underwriter against certain liabilities under the Securities Act of 1933.
See "Underwriting."
(3) Before deduction of expenses payable by the Company estimated at
$ .
(4) In view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures, the
Company has agreed to pay to the Underwriters, as compensation for their
arranging the investment therein of such proceeds, $ per Preferred
Security (or $ in the aggregate). See "Underwriting."
(5) The Company has granted the Underwriter an option, exercisable within 30
days after the date of this Prospectus, to purchase up to an additional
$3,300,000 aggregate liquidation amount of the Preferred Securities on the
same terms as set forth above, solely to cover over-allotments, if any. If
such over-allotment option is exercised in full, the total Price to Public,
and Proceeds to Company will be $ and $ , respectively. See
"Underwriting."
------------------
The Preferred Securities are offered, by the Underwriter subject to receipt
and acceptance by it, prior sale and the Underwriter's 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.
ALEX. BROWN & SONS
INCORPORATED
THE DATE OF THIS PROSPECTUS IS , 1997
<PAGE> 4
(cover page continued)
Securities" and, together with the Preferred Securities, the "Trust
Securities"). The Issuer Trust exists for the sole purpose of issuing the Trust
Securities and investing the proceeds thereof in % Junior Subordinated
Deferrable Interest Debentures (the "Junior Subordinated Debentures," and
together with the Trust Securities, the "Securities") to be issued by the
Company. The Junior Subordinated Debentures will mature on , 2027
(the "Stated Maturity"). The Preferred Securities will have a preference under
certain circumstances over the Common Securities with respect to cash
distributions and amounts payable on liquidation, redemption or otherwise. See
"Description of Preferred Securities -- Subordination of Common Securities."
The Preferred Securities will be represented by one or more global
securities registered in the name of a nominee of The Depository Trust Company,
as depositary ("DTC"). Beneficial interests in the global securities will be
shown on, and transfer thereof will be effected only through, records maintained
by DTC and its participants. Except as described under "Description of Preferred
Securities," Preferred Securities in definitive form will not be issued and
owners of beneficial interests in the global securities will not be considered
holders of the Preferred Securities. Application will be made to include the
Preferred Securities in NASDAQ's National Market. Settlement for the Preferred
Securities will be made in immediately available funds. The Preferred Securities
will trade in DTC's Same-Day Funds Settlement System, and secondary market
trading activity for the Preferred Securities will therefore settle in
immediately available funds.
Holders of the Preferred Securities will be entitled to receive
preferential cumulative cash distributions accumulating from , 1997
and payable quarterly in arrears on the day of , ,
and of each year, commencing , 1997, at the
annual rate of % of the Liquidation Amount of $25 per Preferred Security
("Distributions"). 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 quarterly periods with respect to each deferral period
(each, an "Extension Period"), provided that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Debentures. No interest
shall be due and payable during any Extension Period, except at the end thereof.
Upon the termination of any such Extension Period and the payment of all amounts
then due, the Company may elect to begin a new Extension Period subject to the
requirements set forth herein. If interest payments on the Junior Subordinated
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
Company's capital stock or with respect to debt securities of the Company that
rank pari passu in all respects with or junior to the Junior Subordinated
Debentures. During an Extension Period, interest on the Junior Subordinated
Debentures will continue to accrue (and the amount of Distributions to which
holders of the Preferred Securities are entitled will accumulate) at the rate of
% per annum, compounded quarterly, and holders of Preferred Securities will be
required to accrue interest income for United States federal income tax
purposes. See "Description of Junior Subordinated Debentures -- Option to Extend
Interest Payment Period" and "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount."
The Company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Junior Subordinated Indenture (each as defined
herein), taken together, fully, irrevocably and unconditionally guaranteed all
the Issuer Trust's obligations under the Preferred Securities as described
below. See "Relationship Among the Preferred Securities, the Junior Subordinated
Debentures and the Guarantee -- Full and Unconditional Guarantee." The Guarantee
of the Company 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 Issuer Trust, as described herein (the
"Guarantee"). See "Description of Guarantee." If the Company does not make
payments on the Junior Subordinated Debentures held by the Issuer Trust, the
Issuer Trust may have insufficient funds to pay Distributions on the Preferred
Securities. The Guarantee does not cover payment of Distributions when the
Issuer Trust does not have sufficient funds to pay such Distributions. In such
event, a holder of Preferred Securities may institute a legal proceeding
2
<PAGE> 5
(cover page continued)
directly against the Company to enforce payment of such Distributions to such
holder. See "Description of Junior Subordinated Debentures -- Enforcement of
Certain Rights by Holders of Preferred Securities." The obligations of the
Company under the Guarantee and the Preferred Securities are subordinate and
junior in right of payment to all Senior Indebtedness (as defined in
"Description of Junior Subordinated Debentures -- Subordination") of the
Company.
The Preferred Securities are subject to mandatory redemption (i) in whole,
but not in part, upon repayment of the Junior Subordinated Debentures at Stated
Maturity or their earlier redemption in whole upon the occurrence of a Tax
Event, an Investment Company Event or a Capital Treatment Event (each as defined
herein) and (ii) in whole or in part at any time on or after , 2002
contemporaneously with the optional redemption by the Company of the Junior
Subordinated Debentures in whole or in part. The Junior Subordinated Debentures
are redeemable prior to maturity at the option of the Company (i) on or after
, 2002, in whole at any time or in part from time to time, or (ii)
in whole, but not in part, at any time within 90 days following the occurrence
and continuation of a Tax Event, Investment Company Event or Capital Treatment
Event, in each case at a redemption price set forth herein, which includes the
accrued and unpaid interest on the Junior Subordinated Debentures so redeemed to
the date fixed for redemption. The ability of the Company to exercise its rights
to redeem the Junior Subordinated Debentures or to cause the redemption of the
Preferred Securities prior to the Stated Maturity may be subject to prior
regulatory approval by the Board of Governors of the Federal Reserve System (the
"Federal Reserve"), if then required under applicable Federal Reserve capital
guidelines or policies. See "Description of Junior Subordinated
Debentures -- Redemption" and "Description of Preferred
Securities -- Liquidation Distribution Upon Dissolution."
The holders of the outstanding Common Securities have the right at any time
to dissolve the Issuer Trust and, after satisfaction of liabilities to creditors
of the Issuer Trust as provided by applicable law, to cause the Junior
Subordinated Debentures to be distributed to the holders of the Preferred
Securities and Common Securities in liquidation of the Issuer Trust. The ability
of the Company to dissolve the Issuer Trust may be subject to prior regulatory
approval of the Federal Reserve, if then required under applicable Federal
Reserve capital guidelines or policies. See "Description of Preferred
Securities -- Liquidation Distribution Upon Dissolution."
In the event of the dissolution of the Issuer Trust, after satisfaction of
liabilities to creditors of the Issuer Trust as provided by applicable law, the
holders of the Preferred Securities will be entitled to receive a Liquidation
Amount of $25 per Preferred Security plus accumulated and unpaid Distributions
thereon to the date of payment, subject to certain exceptions, which may be in
the form of a distribution of such amount in Junior Subordinated Debentures. See
"Description of Preferred Securities -- Liquidation Distribution Upon
Dissolution."
The Junior Subordinated Debentures are unsecured and subordinated to all
Senior Indebtedness of the Company. See "Description of Junior Subordinated
Debentures -- Subordination."
Prospective purchasers must carefully consider the information set forth in
"Certain ERISA Considerations."
THE JUNIOR SUBORDINATED DEBENTURES ARE DIRECT AND UNSECURED OBLIGATIONS OF
THE COMPANY, DO NOT EVIDENCE DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER INSURER OR GOVERNMENT AGENCY.
3
<PAGE> 6
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 also may be accessed electronically
by means of the Commission's home page on the Internet at http://www.sec.gov.
This Prospectus does not contain all the information set forth in the
Registration Statement and exhibits thereto, which the Company has filed with
the Commission under the Securities Act of 1933, as amended (the "Securities
Act") and to which reference is hereby made.
No separate financial statements of the Issuer Trust have been included or
incorporated by reference herein. The Company and the Issuer Trust do not
consider that such financial statements would be material to holders of the
Preferred Securities because the Issuer Trust is a newly formed special purpose
entity, has no operating history or independent operations and is not engaged in
and does not propose to engage in any activity other than holding as trust
assets the Junior Subordinated Debentures and issuing the Trust Securities. See
"JBI Capital Trust I," "Description of Preferred Securities," "Description of
Junior Subordinated Debentures" and "Description of Guarantee." In addition, the
Company does not expect that the Issuer Trust will be filing reports under the
Exchange Act with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1995, the Company's Quarterly Reports on Form 10-Q for the quarters ended March
31, June 30 and September 30, 1996, and the Company's Current Reports on Form
8-K dated as of September 10, 1996 and January 24, 1997, previously filed by the
Company with the Commission pursuant to Section 13 of the Exchange Act.
In addition, all reports and definitive proxy or information statements
filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of any
offering of securities made by this Prospectus shall be deemed to be
incorporated herein by reference and to be a part hereof from the date of filing
of such documents. Any statement contained herein, or in any document all or a
portion of which is incorporated or deemed to be incorporated herein by
reference shall be deemed to be modified or superseded for purposes of the
Registration Statement and this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of the Registration
Statement or this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or oral
request of any such person, a copy of any or all of the foregoing documents
incorporated herein by reference (other than certain exhibits to such
documents). Written requests should be directed to the Office of the Secretary,
JeffBanks, Inc., 1609 Walnut Street, Philadelphia, Pennsylvania 19103. Telephone
requests may be directed to (215) 564-5040.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE PREFERRED
SECURITIES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL
MARKET. SUCH STABILIZING TRANSACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
4
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus.
As used herein, (i) the "Junior Subordinated Indenture" means the Junior
Subordinated Indenture, as amended and supplemented from time to time, between
the Company and Bankers Trust Company, as trustee (the "Debenture Trustee"),
pursuant to which the Junior Subordinated Debentures are issued, (ii) the "Trust
Agreement" means the Amended and Restated Trust Agreement relating to the Issuer
Trust, as amended and supplemented from time to time, among the Company, as
Depositor, Bankers Trust Company, as Property Trustee (the "Property Trustee")
and Bankers Trust (Delaware), as Delaware Trustee (the "Delaware Trustee")
(collectively, the "Issuer Trustees") and (iii) the "Guarantee" means the
Guarantee Agreement relating to the Preferred Securities, as amended and
supplemented from time to time, between the Company and Bankers Trust Company,
as Guarantee Trustee.
JEFFBANKS, INC.
The Company is a Pennsylvania chartered, registered bank holding company
headquartered in Philadelphia, Pennsylvania with two wholly owned subsidiaries,
Jefferson Bank ("Jefferson PA") and Jefferson Bank of New Jersey ("Jefferson
NJ," and together with Jefferson PA, the "Banks"). The Company operates
principally through the Banks which are engaged in the commercial banking
business in Philadelphia, Pennsylvania and its immediately adjacent Pennsylvania
and New Jersey suburbs. As of December 31, 1996, the Company operated an
executive office, twenty-seven retail branch offices and a mortgage loan
production office. As of September 30, 1996, the Company had consolidated total
assets of $967.6 million, total deposits of $694.3 million and total
shareholders' equity of $78 million. See "JeffBanks, Inc. -- General."
JBI CAPITAL TRUST I
The Issuer Trust is a statutory business trust created under Delaware law
on January 21, 1997. The Issuer Trust will be governed by the Trust Agreement.
The Issuer Trust exists for the exclusive purposes of (i) issuing and selling
the Trust Securities, (ii) using the proceeds from the sale of the Trust
Securities to acquire the Junior Subordinated Debentures and (iii) engaging in
only those other activities necessary, convenient or incidental thereto (such as
registering the transfer of the Trust Securities). Accordingly, the Junior
Subordinated Debentures will be the sole assets of the Issuer Trust, and
payments under the Junior Subordinated Debentures will be the sole source of
revenue of the Issuer Trust.
THE OFFERING
Securities Offered......... $22,000,000 aggregate Liquidation Amount of %
Preferred Securities (Liquidation Amount $25 per
Preferred Security).
Offering Price............. $ per Preferred Security (Liquidation
Amount $25), plus accumulated Distributions, if
any, from , 1997.
Distribution Dates......... , , , and
of each year, commencing ,
1997.
Extension Periods.......... Distributions on Preferred Securities may be
deferred for the duration of any Extension Period
selected by the Company with respect to the payment
of interest on the Junior Subordinated
5
<PAGE> 8
Debentures. No Extension Period will exceed 20
consecutive quarterly periods or extend beyond the
Stated Maturity. See "Description of Junior
Subordinated Debentures -- Option to Extend
Interest Payment Period" and "Certain Federal
Income Tax Consequences -- Interest Income and
Original Issue Discount."
Ranking.................... The Preferred Securities will rank pari passu, and
payments thereon will be made pro rata, with the
Common Securities except as described under
"Description of Preferred
Securities -- Subordination of Common Securities."
The Junior Subordinated Debentures will be
unsecured and subordinate and junior in right of
payment to the extent and in the manner set forth
in the Junior Subordinated Indenture to all Senior
Indebtedness (as defined herein). See "Description
of Junior Subordinated Debentures." The Guarantee
will constitute an unsecured obligation of the
Company and will rank subordinate and junior in
right of payment to the extent and in the manner
set forth in the Guarantee to all Senior
Indebtedness. See "Description of Guarantee."
Redemption................. The Trust Securities are subject to mandatory
redemption (i) in whole, but not in part, at the
Stated Maturity upon repayment of the Junior
Subordinated Debentures, (ii) in whole, but not in
part, contemporaneously with the optional
redemption at any time by the Company of the Junior
Subordinated Debentures upon the occurrence and
continuation of a Tax Event, Investment Company
Event or Capital Treatment Event and (iii) in whole
or in part, at any time on or after ,
2002, contemporaneously with the optional
redemption by the Company of the Junior
Subordinated Debentures in whole or in part, in
each case at the applicable Redemption Price. See
"Description of Preferred Securities --
Redemption."
ERISA Considerations....... Prospective purchasers must carefully consider the
information set forth under "Certain ERISA
Considerations."
Use of Proceeds............ All the proceeds to the Issuer Trust from the sale
of the Preferred Securities will be invested by the
Issuer Trust in the Junior Subordinated Debentures.
All the net proceeds to be received by the Company
from the sale of the Junior Subordinated Debentures
will be used for general corporate purposes. See
"Use of Proceeds." The Trust Securities will
qualify as Tier 1 or core capital of the Company
under the risk-based capital guidelines of the
Federal Reserve.
NASDAQ National Market
Symbol................... Application has been made to have the Preferred
Securities approved for quotation on the NASDAQ
National Market under the symbol JEFFP.
For additional information regarding the Preferred Securities, see "Description
of Preferred Securities," "Description of Junior Subordinated Debentures,"
"Description of Guarantee," "Relationship Among the Preferred Securities, the
Junior Subordinated Debentures and the Guarantee" and "Certain Federal Income
Tax Consequences."
RISK FACTORS
Prospective investors should carefully consider the matters set forth under
"Risk Factors," beginning on page 7.
6
<PAGE> 9
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the
Preferred Securities offered by this Prospectus. Certain statements in this
Prospectus and documents incorporated herein by reference are forward-looking
and are identified by the use of forward-looking words or phrases such as
"intended," "will be positioned," "expects," is or are "expected,"
"anticipates," and "anticipated." These forward-looking statements are based on
the Company's current expectations. To the extent any of the information
contained or incorporated by reference in this Prospectus constitutes a
"forward-looking statement" as defined in Section 27A(i)(1) of the Securities
Act, the risk factors set forth below are cautionary statements identifying
important factors that could cause actual results to differ materially from
those in the forward-looking statement.
Ranking of Subordinated Obligations Under the Guarantee and the Junior
Subordinated Debentures. The obligations of the Company under the Guarantee
issued by the Company for the benefit of the holders of Preferred Securities and
under the Junior Subordinated Debentures are subordinate and junior in right of
payment to all Senior Indebtedness. At September 30, 1996, the Senior
Indebtedness of the Company aggregated approximately $32 million. None of the
Junior Subordinated Indenture, the Guarantee or the Trust Agreement places any
limitation on the amount of secured or unsecured debt, including Senior
Indebtedness, that may be incurred by the Company. See "Description of
Guarantee -- Status of the Guarantee" and "Description of Junior Subordinated
Debentures -- Subordination."
The ability of the Issuer Trust to pay amounts due on the Preferred
Securities is solely dependent upon the Company's making payments on the Junior
Subordinated Debentures as and when required.
Status of the Company as a Bank Holding Company. The Company is a legal
entity separate and distinct from the Banks, although the principal source of
the Company's cash revenues is dividends from the Banks. The right of the
Company to participate in the assets of any subsidiary upon the latter's
liquidation, reorganization or otherwise (and thus the ability of the holders of
Preferred Securities to benefit indirectly from any such distribution) will be
subject to the claims of the subsidiaries' creditors, which will take priority
except to the extent that the Company may itself be a creditor with a recognized
claim. As of September 30, 1996, the Company's subsidiaries had indebtedness and
other liabilities of approximately $889.6 million.
Payment of dividends by the Banks is restricted by various legal and
regulatory limitations. At December 31, 1996, approximately $26.1 million was
available for payment of dividends to the Company from banking subsidiaries
without prior regulatory approval.
The Banks are also subject to restrictions under federal law which limit
the transfer of funds by any of the Banks to the Company, whether in the form of
loans, extensions of credit, investments, asset purchases or otherwise. Such
transfers by any Bank to the Company or any nonbanking subsidiaries are limited
in amount to 10% of such Bank's capital and surplus and, with respect to the
Company and all such nonbanking subsidiaries, to an aggregate of 20% of such
Bank's capital and surplus. Furthermore, such loans and extensions of credit are
required to be secured in specified amounts.
Option to Extend Interest Payment Period; Tax Consequences. So long as no
Event of Default (as defined in the Junior Subordinated Indenture) has occurred
and is continuing with respect to the Junior Subordinated Debentures (a
"Debenture Event of Default"), the Company has the right under the Junior
Subordinated Indenture to defer the payment of interest on the Junior
Subordinated Debentures at any time or from time to time for a period not
exceeding 20 consecutive quarterly periods with respect to each Extension
Period, provided that no Extension Period may extend beyond the Stated Maturity
of the Junior Subordinated Debentures. See "Description of Junior Subordinated
Debentures -- Debenture Events of Default." As a consequence of any such
7
<PAGE> 10
deferral, quarterly Distributions on the Preferred Securities by the Issuer
Trust will be deferred during any such Extension Period. Distributions to which
holders of the Preferred Securities are entitled will accumulate additional
Distributions thereon during any Extension Period at the rate of % per annum,
compounded quarterly from the relevant payment date for such Distributions,
computed on the basis of a 360-day year of twelve 30-day months and the actual
days elapsed in a partial month in such period. Additional Distributions payable
for each full Distribution period will be computed by dividing the rate per
annum by four. The term "Distribution" as used herein shall include any such
additional Distributions. During any such Extension Period, the Company may not
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Company's
capital stock or (ii) make any payment of principal of or interest or premium,
if any, on or repay, repurchase or redeem any debt securities of the Company
that rank pari passu in all respects with or junior in interest to the Junior
Subordinated Debentures (other than (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of any one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or in
connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of an exchange or conversion of any class or series of the
Company's capital stock (or any capital stock of a subsidiary of the Company)
for any class or series of the Company's capital stock or of any class or series
of the Company's indebtedness for any class or series of the Company's capital
stock, (c) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (d) any declaration of a
dividend in connection with any stockholder's rights plan, or the issuance of
rights, stock or other property under any stockholder's rights plan, or the
redemption or repurchase of rights pursuant thereto, or (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks pari passu with
or junior to such stock). Prior to the termination of any such Extension Period,
the Company may further defer the payment of interest, provided that no
Extension Period may exceed 20 consecutive quarterly periods or extend beyond
the Stated Maturity of the Junior Subordinated Debentures. Upon the termination
of any Extension Period and the payment of all interest then accrued and unpaid
(together with interest thereon at the annual rate of %, compounded quarterly,
to the extent permitted by applicable law), the Company may elect to begin a new
Extension Period subject to the above conditions. No interest shall be due and
payable during an Extension Period, except at the end thereof. The Company must
give the Issuer Trustees notice of its election to begin an Extension Period at
least one Business Day prior to the earlier of (i) the date the Distributions on
the Preferred Securities would have been payable but for the election to begin
such Extension Period and (ii) the date the Property Trustee is required to give
notice to holders of the Preferred Securities of the record date or the date
such Distributions are payable, but in any event not less than one Business Day
prior to such record date. The Property Trustee will give notice of the
Company's election to begin a new Extension Period to the holders of the
Preferred Securities. Subject to the foregoing, there is no limitation on the
number of times that the Company may elect to begin an Extension Period. See
"Description of Preferred Securities -- Distributions" and "Description of
Junior Subordinated Debentures -- Option to Extend Interest Payment Period."
Should an Extension Period occur, a holder of Preferred Securities will
continue to accrue income (in the form of original issue discount) in respect of
its pro rata share of the Junior Subordinated Debentures held by the Issuer
Trust for United States federal income tax purposes. As a result, a holder of
Preferred Securities will include such income in gross income for United States
federal income tax purposes in advance of the receipt of cash, and will not
receive the cash related to such income from the Issuer Trust if the holder
disposes of the Preferred Securities prior to the
8
<PAGE> 11
record date for the payment of Distributions. See "Certain Federal Income Tax
Consequences -- Interest Income and Original Issue Discount" and "-- Sales of
Preferred Securities."
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures. However, should the Company elect to exercise such
right in the future, the market price of the Preferred Securities is likely to
be affected. A holder that disposes of his or its Preferred Securities during an
Extension Period, therefore, might not receive the same return on his or its
investment as a holder that continues to hold its Preferred Securities. In
addition, as a result of the existence of the Company's right to defer interest
payments, the market price of the Preferred Securities (which represent
preferred undivided beneficial interests in the assets of the Issuer Trust) may
be more volatile than the market prices of other securities on which original
issue discount or interest accrues that are not subject to such deferrals.
Tax Event, Investment Company Event or Capital Treatment Event
Redemption. Upon the occurrence and during the continuation of a Tax Event,
Investment Company Event or Capital Treatment Event, the Company has the right
to redeem the Junior Subordinated Debentures in whole, but not in part, at any
time within 90 days following the occurrence of such Tax Event, Investment
Company Event or Capital Treatment Event and thereby cause a mandatory
redemption of the Preferred Securities. Any such redemption shall be at a price
equal to liquidation amount of the Preferred Securities, together with
accumulated Distributions to but excluding the date fixed for redemption. The
ability of the Company to exercise its rights to redeem the Junior Subordinated
Debentures prior to the stated maturity may be subject to prior regulatory
approval by the Federal Reserve, if then required under applicable Federal
Reserve capital guidelines or policies. See "Description of Junior Subordinated
Debentures -- Redemption" and "Description of Preferred
Securities -- Liquidation Distribution Upon Dissolution."
A "Tax Event" means the receipt by the Issuer Trust of an opinion of
counsel to the Company experienced in such matters to the effect that, as a
result of any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of the Preferred Securities, there is more than an insubstantial
risk that (i) the Issuer Trust is, or will be within 90 days of the delivery of
such opinion, subject to United States federal income tax with respect to income
received or accrued on the Junior Subordinated Debentures, (ii) interest payable
by the Company on the Junior Subordinated Debentures is not, or within 90 days
of the delivery of such opinion will not be, deductible by the Company, in whole
or in part, for United States federal income tax purposes or (iii) the Issuer
Trust is, or will be within 90 days of the delivery of the opinion, subject to
more than a de minimis amount of other taxes, duties or other governmental
charges.
See "-- Possible Tax Law Changes Affecting the Preferred Securities" for a
discussion of certain legislative proposals that, if adopted, could give rise to
a Tax Event, which may permit the Company to cause a redemption of the Preferred
Securities prior to , 2002.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act of 1940, as amended
(the "Investment Company Act"), which change or prospective change becomes
effective or would become effective, as the case may be, on or after the date of
the issuance of the Preferred Securities.
9
<PAGE> 12
A "Capital Treatment Event" means the reasonable determination by the
Company that, as a result of the occurrence of any amendment to, or change
(including any announced prospective change) in, the laws (or any rules or
regulations thereunder) of the United States or any political subdivision
thereof or therein, or as a result of any official or administrative
pronouncement or action or judicial decision interpreting or applying such laws
or regulations, which amendment or change is effective or such pronouncement,
action or decision is announced on or after the date of issuance of the
Preferred Securities, there is more than an insubstantial risk that the Company
will not be entitled to treat an amount equal to the Liquidation Amount of the
Preferred Securities as "Tier 1 Capital" (or the then equivalent thereof) for
purposes of the risk-based capital adequacy guidelines of the Federal Reserve,
as then in effect and applicable to the Company.
Exchange of Preferred Securities for Junior Subordinated Debentures. The
holders of all the outstanding Common Securities have the right at any time to
dissolve the Issuer Trust and, after satisfaction of liabilities to creditors of
the Issuer Trust as provided by applicable law, cause the Junior Subordinated
Debentures to be distributed to the holders of the Preferred Securities and
Common Securities in liquidation of the Issuer Trust. The ability of the Company
to dissolve the Issuer Trust may be subject to prior regulatory approval of the
Federal Reserve, if then required under applicable Federal Reserve capital
guidelines or policies. See "Description of Preferred Securities -- Liquidation
Distribution Upon Dissolution."
Under current United States federal income tax law and interpretations and
assuming, as expected, that the Issuer Trust will not be taxable as a
corporation, a distribution of the Junior Subordinated Debentures upon a
liquidation of the Issuer Trust will not be a taxable event to holders of the
Preferred Securities. However, if a Tax Event were to occur that would cause the
Issuer Trust to be subject to United States federal income tax with respect to
income received or accrued on the Junior Subordinated Debentures, a distribution
of the Junior Subordinated Debentures by the Issuer Trust would be a taxable
event to the Issuer Trust and the holders of the Preferred Securities. See
"Certain Federal Income Tax Consequences -- Distribution of Junior Subordinated
Debentures to Securityholders."
Rights Under the Guarantee. Bankers Trust Company will act as the trustee
under the Guarantee and will hold the Guarantee for the benefit of the holders
of the Preferred Securities. Bankers Trust Company will also act as Debenture
Trustee for the Junior Subordinated Debentures and as Property Trustee under the
Trust Agreement. Bankers Trust (Delaware) will act as Delaware Trustee under the
Trust Agreement. The Guarantee guarantees to the holders of the Preferred
Securities the following payments, to the extent not paid by or on behalf of the
Issuer Trust: (i) any accumulated and unpaid Distributions required to be paid
on the Preferred Securities, to the extent that the Issuer Trust has funds on
hand available therefor at the payment date, (ii) the Redemption Price with
respect to any Preferred Securities called for redemption, to the extent that
the Issuer Trust has funds on hand available therefor at such time, and (iii)
upon a voluntary or involuntary dissolution, winding up or liquidation of the
Issuer Trust (unless the Junior Subordinated Debentures are distributed to
holders of the Preferred Securities), the lesser of (a) the aggregate of the
Liquidation Amount and all accumulated and unpaid Distributions to the date of
payment, to the extent that the Issuer Trust has funds on hand available
therefor at such time, and (b) the amount of assets of the Issuer Trust
remaining available for distribution to holders of the Preferred Securities on
liquidation of the Issuer Trust. The Guarantee is subordinated as described
under "-- Ranking of Subordinated Obligations Under the Guarantee and the Junior
Subordinated Debentures" and "Description of Guarantee -- Status of the
Guarantee." The holders of not less than a majority in aggregate Liquidation
Amount of the outstanding Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of the Guarantee or to direct the exercise of
any trust power conferred upon the Guarantee Trustee under the Guarantee. Any
holder of the Preferred Securities may institute a legal proceeding directly
against the Company to enforce its rights under the Guarantee without first
10
<PAGE> 13
instituting a legal proceeding against the Issuer Trust, the Guarantee Trustee
or any other person or entity.
If the Company were to default on its obligation to pay amounts payable
under the Junior Subordinated Debentures, the Issuer Trust may lack funds for
the payment of Distributions or amounts payable on redemption of the Preferred
Securities or otherwise, and, in such event, holders of the Preferred Securities
would not be able to rely upon the Guarantee for payment of such amounts.
Instead, if a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay any amounts payable
in respect of the Junior Subordinated Debentures on the payment date on which
such payment is due and payable, then a holder of Preferred Securities may
institute a legal proceeding directly against the Company for enforcement of
payment to such holder of any amounts payable in respect of such Junior
Subordinated Debentures having a principal amount equal to the aggregate
Liquidation Amount of the Preferred Securities of such holder (a "Direct
Action"). In connection with such Direct Action, the Company will have a right
of set-off under the Junior Subordinated Indenture to the extent of any payment
made by the Company to such holder of Preferred Securities in the Direct Action.
Except as described herein, holders of Preferred Securities will not be able to
exercise directly any other remedy available to the holders of the Junior
Subordinated Debentures or assert directly any other rights in respect of the
Junior Subordinated Debentures. See "Description of Junior Subordinated
Debentures -- Enforcement of Certain Rights by Holders of Preferred Securities,"
"-- Debenture Events of Default" and "Description of Guarantee." The Trust
Agreement provides that each holder of Preferred Securities by acceptance
thereof agrees to the provisions of the Guarantee and the Junior Subordinated
Indenture.
Limited Voting Rights. Holders of Preferred Securities will have limited
voting rights relating generally to the modification of the Preferred Securities
and the Guarantee and the exercise of the Issuer Trust's rights as holder of
Junior Subordinated Debentures. Holders of Preferred Securities will not be
entitled to appoint, remove or replace the Property Trustee or the Delaware
Trustee except upon the occurrence of certain events specified in the Trust
Agreement. The Property Trustee and the holders of all the Common Securities
may, subject to certain conditions, amend the Trust Agreement without the
consent of holders of Preferred Securities to cure any ambiguity or make other
provisions not inconsistent with the Trust Agreement or to ensure that the
Issuer Trust (i) will not be taxable as a corporation for United States federal
income tax purposes, or (ii) will not be required to register as an "investment
company" under the Investment Company Act. See "Description of Preferred
Securities -- Voting Rights; Amendment of Trust Agreement" and "-- Removal of
Issuer Trustees; Appointment of Successors."
Absence of Market. The Preferred Securities are a new issue of securities
with no established trading market. Application has been made to list the
Preferred Securities in the Nasdaq National Market, but one of the requirements
for listing and continued listing is the presence of two market makers for the
Preferred Securities. The Company and the Issuer Trust have been advised by the
Underwriter that it intends to make a market in the Preferred Securities.
However, the Underwriter is not obligated to do so and such market making may be
interrupted or discontinued at any time without notice at the sole discretion of
the Underwriter. Moreover, there can be no assurance of a second market maker
for the Preferred Securities. Accordingly, no assurance can be given as to the
development or liquidity of any market for the Preferred Securities.
Market Prices. There can be no assurance as to the market prices for
Preferred Securities, or the market prices for Junior Subordinated Debentures
that may be distributed in exchange for Preferred Securities if a liquidation of
the Issuer Trust occurs. Accordingly, the Preferred Securities or the Junior
Subordinated Debentures that a holder of Preferred Securities may receive on
liquidation of the Issuer Trust may trade at a discount to the price that the
investor paid to purchase the Preferred Securities offered hereby. Because
holders of Preferred Securities may receive Junior Subordinated Debentures on
termination of the Issuer Trust, prospective purchasers of Preferred Securities
are also making an investment decision with regard to the Junior Subordinated
Deben-
11
<PAGE> 14
tures and should carefully review all the information regarding the Junior
Subordinated Debentures contained herein. See "Description of Junior
Subordinated Debentures."
Possible Tax Law Changes Affecting the Preferred Securities. On March 19,
1996, the Revenue Reconciliation Bill of 1996 (the "Revenue Reconciliation
Bill"), the revenue portion of President Clinton's budget proposal, was
released. If enacted, the Revenue Reconciliation Bill would have generally
denied interest deductions for interest on an instrument issued by a corporation
that has a maximum term of more than 20 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 the provision
were to apply to the Junior Subordinated Debentures, the Company would be unable
to deduct interest on the Junior Subordinated Debentures. On March 29, 1996, the
Chairmen of the Senate Finance and House Ways and Means Committees issued a
joint statement to the effect that it was their intention that the effective
date of the President's legislative proposals, if adopted, would be no earlier
than the date of appropriate Congressional action. It is possible that similar
legislative proposals may be offered by the Clinton Administration and
considered by Congress beginning in 1997. Under current law, the Company will be
able to deduct interest on the Junior Subordinated Debentures. There can be no
assurance, however, that future legislative proposals or final legislation will
not affect the ability of the Company to deduct interest on the Junior
Subordinated Debentures. Such a change could give rise to a Tax Event, which may
permit the Company to cause a redemption of the Preferred Securities before
, 2002. See "Description of Junior Subordinated
Debentures -- Redemption" and "Description of Preferred
Securities -- Redemption." See also "Certain Federal Income Tax
Consequences -- Possible Tax Law Changes."
JEFFBANKS, INC.
GENERAL
The Company is a Pennsylvania chartered, registered bank holding company
headquartered in Philadelphia, Pennsylvania with two wholly owned subsidiaries,
Jefferson PA and Jefferson NJ. The Company operates principally through the
Banks which are engaged in the commercial banking business in Philadelphia,
Pennsylvania and its immediately adjacent Pennsylvania and New Jersey suburbs.
The Company currently operates an executive office, twenty-seven retail branch
offices and a mortgage loan production office. As of September 30, 1996, the
Company had consolidated total assets of $967.6 million, total deposits of
$694.3 million and total shareholders' equity of $78 million.
The Company's primary operating strategy is to establish a reputation and
market presence as the "small and middle-market business bank." The Company has
sought to implement its strategy by targeting the banking needs of high net
worth or high income individuals within its market area and the businesses which
they own or control. To attract this market, the Company provides specialized
commercial lending, cash management, lease financing and personal credit
services. In particular, in its commercial lending, the Company seeks to respond
to its targeted market by customizing the terms of its loans to the specific or
special needs of individual customers or their businesses. Such services are
also intended to aid in generating loans and deposits from the Company's
targeted market. The Company believes that satisfactory attention to this
selected market requires a combination of the services of the type described
above (which the Company believes are frequently unavailable at small banks),
and the personal attention of senior management (which the Company believes is
often unavailable to such customers at major financial institutions). The
customers in this market generally require relatively small amounts of credit
(almost never in excess of $5 million, and often less than $1 million), but
often seek customized solutions to their financial requirements.
The Company also seeks to operate its branches as individual "community
banks" and, accordingly, provides a wide range of banking services for both
individuals and businesses in addition to the more specialized services referred
to previously. For individuals, the Company
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<PAGE> 15
provides services which include demand, NOW, money market, certificates of
deposit, and other saving accounts. The Company also offers telephone transfer
services, automatic teller services through the MAC inter-bank automated teller
system, night depository services, safe-deposit facilities, consumer loan
programs (including installment loans for home repairs and for the purchase of
consumer goods such as automobiles and boats), home equity loans, credit card
plans with Visa and Mastercard, revolving lines of credit, automobile leases,
residential construction loans, permanent mortgages for single family and
multi-family houses and on-line bill-paying services. For businesses, the
Company additionally offers short-term loans for seasonal and working capital
purposes, term loans secured by real estate and other assets, loans for
construction and expansion needs, equipment and automobile leasing and loan
programs, revolving credit plans, and other commercial loans. The Company,
through Monticello Investment Services, also offers a full range of investment
products, including mutual funds, annuities and discount brokerage. Trust
services are marketed in conjunction with The Chase Manhattan Bank.
The Company maintains its principal executive offices at 1609 Walnut
Street, Philadelphia, Pennsylvania 19103.
NEITHER THE PREFERRED SECURITIES NOR THE JUNIOR SUBORDINATED DEBENTURES ARE
OBLIGATIONS OF OR GUARANTEED BY ANY BANK.
CONSOLIDATED RATIOS OF EARNINGS TO FIXED CHARGES
The following unaudited table presents the consolidated ratios of earnings
to fixed charges and earnings to combined fixed charges and preferred stock
dividends of the Company. The consolidated ratio of earnings to fixed charges
has been computed by dividing income before income taxes, cumulative effect of
changes in accounting principles and fixed charges by fixed charges. The
consolidated ratio of earnings to combined fixed charges and preferred stock
dividends has been computed by dividing income before income taxes, cumulative
effect of changes in accounting principles and fixed charges by fixed charges
and preferred stock dividends. Fixed charges represent all interest expense
(ratios are presented both excluding and including interest on deposits),
amortization of notes and debentures expense and the portion of net rental
expense which is deemed to be equivalent to interest on debt. Preferred stock
dividends are increased to an amount representing the pretax earnings which
would be required to cover such dividend requirements. Interest expense (other
than on deposits) includes interest on notes and debentures, federal funds
purchased and securities sold under agreements to repurchase, mortgages,
commercial paper and other funds borrowed:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits...................... 2.50x 3.27x 4.57x 4.83x 8.02x
Including Interest on Deposits...................... 1.41 1.41 1.52 1.40 1.26
Earnings to Combined Fixed Charges and Preferred Stock
Dividend Requirements:
Excluding Interest on Deposits...................... 2.50 2.46 2.59 2.28 2.36
Including Interest on Deposits...................... 1.41 1.33 1.36 1.25 1.16
</TABLE>
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<PAGE> 16
SELECTED CONSOLIDATED FINANCIAL DATA AND OTHER INFORMATION
Presented below is selected unaudited consolidated financial information
for the Company for the periods specified. The consolidated financial
information is not necessarily indicative of the results for any future period
and is qualified in its entirety by the detailed information available in the
Company's reports as described under "Available Information":
<TABLE>
<CAPTION>
AS OF AND
FOR THE NINE
MONTHS ENDED
AS OF AND FOR THE YEARS ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------------------------- -------------------
1991 1992 1993 1994 1995 1995 1996
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Interest income............................ $ 46,124 $ 41,491 $ 40,475 $ 46,943 $ 64,317 $ 46,221 $ 55,380
Interest expense........................... 27,731 19,422 16,591 17,412 28,229 19,981 25,217
-------- -------- -------- -------- -------- -------- --------
Net interest income........................ 18,393 22,069 23,884 29,531 36,088 26,240 30,163
Provision for credit losses................ 2,864 3,153 1,829 1,857 3,135 2,370 2,115
-------- -------- -------- -------- -------- -------- --------
Net interest income after provision for
credit losses............................ 15,529 18,916 22,055 27,674 32,953 23,870 28,048
Non-interest income(1)(2).................. 3,135 4,907 5,495 5,343 6,508 4,608 5,185
Non-interest expense....................... 16,536 18,609 20,741 23,755 27,647 20,192 22,711
-------- -------- -------- -------- -------- -------- --------
Income before income taxes, dividends on
preferred stock and minority interest.... 2,128 5,214 6,809 9,262 11,814 8,286 10,522
Income taxes(3)............................ 742 1,714 2,062 3,081 4,153 2,861 3,779
-------- -------- -------- -------- -------- -------- --------
Income before dividends on preferred stock
and minority interest.................... 1,386 3,500 4,747 6,181 7,661 5,425 6,743
Dividends on preferred stock of
subsidiary............................... 478 646 789 -- -- -- --
Minority interest in net income of
subsidiaries............................. 316 877 1,191 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net Income.......................... $ 592 $ 1,977 $ 2,767 $ 6,181 $ 7,661 $ 5,425 $ 6,743
======== ======== ======== ======== ======== ======== ========
BALANCE SHEET DATA:
Total assets............................... $543,110 $558,211 $633,936 $751,525 $939,006 $877,859 $967,622
Total loans(4)............................. 421,033 438,929 459,281 551,865 673,788 664,430 705,442
Allowance for credit losses................ (4,233) (5,094) (5,283) (7,728) (14,032) (13,004) (10,793)
Investment securities(5)................... 31,874 46,431 96,550 80,628 145,762 98,736 155,977
Goodwill................................... 175 156 135 809 8,978 9,594 9,085
Deposits................................... 490,373 503,660 535,509 619,131 724,967 691,442 694,345
Securities sold under repurchase
agreements............................... 8,501 7,893 16,211 16,229 46,549 34,653 74,587
Minority interest.......................... 11,543 15,690 437 -- -- -- --
Convertible preferred stock and related
surplus.................................. 5,346 5,346 12,845 12,835 -- -- --
Common shareholders' equity................ 18,467 19,916 43,350 51,541 73,311 71,228 78,026
SELECTED OPERATING RATIOS:
Return on average assets................... .28% .66% .83% .95% .96% .95% .96%
Return on average common equity............ .35% 7.63% 10.72% 10.75% 11.30% 10.93% 11.91%
Net interest margin........................ 3.91% 4.46% 4.47% 4.89% 4.87% 4.90% 4.56%
Dividend payout ratio...................... -- -- -- 20.34% 24.82% 23.47% 26.15%
SELECTED CAPITAL AND ASSET QUALITY RATIOS:
Equity/Assets.............................. 4.38% 4.52% 8.86% 8.57% 7.80% 8.11% 8.06%
Non-performing loans/total loans(6)........ 1.47% 1.31% 1.14% 1.60% 1.80% 1.91% 1.37%
Non-performing assets/total loans and non-
performing assets(7)..................... 1.96% 2.32% 2.18% 2.40% 2.34% 2.63% 1.95%
Allowance for credit losses/total loans.... 1.01% 1.16% 1.15% 1.40% 2.08% 1.96% 1.53%
Allowance for credit losses/non-performing
assets(7)................................ 51.00% 49.54% 52.13% 57.97% 88.42% 73.82% 78.16%
Net charge-offs/average loans.............. .49% .54% .38% .51% .48% .73% 1.04%
</TABLE>
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<PAGE> 17
- ---------------
(1) Includes net gain on securities of $34,000 in 1991, $605,000 in 1992,
$376,000 in 1993, $128,000 in 1994 and $333,000 in 1995. Respective amounts
for the nine months ended September 30, 1995 and 1996 were $277,000 and
$149,000.
(2) Effective October 1, 1995, the Company adopted SFAS No. 122, "Accounting for
Mortgage Servicing Rights." The effect of adoption was not material to the
Company's financial position or results of operations.
(3) Effective January 1, 1993, the Company adopted SFAS No. 109, "Accounting for
Income Taxes." The effect of adoption was not material to the Company's
financial position or results of operations.
(4) Includes mortgage loans held for sale of $11.9 million (1991), $7.0 million
(1992), $19.0 million (1993), $380,000 (1994) and $484,000 (1995).
Respective amounts for September 30, 1995 and 1996 were $2.0 million and
$170,000.
(5) Effective January 1, 1994, the Company adopted SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities." The adoption had no
effect on the Company's financial position or results of operations.
(6) Non-performing loans consist of non-accrual loans and renegotiated loans and
exclude loans past due 90 days or more still accruing interest. Effective
January 1, 1995, the Company adopted SFAS No. 114, "Accounting for
Impairment of a Loan," as amended by SFAS No. 118, "Accounting by Creditors
for Impairment of a Loan -- Income Recognition and Disclosures." The effect
of adoption was not material to the Company's financial position or results
of operations.
(7) Non-performing assets consist of non-accrual loans, renegotiated loans and
other real estate owned and exclude loans past due 90 days or more still
accruing interest.
All acquisitions reflected in these periods have been accounted for under
the purchase method of accounting and accordingly, the results of these
entities' operations are included from their respective dates of acquisition.
15
<PAGE> 18
RECENT DEVELOPMENTS
SUMMARY OF OPERATIONS
Net income for the year ended December 31, 1996 was $9.2 million, or $2.26
per fully diluted share, compared with $7.7 million, or $1.94, for 1995, an
increase of 20%. Return on assets and return on equity were .97% and 12.04%,
respectively, for the year 1996 compared with .96% and 11.30%, for the year
1995.
Net interest income for 1996 equaled $40.6 million, an increase of $4.5
million over 1995. The increase reflected higher levels of average earning
assets. During 1996, the net interest margin was 4.56%, compared with 4.87% in
1995. The decrease reflected reductions in commercial loan rates tied to the
prime rate.
The provision for credit losses was $3.0 million for 1996, compared with
$3.1 million in 1995.
Non-interest income totaled $7.1 million in 1996, an increase of $611,000
over 1995. Net securities gains for 1996 totaled $245,000 compared with $333,000
in 1995.
Non-interest expense totaled $30.4 million in 1996, compared with $27.6
million in the year-earlier period representing an increase of 10%. Salaries and
employee benefits totaled $13.7 million in 1996, a 12% increase over the $12.2
million in 1995. That increase reflects expansion of the commercial and consumer
lending departments and the impact of four new branches. Also, advertising
expense increased in 1996 by $531,000 over 1995. Reflected in that increase are
higher credit card origination and marketing expenses, as well as several other
product specific advertising campaigns.
The efficiency ratio is defined as non-interest expense divided by: the
total of net interest income and non-interest income less securities gains. That
ratio was 63.98% and 65.42% respectively, for 1996 and 1995.
FINANCIAL POSITION
Total assets at December 31, 1996 were $1 billion compared with $939.0
million at December 31, 1995. Total loans at December 31, 1996 were $739.0
million compared with $673.8 million at December 31, 1995, while total deposits
were $682.5 million at December 31, 1996 compared with $725.0 million at
December 31, 1995. Average earning assets increased $147.5 million to $891.2
million during 1996 when compared with 1995. Average loans increased 14% to
$696.1 million in the comparison and average investments increased $60.6 million
to $195.1 million.
Total shareholders' equity was $80.3 million and fully diluted net book
value was $19.45 per share, at December 31, 1996 compared to $73.3 million, and
$18.20 per share at December 31, 1995. At December 31, 1996, the Company's
leverage capital ratio, Tier 1 and total risk-based capital ratios were 7.11%,
9.62% and 15.31%, respectively. At December 31, 1996 the Company and each of the
Banks were classified as "well capitalized."
CREDIT QUALITY
Non-performing assets, which are comprised of non-accrual and restructured
loans and other real estate owned, declined $2.6 million from year end 1995 to
$13.2 million. At December 31, 1996 non-performing assets consisted of $9.7
million of non-accrual loans and $3.5 million of other real estate owned.
Non-performing assets were 1.78% of total loans and other real estate owned at
December 31, 1996, compared with 2.34% at December 31, 1995. Non-performing
assets plus loans past due 90 or more days still accruing divided by total
assets amounted to 1.76% and 2.42%, respectively, at December 31, 1996 and 1995.
For purposes of this discussion, non-accrual loans exclude loans past due 90
days or more still accruing interest.
16
<PAGE> 19
The allowance for credit losses totaled $10.9 million at December 31, 1996,
compared with $14 million at December 31, 1995. The allowance as a percentage of
period end loans and of non-performing assets was 1.47% and 82%, respectively,
at December 31, 1996. The comparable prior year end amounts were 2.08% and 88%,
respectively. Net charge-offs during 1996 were $6.2 million compared with $3.0
million in 1995.
ACQUISITIONS
On January 21, 1997, the Company, through a wholly owned subsidiary,
acquired United Valley Bancorp, Inc. ("UVHC"), the holding company for United
Valley Bank ("UVB"). The Company issued 749,278 shares of its Common Stock, and
warrants (in exchange for outstanding warrants to purchase UVHC common stock) to
purchase an additional 255,381 shares of Common Stock at a price of $11.80 per
share, in connection with the merger. Immediately following the merger, UVB was
merged with and into Jefferson PA. UVHC and UVB offered retail and commercial
banking services at three branches in Philadelphia and its immediate
Pennsylvania suburbs. As of September 30, 1996, UVHC had total assets of $122.4
million, total loans of $94.0 million, total deposits of $104.1 million and
total shareholders' equity of $12.9 million.
JBI CAPITAL TRUST I
The Issuer Trust is a statutory business trust created under Delaware law
pursuant to the filing of a certificate of trust with the Delaware Secretary of
State on January 21, 1997. The Issuer Trust will be governed by an Amended and
Restated Trust Agreement among the Company, as Depositor, Bankers Trust
(Delaware), as Delaware Trustee, and Bankers Trust Company, as Property Trustee.
Two individuals will be selected by the holders of the Common Securities to act
as administrators with respect to the Issuer Trust (the "Administrators"). The
Company, while holder of the Common Securities, intends to select two
individuals who are employees or officers of or affiliated with the Company to
serve as the Administrators. See "Description of Preferred
Securities -- Miscellaneous." The Issuer Trust exists for the exclusive purposes
of (i) issuing and selling the Trust Securities, (ii) using the proceeds from
the sale of the Trust Securities to acquire the Junior Subordinated Debentures
and (iii) engaging in only those other activities necessary, convenient or
incidental thereto (such as registering the transfer of the Trust Securities).
Accordingly, the Junior Subordinated Debentures will be the sole assets of the
Issuer Trust, and payments under the Junior Subordinated Debentures will be the
sole source of revenue of the Issuer Trust.
All the Common Securities will initially 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 during
the continuation of a Debenture Event of Default arising as a result of any
failure by the Company to pay any amounts in respect of the Junior Subordinated
Debentures when due, the rights of the holders of the Common Securities to
payment in respect of Distributions and payments upon liquidation, redemption or
otherwise will be subordinated to the rights of the holders of the Preferred
Securities. See "Description of Preferred Securities -- Subordination of Common
Securities." The Company will acquire Common Securities in an aggregate
liquidation amount equal to 3% of the total capital of the Issuer Trust. The
Issuer Trust has a term of 31 years, but may terminate earlier as provided in
the Trust Agreement. The address of the Delaware Trustee is Bankers Trust
(Delaware), 1001 Jefferson Street, Wilmington, Delaware 19801, telephone number
(302) 576-3301. The address of the Property Trustee, the Guarantee Trustee and
the Debenture Trustee is Bankers Trust Company, Four Albany Street, 4th Floor,
New York, New York 10006, telephone number (212) 250-2500.
USE OF PROCEEDS
All the proceeds to the Issuer Trust from the sale of the Preferred
Securities will be invested by the Issuer Trust in the Junior Subordinated
Debentures. The proceeds from the sale of the Preferred
17
<PAGE> 20
Securities will qualify as Tier 1 or core capital with respect to the Company
under the risk-based capital guidelines established by the Federal Reserve. All
the net proceeds to be received by the Company from the sale of the Junior
Subordinated Debentures will be used for general corporate purposes, which may
include the repayment of indebtedness of the Company or the Banks, investments
in or extensions of credit to its subsidiaries and the financing of possible
acquisitions. Pending such use, the net proceeds may be temporarily invested in
short-term obligations. The precise amounts and timing of the application of
proceeds will depend upon the funding requirements of the Company and its
subsidiaries and the availability of other funds. In view of anticipated funding
requirements, the Company may from time to time engage in additional financings
of a character and in amounts to be determined.
18
<PAGE> 21
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Company as of September 30, 1996 and 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 Company's reports filed with the
Commission under the Exchange Act. See "Available Information":
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt:..................................................... $ 32,000 $ 32,000
-------- --------
32,000 32,000
-------- --------
Guaranteed preferred beneficial interests in Company's Junior
Subordinated Debentures(1)........................................ 22,000(3)
--------
22,000(3)
--------
Stockholders' Equity:
Common stock, $1 par value; 10,000,000 authorized, 3,962,267
shares issued.................................................. 3,962 3,962
Additional paid-in-capital........................................ 53,806 53,806
Retained earnings................................................. 20,407 20,407
Net unrealized loss on investment securities available-for-sale... (149) (149)
-------- --------
Total stockholder's equity................................ 78,026 78,026
-------- --------
Total Capitalization...................................... $110,026 $ 132,026
======== ========
Risk-based capital ratios:
Tier 1 capital to risk-weighted assets(2)......................... 9.70% 12.50%
Regulatory minimum................................................ 4.00 4.00
Total capital to risk-weighted assets(2).......................... 15.62 18.27
Regulatory minimum................................................ 8.00 8.00
Leverage ratio.................................................... 7.01 9.12
Regulatory minimum................................................ 3.00 3.00
</TABLE>
- ---------------
(1) As described herein, the sole assets of the Trust will be $22,000,000
principal amount of Junior Subordinated Debentures issued by the Company to
the Trust. The Junior Subordinated Debentures will bear interest at a fixed
rate of % and will mature on , 2027. The Company will
own all of the Common Securities of the Trust.
(2) Assumes net proceeds of the offering of the Preferred Securities are
invested in assets with a 100% risk weighting under the risk-based capital
rules of the Federal Reserve.
(3) Does not reflect the up to $3,300,000 aggregate liquidation amount of the
Preferred Securities subject to the Underwriter's over-allotment option. See
"Underwriting."
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<PAGE> 22
ACCOUNTING TREATMENT
For financial reporting purposes, the Issuer Trust will be treated as a
subsidiary of the Company and, accordingly, the accounts of the Issuer Trust
will be included in the consolidated financial statements of the Company. The
Preferred Securities will be included in the consolidated balance sheets of the
Company and appropriate disclosures about the Preferred Securities, the
Guarantee and the Junior Subordinated Debentures will be included in the notes
to the consolidated financial statements of the Company. For financial reporting
purposes, Distributions on the Preferred Securities will be recorded in the
consolidated statements of income of the Company.
DESCRIPTION OF PREFERRED SECURITIES
Pursuant to the terms of the Trust Agreement for the Issuer Trust, the
Issuer Trustees on behalf of the Issuer Trust will issue the Preferred
Securities and the Common Securities. The Preferred Securities will represent
preferred undivided beneficial interests in the assets of the Issuer Trust and
the holders thereof will be entitled to a preference in certain circumstances
with respect to Distributions and amounts payable on redemption or liquidation
over the Common Securities, as well as other benefits as described in the Trust
Agreement. This summary of certain provisions of the Preferred Securities and
the Trust Agreement does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the Trust
Agreement, including the definitions therein of certain terms. Wherever
particular defined terms of the Trust Agreement are referred to herein, such
defined terms are incorporated herein by reference. A copy of the form of the
Trust Agreement is available upon request from the Issuer Trustees.
GENERAL
The Preferred Securities will be limited to $22,000,000 aggregate
Liquidation Amount outstanding (which amount may be increased by up to
$3,300,000 aggregate liquidation amount of Preferred Securities for exercise of
the Underwriter's over-allotment option). See "Underwriting." The Preferred
Securities will rank pari passu, and payments will be made thereon pro rata,
with the Common Securities except as described under "-- Subordination of Common
Securities." The Junior Subordinated Debentures will be registered in the name
of the Issuer Trust and held by the Property Trustee in trust for the benefit of
the holders of the Preferred Securities and Common Securities. The Guarantee
will be a guarantee on a subordinated basis with respect to the Preferred
Securities but will not guarantee payment of Distributions or amounts payable on
redemption or liquidation of such Preferred Securities when the Issuer Trust
does not have funds on hand available to make such payments. See "Description of
Guarantee."
DISTRIBUTIONS
The Preferred Securities represent preferred undivided beneficial interests
in the assets of the Issuer Trust, and Distributions on each Preferred Security
will be payable at the annual rate of % of the stated Liquidation Amount of
$25, payable quarterly in arrears on the day of , ,
, and of each year (each a "Distribution Date"), to the
holders of the Preferred Securities at the close of business on the day of
, , and (whether or not a Business Day
(as defined below)) next preceding the relevant Distribution Date. Distributions
on the Preferred Securities will be cumulative. Distributions will accumulate
from , 1997. The first Distribution Date for the Preferred Securities
will be , 1997. The amount of Distributions payable for any period
less than a full Distribution period will be computed on the basis of a 360-day
year of twelve 30-day months and the actual days elapsed in a partial month in
such period. Distributions payable for each full Distribution period will be
computed by dividing the rate per annum by four. If any date on which
Distributions are payable on the Preferred Securities is not a Business Day,
then payment of the Distributions payable on such date will be made on the next
succeeding day that is a Business Day (without any additional
20
<PAGE> 23
Distributions or other payment in respect of any such delay), with the same
force and effect as if made on the date such payment was originally payable.
So long as no Debenture Event of Default has occurred and is continuing,
the Company has the right under the Junior Subordinated Indenture to defer the
payment of interest on the Junior Subordinated Debentures at any time or from
time to time for a period not exceeding 20 consecutive quarterly periods with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the Junior Subordinated Debentures. As a
consequence of any such deferral, quarterly Distributions on the Preferred
Securities by the Issuer Trust will be deferred during any such Extension
Period. Distributions to which holders of the Preferred Securities are entitled
will accumulate additional Distributions thereon at the rate of % per
annum, compounded quarterly from the relevant payment date for such
Distributions, computed on the basis of a 360-day year of twelve 30-day months
and the actual days elapsed in a partial month in such period. Additional
Distributions payable for each full Distribution period will be computed by
dividing the rate per annum by four. The term "Distributions" as used herein
shall include any such additional Distributions. During any such Extension
Period, the Company may not (i) declare or pay any dividends or distributions
on, or redeem, purchase, acquire or make a liquidation payment with respect to,
any of the Company's capital stock or (ii) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu in all respects with or junior in
interest to the Junior Subordinated Debentures (other than (a) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, (b) as a result of an exchange or conversion
of any class or series of the Company's capital stock (or any capital stock of a
subsidiary of the Company) for any class or series of the Company's capital
stock or of any class or series of the Company's indebtedness for any class or
series of the Company's capital stock, (c) the purchase of fractional interests
in shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(d) any declaration of a dividend in connection with any stockholder's rights
plan, or the issuance of rights, stock or other property under any stockholder's
rights plan, or the redemption or repurchase of rights pursuant thereto, or (e)
any dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock). Prior to the termination of any
such Extension Period, the Company may further defer the payment of interest,
provided that no Extension period may exceed 20 consecutive quarterly periods or
extend beyond the Stated Maturity of the Junior Subordinated Debentures. Upon
the termination of any such Extension Period and the payment of all amounts then
due, the Company may elect to begin a new Extension Period. No interest shall be
due and payable during an Extension Period, except at the end thereof. The
Company must give the Issuer Trustees notice of its election of such Extension
Period at least one Business Day prior to the earlier of (i) the date the
Distributions on the Preferred Securities would have been payable but for the
election to begin such Extension Period and (ii) the date the Property Trustee
is required to give notice to holders of the Preferred Securities of the record
date or the date such Distributions are payable, but in any event not less than
one Business Day prior to such record date. The Property Trustee will give
notice of the Company's election to begin a new Extension Period to the holders
of the Preferred Securities. Subject to the foregoing, there is no limitation on
the number of times that the Company may elect to begin an Extension Period. See
"Description of Junior Subordinated Debentures -- Option To Extend Interest
Payment Period" and "Certain Federal Income Tax Consequences -- Interest Income
and Original Issue Discount."
21
<PAGE> 24
The Company has no current intention of exercising its right to defer
payments of interest by extending the interest payment period on the Junior
Subordinated Debentures.
The revenue of the Issuer Trust available for distribution to holders of
the Preferred Securities will be limited to payments under the Junior
Subordinated Debentures in which the Issuer Trust will invest the proceeds from
the issuance and sale of the Preferred Securities. See "Description of Junior
Subordinated Debentures." If the Company does not make payments on the Junior
Subordinated Debentures, the Issuer Trust may not have funds available to pay
Distributions or other amounts payable on the Preferred Securities. The payment
of Distributions and other amounts payable on the Preferred Securities (if and
to the extent the Issuer Trust has funds legally available for and cash
sufficient to make such payments) is guaranteed by the Company on a limited
basis as set forth herein under "Description of Guarantee."
REDEMPTION
Upon the repayment or redemption, in whole or in part, of the Junior
Subordinated Debentures, whether at maturity or upon earlier redemption as
provided in the Junior Subordinated Indenture, the proceeds from such repayment
or redemption shall be applied by the Property Trustee to redeem a Like Amount
(as defined below) of the Preferred Securities, upon not less than 30 nor more
than 60 days' notice, at a redemption price (the "Redemption Price") equal to
the aggregate Liquidation Amount of such Preferred Securities plus accumulated
but unpaid Distributions thereon to the date of redemption (the "Redemption
Date") and the related amount of the premium, if any, paid by the Company upon
the concurrent redemption of such Junior Subordinated Debentures. See
"Description of Junior Subordinated Debentures -- Redemption." If less than all
the Junior Subordinated Debentures are to be repaid or redeemed on a Redemption
Date, then the proceeds from such repayment or redemption shall be allocated to
the redemption pro rata of the Preferred Securities and the Common Securities.
The amount of premium, if any, paid by the Company upon the redemption of all or
any part of the Junior Subordinated Debentures to be repaid or redeemed on a
Redemption Date shall be allocated to the redemption pro rata of the Preferred
Securities and the Common Securities.
The Company has the right to redeem the Junior Subordinated Debentures (i)
on or after , 2002, in whole at any time or in part from time to time,
or (ii) in whole, but not in part, at any time within 90 days following the
occurrence and during the continuation of a Tax Event, Investment Company Event
or Capital Treatment Event (each as defined below), in each case subject to
possible regulatory approval. See "-- Liquidation Distribution Upon
Dissolution." A redemption of the Junior Subordinated Debentures would cause a
mandatory redemption of a Like Amount of the Preferred Securities and Common
Securities at the Redemption Price.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in the City of New York or the City of
Philadelphia are authorized or required by law or executive order to remain
closed, or (c) a day on which the Property Trustee's Corporate Trust Office or
the Corporate Trust Office of the Debenture Trustee is closed for business.
"Like Amount" means (i) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount (as defined below) equal to that
portion of the principal amount of Junior Subordinated Debentures to be
contemporaneously redeemed in accordance with the Junior Subordinated Indenture,
allocated to the Common Securities and to the Preferred Securities based upon
the relative Liquidation Amounts of such classes and (ii) with respect to a
distribution of Junior Subordinated Debentures to holders of Trust Securities in
connection with a dissolution or liquidation of the Issuer Trust, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Trust Securities of the holder to whom such Junior Subordinated
Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
22
<PAGE> 25
"Tax Event" means the receipt by the Issuer Trust of an opinion of counsel
to the Company experienced in such matters to the effect that, as a result of
any amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of issuance of the Preferred Securities, there is more than an insubstantial
risk that (i) the Issuer Trust is, or will be within 90 days of the delivery of
such opinion, subject to United States federal income tax with respect to income
received or accrued on the Junior Subordinated Debentures, (ii) interest payable
by the Company on the Junior Subordinated Debentures is not, or within 90 days
of the delivery of such opinion, will not be, deductible by the Company, in
whole or in part, for United States federal income tax purposes or (iii) the
Issuer Trust is, or will be within 90 days of the delivery of such opinion,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
"Investment Company Event" means the receipt by the Issuer Trust of an
opinion of counsel to the Company experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or a
written change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Issuer Trust is or will be considered an "investment company" that is
required to be registered under the Investment Company Act, which change or
prospective change becomes effective or would become effective, as the case may
be, on or after the date of the issuance of the Preferred Securities.
"Capital Treatment Event" means the reasonable determination by the Company
that, as a result of the occurrence of any amendment to, or change (including
any announced prospective change) in, the laws (or any rules or regulations
thereunder) of the United States or any political subdivision thereof or
therein, or as a result of any official or administrative pronouncement or
action or judicial decision interpreting or applying such laws or regulations,
which amendment or change is effective or such pronouncement, action or decision
is announced on or after the date of issuance of the Preferred Securities, there
is more than an insubstantial risk that the Company will not be entitled to
treat an amount equal to the Liquidation Amount of the Preferred Securities as
"Tier 1 Capital" (or the then equivalent thereof) for purposes of the risk-based
capital adequacy guidelines of the Federal Reserve, as then in effect and
applicable to the Company.
Payment of Additional Sums. If a Tax Event described in clause (i) or
(iii) of the definition of Tax Event above has occurred and is continuing and
the Issuer Trust is the holder of all the Junior Subordinated Debentures, the
Company will pay Additional Sums (as defined below), if any, on the Junior
Subordinated Debentures.
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Issuer Trust on the
outstanding Preferred Securities and Common Securities of the Issuer Trust will
not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Issuer Trust has become subject as a result of
a Tax Event.
REDEMPTION PROCEDURES
Preferred Securities redeemed on each Redemption Date shall be redeemed at
the Redemption Price with the applicable proceeds from the contemporaneous
redemption of the Junior Subordinated Debentures. Redemptions of the Preferred
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Issuer Trust has funds on hand
available for the payment of such Redemption Price. See also "-- Subordination
of Common Securities."
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<PAGE> 26
If the Issuer Trust gives a notice of redemption in respect of the
Preferred Securities, then, by 12:00 noon, New York City time, on the Redemption
Date, to the extent funds are available, in the case of Preferred Securities
held in book-entry form, the Property Trustee will deposit irrevocably with DTC
funds sufficient to pay the applicable Redemption Price and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
holders of the Preferred Securities. With respect to Preferred Securities not
held in book-entry form, the Property Trustee, to the extent funds are
available, will irrevocably deposit with the paying agent for the Preferred
Securities funds sufficient to pay the applicable Redemption Price and will give
such paying agent irrevocable instructions and authority to pay the Redemption
Price to the holders thereof upon surrender of their certificates evidencing the
Preferred Securities. Notwithstanding the foregoing, Distributions payable on or
prior to the Redemption Date for any Preferred Securities called for redemption
shall be payable to the holders of the Preferred Securities on the relevant
record dates for the related Distribution Dates. If notice of redemption shall
have been given and funds deposited as required, then upon the date of such
deposit all rights of the holders of such Preferred Securities so called for
redemption will cease, except the right of the holders of such Preferred
Securities to receive the Redemption Price, but without interest on such
Redemption Price, and such Preferred Securities will cease to be outstanding. If
any date fixed for redemption of Preferred Securities is not a Business Day,
then payment of the Redemption Price payable on such date will be made on the
next succeeding day which is a Business Day (without any interest or other
payment in respect of any such delay), except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day. In the event that payment of the Redemption Price in
respect of Preferred Securities called for redemption is improperly withheld or
refused and not paid either by the Issuer Trust or by the Company pursuant to
the Guarantee as described under "Description of Guarantee," Distributions on
such Preferred Securities will continue to accumulate at the then applicable
rate, from the Redemption Date originally established by the Issuer Trust for
such Preferred Securities to the date such Redemption Price is actually paid, in
which case the actual payment date will be the date fixed for redemption for
purposes of calculating the Redemption Price.
Subject to applicable law (including, without limitation, United States
federal securities laws), the Company or its affiliates may at any time and from
time to time purchase outstanding Preferred Securities by tender, in the open
market or by private agreement, and may resell such securities.
If less than all the Preferred Securities and Common Securities are to be
redeemed on a Redemption Date, then the aggregate Liquidation Amount of such
Preferred Securities and Common Securities to be redeemed shall be allocated pro
rata to the Preferred Securities and the Common Securities based upon the
relative Liquidation Amounts of such classes. The particular Preferred
Securities to be redeemed shall be selected on a pro rata basis not more than 60
days prior to the Redemption Date by the Property Trustee from the outstanding
Preferred Securities not previously called for redemption, or if the Preferred
Securities are then held in the form of a Global Preferred Security (as defined
below), in accordance with DTC's customary procedures. The Property Trustee
shall promptly notify the securities registrar for the Trust Securities in
writing of the Preferred Securities selected for redemption and, in the case of
any Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of the Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the aggregate
Liquidation Amount of Preferred Securities which has been or is to be redeemed.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the Redemption Date to each registered holder of Preferred
Securities to be redeemed at its address appearing on the securities register
for the Trust Securities. Unless the Company defaults in payment of the
Redemption Price on the Junior Subordinated Debentures, on and after the
Redemption Date interest will cease to accrue on the Junior Subordinated
Debentures or portions thereof (and, unless
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payment of the Redemption Price in respect of the Preferred Securities is
withheld or refused and not paid either by the Issuer Trust or the Company
pursuant to the Guarantee, Distributions will cease to accumulate on the
Preferred Securities or portions thereof) called for redemption.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, and the
Liquidation Distribution in respect of, the Preferred Securities and Common
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of such Preferred Securities and Common Securities. However, if on any
Distribution Date or Redemption Date a Debenture Event of Default has occurred
and is continuing as a result of any failure by the Company to pay any amounts
in respect of the Junior Subordinated Debentures when due, no payment of any
Distribution on, or Redemption Price of, or Liquidation Distribution in respect
of, any of the Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of such Common Securities, shall be
made unless payment in full in cash of all accumulated and unpaid Distributions
on all the outstanding Preferred Securities for all Distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all the outstanding Preferred
Securities then called for redemption, shall have been made or provided for, and
all funds available to the Property Trustee shall first be applied to the
payment in full in cash of all Distributions on, or Redemption Price of, the
Preferred Securities then due and payable.
In the case of any Event of Default (as defined below) resulting from a
Debenture Event of Default, the holders of the Common Securities will be deemed
to have waived any right to act with respect to any such Event of Default under
the Trust Agreement until the effects of all such Events of Default with respect
to such Preferred Securities have been cured, waived or otherwise eliminated.
See "-- Events of Default; Notice" and "Description of Junior Subordinated
Debentures -- Debenture Events of Default." Until all such Events of Default
under the Trust Agreement with respect to the Preferred Securities have been so
cured, waived or otherwise eliminated, the Property Trustee will act solely on
behalf of the holders of the Preferred Securities and not on behalf of the
holders of the Common Securities, and only the holders of the Preferred
Securities will have the right to direct the Property Trustee to act on their
behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
The amount payable on the Preferred Securities in the event of any
liquidation of the Issuer Trust is $25 per Preferred Security plus accumulated
and unpaid Distributions, subject to certain exceptions, which may be in the
form of a distribution of such amount in Junior Subordinated Debentures.
The holders of all the outstanding Common Securities have the right at any
time to dissolve the Issuer Trust and, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, cause the Junior
Subordinated Debentures to be distributed to the holders of the Preferred
Securities and Common Securities in liquidation of the Issuer Trust.
The Federal Reserve's risk-based capital guidelines currently provide that
redemptions of permanent equity or other capital instruments before stated
maturity could have a significant impact on a bank holding company's overall
capital structure and that any organization considering such a redemption should
consult with the Federal Reserve before redeeming any equity or capital
instrument prior to maturity if such redemption could have a material effect on
the level or composition of the organization's capital base (unless the equity
or capital instrument were redeemed with the proceeds of, or replaced by, a like
amount of a similar or higher quality capital instrument and the Federal Reserve
considers the organization's capital position to be fully adequate after the
redemption).
In the event the Company, while a holder of Common Securities, dissolves
the Issuer Trust prior to the stated maturity of the Preferred Securities and
the dissolution of the Issuer Trust is deemed to constitute the redemption of
capital instruments by the Federal Reserve under its risk-based capital
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guidelines or policies, the dissolution of the Issuer Trust by the Company may
be subject to the prior approval of the Federal Reserve. Moreover, any changes
in applicable law or changes in the Federal Reserve's risk-based capital
guidelines or policies could impose a requirement on the Company that it obtain
the prior approval of the Federal Reserve to dissolve the Issuer Trust.
Pursuant to the Trust Agreement, the Issuer Trust will automatically
dissolve upon expiration of its term or, if earlier, will dissolve on the first
to occur of: (i) certain events of bankruptcy, dissolution or liquidation of the
Company or the holder of the Common Securities, (ii) the distribution of a Like
Amount of the Junior Subordinated Debentures to the holders of the Trust
Securities, if the holders of Common Securities have given written direction to
the Property Trustee to dissolve the Issuer Trust (which direction, subject to
the foregoing restrictions, is optional and wholly within the discretion of the
holders of Common Securities), (iii) the repayment of all the Preferred
Securities in connection with the redemption of all the Trust Securities as
described under "-- Redemption" and (iv) the entry of an order for the
dissolution of the Issuer Trust by a court of competent jurisdiction.
If dissolution of the Issuer Trust occurs as described in clause (i), (ii)
or (iv) above, the Issuer Trust will be liquidated by the Property Trustee as
expeditiously as the Property Trustee determines to be possible by distributing,
after satisfaction of liabilities to creditors of the Issuer Trust as provided
by applicable law, to the holders of such Trust Securities a Like Amount of the
Junior Subordinated Debentures, unless such distribution is not practical, in
which event such holders will be entitled to receive out of the assets of the
Issuer Trust available for distribution to holders, after satisfaction of
liabilities to creditors of the Issuer Trust as provided by applicable law, an
amount equal to, in the case of holders of Preferred Securities, the aggregate
of the Liquidation Amount plus accumulated and unpaid Distributions thereon to
the date of payment (such amount being the "Liquidation Distribution"). If such
Liquidation Distribution can be paid only in part because the Issuer Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then the amounts payable directly by the Issuer Trust on its
Preferred Securities shall be paid on a pro rata basis. The holders of the
Common Securities will be entitled to receive distributions upon any such
liquidation pro rata with the holders of the Preferred Securities, except that
if a Debenture Event of Default has occurred and is continuing as a result of
any failure by the Company to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Preferred Securities shall have a priority
over the Common Securities. See "-- Subordination of Common Securities."
After the liquidation date fixed for any distribution of Junior
Subordinated Debentures (i) the Preferred Securities will no longer be deemed to
be outstanding, (ii) DTC or its nominee, as the registered holder of Preferred
Securities, will receive a registered global certificate or certificates
representing the Junior Subordinated Debentures to be delivered upon such
distribution with respect to Preferred Securities held by DTC or its nominee and
(iii) any certificates representing the Preferred Securities not held by DTC or
its nominee will be deemed to represent the Junior Subordinated Debentures
having a principal amount equal to the stated Liquidation Amount of the
Preferred Securities and bearing accrued and unpaid interest in an amount equal
to the accumulated and unpaid Distributions on the Preferred Securities until
such certificates are presented to the security registrar for the Trust
Securities for transfer or reissuance.
If the Company does not redeem the Junior Subordinated Debentures prior to
maturity and the Issuer Trust is not liquidated and the Junior Subordinated
Debentures are not distributed to holders of the Preferred Securities, the
Preferred Securities will remain outstanding until the repayment of the Junior
Subordinated Debentures and the distribution of the Liquidation Distribution to
the holders of the Preferred Securities.
There can be no assurance as to the market prices for the Preferred
Securities or the Junior Subordinated Debentures that may be distributed in
exchange for Preferred Securities if a dissolution and liquidation of the Issuer
Trust were to occur. Accordingly, the Preferred Securities that an investor may
purchase, or the Junior Subordinated Debentures that the investor may receive on
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dissolution and liquidation of the Issuer Trust, may trade at a discount to the
price that the investor paid to purchase the Preferred Securities offered
hereby.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement (an "Event of Default") with respect to the Preferred Securities
(whatever the reason for such Event of Default and whether it is voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default (see "Description of
Junior Subordinated Debentures -- Debenture Events of Default"); or
(ii) default by the Issuer Trust in the payment of any Distribution when
it becomes due and payable, and continuation of such default for a
period of 30 days; or
(iii) default by the Issuer Trust in the payment of any Redemption Price of
any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer 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 Issuer Trustees and the Company by the holders
of at least 25% in aggregate Liquidation Amount of the outstanding
Preferred Securities, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice
is a "Notice of Default" under the Trust Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee if a successor Property Trustee has
not been appointed within 90 days thereof.
Within five Business Days after the occurrence of any Event of Default
actually known to the Property Trustee, the Property Trustee will transmit
notice of such Event of Default to the holders of Trust Securities and the
Administrators, unless such Event of Default has been cured or waived. The
Company, as Depositor, and the Administrators are required to file annually with
the Property Trustee a certificate as to whether or not they are in compliance
with all the conditions and covenants applicable to them under the Trust
Agreement.
If a Debenture Event of Default has occurred and is continuing as a result
of any failure by the Company to pay any amounts in respect of the Junior
Subordinated Debentures when due, the Preferred Securities will have a
preference over the Common Securities with respect to payments of any amounts in
respect of the Preferred Securities as described above. See "-- Subordination of
Common Securities," "-- Liquidation Distribution Upon Dissolution" and
"Description of Junior Subordinated Debentures -- Debenture Events of Default."
REMOVAL OF ISSUER TRUSTEES; APPOINTMENT OF SUCCESSORS
The holders of at least a majority in aggregate Liquidation Amount of the
outstanding Preferred Securities may remove an Issuer Trustee for cause or, if a
Debenture Event of Default has occurred and is continuing, with or without
cause. If an Issuer Trustee is removed by the holders of the outstanding
Preferred Securities, the successor may be appointed by the holders of at least
25% in Liquidation Amount of Preferred Securities. If an Issuer Trustee resigns,
such Trustee will appoint its successor. If an Issuer Trustee fails to appoint a
successor, the holders of at least 25% in Liquidation Amount of the outstanding
Preferred Securities may appoint a successor. If a successor has not been
appointed by the holders, any holder of Preferred Securities or Common
Securities or the other
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Issuer Trustee may petition a court in the State of Delaware to appoint a
successor. Any Delaware Trustee must meet the applicable requirements of
Delaware law. Any Property Trustee must be a national or state-chartered bank,
and at the time of appointment have securities rated in one of the three highest
rating categories by a nationally recognized statistical rating organization and
have capital and surplus of at least $50,000,000. No resignation or removal of
an Issuer Trustee and no appointment of a successor trustee shall be effective
until the acceptance of appointment by the successor trustee in accordance with
the provisions of the Trust Agreement.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any entity into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such Issuer
Trustee is a party, or any entity succeeding to all or substantially all the
corporate trust business of such Issuer Trustee, will be the successor of such
Issuer Trustee under the Trust Agreement, provided such entity is otherwise
qualified and eligible.
MERGERS, CONSOLIDATIONS, AMALGAMATIONS OR REPLACEMENTS OF THE ISSUER TRUST
The Issuer Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except as described below or as
otherwise set forth in the Trust Agreement. The Issuer Trust may, at the request
of the holders of the Common Securities and with the consent of the holders of
at least a majority in aggregate Liquidation Amount of the outstanding Preferred
Securities, merge with or into, consolidate, amalgamate, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to a trust organized as such under the laws of any State, so long as (i) such
successor entity either (a) expressly assumes all the obligations of the Issuer
Trust with respect to the Preferred Securities or (b) substitutes for the
Preferred Securities other securities having substantially the same terms as the
Preferred Securities (the "Successor Securities") so long as the Successor
Securities have the same priority as the Preferred Securities with respect to
distributions and payments upon liquidation, redemption and otherwise, (ii) a
trustee of such successor entity, possessing the same powers and duties as the
Property Trustee, is appointed to hold the Junior Subordinated Debentures, (iii)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not cause the Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, if then rated, (iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the Preferred Securities (including
any Successor Securities) in any material respect, (v) such successor entity has
a purpose substantially identical to that of the Issuer Trust, (vi) prior to
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease, the Issuer Trust has received an opinion from independent counsel
experienced in such matters to the effect that (a) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect and (b)
following such merger, consolidation, amalgamation, replacement, conveyance,
transfer or lease, neither the Issuer Trust nor such successor entity will be
required to register as an investment company under the Investment Company Act,
and (vii) the Company or any permitted successor or assignee owns all the common
securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee. Notwithstanding the foregoing, the Issuer Trust may not,
except with the consent of holders of 100% in aggregate Liquidation Amount of
the Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to, any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause
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the Issuer Trust or the successor entity to be taxable as a corporation for
United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF TRUST AGREEMENT
Except as provided below and under "-- Removal of Issuer Trustees;
Appointment of Successors" and "Description of Guarantee -- Amendments and
Assignment" and as otherwise required by law and the Trust Agreement, the
holders of the Preferred Securities will have no voting rights.
The Trust Agreement may be amended from time to time by the holders of a
majority of the Common Securities and the Property Trustee, without the consent
of the holders of the Preferred Securities, (i) to cure any ambiguity, correct
or supplement any provisions in the Trust Agreement that may be inconsistent
with any other provision, or to make any other provisions with respect to
matters or questions arising under the Trust Agreement, provided that any such
amendment does not adversely affect in any material respect the interests of any
holder of Trust Securities, or (ii) to modify, eliminate or add to any
provisions of the Trust Agreement to such extent as may be necessary to ensure
that the Issuer Trust will not be taxable as a corporation for United States
federal income tax purposes at any time that any Trust Securities are
outstanding or to ensure that the Issuer Trust will not be required to register
as an "investment company" under the Investment Company Act, and any amendments
of the Trust Agreement will become effective when notice of such amendment is
given to the holders of Trust Securities. The Trust Agreement may be amended by
the holders of a majority of the Common Securities and the Property Trustee with
(i) the consent of holders representing not less than a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities and (ii) receipt by
the Issuer Trustees of an opinion of counsel to the effect that such amendment
or the exercise of any power granted to the Issuer Trustees in accordance with
such amendment will not affect the Issuer Trust's not being taxable as a
corporation for United States federal income tax purposes or the Issuer Trust's
exemption from status as an "investment company" under the Investment Company
Act, except that, without the consent of each holder of Trust Securities
affected thereby, the Trust Agreement may not be amended to (i) change the
amount or timing of any Distribution on the Trust Securities or otherwise
adversely affect the amount of any Distribution required to be made in respect
of the Trust Securities as of a specified date or (ii) restrict the right of a
holder of Trust Securities to institute suit for the enforcement of any such
payment on or after such date.
So long as any Junior Subordinated Debentures are held by the Issuer Trust,
the Property Trustee will not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
execute any trust or power conferred on the Property Trustee with respect to the
Junior Subordinated Debentures, (ii) waive any past default that is waivable
under Section 5.13 of the Junior Subordinated Indenture, (iii) exercise any
right to rescind or annul a declaration that the Junior Subordinated Debentures
shall be due and payable or (iv) consent to any amendment, modification or
termination of the Junior Subordinated Indenture or the Junior Subordinated
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the holders of at least a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities, except that, if a
consent under the Junior Subordinated Indenture would require the consent of
each holder of Junior Subordinated Debentures affected thereby, no such consent
will be given by the Property Trustee without the prior consent of each holder
of the Preferred Securities. The Property Trustee may not revoke any action
previously authorized or approved by a vote of the holders of the Preferred
Securities except by subsequent vote of the holders of the Preferred Securities.
The Property Trustee will notify each holder of Preferred Securities of any
notice of default with respect to the Junior Subordinated Debentures. In
addition to obtaining the foregoing approvals of the holders of the Preferred
Securities, before taking any of the foregoing actions, the Property Trustee
will obtain an opinion of counsel experienced in such matters to the effect that
the Issuer Trust will not be taxable as a corporation for United States federal
income tax purposes on account of such action.
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Any required approval of holders of Preferred Securities may be given at a
meeting of holders of Preferred Securities convened for such purpose or pursuant
to written consent. The Property Trustee will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be given
to each registered holder of Preferred Securities in the manner set forth in the
Trust Agreement.
No vote or consent of the holders of Preferred Securities will be required
to redeem and cancel Preferred Securities in accordance with the Trust
Agreement.
Notwithstanding that holders of Preferred Securities are entitled to vote
or consent under any of the circumstances described above, any of the Preferred
Securities that are owned by the Company, the Issuer Trustees or any affiliate
of the Company or any Issuer Trustees, will, for purposes of such vote or
consent, be treated as if they were not outstanding.
EXPENSES AND TAXES
In the Indenture, the Company, as borrower, has agreed to pay all debts and
other obligations (other than with respect to the Preferred Securities) and all
costs and expenses of the Issuer Trust (including costs and expenses relating to
the organization of the Issuer Trust, the fees and expenses of the Trustees and
the costs and expenses relating to the operation of the Issuer Trust) and to pay
any and all taxes and all costs and expenses with respect thereto (other than
United States withholding taxes) to which the Issuer Trust might become subject.
The foregoing obligations of the Company under the Indenture are for the benefit
of, and shall be enforceable by, any person to whom any such debts, obligations,
costs, expenses and taxes are owed (a "Creditor") whether or not such Creditor
has received notice thereof. Any such Creditor may enforce such obligations of
the Company directly against the Company, and the Company has irrevocably waived
any right or remedy to require that any such Creditor take any action against
the Issuer Trust or any other person before proceeding against the Company. The
Company has also agreed in the Indenture to execute such additional agreements
as may be necessary or desirable to give full effect to the foregoing.
BOOK ENTRY, DELIVERY AND FORM
The Preferred Securities will be issued in the form of one or more fully
registered global securities which will be deposited with, or on behalf of, DTC
and registered in the name of DTC's nominee. Unless and until it is exchangeable
in whole or in part for the Preferred Securities in definitive form, a global
security may not be transferred except as a whole by DTC to a nominee of DTC or
by a nominee of DTC to DTC or another nominee of DTC or by DTC or any such
nominee to a successor of such Depository or a nominee of such successor.
Ownership of beneficial interests in a global security will be limited to
persons that have accounts with DTC or its nominee ("Participants") or persons
that may hold interests through Participants. The Company expects that, upon the
issuance of a global security, DTC will credit, on its book-entry registration
and transfer system, the Participants' accounts with their respective 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 form DTC
of their purchase, but are expected to receive written confirmations from the
Participants through which the beneficial owner entered into the transaction.
Transfers of ownership interests will be accomplished by entries on the books of
Participants acting on behalf of the beneficial owners.
So long as DTC, or its nominee, is the registered owner of a global
security, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the Preferred Securities represented by such global security
for all purposes under the Junior Subordinated Indenture. Except as provided
below, owners of beneficial interests in a global security will not be entitled
to
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receive physical delivery of the Preferred Securities in definitive form and
will not be considered the owners or holders thereof under the Junior
Subordinated Indenture. Accordingly, each person owning a beneficial interest in
such a global security must rely on the procedures of DTC and, if such person is
not a Participant, on the procedures of the Participant through which such
person owns its interest, to exercise any rights of a holder of Preferred
Securities under the Junior Subordinated Indenture. The Company understands
that, under DTC's existing practices, in the event that the Company requests any
action of holders, or an owner of a beneficial interest in such a global
security desires to take any action which a holder is entitled to take under the
Junior Subordinated Indenture, DTC would authorize the Participants holding the
relevant beneficial interests to take such action, and such Participants would
authorize beneficial owners owning through such Participants to take such action
or would otherwise act upon the instructions of beneficial owners owning through
them. Redemption notices will also be sent to DTC. If less than all of the
Preferred Securities are being redeemed, the Company understands that it is
DTC's existing practice to determine by lot the amount of the interest of each
Participant to be redeemed.
Distributions on the Preferred Securities registered in the name of DTC or
its nominee will be made to DTC or its nominee, as the case may be, as the
registered owner of the global security representing such Preferred Securities.
None of the Company, the Trustees, the Administrators, any Paying Agent or any
other agent of the Company or the Trustees will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the global security for such Preferred
Securities or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests. Disbursements of Distributions to
Participants shall be the responsibility of DTC. DTC's practice is to credit
Participants' accounts on a payable date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe that it will
not receive payment on the payable date. Payments by Participants to beneficial
owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Participant
and not of DTC, the Company, the Trustees, the Paying Agent or any other agent
of the Company, subject to any statutory or regulatory requirements as may be in
effect from time to time.
DTC may discontinue providing its services as securities depository with
respect to the Preferred Securities at any time by giving reasonable notice to
the Company or the Trustees. If DTC notifies the Company that it is unwilling to
continue as such, or if it is unable to continue or ceases to be a clearing
agency registered under the Exchange Act and a successor depository is not
appointed by the Company within ninety days after receiving such notice or
becoming aware that DTC is no longer so registered, the Company will issue the
Preferred Securities in definitive form upon registration of transfer of, or in
exchange for, such global security. In addition, the Company may at any time and
in its sole discretion determine not to have the Preferred Securities
represented by one or more global securities and, in such event, will issue
Preferred Securities in definitive form in exchange for all of the global
securities representing such Preferred Securities.
DTC has advised the Company and the Issuer Trust as follows: DTC is a
limited purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the Uniform Commercial Code and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act. DTC was created
to hold securities for its Participants and to facilitate the clearance and
settlement of securities transactions between Participants through electronic
book entry changes to accounts of its Participants, thereby eliminating the need
for physical movement of certificates. Participants include securities brokers
and dealers (such as the Underwriter), 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.
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SAME-DAY SETTLEMENT AND PAYMENT
Settlement for the Preferred Securities will be made by the Underwriter 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 registrar and transfer agent for the
Preferred Securities.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Issuer Trust, but upon payment of any tax or other
governmental charges that may be imposed in connection with any transfer or
exchange. The Issuer Trust will not be required to register or cause to be
registered the transfer of the Preferred Securities after the Preferred
Securities have been called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of
an Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, after such Event of Default, must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the Property
Trustee is under no obligation to exercise any of the powers vested in it by the
Trust Agreement at the request of any holder of Preferred Securities unless it
is offered reasonable indemnity against the costs, expenses and liabilities that
might be incurred thereby.
For information concerning the relationships between Bankers Trust Company,
the Property Trustee, and the Company, see "Description of Junior Subordinated
Debentures -- Information Concerning the Debenture Trustee."
MISCELLANEOUS
The Administrators and the Property Trustee are authorized and directed to
conduct the affairs of and to operate the Issuer Trust in such a way that the
Issuer Trust will not be deemed to be an "investment company" required to be
registered under the Investment Company Act or taxable as a corporation for
United States federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of the Company for United States
federal income tax purposes. In this connection, the Property Trustee and the
holders of Common Securities are authorized to take any action, not inconsistent
with applicable law, the certificate of trust of the Issuer Trust or the Trust
Agreement, that the Property Trustee and the holders of Common Securities
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determine in their discretion to be necessary or desirable for such purposes, as
long as such action does not materially adversely affect the interests of the
holders of the Preferred Securities.
Holders of the Preferred Securities have no preemptive or similar rights.
The Issuer Trust may not borrow money, issue debt or mortgage or pledge any
of its assets.
GOVERNING LAW
The Trust Agreement will be governed by and construed in accordance with
the laws of the State of Delaware.
DESCRIPTION OF JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures are to be issued under the Junior
Subordinated Indenture, under which Bankers Trust Company is acting as Debenture
Trustee. This summary of certain terms and provisions of the Junior Subordinated
Debentures and the Junior Subordinated Indenture does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the Junior Subordinated Indenture, including the definitions
therein of certain terms. Whenever particular defined terms of the Junior
Subordinated Indenture (as amended or supplemented from time to time) are
referred to herein, such defined terms are incorporated herein by reference. A
copy of the form of Junior Subordinated Indenture is available from the
Debenture Trustee upon request.
GENERAL
Concurrently with the issuance of the Preferred Securities, the Issuer
Trust will invest the proceeds thereof, together with the consideration paid by
the Company for the Common Securities, in the Junior Subordinated Debentures
issued by the Company. The Junior Subordinated Debentures will bear interest,
accruing from , 1997, at the annual rate of % of the principal
amount thereof, payable quarterly in arrears on the day of ,
, and of each year (each, an "Interest Payment
Date"), commencing , 1997, to the person in whose name each Junior
Subordinated Debenture is registered at the close of business on the day of
, , or (whether or not a Business Day)
next preceding such Interest Payment Date. It is anticipated that, until the
liquidation, if any, of the Issuer Trust, each Junior Subordinated Debenture
will be registered in the name of the Issuer Trust and held by the Property
Trustee in trust for the benefit of the holders of the Trust Securities. The
amount of interest payable for any period less than a full interest period will
be computed on the basis of a 360-day year of twelve 30-day months and the
actual days elapsed in a partial month in such period. The amount of interest
payable for any full interest period will be computed by dividing the rate per
annum by four. If any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (without any interest or other payment in respect of any such delay), with
the same force and effect as if made on the date such payment was originally
payable. Accrued interest that is not paid on the applicable Interest Payment
Date will bear additional interest on the amount thereof (to the extent
permitted by law) at the rate per annum of %, compounded quarterly and
computed on the basis of a 360-day year of twelve 30-day months and the actual
days elapsed in a partial month in such period. The amount of additional
interest payable for any full interest period will be computed by dividing the
rate per annum by four. The term "interest" as used herein includes quarterly
interest payments, interest on quarterly interest payments not paid on the
applicable Interest Payment Date and Additional Sums (as defined below), as
applicable.
The Junior Subordinated Debentures will mature on , 2027.
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The Junior Subordinated Debentures will be unsecured and will rank junior
and be subordinate in right of payment to all Senior Indebtedness of the
Company. The Junior Subordinated Debentures will not be subject to a sinking
fund. The Junior Subordinated Indenture does not limit the incurrence or
issuance of other secured or unsecured debt by the Company, including Senior
Indebtedness, whether under the Junior Subordinated Indenture or any existing or
other indenture that the Company may enter into in the future or otherwise. See
"-- Subordination."
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Debenture Event of Default has occurred and is continuing,
the Company has the right at any time during the term of the Junior Subordinated
Debentures to defer the payment of interest at any time or from time to time for
a period not exceeding 20 consecutive quarterly periods with respect to each
Extension Period, provided that no Extension Period may extend beyond the Stated
Maturity of the Junior Subordinated Debentures. During any such Extension Period
the Company shall have the right to make partial payments of interest on any
interest payment date. At the end of such Extension Period, the Company must pay
all interest then accrued and unpaid (together with interest thereon at the
annual rate of %, compounded quarterly and computed on the basis of a
360-day year of twelve 30-day months and the actual days elapsed in a partial
month in such period, to the extent permitted by applicable law). The amount of
additional interest payable for any full interest period will be computed by
dividing the rate per annum by four. During an Extension Period, interest will
continue to accrue and holders of Junior Subordinated Debentures (or holders of
Preferred Securities while outstanding) will be required to accrue interest
income for United States federal income tax purposes. See "Certain Federal
Income Tax Consequences -- Interest Income and Original Issue Discount."
During any such Extension Period, the Company may not (i) declare or pay
any dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the Junior Subordinated Debentures
(other than (a) repurchases, redemptions or other acquisitions of shares of
capital stock of the Company in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of any one or more
employees, officers, directors or consultants, in connection with a dividend
reinvestment or stockholder stock purchase plan or in connection with the
issuance of capital stock of the Company (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of an exchange or conversion of any class or series of the Company's
capital stock (or any capital stock of a subsidiary of the Company) for any
class or series of the Company's capital stock or of any class or series of the
Company's indebtedness for any class or series of the Company's capital stock,
(c) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, (d) any declaration of a dividend in
connection with any stockholder's rights plan, or the issuance of rights, stock
or other property under any stockholders rights plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock). Prior to the termination of any such Extension Period, the Company
may further defer the payment of interest, provided that no Extension Period may
exceed 20 consecutive quarterly periods or extend beyond the Stated Maturity of
the Junior Subordinated Debentures. Upon the termination of any such Extension
Period and the payment of all amounts then due, the Company may elect to begin a
new Extension Period subject to the above conditions. No interest shall be due
and payable during an Extension Period, except at the end thereof. The Company
must give the Issuer Trustees notice of its election of such Extension Period at
least one Business Day prior to the earlier of (i) the date the Distributions on
the Preferred
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Securities would have been payable but for the election to begin such Extension
Period and (ii) the date the Property Trustee is required to give notice to
holders of the Preferred Securities of the record date or the date such
Distributions are payable, but in any event not less than one Business Day prior
to such record date. The Property Trustee will give notice of the Company's
election to begin a new Extension Period to the holders of the Preferred
Securities. There is no limitation on the number of times that the Company may
elect to begin an Extension Period.
REDEMPTION
The Junior Subordinated Debentures are redeemable prior to maturity at the
option of the Company (i) on or after , 2002, in whole at any time
or in part from time to time, or (ii) in whole, but not in part, at any time
within 90 days following the occurrence and during the continuation of a Tax
Event, Investment Company Event or Capital Treatment Event (each as defined
under "Description of Preferred Securities -- Redemption"), in each case at the
redemption price described below. The proceeds of any such redemption will be
used by the Issuer Trust to redeem the Preferred Securities.
The Federal Reserve's risk-based capital guidelines, which are subject to
change, currently provide that redemptions of permanent equity or other capital
instruments before stated maturity could have a significant impact on a bank
holding company's overall capital structure and that any organization
considering such a redemption should consult with the Federal Reserve before
redeeming any equity or capital instrument prior to maturity if such redemption
could have a material effect on the level or composition of the organization's
capital base (unless the equity or capital instrument were redeemed with the
proceeds of, or replaced by, a like amount of a similar or higher quality
capital instrument and the Federal Reserve considers the organization's capital
position to be fully adequate after the redemption).
The redemption of the Junior Subordinated Debentures by the Company prior
to their Stated Maturity would constitute the redemption of capital instruments
under the Federal Reserve's current risk-based capital guidelines and may be
subject to the prior approval of the Federal Reserve. The redemption of the
Junior Subordinated Debentures also could be subject to the additional prior
approval of the Federal Reserve under its current risk-based capital guidelines.
The redemption price for Junior Subordinated Debentures is the outstanding
principal amount of the Junior Subordinated Debentures plus accrued interest
(including any Additional Interest or any Additional Sums) thereon to but
excluding the date fixed for redemption.
ADDITIONAL SUMS
The Company has covenanted in the Junior Subordinated Indenture that, if
and for so long as (i) the Issuer Trust is the holder of all Junior Subordinated
Debentures and (ii) the Issuer Trust is required to pay any additional taxes,
duties or other governmental charges as a result of a Tax Event, the Company
will pay as additional sums on the Junior Subordinated Debentures such amounts
as may be required so that the Distributions payable by the Issuer Trust will
not be reduced as a result of any such additional taxes, duties or other
governmental charges. See "Description of Preferred Securities -- Redemption."
REGISTRATION, DENOMINATION AND TRANSFER
The Junior Subordinated Debentures will initially be registered in the name
of the Issuer Trust. If the Junior Subordinated Debentures are distributed to
holders of Preferred Securities, it is anticipated that the depositary
arrangements for the Junior Subordinated Debentures will be substantially
identical to those in effect for the Preferred Securities. See "Description of
Preferred Securities -- Book Entry, Delivery and Form."
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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 the Preferred
Securities -- Book Entry, Delivery and Form." If Junior Subordinated Debentures
are issued in certificated form, principal and interest will be payable, the
transfer of the Junior Subordinated Debentures will be registrable, and Junior
Subordinated Debentures will be exchangeable for Junior Subordinated Debentures
of other authorized denominations of a like aggregate principal amount, at the
corporate trust office of the Debenture Trustee in New York, New York or at the
offices of any Paying Agent or transfer agent appointed by the Company, provided
that payment of interest may be made at the option of the Company by check
mailed to the address of the persons entitled thereto. However, a holder of $1
million or more in aggregate principal amount of Junior Subordinated Debentures
may receive payments of interest (other than interest payable at the Stated
Maturity) by wire transfer of immediately available funds upon written request
to the Debenture Trustee not later than 15 calendar days prior to the date on
which the interest is payable.
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
Junior Subordinated Debenture or at the office of any transfer agent designated
by the Company for such purpose without service charge and upon payment of any
taxes and other governmental charges as described in the Junior Subordinated
Indenture. The Company will appoint the Debenture Trustee as securities
registrar under the Junior Subordinated Indenture. The Company may at any time
designate additional transfer agents with respect to the Junior Subordinated
Debentures.
In the event of any redemption, neither the Company nor the Debenture
Trustee shall be required to (i) issue, register the transfer of or exchange
Junior Subordinated Debentures during a period beginning at the opening of
business 15 days before the day of selection for redemption of the Junior
Subordinated Debentures to be redeemed and ending at the close of business on
the day of mailing of the relevant notice of redemption or (ii) transfer or
exchange any Junior Subordinated Debentures so selected for redemption, except,
in the case of any Junior Subordinated Debentures being redeemed in part, any
portion thereof not to be redeemed.
Any monies deposited with the Debenture Trustee or any paying agent, or
then held by the Company in trust, for the payment of the principal of (and
premium, if any) or interest on any Junior Subordinated Debenture and remaining
unclaimed for two years after such principal (and premium, if any) or interest
has become due and payable shall, at the request of the Company, be repaid to
the Company and the holder of such Junior Subordinated Debenture shall
thereafter look, as a general unsecured creditor, only to the Company for
payment thereof.
RESTRICTIONS ON CERTAIN PAYMENTS; CERTAIN COVENANTS OF THE COMPANY
The Company has covenanted that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the Junior Subordinated Debentures
(other than
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(a) repurchases, redemptions or other acquisitions of shares of capital stock of
the Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period or other event referred to below, (b) as a
result of an exchange or conversion of any class or series of the Company's
capital stock (or any capital stock of a subsidiary of the Company) for any
class or series of the Company's capital stock or of any class or series of the
Company's indebtedness for any class or series of the Company's capital stock,
(c) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, (d) any declaration of a dividend in
connection with any stockholder's rights plan, or the issuance of rights, stock
or other property under any stockholder's rights plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock), if at such time (i) there has occurred any event (a) of which the
Company has actual knowledge that with the giving of notice or the lapse of
time, or both, would constitute a Debenture Event of Default and (b) that the
Company has not taken reasonable steps to cure, (ii) if the Junior Subordinated
Debentures are held by the Issuer Trust, the Company is in default with respect
to its payment of any obligations under the Guarantee or (iii) the Company has
given notice of its election of an Extension Period as provided in the Junior
Subordinated Indenture and has not rescinded such notice, or such Extension
Period, or any extension thereof, is continuing.
The Company has covenanted in the Junior Subordinated Indenture (i) to
continue to hold, directly or indirectly, 100% of the Common Securities,
provided that certain successors that are permitted pursuant to the Junior
Subordinated Indenture may succeed to the Company's ownership of the Common
Securities, (ii) as holder of the Common Securities, not to voluntarily
terminate, windup or liquidate the Issuer Trust, other than (a) in connection
with a distribution of Junior Subordinated Debentures to the holders of the
Preferred Securities in liquidation of the Issuer Trust or (b) in connection
with certain mergers, consolidations or amalgamations permitted by the Trust
Agreement and (iii) to use its reasonable efforts, consistent with the terms and
provisions of the Trust Agreement, to cause the Issuer Trust to continue not to
be taxable as a corporation for United States federal income tax purposes.
MODIFICATION OF JUNIOR SUBORDINATED INDENTURE
From time to time, the Company and the Debenture Trustee may, without the
consent of any of the holders of the outstanding Junior Subordinated Debentures,
amend, waive or supplement the provisions of the Junior Subordinated Indenture
to: (1) evidence succession of another corporation or association to the Company
and the assumption by such person of the obligations of the Company under the
Junior Subordinated Debentures, (2) add further covenants, restrictions or
conditions for the protection of holders of the Junior Subordinated Debentures,
(3) cure ambiguities or correct the Junior Subordinated Debentures in the case
of defects or inconsistencies in the provisions thereof, so long as any such
cure or correction does not adversely affect the interest of the holders of the
Junior Subordinated Debentures in any material respect, (4) change the terms of
the Junior Subordinated Debentures to facilitate the issuance of the Junior
Subordinated Debentures in certificated or other definitive form, (5) evidence
or provide for the appointment of a successor Debenture Trustee, or (6) qualify,
or maintain the qualification of, the Junior Subordinated Indentures under the
Trust Indenture Act. The Junior Subordinated Indenture contains provisions
permitting the Company and the Debenture Trustee, with the consent of the
holders of not less than a majority in principal amount of the Junior
Subordinated Debentures, to modify the Junior Subordinated Indenture in a manner
affecting the rights of the holders of the Junior Subordinated
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Debentures, except that no such modification may, without the consent of the
holder of each outstanding Junior Subordinated Debenture so affected, (i) change
the Stated Maturity of the Junior Subordinated Debentures, or reduce the
principal amount thereof, the rate of interest thereon or any premium payable
upon the redemption thereof, or change the place of payment where, or the
currency in which, any such amount is payable or impair the right to institute
suit for the enforcement of any Junior Subordinated Debenture or (ii) reduce the
percentage of principal amount of Junior Subordinated Debentures, the holders of
which are required to consent to any such modification of the Junior
Subordinated Indenture. Furthermore, so long as any of the Preferred Securities
remain outstanding, no such modification may be made that adversely affects the
holders of such Preferred Securities in any material respect, and no termination
of the Junior Subordinated Indenture may occur, and no waiver of any Debenture
Event of Default or compliance with any covenant under the Junior Subordinated
Indenture may be effective, without the prior consent of the holders of at least
a majority of the aggregate Liquidation Amount of the outstanding Preferred
Securities unless and until the principal of (and premium, if any, on) the
Junior Subordinated Debentures and all accrued and unpaid interest thereon have
been paid in full and certain other conditions are satisfied.
DEBENTURE EVENTS OF DEFAULT
The Junior Subordinated Indenture provides that any one or more of the
following described events with respect to the Junior Subordinated Debentures
that has occurred and is continuing constitutes an "Event of Default" with
respect to the Junior Subordinated Debentures:
(i) failure to pay any interest on the Junior Subordinated Debentures
when due (subject to the deferral of any due date in the case of an
Extension Period); or
(ii) failure to pay any principal of or premium, if any, on the Junior
Subordinated Debentures when due whether at maturity, upon redemption, by
declaration of acceleration or otherwise; or
(iii) failure to observe or perform in any material respect certain
other covenants contained in the Junior Subordinated Indenture for 90 days
after written notice to the Company from the Debenture Trustee or the
holders of at least 25% in aggregate outstanding principal amount of the
outstanding Junior Subordinated Debentures; or
(iv) the Company consents to the appointment of a receiver or other
similar official in any liquidation, insolvency or similar proceeding with
respect to the Company or all or substantially all its property.
For purposes of the Trust Agreement and this Prospectus, each such Event of
Default under the Junior Subordinated Debenture is referred to as a "Debenture
Event of Default." As described in "Description of Preferred
Securities -- Events of Default; Notice," the occurrence of a Debenture Event of
Default will also constitute an Event of Default in respect of the Trust
Securities.
The holders of at least a majority in aggregate principal amount of
outstanding Junior Subordinated Debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Debenture Trustee. The Debenture Trustee or the holders of not less than 25% in
aggregate principal amount of outstanding Junior Subordinated Debentures may
declare the principal due and payable immediately upon a Debenture Event of
Default, and, should the Debenture Trustee or such holders of Junior
Subordinated Debentures fail to make such declaration, the holders of at least
25% in aggregate Liquidation Amount of the outstanding Preferred Securities
shall have such right. The holders of a majority in aggregate principal amount
of outstanding Junior Subordinated Debentures may annul such declaration and
waive the default if all defaults (other than the non-payment of the principal
of Junior Subordinated Debentures which has become due solely by such
acceleration) have been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration
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has been deposited with the Debenture Trustee. Should the holders of Junior
Subordinated Debentures fail to annul such declaration and waive such default,
the holders of a majority in aggregate Liquidation Amount of the outstanding
Preferred Securities shall have such right.
The holders of at least a majority in aggregate principal amount of the
outstanding Junior Subordinated Debentures affected thereby may, on behalf of
the holders of all the Junior Subordinated Debentures, waive any past default,
except a default in the payment of principal (or premium, if any) or interest
(unless such default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) or a default in respect of a covenant
or provision which under the Junior Subordinated Indenture cannot be modified or
amended without the consent of the holder of each outstanding Junior
Subordinated Debenture affected thereby. See "-- Modification of Junior
Subordinated Indenture." The Company is required to file annually with the
Debenture Trustee a certificate as to whether or not the Company is in
compliance with all the conditions and covenants applicable to it under the
Junior Subordinated Indenture.
If a Debenture Event of Default occurs and is continuing, the Property
Trustee will have the right to declare the principal of and the interest on the
Junior Subordinated Debentures, and any other amounts payable under the Junior
Subordinated Indenture, to be forthwith due and payable and to enforce its other
rights as a creditor with respect to the Junior Subordinated Debentures.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If a Debenture Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay any amounts payable
in respect of the Junior Subordinated Debentures on the date such amounts are
otherwise payable, a registered holder of Preferred Securities may institute a
Direct Action against the Company for enforcement of payment to such holder of
an amount equal to the amount payable in respect of Junior Subordinated
Debentures having a principal amount equal to the aggregate Liquidation Amount
of the Preferred Securities held by such holder. The Company may not amend the
Junior Subordinated Indenture to remove the foregoing right to bring a Direct
Action without the prior written consent of the holders of all the Preferred
Securities. The Company will have the right under the Junior Subordinated
Indenture to set-off any payment made to such holder of Preferred Securities by
the Company in connection with a Direct Action.
The holders of the Preferred Securities are not able to exercise directly
any remedies available to the holders of the Junior Subordinated Debentures
except under the circumstances described in the preceding paragraph. See
"Description of Preferred Securities -- Events of Default; Notice."
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
The Junior Subordinated Indenture provides that the Company may not
consolidate with or merge into any other Person or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, and no Person
may consolidate with or merge into the Company or convey, transfer or lease its
properties and assets substantially as an entirety to the Company, unless (i) if
the Company consolidates with or merges into another Person or conveys or
transfers its properties and assets substantially as an entirety to any Person,
the successor Person is organized under the laws of the United States or any
state or the District of Columbia, and such successor Person expressly assumes
the Company's obligations in respect of the Junior Subordinated Debentures; (ii)
immediately after giving effect thereto, no Debenture Event of Default, and no
event which, after notice or lapse of time or both, would constitute a Debenture
Event of Default, has occurred and is continuing; and (iii) certain other
conditions as prescribed in the Junior Subordinated Indenture are satisfied.
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The provisions of the Junior Subordinated Indenture do not afford holders
of the Junior Subordinated Debentures protection in the event of a highly
leveraged or other transaction involving the Company that may adversely affect
holders of the Junior Subordinated Debentures.
SATISFACTION AND DISCHARGE
The Junior Subordinated Indenture provides that when, among other things,
all Junior Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation (i) have become due and payable, (ii) will become due
and payable at the 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 sufficient to pay and discharge the entire indebtedness
on the Junior Subordinated Debentures not previously delivered to the Debenture
Trustee for cancellation, for the principal (and premium, if any) and interest
to the date of the deposit or to the Stated Maturity, as the case may be, then
the Junior Subordinated Indenture will cease to be of further effect (except as
to the Company's obligations to pay all other sums due pursuant to the Junior
Subordinated Indenture and to provide the officers' certificates and opinions of
counsel described therein), and the Company will be deemed to have satisfied and
discharged the Junior Subordinated Indenture.
SUBORDINATION
The Junior Subordinated Debentures will be subordinate and junior in right
of payment, to the extent set forth in the Junior Subordinated Indenture, to all
Senior Indebtedness (as defined below) of the Company. If the Company defaults
in the payment of any principal, premium, if any, or interest, if any, or any
other amount payable on any Senior Indebtedness when the same becomes due and
payable, whether at maturity or at a date fixed for redemption or by declaration
of acceleration or otherwise, then, unless and until such default has been cured
or waived or has ceased to exist or all Senior Indebtedness has been paid, no
direct or indirect payment (in cash, property, securities, by setoff or
otherwise) may be made or agreed to be made on the Junior Subordinated
Debentures, or in respect of any redemption, repayment, retirement, purchase or
other acquisition of any of the Junior Subordinated Debentures.
As used herein, "Senior Indebtedness" means, whether recourse is to all or
a portion of the assets of the Company and whether or not contingent, (i) every
obligation of the Company for money borrowed; (ii) every obligation of the
Company evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of the Company with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of the Company; (iv) every obligation of the Company issued or
assumed as the deferred purchase price of property services (but excluding trade
accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of the Company; (vi) every
obligation of the Company for claims (as defined in Section 101(4) of the United
States Bankruptcy Code of 1978, as amended) in respect of derivative products
such as interest and foreign exchange rate contracts, commodity contracts and
similar arrangements; and (vii) every obligation of the type referred to in
clauses (i) through (vi) of another person and all dividends of another person
the payment of which, in either case, the Company has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise,
including without limitation the Company's 8.75% Subordinated Notes Due April 1,
2006 in the aggregate principal amount of $23,000,000; provided that "Senior
Indebtedness" shall not include (i) any obligations which, by their terms, are
expressly stated to rank pari passu in right of payment with, or to not be
superior in right of payment to, the Junior Subordinated Debentures, (ii) any
Senior Indebtedness of the Company which when incurred and without respect to
any election under Section 1111(b) of the United States Bankruptcy Code of 1978,
as amended, was without recourse to the Company, (iii) any Indebtedness of the
Company to any of its subsidiaries, (iv) Indebtedness to any executive officer
or director of the Company, or (v) any indebtedness in respect of debt
securities issued to any trust, or a trustee of such trust, partnership or other
entity
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affiliated with the Company that is a financing entity of the Company in
connection with the issuance of such financing entity of securities that are
similar to the Preferred Securities.
In the event of (i) certain events of bankruptcy, dissolution or
liquidation of the Company or the holder of the Common Securities, (ii) any
proceeding for the liquidation, dissolution or other winding up of the Company,
voluntary or involuntary, whether or not involving insolvency or bankruptcy
proceedings, (iii) any assignment by the Company for the benefit of creditors or
(iv) any other marshalling of the assets of the Company, all Senior Indebtedness
(including any interest thereon accruing after the commencement of any such
proceedings) shall first be paid in full before any payment or distribution,
whether in cash, securities or other property, shall be made on account of the
Junior Subordinated Debentures. In such event, any payment or distribution on
account of the Junior Subordinated Debentures, whether in cash, securities or
other property, that would otherwise (but for the subordination provisions) be
payable or deliverable in respect of the Junior Subordinated Debentures will be
paid or delivered directly to the holders of Senior Indebtedness in accordance
with the priorities then existing among such holders until all Senior
Indebtedness (including any interest thereon accruing after the commencement of
any such proceedings) has been paid in full.
In the event of any such proceeding, after payment in full of all sums
owing with respect to Senior Indebtedness, the holders of Junior Subordinated
Debentures, together with the holders of any obligations of the Company ranking
on a parity with the Junior Subordinated Debentures, will be entitled to be paid
from the remaining assets of the Company the amounts at the time due and owing
on the Junior Subordinated Debentures and such other obligations before any
payment or other distribution, whether in cash, property or otherwise, will be
made on account of any capital stock or obligations of the Company ranking
junior to the Junior Subordinated Debentures and such other obligations. If any
payment or distribution on account of the Junior Subordinated Debentures of any
character or any security, whether in cash, securities or other property is
received by any holder of any Junior Subordinated Debentures in contravention of
any of the terms hereof and before all the Senior Indebtedness has been paid in
full, such payment or distribution or security will be received in trust for the
benefit of, and must be paid over or delivered and transferred to, the holders
of the Senior Indebtedness at the time outstanding in accordance with the
priorities then existing among such holders for application to the payment of
all Senior Indebtedness remaining unpaid to the extent necessary to pay all such
Senior Indebtedness in full. By reason of such subordination, in the event of
the insolvency of the Company, holders of Senior Indebtedness may receive more,
ratably, and holders of the Junior Subordinated Debentures may receive less,
ratably, than the other creditors of the Company. Such subordination will not
prevent the occurrence of any Event of Default in respect of the Junior
Subordinated Debentures.
The Junior Subordinated Indenture places no limitation on the amount of
additional Senior Indebtedness that may be incurred by the Company. The Company
expects from time to time to incur additional indebtedness constituting Senior
Indebtedness.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee, other than during the occurrence and continuance of
a default by the Company in performance of its obligations under the Junior
Subordinated Debenture, is under no obligation to exercise any of the powers
vested in it by the Junior Subordinated Indenture at the request of any holder
of Junior Subordinated Debentures, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities that might be incurred
thereby. The Debenture Trustee is not required to expend or risk its own funds
or otherwise incur personal financial liability in the performance of its duties
if the Debenture Trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
Bankers Trust Company, the Debenture Trustee, may serve from time to time
as trustee under other indentures or trust agreements with the Company or its
subsidiaries relating to other issues of
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their securities. In addition, the Company and certain of its affiliates may
have other banking relationships with Bankers Trust Company and its affiliates.
GOVERNING LAW
The Junior Subordinated Indenture and the Junior Subordinated Debentures
will be governed by and construed in accordance with the laws of the State of
New York.
DESCRIPTION OF GUARANTEE
The Guarantee will be executed and delivered by the Company concurrently
with the issuance of Preferred Securities by the Issuer Trust for the benefit of
the holders from time to time of the Preferred Securities. Bankers Trust Company
will act as Guarantee Trustee under the Guarantee. This summary of certain
provisions of the Guarantee does not purport to be complete and is subject to,
and qualified in its entirety by reference to, all the provisions of the
Guarantee, including the definitions therein of certain terms. A copy of the
form of Guarantee is available upon request from the Guarantee Trustee. The
Guarantee Trustee will hold the Guarantee for the benefit of the holders of the
Preferred Securities.
GENERAL
The Company will irrevocably agree to pay in full on a subordinated basis,
to the extent set forth herein, the Guarantee Payments (as defined below) to the
holders of the Preferred Securities, as and when due, regardless of any defense,
right of set-off or counterclaim that the Issuer Trust may have or assert other
than the defense of payment. The following payments with respect to the
Preferred Securities, to the extent not paid by or on behalf of the Issuer Trust
(the "Guarantee Payments"), will be subject to the Guarantee: (i) any
accumulated and unpaid Distributions required to be paid on such Preferred
Securities, to the extent that the Issuer Trust has funds on hand available
therefor at such time, (ii) the Redemption Price with respect to any Preferred
Securities called for redemption, to the extent that the Issuer Trust has funds
on hand available therefor at such time, and (iii) upon a voluntary or
involuntary dissolution, of the Issuer Trust (unless the Junior Subordinated
Debentures are distributed to holders of the Preferred Securities), the lesser
of (a) the aggregate of the Liquidation Amount and all accumulated and unpaid
Distributions to the date of payment, to the extent that the Issuer Trust has
funds on hand available therefor at such time, and (b) the amount of assets of
the Issuer Trust remaining available for distribution to holders of the
Preferred Securities on liquidation of the Issuer Trust. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of the Preferred Securities or by
causing the Issuer Trust to pay such amounts to such holders.
The Guarantee will be an irrevocable guarantee on a subordinated basis of
the Issuer Trust's obligations under the Preferred Securities, but will apply
only to the extent that the Issuer Trust has funds sufficient to make such
payments, and is not a guarantee of collection.
If the Company does not make payments on the Junior Subordinated Debentures
held by the Issuer Trust, the Issuer Trust will not be able to pay any amounts
payable in respect of the Preferred Securities and will not have funds legally
available therefor. The Guarantee will rank subordinate and junior in right of
payment to all Senior Indebtedness of the Company. See "-- Status of the
Guarantee." The Guarantee does not limit the incurrence or issuance of other
secured or unsecured debt of the Company, including Senior Indebtedness, whether
under the Junior Subordinated Indenture, any other indenture that the Company
may enter into in the future or otherwise.
The Company has, through the Guarantee, the Trust Agreement, the Junior
Subordinated Debentures and the Junior Subordinated Indenture, taken together,
fully, irrevocably and unconditionally guaranteed all the Issuer Trust's
obligations under the Preferred Securities on a subordinated basis. No single
document standing alone or operating in conjunction with fewer than all the
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other documents constitutes such guarantee. It is only the combined operation of
these documents that has the effect of providing a full, irrevocable and
unconditional guarantee of the Issuer Trust's obligations in respect of the
Preferred Securities. See "Relationship Among the Preferred Securities, the
Junior Subordinated Debentures and the Guarantee."
STATUS OF THE GUARANTEE
The Guarantee will constitute an unsecured obligation of the Company and
will rank subordinate and junior in right of payment to all Senior Indebtedness
of the Company in the same manner as the Junior Subordinated Debentures.
The Guarantee will constitute a guarantee of payment and not of collection
(i.e., the guaranteed party may institute a legal proceeding directly against
the Guarantor to enforce its rights under the Guarantee without first
instituting a legal proceeding against any other person or entity). The
Guarantee will be held by the Guarantee Trustee for the benefit of the holders
of the Preferred Securities. The Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Issuer
Trust or distribution to the holders of the Preferred Securities of the Junior
Subordinated Debentures.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of holders of the Preferred Securities (in which case no vote will be
required), the Guarantee may not be amended without the prior approval of the
holders of not less than a majority of the aggregate Liquidation Amount of the
outstanding Preferred Securities. The manner of obtaining any such approval will
be as set forth under "Description of the Capital Securities -- Voting Rights;
Amendment of Trust Agreement." All guarantees and agreements contained in the
Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the holders of
the Preferred Securities then outstanding.
EVENTS OF DEFAULT
An event of default under the Guarantee will occur upon the failure of the
Company to perform any of its payment or other obligations thereunder, or to
perform any non-payment obligation if such non-payment default remains
unremedied for 30 days. The holders of not less than a majority in aggregate
Liquidation Amount of the outstanding Preferred Securities have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee in respect of the Guarantee or to direct the
exercise of any trust or power conferred upon the Guarantee Trustee under the
Guarantee.
Any registered holder of Preferred Securities may institute a legal
proceeding directly against the Company to enforce its rights under the
Guarantee without first instituting a legal proceeding against the Issuer Trust,
the Guarantee Trustee or any other person or entity.
The Company, as guarantor, is required to file annually with the Guarantee
Trustee a certificate as to whether or not the Company is in compliance with all
the conditions and covenants applicable to it under the Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Guarantee Trustee, other than during the occurrence and continuance of
a default by the Company in performance of the Guarantee, undertakes to perform
only such duties as are specifically set forth in the Guarantee and, after the
occurrence of an event of default with respect to the Guarantee, must exercise
the same degree of care and skill as a prudent person would exercise or use in
the conduct of his or her own affairs. Subject to this provision, the Guarantee
Trustee is under no obligation to exercise any of the powers vested in it by the
Guarantee at the request of any holder
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of the Preferred Securities unless it is offered reasonable indemnity against
the costs, expenses and liabilities that might be incurred thereby.
For information concerning the relationship between Bankers Trust Company,
the Guarantee Trustee, and the Company, see "Description of Junior Subordinated
Debentures -- Information Concerning the Debenture Trustee."
TERMINATION OF THE GUARANTEE
The Guarantee will terminate and be of no further force and effect upon
full payment of the Redemption Price of the Preferred Securities, upon full
payment of the amounts payable with respect to the Preferred Securities upon
liquidation of the Issuer Trust or upon distribution of Junior Subordinated
Debentures to the holders of the Preferred Securities. The Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any holder of the Preferred Securities must restore payment of any sums
paid under the Preferred Securities or the Guarantee.
GOVERNING LAW
The Guarantee will be governed by and construed in accordance with the laws
of the State of New York.
RELATIONSHIP AMONG THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES AND THE GUARANTEE
FULL AND UNCONDITIONAL GUARANTEE
Payments of Distributions and other amounts due on the Preferred Securities
(to the extent the Issuer Trust has funds available for such payment) are
irrevocably guaranteed, on a subordinated basis, by the Company as and to the
extent set forth under "Description of Guarantee." Taken together, the Company's
obligations under the Junior Subordinated Debentures, the Junior Subordinated
Indenture, the Trust Agreement and the Guarantee provide, in the aggregate, a
full, irrevocable and unconditional guarantee of payments of Distributions and
other amounts due on the Preferred Securities. No single document standing alone
or operating in conjunction with fewer than all the other documents constitutes
such guarantee. It is only the combined operation of these documents that has
the effect of providing a full, irrevocable and unconditional guarantee of the
Issuer Trust's obligations in respect of the Preferred Securities. If and to the
extent that the Company does not make payments on the Junior Subordinated
Debentures, the Issuer Trust will not have sufficient funds to pay Distributions
or other amounts due on the Preferred Securities. The Guarantee does not cover
payment of amounts payable with respect to the Preferred Securities when the
Issuer Trust does not have sufficient funds to pay such amounts. In such event,
the remedy of a holder of the Preferred Securities is to institute a legal
proceeding directly against the Company for enforcement of payment of the
Company's obligations under Junior Subordinated Debentures having a principal
amount equal to the Liquidation Amount of the Preferred Securities held by such
holder.
The obligations of the Company under the Junior Subordinated Debentures and
the Guarantee are subordinate and junior in right of payment to all Senior
Indebtedness.
SUFFICIENCY OF PAYMENTS
As long as payments are made when due on the Junior Subordinated
Debentures, such payments will be sufficient to cover Distributions and other
payments distributable on the Preferred Securities, primarily because (i) the
aggregate principal amount of the Junior Subordinated Debentures will be equal
to the sum of the aggregate stated Liquidation Amount of the Preferred
Securities and Common Securities; (ii) the interest rate and interest and other
payment dates on the Junior
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Subordinated Debentures will match the Distribution rate, Distribution Dates and
other payment dates for the Preferred Securities; (iii) the Company will pay for
any and all costs, expenses and liabilities of the Issuer Trust except the
Issuer Trust's obligations to holders of the Trust Securities; and (iv) the
Trust Agreement further provides that the Issuer Trust will not engage in any
activity that is not consistent with the limited purposes of the Issuer Trust.
Notwithstanding anything to the contrary in the Junior Subordinated
Indenture, the Company has the right to set-off any payment it is otherwise
required to make thereunder against and to the extent the Company has
theretofore made, or is concurrently on the date of such payment making, a
payment under the Guarantee.
ENFORCEMENT RIGHTS OF HOLDERS OF PREFERRED SECURITIES
A holder of any Preferred Security may institute a legal proceeding
directly against the Company to enforce its rights under the Guarantee without
first instituting a legal proceeding against the Guarantee Trustee, the Issuer
Trust or any other person or entity. See "Description of Guarantee."
A default or event of default under any Senior Indebtedness of the Company
would not constitute a default or Event of Default in respect of the Preferred
Securities. However, in the event of payment defaults under, or acceleration of,
Senior Indebtedness of the Company, the subordination provisions of the Junior
Subordinated Indenture provide that no payments may be made in respect of the
Junior Subordinated Debentures until such Senior Indebtedness has been paid in
full or any payment default thereunder has been cured or waived. See
"Description of Junior Subordinated Debentures -- Subordination."
LIMITED PURPOSE OF ISSUER TRUST
The Preferred Securities represent preferred undivided beneficial interests
in the assets of the Issuer Trust, and the Issuer Trust exists for the sole
purpose of issuing its Preferred Securities and Common Securities and investing
the proceeds thereof in Junior Subordinated Debentures. A principal difference
between the rights of a holder of a Preferred Security and a holder of a Junior
Subordinated Debenture is that a holder of a Junior Subordinated Debenture is
entitled to receive from the Company payments on Junior Subordinated Debentures
held, while a holder of Preferred Securities is entitled to receive
Distributions or other amounts distributable with respect to the Preferred
Securities from the Issuer Trust (or from the Company under the Guarantee) only
if and to the extent the Issuer Trust has funds available for the payment of
such Distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of the Issuer Trust, other
than any such dissolution involving the distribution of the Junior Subordinated
Debentures, after satisfaction of liabilities to creditors of the Issuer Trust
as required by applicable law, the holders of the Preferred Securities will be
entitled to receive, out of assets held by the Issuer Trust, the Liquidation
Distribution in cash. See "Description of Preferred Securities -- Liquidation
Distribution Upon Dissolution." Upon any voluntary or involuntary liquidation or
bankruptcy of the Company, the Issuer Trust, as registered holder of the Junior
Subordinated Debentures, would be a subordinated creditor of the Company,
subordinated and junior in right of payment to all Senior Indebtedness as set
forth in the Junior Subordinated Indenture, but entitled to receive payment in
full of all amounts payable with respect to the Junior Subordinated Debentures
before any stockholders of the Company receive payments or distributions. Since
the Company is the guarantor under the Guarantee and has agreed under the Junior
Subordinated Indenture to pay for all costs, expenses and liabilities of the
Issuer Trust (other than the Issuer Trust's obligations to the holders of the
Trust Securities), the positions of a holder of the Preferred Securities and a
holder of such Junior Subordinated Debentures relative to other creditors and to
stockholders of the Company in the event of liquidation or bankruptcy of the
Company are expected to be substantially the same.
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CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of Preferred Securities.
This summary only addresses the tax consequences to a person that acquires
Preferred Securities on their original issue at their original offering price
and that is, except as noted below, (i) an individual citizen or resident of the
United States, (ii) a corporation, partnership, or other entity organized under
the laws of the United States or any state thereof or the District of Columbia,
(iii) an estate the income of which is subject to United States federal income
tax regardless of source or (iv) a trust if (a) a United States court of law is
able to exercise primary supervision over the trust's administration and (b) one
or more United States fiduciaries have the authority to control all of the
trust's substantial decisions (a "United States Person"). This summary does not
address all tax consequences that may be applicable to a United States Person
that is a beneficial owner of Preferred Securities, nor does it address the tax
consequences to, except as noted below, (i) persons that are not United States
Persons, (ii) 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 and dealers in securities or currencies, (iii) 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
United States federal income tax purposes, (iv) persons whose functional
currency is not the United States dollar or (v) 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 the Ledgewood Law Firm, P.C., in its capacity as
special tax counsel to the Company and the Issuer Trust. This summary is based
upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
regulations, Internal Revenue Service ("IRS") 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 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 may 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 United States federal income tax treatment of the purchase,
ownership and disposition of Preferred Securities may differ from the treatment
described below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE UNITED STATES FEDERAL TAX
CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF PREFERRED SECURITIES,
AS WELL AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
CLASSIFICATION OF THE JUNIOR SUBORDINATED DEBENTURES AND THE ISSUER TRUST
Under current law and assuming compliance with the terms of the Trust
Agreement, the Issuer Trust will not be taxable as a corporation but will
instead be classified as a grantor trust 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 income, including original issue discount ("OID"), paid or
accrued with respect to the Junior Subordinated Debentures whether or not cash
is actually distributed to the Securityholders. See "-- Interest Income and
Original Issue Discount." The Junior Subordinated Debentures will be classified
as indebtedness of the Company for United States federal income tax purposes.
INTEREST INCOME AND ORIGINAL ISSUE DISCOUNT
Under recently issued Treasury regulations applicable to debt instruments
issued on or after August 13, 1996 (the "Regulations"), a "remote" contingency
that stated interest will not be timely
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paid will be ignored in determining whether a debt instrument is issued with
OID. The Company believes that the likelihood of its exercising its option to
defer payments of interest is remote. Based on the foregoing, the Company
believes that the Junior Subordinated Debentures will not be considered to be
issued with OID at the time of their original issuance and, accordingly, a
Securityholder should include in gross income such Securityholder's allocable
share of interest on the Junior Subordinated Debentures in accordance with such
Securityholder's method of tax accounting.
Under the Regulations, if the Company exercised its option to defer any
payment of interest, the Junior Subordinated Debentures would at that time be
treated as issued with OID, and all stated interest on the Junior Subordinated
Debentures would thereafter be treated as OID as long as the Junior Subordinated
Debentures remained outstanding. In such event, all of a Securityholder's
taxable interest 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 reported as taxable income. Consequently, a Securityholder
would be required to include in gross income OID even though the Company would
not make any actual cash payments during an Extension Period.
The Regulations have not been addressed in any rulings or other
interpretations by the IRS, and it is possible that the IRS could take a
position contrary to the interpretation herein.
Because income on the Preferred Securities will constitute interest or OID,
corporate Securityholders will not be entitled to a dividends-received deduction
with respect to any income recognized with respect to the Preferred Securities.
Subsequent uses of the term "interest" in this summary include income in
the form of OID. Distribution of Junior Subordinated Debentures to
Securityholders
Under current law, a distribution by the Issuer Trust of the Junior
Subordinated Debentures as described under the caption "Description of Preferred
Securities -- Liquidation Distribution Upon Dissolution" will be non-taxable and
will result in the Securityholder receiving directly its pro rata share of the
Junior Subordinated Debentures previously held indirectly through the Issuer
Trust, 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. If, however, the liquidation of the Issuer Trust were
to occur because the Issuer Trust is subject to United States federal income tax
with respect to income accrued or received on the Junior Subordinated
Debentures, the distribution of Junior Subordinated Debentures to
Securityholders by the Issuer Trust would be a taxable event to the Issuer Trust
and each Securityholder, and the Securityholder would recognize gain or loss as
if the Securityholder had exchanged its Preferred Securities for the Junior
Subordinated Debentures it received upon the liquidation of the Issuer Trust. A
Securityholder will accrue interest in respect of Junior Subordinated Debentures
received from the Issuer Trust in the manner described above under "-- Interest
Income and Original Issue Discount."
Under certain circumstances described herein (see "Description of Junior
Subordinated Debentures -- Redemption"), the Junior Subordinated Debentures may
be redeemed by the Company for cash and the proceeds of such redemption
distributed by the Issuer Trust to holders in redemption of their Preferred
Securities. Under current law, such a redemption would, for United States
federal income tax purposes, constitute a taxable disposition of the redeemed
Preferred Securities, and a holder would recognize gain or loss as if it sold
such redeemed Preferred Securities for cash. See "-- Sales of Preferred
Securities."
SALES OF PREFERRED SECURITIES
A Securityholder that sells Preferred Securities will recognize gain or
loss equal to the difference between its adjusted tax basis in the Preferred
Securities and the amount realized on the sale of such Preferred Securities.
Assuming that the Company does not exercise its option to defer
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payment of interest on the Junior Subordinated Debentures, and the Preferred
Securities are not considered issued with OID, a Securityholder's adjusted tax
basis in the Preferred Securities generally will be its initial purchase price.
If the Junior Subordinated Debentures are deemed to be issued with OID as a
result of the Company's deferral of any interest payment, or otherwise, a
Securityholder's tax basis in the Preferred Securities generally will be its
initial purchase price, increased by OID previously includible in such
Securityholder's gross income to the date of disposition and decreased by
distributions or other payments received on the Preferred Securities since and
including the date of commencement of the first Extension Period. Such gain or
loss generally will be a capital gain or loss (except to the extent of any
accrued interest with respect to such Securityholder's pro rata share of the
Junior Subordinated Debentures required to be included in income) and generally
will be a long-term capital gain or loss if the Preferred Securities have been
held for more than one year.
Should the Company exercise its option to defer any payment of interest on
the Junior Subordinated Debentures, the Preferred Securities may trade at a
price that does not accurately reflect the value of accrued but unpaid interest
with respect to the underlying Junior Subordinated Debentures. In the event of
such a deferral, a Securityholder that disposes of its Preferred Securities
between record dates for payments of distributions thereon will be required to
include in income as ordinary income its share of accrued but unpaid interest on
the Junior Subordinated Debentures to the date of disposition as OID, but may
not receive the cash related thereto. However, such Securityholder will add such
amount to its adjusted tax basis in the Preferred Securities. To the extent the
selling price is less than the Securityholder's adjusted tax basis, such
Securityholder will recognize a capital loss. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
United States federal income tax purposes.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest income paid or accrued on the Preferred Securities
held of record by United States Persons (other than corporations and other
exempt Securityholders) will be reported to the IRS. "Backup" withholding at a
rate of 31% will apply to payments of interest to non-exempt United States
Persons unless the Securityholder furnishes its taxpayer identification number
in the manner prescribed in applicable Treasury regulations, certifies that such
number is correct, certifies as to no loss of exemption from backup withholding
and meets certain other conditions.
Payment of the proceeds from the disposition of Preferred Securities to or
through the United States office of a broker is subject to information reporting
and backup withholding unless the Securityholder establishes an exemption from
information reporting and backup withholding.
Any amounts withheld from a Securityholder under the backup withholding
rules will be allowed as a refund or a credit against such Securityholder's
United States federal income tax liability, provided the required information is
furnished to the IRS.
It is anticipated that income on the Preferred Securities will be reported
to Securityholders on Form 1099 and mailed to Securityholders by January 31
following each calendar year.
These backup withholding tax and information reporting rules currently are
under review by the United States Treasury Department and proposed Treasury
regulations issued on April 15, 1996 would modify certain of such rules
generally with respect to payments made after December 31, 1997. Accordingly,
the application of such rules to the Preferred Securities could be changed.
UNITED STATES ALIEN SECURITYHOLDERS
For purposes of this discussion, a "United States Alien Securityholder" is
any corporation, individual, partnership, estate or trust that for United States
federal income tax purposes is a foreign corporation, a nonresident alien
individual, a foreign partnership or a nonresident fiduciary of a foreign estate
or trust.
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Under current United States federal income tax law: (i) payments by the
Trust or any of its paying agents to any holder of Preferred Securities that is
a United States Alien Securityholder will not be subject to United States
federal withholding tax, provided that (a) the beneficial owner of the Preferred
Securities 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 beneficial owner of the Preferred Securities is not a controlled foreign
corporation that is related to the Company through stock ownership, and (c)
either (A) the beneficial owner of the Preferred Securities certifies to the
Trust, or its agent, under penalties of perjury, that it is not a United States
Securityholder and provides its name and address, or (B) a securities clearing
organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "Financial
Institution") and holds the Preferred Securities certifies to the Trust or its
agent under penalties of perjury that such statement has been received from the
beneficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes the Trust or its agent with a copy thereof; and
(ii) a United States Alien Securityholder of Preferred Securities will not be
subject to United States federal withholding tax on any gain realized upon the
sale or other disposition of Preferred Securities.
POSSIBLE TAX LAW CHANGES
On March 19, 1996, the Revenue Reconciliation Bill, the revenue portion of
President Clinton's budget proposal, was released. If enacted, the Revenue
Reconciliation Bill would have generally denied interest deductions for interest
on an instrument issued by a corporation that has a maximum term of more than 20
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. For purposes of determining the weighted average maturity or the
term of an instrument, any right to extend would be treated as exercised. The
above-described provisions of the Revenue Reconciliation Bill were proposed to
be effective generally for instruments issued on or after December 7, 1995. If
the proposed provision were to apply to the Junior Subordinated Debentures, the
Company would be unable to deduct interest on the Junior Subordinated
Debentures. On March 29, 1996, the Chairmen of the Senate Finance and House Ways
and Means Committees issued a joint statement to the effect that it was their
intention that the effective date of the President's legislative proposals, if
adopted, will be no earlier than the date of appropriate Congressional action.
It is possible that similar legislative proposals may be offered by the Clinton
Administration and considered by Congress beginning in 1997. Under current law,
the Company will be able to deduct interest on the Junior Subordinated
Debentures. There can be no assurance, however, that future legislative
proposals or final legislation will not affect the ability of the Company to
deduct interest on the Junior Subordinated Debentures. Such a change could give
rise to a Tax Event, which may permit the Company to cause a redemption of the
Preferred Securities, as described more fully in this Offering Circular under
"Description of Preferred Securities -- Redemption."
CERTAIN ERISA CONSIDERATIONS
The Company and certain affiliates of the Company may each be considered a
"party in interest" within the meaning of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") or a "disqualified person" within the
meaning of Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code") with respect to 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
49
<PAGE> 52
Preferred Securities are acquired pursuant to and in accordance with an
applicable exemption. Any pension or other employee benefit plan proposing to
acquire any Preferred Securities should consult with its counsel.
SUPERVISION, REGULATION AND OTHER MATTERS
The following information is not intended to be an exhaustive description
of the statutes and regulations applicable to the Company. The discussion is
qualified in its entirety by reference to all particular statutory or regulatory
provisions. Additional information regarding supervision and regulation is
included in the documents incorporated herein by reference. See "Incorporation
of Certain Documents by Reference."
The business of the Company is influenced by prevailing economic conditions
and governmental policies, both foreign and domestic. The actions and policy
directives of the Federal Reserve determine to a significant degree the cost and
the availability of funds obtained from money market sources for lending and
investing. The Federal Reserve's policies and regulations also influence,
directly and indirectly, the rates of interest paid by commercial banks on their
time and savings deposits. The nature and impact on the Company of future
changes in economic conditions and monetary and fiscal policies, both foreign
and domestic, are not predictable.
The Company is subject to supervision and examination by federal bank
regulatory authorities. The Company's primary bank regulatory authority is the
Federal Reserve.
The federal bank regulatory authorities have each adopted risk-based
capital guidelines to which the Company is subject. These guidelines are based
on an international agreement developed by the Basle Committee on Banking
Regulations and Supervisory Practices, which consists of representatives of
central banks and supervisory authorities in 12 countries including the United
States of America. The guidelines establish a systematic analytical framework
that makes regulatory capital requirements more sensitive to differences in risk
profiles among banking organizations, takes off-balance sheet exposures into
explicit account in assessing capital adequacy and minimizes disincentives to
holding liquid, low-risk assets. Risk-based assets are determined by allocating
assets and specified off-balance sheet commitments and exposures into four
weighted categories, with higher levels of capital being required for the
categories perceived as representing greater risk.
Each of the Company's subsidiary banks are required to maintain minimum
ratios of "qualifying total capital" and Tier 1 capital to risk-weighted assets
of 8% and 4% respectively. In addition, the federal bank regulators have
established leverage ratio (Tier 1 capital to total adjusted average assets)
guidelines providing for a minimum leverage ratio of 3% for banks meeting
certain specified criteria, including excellent asset quality, high liquidity,
low interest rate exposure and the highest regulatory rating. Institutions not
meeting these criteria are expected to maintain a ratio which exceeds the 3%
minimum by at least 100 to 200 basis points. The federal bank regulatory
authorities may, however, set higher capital requirements when a bank's
particular circumstances warrant. Bank holding companies are expected to serve
as a source of strength to their subsidiary banks under the Federal Reserve's
regulations and policies.
Effective January 17, 1995, the federal bank regulatory agencies, including
the Federal Reserve, amended their respective agency risked-based capital
standards to include concentration of credit risk and the risks of
non-traditional activities. Those agencies, including the Federal Reserve, also
issued a joint policy statement, effective June 26, 1996, that provides guidance
on sound practices for interest rate risk management. The policy describes
critical factors affecting the agencies' evaluation of a bank's interest rate
risk when making a determination of capital adequacy.
The federal banking agencies possess broad powers to take corrective action
as deemed appropriate for an insured depository institution and its holding
companies. The extent of these powers depends upon whether the institution in
question is considered "well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" or "critically under-
50
<PAGE> 53
capitalized." Generally, as an institution is deemed to be less well
capitalized, the scope and severity of the agencies' powers increase. The
agencies' corrective powers can include, among other things, requiring an
insured financial institution to adopt a capital restoration plan which cannot
be approved unless guaranteed by the institution's parent holding company;
placing limits on asset growth and restrictions on activities; placing
restrictions on transactions with affiliates; restricting the interest rates the
institution may pay on deposits; prohibiting the institution from accepting
deposits from correspondent banks; prohibiting the payment of principal or
interest on subordinated debt; prohibiting the holding company from making
capital distributions without prior regulatory approval; and, ultimately,
appointing a receiver for the institution. Business activities may also be
influenced by an institution's capital classification. For instance, only a
"well capitalized" depository institution may accept brokered deposits without
prior regulatory approval and only an "adequately capitalized" depository
institution may accept brokered deposits with prior regulatory approval. At
September 30,1996, the Company, on a consolidated basis, and each of the Banks
individually, exceeded the required capital ratios for classification as a "well
capitalized" organization or institution, as the case may be.
The deposits of the Company's subsidiary banks are insured by the Federal
Deposit Insurance Corporation (the "FDIC") and are subject to FDIC insurance
assessments. The amount of FDIC assessments paid by individual insured
depository institutions is based on their relative risk as measured by
regulatory capital ratios and certain other factors. During 1995, the FDIC's
Board of Directors significantly reduced premium rates assessed for deposits
insured by the Bank Insurance Fund (the "BIF"), resulting in the Company not
currently being assessed a premium on its BIF-insured deposits. With respect to
deposits insured by the Savings Association Insurance Fund ("SAIF"), on
September 30, 1996, President Clinton signed into law legislation that mandated
a one-time assessment on SAIF-insured deposits to recapitalize the SAIF. As a
result, for the quarter ended September 30, 1996, the Company recorded a pre-tax
charge of $45,000 for this SAIF assessment. The legislation also mandates
reductions in deposit premium rates on SAIF-insured deposits.
Under federal law, a financial institution insured by the FDIC under common
ownership with a failed institution can be required to indemnify the FDIC for
its losses resulting from the insolvency of the failed institution, even if such
indemnification causes the affiliated institution also to become insolvent. As a
result, the Company could, under certain circumstances, be obligated for the
liabilities of any of its affiliates, such as the Banks, that are FDIC-insured
institutions. In addition, if any insured depository institution becomes
insolvent and the FDIC is appointed its conservator or receiver, the FDIC may
disaffirm or repudiate any contract or lease to which such institution is a
party, the performance of which is determined to be burdensome and the
disaffirmance or repudiation of which is determined to promote the orderly
administration of the institution's affairs. If Federal law were construed to
permit the FDIC to apply these provisions to debt obligations of an insured
depository institution, the result could be that such obligations would be
prepaid without premium. Federal law also accords the claims of a receiver of an
insured depository institution for administrative expenses and the claims of
holders of deposit liabilities of such an institution priority over the claims
of general unsecured creditors of such an institution in the event of a
liquidation or other resolution of such institution.
The Bank Holding Company Act of 1956, as amended, currently permits
adequately capitalized and adequately managed bank holding companies from any
state to acquire banks and bank holding companies located in any other state,
subject to certain conditions. Effective June 1, 1997, the Company will have the
ability, subject to certain restrictions, including state opt-out provisions, to
consolidate with other banking subsidiaries of the Company or to acquire by
acquisition or merger branches outside of its home state. States may
affirmatively opt-in earlier, which Pennsylvania (among other states) has done.
Competition may increase as banks branch across state lines and enter new
markets.
51
<PAGE> 54
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement (the
"Underwriting Agreement"), Alex. Brown & Sons Incorporated (the "Underwriter")
has agreed to purchase from the Issuer Trust $22,000,000 aggregate Liquidation
Amount of Preferred Securities at the public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus.
The Underwriting Agreement provides that the obligations of the Underwriter
are subject to certain conditions precedent and that the Underwriter will
purchase all of the Preferred Securities offered hereby if any of such Preferred
Securities are purchased.
The Company has been advised by the Underwriter that the Underwriter
proposes 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 share. The Underwriter
may allow, and such dealers may reallow, a concession not in excess of $ per
share to certain other dealers. After the public offering, the offering price
and other selling terms may be changed by the Underwriter.
The Company has granted to the Underwriter an option, exercisable not later
than 30 days after the date of this Prospectus, to purchase up to an additional
$3,300,000 aggregate Liquidation Amount of the Preferred Securities at the
public offering price, less the underwriting discounts and commissions set forth
on the cover page of this Prospectus, plus accrued interest, if any, from
, 1997. To the extent that the Underwriter exercises such option, the
Company will be obligated, pursuant to the option, to sell such Preferred
Securities to the Underwriter. The Underwriter may exercise such option only to
cover over-allotments made in connection with the sale of the Preferred
Securities offered hereby. If purchased, the Underwriter will offer such
additional Preferred Securities on the same terms as those on which the
$22,000,000 aggregate Liquidation Amount of the Preferred Securities are being
offered.
In view of the fact that the proceeds from the sale of the Preferred
Securities will be used to purchase the Junior Subordinated Debentures issued by
the Company, the Underwriting Agreement provides that the Company will pay as
compensation for the Underwriter's arranging the investment therein of such
proceeds an amount of $ per Preferred Security (or $ in the
aggregate) for the account of the Underwriter.
The Preferred Securities are a new issue of securities with no established
trading market. The Company and the Issuer Trust have been advised by the
Underwriter that it intends to make a market in the Preferred Securities.
However, the Underwriter is not obligated to do so and such market making may be
interrupted or discontinued at any time without notice at the sole discretion of
the Underwriter. Application has been made by the Underwriter to list the
Preferred Securities in the Nasdaq National Market, but one of the requirements
for listing and continuing listing is the presence of two market makers for the
Preferred Securities, and the presence of a second market maker cannot be
assured. Accordingly, no assurance can be given as to the development or
liquidity of any market for the Preferred Securities.
The Company and the Issuer Trust have agreed to indemnify the Underwriter
against certain liabilities, including liabilities under the Securities Act.
The Underwriter has in the past performed and may in the future perform
various services to the Company, including investment banking services, for
which it has or may receive customary fees for such services.
VALIDITY OF SECURITIES
Certain matters of Delaware law relating to the validity of the Preferred
Securities, the enforceability of the Trust Agreement and the creation of the
Issuer Trust will be passed upon by
52
<PAGE> 55
Richards, Layton & Finger, special Delaware counsel to the Company and the
Issuer Trust. The validity of the Guarantee and the Junior Subordinated
Debentures will be passed upon for the Company by the Ledgewood Law Firm, P.C.,
Philadelphia, Pennsylvania, counsel to the Company, and for the Underwriter by
Arnold & Porter, Washington, D.C. and New York, New York.
EXPERTS
The consolidated financial statements of the Company as of and for the
years ended December 31, 1995 and 1994, appearing in the 1995 Annual Report of
the Company to its Shareholders and included in the Annual Report on Form 10-K
for the year ended December 31, 1995 are incorporated by reference in this
Prospectus or in the Registration Statement of which this Prospectus forms a
part, have been audited by Grant Thornton LLP, independent certified public
accountants, whose reports thereon appears therein, and in reliance upon such
reports of Grant Thornton LLP, given upon the authority of such firm as experts
in accounting and auditing.
The consolidated financial statements of the Company for the year ended
December 31, 1993 incorporated by reference to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995 have been so incorporated in
reliance on the report of Price Waterhouse LLP, independent accountants, given
on the authority of said firm as experts in auditing and accounting.
53
<PAGE> 56
- ------------------------------------------------------
- ------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE OFFERING MADE HEREBY
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER
TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON OR BY ANYONE IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. 4
Incorporation of Certain Documents by
Reference........................... 4
Prospectus Summary.................... 5
Risk Factors.......................... 7
JeffBanks, Inc........................ 12
Selected Consolidated Financial Data
and Other Information............... 14
Recent Developments................... 16
JBI Capital Trust I................... 17
Use of Proceeds....................... 17
Capitalization........................ 19
Accounting Treatment.................. 20
Description of Preferred Securities... 20
Description of Junior Subordinated
Debentures.......................... 33
Description of Guarantee.............. 41
Relationship Among the Capital
Securities, the Junior Subordinated
Debentures and the Guarantee........ 44
Certain Federal Income Tax
Consequences........................ 45
Certain ERISA Considerations.......... 49
Supervision, Regulation and Other
Matters............................. 49
Underwriting.......................... 52
Validity of Securities................ 52
Experts............................... 53
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
LOGO
$22,000,000
JBI Capital Trust I
% PREFERRED SECURITIES
(Liquidation Amount
$25 per Preferred Security)
fully and unconditionally guaranteed, to the
extent described herein, by
JeffBanks, Inc.
-------------------
PROSPECTUS
-------------------
ALEX. BROWN & SONS
INCORPORATED
, 1997
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 57
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following expenses will be incurred in connection with the issuance and
distribution of the Securities being registered, other than underwriting
discounts and commissions.
To be borne by the Company:
<TABLE>
<S> <C>
Registration Fee.......................................................... $ 7,667
Legal Services............................................................ 75,000*
Printing and Engraving.................................................... 60,000*
Accounting Fees........................................................... 20,000*
Trustee Fees and Expenses................................................. 20,000*
Blue Sky Fees and Expenses................................................ 10,000*
Miscellaneous............................................................. 7,333*
------
Total................................................................ 200,000
======
</TABLE>
- ---------------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Sections 1741-1743 of the Pennsylvania Business Corporation Law of 1988
(Act of December 21, 1988, P.L. 1444) ("1988 BCL") provide that a business
corporation may indemnify directors and officers against liabilities they may
incur in such capacities provided certain standards are met, including good
faith and the belief that the particular action is in the best interests of the
corporation. In general, this power to indemnify does not exist in the case of
actions against a director or officer by or in the right of the corporation if
the person entitled to indemnification shall have been adjudged to be liable for
negligence or misconduct in the performance of his duties. A corporation is
required to indemnify directors and officers against expenses they may incur in
defending actions against them in such capacities if they are successful on the
merits or otherwise in the defense of such actions.
Section 1746 of the 1988 BCL provides that the foregoing provisions shall
not be deemed exclusive of any other rights to which a person seeking
indemnification may be entitled under, among other things, any by-law provision,
provided that no indemnification may be made in any case where the act or
failure to act giving rise to the claim for indemnification is determined by a
court to have constituted willful misconduct or recklessness.
The By-laws of the Company provide that it shall indemnify an officer or
director against any liability incurred in his or her capacity as an officer,
director, employee or agent of the Company, or as an officer, director,
employee, agent, fiduciary or trustee of another entity on behalf of the
Company, except where (i) such indemnification is expressly prohibited by
applicable law or (ii) where the conduct of such person has been finally
determined by an arbitration proceeding for such purpose, or otherwise, to
constitute willful misconduct or recklessness or to be otherwise unlawful.
ITEM 16. EXHIBITS
The exhibits listed on the Exhibit Index on page II-6 of this Registration
Statement were previously filed or are filed herewith.
II-1
<PAGE> 58
ITEM 17. UNDERTAKINGS
Each of the undersigned Registrants hereby undertakes:
1. That, for purposes of determining any liability under the Securities Act
of 1933 as amended (the "Securities Act"), each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
2. That, for purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
3. That, for the purpose of determining any 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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions set forth in Item 15 hereof, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission ("Commission") such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceedings) is asserted by such director, officer or controlling person
in connection with the securities being registered and the Commission remains of
the same opinion, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-2
<PAGE> 59
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Philadelphia, Pennsylvania, on this 24th day of
January, 1997.
JEFFBANKS, INC.
By /s/ BETSY Z. COHEN
------------------------------------
Betsy Z. Cohen, Chairman
and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------- -----------------
<C> <S> <C>
/s/ BETSY Z. COHEN Chairman of the Board of January 24, 1997
- ------------------------------------------ Directors, Chief Executive
Betsy Z. Cohen Officer and Director
(Principal Executive Officer)
EDWARD E. COHEN* Chairman of the Executive January 24, 1997
- ------------------------------------------ Committee and Director
Edward E. Cohen
PAUL FRENKIEL* Senior Vice President, Chief January 24, 1997
- ------------------------------------------ Financial Officer and
Paul Frenkiel Treasurer (Principal
Financial and Accounting
Officer)
HERSH KOZLOV* Director January 24, 1997
- ------------------------------------------
Hersh Kozlov
WILLIAM H. LAMB* Secretary and Director January 24, 1997
- ------------------------------------------
William H. Lamb
ARTHUR MAKADON* Director January 24, 1997
- ------------------------------------------
Arthur Makadon
P. SHERRILL NEFF* Director January 24, 1997
- ------------------------------------------
P. Sherrill Neff
JAMES R. SIBEL* Executive Vice President, Chief January 24, 1997
- ------------------------------------------ Credit Officer and Director
James R. Sibel
</TABLE>
II-3
<PAGE> 60
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------- -----------------
<C> <S> <C>
HARMON S. SPOLAN* President and Director January 24, 1997
- ------------------------------------------
Harmon S. Spolan
WILLIAM D. WHITE* Director January 24, 1997
- ------------------------------------------
William D. White
*By /s/ BETSY Z. COHEN
- ------------------------------------------
Betsy Z. Cohen
(Attorney-in-Fact)
</TABLE>
II-4
<PAGE> 61
Pursuant to the requirements of the Securities Act of 1933, the Trust has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Philadelphia, State of Pennsylvania on January 24, 1997.
JBI CAPITAL TRUST I
By JEFFBANKS, INC.,
as Depositor
By /s/ BETSY Z. COHEN
------------------------------------
Chief Executive Officer
II-5
<PAGE> 62
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -------------------------------------------------------------------
<C> <C> <S> <C>
1.1 -- Form of Underwriting Agreement, filed herewith.
4.1 -- Form of Junior Subordinated Indenture, filed herewith.
4.2 -- Form of Trust Agreement, filed herewith.
4.3 -- Form of Amended and Restated Trust Agreement, filed herewith.
4.4 -- Form of Guarantee, filed herewith.
5.1 -- Opinion of Richards, Layton & Finger, filed herewith.
5.2 -- Opinion of Ledgewood Law Firm, P.C., filed herewith.
8.1 -- Tax opinion of the Ledgewood Law Firm, P.C., filed herewith.
23.1 -- Consent of Grant Thornton LLP, previously filed.
23.2 -- Consent of Price Waterhouse LLP, previously filed.
23.3 -- Consent of Richards, Layton & Finger, included in Exhibit 5.1.
23.4 -- Consent of the Ledgewood Law Firm, P.C., included in Exhibit 5.2.
24.1 -- Powers of Attorney of certain directors and officers of JeffBanks,
Inc., previously filed.
25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of Bankers Trust Company, as trustee under the Junior
Subordinated Indenture, the Amended and Restated Trust Agreement
and the Guarantee Agreement relating to JBI Capital Trust I, filed
herewith.
</TABLE>
II-6
<PAGE> 1
EXHIBIT 1.1
JBI CAPITAL TRUST I
$22,000,000
____% Preferred Securities
(Liquidation Amount $25 per Preferred Security)
by
ALEX. BROWN & SONS INCORPORATED
UNDERWRITING AGREEMENT
_______ __, 1997
ALEX. BROWN & SONS INCORPORATED
1 South Street
Baltimore, Maryland 21202
Dear Sirs:
JBI Capital Trust I (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 JeffBanks, Inc., a Pennsylvania corporation
(the "Company"), as depositor of the Trust and as guarantor, propose, upon
the terms and conditions set forth herein, to issue and sell to Alex.
Brown & Sons Incorporated (the "Underwriter") an aggregate liquidation
amount of $22,000,000 (the "Firm Securities") of the Trust's ____%
preferred securities (the "Preferred Securities"). The Trust and the
Company also propose to issue and sell to the Underwriter, at the
Underwriter's option, up to an additional $3,300,000 aggregate Liquidation
Amount of Preferred Securities (the "Option Securities") as set forth
herein. The term "Preferred Securities" as used herein, unless indicated
otherwise, shall mean the Firm Securities and the Option Securities.
The Preferred Securities and Common Securities (as defined herein)
are to be issued pursuant to the terms of an Amended and Restated Trust
Agreement dated as of _______ __, 1997 (the "Trust Agreement"), among the
Company, as depositor, and, together with the Trust, the "Offerors," and
Bankers Trust Company ("Trust Company"), a New York banking corporation,
as property trustee ("Property Trustee") and Bankers Trust (Delaware)
("Trust Delaware"), a Delaware banking corporation, as Delaware trustee
("Delaware Trustee")
<PAGE> 2
- 2 -
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 Preferred Securities Guarantee Agreement dated
as of _______ __, 1997 (the "Guarantee Agreement"), between the Company
and the Trust Company, as Trustee (the "Guarantee Trustee"). The assets
of the Trust will consist of ____% junior subordinated deferrable interest
debentures, due __________, 2027 (the "Subordinated Debentures") of the
Company which will be issued under an indenture dated as of _______ __,
1997 (the "Indenture"), between the Company and the Trust Company, as
Trustee (the "Indenture Trustee"). Under certain circumstances, the
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 the Subordinated Debentures.
The Company and the Trust have filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form
S-3 (No. 333-20111) and a related preliminary prospectus for the
registration of the Preferred Securities and the Subordinated Debentures
under the Securities Act of 1933, as amended (the "Securities Act"), and
the rules and regulations thereunder (the "Securities Act Regulations").
The Company and the Trust have prepared and filed such amendments thereto,
if any, and such amended preliminary prospectuses, if any, as may have
been required to the date hereof, and will file such additional amendments
thereto and such amended prospectuses as may hereafter be required.
The registration statement has been declared effective under the
Securities Act by the Commission. The registration statement as amended
at the time it became effective (including the Prospectus and the
documents incorporated by reference therein pursuant the section therein
entitled "Incorporation of Certain Documents by Reference" and all
information deemed to be a part of the registration statement at the time
it became effective pursuant to Rule 430A(b) of the Securities Act
Regulations) is hereinafter called the "Registration Statement," except
that, if the Company files a post-effective amendment to such registration
statement
<PAGE> 3
- 3 -
which becomes effective prior to the Closing Date (as defined below),
"Registration Statement" shall refer to such registration statement as so
amended. Each prospectus included in the registration statement, or
amendments thereof, before it became effective under the Securities Act
and any prospectus filed with the Commission by the Company with the
consent of the Underwriter pursuant to Rule 424(a) of the Securities Act
Regulations (including the documents incorporated by reference therein) is
hereinafter called the "Preliminary Prospectus." The term "Prospectus"
means the final prospectus (including the documents incorporated by
reference therein), as first filed with the Commission pursuant to
paragraph (1) or (4) of Rule 424(b) of the Securities Act Regulations.
The Commission has not issued any order preventing or suspending the use
of any Preliminary Prospectus. The Company hereby agrees with the
Underwriter as follows:
SECTION 1. Representations and Warranties.
a. Each of the Offerors represents and warrants to the Underwriter as
follows:
(i) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements thereto will, when they
become effective or are filed with the Commission, as the case may
be, conform, in all material respects with the requirements of the
Securities Act, with respect to the documents incorporated by
reference, the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the applicable rules and regulations under
said acts; the Trust Agreement, the Guarantee Agreement, and the
Indenture conform with the requirements of the Trust Indenture Act,
and the applicable rules and regulations thereunder; the
Registration Statement did not, and any amendment thereto will not,
in each case as of the applicable effective date, contain any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, not
misleading; and the Prospectus and any amendment or supplement
thereto will not, as of the applicable filing date and at the
Closing Date (as hereinafter defined), contain any untrue statement
of a material fact or omit to state a material fact necessary in
order to make the statements made, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the
<PAGE> 4
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representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement or
Prospectus made in reliance upon and in conformity with information
furnished to the Trust or the Company by or on behalf of any
Underwriter in writing expressly for use in the Registration
Statement or Prospectus.
(ii) The documents incorporated by reference in the
Prospectus pursuant to the section therein entitled "Incorporation
of Certain Documents by Reference," at the time they were filed with
the Commission, complied in all material respects with the
requirements of the Securities Act, the Securities Act Regulations
and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder,
and did not contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements
made, in the light of the circumstances under which they were made,
not misleading.
(iii) Neither the Company nor the Trust is an open-end
investment company, unit investment trust or face-amount
certificate company that is, or is required to be, registered under
Section 8 of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), nor is either a closed-end investment
company required to be registered, but not registered, thereunder.
(iv) Each report filed by the Company with the Commission
under the Exchange Act, and the rules and regulations promulgated
thereunder, and incorporated by reference in the Registration
Statement, compiled when filed with the Commission as to form in
all material respects with the requirements of the Exchange Act and
the applicable rules and regulations thereunder.
(v) The Trust and the Company meet the requirements for the
use of Form S-3 under the Securities Act.
(vi) The Company has been duly incorporated and remains a
subsisting corporation in good standing under the laws of the
Commonwealth of Pennsylvania with corporate
<PAGE> 5
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power and authority to own and lease its properties and to conduct
its business as described in the Prospectus and to enter into and
perform its obligations under this Agreement, the Trust Agreement,
the Guarantee Agreement, the Indenture and the Preferred Securities;
the Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction, if any, in
which its ownership or leasing of properties or the conduct of its
business requires such qualification, except where the failure to
so qualify would not have a material adverse effect on the conduct
of the business, condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise; and the Company is duly
registered as a bank holding company under the Bank Holding Company
Act of 1956, as amended.
(vii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse
change in the condition, financial or otherwise, of the Company and
its subsidiaries considered as one enterprise, or in the 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, (B) there have been no material
transactions entered into by the Company or its subsidiaries other
than those in the ordinary course of business, and (C) the Company
has not sustained any material loss or interference with its
assets, businesses or properties (whether owned or leased) from
fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree.
(viii) The Preferred Securities have been duly and validly
authorized for issuance and sale to the Underwriter pursuant to
this Agreement and, when executed and authenticated in accordance
with the terms of the Trust Agreement and delivered to the
Underwriter against payment of the consideration set forth herein,
will constitute valid and legally binding obligations of the Trust
enforceable in accordance with their
<PAGE> 6
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terms and entitled to the benefits provided by the Trust Agreement.
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
Subordinated Debentures have been duly and validly authorized for
delivery by the Company and when duly authenticated in accordance
with the terms of the Indenture and delivered to the Trust against
payment of the consideration set forth herein, will constitute
valid and legally binding obligations of the Company enforceable
against the Company in accordance with their 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 entitled to
the benefits provided by the Indenture. The Indenture has been
duly authorized and, when executed by the proper officers of the
Company and delivered by the Company, will have been duly executed
and delivered by the Company and will constitute the valid and
legally binding instrument of the Company, 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 Trust Agreement, the
Guarantee Agreement, and the Indenture have been duly qualified
under the Trust Indenture Act; and the Preferred Securities, the
Trust Agreement, the Guarantee Agreement, the Subordinated
Debentures and the Indenture conform in all material respects to
the descriptions thereof contained in the Registration Statement
and the Prospectus.
<PAGE> 7
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(ix) This Agreement has been duly authorized, executed and
delivered by the Trust and the Company and constitutes the valid
and binding agreement of the Trust and the Company enforceable
against the Trust and the Company in accordance with its terms
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally, or by general equitable
principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
(x) Neither the Trust, nor the Company or any of its
subsidiaries is in violation of its charter or in default in the
performance or observance of any material obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which
it is a party or by which it or any of its properties may be bound
and which is material to the either the Trust or the Company and
its subsidiaries considered as one enterprise and the execution and
delivery of this Agreement, the Trust Agreement, the Guarantee
Agreement, and the Indenture, the issue and sale of the Preferred
Securities, the issue and sale of the Subordinated Debentures, the
compliance by the Trust and the Company with the provisions of the
Preferred Securities and the Subordinated Debentures, this
Agreement, the Trust Agreement, the Guarantee Agreement, and the
Indenture, and the consummation of the transactions herein and
therein contemplated will not conflict with or constitute a breach
of, or default under, the organization documents of the Trust or 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 to which the Trust or the Company
or any of its subsidiaries is a party or by which it or any of its
properties may be bound and which is material to the Trust or the
Company and its subsidiaries considered as one enterprise, nor will
such action result in any violation on the part of the Trust or the
Company or its subsidiaries of any applicable law or regulation or
of any applicable administrative, regulatory or court decree, which
violation is material to the Trust or the Company.
<PAGE> 8
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(xi) There are no actions, suits, claims or proceedings
pending or, to the knowledge of the Trust or the Company,
threatened against the Trust or the Company or any of its
subsidiaries before any court or administrative agency or otherwise
which are required to be disclosed in the Registration Statement
and are not so disclosed which, if determined adversely to the
Trust or the Company or any of its subsidiaries would individually
or in the aggregate have a material adverse effect on the business,
condition (financial and otherwise), earnings, business affairs or
business prospects of the Trust or the Company and its
subsidiaries, considered as one enterprise or prevent the
consummation of the transactions contemplated hereby.
(xii) The Commission has not issued an order preventing or
suspending the use of the Prospectus, nor instituted proceedings
for that purpose.
(xiii) The independent certified public accountants who
audited the consolidated financial statements included or
incorporated by reference in the Prospectus are independent public
accountants as required by the Securities Act and the Securities
Act Regulations.
(xiv) The consolidated financial statements, including the
notes thereto and the supporting schedules, included or
incorporated by reference in the Prospectus present fairly, the
financial position, results of operations and cash flows of the
Company and its subsidiaries at the dates indicated, and the
results of their operations for the periods specified; such
consolidated financial statements have been prepared in conformity
with generally accepted accounting principles applied on a
consistent basis except as otherwise stated therein.
(xv) The Company and it subsidiaries have good and
marketable title to all of the properties and assets owned by them
reflected in the consolidated financial statements (or as described
in the Prospectus), subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except those reflected in such consolidated
<PAGE> 9
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financial statements (or as described in the Prospectus or which
are not material in amount).
(xvi) The Company and its subsidiaries have filed all
federal, state and local tax returns which have been required to be
filed and have paid all taxes indicated by said returns and all
assessments received by them or any of them to the extent that such
taxes have become due and are not being contested in good faith.
All tax liabilities have been adequately provided for in the
consolidated financial statements of the Company.
(xvii) 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, or the
Indenture, or the issuance and sale of the Preferred Securities, the
issuance and sale of the Subordinated Debentures, or the
consummation by the Trust and 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, or
will have been obtained at the Closing Date, under the Securities
Act, the Exchange Act and the Trust Indenture Act and such as may
be required under the blue sky or securities laws of various states
in connection with the offering of the Preferred Securities.
(xviii) The Company and its subsidiaries possess all material
licenses, certificates, authorities or permits issued by the
appropriate State or Federal regulatory agencies or bodies
necessary to conduct their businesses as described in the
Prospectus, and neither the Company nor its subsidiaries have
received any notice of proceedings relating to the revocation or
modification of any such license, certificate, authority or permit
which, individually or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a material
adverse effect on the conduct of the business, condition (financial
or otherwise), earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise.
Neither the Company nor any of its subsidiaries is party to or
otherwise the
<PAGE> 10
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subject to any consent decree, memorandum of understanding, written
commitment or other supervisory agreement with the Board of
Governors of the Federal Reserve System or any Federal Reserve Bank
(the "Federal Reserve"), the Federal Deposit Insurance Corporation
("FDIC"), the Office of the Comptroller of the Currency, or any
other federal or state authority or agency responsible for the
supervision, regulation or insurance of depository institutions or
their holding companies.
(xix) There are no contracts or other documents which are
required to be filed as exhibits to the Registration Statement by
the Securities Act or by the Securities Act Regulations which have
not been filed as exhibits to the Registration Statement.
(xx) The Preferred Securities have been approved for listing
on the Nasdaq National Market.
(xxi) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder.
(xxii) The Company and its subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the
value of their respective properties and as is customary for
companies engaged in similar businesses.
b. Any certificate signed by any officer of the Trust or the
Company and delivered to you or to your counsel shall be deemed a
representation and warranty by the Trust or the Company to you as to the
matters covered thereby.
SECTION 2. Sale and Delivery to Underwriter, Closing.
On the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, the Trust and
the Company, as the case may be, agree that the Trust will sell to the
Underwriter, and
<PAGE> 11
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the Underwriter agrees to purchase from the Trust, the Firm Securities, at
a purchase price of $____ per Firm Security.
Payment of the purchase price for, and delivery of, the Firm
Securities shall be made at the offices of Arnold & Porter, 555 Twelfth
Street, N.W., Washington, D.C. 20004, or at such other place as shall be
agreed upon by you, the Trust and the Company, at 10:00 A.M. Eastern
Standard Time, on the third business day (unless postponed in accordance
with the provisions of Section 9) following the date of this Agreement, or
such other time not later than ten business days after such date as shall
be agreed upon by the Underwriter, the Trust and the Company (such time
and date of payment and delivery being herein called the "Closing Date").
As compensation for the commitments of the Underwriter contained in
this Section 2, the Company hereby agrees to pay to the Underwriter an
amount equal to $__ per Firm Security times the total number of Firm
Securities purchased by the Underwriter on the Closing Date as commissions
for the sale of such Firm Securities under this Agreement. Such payment
will be made on the Closing Date with respect to the Firm Securities.
Payment for the Firm Securities shall be made to the Trust by wire
transfer of immediately available funds, against delivery to the
Underwriter of the Firm Securities to be purchased by it. The Firm
Securities shall be issued in the form of one or more fully registered
global notes (the "Global Notes") in book-entry form in such denominations
and registered in the name of the nominee of The Depository Trust Company
(the "Depository") or in such names as the Underwriter may request in
writing at least two business days before the Closing Date. The Global
Notes representing the Firm Securities shall be made available for
examination by the Underwriter not later than 10:00 A.M. Eastern Standard
Time on the last business day prior to the Closing Date.
In addition, upon written notice from the Underwriter to the Trust
from time to time prior to 9:00 P.M., Eastern Standard Time, on the 30th
day after the date of the Prospectus (or, if such 30th day shall be a
Saturday, Sunday or a holiday, on the next business day thereafter), the
Underwriter shall have the right to purchase all or any portion of the
Option Securities at
<PAGE> 12
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the same purchase price as the Firm Securities, plus accrued interest, if
any, from the Closing Date to the Option Closing Date (as defined herein).
No Option Securities shall be sold or delivered unless the Firm Securities
previously have been, or simultaneously are, sold and delivered. Option
Securities may be purchased only for the purpose of covering over-
allotments made in connection with the offering of the Firm Securities.
Each time for the delivery of and payment for the Option
Securities, being herein referred to as an "Option Closing Date," which
may be the Closing Date, shall be determined by the Underwriter, but shall
be issued not later than five (5) full business days after written notice
to the Trust of the Underwriter's election to purchase Option Securities
is given. Each payment of the purchase price for, and delivery of, the
Option Securities shall be made at each Option Closing Date at such
offices as is designated by the Underwriter.
As compensation for the commitments of the Underwriter contained in
this Section 2, the Company hereby agrees to pay to the Underwriter an
amount equal to $__ per Option Security times the total number of Option
Securities purchased by the Underwriter on the Option Closing Date as
commissions for the sale of such Option Securities under this Agreement.
Such payment will be made on the Option Closing Date with respect to the
Option Securities.
Each payment for Option Securities shall be made to the Trust by
wire transfer of immediately available funds, against delivery to the
Underwriter of such Option Securities. The Option Securities shall be
issued in the form of one or more fully registered Global Notes in
book-entry form in such denominations and registered in the name of the
nominee of the Depository or in such names as the Underwriter may request
in writing at least two days before the Option Closing Date. The Global
Notes representing the Option Securities shall be made available for
examination by the Underwriter not later than 10:00 A.M. Eastern Standard
Time on the last business day prior to the Option Closing Date.
SECTION 3. Offering by the Underwriter. The Trust and the Company
are advised that the Underwriter proposes to make a public offering of the
Preferred Securities, on the terms and conditions set forth in the
<PAGE> 13
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Registration Statement from time to time as and when the Underwriter deems
advisable after the Registration Statement becomes effective.
SECTION 4. Covenants of the Offerors. Each of the Trust and the
Company covenants with the Underwriter as follows:
a. The Trust and the Company will prepare the Prospectus in a
form approved by the Underwriter and will file such Prospectus with the
Commission pursuant to subparagraph (1) or (4) of Rule 424(b) not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement. The Trust will
notify the Underwriter immediately, and confirm the notice in writing, (i)
of the effectiveness of the Registration Statement and any amendment
thereto (including any post-effective amendment), and of the filing of the
Prospectus pursuant to Rule 424(b), (ii) of the receipt of any comments
from the Commission, (iii) of any request by the Commission for any
amendment to the Registration Statement or any amendment or supplement to
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 the Prospectus, of the suspension of the
qualification of the securities for offering or sale in any jurisdiction,
or of the initiation or threatening of any proceeding for such purpose.
The Trust and the Company will make every reasonable effort to prevent the
issuance of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus or suspending any such
qualification and, if any such order is issued, to obtain the lifting
thereof at the earliest possible moment.
b. The Trust and the Company will deliver to the Underwriter
notice of their intention to prepare or file any amendment to the
Registration Statement relating to the Preferred Securities (including any
post-effective amendment) or any amendment or supplement to the Prospectus
(including documents deemed to be incorporated by reference into the
Prospectus and including any revised prospectus which the Trust and the
Company propose for use by the Underwriter in connection with the offering
of the Preferred Securities which differs from the prospectus on file at
the Commission at the time the Registration Statement becomes effective,
<PAGE> 14
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whether or not such revised prospectus is required to be filed pursuant to
Rule 424(b) of the Securities Act Regulations), will furnish the
Underwriter and counsel for the Underwriter with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such amendment or
supplement or use any such prospectus to which the Underwriter or counsel
for the Underwriter shall reasonably object.
c. The Trust and the Company will deliver to the Underwriter
one manually executed copy of the Registration Statement as originally
filed and of each amendment thereto (including exhibits filed therewith or
incorporated by reference therein and documents incorporated by reference
into the Prospectus), such number of conformed copies of the Registration
Statement as originally filed and of each amendment thereto (including
documents incorporated by reference into the Prospectus but without
exhibits) as such Underwriter may reasonably request and copies of each
Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus.
d. The Trust and the Company will furnish to the Underwriter,
from time to time during the period when the Prospectus is required to be
delivered under the Securities Act, such number of copies of the
Prospectus (as amended or supplemented, if applicable) as you may
reasonably request for the purposes contemplated by the Securities Act or
the Securities Act Regulations.
e. If any event shall occur as a result of which it is
necessary, in the reasonable opinion of counsel for the Underwriter, to
amend or supplement the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, the Trust and the Company will forthwith amend
or supplement the Prospectus by preparing and furnishing to the
Underwriter a reasonable number of copies of an amendment of or supplement
to the Prospectus (in form and substance satisfactory to counsel for the
Underwriter) so that, as so amended or supplemented, the Prospectus will
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in the light
of the circumstances existing at the time it is delivered to a purchaser,
not misleading.
<PAGE> 15
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f. The Trust and the Company, during the period when the
Prospectus is required to be delivered under the Securities Act, will file
promptly all documents required to be filed with the Commission pursuant
to Section 13, 14 or 15 of the Exchange Act subsequent to the time the
Registration Statement becomes effective.
g. Both the Trust and the Company will endeavor, in cooperation
with the Underwriter, to qualify the Preferred Securities for offering and
sale under the applicable securities laws of such states and other
jurisdictions of the United States as the Underwriter may designate, and
will maintain such qualifications in effect for as long as may be required
for the distribution of the Preferred Securities, except that neither the
Trust nor the Company shall be required in connection therewith to qualify
as a foreign corporation or to execute a general consent to service of
process in any state or other jurisdiction. The Trust and 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.
h. The Company will make generally available to its security
holders, as soon as it is practicable to do so, but in any event not later
than 15 months after the effective date of the Registration Statement, an
earnings statement (which need not be audited) in reasonable detail,
covering a period of at least 12 consecutive months beginning on the first
day of the first full fiscal quarter after the effective date of the
Registration Statement, which earnings statement shall satisfy the
requirements of Section 11(a) of the Securities Act and Rule 158 of the
Securities Act Regulations and will advise you in writing when such
statement has been so made available. If such fiscal quarter is the last
fiscal quarter of the Trust's fiscal year, such earnings statement shall
be made available not later than 90 days after the close of the period
covered thereby and in all other cases shall be made available not later
than 45 days after the close of the period covered thereby.
i. The Trust and the Company will take such action as may be
necessary to comply with the rules and regulations of the Nasdaq National
Market in respect of the offering of the Preferred Securities.
j. The Trust and the Company, from the date hereof until the
Closing Date (including any Option
<PAGE> 16
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Closing Date), will not offer, sell, contract to sell or otherwise dispose
of any securities issued or guaranteed by the Trust or the Company that in
the reasonable judgment of the Underwriter are substantially similar to
the Preferred Securities, without the prior written consent of the
Underwriter.
k. For a period of five years (but not beyond any such date on
which no Securities shall be outstanding) after the Closing Date, the
Trust and the Company will furnish to the Underwriter copies of all
reports and communications delivered to the Trust's shareholders or to
holders of the Preferred Securities and will also furnish copies of all
reports (excluding exhibits) filed with the Commission on Forms 8-K, 10-Q
and 10-K, and all other reports and information furnished to its
shareholders generally, not later than the time such reports are first
furnished to its shareholders generally.
l. The Trust shall apply the net proceeds of its sale of the
Preferred Securities, combined with the entire proceeds from the sale by
the Trust to the Company of the Trust's Common Securities, to purchase an
equivalent amount of the Subordinated Debentures. All the net proceeds to
be received by the Company from the sale of the Subordinated Debentures
will be used for general corporate purposes, as described more fully in
the Prospectus.
m. Neither the Company nor the Trust shall enter into any
contractual agreement with respect to the distribution of the Preferred
Securities except for the arrangements with the Underwriter.
SECTION 5. Costs and Expenses. The Company will pay all costs,
expenses and fees incident to the performance of its obligations under this
Agreement (except for the fees and disbursements of counsel for the
Underwriter other than pursuant to item (vi) of this Section 5), including:
(i) the printing and filing of the Registration Statement as originally
filed and any amendments and exhibits thereto, (ii) the filing fee of the
National Association of Securities Dealers, Inc. and expenses relating to
any review of the offering and listing of the Preferred Securities on the
Nasdaq National Market, (iii) all expenses (including reasonable fees and
disbursements of counsel to the Company and the Trust) payable pursuant to
Section 4 of this Agreement, (iv) all costs and expenses incurred in
connection with
<PAGE> 17
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the preparation, issuance and delivery of the Preferred Securities to the
Underwriter, (v) the fees and disbursements of the Trust's and the
Company's counsel and accountants, (vi) the expenses in connection with the
qualification of the Preferred Securities under state securities laws in
accordance with the provisions of Section 4(g), including filing fees and
the reasonable fees and disbursements of counsel to the Underwriter in
connection therewith and in connection with the preparation of the
preliminary and final Blue Sky memoranda and Legal Investment Surveys,
(vii) the printing and delivery to the Underwriter of copies of the
preliminary and final Blue sky memoranda and Legal Investment surveys,
(viii) all costs and expenses incurred in the preparation and the printing
(including word processing and duplication costs) of the Preferred
Securities, the Indenture, the Guarantee Agreement, the Trust Agreement and
all other documents relating to the issuance, purchase and initial resale
of the Preferred Securities, and (ix) the fees and expenses of the Property
Trustee, the Delaware Trustee, the Indenture Trustee, and the Guarantee
Trustee, and any agent of the Property Trustee, the Delaware Trustee, the
Indenture Trustee, and the Guarantee Trustee, and the fees and
disbursements of the Property Trustee's counsel, in connection with the
Trust Agreement and the Preferred Securities.
If this Agreement is terminated by the Underwriter in accordance
with the provisions of Section 6 or Section 9, the Company shall reimburse
the Underwriter for all of their reasonable out-of-pocket expenses,
including the reasonable fees and disbursements of counsel for the
Underwriter, incurred in connection with investigating, marketing and
proposing to market the Preferred Securities.
SECTION 6. Conditions of Underwriter's Obligations. The
obligations of the Underwriter to purchase and pay for the Firm Securities
at the Closing Date and the Option Securities at each Option Closing Date
are subject to the accuracy of the representations and warranties of the
Trust and the Company herein contained at and as of the date hereof and
the Closing Date and at each Option Closing Date, to the performance by
the Trust and the Company of their respective obligations hereunder, and
to the following further conditions:
a. The Prospectus shall have been timely filed with the
Commission in accordance with Section
<PAGE> 18
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4(a); and at the Closing Date and each Option Closing Date, no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued under the Securities Act or proceedings
therefor initiated or threatened by the Commission; and any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus shall have been complied with and there shall
not have come to the attention of the Underwriter any facts that would
cause the Underwriter to believe that the Prospectus, at the time it was
required to be delivered to a purchaser of the Preferred Securities,
contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements made, in light of
the circumstances existing at such time, not misleading.
b. On the Closing Date you shall have received:
(i) The favorable opinion, dated as of the Closing Date and
any Option Closing Date, of Ledgewood Law Firm, P.C. counsel for the
Company, in form and substance substantially in the form attached
hereto as Exhibit A.
In rendering such opinion, counsel may state that they are
passing only on matters of Pennsylvania and United States Federal
law. In rendering such opinion, counsel may rely upon an opinion
or opinions, each dated the Closing Date, of other counsel retained
by them or the Company as to laws of any jurisdiction other than
the United States or the Commonwealth of Pennsylvania, provided
that (A) such reliance is expressly authorized by each opinion so
relied upon and a copy of each such opinion is delivered to the
Underwriter, and (B) counsel shall state in their opinion that they
and the Underwriter is justified in relying thereon. Insofar as
such opinions involve factual matters, such counsel may rely, to
the extent such counsel deems proper, upon certificates of officers
of the Company, its subsidiaries and the Trust and certificates of
public officials.
(ii) The favorable opinion, dated the Closing Date, of White
& Case, counsel to the Trust Company and Trust Delaware,
substantially in the form attached hereto as Exhibit B.
<PAGE> 19
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(iii) The favorable opinion, dated the Closing Date, of
Richards, Layton & Finger, special Delaware counsel to the Company
and the Trust, substantially to the effect and in the form attached
hereto as Exhibit C.
(iv) The favorable opinion, dated the Closing Date, Arnold &
Porter, counsel to the Underwriter as to such matters as the
Underwriter shall reasonably request.
In rendering such opinion, counsel may rely upon an opinion or
opinions, each dated the Closing Date, of other counsel retained by
them or the Company as to laws of any jurisdiction other than the
United States or the State of New York, provided that (A) such
reliance is expressly authorized by each opinion so relied upon and
a copy of each such opinion is delivered to the Underwriter, and
(B) counsel shall state in their opinion that they believe that
they and the Underwriter are justified in relying thereon. Insofar
as such opinions involve factual matters, such counsel may rely, to
the extent such counsel deems proper, upon certificates of officers
of the Company, its subsidiaries and the Trust and certificates of
public officials.
c. At the time of the execution of this Agreement, the
Underwriter shall have received from Grant Thornton LLP a letter
dated such date, in form and substance satisfactory to the Underwriter, to
the effect that (i) they are independent public accountants as required by
the Securities Act and the Securities Act Regulations; (ii) it is their
opinion that the financial statements included or incorporated by
reference in the Registration Statement and covered by their opinion
therein comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Exchange Act and the
applicable rules and regulations thereunder; (iii) based upon limited
procedures set forth in detail in such letter, nothing has come to their
attention which causes them to believe that during the period from
December 31, 1995 to a specified date not more than five days prior to
the date of this Agreement, there has been any change in the capital stock
or long-term debt of the Company or its subsidiaries or any decrease in
consolidated total assets of the Company and its subsidiaries as compared
with the amounts shown in the
<PAGE> 20
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December 31, 1995 consolidated balance sheet incorporated by reference
in the Registration Statement, or any decrease, as compared with the
corresponding period in the preceding year, in net income or net interest
income of the Company and its subsidiaries on a consolidated basis, except
in each case as set forth or contemplated in the Registration Statement;
(iv) they have read in the Registration Statement and certain dollar
amounts, percentages and other financial information specified by the
Underwriter which is included or incorporated by reference in the
Registration Statement and have performed the procedures set forth in
detail in such letter and have found such amounts, percentages or other
financial information to be in agreement with the relevant accounting and
financial records of the Company and its subsidiaries.
At the time of the execution of this Agreement, the Underwriter
shall have received from Price Waterhouse LLP a letter dated such date,
in form and substance satisfactory to the Underwriter, addressing items
(i) and (ii) of the preceding paragraph.
d. On the Closing Date and any Option Closing Date, the
Underwriter shall have received from Grant Thornton LLP a letter,
dated as of the Closing Date or such Option Closing Date, to the effect
that they reaffirm the statements made in the letter furnished pursuant to
paragraph (c) of this Section, except that the "specified date" referred
to shall be a date not more than five days prior to the Closing Date or
Option Closing Date, as the case may be.
On the Closing Date and any Option Closing Date, the Underwriter
shall have received from Price Waterhouse LLP a letter, dated as of the
Closing Date or such Option Closing Date, to the effect that they reaffirm
the statements made in the letter furnished pursuant to paragraph (c) of
this Section.
e. On the Closing Date, a certificate signed by the Chairman
of the Board, the President, a Vice Chairman of the Board or any Executive
or Senior Vice President and the principal financial or accounting officer
of the Company, dated the Closing Date, to the effect that the signers of
such certificate have carefully examined the Registration Statement and
this Agreement and that:
(i) The representations and warranties of the Company in this
Agreement are true and correct in
<PAGE> 21
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all material respects on and as of the Closing Date with the same
effect as if made on the Closing Date and the Company has complied
in all material respects with all the agreements and satisfied in
all material respects all the conditions on its part to be
performed or satisfied at or prior to the Closing Date; and
(ii) Since the date of the most recent financial statements
included in the Registration Statement (exclusive of any supplement
thereto), there has been no material adverse change in the
condition (financial or other), earnings, business or properties of
the Company and its subsidiaries taken as a whole, whether or not
arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Registration
Statement (exclusive of any supplement thereto).
f. On the Closing Date or any Option Closing Date, 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, of the Company and its subsidiaries
considered as one enterprise, or in the 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, and
you shall have received a certificate of the Chairman of the Board, the
President or a Senior Vice President of the Company and the principal
financial or accounting officer of the Company, dated as of the Closing
Date, to the effect that there has been no such material adverse change
and to the effect that the other representations and warranties of the
Company contained in Section I are true and correct with the same force
and effect as though expressly made at and as of the Closing Date or any
Option Closing Date, and that the Company has complied with all its
agreements contained herein and the condition set forth in Section (a) has
been fulfilled.
g. Prior to the Closing Date, the Company shall have furnished
to the Underwriter such further information, certificates and documents as
the Underwriter may reasonably request in connection with the offering of
the Preferred Securities.
<PAGE> 22
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If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be
terminated by the Underwriter by notice to the Company at any time at or
prior to the Closing Date or, with respect to Option Securities, the
Option Closing Date, and such termination shall be without liability of
any party to any other party except as provided in Section 5 and except
that Sections 7 and 8 hereof shall survive such termination.
SECTION 7. Indemnification.
a. The Company agrees to indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within
the meaning of the Securities Act against any losses, claims, damages or
liabilities to which the Underwriter or such controlling person may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in the Registration
Statement, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and subject to Section 7(c) hereof,
will reimburse the Underwriter and each such controlling person for any
legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any such
loss, claim, damage, liability, action or proceeding; provided, however,
that the Company will not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement, or omission or alleged
omission made in the Registration Statement, any Preliminary Prospectus,
the Prospectus, or such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by the
Underwriter specifically for use in the preparation thereof. This
indemnity agreement will be in addition to any liability which the Company
may otherwise have.
b. The Underwriter will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed the
Registration Statement and each person, if any, who controls the Company,
against
<PAGE> 23
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any losses, claims, damages or liabilities to which the Company or any
such director, officer, or controlling person may become subject under the
Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto, or arise out of or are
based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under
which they were made, and will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending any such
loss, claim, damage, liability, action or proceeding; provided, however,
that the Underwriter will be liable in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission has been made in the Registration Statement,
any Preliminary Prospectus, the Prospectus or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by or through the Underwriter specifically for
use in the preparation thereof. For purposes of this Section 7, the only
written information furnished by the Underwriters for use in the
Registration Statement and the Prospectus is the information in the last
paragraph of the cover page of the Prospectus and the second and fifth
paragraphs under the caption "Underwriting" in the Prospectus. This
indemnity agreement will be in addition to any liability which the
Underwriter may otherwise have.
c. In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to this Section 6, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 7(a) or (b) shall be available to
any party who shall fail to give notice as provided in this Section 7(c)
if the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was materially prejudiced by the
failure to give such notice, but the failure to give such notice shall not
relieve the indemnifying party or
<PAGE> 24
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parties from any liability which it or they may have to the indemnified
party for contribution under Section 7(d) hereof or otherwise than on
account of the provisions of Section 7(a) or (b). In case any such
proceeding shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall retain counsel reasonably satisfactory to the indemnified party
to defend the indemnified party and shall pay as incurred the fees and
disbursements of such counsel related to such proceeding. The indemnifying
party shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party. In any such proceeding, any indemnified party shall
have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay as incurred
the fees and expenses of the counsel retained by the indemnified party in
the event (i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel, (ii) the indemnifying
party has failed to assume the defense of such proceeding or shall have
failed to retain counsel reasonably satisfactory to the indemnified party,
or (iii) the named parties to any such proceeding (including any impleaded
parties) include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel under applicable rules
of professional conduct, would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying
party shall not, in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the reasonable fees and expenses of
more than one separate firm (and appropriate local counsel) for all such
indemnified parties. Such firm shall be designated in writing by the
Underwriter in the case of parties indemnified pursuant to Section 7(a) and
by the Company in the case of parties indemnified pursuant to Section 7(b).
The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent but if settled with such
consent or if there be a final judgement for the plaintiff, the
indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment.
<PAGE> 25
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d. If the indemnification provided for in this Section 7 is
unavailable (other than by reason of the exception contained in the second
sentence of Section 7(c) hereof) to or insufficient to hold harmless an
indemnified party under Section 7(a) or (b) above in respect of any
losses, claims, damages or liabilities (or actions or proceedings in
respect thereof referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and
the Underwriter on the other from the offering of the Preferred Securities.
If, however, the allocation provided by the immediately preceding sentence
is not permitted by applicable law or if the indemnified party failed to
give the notice required under Section 7(c) above, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified
party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one
hand and the Underwriter on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities
(or actions or proceedings in respect thereof) as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriter on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bears to the total
underwriting discounts and commissions received by the Underwriter, in
each case as set forth in the table on the cover page of the Prospectus.
The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Underwriter on
the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriter agree that it would not be just and
equitable if contributions pursuant to this Section 7(d) were determined
by pro rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
Section 7(d).
<PAGE> 26
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The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) referred to above in this Section 7(d) shall be deemed to
include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d),
(i) except with respect to information contained or omitted from the
Registration Statement, any Preliminary Prospectus or the Prospectus or
any amendment or supplement thereto in reliance upon and in conformity
with written information furnished to the Company by or through the
Underwriter specifically for use in the preparation thereof, the
Underwriter shall not be required to contribute any amount in excess of
the underwriting discounts and commissions applicable to the Preferred
Securities purchased by the Underwriter and (ii) no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
e. In any proceeding relating to the Registration Statement,
any Preliminary Prospectus, the Prospectus or any supplement or amendment
thereto, each party against whom contribution may be sought under this
Section 7 hereby consents to the jurisdiction of any court having
jurisdiction over any other contributing party, agrees that process
issuing from such court may be served upon him or it by any other
contributing party and consents to the service of such process and agrees
that any other contributing party may join him or it as an additional
defendant in any such proceeding in which such other contributing party is
a party.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. The reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties and
covenants contained in this Agreement shall remain in full force and
effect, regardless of (a) any termination of this Agreement, (b) any
investigation made by or on behalf of the Underwriter or by or on behalf of
any person controlling the Underwriter, or by or on behalf of the Company,
and (c) delivery of and payment for the Preferred Securities to the
Underwriter.
SECTION 9. Termination of Agreement. The Underwriter may terminate
this Agreement, by notice to
<PAGE> 27
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the Company, at any time at or prior to the Closing Date or any Option
Closing Date (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, of the Company and its
subsidiaries considered as one enterprise, or in the 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 new outbreak of
hostilities or escalation of any existing hostilities or other calamity or
crisis the effect of which on the financial markets of the United States
is such as to make it, in the reasonable professional judgment of the
Underwriter, impracticable to market the Preferred Securities or to enforce
contracts for the sale of the Preferred Securities, or (iii) if trading in
the securities of the Company has been suspended by the Commission or if
trading or quotation generally on the Nasdaq National Market has been
suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges of prices for securities have been required by the Nasdaq
National Market or by order of the Commission or any other governmental
authority, or (iv) if a banking moratorium has been declared by either
federal or Pennsylvania authorities.
If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party,
except as provided in Section 7, and provided further that Sections 7 and
8 hereof shall survive such termination.
SECTION 10. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given
if mailed or transmitted by any standard form of telecommunications.
Notices to the Underwriter shall be directed to it at Alex. Brown & Sons
Incorporated, 1 South Street, Baltimore, Maryland 21202, Attention of
Donald W. Delson; and notice to the Company and the Trust shall be
directed to it at 1609 Walnut Street, Philadelphia, Pennsylvania 19103,
Attention of Betsy Z. Cohen.
SECTION 11. Parties. This Agreement shall inure to the benefit of
and be binding upon the Underwriter and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended
or shall be construed to give any person, firm or corporation, other than
the parties hereto and their respective successors and the controlling
persons and
<PAGE> 28
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officers and directors referred to in Sections 7 and 8 and their heirs and
legal representatives, any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for
the sole and exclusive benefit of the parties hereto and their respective
successors, and said controlling persons and officers and directors and
their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Securities from an
Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 12. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE
GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF
PENNSYLVANIA APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SAID
STATE. SPECIFIED TIMES OF DAY REFER TO EASTERN STANDARD TIME.
<PAGE> 29
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon
this instrument along with all counterparts will become a binding
agreement between the Underwriter and the Company in accordance with its
terms.
Very truly yours,
JBI CAPITAL TRUST I
By: JeffBanks, Inc.
on behalf of JeffBanks
Capital Trust I
By:
------------------------------------
Name:
Title:
JEFFBANKS, INC.
By:
------------------------------------
Name:
Title:
Confirmed and accepted, as of the date
first above written.
ALEX. BROWN & SONS INCORPORATED
By:
------------------------------------
Name:
Title:
<PAGE> 30
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EXHIBIT A
The opinion of special counsel to the Company to be delivered
pursuant to Section 6(b)(i) of the Underwriting Agreement shall be
substantially to the effect that:
1. The Company is a corporation validly organized and presently
subsisting under the laws of the Commonwealth of Pennsylvania,
with requisite corporate power and authority to own its properties
and conduct its business as described in the Registration
Statement, except for such power and authority the absence of
which would not have a material adverse effect on the Company, and
is duly registered as bank holding company under the Bank Holding
Company Act of 1956, as amended.
2. The Underwriting Agreement has been duly authorized, executed
and delivered by the Company.
3. 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.
4. 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.
5. The Indenture has been duly authorized, executed and delivered
by the Company 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
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.
6. The 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
<PAGE> 31
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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, 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.
7. 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.
8. The statements set forth in the Registration Statement under
the captions "Supervision, Regulation and Other Matters,"
"Description of Preferred Securities," "Description of Guarantee"
and "Relationship among the Preferred Securities, the Junior
Subordinated Debentures and the Guarantee," insofar as they purport
to describe the provisions of the laws and documents referred to
therein, fairly summarize the matters described therein.
9. 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.
10. The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such opinion
and, to the best of such counsel's knowledge and information, no
stop order suspending the effectiveness of the Registration
Statement has been issued under the Securities Act and no
proceedings therefor have been initiated or threatened by the
Commission.
11. The Registration Statement and the Prospectus and any
amendment or supplement thereto made by the Company prior to the
Closing Date or any Option Closing Date (other than the financial
statements and financial and statistical data included therein, as
to which no opinion need be rendered), when it or they became
effective or were filed with the Commission, as the case may be,
and in each case at the Closing Date or any Option Closing Date,
complied as to form in all material respects with the requirements
of the Securities Act, the Trust Indenture Act and the applicable
rules and regulations under said acts and the documents
incorporated by reference into the Prospectus (other than the
financial statements and financial and statistical data included
therein, as to which no opinion need be rendered) complied as to
form in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission
<PAGE> 32
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thereunder, and such counsel have no reason to believe that the
Registration Statement, at the time it became effective, contained
any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements contained
therein, not misleading, or that the Prospectus, at the time it
was mailed to the Commission for filing or at the Closing Date or
any Option Closing Date, contained any untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements contained therein, in the light of
the circumstances under which they were made, not misleading.
12. Such counsel knows of no material legal or governmental
proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or
any of its subsidiaries is the subject which are required to be
disclosed in the Registration Statement or which would affect the
consummation of the transactions contemplated in this Agreement,
the Indenture or the Preferred Securities; and such counsel knows of
no such proceedings which are threatened or contemplated by
governmental authorities or threatened by others.
13. 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 reference as exhibits thereto, and such
instruments as are summarized in the Registration Statement are
fairly summarized in all material respects.
14. 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).
15. The execution and delivery of this Agreement, the Trust
Agreement, the Guarantee Agreement, and the Indenture, the issue
and sale of the Preferred Securities and the Subordinated
Debentures, the compliance by the Company with the provisions of
the Preferred Securities, the 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
<PAGE> 33
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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 of its subsidiaries 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 of its subsidiaries of any applicable law or regulation or
of any administrative, regulatory or court decree known to such
counsel.
<PAGE> 34
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EXHIBIT B
The opinion of counsel to the Trust Company and Trust Delaware to
be delivered pursuant to Section 6(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 New York.
2. Trust Delaware 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.
3. 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.
4. 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.
5. 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.
6. The Delaware 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.
7. Each of the Indenture and the Guarantee Agreement has been
duly executed and delivered by the Indenture Trustee and the
Guarantee Trustee, respectively, and constitutes 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 applicable to Delaware banking
corporations affecting the enforcement of creditors' rights
generally, and by general principles of equity, including, without
limitation, concepts of materiality, reasonableness, good faith
<PAGE> 35
- 35 -
and fair dealing (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
8. The Subordinated Debentures delivered on the date hereof have
been duly authenticated by the Indenture Trustee in accordance
with the terms of the Indenture.
<PAGE> 36
- 36 -
EXHIBIT C
The opinion of counsel, as special Delaware counsel to the Company
and the Trust to be delivered pursuant to Section 6(b)(iv) 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"), with
the business trust power and authority to own property and to
conduct its business as described in the Registration Statement
and to enter into and perform its obligations under each of the
Underwriting Agreement, the Preferred Securities, the Common
Securities and the Trust Agreement.
2. The Common Securities have been duly authorized by the Trust
Agreement and, when issued and delivered by the Trust to the
Company in accordance with the terms of the Trust Agreement
against payment therefor in accordance with the terms of the
Registration Statement and as described in the Registration
Statement, will be validly issued and (subject to the terms of the
Trust Agreement) fully paid and non-assessable undivided
beneficial interests in the assets of the trust. Under the
Delaware Act and the Trust Agreement, the issuance of the Common
Securities is not subject to preemptive or other similar rights.
We note that the Holders of Common Securities will be subject to
the withholding provisions of Section 10.4 of the Trust Agreement,
as set forth in the Trust Agreement and will be liable for the
debts and obligations of the Trust to the extent provided in
Section 9.1(b) of the Trust Agreement.
3. The Preferred Securities have been duly authorized by the Trust Agreement
and, when issued and delivered in accordance with the terms of the Trust
Agreement, against payment of the consideration as set forth in the Underwriting
Agreement, the Preferred Securities will be validly issued and (subject to the
terms of the Trust Agreement) fully paid and non-assessable undivided beneficial
interest in the assets of the Trust. The Holders of the Preferred Securities
will be entitled to the benefits of the Trust Agreement (subject to the
limitations set forth in Paragraph 5 below) and will be entitled to the same
limitation of personal liability as extended to stockholders of private
corporations for profit organized under the Delaware General Corporation Law;
provided that we express no opinion as to any Holder of a Capital Security that
is, was, or becomes a named Trustee of the Trust. We note that the Holders of
Preferred Securities will be subject to withholding provisions of Section 4.5 of
the Trust Agreement and will be required to make payment or provide indemnity or
security as set forth in the Trust Agreement.
<PAGE> 37
- 37 -
4. All necessary trust action has been taken to duly authorize
the execution and delivery by the Trust of the Underwriting
Agreement.
5. The Trust Agreement constitutes a valid and binding obligation
of the Company and the Administrators, enforceable against the
Company and the Administrators in accordance with its terms,
except to the extent that enforcement thereof may be limited by
(i) bankruptcy, insolvency, receivership, liquidation, fraudulent
conveyance, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and
remedies, (ii) general principles of equity (regardless of whether
considered and applied in a proceeding in equity or at law) and
(iii) considerations of public policy and the effect of applicable
law relating to fiduciary duties.
6. The issuance and sale by the Trust of the Preferred Securities,
the purchase by the Trust of the 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.
7. Assuming that the Trust derives no income from or connected
with services provided within the State of Delaware and has no
assets, activities (other than having a Delaware Trustee as
required by the Delaware Act and the filing of documents with the
Secretary of State of the State of Delaware) or employees in the
State of Delaware, no filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of,
any Delaware court or Delaware governmental authority or agency
(other than as may be required under the securities or blue sky
laws of the State of Delaware as to which we express no opinion)
is necessary or required in connection with the due authorization,
execution and delivery of the Underwriting Agreement or the
offering, issuance, sale or delivery of the Preferred Securities.
<PAGE> 1
================================================================================
JEFFBANKS, INC.
to
BANKERS TRUST COMPANY
Trustee
----------
JUNIOR SUBORDINATED INDENTURE
Date as of _______ __, 1997
===============================================================================
<PAGE> 2
JBI CAPITAL TRUST I
Certain Sections of this Junior Subordinated Indenture relating
to Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Junior Subordinated
Act Section Indenture Section
- --------------- -------------------
<S> <C>
Section 310(a)(1)........................................... 6.9
(a)(2)........................................... 6.9
(a)(3)........................................... Not Applicable
(a)(4)........................................... Not Applicable
(a)(5)........................................... 6.9
(b).............................................. 6.8, 6.10
Section 311(a).............................................. 6.13
(b).............................................. 6.13
(b)(2)........................................... 7.3(a)
Section 312(a).............................................. 7.1, 7.2(a)
(b).............................................. 7.2(b)
(c).............................................. 7.2(c)
Section 313(a).............................................. 7.3(a)
(a)(4)........................................... 7.3(a)
(b).............................................. 7.3(b)
(c).............................................. 7.3(a)
(d).............................................. 7.3(c)
Section 314(a).............................................. 7.4
(b).............................................. 7.4
(c)(1)........................................... 1.2
(c)(2)........................................... 1.2
(c)(3)........................................... Not Applicable
(e).............................................. 1.2
Section 315(a).............................................. 6.1(a)
(b).............................................. 6.2, 7.3
(c).............................................. 6.1(b)
(d).............................................. 6.1(c)
(e).............................................. 5.14
Section 316(a).............................................. 5.12
(a)(1)(A)........................................ 5.12
(a)(1)(B)........................................ 5.13
(a)(2)........................................... Not Applicable
(b).............................................. 5.8
(c).............................................. 1.4(f)
Section 317(a)(1)........................................... 5.3
(a)(2)........................................... 5.4
(b).............................................. 10.3
Section 318(a).............................................. 1.7
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to be
a part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
Page
----
ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION....................................... 2
SECTION 1.1. Definitions............................................... 2
SECTION 1.2. Compliance Certificate and Opinions....................... 13
SECTION 1.3. Forms of Documents Delivered to Trustee................... 14
SECTION 1.4. Acts of Holders........................................... 15
SECTION 1.5. Notices, Etc. to Trustee and Company...................... 18
SECTION 1.6. Notice to Holders; Waiver................................. 18
SECTION 1.7. Conflict with Trust Indenture Act......................... 19
SECTION 1.8. Effect of Headings and Table of Contents.................. 19
SECTION 1.9. Successors and Assigns.................................... 19
SECTION 1.10. Separability Clause....................................... 19
SECTION 1.11. Benefits of Indenture..................................... 19
SECTION 1.12. Governing Law............................................. 20
SECTION 1.13. Non-Business Days......................................... 20
ARTICLE II SECURITY FORMS............................................ 20
SECTION 2.1. Forms Generally........................................... 20
SECTION 2.2. Form of Face of Security.................................. 21
SECTION 2.3. Form of Reverse of Security............................... 26
SECTION 2.4. Additional Provisions Required in Global Security......... 30
ARTICLE III THE SECURITIES
SECTION 3.1. Title and Terms........................................... 31
SECTION 3.2. Denominations............................................. 35
SECTION 3.3. Execution, Authentication, Delivery and Dating............ 35
SECTION 3.4. Temporary Securities...................................... 37
SECTION 3.5. Global Securities......................................... 38
SECTION 3.6. Registration, Transfer and Exchange Generally; Certain
Transfers and Exchanges; Securities Act Legends........... 39
SECTION 3.7. Mutilated, Lost and Stolen Securities..................... 43
SECTION 3.8. Payment of Interest and Additional Interest;
Interest Rights Preserved................................. 44
SECTION 3.9. Persons Deemed Owners..................................... 46
SECTION 3.10. Cancellation.............................................. 46
SECTION 3.11. Computation of Interest................................... 47
SECTION 3.12. Deferrals of Interest Payment Dates....................... 47
SECTION 3.13. Right of Set-Off.......................................... 49
SECTION 3.14. Agreed Tax Treatment...................................... 49
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<PAGE> 4
SECTION 3.15. Shortening or Extension of Stated
Maturity............................................. 49
SECTION 1.16. CUSIP Numbers........................................ 50
ARTICLE IV SATISFACTION AND DISCHARGE........................... 50
SECTION 4.1. Satisfaction and Discharge of Indenture.............. 50
SECTION 4.2. Application of Trust Money........................... 51
ARTICLE V REMEDIES............................................. 52
SECTION 5.1. Events of Default.................................... 52
SECTION 5.2. Acceleration of Maturity; Rescission
and Annulment........................................ 53
SECTION 5.3. Collection of Indebtedness and Suits
for Enforcement by Trustee........................... 54
SECTION 5.4. Trustee May File Proofs of Claim..................... 55
SECTION 5.5. Trustee May Enforce Claim Without
Possession of Securities............................. 56
SECTION 5.6. Application of Money Collected....................... 57
SECTION 5.7. Limitation on Suits.................................. 57
SECTION 5.8. Unconditional Right of Holders to
Receive Principal, Premium and
Interest; Direct Action by Holders
of Preferred Securities.............................. 58
SECTION 5.9. Restoration of Rights and Remedies................... 59
SECTION 5.10. Rights and Remedies Cumulative....................... 59
SECTION 5.11. Delay or Omission Not Waiver......................... 59
SECTION 5.12. Control by Holders................................... 60
SECTION 5.13. Waiver of Past Defaults.............................. 60
SECTION 5.14. Undertaking for Costs................................ 61
SECTION 5.15. Waiver of Usury, Stay or Extension Laws.............. 61
ARTICLE VI THE TRUSTEE.......................................... 62
SECTION 6.1. Certain Duties and Responsibilities.................. 62
SECTION 6.2. Notice of Defaults................................... 63
SECTION 6.3. Certain Rights of Trustee............................ 64
SECTION 6.4. Not Responsible for Recitals or
Issuance of Securities............................... 65
SECTION 6.5. May Hold Securities.................................. 65
SECTION 6.6. Money Held in Trust.................................. 65
SECTION 6.7. Compensation and Reimbursements...................... 65
SECTION 6.8. Disqualification; Conflicting
Interests............................................ 66
SECTION 6.9. Corporate Trustee Required;
Eligibility.......................................... 67
SECTION 6.10. Resignation and Removal; Appointment
of Successor......................................... 67
SECTION 6.11. Acceptance of Appointment by
Successor............................................ 69
- ii -
<PAGE> 5
SECTION 6.12. Merger, Conversion, Consolidation or
Succession to Business ...................................71
SECTION 6.13. Preferential Collection of Claims Against Company ........71
SECTION 6.14. Appointment of Authenticating Agent ......................71
SECTION VII HOLDER'S LISTS AND REPORTS BY TRUSTEE, PAYING
AGENT AND COMPANY ........................................73
SECTION 7.1. Company to Furnish Trustee Names and
Addresses of Holders .....................................73
SECTION 7.2. Preservation of Information,
Communications to Holders ................................74
SECTION 7.3. Reports by Trustee and Paying Agent ......................74
SECTION 7.4. Reports by Company .......................................75
ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE ........................................75
SECTION 8.1. Company May Consolidate, Etc., Only
on Certain Terms .........................................75
SECTION 8.2. Successor Company Substituted ............................76
ARTICLE IX SUPPLEMENTAL INDENTURES ..................................77
SECTION 9.1. Supplemental Indentures Without Consent
of Holders ...............................................77
SECTION 9.2. Supplemental Indentures With Consent of Holders ..........79
SECTION 9.3. Execution of Supplemental Indentures .....................80
SECTION 9.4. Effect of Supplemental Indentures ........................81
SECTION 9.5. Conformity with Trust Indenture Act ......................81
SECTION 9.6. Reference in Securities to Supplemental Indentures .......81
ARTICLE X COVENANTS ................................................81
SECTION 10.1. Payment of Principal, Premium and Interest ...............81
SECTION 10.2. Maintenance of Office or Agency ..........................82
SECTION 10.3. Money for Security Payments to be Held in Trust ..........82
SECTION 10.4. Statement as to Compliance ...............................84
SECTION 10.5. Waiver of Certain Covenants ..............................84
SECTION 10.6. Additional Sums ..........................................85
SECTION 10.7. Additional Covenants .....................................86
SECTION 10.8. Original Issue Discount ..................................87
ARTICLE XI REDEMPTION OF SECURITIES .................................87
SECTION 11.1. Applicability of This Article ............................87
SECTION 11.2. Election to Redeem; Notice of Trustee ....................88
SECTION 11.3. Selection of Securities to be Redeemed ...................88
SECTION 11.4. Notice of Redemption .....................................89
- iii -
<PAGE> 6
SECTION 11.5. Deposit of Redemption Price..................... 90
SECTION 11.6. Payment of Securities Called for
Redemption....................................... 90
SECTION 11.7. Right of Redemption of Securities
Initially Issued to an Issuer Trust.............. 91
ARTICLE XII SINKING FUNDS.................................... 91
ARTICLE XIII SUBORDINATION OF SECURITIES...................... 91
SECTION 13.1. Securities Subordinate to Senior
Indebtedness..................................... 91
SECTION 13.2. No Payment When Senior Indebtedness
in Default; Payment Over of Proceeds
Upon Dissolution, Etc............................ 92
SECTION 13.3. Payment Permitted If No Default.................. 94
SECTION 13.4. Subrogation to Rights of Holders of
Senior Indebtedness.............................. 94
SECTION 13.5. Provisions Solely to Define Relative
Rights........................................... 95
SECTION 13.6. Trustee to Effectuate Subordination.............. 95
SECTION 13.7. No Waiver of Subordination Provisions............ 96
SECTION 13.8. Notice to Trustee................................ 96
SECTION 13.9. Reliance on Judicial Order or
Certificate of Liquidating Agent................. 97
SECTION 13.10. Trustee Not Fiduciary for Holders of
Senior Indebtedness.............................. 98
SECTION 13.11. Rights of Trustee as Holder of Senior
Indebtedness; Preservation of
Trustee's Rights................................. 98
SECTION 13.12. Article Applicable to Paying Agents.............. 98
SECTION 13.13. Certain Conversions or Exchanges
Deemed Payment................................... 98
ANNEX A FORM OF RESTRICTED SECURITIES
CERTIFICATE
- iv -
<PAGE> 7
EXHIBIT 4.1
JUNIOR SUBORDINATED INDENTURE
THIS JUNIOR SUBORDINATED INDENTURE, dated as of January ___, 1997, between
JEFFBANKS, INC., a Pennsylvania Corporation (the "Company"), having its
principal office at 1609 Walnut Street, Philadelphia, Pennsylvania 19103, and
BANKERS TRUST COMPANY, as Trustee, having its principal office at Four Albany
Street, 4th Floor, New York, New York 10006 (the "Trustee").
RECITALS OF THE COMPANY
WHEREAS, the Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of its unsecured
junior subordinated debt securities in series (hereinafter called the
"Securities") of substantially the tenor hereinafter provided, including
Securities issued to evidence loans made to the Company from the proceeds from
the issuance from time to time by one or more business trusts (each an "Issuer
Trust") of undivided preferred beneficial interests in the assets of such
Issuer Trusts (the "Preferred Securities") and common undivided interests in the
assets of such Issuer Trusts (the "Common Securities" and, collectively with
the Preferred Securities, the "Trust Securities"), and to provide the terms and
conditions upon which the Securities are to be authenticated, issued and
delivered; and
WHEREAS, all things necessary to make this Indenture a valid agreement of
the Company, in accordance with its terms, have been done.
NOW THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders (as such term is defined in Section 1.1 hereof)
thereof, it is mutually covenanted and agreed, for the equal and proportionate
benefit of all Holders of the Securities or of any series thereof, and
intending to be legally bound hereby, as follows:
<PAGE> 8
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) The terms defined in this Article have the meanings assigned to them
in this Article, and include the plural as well as the singular;
(2) 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;
(3) The words "include", "includes" and "including" shall be deemed to be
followed by the phrase "without limitation";
(4) All accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect at the time of computation;
(5) Whenever the context may require, any gender shall be deemed to
include the other;
(6) Unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of this
Indenture; and
(7) The words "hereby", "herein", "hereof" and "hereunder" and other
words of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
"Act" when used with respect to any Holder has the meaning specified in
Section 1.4.
"Additional Interest" means the interest, if any, that shall accrue on any
interest on the Securities of any series the payment of which has not been made
on the applicable Interest Payment Date and which shall accrue at the rate per
annum specified or determined as specified in such Security.
"Additional Sums" has the meaning specified in Section 10.6.
- 2 -
<PAGE> 9
"Additional Taxes" means any additional taxes, duties and other
governmental charges to which an Issuer Trust has become subject from time to
time as a result of a Tax Event.
"Administrator" means, in respect of any Issuer Trust, each Person
appointed in accordance with the related Trust Agreement, solely in such
Person's capacity as Administrator of such Issuer Trust and not in such
Person's individual capacity, or any successor Administrator appointed as
therein provided.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Member" means any member of, or participant in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Global Security or beneficial interest therein, the rules and
procedures of the Depositary for such Global Security, in each case to the
extent applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any Person authorized by the Trustee pursuant
to Section 6.14 to act on behalf of the Trustee to authenticate Securities of
one or more series.
- 3 -
<PAGE> 10
"Board of Directors" means the board of directors of the Company or the
Executive Committee of the board of directors of the Company (or any other
committee of the board of directors of the Company performing similar
functions) or, for purposes of this Indenture, a committee designated by the
board of directors of the Company (or such committee), comprised of two or more
members of the board of directors of the Company or officers of the Company, or
both.
"Board Resolution" means a copy of a resolution certified by the Secretary
or any Assistant Secretary of the Company to have been duly adopted by the
Board of Directors, or such committee of the Board of Directors or officers of
the Company to which authority to act on behalf of the Board of Directors has
been delegated, and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in the City of New York or the City of
Philadelphia are authorized or required by law or executive order to remain
closed, or (iii) day on which the Corporate Trust Office of the Trustee, or,
with respect to the Securities of a series initially issued to an Issuer Trust,
the "Corporate Trust Office" (as defined in the related Trust Agreement) of the
Property Trustee or the Delaware Trustee under the related Trust Agreement, is
closed for business.
"Capital Treatment Event" means, in respect of any Issuer Trust, the
reasonable determination by the Company that, as a result of the occurrence of
any amendment to, or change (including any announced prospective change) in,
the laws (or any rules or regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement, action or decision is announced on or after the date of the
issuance of the Preferred Securities of such Issuer Trust, there is more than
an insubstantial risk that the Company will not be entitled to treat an amount
equal to the Liquidation Amount (as such term is defined in the related Trust
Agreement) of such Preferred Securities as "Tier 1 Capital" (or the then
equivalent thereof) for purposes of the risk-based capital adequacy guidelines
of the Board of Governors of the Federal Reserve System, as then in effect and
applicable to the Company.
- 4 -
<PAGE> 11
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties on such date.
"Common Securities" has the meaning specified in the first recital of this
Indenture.
"Common Stock" means the common stock, par value $1.00 per share, of the
Company.
"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor entity shall have become such pursuant to
the applicable provisions of this Indenture, and thereafter "Company" shall
mean such successor entity.
"Company Request" and "Company Order" mean, respectively, the written
request or order signed in the name of the Company by any Chairman of the Board
of Directors, any Vice Chairman of the Board of Directors, its President or a
Vice President, and by its Chief Financial Officer, its Treasurer, its
Secretary or an Assistant Secretary, and delivered to the Trustee.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered.
"Defaulted Interest" has the meaning specified in Section 3.8.
"Delaware Trustee" means, with respect to any Issuer Trust, the Person
identified as the "Delaware Trustee" in the related Trust Agreement, solely in
its capacity as Delaware Trustee of such Issuer Trust under such Trust
Agreement and not in its individual capacity, or its successor in interest in
such capacity, or any successor Delaware trustee appointed as therein provided.
"Depositary" means, with respect to the Securities of any series issuable
or issued in whole or in part in the form of one or more Global Securities, the
Person designated as Depositary by the Company pursuant to Section 3.1 with
respect to such series (or any successor thereto).
"Discount Security" means any security that provides for an amount less
than the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 5.2.
"Dollar" or "$" means the currency of the United States of America that,
as at the time of payment, is legal tender for the payment of public and
private debts.
The term "entity" includes a bank, corporation, association, company,
limited liability company, joint-stock company or business trust.
- 5 -
<PAGE> 12
"Event of Default," unless otherwise specified in the supplemental
indenture creating a series of Securities, has the meaning specified in Article
V.
"Exchange Act" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time.
"Expiration Date" has the meaning specified in Section 1.4.
"Extension Period" has the meaning specified in Section 3.12.
"Global Security" means a Security in the form prescribed in Section 2.4
evidencing all or part of a series of Securities, issued to the Depositary or
its nominee for such series, and registered in the name of such Depositary or
its nominee.
"Guarantee" means, with respect to any Issuer Trust, the Guarantee
Agreement executed by the Company for the benefit of the Holders of the
Preferred Securities issued by such Issuer Trust as modified, amended or
supplemented from time to time.
"Holder" means a Person in whose name a Security is registered in the
Securities Register.
"Indenture" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof and shall
include the terms of each particular series of Securities established as
contemplated by Section 3.1.
"Investment Company Act" means the Investment Company Act of 1940 and any
statute successor thereto, in each case as amended from time to time.
"Institutional Accredited Investor" means an institutional accredited
investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act.
"Interest Payment Date" means, as to each series of Securities, the Stated
Maturity of an installment of interest on such Securities.
"Investment Company Event" means the receipt by an Issuer Trust of an
Opinion of Counsel (as defined in the relevant Trust Agreement) experienced in
such matters to the effect that, as a result of the occurrence of a change in
law or regulation or a written change (including any announced prospective
change) in interpretation or application of law or
- 6 -
<PAGE> 13
regulation by any legislative body, court, governmental agency or regulatory
authority, there is more than an insubstantial risk that such Issuer Trust is
or will be considered an "investment company" that is required to be registered
under the Investment Company Act, which change or prospective change becomes
effective or would become effective, as the case may be, on or after the date
of the issuance of the Preferred Securities of such Issuer Trust.
"Issuer Trust" has the meaning specified in the first recital of this
Indenture.
"Maturity" when used with respect to any Security means the date on which
the principal of such Security becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration,
call for redemption or otherwise.
"Notice of Default" means a written notice of the kind specified in
Section 5.1(3).
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, a Vice Chairman of the Board, the President or any Vice President, and by
the Chief Financial Officer, the Treasurer, the Secretary or an Assistant
Secretary, of the Company, and delivered to the Trustee; provided, however, that
the Officers' Certificate delivered pursuant to the provisions of Section 10.4
hereof shall comply with the provisions of Section 314 of the Trust Indenture
Act.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Company or any Affiliate of the Company.
"Original Issue Date" means the date of issuance specified as such in each
Security.
"Outstanding" means, when used in reference to any Securities, as of the
date of determination, all Securities theretofore authenticated and delivered
under this Indenture, except:
- 7 -
<PAGE> 14
(i) Securities theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities for whose payment money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent in trust for the
Holders of such Securities; and
(iii) Securities in substitution for or in lieu of which other Securities
have been authenticated and delivered or that have been paid pursuant to
Section 3.6, unless proof satisfactory to the Trustee is presented that any
such Securities are held by Holders in whose hands such Securities are valid,
binding and legal obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor (other than, for the avoidance of doubt, the
Issuer Trust to which Securities of the applicable series were initially
issued) shall be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities that the Trustee knows to be so owned shall be so disregarded.
Securities so owned that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and that the pledgee
is not the Company or any other obligor upon the Securities or any Affiliate of
the Company or such other obligor (other than, for the avoidance of doubt, such
Issuer Trust). Upon the written request of the Trustee, the Company shall
furnish to the Trustee promptly an Officers' Certificate listing and
identifying all Securities, if any, known by the Company to be owned or held by
or for the account of the Company, or any other obligor on the Securities or
any Affiliate of the Company or such obligor (other than, for the avoidance of
doubt, such Issuer Trust), and, subject to the provisions of Section 6.1, the
Trustee shall be entitled to accept such Officers' Certificate as conclusive
evidence of the facts therein set forth and of the fact that all Securities not
listed therein are Outstanding for the purpose of any such determination.
"Paying Agent" means the Trustee or any Person authorized by the Company
to pay the principal of (or premium, if any) or
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<PAGE> 15
interest on, or other amounts in respect of any Securities on behalf of the
Company.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Place of Payment" means, with respect to the Securities of any series,
the place or places where the principal of (and premium, if any) and interest
on the Securities of such series are payable pursuant to Section 3.1.
"Predecessor Security" of any particular Security means every previous
Security evidencing all or a portion of the same debt as that evidenced by such
particular Security. For the purposes of this definition, any security
authenticated and delivered under Section 3.7 in lieu of a mutilated,
destroyed, lost or stolen Security shall be deemed to evidence the same debt as
the mutilated, destroyed, lost or stolen Security.
"Preferred Securities" has the meaning specified in the first recital of
this Indenture.
"Proceeding" has the meaning specified in Section 13.2.
"Property Trustee" means, with respect to any Issuer Trust, the Person
identified as the "Property Trustee" in the related Trust Agreement, solely in
its capacity as Property Trustee of such Issuer Trust under such Trust
Agreement and not in its individual capacity, or its successor in interest in
such capacity, or any successor property trustee appointed as therein provided.
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<PAGE> 16
"Redemption Date", when used with respect to any Security to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture or
the terms of such Security.
"Redemption Price", when used with respect to any Security to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
with respect to the Securities of a series means, unless otherwise provided
pursuant to Section 3.1 with respect to Securities of such series, the close of
business on the date that is the __________, __________, __________, or
__________ next preceding such Interest Payment Date (whether or not a Business
Day).
"Responsible Officer", when used with respect to the Property Trustee
means any officer assigned to the Corporate Trust Office, including any
managing director, vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and having direct responsibility for the administration of this
Indenture, and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Restricted Security" means each Security required pursuant to Section
3.6(c) to bear a Restricted Securities Legend.
"Restricted Securities Certificate" means a certificate substantially in
the form set forth in Annex A.
"Restricted Securities Legend" means a legend substantially in the form of
the legend required in the form of Security set forth in Section 2.2 to be
placed upon a Restricted Security.
"Rights Plan" means any plan of the Company providing for the issuance by
the Company to all holders of its Common Stock, par value $1.00 per share, of
rights entitling the holders thereof to subscribe for or purchase shares of any
class or series of capital stock of the Company which rights (i) are deemed to
be transferred with such shares of such Common Stock, (ii) are not exercisable,
and (iii) are also issued in respect of future issuances of such Common Stock,
in each case until the occurrence of a specified event or events.
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<PAGE> 17
"Securities" or "Security" means any debt securities or debt security, as
the case may be, authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as modified, amended or
supplemented from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 3.6.
"Senior Indebtedness" means, whether recourse is to all or a portion of
the assets of the Company and whether or not contingent, (i) every obligation
of the Company for money borrowed; (ii) every obligation of the Company
evidenced by bonds, debentures, notes or other similar instruments, including
obligations incurred in connection with the acquisition of property, assets or
businesses; (iii) every reimbursement obligation of the Company with respect to
letters of credit, bankers' acceptances or similar facilities issued for the
account of the Company; (iv) every obligation of the Company issued or assumed
as the deferred purchase price of property of services (but excluding trade
accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of the Company; (vi) every
obligation of the Company for claims (as defined in Section 101(4) of the
United States Bankruptcy Code of 1978, as amended) in respect of derivative
products such as interest and foreign exchange rate contracts, commodity
contracts and similar arrangements; and (vii) every obligation of the type
referred to in clauses (i) through (vi) of another person and all dividends of
another person the payment of which, in either case, the Company has guaranteed
or is responsible or liable, directly or indirectly, as obligor or otherwise,
including without limitation the Company's 8.75% Subordinated Notes Due April
1, 2006 in the aggregate principal amount of $23,000,000; provided that "Senior
Indebtedness" shall not include (i) any obligations which, by their terms, are
expressly stated to rank pari passu in right of payment with, or to not be
superior in right of payment to, the Junior Subordinated Debentures, (ii) any
Senior Indebtedness of the Company which when incurred and without respect to
any election under Section 1111(b) of the United States Bankruptcy Code of
1978, as amended, was without recourse to the Company, (iii) any Senior
Indebtedness of the Company to any of its subsidiaries, (iv) Senior
Indebtedness to any executive officer or director of the Company, or (v) any
indebtedness in respect of debt securities issued to any trust, or a trustee
of such trust, partnership or other entity affiliated with the Company that is
a financing entity of the Company in
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connection with the issuance of such financing entity of securities that are
similar to the Preferred Securities.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 3.8.
"Stated Maturity", when used with respect to any Security or any
installment of principal thereof or interest thereon, means the date specified
pursuant to the terms of such Security as the fixed date on which the principal
of such Security or such installment of principal or interest is due and
payable, as such date may, in the case of such principal, be shortened or
extended as provided pursuant to the terms of such Security and this Indenture.
"Subsidiary" means an entity more than 50% of the outstanding voting stock
of which is owned, directly or indirectly, by the Company or by one or more
other Subsidiaries, or by the Company and one or more other Subsidiaries. For
purposes of this definition, "voting stock" means stock that ordinarily has
voting power for the election of directors, whether at all times or only so
long as no senior class of stock has such voting power by reason of any
contingency.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that
evidenced by, such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 3.7 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed to evidence the same debt as the mutilated, destroyed, lost or
stolen Security.
"Tax Event" means the receipt by an Issuer Trust of an Opinion of Counsel
(as defined in the relevant Trust Agreement) experienced in such matters to the
effect that, as a result of any amendment to, or change (including any
announced prospective change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof or
therein, or as a result of any official or administrative pronouncement or
action or judicial decision interpreting or applying such laws or regulations,
which amendment or change is effective or which pronouncement or decision is
announced on or after the date of issuance of the Preferred Securities of such
Issuer Trust, there is more than an insubstantial risk that (i) such Issuer
Trust is, or will be within 90 days of the delivery of such Opinion of Counsel,
subject to United States Federal income tax with
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<PAGE> 19
respect to income received or accrued on the corresponding series of Securities
issued by the Company to such Issuer Trust, (ii) interest payable by the
Company on such corresponding series of Securities is not, or within 90 days of
the delivery of such Opinion of Counsel will not be, deductible by the Company,
in whole or in part, for United States Federal income tax purposes, or (iii)
such Issuer Trust is, or will be within 90 days of the delivery of such Opinion
of Counsel, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"Trust Agreement" means, with respect to any Issuer Trust, the trust
agreement or other governing instrument of such Issuer Trust.
"Trustee" means the Person named as the "Trustee" in the first paragraph
of this Indenture, solely in its capacity as such and not in its individual
capacity, until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder and, if at any time there
is more than one such Person, "Trustee" as used with respect to the Securities
of any series shall mean the Trustee with respect to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as modified,
amended or supplemented from time to time, except as provided in Section 9.5.
"Trust Securities" has the meaning specified in the first recital of this
Indenture.
"Vice President," when used with respect to the Company, means any duly
appointed vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
SECTION 1.2. Compliance Certificate and Opinions.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent
(including covenants compliance with which constitutes a condition precedent),
if any, provided for in this Indenture relating to the proposed action have
been complied with and an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent (including covenants compliance
with which constitutes a condition precedent), if
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<PAGE> 20
any, have been complied with, except that in the case of any such application
or request as to which the furnishing of such documents is specifically
required by any provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture (other than the certificates
provided pursuant to Section 10.4) shall include:
(1) a statement by each individual signing such certificate or opinion
that such individual has read such covenant or condition and the definitions
herein relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions of such individual
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he or she has
made such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether, in the opinion of such individual, such
condition or covenant has been complied with.
SECTION 1.3. Forms of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to matters upon which his or her certificate or opinion is based
are erroneous. Any such certificate or Opinion of Counsel may be based,
insofar as it
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<PAGE> 21
relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions, or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4. Acts of Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given to or taken by Holders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments is or are delivered to the
Trustee, and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or
of a writing appointing any such agent shall be sufficient for any purpose of
this Indenture and (subject to Section 6.1) conclusive in favor of the Trustee
and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him or her the
execution thereof. Where such execution is by a Person acting in other than
his or her individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his or her authority.
(c) The fact and date of the execution by any Person of any such
instrument or writing, or the authority of the Person executing the same, may
also be provided in any other manner that the Trustee deems sufficient and in
accordance with such reasonable rules as the Trustee may determine.
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<PAGE> 22
(d) The ownership of Securities shall be proved by the Securities
Register.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Holder of any Security shall bind every future Holder of
the same Security and the Holder of every Security issued upon the transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or suffered to be done by the Trustee or the Company in reliance thereon,
whether or not notation of such action is made upon such Security.
(f) The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities of any series entitled to
give, make or take any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Indenture to be
given, made or taken by Holders of Securities of such series, provided that the
Company may not set a record date for, and the provisions of this paragraph
shall not apply with respect to, the giving or making of any notice,
declaration, request or direction referred to in the next succeeding paragraph.
If any record date is set pursuant to this paragraph, the Holders of
Outstanding Securities of the relevant series on such record date, and no other
Holders, shall be entitled to take the relevant action, whether or not such
Holders remain Holders after such record date, provided that no such action
shall be effective hereunder unless taken on or prior to the applicable
Expiration Date (as defined below) by Holders of the requisite principal amount
of Outstanding Securities of such series on such record date. Nothing in this
paragraph shall be construed to prevent the Company from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically
and with no action by any Person be cancelled and of no effect), and nothing in
this paragraph shall be construed to render ineffective any action taken by
Holders of the requisite principal amount of Outstanding Securities of the
relevant series on the date such action is taken. Promptly after any record
date is set pursuant to this paragraph, the Company, at its own expense, shall
cause notice of such record date, the proposed action by Holders and the
applicable Expiration Date to be given to the Trustee in writing and to each
Holder of Securities of the relevant series in the manner set forth in Section
1.6.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities
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<PAGE> 23
of any series entitled to join in the giving or making of (i) any Notice of
Default, (ii) any declaration of acceleration referred to in Section 5.2, (iii)
any request to institute proceedings referred to in Section 5.7(2), or (iv) any
direction referred to in Section 5.12, in each case with respect to Securities
of such series. If any record date is set pursuant to this paragraph, the
Holders of Outstanding Securities of such series on such record date, and no
other Holders, shall be entitled to join in such notice, declaration, request
or direction, whether or not such Holders remain Holders after such record
date, provided that no such action shall be effective hereunder unless taken on
or prior to the applicable Expiration Date by Holders of the requisite
principal amount of Outstanding Securities of such series on such record date.
Nothing in this paragraph shall be construed to prevent the Trustee from
setting a new record date for any action for which a record date has previously
been set pursuant to this paragraph (whereupon the record date previously set
shall automatically and with no action by any Person be cancelled and of no
effect) and nothing in this paragraph shall be construed to render ineffective
any action taken by Holders of the requisite principal amount of Outstanding
Securities of the relevant series on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Trustee, at the
Company's expense, shall cause notice of such record date, the proposed action
by Holders and the applicable Expiration Date to be given to the Company in
writing and to each Holder of Securities of the relevant series in the manner
set forth in Section 1.6.
With respect to any record date set pursuant to this Section, the party
hereto that sets such record date may designate any day as the "Expiration
Date" and from time to time may change the Expiration Date to any earlier or
later day, provided that no such change shall be effective unless notice of the
proposed new Expiration Date is given to the other party hereto in writing, and
to each Holder of Securities of the relevant series in the manner set forth in
Section 1.6 on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this Section,
the party hereto that set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
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<PAGE> 24
(g) Without limiting the foregoing, a Holder entitled hereunder to take
any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 1.5. Notices, Etc. to Trustee and Company.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder, any holder of Preferred Securities or the
Company shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to or with the Trustee at its Corporate Trust
Office, or
(2) the Company by the Trustee, any Holder or any holder of Preferred
Securities shall be sufficient for every purpose (except as otherwise provided
in Section 5.1) hereunder if in writing and mailed, first class, postage
prepaid, to the Company addressed to it at the address of its principal office
specified in the first paragraph of this instrument or at any other address
previously furnished in writing to the Trustee by the Company.
SECTION 1.6. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first class postage prepaid, to each Holder affected
by such event, at the address of such Holder as it appears in the Securities
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. If, by reason of the
suspension of or irregularities in regular mail services or for any other
reason, it shall be impossible or impracticable to mail notice of any event to
Holders when said notice is required to be given pursuant to any provision of
this Indenture or of the relevant Securities, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice. In any case where notice to Holders is given
by mail, neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder shall affect the sufficiency of such notice
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<PAGE> 25
with respect to other Holders. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
SECTION 1.7. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the provision of the Trust Indenture Act shall control.
If any provision of this Indenture modifies or excludes any provision of the
Trust Indenture Act that may be so modified or excluded, the latter provision
shall be deemed to apply to this Indenture as so modified or to be excluded, as
the case may be.
SECTION 1.8. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 1.9. Successors and Assigns.
All covenants and agreements in this Indenture by the Company shall bind
its successors and assigns, whether so expressed or not.
SECTION 1.10. Separability Clause.
If any provision in this Indenture or in the Securities shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall
give to any Person, other than the parties hereto and their successors and
assigns, the holders of Senior Indebtedness, the Holders of the Securities and,
to the extent expressly provided in Sections 5.2, 5.8, 5.9, 5.11, 5.13, 9.1 and
9.2, the holders of Preferred Securities, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
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<PAGE> 26
SECTION 1.12. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 1.13. Non-Business Days.
If any Interest Payment Date, Redemption Date or Stated Maturity of any
Security shall not be a Business Day, then (notwithstanding any other provision
of this Indenture or the Securities) payment of interest or principal (and
premium, if any) or other amounts in respect of such Security need not be made
on such date, but may be made on the next succeeding Business Day (and no
interest shall accrue in respect of the amounts whose payment is so delayed for
the period from and after such Interest Payment Date, Redemption Date or Stated
Maturity, as the case may be, until such next succeeding Business Day) except
that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day (in each case
with the same force and effect as if made on the Interest Payment Date or
Redemption Date or at the Stated Maturity).
ARTICLE II
SECURITY FORMS
SECTION 2.1. Forms Generally.
The Securities of each series and the Trustee's certificate of
authentication shall be in substantially the forms set forth in this Article,
or in such other form or forms as shall be established by or pursuant to a
Board Resolution or in one or more indentures supplemental hereto, in each case
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture and may have such letters,
numbers or other marks of identification and such legends or endorsements
placed thereon as may be required to comply with applicable tax laws or the
rules of any securities exchange or as may, consistently herewith, be
determined by the officers executing such securities, as evidenced by their
execution of the Securities. If the form of Securities of any series is
established by action taken pursuant to a Board Resolution, a copy of an
appropriate record of such action shall be certified by the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee at or prior to
the
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<PAGE> 27
delivery of the Company Order contemplated by Section 3.3 with respect to the
authentication and delivery of such Securities.
The Trustee's certificates of authentication shall be substantially in the
form set forth in this Article.
The definitive Securities shall be printed, lithographed or engraved or
produced by any combination of these methods, if required by any securities
exchange on which the Securities may be listed, on a steel engraved border or
steel engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as evidenced by their
execution of such securities.
Securities distributed to holders of Global Preferred Securities (as
defined in the applicable Trust Agreement) upon the dissolution of an Issuer
Trust shall be distributed in the form of one or more Global Securities
registered in the name of a Depositary or its nominee, and deposited with the
Securities Registrar, as custodian for such Depositary, or with such Depositary,
for credit by the Depositary to the respective accounts of the beneficial owners
of the Securities represented thereby (or such other accounts as they may
direct). Securities distributed to holders of Preferred Securities other than
Global Preferred Securities upon the dissolution of an Issuer Trust shall not be
issued in the form of a Global Security or any other form intended to facilitate
book-entry trading in beneficial interests in such Securities.
SECTION 2.2. Form of Face of Security.
JEFFBANKS, INC.
[Title of Security]
[If the Security is a Restricted Security, insert -- THE SECURITIES
EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (A) BY ANY INITIAL INVESTOR THAT IS NOT A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT, (I) TO A PERSON WHO THE TRANSFEROR REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (II) IN AN OFFSHORE TRANSACTION COMPLYING WITH THE PROVISIONS OF
RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (III)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 THEREUNDER (IF
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<PAGE> 28
AVAILABLE), OR (B) BY AN INITIAL INVESTOR THAT IS A QUALIFIED INSTITUTIONAL
BUYER OR BY ANY SUBSEQUENT INVESTOR, AS SET FORTH IN (A) ABOVE AND, IN
ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, AND, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF THE STATES AND OTHER
JURISDICTIONS OF THE UNITED STATES. THE HOLDER OF THIS SECURITY AGREES THAT IT
WILL COMPLY WITH THE FOREGOING RESTRICTIONS. SECURITIES OWNED BY AN INITIAL
INVESTOR THAT IS NOT A QUALIFIED INSTITUTIONAL BUYER MAY NOT BE HELD IN GLOBAL
FORM AND MAY NOT BE TRANSFERRED WITHOUT CERTIFICATION THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS, AS PROVIDED IN THE INDENTURE REFERRED
TO BELOW. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE
EXEMPTION PROVIDED BY RULE 144 FOR RESALES OF THE SECURITIES.]
No. $
JEFFBANKS, INC., a Pennsylvania corporation (hereinafter called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
______________________, or registered assigns, the principal sum of _________
Dollars on ________, [if the Security is a Global Security, then insert, if
applicable--, or such other principal amount represented hereby as may be set
forth in the records of the Securities Registrar hereinafter referred to in
accordance with the Indenture,] [; provided that the Company may (i) shorten
the Stated Maturity of the principal of this Security to a date not earlier
than ___________, and (ii) extend the Stated Maturity of the principal of this
Security at any time on one or more occasions, subject to certain conditions
specified in Section 3.15 of the Indenture, but in no event to a date later
than _________]. The Company further promises to pay interest on said
principal from ______________, or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, [monthly] [quarterly]
[semi-annually] [if applicable, insert--(subject to deferral as set forth
herein)] in arrears on [insert applicable Interest Payment Dates] of each year,
commencing ______________ at the rate of __% per annum, [if applicable
insert--together with Additional Sums, if any, as provided in Section 10.6 of
the Indenture,] until the principal hereof is paid or duly provided for or made
available for payment [if applicable, insert--; provided that any overdue
principal, premium or Additional Sums and any overdue installment of interest
shall bear Additional Interest at the rate of __% per annum (to the extent that
the payment of such interest shall be legally enforceable), compounded
[monthly] [quarterly] [semi-annually], from the dates such
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<PAGE> 29
amounts are due until they are paid or made available for payment, and such
interest shall be payable on demand]. The amount of interest payable for any
period less than a full interest period shall be computed on the basis of a
360-day year of twelve 30-day months and the actual days elapsed in a partial
month in such period. The amount of interest payable for any full interest
period shall be computed by dividing the applicable rate per annum by
[twelve/four/two]. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest installment [if applicable, insert--, which shall be the
[__________ or ____________] (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date]. Any such interest not so
punctually paid or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Securities of this series not less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
[If applicable, insert--So long as no Event of Default has occurred and is
continuing, the Company shall have the right, at any time during the term of
this Security, from time to time to defer the payment of interest on this
Security for up to _________ consecutive [monthly] [quarterly] [semi- annual]
interest payment periods with respect to each deferral period (each an
"Extension Period") [if applicable, insert--, during which Extension Periods
the Company shall have the right to make partial payments of interest on any
Interest Payment Date, and] at the end of which the Company shall pay all
interest then accrued and unpaid including Additional Interest, as provided
below; provided, however, that no Extension Period shall extend beyond the
Stated Maturity of the principal of this Security [If Stated Maturity can be
shortened or extended, insert--, as then in effect,] and no such Extension
Period may end on a date other than an Interest Payment Date; and provided,
further, however, that during any such Extension Period, the Company shall not
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of
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<PAGE> 30
the Company's capital stock, or (ii) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu in all respects with or junior
in interest to this Security (other than (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of any one or more employees, officers, directors or consultants, in
connection with a dividend reinvestment or stockholder stock purchase plan or
in connection with the issuance of capital stock of the Company (or securities
convertible into or exercisable for such capital stock) as consideration in an
acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of an exchange or conversion of any class or series of the
Company's capital stock (or any capital stock of a Subsidiary of the Company)
for any class or series of the Company's capital stock or of any class or
series of the Company's indebtedness for any class or series of the Company's
capital stock, (c) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any Rights Plan, or the issuance
of rights, stock or other property under any Rights Plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of
stock, warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks pari passu with or
junior to such stock). Prior to the termination of any such Extension Period,
the Company may further defer the payment of interest, provided that no
Extension Period shall exceed _______ consecutive [monthly] [quarterly]
[semi-annual] interest payment periods, extend beyond the Stated Maturity of
the principal of this Security or end on a date other than an Interest Payment
Date. Upon the termination of any such Extension Period and upon the payment
of all accrued and unpaid interest and any Additional Interest then due on any
Interest Payment Date, the Company may elect to begin a new Extension Period,
subject to the above conditions. No interest shall be due and payable during
an Extension Period, except at the end thereof, but each installment of
interest that would otherwise have been due and payable during such Extension
Period shall bear Additional Interest (to the extent that the payment of such
interest shall be legally enforceable) at the rate of __% per annum, compounded
[monthly] [quarterly] [semi-annually] and calculated as set forth in the first
paragraph of this Security, from the date on which such amounts would otherwise
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<PAGE> 31
have been due and payable until paid or made available for payment. The
Company shall give the Holder of this Security and the Trustee notice of its
election to begin any Extension Period at least one Business Day prior to the
next succeeding Interest Payment Date on which interest on this Security would
be payable but for such deferral [if applicable, insert--or so long as such
securities are held by [insert name of applicable Issuer Trust], at least one
Business Day prior to the earlier of (i) the next succeeding date on which
Distributions on the Preferred Securities of such Issuer Trust would be payable
but for such deferral, and (ii) the date on which the Property Trustee of such
Issuer Trust is required to give notice to holders of such Preferred Securities
of the record date or the date such Distributions are payable, but in any event
not less than one Business Day prior to such record date.]
Payment of the principal of (and premium, if any) and interest on this
Security will be made at the office or agency of the Company maintained for
that purpose in the United States, in such coin or currency of the United
States of America as at the time of payment is legal tender for payment of
public and private debts [if applicable, insert--; provided, however that at
the option of the Company payment of interest may be made (i) by check mailed
to the address of the Person entitled thereto as such address shall appear in
the Securities Register, or (ii) if to a Holder of $1,000,000 or more in
aggregate principal amount of this Security, by wire transfer in immediately
available funds upon written request to the Trustee not later than 15 calendar
days prior to the date on which the interest is payable].
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinate and subject in right of payments to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his or her behalf to take
such actions as may be necessary or appropriate to effectuate the subordination
so provided, and (c) appoints the Trustee his or her attorney-in-fact for any
and all such purposes. Each Holder hereof, by his or her acceptance hereof,
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such holder upon
said provisions.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further
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<PAGE> 32
provisions shall for all purposes have the same effect as if set forth at this
place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
JEFFBANKS, INC.
By:
-----------------------------
Name:
Title:
Attest:
- --------------------------------
Secretary or Assistant Secretary
SECTION 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or
more series under the Junior Subordinated Indenture, dated as of January ___,
1997 (herein called the "Indenture"), between the Company and Bankers Trust
Company, as Trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee, the holders of Senior Indebtedness and the Holders of the
Securities, and of the terms upon which the Securities are, and are to be,
authenticated and delivered. This Security is one of the series designated on
the face hereof [if applicable, insert--, limited in aggregate principal amount
to $ _______].
All terms used in this Security that are defined in the Indenture [if
applicable, insert-- or in [insert name of trust
- 26 -
<PAGE> 33
agreement], dated as of _________ (as modified, amended or supplemented from
time to time the "Trust Agreement"), relating to [insert name of Issuer Trust]
[the ("Issuer Trust") among the Company, as Depositor, the Trustees named
therein and the Holders from time to time of the Trust Securities issued
pursuant thereto] shall have the meanings assigned to them in the Indenture [if
applicable, insert--or the Trust Agreement, as the case may be].
[If applicable, insert--The Company has the right to redeem this Security
(i) on or after _________, in whole at any time or in part from time to time,
or (ii) in whole (but not in part), at any time within 90 days following the
occurrence and during the continuation of a Tax Event, Investment Company
Event, or Capital Treatment Event, in each case at the Redemption Price
described below, and subject to possible regulatory approval. The Redemption
Price shall equal 100% of the principal amount hereof being redeemed, together
with accrued interest to but excluding the date fixed for redemption.]
[If the Security is subject to redemption of any kind, insert--In the
event of redemption of this Security in part only, a new Security or Securities
of this series for the unredeemed portion hereof will be issued in the name of
the Holder hereof upon the cancellation hereof.]
[If applicable, insert--The Indenture contains provisions for defeasance
at any time [of the entire indebtedness of this Security] [or] [certain
restrictive covenants and Events of Default with respect to this Security] [,
in each case] upon compliance by the Company with certain conditions set forth
in the Indenture.]
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and
obligations of the Company and of the Holders of the Securities, with the
consent of the Holders of not less than a majority in principal amount of the
Outstanding Securities of each series to be affected by such supplemental
indenture. The Indenture also contains provisions permitting Holders of
specified percentages in principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Security shall be conclusive
and binding upon such Holder and upon all future Holders of this
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<PAGE> 34
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
[If the Security is not a Discount Security, insert--As provided in and
subject to the provisions of the Indenture, if an Event of Default with respect
to the Securities of this series at the time Outstanding occurs and is
continuing, then and in every such case the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Outstanding Securities of this
series may declare the principal amount of all the Securities of this series to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders) [if applicable, insert--, provided that, if
upon an Event of Default, the Trustee or such Holders fail to declare the
principal of all the outstanding Securities of this series to be immediately
due and payable, the holders of at least 25% in aggregate Liquidation Amount of
the Preferred Securities then outstanding shall have the right to make such
declaration by a notice in writing to the Company and the Trustee]; and upon
any such declaration the principal amount of and the accrued interest
(including any Additional Interest) on all the Securities of this series shall
become immediately due and payable, provided that the payment of principal and
interest (including any Additional Interest) on such Securities shall remain
subordinated to the extent provided in Article XIII of the Indenture.]
[If the Security is a Discount Security, insert--As provided in and
subject to the provisions of the Indenture, if an Event of Default with respect
to the Securities of this series at the time Outstanding occurs and is
continuing, then and in every such case the Trustee or the Holders of not less
than 25% in aggregate principal amount of the Outstanding Securities of this
series may declare an amount of principal of the Securities of this series to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders) [if applicable, insert--, provided that, if
upon an Event of Default, the Trustee or such Holders fail to declare such
principal amount of the Outstanding Securities of this series to be immediately
due and payable, the holders of at least 25% in aggregate Liquidation Amount of
the Preferred Securities then outstanding shall have the right to make such
declaration by a notice in writing to the Company and the Trustee. The
principal amount payable upon such acceleration shall be equal to--insert
formula for determining the amount]. Upon any such declaration, such amount of
the principal of and the accrued
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<PAGE> 35
interest (including any Additional Interest) on all the Securities of this
series shall become immediately due and payable, provided that the payment of
such principal and interest (including any Additional Interest) on all the
Securities of this series shall remain subordinated to the extent provided in
Article XIII of the Indenture. Upon payment (i) of the amount of principal so
declared due and payable and (ii) of interest on any overdue principal, premium
and interest (in each case to the extent that the payment of such interest
shall be legally enforceable), all of the Company's obligations in respect of
the payment of the principal of and premium and interest, if any, on this
Security shall terminate.]
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest (including Additional Interest) on this Security at the times, place
and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Security is registrable in the Securities
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company maintained under Section 10.2 of the Indenture
for such purpose, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Securities Registrar duly
executed by, the Holder hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Securities of this series, of like
tenor, of authorized denominations and for the same aggregate principal amount,
will be issued to the designated transferee or transferees.
The Securities of this series are issuable only in registered form without
coupons in denominations of $_________ and any integral multiple of $________
in excess thereof. As provided in the Indenture and subject to certain
limitations therein set forth, Securities of this series are exchangeable for a
like aggregate principal amount of Securities of this series and of like tenor
of a different authorized denomination, as requested by the Holder surrendering
the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
- 29 -
<PAGE> 36
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Security is registered as the owner hereof for
all purposes, whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires a beneficial
interest in, this Security agrees that for United States Federal, state and
local tax purposes it is intended that this Security constitute indebtedness.
THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
THIS SECURITY IS A DIRECT AND UNSECURED OBLIGATION OF THE COMPANY, DOES
NOT EVIDENCE DEPOSITS AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION OR ANY OTHER INSURER OR GOVERNMENT AGENCY.
SECTION 2.4. Additional Provisions Required in Global Security.
Unless otherwise specified as contemplated by Section 3.1, any Global
Security issued hereunder shall, in addition to the provisions contained in
Sections 2.2 and 2.3, bear a legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A
DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE AND MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A
NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE.
- 30 -
<PAGE> 37
SECTION 2.5. Form of Trustee's Certificate of
Authentication.
The Trustee's certificates of authentication shall be in substantially the
following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
Dated: BANKERS TRUST COMPANY,
--------------------- as Trustee
By:
-------------------------
Authorized Signatory
ARTICLE III
THE SECURITIES
SECTION 3.1. Title and Terms.
The aggregate principal amount of Securities that may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution and, subject to Section 3.3,
set forth or determined in the manner provided, in an Officers' Certificate, or
established in one or more indentures supplemental hereto, prior to the
issuance of Securities as a series:
(a) the title of the securities of such series, which shall distinguish
the Securities of the series from all other Securities;
(b) the limit, if any, upon the aggregate principal amount of the
Securities of such series that may be authenticated and delivered under this
Indenture (except for Securities authenticated and delivered upon registration
of transfer of, or in exchange for, or in lieu of, other Securities of the
series pursuant to Section 3.4, 3.5, 3.6, 9.6 or 11.6 and except for any
Securities that, pursuant to Section 3.3, are deemed never to have been
authenticated and delivered hereunder); provided, however, that the authorized
aggregate principal amount of such series may be increased above such amount by
a Board Resolution to such effect;
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<PAGE> 38
(c) the Person to whom any interest on a Security of the series shall be
payable, if other than the Person in whose name that security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest;
(d) the Stated Maturity or Maturities on which the principal of the
Securities of such series is payable or the method of determination thereof,
and any dates on which or circumstances under which, the Company shall have the
right to extend or shorten such Stated Maturity or Maturities;
(e) the rate or rates, if any, at which the Securities of such series
shall bear interest, if any, the rate or rates and extent to which Additional
Interest, if any, shall be payable with respect to any Securities of such
series, the date or dates from which any such interest or Additional Interest
shall accrue, the Interest Payment Dates on which such interest shall be
payable, the right, pursuant to Section 3.12 or as otherwise set forth therein,
of the Company to defer or extend an Interest Payment Date, and the Regular
Record Date for the interest payable on any Interest Payment Date or the method
by which any of the foregoing shall be determined;
(f) the place or places where the principal of (and premium, if any) and
interest or Additional Interest on the Securities of such series shall be
payable, the place or places where the Securities of such series may be
presented for registration of transfer or exchange, any restrictions that may
be applicable to any such transfer or exchange in addition to or in lieu of
those set forth herein and the place or places where notices and demands to or
upon the Company in respect of the Securities of such series may be made;
(g) the period or periods within or the date or dates on which, if any,
the price or prices at which and the terms and conditions upon which the
Securities of such series may be redeemed, in whole or in part, at the option
of the Company, and if other than by a Board Resolution, the manner in which
any election by the Company to redeem such Securities shall be evidenced;
(h) the obligation or the right, if any, of the Company to redeem, repay
or purchase the Securities of such series pursuant to any sinking fund,
amortization or analogous provisions, or at the option of a Holder thereof, and
the period or periods within which, the price or prices at which, the currency
or currencies (including currency unit or units) in which and the other terms
and conditions upon which
- 32 -
<PAGE> 39
Securities of the series shall be redeemed, repaid or purchased, in whole or in
part, pursuant to such obligation;
(i) the denominations in which any Securities of such series shall be
issuable;
(j) if other than Dollars, the currency or currencies (including any
currency unit or units) in which the principal of (and premium, if any) and
interest and Additional Interest, if any, on the Securities of the series shall
be payable, or in which the Securities of the series shall be denominated and
the manner of determining the equivalent thereof in Dollars for purposes of the
definition of Outstanding;
(k) the additions, modifications or deletions, if any, in the Events of
Default or covenants of the Company set forth herein with respect to the
Securities of such series;
(l) if, other than the principal amount thereof, the portion of the
principal amount of Securities of such series that shall be payable upon
declaration of acceleration of the Maturity thereof;
(m) if the principal amount payable at the Stated Maturity of any
Securities of the series will not be determinable as of any one or more dates
prior to the Stated Maturity, the amount which shall be deemed to be the
principal amount of such Securities as of any such date for any purpose
thereunder or hereunder, including the principal amount thereof which shall be
due and payable upon any Maturity other than the Stated Maturity or which shall
be deemed to be Outstanding as of any date prior to the Stated Maturity (or, in
any such case, the manner in which such amount deemed to be the principal
amount shall be determined);
(n) if applicable, that the Securities of the series, in whole or in any
specified part, shall be defeasible and, if other than by a Board Resolution,
the manner in which any election by the Company to defease such Securities
shall be evidenced;
(o) the additions or changes, if any, to this Indenture with respect to
the Securities of such series as shall be necessary to permit or facilitate the
issuance of the Securities of such series in bearer form, registrable or not
registrable as to principal, and with or without interest coupons;
(p) any index or indices used to determine the amount of payments of
principal of and premium, if any, on the
- 33 -
<PAGE> 40
Securities of such series or the manner in which such amounts will be
determined;
(q) if applicable, that any Securities of the series shall be issuable in
whole or in part in the form of one or more Global Securities and, in such
case, the respective Depositaries for such Global Securities, the form of any
legend or legends that shall be borne by any such Global Security in addition
to or in lieu of that set forth in Section 2.4 and any circumstances in
addition to or in lieu of those set forth in Section 3.5 in which any such
Global Security may be exchanged in whole or in part for Securities registered,
and any transfer of such Global Security in whole or in part may be registered,
in the name or names of Persons other than the Depositary for such Global
Security or a nominee thereof;
(r) the appointment of any Paying Agent or agents for the Securities of
such series;
(s) the terms of any right to convert or exchange Securities of such
series into any other securities or property of the Company, and the additions
or changes, if any, to this Indenture with respect to the Securities of such
series to permit or facilitate such conversion or exchange;
(t) if such Securities are to be issued to an Issuer Trust, the form or
forms of the Trust Agreement and Guarantee relating thereto;
(u) if, other than as set forth herein, the relative degree, if any, to
which the Securities or the series shall be senior to or be subordinated to
other series of Securities in right of payment, whether such other series of
Securities are Outstanding or not;
(v) any addition to or change in the Events of Default which applies to
any Securities of the series and any change in the right of the Trustee or the
requisite Holders of such Securities to declare the principal amount thereof
due and payable pursuant to Section 5.2;
(w) any addition to or change in the covenants set forth in Article X
which applies to Securities of the series; and
(x) any other terms of the Securities of such series (which terms shall
not be inconsistent with the provisions of this Indenture, except as permitted
by Section 9.1(6)).
- 34 -
<PAGE> 41
All Securities of any one series shall be substantially identical except
as to denomination and except as may otherwise be provided herein or in or
pursuant to such Board Resolution and set forth, or determined in the manner
provided, in such Officers' Certificate or in any indenture supplemental
hereto.
If any of the terms of the series are established by action taken pursuant
to a Board Resolution, a copy of an appropriate record of such action shall be
certified by the Secretary or an Assistant Secretary of the Company and
delivered to the Trustee at or prior to the delivery of the Officers'
Certificate setting forth the terms of the series.
The securities shall be subordinated in right of payment to Senior
Indebtedness as provided in Article XIII.
SECTION 3.2. Denominations.
The Securities of each series shall be in registered form without coupons
and shall be issuable in denominations specified as contemplated by Section
3.1(i).
SECTION 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its Vice Chairman of the Board, its President or one of its Vice
Presidents, under its corporate seal reproduced or impressed thereon and
attested by its Secretary or one of its Assistant Secretaries. The signature
of any of these officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities. At any time and from time to
time after the execution and delivery of this Indenture, the Company may
deliver Securities of any series executed by the Company to the Trustee for
authentication, together with a Company Order for the authentication and
delivery of such Securities, and the Trustee in accordance with the Company
Order shall authenticate and deliver such Securities. If the form or terms of
the Securities of the series have been established by or pursuant to one or
more Board Resolutions as permitted by Sections 2.1 and 3.1, in authenticating
such Securities, and
- 35 -
<PAGE> 42
accepting the additional responsibilities under this Indenture in relation to
such Securities, the Trustee shall be entitled to receive, and (subject to
Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel
stating,
(1) if the form of such Securities has been established by or
pursuant to Board Resolution as permitted by Section 2.1, that such form
has been established in conformity with the provisions of this Indenture;
(2) if the terms of such Securities have been established by or
pursuant to Board Resolution as permitted by Section 3.1, that such terms
have been established in conformity with the provisions of this Indenture;
and
(3) that such Securities, when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, will constitute valid and
legally binding obligations of the Company enforceable in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
If such form or terms have been so established, the Trustee shall not be
required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
that is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and the preceding paragraph,
if all Securities of a series are not to be originally issued at one time, it
shall not be necessary to deliver the Officers' Certificate otherwise required
pursuant to Section 3.1 or the Company Order and Opinion of Counsel otherwise
required pursuant to such preceding paragraph at or prior to the authentication
of each Security of such series if such documents are delivered at or prior to
the authentication upon original issuance of the first Security of such series
to be issued.
Each Security shall be dated the date of its authentication.
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No Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Security a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
officers, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such security has been duly authenticated and
delivered hereunder. Notwithstanding the foregoing, if any Security shall have
been authenticated and delivered hereunder but never issued and sold by the
Company, and the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 3.10, for all purposes of this Indenture
such Security shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
SECTION 3.4. Temporary Securities.
Pending the preparation of definitive Securities of any series, the
Company may execute, and upon receipt of a Company Order the Trustee shall
authenticate and deliver, temporary Securities that are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any denomination,
substantially of the tenor of the definitive Securities of such series in lieu
of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Securities
may determine, as evidenced by their execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
definitive Securities of such series to be prepared without unreasonable delay.
After the preparation of definitive Securities, the temporary Securities shall
be exchangeable for definitive Securities upon surrender of the temporary
Securities at the office or agency of the Company designated for that purpose
without charge to the Holder. Upon surrender for cancellation of any one or
more temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor one or more definitive securities
of the same series, of any authorized denominations having the same Original
Issue Date and Stated Maturity and having the same terms as such temporary
Securities. Until so exchanged, the temporary Securities of any series shall
in all respects be entitled to the same benefits under this Indenture as
definitive Securities of such series.
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SECTION 3.5. Global Securities.
(a) Each Global Security issued under this Indenture shall be registered
in the name of the Depositary designated by the Company for such Global
Security or a nominee thereof and delivered to such Depositary or a nominee
thereof or custodian therefor, and each such Global Security shall constitute a
single Security for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global
Security may be exchanged in whole or in part for Securities registered, and no
transfer of a Global Security in whole or in part may be registered, in the
name of any Person other than the Depositary for such Global Security or a
nominee thereof unless (i) such Depositary advises the Trustee in writing that
such Depositary is no longer willing or able to properly discharge its
responsibilities as Depositary with respect to such Global Security, and the
Company is unable to locate a qualified successor, (ii) the Company executes
and delivers to the Trustee a Company Order stating that the Company elects to
terminate the book-entry system through the Depositary, or (iii) there shall
have occurred and be continuing an Event of Default.
(c) If any Global Security is to be exchanged for other Securities or
cancelled in whole, it shall be surrendered by or on behalf of the Depositary
or its nominee to the Securities Registrar for exchange or cancellation as
provided in this Article III. If any Global Security is to be exchanged for
other Securities or cancelled in part, or if another Security is to be
exchanged in whole or in part for a beneficial interest in any Global Security,
then either (i) such Global Security shall be so surrendered for exchange or
cancellation as provided in this Article III or (ii) the principal amount
thereof shall be reduced, subject to Section 3.6(b)(v), or increased by an
amount equal to the portion thereof to be so exchanged or cancelled, or equal
to the principal amount of such other Security to be so exchanged for a
beneficial interest therein, as the case may be, by means of an appropriate
adjustment made on the records of the Securities Registrar, whereupon the
Trustee, in accordance with the Applicable Procedures, shall instruct the
Depositary or its authorized representative to make a corresponding adjustment
to its records. Upon any such surrender or adjustment of a Global Security by
the Depositary, accompanied by registration instructions, the Trustee shall,
subject to Section 3.6(b) and as otherwise provided in this Article III,
authenticate and deliver any Securities issuable in exchange for such Global
Security (or any portion thereof) in
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accordance with the instructions of the Depositary. The Trustee shall not be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be fully protected in relying on, such instructions.
(d) Every Security authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Security or any portion
thereof, whether pursuant to this Article III, Section 9.6 or 11.6 or
otherwise, shall be authenticated and delivered in the form of, and shall be, a
Global Security, unless such Security is registered in the name of a Person
other than the Depositary for such Global Security or a nominee thereof.
(e) The Depositary or its nominee, as the registered owner of a Global
Security, shall be the Holder of such Global Security for all purposes under
this Indenture and the Securities, and owners of beneficial interests in a
Global Security shall hold such interests pursuant to the Applicable
Procedures. Accordingly, any such owner's beneficial interest in a Global
Security shall be shown only on, and the transfer of such interest shall be
effected only through, records maintained by the Depositary or its nominee or
agent. Neither the Trustee nor the Securities Registrar shall have any
liability in respect of any transfers effected by the Depositary.
(f) The rights of owners of beneficial interests in a Global Security
shall be exercised only through the Depositary and shall be limited to those
established by law and agreements between such owners and the Depositary and/or
its Agent Members.
SECTION 3.6. Registration, Transfer and Exchange Generally; Certain
Transfers and Exchanges; Securities Act Legends.
(a) The Company shall cause to be kept at the Corporate Trust Office of
the Trustee a register in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Securities and
transfers of Securities. Such register is herein sometimes referred to as the
"Securities Register." The Trustee is hereby appointed "Securities Registrar"
for the purpose of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any Security at the offices
or agencies of the Company designated for that purpose, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated
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transferee or transferees, one or more new Securities of the same series of any
authorized denominations of like tenor and aggregate principal amount and
bearing such restrictive legends as may be required by this Indenture.
At the option of the Holder, Securities may be exchanged for other
Securities of the same series of any authorized denominations, of like tenor
and aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture, upon surrender of the Securities to be exchanged at
such office or agency. Whenever any securities are so surrendered for
exchange, the Company shall execute, and the Trustee shall authenticate and
deliver, the Securities that the Holder making the exchange is entitled to
receive.
All Securities issued upon any transfer or exchange of Securities shall be
the valid obligations of the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Securities surrendered upon such
transfer or exchange.
Every Security presented or surrendered for transfer or exchange shall (if
so required by the Company or the Trustee) be duly endorsed, or be accompanied
by a written instrument of transfer in form satisfactory to the Company and the
Securities Registrar, duly executed by the Holder thereof or such Holder's
attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or exchange
of Securities, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Securities.
Neither the Company nor the Trustee shall be required, pursuant to the
provisions of this Section, (i) to issue, register the transfer of or exchange
any Security of any series during a period beginning at the opening of business
15 days before the day of selection for redemption of Securities of that series
pursuant to Article XI and ending at the close of business on the day of
mailing of the notice of redemption, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except,
in the case of any such Security to be redeemed in part, any portion thereof
not to be redeemed.
(b) Certain Transfers and Exchanges. Notwithstanding any other provision
of this Indenture, transfers and exchanges of Securities and beneficial
interests in a Global Security shall be made only in accordance with this
Section 3.6(b).
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(i) Restricted Non-Global Security to Global Security. If the
Holder of a Restricted Security (other than a Global Security) wishes at
any time to transfer all or any portion of such Security to a Person who
wishes to take delivery thereof in the form of a beneficial interest in a
Global Security, such transfer may be effected only in accordance with the
provisions of this clause (b)(i) and subject to the Applicable Procedures.
Upon receipt by the Securities Registrar of (A) such Security as provided
in Section 3.6(a) and instructions satisfactory to the Securities
Registrar directing that a beneficial interest in the Global Security in a
specified principal amount not greater than the principal amount of such
Security be credited to a specified Agent Member's account and (B) a
Restricted Securities Certificate duly executed by such Holder or such
Holder's attorney duly authorized in writing, then the Securities
Registrar shall cancel such Security (and issue a new Security in respect
of any untransferred portion thereof) as provided in Section 3.6(a) and
increase the aggregate principal amount of the Global Security by the
specified principal amount as provided in Section 3.5(c).
(ii) Non-Global Security to Non-Global Security. A Security that is
not a Global Security may be transferred, in whole or in part, to a Person
who takes delivery in the form of another Security that is not a Global
Security as provided in Section 3.6(a), provided that if the Security to
be transferred in whole or in part is a Restricted Security, the
Securities Registrar shall have received a Restricted Securities
Certificate duly executed by the transferor Holder or such Holder's
attorney duly authorized in writing.
(iii) Exchanges Between Global Security and Non- Global Security. A
beneficial interest in a Global Security may be exchanged for a Security
that is not a Global Security as provided in Section 3.5.
(iv) Certain Initial Transfers of Non-Global Securities. In the
case of Securities initially issued other than in global form, an initial
transfer or exchange of such Securities that does not involve any change
in beneficial ownership may be made to an Institutional Accredited
Investor or Investors as if such transfer or exchange were not an initial
transfer or exchange; provided that written certification shall be
provided by the transferee and transferor of such
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Securities to the Securities Registrar that such transfer or exchange does
not involve a change in beneficial ownership.
(v) Limitations Relating to Principal Amount. Notwithstanding any
other provision of this Indenture and unless otherwise specified as
permitted by Section 3.1; Securities or portions thereof may be
transferred or exchanged only in principal amounts of not less than
$100,000. Any transfer, exchange or other disposition of Securities in
contravention of this Section 3.6(b)(v) shall be deemed to be void and of
no legal effect whatsoever, any such transferee shall be deemed not to be
the Holder or owner of any beneficial interest in such Securities for any
purpose, including but not limited to the receipt of interest payable on
such Securities, and such transferee shall be deemed to have no interest
whatsoever in such Securities.
(c) Restricted Securities Legend. Except as set forth below, all
Securities shall bear a Restricted Securities Legend:
(i) subject to the following clauses of this Section 3.6(c), a
Security or any portion thereof that is exchanged, upon transfer or
otherwise, for a Global Security or any portion thereof shall bear the
Restricted Securities Legend while represented thereby;
(ii) subject to the following clauses of this Section 3.6(c), a new
Security which is not a Global Security and is issued in exchange for
another Security (including a Global Security) or any portion thereof,
upon transfer or otherwise, shall, if such new Security is required
pursuant to Section 3.6(b)(ii) or (iii) to be issued in the form of a
Restricted Security, bear a Restricted Securities Legend;
(iii) a new Security (other than a Global Security) that does not
bear a Restricted Securities Legend may be issued in exchange for or in
lieu of a Restricted Security or any portion thereof that bears such a
legend if, in the Company's judgment, placing such a legend upon such new
Security is not necessary to ensure compliance with the registration
requirements of the Securities Act, and the Trustee, at the written
direction of the Company in the form of an Officers' Certificate, shall
authenticate and deliver such a new Security as provided in this Article
III;
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(iv) notwithstanding the foregoing provisions of this Section
3.6(c), a Successor Security of a Security that does not bear a Restricted
Securities Legend shall not bear such form of legend unless the Company
has reasonable cause to believe that such Successor Security is a
"restricted security" within the meaning of Rule 144, in which case the
Trustee, at the written direction of the Company in the form of an
Officers' Certificate, shall authenticate and deliver a new Security
bearing a Restricted Securities Legend in exchange for such Successor
Security as provided in this Article III; and
(v) Securities distributed to a holder of Preferred Securities upon
dissolution of an Issuer Trust shall bear a Restricted Securities Legend
if the Preferred Securities so held bear a similar legend.
SECTION 3.7. Mutilated, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee together with such
security or indemnity as may be required by the Company or the Trustee to save
each of them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of the same
series, of like tenor and aggregate principal amount, bearing the same legends,
and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and to the Trustee (i) evidence
to their satisfaction of the destruction, loss or theft of any Security, and
(ii) such security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Company or the Trustee that
such Security has been acquired by a bona fide purchaser, the Company shall
execute and upon its request the Trustee shall authenticate and deliver, in
lieu of any such destroyed, lost or stolen Security, a new Security of the same
series, of like tenor and aggregate principal amount and bearing the same
legends as such destroyed, lost or stolen Security, and bearing a number not
contemporaneously outstanding.
If any such mutilated, destroyed, lost or stolen Security has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section 3.7, the Company
may require the payment of a sum
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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.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of such series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
SECTION 3.8. Payment of Interest and Additional
Interest; Interest Rights Preserved.
Interest and Additional Interest on any Security of any series that is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date, shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest in respect of Securities of such series, except
that, unless otherwise provided in the Securities of such series, interest
payable on the Stated Maturity of the principal of a Security shall be paid to
the Person to whom principal is paid. The initial payment of interest on any
Security of any series that is issued between a Regular Record Date and the
related Interest Payment Date shall be payable as provided in such Security or
in the Board Resolution pursuant to Section 3.1 with respect to the related
series of Securities.
Any interest on any Security that is due and payable, but is not timely
paid or duly provided for, on any Interest Payment Date for Securities of such
series (herein called "Defaulted Interest"), shall forthwith cease to be
payable to the registered Holder on the relevant Regular Record Date by virtue
of having been such Holder, and such Defaulted Interest may be paid by the
Company, at its election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Securities of such series in respect of
which interest is
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in default (or their respective Predecessor Securities) are registered at
the close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the date of the proposed
payment, and which shall be fixed at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date
of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such Defaulted Interest as in this
clause provided. Thereupon, the Trustee shall fix a Special Record Date for
the payment of such Defaulted Interest, which shall be not more than 15
days and not less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Trustee of the notice of
the proposed payment. The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense of the
Company, shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed, first class,
postage prepaid, to each Holder of a Security of such series at the address
of such Holder as it appears in the Securities Register not less than 10
days prior to such Special Record Date. The Trustee may, in its
discretion, in the name and at the expense of the Company, cause a similar
notice to be published at least once in a newspaper, customarily published
in the English language on each Business Day and of general circulation in
the Borough of Manhattan, The City of New York, but such publication shall
not be a condition precedent to the establishment of such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been mailed as aforesaid, such
Defaulted Interest shall be paid to the Persons in whose names the
Securities of such series (or their respective Predecessor Securities) are
registered on such Special Record Date and shall no longer be payable
pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of the series in respect of
which interest is in default may be listed and, upon such notice as may be
required by such exchange (or by the Trustee if the
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Securities are not listed), if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this clause 2, such payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in
lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue interest, that were carried by such other Security.
SECTION 3.9. Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee shall
treat the Person in whose name any Security is registered as the owner of such
Security for the purpose of receiving payment of principal of and (subject to
Section 3.8) any interest on such Security and for all other purposes
whatsoever, whether or not such Security be overdue, and neither the Company,
the Trustee nor any agent of the Company or the Trustee shall be affected by
notice to the contrary.
No holder of any beneficial interest in any Global Security held on its
behalf by a Depositary shall have any rights under this Indenture with respect
to such Global Security, and such Depositary may be treated by the Company, the
Trustee and any agent of the Company or the Trustee as the owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or
the Trustee from giving effect to any written certification, proxy or other
authorization furnished by a Depositary or impair, as between a Depositary and
such holders of beneficial interests, the operation of customary practices
governing the exercise of the rights of the Depositary (or its nominee) as
Holder of any Security.
SECTION 3.10. Cancellation.
All Securities surrendered for payment, redemption, transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee, and any such Securities and Securities surrendered directly to the
Trustee for any such purpose shall be promptly canceled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder that the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly canceled
by the Trustee. No Securities shall be
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authenticated in lieu of or in exchange for any Securities canceled as provided
in this Section, except as expressly permitted by this Indenture. All canceled
Securities shall be destroyed by the Trustee and the Trustee shall deliver to
the Company a certificate of such destruction.
SECTION 3.11. Computation of Interest.
Except as otherwise specified as contemplated by Section 3.1 for
Securities of any series, interest on the Securities of each series for any
period shall be computed on the basis of a 360-day year of twelve 30-day months
and the actual number of days elapsed in any partial month in such period, and
interest on the Securities of each series for a full period shall be computed
by dividing the rate per annum by the number of interest periods that together
constitute a full twelve months.
SECTION 3.12. Deferrals of Interest Payment Dates.
If specified as contemplated by Section 2.1 or Section 3.1 with respect to
the Securities of a particular series, so long as no Event of Default has
occurred and is continuing, the Company shall have the right, at any time
during the term of such series, from time to time to defer the payment of
interest on such Securities for such period or periods (each an "Extension
Period") not to exceed the number of consecutive quarterly, semi-annual or
other periods that equal five years with respect to each Extension Period,
during which Extension Periods the Company shall, if so specified as
contemplated by Section 3.1, have the right to make partial payments of
interest on any Interest Payment Date. No Extension Period shall end on a date
other than an Interest Payment Date. At the end of any such Extension Period,
the Company shall pay all interest then accrued and unpaid on the Securities
(together with Additional Interest thereon, if any, at the rate specified for
the Securities of such series to the extent permitted by applicable law);
provided, however, that no Extension Period shall extend beyond the Stated
Maturity of the principal of the Securities of such series; and provided
further, however, that, during any such Extension Period, the Company shall not
(i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Company's
capital stock, or (ii) make any payment of principal of or interest or premium,
if any, on or repay, repurchase or redeem any debt securities of the Company
that rank pari passu in all respects with or junior in interest to the
Securities of such series (other than (a) repurchases, redemptions or other
acquisitions of shares of capital stock of the Company in
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connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into
prior to the applicable Extension Period, (b) as a result of an exchange or
conversion of any class or series of the Company's capital stock (or any
capital stock of a Subsidiary of the Company) for any class or series of the
Company's capital stock or of any class or series of the Company's indebtedness
for any class or series of the Company's capital stock, (c) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (d) any declaration of a dividend in connection with
any Rights Plan, or the issuance of rights, stock or other property under any
Rights Plan, or the redemption or repurchase of rights pursuant thereto, or (e)
any dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock). Prior to that termination of
any such Extension Period, the Company may further defer the payment of
interest, provided that no Event of Default has occurred and is continuing and
provided further, that no Extension Period shall exceed the period or periods
specified in such Securities, extend beyond the Stated Maturity of the
principal of such Securities or end on a date other than an Interest Payment
Date. Upon the termination of any such Extension Period and upon the payment
of all accrued and unpaid interest and any Additional Interest then due on any
Interest Payment Date, the Company may elect to begin a new Extension Period,
subject to the above conditions. No interest or Additional Interest shall be
due and payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Additional Interest as and to the extent as
may be specified as contemplated by Section 3.1. The Company shall give the
Holders of the Securities of such series and the Trustee notice of its election
to begin any such Extension Period at least one Business Day prior to the next
succeeding Interest Payment Date on which interest on Securities of such series
would be payable but for such deferral or, with respect to any Securities of a
series issued to an Issuer Trust, so long as any such Securities are held by
such Issuer Trust, at least one Business Day prior to the earlier of (i) the
next
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succeeding date on which Distributions on the Preferred Securities of such
Issuer Trust would be payable but for such deferral, and (ii) the date on which
the Property Trustee of such Issuer Trust is required to give notice to holders
of such Preferred Securities of the record date or the date such Distributions
are payable, but in any event not less than one Business Day prior to such
record date.
The Trustee shall promptly give notice of the Company's election to begin
any such Extension Period to the Holders of the Outstanding Securities of such
series.
SECTION 3.13. Right of Set-Off.
With respect to the Securities of a series initially issued to an Issuer
Trust, notwithstanding anything to the contrary herein, the Company shall have
the right to set off any payment it is otherwise required to make in respect of
any such Security to the extent the Company has theretofore made, or is
concurrently on the date of such payment making, a payment under the Guarantee
relating to such Security or to a holder of Preferred Securities pursuant to an
action undertaken under Section 5.8 of this Indenture.
SECTION 3.14. Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company and, by its
acceptance of a Security or a beneficial interest therein, the Holder of, and
any Person that acquires a beneficial interest in, such Security agree that for
United States Federal, state and local tax purposes it is intended that such
Security constitutes indebtedness.
SECTION 3.15. Shortening or Extension of Stated Maturity.
If specified as contemplated by Section 2.1 or Section 3.1 with respect to
the Securities of a particular series, the Company shall have the right to (i)
shorten the Stated Maturity of the principal of the Securities of such series
at any time to any date and (ii) extend the Stated Maturity of the principal of
the Securities of such series at any time at its election for one or more
periods, provided that, if the Company elects to exercise its right to extend
the Stated Maturity of the principal of the Securities of such series pursuant
to clause (ii) above, at the time such election is made and at the time of
extension, such conditions as may be specified in such Securities shall have
been satisfied.
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SECTION 3.16. CUSIP Numbers.
The Company, in issuing the Securities, may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notice
of redemption and other similar or related materials as a convenience to
Holders; provided that any such notice or other materials may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of redemption or other
materials and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be
affected by any defect in or omission of such numbers.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further effect
(except as to any surviving rights of registration of transfer or exchange of
Securities herein expressly provided for and as otherwise provided in this
Section 4.1) and the Trustee, on demand of and at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture, when
(1) either
(A) all Securities theretofore authenticated and delivered
(other than (i) Securities that have been destroyed, lost or stolen
and that have been replaced or paid as provided in Section 3.7 and
(ii) Securities for whose payment money has theretofore been
deposited in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 10.3) have been delivered to the Trustee for
cancellation; or
(B) all such Securities not theretofore delivered to the
Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity
within one year of the date of deposit, or
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(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of subclause (B)(i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for such purpose an amount in the currency or currencies in which
the Securities of such series are payable sufficient to pay and discharge
the entire indebtedness on such Securities not theretofore delivered to
the Trustee for cancellation, for the principal (and premium, if any) and
interest (including any Additional Interest) to the date of such deposit
(in the case of Securities that have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 6.7, the
obligations of the Company to any Authenticating Agent under Section 6.14
and, if money shall have been deposited with the Trustee pursuant to
subclause (B) of clause (1) of this Section, the obligations of the
Trustee under Section 4.2 and the last paragraph of Section 10.3 shall
survive.
SECTION 4.2 Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all money
deposited with the Trustee pursuant to Section 4.1 shall be held in trust and
applied by the Trustee, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest and Additional Interest for the payment of which such money
or obligations have been deposited with or received by the Trustee.
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ARTICLE V
REMEDIES
SECTION 5.1. Events of Default.
"Event of Default", wherever used herein with respect to the Securities of
any series, 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):
(1) default in the payment of any interest upon any Security of that
series, including any Additional Interest in respect thereof, when it
becomes due and payable, and continuance of such default for a period of
30 days (subject to the deferral of any due date in the case of an
Extension Period); or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity; or
(3) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in the
Securities of that series or in this Indenture for a period of 90 days
after the date on which written notice of such failure, requiring the
Company to remedy the same, shall have been given to the Company by the
Trustee by registered or certified mail or to the Company and the Trustee
by the Holders of at least 25% in aggregate principal amount of the
Outstanding Securities of that series; or
(4) the occurrence of the appointment of a receiver or other similar
official in any liquidation, insolvency or similar proceeding with respect
to the Company or all or substantially all of its property; or a court or
other governmental agency shall enter a decree or order and such decree or
order shall remain unstayed and undischarged for a period of 60 days; or
(5) any other Event of Default provided with respect to Securities of
that series.
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SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in Section
5.1(4)) with respect to Securities of any series at the time Outstanding occurs
and is continuing, then, and in every such case, the Trustee or the Holders of
not less than 25% in aggregate principal amount of the Outstanding Securities of
that series may declare the principal amount (or, if the Securities of that
series are Discount Securities, such portion of the principal amount as may be
specified in the terms of that series) of all the Securities of that series to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by Holders), provided that, in the case of the Securities
of a series issued to an Issuer Trust, if, upon an Event of Default, the Trustee
or the Holders of not less than 25% in principal amount of the Outstanding
Securities of such series fail to declare the principal of all the Outstanding
Securities of such series to be immediately due and payable, the holders of at
least 25% in aggregate Liquidation Amount (as defined in the related Trust
Agreement) of the related series of Preferred Securities issued by such Issuer
Trust then outstanding shall have the right to make such declaration by a notice
in writing to the Company and the Trustee; and upon any such declaration such
principal amount (or specified portion thereof) of and the accrued interest
(including any Additional Interest) on all the Securities of such series shall
become immediately due and payable. If an Event of Default specified in Section
5.1(4) with respect to Securities of any series at the time Outstanding occurs,
the principal amount of all the Securities of such series (or, if the Securities
of such series are Discount Securities, such portion of the principal amount of
such Securities as may be specified by the terms of that series) shall
automatically, and without any declaration or other action on the part of the
Trustee or any Holder, become immediately due and payable. Payment of principal
and interest (including any Additional Interest) on such Securities shall remain
subordinated to the extent provided in Article XIII notwithstanding that such
amount shall become immediately due and payable as herein provided.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in
this Article provided, the Holders of a majority in aggregate principal amount
of the Outstanding Securities of that series, by written notice to the Company
and the Trustee, may rescind and annul such declaration and its consequences
if:
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(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all overdue installments of interest on all Securities of
such series;
(B) any accrued Additional Interest on all Securities of such
series;
(C) the principal of (and premium, if any, on) any Securities of
such series that have become due otherwise than by such declaration
of acceleration and interest and Additional Interest thereon at the
rate borne by the Securities; and
(D) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
that has become due solely by such acceleration, have been cured or waived
as provided in Section 5.13.
In the case of Securities of a series initially issued to an Issuer Trust,
if the Holders of such Securities fail to annul such declaration and waive such
default, the holders of a majority in aggregate Liquidation Amount (as defined
in the related Trust Agreement) of the related series of Preferred Securities
issued by such Issuer Trust then outstanding shall also have the right to
rescind and annul such declaration and its consequences by written notice to
the Company and the Trustee, subject to the satisfaction of the conditions set
forth in clauses (1) and (2) above of this section 5.2.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if:
(1) default is made in the payment of any installment of interest
(including any Additional Interest) on any Security of any series when
such
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interest becomes due and payable and such default continues for a period
of 30 days, or
(2) default is made in the payment of the principal of (and premium,
if any, on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities, the whole amount then due and
payable on such Securities for principal (and premium, if any) and
interest (including any Additional Interest), and, in addition thereto,
all amounts owing the Trustee under Section 6.7.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, and may
prosecute such proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon such Securities and collect the
monies adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor upon the Securities, wherever
situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy.
SECTION 5.4. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial or
administrative proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors,
(a) the Trustee (irrespective of whether the principal of the Securities
of any series shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Trustee shall have
made any demand on the Company for the payment of overdue principal (and
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premium, if any) or interest (including any Additional Interest)) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest (including any Additional Interest) owing
and unpaid in respect to the Securities and to file such other papers or
documents as may be necessary or advisable and to take any and all actions
as are authorized under the Trust Indenture Act in order to have the
claims of the Holders and any predecessor to the Trustee under Section 6.7
allowed in any such judicial or administrative proceedings; and
(ii) in particular, the Trustee shall be authorized to collect and
receive any monies or other property payable or deliverable on any such
claims and to distribute the same in accordance with Section 5.6; and
(b) any custodian, receiver, assignee, trustee, liquidator, sequestrator,
conservator (or other similar official) in any such judicial or administrative
proceeding is hereby authorized by each Holder to make such payments to the
Trustee for distribution in accordance with Section 5.6, and in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it and any predecessor Trustee
under Section 6.7.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding; provided, however,
that the Trustee may, on behalf of the Holders, vote for the election of a
trustee in bankruptcy or similar official and be a member of a creditors' or
other similar committee.
SECTION 5.5. Trustee May Enforce Claim Without
Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and
any such proceeding instituted by the Trustee shall be brought in its own name
as trustee of an express trust, and any recovery
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of judgment shall, subject to Article XIII and after provision for the payment
of all the amounts owing the Trustee and any predecessor Trustee under Section
6.7, its agents and counsel, be for the ratable benefit of the Holders of the
Securities in respect of which such judgment has been recovered.
SECTION 5.6 Application of Money Collected.
Any money or property collected or to be applied by the Trustee with
respect to a series of Securities pursuant to this Article shall be applied in
the following order, at the date or dates fixed by the Trustee and, in case of
the distribution of such money or property on account of principal (or premium,
if any) or interest (including any Additional Interest), upon presentation of
the Securities and the notation thereon of the payment if only partially paid
and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any predecessor
Trustee under Section 6.7;
SECOND: Subject to Article XIII, to the payment of the amounts then due
and unpaid upon Securities of such series for principal (and premium, if any)
and interest (including any Additional Interest) in respect of which or for the
benefit of which such money has been collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on such series
of Securities for principal (and premium, if any) and interest (including any
Additional Interest), respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 5.7 Limitation on Suits.
Subject to Section 5.8, no Holder of any Securities of any series shall
have any right to institute any proceeding, judicial or otherwise, with respect
to this Indenture or for the appointment of a receiver, assignee, trustee,
liquidator, sequestrator (or other similar official) or for any other remedy
hereunder, unless:
(1) such Holder has previously given written notice to the Trustee
of a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in aggregate principal amount
of the Outstanding Securities of that series shall have made written
request to the Trustee to
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institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority in aggregate principal amount of the Outstanding Securities of
that series;
it being understood and intended that no one or more of such Holders shall
have any right in any manner whatever by virtue of, or by availing itself
of, any provision of this Indenture to affect, disturb or prejudice the
rights of any other Holders of Securities, or to obtain or to seek to
obtain priority or preference over any other of such Holders or to enforce
any right under this Indenture, except in the manner herein provided and
for the equal and ratable benefit of all such Holders.
SECTION 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest; Direct Action by Holders of Preferred
Securities.
Notwithstanding any other provision in this Indenture, the Holder of any
Security of any series shall have the right, which is absolute and
unconditional, to receive payment of the principal of (and premium, if any) and
(subject to Sections 3.8 and 3.12) interest (including any Additional Interest)
on such Security on the respective Stated Maturities expressed in such Security
(or in the case of redemption, on the Redemption Date) and to institute suit for
the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder. In the case of Securities of a series
issued to an Issuer Trust, any registered holder of the series of Preferred
Securities issued by such Issuer Trust shall have the right, upon the occurrence
of an Event of Default described in Section 5.1(1) or 5.1(2), to institute a
suit directly against the Company for enforcement of payment to such holder of
principal of (premium, if any) and (subject to Sections 3.8 and 3.12) interest
(including any Additional Interest) on the Securities having a principal amount
equal to
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the aggregate Liquidation Amount (as defined in the related Trust Agreement) of
such Preferred Securities held by such holder.
SECTION 5.9. Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Preferred Securities issued by
any Issuer Trust has instituted any proceeding to enforce any right or remedy
under this Indenture and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to the Trustee, such Holder or
such holder of Preferred Securities, then, and in every such case, the Company,
the Trustee, such Holders and such holder of Preferred Securities shall, subject
to any determination in such proceeding, be restored severally and respectively
to their former positions hereunder, and thereafter all rights and remedies of
the Trustee, such Holder and such holder of Preferred Securities shall continue
as though no such proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the last paragraph of Section 3.7, no
right or remedy herein conferred upon or reserved to the Trustee or the Holders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Trustee, any Holder of any Security with
respect to the Securities of the related series or any holder of any Capital
Security to exercise any right or remedy accruing upon any Event of Default
with respect to the Securities of the related series shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein.
Every right and remedy given by this Article or by law to the Trustee or to
the Holders and the right and remedy given to the holders of Preferred
Securities by Section 5.8 may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee, the Holders or the holders of Preferred
Securities, as the case may be.
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SECTION 5.12. Control by Holders.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities of any series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or exercising any trust or power conferred on the Trustee, with
respect to the Securities of such series, provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction, and
(3) subject to the provisions of Section 6.1, the Trustee shall have
the right to decline to follow such direction if a Responsible Officer or
Officers of the Trustee shall, in good faith, determine that the
proceeding so directed would be unjustly prejudicial to the Holders not
joining in any such direction or would involve the Trustee in personal
liability.
SECTION 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Securities of any series affected thereby and, in the case of
any Securities of a series initially issued to an Issuer Trust, the holders of
a majority in aggregate Liquidation Amount (as defined in the related Trust
Agreement) of the Preferred Securities issued by such Issuer Trust may waive any
past default hereunder and its consequences with respect to such series except
a default:
(1) in the payment of the principal of (or premium, if any) or
interest (including any Additional Interest) on any Security of such
series (unless such default has been cured and the Company has paid to or
deposited with the Trustee a sum sufficient to pay all matured
installments of interest (including Additional Interest) and all principal
of (and premium, if any, on) all Securities of that series due otherwise
than by acceleration), or
(2) in respect of a covenant or provision hereof that under Article
IX cannot be modified or amended
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without the consent of each Holder of any Outstanding Security of such
series affected.
Any such waiver shall be deemed to be on behalf of the Holders of all the
Securities of such series, or in the case of waiver by holders of Preferred
Securities issued by such Issuer Trust, by all holders of Preferred Securities
issued by such Issuer Trust.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by
his acceptance thereof shall be deemed to have agreed, that any court may, in
its discretion, require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken
or omitted by it as Trustee, the filing by any party litigant in such suit of
an undertaking to pay the costs of such suit, and that such court may, in its
discretion, assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant, but the
provisions of this Section shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% in aggregate principal amount of the Outstanding
Securities of any series, or to any suit instituted by any Holder for the
enforcement of the payment of the principal of (or premium, if any) or interest
(including any Additional Interest) on any Security on or after the respective
Stated Maturities expressed in such Security.
SECTION 5.15. Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of any
such law, and covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Trustee, but will
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suffer and permit the execution of every such power as though no such law had
been enacted.
ARTICLE VI
THE TRUSTEE
SECTION 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture, but
in the case of any such certificates or opinions that by any provisions
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct except that
(1) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that the
Trustee was negligent in ascertaining the pertinent facts; and
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(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 Holders pursuant to Section 5.12 relating to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture with respect to the Securities of a series.
(d) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if there shall be reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section.
SECTION 6.2. Notice of Defaults.
Within 90 days after actual knowledge by a Responsible Officer of the
Trustee of the occurrence of any default hereunder with respect to the
Securities of any series, the Trustee shall transmit by mail to all Holders of
Securities of such series, as their names and addresses appear in the
Securities Register, notice of such default, unless such default shall have
been cured or waived; provided, however, that, except in the case of a default
in the payment of the principal of (or premium, if any) or interest (including
any Additional Interest) on any Security of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders of Securities of such series; and
provided further, that, in the case of any default of the character specified
in Section 5.1(3), no such notice to Holders of Securities of such series shall
be given until at least 30 days after the occurrence thereof. For the purpose
of this Section, the term "default" means any event that is, or after notice or
lapse of time or both would become, an Event of Default with respect to
Securities of such series.
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SECTION 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, Security
or other paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and the advice of such counsel
or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders pursuant to this Indenture, unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, indenture,
Security or other paper or document, but the Trustee in its discretion may make
such inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such inquiry or investigation, it
shall be entitled to examine the books, records and premises of the Company,
personally or by agent or attorney; and
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(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the
Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Indenture or of the Securities. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of the Securities or the proceeds thereof.
SECTION 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Securities
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to
Sections 6.8 and 6.13, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Securities Registrar or such other agent.
SECTION 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under
no liability for interest on any money received by it hereunder except as
otherwise agreed with the Company.
SECTION 6.7. Compensation and Reimbursement.
(a) The Company agrees to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder in such amounts as the
Company and the Trustee shall agree from time to time (which compensation shall
not be limited by any provision of law in regard to the compensation of a
trustee of an express trust).
(b) Since the Trust is being formed solely to facilitate an investment in
the Preferred Securities, the Company, as borrower, hereby covenants to pay all
debts and obligations
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(other than with respect to the Preferred Securities and the Common
Securities) and all reasonable costs and expenses of the Issuer Trust (including
without limitation all costs and expenses relating to the organization of the
Issuer Trust, the fees and expenses of the trustees and all reasonable costs and
expenses relating to the operation of the Issuer Trust) and to pay any and all
taxes, duties, assessments or governmental charges of whatever nature (other
than withholding taxes) imposed on the Issuer Trust by the United States, or any
taxing authority, so that the net amounts received and retained by the Issuer
Trust and the Property Trustee after paying such expenses will be equal to the
amounts the Issuer Trust and the Property Trustee would have received had no
such costs or expenses been incurred by or imposed on the Issuer Trust. The
foregoing obligations of the Company are for the benefit of, and shall be
enforceable by, any person to whom any such debts, obligations, costs, expenses
and taxes are owed (each, a "Creditor") whether or not such Creditor has
received notice thereof. Any such Creditor may enforce such obligations
directly against the Company, and the Company irrevocably waives any right or
remedy to require that any such Creditor take any action against the Issuer
Trust or any other person before proceeding against the Company. The Company
shall execute such additional agreements as may be necessary or desirable to
give full effect to the foregoing.
(3) The Company shall indemnify the Trustee for, and hold it harmless
against, any loss, liability or expense (including the reasonable compensation
and the expenses and disbursements of its agents and counsel) incurred without
negligence or bad faith, arising out of or in connection with the acceptance or
administration of this trust or the performance of its duties hereunder,
including the reasonable costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder. This indemnification shall survive the termination
of this Indenture or the resignation or removal of the Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 5.1(4) occurs, the expenses and the compensation
for the services are intended to constitute expenses of administration under
the Bankruptcy Reform Act of 1978 or any successor statute.
SECTION 6.8. Disqualification; Conflicting Interests.
The Trustee for the Securities of any series issued hereunder shall be
subject to the provisions of Section 310(b) of the Trust Indenture Act.
Nothing herein shall prevent the Trustee from filing with the Commission the
application
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referred to in the second to last paragraph of said Section 310(b).
SECTION 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be:
(a) an entity organized and doing business under the laws of the United
States of America or of any state or territory thereof or of the District of
Columbia, authorized under such laws to exercise corporate trust powers and
subject to supervision or examination by Federal, state, territorial or
District of Columbia authority, or
(b) an entity or other Person organized and doing business under the laws
of a foreign government that is permitted to act as Trustee pursuant to a rule,
regulation or order of the Commission, authorized under such laws to exercise
corporate trust powers, and subject to supervision or examination by authority
of such foreign government or a political subdivision thereof substantially
equivalent to supervision or examination applicable to United States
institutional trustees;
in either case having a combined capital and surplus of at least $50,000,000,
subject to supervision or examination by Federal or state authority. If such
entity publishes reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then, for
the purposes of this Section, the combined capital and surplus of such entity
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article. Neither the Company nor any Person directly or indirectly
controlling, controlled by or under common control with the Company shall serve
as Trustee for the Securities of any series issued hereunder.
SECTION 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 6.11.
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(b) The Trustee may resign at any time with respect to the Securities of
one or more series by giving written notice thereof to the Company. If an
instrument of acceptance by a successor Trustee shall not have been delivered
to the Trustee within 30 days after the giving of such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee with respect to the Securities of such
series.
(c) The Trustee may be removed at any time with respect to the Securities
of any series by Act of the Holders of a majority in aggregate principal amount
of the Outstanding Securities of such series, delivered to the Trustee and to
the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 6.8 after written
request therefor by the Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (i) the Company, acting pursuant to the authority of a
Board Resolution, may remove the Trustee with respect to the Securities of all
series issued hereunder, or (ii) subject to Section 5.14, any Holder who has
been a bona fide Holder of a Security for at least six months may, on behalf of
such Holder and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee with respect to the Securities of
all series issued hereunder and the appointment of a successor Trustee or
Trustees.
(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Trustee for any cause with
respect to the Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee with respect to the
Securities of that or those series. If, within one year after
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such resignation, removal or incapability, or the occurrence of such vacancy, a
successor Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in aggregate principal amount of
the Outstanding Securities of such series delivered to the Company and the
retiring Trustee, the successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Trustee with respect to
the Securities of such series and supersede the successor Trustee appointed by
the Company. If no successor Trustee with respect to the Securities of any
series shall have been so appointed by the Company or the Holders and accepted
appointment in the manner hereinafter provided, any Holder who has been a bona
fide Holder of a Security of such series for at least six months may, subject
to Section 5.14, on behalf of such Holder and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
(f) The Company shall give notice of each resignation and each removal of
the Trustee with respect to the Securities of any series and each appointment
of a successor Trustee with respect to the Securities of any series by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Securities of such series as their names and addresses appear in the
Securities Register. Each notice shall include the name of the successor
Trustee with respect to the Securities of such series and the address of its
Corporate Trust Office.
SECTION 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee with
respect to all Securities, every such successor Trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
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(b) In case of the appointment hereunder of a successor Trustee with
respect to the Securities of one or more (but not all) series, the Company, the
retiring Trustee and each successor Trustee with respect to the Securities of
one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1)
shall contain such provisions as shall be necessary or desirable to transfer
and confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of
that or those series to which the appointment of such successor Trustee
relates, (2) if the retiring Trustee is not retiring with respect to all
Securities, shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Securities of that or those series as to
which the retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, it being understood that
nothing herein or in such supplemental indenture shall constitute such Trustees
or co-trustees of the same trust and that each such Trustee shall be trustee of
a trust or trusts hereunder separate and apart from any trust or trusts
hereunder administered by any other such Trustee; and upon the execution and
delivery of such supplemental indenture the resignation or removal of the
retiring Trustee shall become effective to the extent provided therein and each
removal of the retiring Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts, and duties of the
retiring Trustee with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates; but, on request of the
Company or any successor Trustee, such retiring Trustee shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all rights, powers and trusts referred to in
paragraph (a) or (b) of this Section, as the case may be.
(d) 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.
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SECTION 6.12. Merger, Conversion, Consolidation or Succession to
Business.
Any entity into which the Trustee may be merged or converted or with which
it may be consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any entity succeeding
to all or substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such entity shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto. In case any Securities shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion
or consolidation to such authenticating Trustee may adopt such authentication
and deliver the Securities so authenticated, and in case any Securities shall
not have been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor Trustee or in the name of such
successor Trustee, and in all cases the certificate of authentication shall
have the full force which it is provided anywhere in the Securities or in this
Indenture that the certificate of the Trustee shall have.
SECTION 6.13. Preferential Collection of Claims Against Company.
If and when the Trustee shall be or become a creditor of the Company (or
any other obligor upon the Securities), the Trustee shall be subject to the
provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
SECTION 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities, which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon original
issue and upon exchange, registration of transfer or partial redemption thereof
or pursuant to Section 3.6, and Securities so authenticated shall be entitled
to the benefits of this Indenture and shall be valid and obligatory for all
purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Indenture to the authentication and delivery of Securities by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the
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Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Company and shall at all times be an entity organized and
doing business under the laws of the United States of America, or of any state
or territory thereof or of the District of Columbia, authorized under such laws
to act as Authenticating Agent, having a combined capital and surplus of not
less than $50,000,000 and subject to supervision or examination by Federal or
state authority. If such Authenticating Agent publishes reports of condition
at least annually, pursuant to law or to the requirements of said supervising
or examining authority, then for the purposes of this Section the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease to
be eligible in accordance with the provisions of this Section, such
Authenticating Agent shall resign immediately in the manner and with the effect
specified in this Section.
Any entity into which an Authenticating Agent may be merged or converted
or with which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which such Authenticating Agent shall be a
party, or any entity succeeding to all or substantially all of the corporate
trust business of an Authenticating Agent shall be the successor Authenticating
Agent hereunder, provided such entity shall be otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and to the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent, which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 1.6 to all Holders of Securities
of the series with respect to which such Authenticating Agent will serve. Any
successor Authenticating Agent upon acceptance hereunder shall become vested
with all the rights, powers and duties of its predecessor hereunder, with like
effect as if originally named as an Authenticating Agent. No successor
Authenticating Agent shall be appointed unless eligible under the provision of
this Section.
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The Company agrees to pay to each Authenticating Agent from time to time
reasonable compensation for its services under this Section, and the Trustee
shall be entitled to be reimbursed for such payment, subject to the provisions
of Section 6.7.
If an appointment with respect to one or more series is made pursuant to
this Section, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternative
certificate of authentication in the following form:
This is one of the Securities referred to in the within mentioned
Indenture.
Dated: BANKERS TRUST COMPANY,
------------------- as Trustee
By:
------------------------------
As Authenticating Agent
Name:
Title:
By:
------------------------------
Authorized Signatory
Name:
Title:
ARTICLE VII
HOLDER'S LISTS AND REPORTS BY TRUSTEE,
PAYING AGENT AND COMPANY
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) quarterly, not more than 15 days after , , and
in each year, a list, in such form as the Trustee may reasonably
require, of the names and addresses of the Holders as of such June 30 and
December 31, and
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(b) at such other times as the Trustee may request in writing, within 30
days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished, excluding from any such list names and addresses received by the
Trustee in its capacity as Securities Registrar.
SECTION 7.2. Preservation of Information, Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 7.1 and the names and
addresses of Holders received by the Trustee in its capacity as Securities
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 7.1 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with respect
to their rights under this Indenture or under the Securities, and the
corresponding rights and privileges of the Trustee, shall be as provided in the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of the
disclosure of information as to the names and addresses of the Holders made
pursuant to the Trust Indenture Act.
SECTION 7.3. Reports by Trustee and Paying Agent.
(a) The Trustee shall transmit to Holders such reports concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act, at the times and in the manner provided pursuant thereto.
(b) Reports so required to be transmitted at stated intervals of not more
than 12 months shall be transmitted no later than in each calendar
year, commencing with the first after the first issuance of
Securities under this Indenture.
(c) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Trustee with each securities exchange upon which any
Securities are listed and also with the Commission. The Company will notify
the
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Trustee when any Securities are listed on any securities exchange.
(d) The Paying Agent shall comply with all withholding, backup
withholding, tax and information reporting requirements under the Internal
Revenue Code of 1986, as amended, and the Treasury Regulations issued
thereunder with respect to payments on, or with respect to, the Securities.
SECTION 7.4. Reports by Company.
The Company shall file or cause to be filed with the Trustee and with the
Commission, and transmit to Holders, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided in the Trust Indenture
Act. In the case of information, documents or reports required to be filed
with the Commission pursuant to Section 13(a) or Section 15(d) of the Exchange
Act, the Company shall file or cause the filing of such information documents
or reports with the Trustee within 15 days after the same is required to be
filed with the Commission.
ARTICLE VIII
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 8.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or
convey, transfer or lease its properties and assets substantially as an
entirety to any Person, and no Person shall consolidate with or merge into the
Company or convey, transfer or lease its properties and assets substantially as
an entirety to the Company, unless:
(1) If the Company shall consolidate with or merge into another
Person or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, the entity formed by such
consolidation or into which the Company is merged or the Person that
acquires by conveyance or transfer, or that leases, the properties and
assets of the Company substantially as an entirety shall be an entity
organized and existing under the laws of the United States of America or
any state thereof or the District of Columbia and shall expressly assume,
by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of (and
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premium, if any), and interest (including any Additional Interest) on all
the Securities of every series and the performance of every covenant of
this Indenture on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event that, after notice or lapse of time, or both, would
constitute an Event of Default, shall have occurred and be continuing; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and any such
supplemental indenture comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been
complied with and, in the case of a transaction subject to this Section
8.1 but not requiring a supplemental indenture under paragraph (1) of this
Section 8.1, an Officer's Certificate or Opinion of Counsel to the effect
that the surviving, resulting or successor entity is legally bound by the
Indenture and the Securities; and the Trustee, subject to Section 6.1, may
rely upon such Officers' Certificates and Opinions of Counsel as
conclusive evidence that such transaction complies with this Section 8.1.
SECTION 8.2. Successor Company Substituted.
Upon any consolidation or merger by the Company with or into any other
Person, or any conveyance, transfer or lease by the Company of its properties
and assets substantially as an entirety to any Person in accordance with
Section 8.1, the successor entity formed by such consolidation or into which
the Company is merged or to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; and in the event of any
such conveyance, transfer or lease the Company shall be discharged from all
obligations and covenants under the Indenture and the Securities.
Such successor Person may cause to be executed, and may issue either in
its own name or in the name of the Company, any or all of the Securities
issuable hereunder that theretofore shall not have been signed by the Company
and delivered to the Trustee; and, upon the order of such successor Person
instead of the Company and subject to all the
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terms, conditions and limitations in this Indenture prescribed, the Trustee
shall authenticate and shall deliver any Securities that previously shall have
been signed and delivered by the officers of the Company to the Trustee for
authentication pursuant to such provisions and any Securities that such
successor Person thereafter shall cause to be executed and delivered to the
Trustee on its behalf for the purpose pursuant to such provisions. All the
Securities so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Securities theretofore or thereafter issued in
accordance with the terms of this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease, such
changes in phraseology and form may be made in the Securities thereafter to be
issued as may be appropriate.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.1. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Trustee, at any time and from time to time, may amend or
waive any provision of this Indenture or enter into one or more indentures
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(1) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company
herein and in the Securities contained; or
(2) to convey, transfer, assign, mortgage or pledge any property to
or with the Trustee or to surrender any right or power herein conferred
upon the Company; or
(3) to establish the form or terms of Securities of any series as
permitted by Sections 2.1 or 3.1; or
(4) to facilitate the issuance of Securities of any series in
certificated or other definitive form; or
(5) to add to the covenants of the Company for the benefit of the
Holders of all or any series of Securities (and if such covenants are to
be for the benefit of less than all series of Securities, stating that
such
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covenants are expressly being included solely for the benefit of the
series specified) or to surrender any right or power herein conferred upon
the Company; or
(6) to add any additional Events of Default for the benefit of the
Holders of all or any series of Securities (and if such additional Events
of Defaults are to be for the benefit of less than all series of
Securities, stating that such additional Events of Default are expressly
being included solely for the benefit of the series specified); or
(7) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall (a) become effective
only when there is no Security Outstanding of any series created prior to
the execution of such supplemental indenture that is entitled to the
benefit of such provision or (b) not apply to any Outstanding Securities;
or
(8) to cure any ambiguity, to correct or supplement any provision
herein that may be defective or inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture, provided that such action pursuant
to this clause (8) shall not adversely affect the interest of the Holders
of Securities of any series in any material respect or, in the case of the
Securities of a series issued to an Issuer Trust and for so long as any of
the corresponding series of Preferred Securities issued by such Issuer
Trust shall remain outstanding, the holders of such Preferred Securities;
or
(9) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, pursuant
to the requirements of Section 6.11(b); or
(10) to comply with the requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act.
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SECTION 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by a Board Resolution, and the Trustee
may enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders of Securities of such series under this Indenture; provided, however,
that no such supplemental indenture shall, without the consent of the Holder of
each Outstanding Security of each series affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest (including any Additional Interest) on, any
Security, or reduce the principal amount thereof or the rate of interest
thereon or any premium payable upon the redemption thereof, or reduce the
amount of principal of a Discount Security that would be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to
Section 5.2, or change the place of payment where, or the coin or currency
in which, any Security or interest thereon is payable, or impair the right
to institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date), or
(2) reduce the percentage in aggregate principal amount of the
Outstanding Securities of any series, the consent of whose Holders is
required for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with certain provisions
of this Indenture or certain defaults hereunder and their consequences)
provided for in this Indenture, or
(3) modify any of the provisions of this Section, Section 5.13 or
Section 10.5, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Security affected thereby;
provided, further, that, in the case of the Securities of a series issued
to an Issuer Trust, so long as any of the corresponding series of
Preferred Securities issued by such
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Issuer Trust remains outstanding, (i) no such amendment shall be made that
adversely affects the holders of such Preferred Securities in any material
respect, and no termination of this Indenture shall occur, and no waiver
of any Event of Default or compliance with any covenant under this
Indenture shall be effective, without the prior consent of the holders of
at least a majority of the aggregate Liquidation Amount (as defined in the
related Trust Agreement) of such Preferred Securities then outstanding
unless and until the principal of (and premium, if any, on) the Securities
of such series and all accrued and (subject to Section 3.8) unpaid
interest (including any Additional Interest) thereon have been paid in
full, and (ii) no amendment shall be made to Section 5.8 of this Indenture
that would impair the rights of the holders of Preferred Securities issued
by an Issuer Trust provided therein without the prior consent of the
holders of each such Preferred Security then outstanding unless and until
the principal of (and premium, if any, on) the Securities of such series
and all accrued and (subject to Section 3.8) unpaid interest (including
any Additional Interest) thereon have been paid in full.
A supplemental indenture that changes or eliminates any covenant or other
provision of this Indenture that has expressly been included solely for the
benefit of one or more particular series of Securities or any corresponding
series of Preferred Securities of an Issuer Trust that holds the Securities of
any series, or that modifies the rights of the Holders of Securities of such
series or holders of such Preferred Securities of such corresponding series with
respect to such covenant or other provision, shall be deemed not to affect the
rights under this Indenture of the Holders of Securities of any other series or
holders of Preferred Securities of any other such corresponding series.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such Act shall approve the substance thereof.
SECTION 9.3. Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and (subject to Section 6.1) shall be fully protected in relying upon,
an Officers' Certificate and an Opinion of Counsel stating that
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the execution of such supplemental indenture is authorized or permitted by this
Indenture, and that all conditions precedent herein provided for relating to
such action have been complied with. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture that affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the Trust Indenture Act as then in effect.
SECTION 9.6. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Company, bear a notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the Company shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Company, to any such supplemental indenture may be prepared and
executed by the Company and authenticated and delivered by the Trustee in
exchange for Outstanding Securities of such series.
ARTICLE X
COVENANTS
SECTION 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of (and premium,
if any) and interest (including any Additional Interest) on the Securities of
that series in accordance with the terms of such Securities and this Indenture.
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SECTION 10.2. Maintenance of Office or Agency.
The Company will maintain in each Place of Payment for any series of
Securities an office or agency where Securities of that series may be presented
or surrendered for payment, where Securities of that series may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities of that series and this Indenture
may be served. The Company initially appoints the Trustee, acting through its
Corporate Trust Office, as its agent for said purposes. The Company will give
prompt written notice to the Trustee of any change in the location of any such
office or agency. If at any time the Company shall fail to maintain such
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at
the Corporate Trust Office of the Trustee, and the Company hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other offices
or agencies where the Securities may be presented or surrendered for any or all
of such purposes, and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in each
Place of Payment for Securities of any series for such purposes. The Company
will give prompt written notice to the Trustee of any such designation and any
change in the location of any such office or agency.
SECTION 10.3. Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect
to any series of Securities, it will, on or before each due date of the
principal of (and premium, if any) or interest (including Additional Interest)
on any of the Securities of such series, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay the principal
(and premium, if any) or interest (including Additional Interest) so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided, and will promptly notify the Trustee of its failure so to act.
Whenever the Company shall have one or more Paying Agents, it will, prior
to 10:00 a.m., New York City time, on
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each due date of the principal of (or premium, if any) or interest, including
Additional Interest on any Securities, deposit with a Paying Agent a sum
sufficient to pay the principal (and premium, if any) or interest, including
Additional Interest so becoming due, such sum to be held in trust for the
benefit of the Persons entitled to such principal (and premium, if any) or
interest, including Additional Interest, and (unless such Paying Agent is the
Trustee) the Company will promptly notify the Trustee of its failure so to act.
The Company will cause each Paying Agent other than the Trustee to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any, or interest (including Additional Interest) on the Securities
of a series in trust for the benefit of the Persons entitled thereto until such
sums shall be paid to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon such Securities) in the making of any payment of principal (and
premium, if any) or interest (or Additional Interest) in respect of any
Security of any Series;
(3) at any time during the continuance of any default with respect to a
series of Securities, upon the written request of the Trustee, forthwith pay to
the Trustee all sums so held in trust by such Paying Agent with respect to such
series; and
(4) comply with the provisions of the Trust Indenture Act applicable to it
as a Paying Agent.
The Company may, at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same trusts 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.
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Any money deposited with the Trustee or any Paying Agent, or then held by
the Company in trust for the payment of the principal of (and premium, if any)
or interest (including Additional Interest) on any Security and remaining
unclaimed for two years after such principal (and premium, if any) or interest
(including Additional Interest) has become due and payable shall (unless
otherwise required by mandatory provision of applicable escheat or abandoned or
unclaimed property law) be paid on Company Request to the Company, or (if then
held by the Company) shall (unless otherwise required by mandatory provision of
applicable escheat or abandoned or unclaimed property law) be discharged from
such trust; and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, the City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then
remaining will be repaid to the Company.
SECTION 10.4. Statement as to Compliance.
The Company shall deliver to the Trustee, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate covering the preceding calendar year, stating whether or not to the
best knowledge of the signers thereof of the Company is in default in the
performance, observance or fulfillment of or compliance with any of the terms,
provisions, covenants and conditions of this Indenture, and if the Company
shall be in default, specifying all such defaults and the nature and status
thereof of which they may have knowledge. For the purpose of this Section
10.4, compliance shall be determined without regard to any grace period or
requirement of notice provided pursuant to the terms of this Indenture.
SECTION 10.5. Waiver of Certain Covenants.
Subject to the rights of holders of Preferred Securities specified in
Section 9.2, if any, the Company may omit in any particular instance to comply
with any covenant or condition provided pursuant to Section 3.1, 9.1(3) or
9.1(4) with
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respect to the Securities of any series, if before or after the time for such
compliance the Holders of at least a majority in aggregate principal amount of
the Outstanding Securities of such series shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
covenant or condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company in respect of any
such covenant or condition shall remain in full force and effect.
SECTION 10.6. Additional Sums.
In the case of the Securities of a series initially issued to an Issuer
Trust, so long as no Event of Default has occurred and is continuing and except
as otherwise specified as contemplated by Section 2.1 or Section 3.1, if (i) an
Issuer Trust is the Holder of all of the Outstanding Securities of such series,
and (ii) a Tax Event described in clause (i) or (iii) of the definition of "Tax
Event" in Section 1.1 hereof has occurred and is continuing in respect of such
Issuer Trust, the Company shall pay to such Issuer Trust (and its permitted
successors or assigns under the related Trust Agreement) for so long as such
Issuer Trust (or its permitted successor or assignee) is the registered holder
of the Outstanding Securities of such series, such additional sums as may be
necessary in order that the amount of Distributions (including any Additional
Amounts (as defined in such Trust Agreement)) then due and payable by such
Issuer Trust on the related Preferred Securities and Common Securities that at
any time remain outstanding in accordance with the terms thereof shall not be
reduced as a result of such Additional Taxes (the "Additional Sums"). Whenever
in this Indenture or the Securities there is a reference in any context to the
payment of principal of or interest on the Securities, such mention shall be
deemed to include mention of the payments of the Additional Sums provided for in
this paragraph to the extent that, in such context, Additional Sums are, were or
would be payable in respect thereof pursuant to the provisions of this paragraph
and express mention of the payment of Additional Sums (if applicable) in any
provisions hereof shall not be construed as excluding Additional Sums in those
provisions hereof where such express mention is not made; provided, however,
that the deferral of the payment of interest pursuant to Section 3.12 or the
Securities shall not defer the payment of any Additional Sums that may be due
and payable.
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SECTION 10.7. Additional Covenants.
The Company covenants and agrees with each Holder of Securities of each
series that it shall not (x) declare or pay any dividends or distributions on,
or redeem purchase, acquire or make a liquidation payment with respect to, any
shares of the Company's capital stock, or (y) make any payment of principal of
or interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Company that rank pari passu in all respects with or junior
in interest to the Securities of such series (other than (a) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into
prior to the applicable Extension Period or other event referred to below, (b)
as a result of an exchange or conversion of any class or series of the
Company's capital stock (or any capital stock of a Subsidiary of the Company)
for any class or series of the Company's capital stock or of any class or
series of the Company's indebtedness for any class or series of the Company's
capital stock, (c) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with any Rights Plan, or the issuance
of rights, stock or other property under any Rights Plan, or the redemption or
repurchase of rights pursuant thereto, or (e) any dividend in the form of
stock, warrants, options or other rights where the dividend stock or the stock
issuable upon exercise of such warrants, options or other rights is the same
stock as that on which the dividend is being paid or ranks pari passu with or
junior to such stock) if at such time (i) there shall have occurred any event
(A) of which the Company has actual knowledge that with the giving of notice or
the lapse of time, or both, would constitute an Event of Default with respect
to the Securities of such series, and (B) which the Company shall not have
taken reasonable steps to cure, (ii) if the Securities of such series are held
by an Issuer Trust, the Company shall be in default with respect to its payment
of any obligations under the Guarantee relating to the Preferred Securities
issued by such Issuer Trust, or (iii) the Company shall have given notice of
its election to begin an Extension Period with respect to the Securities of
such series as provided herein
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and shall not have rescinded such notice, or such Extension Period, or any
extension thereof, shall be continuing.
The Company also covenants with each Holder of Securities of a series
issued to an Issuer Trust (i) to hold, directly or indirectly, 100% of the
Common Securities of such Issuer Trust, provided that any permitted successor
of the Company as provided under Section 8.2 may succeed to the Company's
ownership of such Common Securities, (ii) as holder of such Common Securities,
not to voluntarily terminate, windup or liquidate such Issuer Trust, other than
(a) in connection with a distribution of the Securities of such series to the
holders of the related Preferred Securities in liquidation of such Issuer Trust,
or (b) in connection with certain mergers, consolidations or amalgamations
permitted by the related Trust Agreement, and (iii) to use its reasonable
efforts, consistent with the terms and provisions of such Trust Agreement, to
cause such Issuer Trust to continue not to be taxable as a corporation for
United States Federal income tax purposes.
SECTION 10.8. Original Issue Discount.
On or before December 15 of each year during which any Securities are
outstanding, the Company shall furnish to each Paying Agent such information as
may be reasonably requested by each Paying Agent in order that each Paying
Agent may prepare the information which it is required to report for such year
on Internal Revenue Service Forms 1096 and 1099 pursuant to Section 6049 of the
Internal Revenue Code of 1986, as amended. Such information shall include the
amount of original issue discount includible in income for each authorized
minimum denomination of principal amount at Stated Maturity of outstanding
Securities during such year.
ARTICLE XI
REDEMPTION OF SECURITIES
SECTION 11.1. Applicability of This Article.
Redemption of Securities of any series as permitted or required by any
form of Security issued pursuant to this Indenture shall be made in accordance
with such form of Security and this Article; provided, however, that, if any
provision of any such form of Security shall conflict with any provision of
this Article, the provision of such form of Security shall govern.
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SECTION 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
or pursuant to a Board Resolution. In case of any redemption at the election
of the Company, the Company shall, not less than 30 nor more than 60 days prior
to the Redemption Date (unless a shorter notice shall be satisfactory to the
Trustee), notify the Trustee and, in the case of Securities of a series held by
an Issuer Trust, the Property Trustee under the related Trust Agreement, of
such date and of the principal amount of Securities of the applicable series to
be redeemed and provide the additional information required to be included in
the notice or notices contemplated by Section 11.4; provided that, in the case
of any series of Securities initially issued to an Issuer Trust, for so long as
such Securities are held by such Issuer Trust, such notice shall be given not
less than 45 nor more than 75 days prior to such Redemption Date (unless a
shorter notice shall be satisfactory to the Property Trustee under the related
Trust Agreement). In the case of any redemption of Securities prior to the
expiration of any restriction on such redemption provided in the terms of such
Securities, the Company shall furnish the Trustee with an Officers' Certificate
and an Opinion of Counsel evidencing compliance with such restriction.
SECTION 11.3. Selection of Securities to be Redeemed.
If less than all the Securities of any series are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities of
such series not previously called for redemption, by such method as the Trustee
shall deem fair and appropriate and which may provide for the selection for
redemption of a portion of the principal amount of any Security of such series,
provided that the unredeemed portion of the principal amount of any Security
shall be in an authorized denomination (which shall not be less than the
minimum authorized denomination) for such Security.
The Trustee shall promptly notify the Company in writing of the Securities
selected for partial redemption and the principal amount thereof to be
redeemed. For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Security redeemed or to be redeemed only in part, to the
portion of the principal amount of such Security that has been or is to be
redeemed.
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SECTION 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not later than the thirtieth day, and not earlier than the sixtieth day,
prior to the Redemption Date, to each Holder of Securities to be redeemed, at
the address of such Holder as it appears in the Securities Register.
With respect to Securities of such series to be redeemed, each notice of
redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price or, if the Redemption Price cannot be calculated
prior to the time the notice is required to be sent, the estimate of the
Redemption Price provided pursuant to the Indenture together with a statement
that it is an estimate and that the actual Redemption Price will be calculated
on the third Business Day prior to the Redemption Date (if such an estimate of
the Redemption Price is given, a subsequent notice shall be given as set forth
above setting forth the Redemption Price promptly following the calculation
thereof);
(c) if less than all Outstanding Securities of such particular series are
to be redeemed, the identification (and, in the case of partial redemption, the
respective principal amounts) of the particular Securities to be redeemed;
(d) that, on the Redemption Date, the Redemption Price will become due
and payable upon each such Security or portion thereof, and that interest
thereon, if any, shall cease to accrue on and after said date;
(e) the place or places where such Securities are to be surrendered for
payment of the Redemption Price;
(f) such other provisions as may be required in respect of the terms of a
particular series of Securities; and
(g) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company and shall be irrevocable.
The notice, if mailed in the manner provided above, shall be conclusively
presumed to have been duly given, whether or not the Holder
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receives such notice. In any case, a failure to give such notice by mail or
any defect in the notice to the Holder of any Security designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Security.
SECTION 11.5. Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on the Redemption Date specified
in the notice of redemption given as provided in Section 11.4, the Company will
deposit with the Trustee or with one or more Paying Agents (or if the Company
is acting as its own Paying Agent, the Company will segregate and hold in trust
as provided in Section 10.3) an amount of money sufficient to pay the
Redemption Price of, and any accrued interest (including Additional Interest)
on, all the Securities (or portions thereof) that are to be redeemed on that
date.
SECTION 11.6. Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in Section 11.4,
the Securities or portion of Securities with respect to which such notice has
been given shall become due and payable on the date and at the place or places
stated in such notice at the applicable Redemption Price, together with accrued
interest (including any Additional Interest) to the Redemption Date. On
presentation and surrender of such Securities at a Place of Payment in said
notice specified, the said Securities or the specified portions thereof shall
be paid and redeemed by the Company at the applicable Redemption Price,
together with accrued interest (including any Additional Interest) to the
Redemption Date; provided, however, that, unless otherwise specified as
contemplated by Section 3.1, installments of interest (including Additional
Interest) whose Stated Maturity is on or prior to the Redemption Date will be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant record
dates according to their terms and the provisions of Section 3.8.
Upon presentation of any Security redeemed in part only, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder thereof,
at the expense of the Company, a new Security or Securities of the same series,
of authorized denominations, in aggregate principal amount equal to the
unredeemed portion of the Security so presented and having the same Original
Issue Date, Stated Maturity and terms.
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If any Security called for redemption shall not be so paid under surrender
thereof for redemption, the principal of and premium, if any, on such Security
shall, until paid, bear interest from the Redemption Date at the rate
prescribed therefor in the Security.
SECTION 11.7. Right of Redemption of Securities
Initially Issued to an Issuer Trust.
In the case of the Securities of a series initially issued to an Issuer
Trust, except as otherwise specified as contemplated by Section 3.1, the
Company, at its option, may redeem such Securities (i) on or after the date
specified in such Security, in whole at any time or in part from time to time,
or (ii) upon the occurrence and during the continuation of a Tax Event, an
Investment Company Event or a Capital Treatment Event, at any time within 90
days following the occurrence and during the continuation of such Tax Event,
Investment Company Event or Capital Treatment Event, in whole (but not in
part), in each case at a Redemption Price specified in such Security, together
with accrued interest (including Additional Interest) to the Redemption Date.
If less than all the Securities of any such series are to be redeemed, the
aggregate principal amount of such Securities remaining Outstanding after
giving effect to such redemption shall be sufficient to satisfy any provisions
of the Trust Agreement related to the Issuer Trust to which such Securities
were issued.
ARTICLE XII
SINKING FUNDS
Except as may be provided in any supplemental or amended indenture, no
sinking fund shall be established or maintained for the retirement of
Securities of any series.
ARTICLE XIII
SUBORDINATION OF SECURITIES
SECTION 13.1. Securities Subordinate to Senior
Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by its
acceptance thereof, likewise covenants and agrees, that, to the extent and in
the manner hereinafter set forth in this Article, the payment of the principal
of (and
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premium, if any) and interest (including any Additional Interest) on each and
all of the Securities of each and every series are hereby expressly made
subordinate and subject in right of payment to the prior payment in full of all
Senior Indebtedness.
SECTION 13.2. No Payment When Senior Indebtedness in Default; Payment
Over of Proceeds Upon Dissolution, Etc.
If the Company shall default in the payment of any principal of (or
premium, if any) or interest on any Senior Indebtedness when the same becomes
due and payable, whether at maturity or at a date fixed for prepayment or by
declaration of acceleration or otherwise, then, upon written notice of such
default to the Company by the holders of Senior Indebtedness or any trustee
therefor, unless and until such default shall have been cured or waived or
shall have ceased to exist, no direct or indirect payment (in cash, property,
securities, by set-off or otherwise) shall be made or agreed to be made on
account of the principal of (or premium, if any) or interest (including
Additional Interest) on any of the Securities, or in respect of any redemption,
repayment, retirement, purchase or other acquisition of any of the Securities.
In the event of (i) any insolvency, bankruptcy, receivership, liquidation,
reorganization, readjustment, composition or other similar proceeding relating
to the Company, its creditors or its property, (ii) any proceeding for the
liquidation, dissolution or other winding up of the Company, voluntary or
involuntary, whether or not involving insolvency or bankruptcy proceedings,
(iii) any assignment by the Company for the benefit of creditors or (iv) any
other marshalling of the assets of the Company (each such event, if any, herein
sometimes referred to as a "Proceeding"), all Senior Indebtedness (including
any interest thereon accruing after the commencement of any such proceedings)
shall first be paid in full before any payment or distribution, whether in
cash, securities or other property, shall be made to any Holder of any of the
Securities on account thereof. Any payment or distribution, whether in cash,
securities or other property (other than securities of the Company or any other
entity provided for by a plan of reorganization or readjustment, the payment of
which is subordinate, at least to the extent provided in these subordination
provisions with respect to the indebtedness evidenced by the Securities, to the
payment of all Senior Indebtedness at the time outstanding and to any
securities issued in respect thereof under any such plan of reorganization or
readjustment), which would otherwise
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(but for these subordination provisions) be payable or deliverable in respect
of the Securities of any series shall be paid or delivered directly to the
holders of Senior Indebtedness in accordance with the priorities then existing
among such holders until all Senior Indebtedness (including any interest
thereon accruing after the commencement of any Proceeding) shall have been paid
in full.
In the event of any Proceeding, after payment in full of all sums owing
with respect to Senior Indebtedness, the Holders of the Securities, together
with the holders of any obligations of the Company ranking on a parity with the
Securities, shall be entitled to be paid from the remaining assets of the
Company the amounts at the time due and owing on account of unpaid principal of
(and premium, if any) and interest on the Securities and such other obligations
before any payment or other distribution; whether in cash, property or
otherwise, shall be made on account of any capital stock or any obligations of
the Company ranking junior to the Securities, and such other obligations. If,
notwithstanding the foregoing, any payment or distribution of any character or
any security, whether in cash, securities or other property (other than
securities of the Company or any other entity provided for by a plan of
reorganization or readjustment the payment of which is subordinate, at least to
the extent provided in these subordination provisions with respect to the
indebtedness evidenced by the Securities, to the payment of all Senior
Indebtedness at the time outstanding and to any securities issued in respect
thereof under any plan of reorganization or readjustment), shall be received by
the Trustee or any Holder in contravention of any of the terms hereof and
before all Senior Indebtedness shall have been paid in full, such payment or
distribution or security shall be received in trust for the benefit of, and
shall be paid over or delivered and transferred to, the holders of the Senior
Indebtedness at the time outstanding in accordance with the priorities then
existing among such holders for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary to pay all such Senior
Indebtedness in full. In the event of the failure of the Trustee or any Holder
to endorse or assign any such payment, distribution or security, each holder of
Senior Indebtedness is hereby irrevocably authorized to endorse or assign the
same.
The Trustee and the Holders shall take such action (including, without
limitation, the delivery of this Indenture to an agent for the holders of
Senior Indebtedness or consent to the filing of a financing statement with
respect hereto) as may, in the opinion of counsel designated by the holders of
a majority in principal amount of the Senior Indebtedness at the
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time outstanding, be necessary or appropriate to assure the effectiveness of
the subordination effected by these provisions.
The provisions of this Section 13.2 shall not impair any rights,
interests, remedies or powers of any secured creditor of the Company in respect
of any security interest the creation of which is not prohibited by the
provisions of this Indenture.
The securing of any obligations of the Company, otherwise ranking on a
parity with the Securities or ranking junior to the Securities shall not be
deemed to prevent such obligations form constituting, respectively, obligations
ranking on a parity with the Securities or ranking junior to the Securities.
SECTION 13.3. Payment Permitted If No Default.
Nothing contained in this Article or elsewhere in this Indenture or in any
of the Securities shall prevent (a) the Company, at any time, except during the
pendency of the conditions described in the first paragraph of Section 13.2 or
of any Proceeding referred to in Section 13.2, from making payments at any time
of principal of (and premium, if any) or interest (including Additional
Interest) on the Securities, or (b) the application by the Trustee of any
monies deposited with it hereunder to the payment of or on account of the
principal of (and premium, if any) or interest (including any Additional
Interest) on the Securities or the retention of such payment by the Holders,
if, at the time of such application by the Trustee, it did not have knowledge
that such payment would have been prohibited by the provisions of this Article.
SECTION 13.4. Subrogation to Rights of Holders of Senior Indebtedness.
Subject to the payment in full of all amounts due or to become due on all
Senior Indebtedness, or the provision for such payment in cash or cash
equivalents or otherwise in a manner satisfactory to the holders of Senior
Indebtedness, the Holders of the Securities shall be subrogated to the extent
of the payments or distributions made to the holders of such Senior
Indebtedness pursuant to the provisions of this Article (equally and ratably
with the holders of all indebtedness of the Company that by its express terms
is subordinated to Senior Indebtedness of the Company to substantially the same
extent as the Securities are subordinated to the Senior Indebtedness and is
entitled to like rights of subrogation by
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reason of any payments or distributions made to holders of such Senior
Indebtedness) to the rights of the holders of such Senior Indebtedness to
receive payments and distributions of cash, property and securities applicable
to the Senior Indebtedness until the principal of (and premium if any) and
interest (including Additional Interest) on the Securities shall be paid in
full. For purposes of such subrogation, no payments or distributions to the
holders of the Senior Indebtedness of any cash, property or securities to which
the Holders of the Securities or the Trustee would be entitled except for the
provisions of this Article, and no payments over pursuant to the provisions of
this Article to the holders of Senior Indebtedness by Holders of the Securities
or the Trustee, shall, as among the Company, its creditors other than holders
of Senior Indebtedness, and the Holders of the Securities, be deemed to be a
payment or distribution by the Company to or on account of the Senior
Indebtedness.
SECTION 13.5. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the purpose
of defining the relative rights of the Holders of the Securities on the one
hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities
is intended to or shall (a) impair, as between the Company and the Holders of
the Securities, the obligations of the Company, which are absolute and
unconditional, to pay to the Holders of the Securities the principal of (and
premium, if any) and interest (including any Additional Interest) on the
Securities as and when the same shall become due and payable in accordance with
their terms; or (b) affect the relative rights against the Company of the
Holders of the Securities and creditors of the Company other than their rights
in relation to the holders of Senior Indebtedness; or (c) prevent the Trustee
or the Holder of any Security (or to the extent expressly provided herein, the
holder of any Capital Security) from exercising all remedies otherwise
permitted by applicable law upon default under this Indenture, including filing
and voting claims in any Proceeding, subject to the rights, if any, under this
Article of the holders of Senior Indebtedness to receive cash, property and
securities otherwise payable or deliverable to the Trustee or such Holder.
SECTION 13.6. Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof authorizes and
directs the Trustee on his or her
- 95 -
<PAGE> 102
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination provided in this Article and appoints the Trustee
his or her attorney-in- fact for any and all such purposes.
SECTION 13.7. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof that any such holder may have or
be otherwise charged with.
Without in any way limiting the generality of the immediately preceding
paragraph, the holders of Senior Indebtedness may, at any time and from time to
time, without the consent of or notice to the Trustee or the Holders of the
Securities of any series, without incurring responsibility to such Holders of
the Securities and without impairing or releasing the subordination provided in
this Article or the obligations hereunder of such Holders of the Securities to
the holders of Senior Indebtedness, do any one or more of the following: (i)
change the manner, place or terms of payment or extent the time of payment of,
or renew or alter, Senior Indebtedness, or otherwise amend or supplement in any
manner Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (iii) release any Person liable in any manner for
the collection of Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights against the Company and any other Person.
SECTION 13.8. Notice to Trustee.
The Company shall give prompt written notice to a Responsible Officer of
the Trustee of any fact known to the Company that would prohibit the making of
any payment to or by the Trustee in respect of the Securities. Notwithstanding
the provisions of this Article or any other provision of this Indenture, the
Trustee shall not be charged with knowledge of the existence of any facts that
would prohibit the making of any payment to or by the Trustee in respect of the
Securities, unless and until the Trustee shall have received written notice
thereof from the Company or a holder of Senior
- 96 -
<PAGE> 103
Indebtedness or from any trustee, agent or representative therefor; provided,
however, that if the Trustee shall not have received the notice provided for in
this Section at least two Business Days prior to the date upon which by the
terms hereof any monies may become payable for any purpose (including, the
payment of the principal of (and premium, if any, on) or interest (including
any Additional Interest) on any Security), then, anything herein contained to
the contrary notwithstanding, the Trustee shall have full power and authority
to receive such monies and to apply the same to the purpose for which they were
received and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.
Subject to the provisions of Section 6.1, the Trustee shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
or herself to be a holder of Senior Indebtedness (or a trustee or attorney-in-
fact therefor) to establish that such notice has been given by a holder of
Senior Indebtedness (or a trustee or attorney-in- fact therefor). In the event
that the Trustee determines in good faith that further evidence is required
with respect to the right of any Person as a holder of Senior Indebtedness to
participate in any payment or distribution pursuant to this Article, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article, and if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment.
SECTION 13.9. Reliance on Judicial Order or Certificate of Liquidating
Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 6.1, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such Proceeding is
pending, or a certificate of the trustee in bankruptcy, receiver, conservator,
liquidating trustee, custodian, assignee for the benefit of creditors, agent or
other Person making such payment or distribution, delivered to the Trustee or
to the Holders of Securities, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of the
Senior Indebtedness and other indebtedness of the Company, the amount
- 97 -
<PAGE> 104
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article.
SECTION 13.10. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee, in its capacity as trustee under this Indenture, shall not be
deemed to owe any fiduciary duty to the holders of Senior Indebtedness and
shall not be liable to any such holders if it shall in good faith mistakenly
pay over or distribute to Holders of Securities or to the Company or to any
other Person cash, property or securities to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article or otherwise.
SECTION 13.11. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Indebtedness that may at
any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
SECTION 13.12. Article Applicable to Paying Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee.
SECTION 13.13. Certain Conversions or Exchanges Deemed Payment.
For purposes of this Article only, (a) the issuance and delivery of junior
securities upon conversion or exchange of Securities of any series shall not be
deemed to constitute a payment or distribution on account of the principal of
(or premium, if any, on) or interest (including any Additional Interest) on
such Securities or on account of the purchase or other acquisition of such
Securities, and (b) the payment, issuance or delivery of cash, property or
securities (other than junior securities) upon conversion or exchange of a
- 98 -
<PAGE> 105
Security of any series shall be deemed to constitute payment on account of the
principal of such security. For the purposes of this Section, the term "junior
securities" means (i) shares of any stock of any class of the Company, and (ii)
securities of the Company that are subordinated in right of payment to all
Senior Indebtedness that may be outstanding at the time of issuance or delivery
of such securities to substantially the same extent as, or to a greater extent
than, the Securities are so subordinated as provided in this Article.
* * * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
[Remainder of page left intentionally blank; signatures appear
on following page.]
- 99 -
<PAGE> 106
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.
Attest: JEFFBANKS, INC.
-------------------
By:
------------------------------
Name:
Title:
Attest: BANKERS TRUST COMPANY, as
------------------- Trustee
By:
------------------------------
Name:
Title:
- 100 -
<PAGE> 107
ANNEX A
FORM OF RESTRICTED SECURITIES CERTIFICATE
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Section 3.6(b) of
the Indenture referred to below)
[ ],
as Securities Registrar
[address]
Re: [Title of Securities] of JeffBanks, Inc. (the "Securities")
Reference is made to the Junior Subordinated Indenture, dated as of
January ___, 1997 (the "Indenture"), between JeffBanks, Inc., a Pennsylvania
corporation, and Bankers Trust Company, as Trustee. Terms used herein and
defined in the Indenture or in Regulation S, Rule 144A or Rule 144 under the
U.S. Securities Act of 1933 (the "Securities Act") are used here as so defined.
This certificate relates to $ aggregate principal amount of
Securities, which are evidenced by the following certificate(s) (the "Specified
Securities"):
CUSIP No(s).
CERTIFICATE No(s).
CURRENTLY IN GLOBAL FORM: Yes _____ No _____(check one)
The person in whose name this certificate is executed below
(the "Undersigned") hereby certifies that either (i) it is the
sole beneficial owner of the Specified Securities or (ii) it
is acting on behalf of all the beneficial owners of the
Specified Securities and is duly authorized by them to do so.
Such beneficial owner or owners are referred to herein
collectively as the "Owner". If the Specified Securities are
represented by a Global Security, they are held through a
Depositary or an Agent Member in the name of the Undersigned,
as or on behalf of the Owner. If the Specified Securities are
- 101 -
<PAGE> 108
not represented by a Global Security, they are registered in the name of the
Undersigned, as or on behalf of the Owner.
The Owner has requested that the Specified Securities be transferred to a
person (the "Transferee") who will take delivery in the form of a Restricted
Security. In connection with such transfer, the Owner hereby certifies that,
unless such transfer is being effected pursuant to an effective registration
statement under the Securities Act, it is being effected in accordance with
Rule 144A, Rule 904 of Regulation S or Rule 144 under the Securities Act and
all applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies that
(1) Rule 144A Transfers. If the transfer is being effected in
accordance with Rule 144A:
(A) the Specified Securities are being transferred to a person
that the Owner and any person acting on its behalf reasonably believe
is a "qualified institutional buyer" within the meaning of Rule 144A,
acquiring for its own account or for the account of a qualified
institutional buyer; and
(B) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the
Owner may be relying on Rule 144A in connection with the transfer;
and
(2) Rule 904 Transfers. If the transfer is being effected in
accordance with Rule 904:
(A) the Owner is not a distributor of the Securities, an
affiliate of the Company or any such distributor or a person acting
in behalf of any of the foregoing;
(B) the offer of the Specified Securities was not made to a
person in the United States;
(C) either;
(i) at the time the buy order was originated, the
Transferee was outside the United States or the Owner and any
person acting on its behalf reasonably believed that the
Transferee was outside the United States, or
- 102 -
<PAGE> 109
(ii) the transaction is being executed in, on or through
the facilities of the Eurobond market, as regulated by the
Association of International Bond Dealers, or another designated
offshore securities market and neither the Owner nor any person
acting on its behalf know that the transaction has been
prearranged with a buyer in the United States;
(D) no directed selling efforts within the meaning of Rule 902
of Regulation S have been made in the United States by or on behalf
of the Owner or any affiliate thereof; and
(E) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act.
(3) Rule 144 Transfers. If the transfer is being effected pursuant
to Rule 144:
(A) the transfer is occurring after a holding period of at least
two years (computed in accordance with paragraph (d) of Rule 144) has
elapsed since the date the Specified Securities were acquired from the
Company or from an affiliate (as such term is defined in Rule 144), or
such shorter period as Rule 144 may hereinafter require, of the
Company, whichever is later, and is being effected in accordance with
the applicable amount, manner of sale and notice requirements of
paragraphs (e), (f) and (h) of Rule 144;
(B) the transfer is occurring after a holding period by the
Owner of at least three years has elapsed since the date the
Specified Securities were acquired from the Company or from an
affiliate (as such term is defined in Rule 144) of the Company,
whichever is later, and the Owner is not, and during the preceding
three months has not been, an affiliate of the Company; or
(C) the Owner is a Qualified Institutional Buyer under Rule
144A or has acquired the Securities otherwise in accordance with
Sections (1), (2) or (3) hereof and is transferring the Securities to
an institutional accredited investor in a transaction exempt from the
requirements of the Securities Act.
- 103 -
<PAGE> 110
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company and the Initial Purchasers (as defined
in the Trust Agreement relating to the Issuer Trust to which the Securities
were initially issued).
(Print the name of the Undersigned, as
such term is defined in the second
paragraph of this certificate.)
Dated: By:
-------------------- -------------------------
Name:
Title:
(If the Undersigned is a corporation,
partnership or fiduciary, the title of the
person signing on behalf of the
Undersigned must be stated.)
- 104 -
<PAGE> 1
EXHIBIT 4.2
TRUST AGREEMENT
This TRUST AGREEMENT, dated as of January 21, 1997 (this "Trust
Agreement"), among (i) JEFFBANKS, INC., a Pennsylvania corporation (the
"Depositor"), and (ii) BANKERS TRUST (DELAWARE), a Delaware banking corporation
(the "Trustee"). The Depositor and the Trustee hereby agree as follows:
1. The trust created hereby (the "Trust") shall be known as "JBI
Capital Trust I" in which name the Trustee, or the Depositor to the extent
provided herein, may engage in the transactions contemplated hereby, make and
execute contracts, and sue and be sued.
2. The Depositor hereby assigns, transfers conveys and sets over
to the Trustee the sum of $1. The Trustee hereby acknowledges receipt of such
amount in trust from the Depositor, which amount shall constitute the initial
trust estate. The Trustee hereby declares that it 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. Section 3801, et seq. (the "Business Trust
Act"), and that this document constitutes the governing instrument of the
Trust. The Trustee is 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 will enter into an amended and
restated Trust Agreement, satisfactory to each such party and substantially in
the form included as an exhibit to the 1933 Act Registration Statement (as
defined below), to provide for the contemplated operation of the Trust created
hereby and the issuance of the Preferred Securities and Common Securities
referred to therein. Prior to the execution and delivery of such amended and
restated Trust Agreement, the Trustee 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 of any licenses, consents or approvals required by applicable law or
otherwise.
4. The Depositor and the Trustee hereby authorized and direct the
Depositor, as the sponsor of the Trust, (i) to file with the Securities and
Exchange Commission (the "Commission") and execute, in each case on behalf of
the Trust, (a) the Registration Statement on Form S-3 (the "1933 Act
Registration Statement"), including any pre-effective or post-effective
amendments to the 1933 Act Registration Statement, relating to the registration
under the Securities Act of 1933, as amended, of the Preferred Securities of
the Trust and possibly certain other securities and (b) a Registration
Statement on Form 8-A (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 New York Stock Exchange
or any other national stock exchange or The Nasdaq National Market (each, an
"Exchange") and execute on behalf of the Trust one or more listing applications
and all other applications, statements, certificates, agreements and other
instruments as shall be necessary of desirable to cause the Preferred
Securities to be listed on any of the Exchanges; (iii) to file and execute on
behalf of the trust such applications, reports, surety bonds, irrevocable
consents, appointments of attorney for
<PAGE> 2
service of process and other papers and documents as shall be necessary or
desirable to register the Preferred Securities under the securities or blue sky
laws of such jurisdictions as the Depositor, on behalf of the Trust, may deem
necessary or desirable and (iv) to execute on behalf of the Trust that certain
Underwriting Agreement relating to the Preferred Securities, among the Trust,
the Depositor and the several Underwriters named therein, substantially in the
form included as an exhibit to the 1933 Act Registration Statement. In
connection with the filings referred to above, the Depositor hereby constitutes
and appoints _________________________ and ________________________, and each
of them, as its true and lawful attorneys-in-fact and agents, with full power
of substitution and resubstitution, for the Depositor or in the Depositor's
name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to the 1933 Act Registration
Statement and the 1934 Act Registration Statement and to file the same, with
all exhibits thereto, and other documents in connection therewith, with the
Commission, the Exchange and administrators of state securities or blue sky
laws, 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 connection therewith, as fully to all intents and purposes as the
Depositor might or could to in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their respective
substitute or substitutes, shall do or cause to be done by virtue hereof.
5. This Trust Agreement may be executed in one or more
counterparts.
6. The number of Trustees initially shall be one (1) 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 (30) days' prior
notice to 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 of principles.)
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have cause this Trust Agreement
to be duly executed as of the day and year first above written.
JEFFBANKS, INC.,
as Depositor
By:
-----------------------------
Name:
Title:
BANKERS TRUST (DELAWARE),
as Trustee
By:
-----------------------------
Name:
Title:
3
<PAGE> 1
EXHIBIT 4.3
AMENDED AND RESTATED
TRUST AGREEMENT
among
JEFFBANKS, INC., as Depositor,
BANKERS TRUST COMPANY
as Property Trustee,
and
BANKERS TRUST (DELAWARE),
as Delaware Trustee
Dated as of _______ , 1997
JBI CAPITAL TRUST I
<PAGE> 2
JBI CAPITAL TRUST I
Certain Sections of this Trust Agreement relating, to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section Section
- -------------- ---------------
<S> <C>
(Section) 310(a)(1)...................................... 8.7
(a)(2)....................................... 8.7
(a)(3)....................................... 8.9
(a)(4)....................................... 2.7(a)(ii)
(b).......................................... 8.8, 10.10(b)
(Section) 311(a)......................................... 8.13, 10.10(b)
(b).......................................... 8.13, 10.10(b)
(Section) 312(a)......................................... 10.10(b)
(b).......................................... 10.10(b), (f)
(c).......................................... 5.7
(Section) 313(a)......................................... 8.15(a)
(a)(4)....................................... 10.10(c)
(b).......................................... 8.15(c), 10.10(c)
(c).......................................... 10.8, 10.10(c)
(d).......................................... 10.10(c)
(Section) 314(a)......................................... 8.16, 10.10(d)
(b).......................................... Not Applicable
(c)(1)....................................... 8.17, 10.10(d), (e)
(c)(2)....................................... 8.17, 10.10(d), (e)
(c)(3)....................................... 8.17, 10.10(d), (e)
(e).......................................... 8.17, 10.10(e)
(Section) 315(a)......................................... 8.1(d)
(b).......................................... 8.2
(c).......................................... 8.1(c)
(d).......................................... 8.1(d)
(e).......................................... Not Applicable
(Section) 316(a)......................................... Not Applicable
(a)(1)(A).................................... Not Applicable
(a)(1)(B).................................... Not Applicable
(a)(2)....................................... Not Applicable
(b).......................................... 5.13
(c).......................................... 6.7
(Section) 317(a)(1)...................................... Not Applicable
(a)(2)....................................... 8.14
(b).......................................... 5.10
(Section) 318(a)......................................... 10.10(a)
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Trust Agreement.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I. DEFINED TERMS
SECTION 1.1. Definitions................................... 2
ARTICLE II. CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name.......................................... 17
SECTION 2.2. Office of the Delaware Trustee; Principal
Place of Business............................. 17
SECTION 2.3. Initial Contribution of Trust Property,
Organizational Expenses....................... 18
SECTION 2.4. Issuance of Preferred Securities.............. 18
SECTION 2.5. Issuance of the Common Securities;
Subscription and Purchase of Junior
Subordinated Debentures....................... 18
SECTION 2.6. Declaration of Trust.......................... 19
SECTION 2.7. Authorization to Enter into Certain
Transactions.................................. 19
SECTION 2.8. Assets of Trust............................... 23
SECTION 2.9. Title to Trust Property....................... 23
ARTICLE III. PAYMENT ACCOUNT
SECTION 3.1. Payment Account............................... 23
ARTICLE IV. DISTRIBUTIONS; REDEMPTION
SECTION 4.1. Distributions................................. 24
SECTION 4.2. Redemption.................................... 25
SECTION 4.3. Subordination of Common Securities............ 28
SECTION 4.4. Payment Procedures............................ 29
SECTION 4.5. Tax Returns and Reports....................... 30
SECTION 4.6. Payment of Taxes, Duties, Etc.
of the Issuer Trust........................... 30
SECTION 4.7. Payments under Indenture or Pursuant to
Direct Actions................................ 31
SECTION 4.8. Liability of the Holder of Common Securities.. 31
ARTICLE V. TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership............................. 31
SECTION 5.2. The Trust Securities Certificates............. 31
SECTION 5.3. Execution and Delivery of Trust
Securities Certificates....................... 32
SECTION 5.4. Global Preferred Security..................... 32
SECTION 5.5. Registration of Transfer and Exchange
Generally; Certain Transfers and
Exchanges; Preferred Securities Certificates.. 34
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen
Trust Securities Certificates................. 38
SECTION 5.7. Persons Deemed Holders........................ 39
</TABLE>
- 1 -
<PAGE> 4
<TABLE>
<S> <C>
SECTION 5.8. Access to List of Holders'
Names and Addresses........................... 39
SECTION 5.9. Maintenance of Office or Agency............... 39
SECTION 5.10. Appointment of Paying Agent................... 39
SECTION 5.11. Ownership of Common Securities
by Depositor.................................. 40
SECTION 5.12. Notices to Clearing Agency.................... 41
SECTION 5.13. Rights of Holders............................. 41
ARTICLE VI. ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Holder's Voting Rights......... 44
SECTION 6.2. Notice of Meetings............................ 45
SECTION 6.3. Meetings of Holders........................... 45
SECTION 6.4. Voting Rights................................. 46
SECTION 6.5. Proxies, etc.................................. 46
SECTION 6.6. Holder Action by Written
Consent....................................... 46
SECTION 6.7. Record Date for Voting and Other
Purposes...................................... 46
SECTION 6.8. Acts of Holders............................... 47
SECTION 6.9. Inspection of Records......................... 48
ARTICLE VII. REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties
of the Property Trustee and
the Delaware Trustee.......................... 48
SECTION 7.2. Representations and Warranties of
Depositor..................................... 50
ARTICLE VIII. THE ISSUER TRUSTEES; THE ADMINISTRATORS
SECTION 8.1. Certain Duties and Responsibilities........... 50
SECTION 8.2. Certain Notices............................... 53
SECTION 8.3. Certain Rights of Property Trustee............ 54
SECTION 8.4. Not Responsible for Recitals
or Issuance of Securities..................... 56
SECTION 8.5. May Hold Securities........................... 56
SECTION 8.6. Compensation; Indemnity; Fees................. 56
SECTION 8.7. Corporate Property Trustee Required;
Eligibility of Trustees and Administrators.... 57
SECTION 8.8. Conflicting Interests......................... 58
SECTION 8.9. Co-Trustees and Separate Trustee.............. 58
SECTION 8.10. Resignation and Removal; Appointment of
Successor..................................... 60
SECTION 8.11. Acceptance of Appointment by
Successor..................................... 62
SECTION 8.12. Merger, Conversion, Consolidation or
Succession to Business........................ 62
</TABLE>
- 2 -
<PAGE> 5
<TABLE>
<S> <C>
SECTION 8.13. Preferential Collection of Claims
Against Depositor or Issuer Trust............. 63
SECTION 8.14. Trustee May File Proofs of Claims............. 63
SECTION 8.15. Reports by Property Trustee................... 64
SECTION 8.16. Reports to the Property Trustee............... 64
SECTION 8.17. Evidence of Compliance with Conditions
Precedent..................................... 65
SECTION 8.18. Number of Issuer Trustees..................... 65
SECTION 8.19. Delegation of Power........................... 65
SECTION 8.20. Appointment of Administrators................. 65
ARTICLE IX. DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date.............. 66
SECTION 9.2. Early Termination............................. 66
SECTION 9.3. Dissolution................................... 67
SECTION 9.4. Liquidation................................... 67
SECTION 9.5. Mergers, Consolidations, Amalgamations
or Replacements of the Issuer Trust........... 69
ARTICLE X. MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders............... 70
SECTION 10.2. Amendment..................................... 71
SECTION 10.3. Separability.................................. 72
SECTION 10.4. Governing Law................................. 72
SECTION 10.5. Payments Due on Non-Business Day.............. 72
SECTION 10.6. Successors.................................... 73
SECTION 10.7. Headings...................................... 73
SECTION 10.8. Reports, Notices and Demands.................. 73
SECTION 10.9. Agreement Not to Petition..................... 74
SECTION 10.10. Trust Indenture Act; Conflict with
Trust Indenture Act........................... 75
SECTION 10.11. Acceptance of Terms of Trust Agreement,
Guarantee and Indenture....................... 75
Exhibit A Certificate of Trust
Exhibit B Form of Certificate Depositary Agreement
Exhibit C Form of Common Securities Certificate
Exhibit D Form of Preferred Securities Certificate
</TABLE>
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<PAGE> 6
AGREEMENT
Amended and Restated Trust Agreement, dated as of January , 1997, among
(i) JeffBanks, Inc., a Pennsylvania corporation (including any successors or
assigns, the "Depositor"), (ii) Bankers Trust Company, a New York banking
corporation, as property trustee, (in such capacity, the "Property Trustee"
and, in its separate corporate capacity and not in its capacity as Property
Trustee, the "Bank"), and (iii) Bankers Trust (Delaware), a Delaware banking
corporation, as Delaware trustee (the "Delaware Trustee") (the Property Trustee
and the Delaware Trustee are referred to collectively herein as the "Issuer
Trustees") and (iv) the several Holders, as hereinafter defined.
WITNESSETH
WHEREAS, the Depositor, the Property Trustee, and the Delaware Trustee
have heretofore duly declared and established a business trust pursuant to the
Delaware Business Trust Act by the entering into a certain Trust Agreement,
dated as of January 21, 1997 (the "Original Trust Agreement"), and by the
execution and filing by the Delaware Trustee with the Secretary of State of the
State of Delaware of the Certificate of Trust, filed on January 21, 1997 (the
"Certificate of Trust"), attached as Exhibit A; and
WHEREAS, the Depositor and the Delaware Trustee desire to amend and
restate the Original Trust Agreement in its entirety as set forth herein to
provide for, among other things, (i) the issuance of the Common Securities by
the Issuer Trust to the Depositor, (ii) the issuance and sale of the Preferred
Securities by the Issuer Trust pursuant to the Underwriting Agreement, (iii)
the acquisition by the Issuer Trust from the Depositor of all of the right,
title and interest in the Junior Subordinated Debentures, and (iv) the
appointment of the Administrators.
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the benefit of
the other parties and for the benefit of the Holders, hereby amends and
restates the Original Trust Agreement in its entirety and agrees, intending to
be legally bound, as follows:
<PAGE> 7
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ARTICLE I
DEFINED TERMS
SECTION 1.1. Definitions.
For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) The terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;
(b) All other terms used herein that are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to
them therein;
(c) The words "include," "includes" and "including" shall be deemed to
be followed by the phrase "without limitation";
(d) All accounting terms used but not defined herein have the meanings
assigned to them in accordance with United States generally accepted accounting
principles as in effect at the time of computation;
(e) Unless the context otherwise requires, any reference to an "Article"
or a "Section" refers to an Article or a Section, as the case may be, of this
Trust Agreement;
(f) The words "herein", "hereof' and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision; and
(g) all references to the date the Preferred Securities were originally
issued shall refer to the date the Preferred Securities were originally
issued.
"Act" has the meaning specified in Section 6.8.
"Additional Amount" means, with respect to Trust Securities of a given
Liquidation Amount and/or a given period, the amount of Additional Interest (as
defined in the Indenture) paid by the Depositor on a Like Amount of Debentures
for such period.
"Additional Sums" has the meaning specified in Section 10.6 of the
Indenture.
<PAGE> 8
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"Administrators" means each Person appointed in accordance with Section
8.20 solely in such Person's capacity as Administrator of the Issuer Trust
heretofore formed and continued hereunder and not in such Person's individual
capacity, or any successor Administrator appointed as herein provided; with the
initial Administrators being Betsy Z. Cohen and Paul Frenkiel.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling' and "controlled" have meanings correlative to the
foregoing.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Preferred Security or beneficial interest
therein, the rules and procedures of the Depositary for such Preferred
Security, in each case to the extent applicable to such transaction and as in
effect from time to time.
"Bank" has the meaning specified in the preamble to this Trust Agreement.
"Bankruptcy Event" means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in the
premises judging such Person a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjudication or
composition of or in respect of such Person under any applicable federal or
State bankruptcy, insolvency, reorganization or other similar law, or
appointing a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of such Person or of any substantial part of its property or
ordering the winding up or liquidation of its affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60 consecutive
days; or
(b) the institution by such Person of proceedings to be adjudicated a
bankrupt or insolvent, or the consent by it to the institution of bankruptcy or
insolvency proceedings against it, or the filing by it of a petition or answer
or consent seeking reorganization or relief under any applicable federal or
State bankruptcy, insolvency, reorganization or other similar law, or the
consent by it to the filing of any such petition or to the appointment of a
receiver, liquidator, assignee, trustee,
<PAGE> 9
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sequestrator (or similar official) of such Person or of any substantial part of
its property or the making by it of an assignment for the benefit of creditors,
or the admission by it in writing of its inability to pay its debts generally
as they become due and its willingness to be adjudicated a bankrupt, or the
taking of corporate action by such Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 10.9.
"Board of Directors" means the board of directors of the Depositor or the
Executive Committee of the board of directors of the Depositor (or any other
committee of the board of directors of the Depositor performing similar
functions) or a committee designated by the board of directors of the Depositor
(or any such committee), comprised of two or more members of the board of
directors of the Depositor or officers of the Depositor, or both.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Depositor to have been duly adopted
by the Depositor's Board of Directors, or such committee of the Board of
Directors or officers of the Depositor to which authority to act on behalf of
the Board of Directors has been delegated, and to be in full force and effect
on the date of such certification, and delivered to the Issuer Trustees.
"Business Day" means a day other than (a) a Saturday or Sunday, (b) a day
on which banking institutions in the City of New York, New York or in the City
of Philadelphia, Pennsylvania are authorized or required by law or executive
order to remain closed or (c) a day on which the Property Trustee's Corporate
Trust Office or the Delaware Trustee's Corporate Trust Office or the Corporate
Trust Office of the Debenture Trustee is closed for business.
"Capital Treatment Event" means, in respect of any Issuer Trust, the
reasonable determination by the Depositor that, as a result of the occurrence
of any amendment to, or change (including any announced prospective change) in,
the laws (or any rules or regulations thereunder) of the United States or any
political subdivision thereof or therein, or as a result of any official or
administrative pronouncement or action or judicial decision interpreting or
applying such laws or regulations, which amendment or change is effective or
such pronouncement, action or decision is announced on or after the date of the
issuance of the Preferred Securities of such Issuer Trust, there is more than
an insubstantial risk that the Depositor will not be entitled to treat an
amount equal to the Liquidation Amount of such Preferred Securities as "Tier 1
Capital" (or the then
<PAGE> 10
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equivalent thereof) for purposes of the risk-based capital adequacy guidelines
of the Board of Governors of the Federal Reserve System, as then in effect and
applicable to the Depositor.
"Certificate Depositary Agreement" means the agreement among the Issuer
Trust, the Depositor and the Depository Trust Company ("DTC"), as the initial
Clearing Agency, dated as of the Closing Date, substantially in the form
attached as Exhibit B, as the same may be amended and supplemented from time
to time.
"Certificate of Trust" has the meaning specified in the preamble to this
Trust Agreement.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.
DTC shall be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Date" means the Time of Delivery for the Firm Securities, which
date is also the date of execution and delivery of this Trust Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Securities Certificate" means a certificate evidencing ownership
of Common Securities, substantially in the form attached as Exhibit C.
"Common Security" means an undivided beneficial interest in the assets of
the Issuer 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.
"Corporate Trust Office" means the principal office of the Property
Trustee located in the City of New York, New York, which at the time of
<PAGE> 11
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the execution of this Trust Agreement is located at Four Albany Street, New
York, New York 10006; Attention: Corporate Trust and Agency Group - Corporate
Market Services.
"Debenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to be
redeemed under the Indenture, the date fixed for redemption of such Debentures
under the Indenture.
"Debenture Trustee" means Bankers Trust Company, a New York banking
corporation and any successor.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. 3801, et seq., as it may be amended from time to
time.
"Delaware Trustee" means the corporation identified as the "Delaware
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Delaware Trustee of the Issuer Trust continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"Depositary" means the Depository Trust Company or any successor thereto.
"Depositor" has the meaning specified in the preamble to this Trust
Agreement.
"Distribution Date" has the meaning specified in Section 4.1(a).
"Distributions" means amounts payable in respect of the Trust Securities
as provided in Section 4.1.
"DTC" means the Depository Trust Company.
"Early Termination Event" has the meaning specified in Section 9.2.
"Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
<PAGE> 12
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(b) default by the Issuer Trust in the payment of any Distribution when
it becomes due and payable, and continuation of such default for a period of 30
days; or
(c) default by the Issuer Trust in the payment of any Redemption Price
of any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Issuer Trustees in this Trust Agreement (other
than a covenant or warranty a default in the performance of which or the breach
of which is dealt with in clause (b) or (c) above) and continuation of such
default or breach for a period of 60 days after there has been given, by
registered or certified mail, to the Issuer Trustees and the Depositor by the
Holders of at least 25% in aggregate Liquidation Amount of the Outstanding
Preferred Securities, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; or
(e) the occurrence of any Bankruptcy Event with respect to the Property
Trustee or all or substantially all of its property if a successor Property
Trustee has not been appointed within a period of 90 days thereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and any successor statute thereto, in each case as amended from time
to time.
"Expiration Date" has the meaning specified in Section 9.1.
"Firm Securities" means an aggregate Liquidation Amount of $22,000,000 of
the Issuer Trust's ____% preferred securities.
"Global Preferred Securities Certificate" means a Preferred Securities
Certificate evidencing ownership of Global Preferred Securities.
"Global Preferred Security" means a Preferred Security, the ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 5.4.
"Guarantee Agreement" means the Guarantee Agreement executed and
delivered by the Depositor and Bankers Trust Company, as 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.
<PAGE> 13
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"Holder" means a Person in whose name a Trust Security or Trust
Securities is registered in the Securities Register; any such Person shall be
deemed to be a beneficial owner within the meaning of the Delaware Business
Trust Act.
"Indenture" means the Junior Subordinated Indenture, dated as of January
__, 1997, between the Depositor and the Debenture Trustee (as amended or
supplemented from time to time) relating to the issuance of the Junior
Subordinated Debentures.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Investment Company Event" means the receipt by the Issuer Trust of an
Opinion of Counsel experienced in such matters to the effect that, as a result
of the occurrence of a change in law or regulation or a written change
(including any announced prospective change) in interpretation or application
of law or regulation by any legislative body, court, governmental agency or
regulatory authority, there is more than an insubstantial risk that the Issuer
Trust is or will be considered an "investment company" that is required to be
registered under the Investment Company Act, which change or prospective change
becomes effective or would become effective, as the case may be, on or after
the date of the issuance of the Preferred Securities.
"Issuer Trust" means JeffBanks Capital Trust I.
"Issuer Trustees" means, collectively, the Property Trustee and the
Delaware Trustee.
"Junior Subordinated Debentures" means the aggregate principal amount of
the Depositor's ____% Junior Subordinated Deferrable Interest Debentures, due
________ __, 2027, issued pursuant to the Indenture.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust Securities,
Trust Securities having a Liquidation Amount equal to that portion of the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, allocated to the Common Securities
and to the Preferred Securities based upon the relative Liquidation Amounts of
such classes and (b) with respect to a distribution of Junior Subordinated
Debentures to
<PAGE> 14
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Holders of Trust Securities in connection with a dissolution or liquidation of
the Issuer Trust, Junior Subordinated Debentures having a principal amount
equal to the Liquidation Amount of the Trust Securities of the Holder to whom
such Junior Subordinated Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
"Liquidation Date" means the date on which Junior Subordinated Debentures
are to be distributed to Holders of Trust Securities in connection with a
dissolution and liquidation of the Issuer Trust pursuant to Section 9.4.
"Liquidation Distribution" has the meaning specified in Section 9.4(d).
"Majority in Liquidation Amount of the Preferred Securities" or "Majority
in Liquidation Amount of the Common Securities" means, except as provided by
the Trust Indenture Act, Preferred Securities or Common Securities, as the case
may be, representing more than 50% of the aggregate Liquidation Amount of all
then Outstanding Preferred Securities or Common Securities, as the case may be.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board and Chief Executive Officer, President or a Vice President, and by the
Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or
an Assistant Secretary, of the Depositor, and delivered to the party provided
herein. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Trust Agreement shall include:
(a) a statement by each officer signing the Officers' Certificate
that such officer has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officers' Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for or an employee of the Depositor or any Affiliate of the Depositor.
<PAGE> 15
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"Option Closing Date" shall have the meaning provided in the Underwriting
Agreement.
"Option Securities" means an aggregate Liquidation Amount of $3,300,000
of the Issuer Trust's ____% preferred securities, issuable to the Underwriter,
at its option, exercisable within 30 days after the date of the Prospectus,
solely to cover over-allotments, if any.
"Original Trust Agreement" has the meaning specified in the preamble to
this Trust Agreement.
"Outstanding," with respect to Trust Securities, means, as of the date of
determination, all Trust Securities theretofore executed and delivered under
this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Property Trustee
or delivered to the Property Trustee for cancellation;
(b) Trust Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Property Trustee or
any Paying Agent for the Holders of such Preferred Securities, provided that if
such Trust Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Trust Agreement; and
(c) Trust Securities which have been paid or in exchange for or in
lieu of which other Trust Securities have been executed and delivered pursuant
to Sections 5.4, 5.5, 5.6 and 5.13;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Preferred Securities owned by the Depositor, any Issuer Trustee, any
Administrator or any Affiliate of the Depositor shall be disregarded and deemed
not to be Outstanding, except that (a) in determining whether any Issuer Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Preferred Securities that such Issuer
Trustee or such Administrator, as the case may be, knows to be so owned shall be
so disregarded and (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
Issuer Trustees, one or more of the Administrators and/or any such Affiliate.
Preferred Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the
<PAGE> 16
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satisfaction of the Administrators the pledgee's right so to act with respect
to such Preferred Securities and that the pledgee is not the Depositor or any
Affiliate of the Depositor.
"Owner" means each Person who is the beneficial owner of Global Preferred
Securities as reflected in the records of the Clearing Agency or, if a Clearing
Agency Participant is not the Owner, then as reflected in the records of a
Person maintaining an account with such Clearing Agency (directly or
indirectly, in accordance with the rules of such Clearing Agency.
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.10 and shall initially be the Property Trustee.
"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Property Trustee with the Property Trustee in its
trust department for the benefit of the Holders in which all amounts paid in
respect of the Junior Subordinated Debentures will be held and from which the
Property Trustee, through the Paying Agent, shall make payments to the Holders
in accordance with Sections 4.1 and 4.2.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, company,
limited liability company, trust, unincorporated organization or government or
any agency or political subdivision thereof, or any other entity of whatever
nature.
"Preferred Securities Certificate" means a certificate evidencing
ownership of Preferred Securities, substantially in the form attached as
Exhibit D.
"Preferred Security" means a Firm Security or an Option Security, each
constituting a preferred undivided beneficial interest in the assets of the
Issuer Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Property Trustee" means the Person identified as the "Property Trustee"
in the preamble to this Trust Agreement solely in its capacity as Property
Trustee of the Issuer Trust formed and continued hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor property trustee appointed as herein provided.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Junior
<PAGE> 17
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Subordinated Debenture Redemption Date and the stated maturity of the Junior
Subordinated Debentures shall be a Redemption Date for a Like Amount of Trust
Securities, including but not limited to any date of redemption pursuant to the
occurrence of any Special Event.
"Redemption Price" means with respect to a redemption of any Trust
Security, the Liquidation Amount of such Trust Security, together with
accumulated but unpaid Distributions to but excluding the date fixed for
redemption, plus the related amount of the premium, if any, paid by the
Depositor upon the concurrent redemption of a Like Amount of Junior
Subordinated Debentures.
"Relevant Trustee" has the meaning specified in Section 8.10.
"Responsible Officer" when used with respect to the Property Trustee
means any officer assigned to the Corporate Trust Office, including any
managing director, vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Property Trustee
customarily performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration of
the Indenture, and also, with respect to a particular matter, any other officer
to whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Securities Act" means the Securities Act of 1933, as amended, and any
successor statute thereto, in each case as amended from time to time.
"Securities Register" and "Securities Registrar" have the respective
meanings specified in Section 5.5.
"Special Event" means any Tax Event, Capital Treatment Event or
Investment Company Event.
"Successor Preferred Securities" of any particular Preferred Securities
Certificate means every Preferred Securities Certificate issued after, and
evidencing all or a portion of the same beneficial interest in the Issuer Trust
as that evidenced by, such particular Preferred Securities Certificate; and,
for the purposes of this definition, any Preferred Securities Certificate
executed and delivered under Section 5.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Preferred Securities Certificate shall be
deemed to evidence the same beneficial interest in the Issuer Trust as the
mutilated, destroyed, lost or stolen Preferred Securities Certificate.
<PAGE> 18
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"Tax Event" means the receipt by the Issuer Trust of an Opinion of
Counsel experienced in such matters to the effect that, as a result of any
amendment to, or change (including any announced prospective change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official or administrative pronouncement or action or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement, action or decision is announced on or after
the date of issuance of the Preferred Securities, there is more than an
insubstantial risk that (i) the Issuer Trust is, or will be within 90 days of
the delivery of such Opinion of Counsel, subject to United States Federal
income tax with respect to income received or accrued on the Junior
Subordinated Debentures, (ii) interest payable by the Depositor on the Junior
Subordinated Debentures is not, or within 90 days of the delivery of such
Opinion of Counsel will not be, deductible by the Depositor, in whole or in
part, for United States federal income tax purposes, or (iii) the Issuer Trust
is, or will be within 90 days of the delivery of such Opinion of Counsel,
subject to more than a de minimis amount of other taxes, duties or other
governmental changes.
"Time of Delivery" means 10:00 a.m. Eastern Standard Time, either
(i) with respect to the Firm Securities or Common Securities, on the third
Business Day (unless postponed in accordance with the provisions of Section 9
of the Underwriting Agreement) following the date of execution of the
Underwriting Agreement, or such other time not later than ten Business Days
after such date as shall be agreed upon by the Underwriters, the Issuer Trust
and the Company, or (ii) with respect to the Option Securities, the Option
Closing Date.
"Trust Agreement" means this Amended and Restated Trust Agreement, as the
same may be modified, amended or supplemented in accordance with the applicable
provisions hereof, including (i) all Exhibits hereto, and (ii) for all purposes
of this Amended and Restated Trust Agreement any such modification, amendment
or supplement, the provisions of the Trust Indenture Act that are deemed to be
a part of and govern this Amended and Restated Trust Agreement and any
modification, amendment or supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 or any
successor statute, in each case as amended from time to time.
"Trust Property" means (a) the Junior Subordinated Debentures, (b) any
cash on deposit in, or owing to, the Payment
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Account, and (c) all proceeds and rights in respect of the foregoing and any
other property and assets for the time being held or deemed to be held by the
Property Trustee pursuant to the trusts of this Trust Agreement.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trust Security" means any one of the Common Securities or the Preferred
Securities.
"Underwriter" has the meaning specified in the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
January __, 1997, among the Issuer Trust, the Depositor and the Underwriter, as
the same may be amended from time to time.
ARTICLE II
CONTINUATION OF THE ISSUER TRUST
SECTION 2.1. Name.
The Issuer Trust continued hereby shall be known as "JBI Capital
Trust I", as such name may be modified from time to time by the Administrators
following written notice to the Holders of Trust Securities and the other
Issuer Trustees, in which name the Administrators and the Issuer Trustees may
engage in the transactions contemplated hereby, make and execute contracts and
other instruments on behalf of the Issuer Trust and sue and be sued.
SECTION 2.2. Office of the Delaware Trustee; Principal Place of Business.
The address of the Delaware Trustee in the State of Delaware is Bankers
Trust (Delaware), 1001 Jefferson Street, Suite 550, Wilmington, DE 19801,
Attention: Lisa Wilkins, or such other address in the State of Delaware as
the Delaware Trustee may designate by written notice to the Holders and the
Depositor. The principal executive office of the Issuer Trust is in care of
JeffBanks, Inc., 1609 Walnut Street, Philadelphia, Pennsylvania 19103,
Attention: Office of the Secretary.
<PAGE> 20
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SECTION 2.3. Initial Contribution of Trust Property, Organizational
Expenses.
The Property Trustee acknowledges receipt in trust from the Depositor in
connection with this Trust Agreement of the sum of $10, which constitutes the
initial Trust Property. The Depositor shall pay all organizational expenses of
the Issuer Trust as they arise or shall, upon request of any Issuer Trustee,
promptly reimburse such Issuer Trustee for any such expenses paid by such
reasonable Issuer Trustee. The Depositor shall make no claim upon the Trust
Property for the payment of such expenses.
SECTION 2.4. Issuance of the Preferred Securities.
On January , 1997, the Depositor, both on its own behalf and on behalf
of the Issuer Trust pursuant to the Original Trust Agreement, executed and
delivered the Underwriting Agreement. Contemporaneously with the execution and
delivery of this Trust Agreement, an Administrator, on behalf of the Issuer
Trust, shall manually execute in accordance with Section 5.3 and the Property
Trustee shall authenticate in accordance with Section 5.4 and deliver to the
Underwriter, Firm Securities Certificates, registered in the names requested by
the Underwriter, in an aggregate amount of 880,000 Firm Securities having an
aggregate Liquidation Amount of $22,000,000, against receipt of the aggregate
purchase price of such Preferred Securities of $22,000,000, by the Property
Trustee. At the option of the Underwriter, within 30 days of the date of the
Prospectus, and solely for the purpose of covering an over- allotment, if any,
an Administrator, on behalf of the Issuer Trust, shall manually execute in
accordance with Section 5.3 and the Property Trustee shall authenticate in
accordance with Section 5.4 and deliver to the Underwriter, Option Securities
Certificates, registered in the names requested by the Underwriter, up to
132,000 Option Securities having an aggregate Liquidation Amount of $3,300,000,
against receipt of the aggregate purchase price of such Option Securities of
$3,300,000, by the Property Trustee.
SECTION 2.5. Issuance of the Common Securities; Subscription and Purchase
of Junior Subordinated Debentures.
Contemporaneously with the execution and delivery of this Trust
Agreement, an Administrator, on behalf of the Issuer Trust, shall execute or
cause to be executed in accordance with Section 5.2 and the Property Trustee
shall deliver to the Depositor Common Securities Certificates, registered in
the name of the Depositor, in an aggregate amount of 27,217 Common Securities
having an aggregate Liquidation Amount of $680,425 against receipt of the
aggregate purchase price of such Common
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Securities of $680,425 by the Property Trustee. In the event of any exercise of
an over-allotment option requiring issuance of additional Preferred Securities
Certificates, as described in Section 2.4 above, a proportionate number of
additional Common Securities Certificates, with corresponding aggregate
Liquidation Amount, shall be delivered to the Depositor. Contemporaneously with
the executions, and deliveries of Common Securities Certificates and any
Preferred Securities Certificates, an Administrator, on behalf of the Issuer
Trust, shall subscribe for and purchase from the Depositor corresponding amounts
of Junior Subordinated Debentures, registered in the name of the Property
Trustee and having an aggregate principal amount equal to $22,680,425, plus, in
the event of any exercise of the over-allotment option (i) a corresponding
additional number of Junior Subordinated Debentures not exceeding an aggregate
principal amount of $3,300,000 and (ii) a corresponding number of Junior
Subordinated Debentures not exceeding an aggregate principal amount equal to the
aggregate Liquidation Amount of Common Securities issued pursuant to such
exercise of an over-allotment option; and, in satisfaction of the purchase price
for such Junior Subordinated Debentures, the Property Trustee, on behalf of the
Issuer Trust, shall deliver to the Depositor the sum of $22,680,425, plus any
corresponding over-allotment option amount (being the sum of the amounts
delivered to the Property Trustee pursuant to (i) the second sentence of Section
2.4, and (ii) the first and second sentences of this Section 2.5) and receive on
behalf of the Issuer Trust the Junior Subordinated Debentures.
SECTION 2.6. Declaration of Trust.
The exclusive purposes and functions of the Issuer Trust are to (a) issue
and sell Trust Securities and use the proceeds from such sale to acquire the
Junior Subordinated Debentures, and (b) engage in only those other activities
necessary or incidental thereto. The Depositor hereby appoints the Issuer
Trustees as trustees of the Issuer Trust, to have all the rights, powers
and duties to the extent set forth herein, and the Issuer Trustees hereby
accept such appointment. The Property Trustee hereby declares that it will
hold the Trust Property in trust upon and subject to the conditions set forth
herein for the benefit of the Issuer Trust and the Holders. The Depositor
hereby appoints the Administrators, with such Administrators having all rights,
powers and duties set forth herein with respect to accomplishing the purposes
of the Issuer Trust, and the Administrators hereby accept such appointment,
provided, however, that it is the intent of the parties hereto that such
Administrators shall not be trustees or fiduciaries with respect to the Issuer
Trust and this Agreement shall be construed in a manner consistent with such
intent. The Property Trustee shall have the right and power to perform those
duties assigned to the Administrators. The Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities, of the
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Property Trustee or the Administrators set forth herein. The Delaware Trustee
shall be one of the trustees of the Issuer Trust for the sole and limited
purpose of fulfilling the requirements of Section 3807 of the Delaware Business
Trust Act and for taking such actions as are required to be taken by a Delaware
trustee under the Delaware Business Trust Act.
SECTION 2.7. Authorization to Enter into Certain Transactions.
(a) The Issuer Trustees and the Administrators shall conduct the affairs
of the Issuer Trust in accordance with the terms of this Trust Agreement.
Subject to the limitations set forth in paragraph (b) of this Section and in
accordance with the following provisions (i), (ii) and (iii), the Issuer
Trustees and the Administrators shall act as follows:
(i) Each Administrator shall:
(A) comply with the Underwriting Agreement regarding the issuance
and sale of the Trust Securities;
(B) assist in compliance with the Securities Act, applicable state
securities or blue sky laws, and the Trust Indenture Act;
(C) assist in the listing of the Preferred Securities upon such
securities exchange or exchanges or upon the Nasdaq National Market as shall be
determined by the Depositor, with the registration of the Preferred Securities
under the Exchange Act, if required, and the preparation and filing of all
periodic and other reports and other documents pursuant to the foregoing;
(D) execute and deliver an application for a taxpayer identification
number for the Issuer Trust; and
(E) assist with the preparation of a registration statement and a
prospectus in relation to the Preferred Securities, including any amendments
thereto and the taking of any action necessary or desirable to sell the
Preferred Securities in a transaction or series of transactions subject to the
registration requirements of the Securities Act.
(F) take any action incidental to the foregoing as necessary or
advisable to give effect to the terms of this Trust Agreement.
(ii) The Property Trustee shall have the power and authority to act on
behalf of the Issuer Trust with respect to the following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Junior Subordinated Debentures;
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(C) the receipt and collection of interest, principal and any other
payments made in respect of the Junior Subordinated Debentures in the Payment
Account;
(D) the distribution of amounts owed to the Holders in respect of
the Trust Securities;
(E) the exercise of all of the rights, powers and privileges of a
holder of the Junior Subordinated Debentures;
(F) the sending of notices of default and other information
regarding the Trust Securities and the Junior Subordinated Debentures to the
Holders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in accordance with the
terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the winding up
of the affairs of and liquidation of the Issuer Trust and the preparation,
execution and filing of the certificate of cancellation with the Secretary of
State of the State of Delaware; and
(I) after an Event of Default (other than under paragraph (b), (c),
(d), or (f) of the definition of such term if such Event of Default is by or
with respect to the Property Trustee), comply with the provisions of this Trust
Agreement and take any action to give effect to the terms of this Trust
Agreement and protect and conserve the Trust Property for the benefit of the
Holders (without consideration of the effect of any such action on any
particular Holder);
provided, however, that nothing in this Section 2.7(a)(ii) shall require the
Property Trustee to take any action that is not otherwise required in this
Trust Agreement.
(b) So long as this Trust Agreement remains in effect, the Issuer Trust
(or the Issuer Trustees or Administrators acting on behalf of the Issuer Trust)
shall not undertake any business, activities or transaction except as expressly
provided herein or contemplated hereby. In particular, neither the Issuer
Trustees nor the Administrators shall (i) acquire any
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investments or engage in any activities not authorized by this Trust Agreement,
(ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise
dispose of any of the Trust Property or interests therein, including to
Holders, except as expressly provided herein, (iii) take any action that would
reasonably be expected to cause the Issuer Trust to become taxable as a
corporation for United States Federal income tax purposes, (iv) incur any
indebtedness for borrowed money or issue any other debt, or (v) take or consent
to any action that would result in the placement of a Lien on any of the Trust
Property. The Property Trustee shall defend all claims and demands of all
Persons at any time claiming any Lien on any of the Trust Property adverse to
the interest of the Issuer Trust or the Holders in their capacity as Holders.
(c) In connection with the issue and sale of the Preferred Securities,
the Depositor shall have the right and responsibility to assist the Issuer
Trust with respect to, or effect on behalf of the Issuer Trust, the following
(and any actions taken by the Depositor in furtherance of the following prior
to the date of this Trust Agreement are hereby ratified and confirmed in all
respects):
(i) the preparation by the Issuer Trust of, and the execution and
delivery of, a registration statement, and a prospectus in relation to the
Preferred Securities, including any amendments thereto and the taking of any
action necessary or desirable to sell the Preferred Securities in a transaction
or a series of transactions subject to the registration requirements of the
Securities Act;
(ii) the determination of the States in which to take appropriate
action to qualify or register for sale all or part of the Preferred Securities
and the determination of any and all such acts, other than actions that must be
taken by or on behalf of the Issuer Trust, and the advice to the Issuer
Trustees of actions they must take on behalf of the Issuer Trust, and the
preparation for execution and filing of any documents to be executed and filed
by the Issuer Trust or on behalf of the Issuer Trust, as the Depositor deems
necessary or advisable in order to comply with the applicable laws of any such
States in connection with the sale of the Preferred Securities;
(iii) the negotiation of the terms of, and the execution and
delivery of, the Underwriting Agreement providing for the sale of the Preferred
Securities;
(iv) the taking of any other actions necessary or desirable to carry
out any of the foregoing activities; and
(v) compliance with the listing requirements of the Preferred
Securities upon such securities exchange or exchanges, or upon the Nasdaq
National Market, as shall be determined by the Depositor, the registration of
the Preferred Securities under the Exchange Act, if required, and the
preparation and filing of all periodic and other reports and other documents
pursuant to the foregoing.
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(d) Notwithstanding anything herein to the contrary, the Administrators
and the Property Trustee are authorized and directed to conduct the affairs of
the Issuer Trust and to operate the Issuer Trust so that the Issuer Trust will
not be deemed to be an "investment company" required to be registered under the
Investment Company Act, and will not be taxable as a corporation for the United
States Federal income tax purposes and so that the Junior Subordinated
Debentures will be treated as indebtedness of the Depositor for United States
income tax purposes. In this connection, the Property Trustee and the Holders
of Common Securities are authorized to take any action, not inconsistent with
applicable law, the Certificate of Trust or this Trust Agreement, that the
Property Trustee and Holders of Common Securities determine in their discretion
to be necessary or desirable for such purposes, as long as such action does not
adversely affect in any material respect the interests of the holders of the
Outstanding Preferred Securities. In no event shall the Administrators or the
Issuer Trustees be liable to the Issuer Trust or the Holders for any failure to
comply with this section that results from a change in law or regulations or
in the interpretation thereof.
SECTION 2.8. Assets of Trust.
The assets of the Issuer Trust shall consist solely of the Trust
Property.
SECTION 2.9. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered
by the Property Trustee for the benefit of the Issuer Trust and the Holders in
accordance with this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
SECTION 3.1. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall
establish the Payment Account. The Property Trustee and its agents shall have
exclusive control and sole right of withdrawal with respect to the Payment
Account for the purpose of making deposits in and withdrawals from the Payment
Account in accordance with this Trust Agreement. All monies and other property
deposited or held from time to time in the Payment
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Account shall be held by the Property Trustee in the Payment
Account for the exclusive benefit of the Holders and for
distribution as herein provided, including (and subject to) any
priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Junior Subordinated Debentures.
Amounts held in the Payment Account shall not be invested by the Property
Trustee pending distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
SECTION 4.1. Distributions.
(a) The Trust Securities represent undivided beneficial interests in the
Trust Property, and Distributions (including Distributions of Additional
Amounts) will be made on the Trust Securities at the rate and on the dates that
payments of interest (including payments of Additional Interest, as defined in
the Indenture) are made on the Junior Subordinated Debentures. Accordingly:
(i) Distributions on the Trust Securities shall be cumulative and
will accumulate whether or not there are funds of the Issuer Trust
available for the payment of Distributions. Distributions shall
accumulate from _________ , 1997, and, except in the event (and to the
extent) that the Depositor exercises its right to defer the payment of
interest on the Debentures pursuant to the Indenture, shall be payable
quarterly in arrears on the _____ day of ________ __, ________ __,
________ __, and _______ __ 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 (without
any interest or other payment in respect of any such delay), with the
same force and effect as if made on the date on which such payment was
originally payable (each date on which distributions are payable in
accordance with this Section 4.1(a), a "Distribution Date").
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(ii) The Trust Securities shall be entitled to Distributions
payable at a rate of ___% per annum of the Liquidation Amount of the Trust
Securities. The amount of Distributions payable for any period less than
a full Distribution period shall be computed on the basis of a 360-day
year of twelve 30-day months and the actual number of days elapsed in a
partial month in a period. Distributions payable for each full
Distribution period will be computed by dividing the rate per annum by
four. The amount of Distributions payable for any period shall include
any Additional Amounts in respect of such period.
(iii) So long as no Debenture Event of Default has occurred and is
continuing, the Depositor has the right under the Indenture to defer the
payment of interest on the Junior Subordinated Debentures at any time and
from time to time for a period not exceeding 20 consecutive quarterly
periods (an "Extension Period"), provided that no Extension Period may
extend beyond ________ __, 2027. As a consequence of any such deferral,
quarterly Distributions on the Trust Securities by the Trust will also be
deferred (and the amount of Distributions to which Holders of the Trust
Securities are entitled will accumulate additional Distributions thereon
at the rate per annum of ____% per annum, compounded quarterly) from the
relevant payment date for such Distributions, computed on the basis of a
360- day year of twelve 30-day months and the actual days elapsed in a
partial month in such period. Additional Distributions payable for each
full Distribution period will be computed by dividing the rate per annum
by four (4). The term "Distributions" as used in Section 4.1 shall
include any such additional Distributions provided pursuant to this
Section 4.1(a)(iii).
(iv) Distributions on the Trust Securities shall be made by the
Property Trustee from the Payment Account and shall be payable on each
Distribution Date only to the extent that the Issuer Trust has funds then
on hand and available in the Payment Account for the payment of such
Distributions.
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(b) Distributions on the Trust Securities with respect to a Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities at the close of business on the relevant
record date, which shall be at the close of business on the ____ day of _______
__, _______ __, _______ __, _______ __, (whether or not a Business Day).
SECTION 4.2. Redemption.
(a) On each Junior Subordinated Debenture Redemption Date and on the
stated maturity of the Junior Subordinated Debentures, the Issuer Trust will be
required to redeem a Like Amount of Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date to each Holder of Trust Securities to be
redeemed, at such Holder's address appearing in the Security Register. All
notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price, or if the Redemption Price cannot be
calculated prior to the time the notice is required to be sent, the estimate of
the Redemption Price provided pursuant to the Indenture together with a
statement that it is an estimate and that the actual Redemption Price will be
calculated on the third Business Day prior to the Redemption Date (and if an
estimate is provided, a further notice shall be sent of the actual Redemption
Price on the date, or as soon as practicable thereafter, that notice of such
actual Redemption Price is received pursuant to the Indenture);
(iii) the CUSIP number or CUSIP numbers of the Preferred Securities
affected;
(iv) if less than all the Outstanding Trust Securities are to be
redeemed, the identification and the total Liquidation Amount of the particular
Trust Securities to be redeemed;
(v) that on the Redemption Date the Redemption Price will become
due and payable upon each such Trust Security to be redeemed and that
Distributions thereon will cease to accumulate on and after said date, except
as provided in Section 4.2(d) below; and
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(vi) the place or places where Trust Securities are to be
surrendered for the payment of the Redemption Price.
The Issuer Trust in issuing the Trust Securities shall use "CUSIP"
numbers, and the Property Trustee shall indicate the "CUSIP" numbers of the
Trust Securities in notices of redemption and related materials as a
convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Trust Securities or as contained in any notice of redemption and related
material.
(c) The Trust Securities redeemed on each Redemption Date shall be
redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption of Junior Subordinated Debentures. Redemptions of
the Trust Securities shall be made and the Redemption Price shall be payable on
each Redemption Date only to the extent that the Issuer Trust has funds then on
hand and available in the Payment Account for the payment of such Redemption
Price.
(d) If the Property Trustee gives a notice of redemption in respect of
any Preferred Securities, then, by 12:00 noon, New York City time, on the
Redemption Date, subject to Section 4.2(c), the Property Trustee will, with
respect to Preferred Securities held in global form, irrevocably deposit with
the Clearing Agency for such Preferred Securities, to the extent available
therefor, funds sufficient to pay the applicable Redemption Price and will give
such Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Preferred Securities. With respect to
Preferred Securities that are not held in global form, the Property Trustee,
subject to Section 4.2(c), will irrevocably deposit with the Paying Agent, to
the extent available therefor, funds sufficient to pay the applicable
Redemption Price and will give the Paying Agent irrevocable instructions and
authority to pay the Redemption Price to the Holder of the Preferred Securities
upon surrender of their Preferred Securities Certificates. Notwithstanding the
foregoing, Distributions payable on or prior to the Redemption Date for any
Trust Securities called for redemption shall be payable to the Holders of such
Trust Securities as they appear on the Register for the Trust Securities on the
relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then, upon
the date of such deposit, all rights of Holders holding Trust Securities so
called for redemption will cease, except the right of such Holders to receive
the Redemption Price and any Distribution payable in respect of the Trust
Securities on or prior to the Redemption Date, but without interest, and such
Securities will cease to be Outstanding. In the event that any date on which
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any applicable Redemption Price is payable is not a Business Day, then payment
of the applicable Redemption Price payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), except that, if such Business Day falls
in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case, with the same force and effect as if made
on such date. In the event that payment of the Redemption Price in respect of
any Trust Securities called for redemption is improperly withheld or refused
and not paid either by the Issuer Trust or by the Depositor pursuant to the
Guarantee Agreement, Distributions on such Trust Securities will continue to
accumulate, as set forth in Section 4.1, from the Redemption Date originally
established by the Issuer Trust for such Trust Securities to the date such
applicable Redemption Price is actually paid, in which case the actual payment
date will be the date fixed for redemption for purposes of calculating the
applicable Redemption Price.
(e) Subject to Section 4.3(a), if less than all the Outstanding Trust
Securities are to be redeemed on a Redemption Date, then the particular
Preferred Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Property Trustee from the Outstanding
Preferred Securities not previously called for redemption in such a manner as
the Property Trustee shall deem fair and appropriate.
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SECTION 4.3. Subordination of Common Securities.
(a) Payment of Distributions (including Additional Amounts, if
applicable) on, the Redemption Price of, and the Liquidation Distribution in
respect of, the Trust Securities, as applicable, shall be made, subject to
Section 4.2(e), pro rata among the Common Securities and the Preferred
Securities based on the Liquidation Amount of such Trust Securities; provided,
however, that if on any Distribution Date or Redemption Date any Event of
Default resulting from a Debenture Event of Default in Section 5.1(1) or 5.1(2)
of the Indenture shall have occurred and be continuing, no payment of any
Distribution (including any Additional Amounts) on, Redemption Price of, or
Liquidation Distribution in respect of, any Common Security, and no other
payment on account of the redemption, liquidation or other acquisition of
Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions (including any Additional Amounts) on all
Outstanding Preferred Securities for all Distribution periods terminating on or
prior thereto, or, in the case of payment of the Redemption Price, the full
amount of such Redemption Price on all Outstanding Preferred Securities then
called for redemption, or in the case of payment of the Liquidation
Distribution the full amount of such Liquidation Distribution on all
Outstanding Preferred Securities, shall have been made or provided for, and
all funds immediately available to the Property Trustee shall first be applied
to the payment in full in cash of all Distributions (including any Additional
Amounts) on, or the Redemption Price of, Preferred Securities then due and
payable. The existence of an Event of Default does not entitle the Holders of
Preferred Securities to accelerate the maturity thereof.
(b) In the case of the occurrence of any Event of Default resulting from
any Debenture Event of Default, the Holder of the Common Securities shall have
no right to act with respect to any such Event of Default under this Trust
Agreement until the effects of all such Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated. Until
all such Events of Default under this Trust Agreement with respect to the
Preferred Securities have been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the Holders of the Preferred
Securities and not on behalf of the Holder of the Common Securities, and only
the Holders of the Preferred Securities will have the right to direct the
Property Trustee to act on their behalf.
<PAGE> 32
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SECTION 4.4. Payment Procedures.
Payments of Distributions (including any Additional Amounts) in respect
of the Preferred Securities shall be made by check mailed to the address of the
Person entitled thereto as such address shall appear on the Securities Register
or, if the Preferred Securities are held by a Clearing Agency, such
Distributions shall be made to the Clearing Agency in immediately available
funds, which will credit the relevant accounts on the applicable Distribution
Dates. Payments of Distributions to Holders of $1,000,000 or more in aggregate
Liquidation Amount of Preferred Securities may be made by wire transfer of
immediately available funds upon written request of such Holder of Preferred
Securities to the Securities Registrar not later than 15 calendar days prior to
the date on which the Distribution is payable. Payments in respect of the
Common Securities shall be made in such manner as shall be mutually agreed
between the Property Trustee and the Holder of the Common Securities.
SECTION 4.5. Tax Returns and Reports.
The Administrators 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 Issuer Trust. In this regard, the Administrators shall (a) prepare and
file (or cause to be prepared and filed) all Internal Revenue Service forms
required to be filed in respect of the Issuer Trust in each taxable year of the
Issuer Trust and (b) prepare and furnish (or cause to be prepared and
furnished) to each Holder all Internal Revenue Service forms required to be
provided by the Issuer Trust. The Administrators shall provide the Depositor
and the Property Trustee with a copy of all such returns and reports promptly
after such filing or furnishing. The Issuer Trustees shall comply with United
States Federal withholding and backup withholding tax laws and information
reporting requirements with respect to any payments to Holders under the Trust
Securities.
On or before December 15 of each year during which any Preferred
Securities are outstanding, the Administrators shall furnish to the Paying
Agent such information as may be reasonably requested by the Property Trustee
in order that the Property Trustee may prepare the information which it is
required to report for such year on Internal Revenue Service Forms 1096 and
1099 pursuant to Section 6049 of the Internal Revenue Code of 1986, as amended.
Such information shall include the amount of original issue discount includible
in income for each outstanding Preferred Security during such year.
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SECTION 4.6. Payment of Taxes; Duties, Etc. of the Issuer Trust.
Upon receipt under the Junior Subordinated Debentures of Additional Sums,
the Property Trustee shall promptly pay any taxes, duties or governmental
charges of whatsoever nature (other than withholding taxes) imposed on the
Issuer Trust by the United States or any other taxing authority.
SECTION 4.7. Payments under Indenture or Pursuant to Direct Actions.
Any amount payable hereunder to any Holder of Preferred Securities shall
be reduced by the amount of any corresponding payment such Holder has directly
received pursuant to Section 5.8 of the Indenture or Section 5.13 of this Trust
Agreement.
SECTION 4.8. Liability of the Holder of Common Securities.
The Holder of Common Securities shall be liable for the debts and
obligations of the Issuer Trust as set forth in Section 6.7 of the Indenture
regarding allocation of expenses.
ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 5.1. Initial Ownership.
Upon the formation of the Issuer Trust and the contribution by the
Depositor pursuant to Section 2.3 and until the issuance of the Trust
Securities, and at any time during which no Trust Securities are outstanding,
the Depositor shall be the sole beneficial owner of the Issuer Trust.
SECTION 5.2. The Trust Securities Certificates.
(a) The Trust Securities Certificates shall be executed on behalf of the
Issuer Trust by manual or facsimile signature of at least one Administrator
except as provided in Section 5.3. Trust Securities Certificates bearing the
manual signatures of individuals who were, at the time when such signatures
shall have been affixed, authorized to sign on behalf of the Issuer Trust,
shall be validly issued and entitled to the benefits of this Trust Agreement,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the delivery of such Trust Securities Certificates or did
not hold such offices at the date of delivery of such Trust Securities
Certificates. A transferee of a Trust Securities Certificate
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shall become a Holder, and shall be entitled to the rights and subject to the
obligations of a Holder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Section 5.5.
(b) Upon their original issuance, Preferred Securities Certificates
shall be issued in the form of one or more fully registered Global Preferred
Securities Certificates which will be deposited with or on behalf of the
Depositary and registered in the name of the Depositary's nominee. Unless and
until it is exchangeable in whole or in part for the Preferred Securities in
definitive form, a global security may not be transferred except as a whole by
the Depositary to a nominee of the Depositary or by a nominee of the Depositary
to the Depositary or another nominee of the Depositary or by the Depositary or
any such nominee to a successor of such Depositary or a nominee of such
successor.
(c) A single Common Securities Certificate representing the Common
Securities shall be issued to the Depositor in the form of a definitive Common
Securities Certificate.
SECTION 5.3. Execution and Delivery of Trust Securities Certificates.
At the Time of Delivery, the Administrators shall cause Trust Securities
Certificates, in an aggregate Liquidation Amount as provided in Sections 2.4
and 2.5, to be executed on behalf of the Issuer Trust and delivered to the
Property Trustee and upon such delivery the Property Trustee shall authenticate
such Trust Securities Certificates and deliver such Trust Securities
Certificates upon the written order of the Depositor, executed by two
authorized officers thereof, without further corporate action by the Depositor,
in authorized denominations.
SECTION 5.4. Global Preferred Security.
(a) Any Global Preferred Security issued under this Trust Agreement
shall be registered in the name of the nominee of the Clearing Agency and
delivered to such custodian therefor, and such Global Preferred Security shall
constitute a single Preferred Security for all purposes of this Trust
Agreement.
(b) Notwithstanding any other provision in this Trust Agreement, a
Global Preferred Security may not be exchanged in whole or in part for
Preferred Securities registered, and no transfer of the Global Preferred
Security in whole or in part may be registered, in the name of any Person other
than the Clearing Agency for such Global Preferred Security, or its nominee
thereof unless (i) such Clearing Agency advises the Property Trustee in writing
that such Clearing Agency is no
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longer willing or able to properly discharge its responsibilities as Clearing
Agency with respect to such Global Preferred Security, and the Depositor is
unable to locate a qualified successor, (ii) the Issuer Trust at its option
advises the Depositary in writing that it elects to terminate the book- entry
system through the Clearing Agency, or (iii) there shall have occurred and be
continuing an Event of Default.
(c) If a Preferred Security is to be exchanged in whole or in part for a
beneficial interest in a Global Preferred Security, then either (i) such Global
Preferred Security shall be so surrendered for exchange or cancellation as
provided in this Article V or (ii) the Liquidation Amount thereof shall be
reduced or increased by an amount equal to the portion thereof to be so
exchanged or cancelled, or equal to the Liquidation Amount of such other
Preferred Security to be so exchanged for a beneficial interest therein, as the
case may be, by means of an appropriate adjustment made on the records of the
Security Registrar, whereupon the Property Trustee, in accordance with the
Applicable Procedures, shall instruct the Clearing Agency or its authorized
representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Preferred Security by the Clearing Agency,
accompanied by registration instructions, the Property Trustee shall, subject to
Section 5.4(b) and as otherwise provided in this Article V, authenticate and
deliver any Preferred Securities issuable in exchange for such Global Preferred
Security (or any portion thereof) in accordance with the instructions of the
Clearing Agency. The Property Trustee shall not be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be fully
protected in relying on, such instructions.
(d) Every Preferred Security authenticated and delivered upon
registration of transfer of, or in exchange for or in lieu of, a Global
Preferred Security or any portion thereof, whether pursuant to this Article V
or Article IV or otherwise, shall be authenticated and delivered in the form
of, and shall be, a Global Preferred Security, unless such Global Preferred
Security is registered in the name of a Person other than the Clearing Agency
for such Global Preferred Security or a nominee thereof.
(e) The Clearing Agency or its nominee, as the registered owner of a
Global Preferred Security, shall be considered the Holder of the Preferred
Securities represented by such Global Preferred Security for all purposes under
this Trust Agreement and the Preferred Securities, and owners of beneficial
interests in such Global Preferred Security shall hold such interests pursuant
to the Applicable Procedures and, except as otherwise provided herein, shall
not be entitled to receive physical delivery of any such Preferred Securities
in definitive form and
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shall not be considered the Holders thereof under this Trust Agreement.
Accordingly, any such owner's beneficial interest in the Global Preferred
Security shall be shown only on, and the transfer of such interest shall be
effected only through, records maintained by the Clearing Agency or its
nominee. Neither the Property Trustee, the Securities Registrar [nor the
Depositor] shall have any liability in respect of any transfers effected by
the Clearing Agency.
(f) The rights of owners of beneficial interests in a Global Preferred
Security shall be exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between such owners and the
Clearing Agency.
SECTION 5.5. Registration of Transfer and Exchange Generally; Certain
Transfers and Exchanges; Preferred Securities Certificates.
(a) The Property Trustee shall keep or cause to be kept at its Corporate
Trust Office a register or registers for the purpose of registering Preferred
Securities Certificates and transfers and exchanges of Preferred Securities
Certificates in which the registrar and transfer agent with respect to the
Preferred Securities (the "Securities Registrar"), subject to such reasonable
regulations as it may prescribe, shall provide for the registration of
Preferred Securities Certificates and Common Securities Certificates (subject
to Section 5.11 in the case of Common Securities Certificates) and registration
of transfers and exchanges of Preferred Securities Certificates as herein
provided. Such register is herein sometimes referred to as the "Securities
Register." The Property Trustee is hereby appointed "Securities Registrar" for
the purpose of registering Preferred Securities and transfers of Preferred
Securities as herein provided.
Upon surrender for registration of transfer of any Preferred Security at
the offices or agencies of the Property Trustee designated for that purpose, the
Depositor shall execute, and authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Preferred Securities of
the same series of any authorized denominations of like tenor and aggregate
principal amount and bearing such legends as may be required by this Trust
Agreement.
At the option of the Holder, Preferred Securities may be exchanged for
other Preferred Securities of any authorized denominations, of like tenor and
aggregate Liquidation Amount and bearing such legends as may be required by
this Trust Agreement, upon surrender of the Preferred Securities to be
exchanged at such office or agency. Whenever any securities are so surrendered
for exchange, the Property Trustee shall execute
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and authenticate and deliver the Preferred Securities that the Holder making
the exchange is entitled to receive.
All Preferred Securities issued upon any transfer or exchange of
Preferred Securities shall be the valid obligations of the Issuer Trust,
evidencing the same debt, and entitled to the same benefits under this Trust
Agreement, as the Preferred Securities surrendered upon such transfer or
exchange.
Every Preferred Security presented or surrendered for transfer or
exchange shall (if so required by the Property Trustee) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Property Trustee and the Securities Registrar, duly executed by the Holder
thereof or such Holder's attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or exchange
of Preferred Securities, but the Property Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Preferred Securities.
Neither the Issuer Trust nor the Property Trustee shall be required,
pursuant to the provisions of this Section, (i) to issue, register the transfer
of or exchange any Preferred Security during a period beginning at the opening
of business 15 days before the day of selection for redemption of Preferred
Securities pursuant to Article IV and ending at the close of business on the
day of mailing of the notice of redemption, or (ii) to register the transfer of
or exchange any Preferred Security so selected for redemption in whole or in
part, except, in the case of any such Preferred Security to be redeemed in
part, any portion thereof not to be redeemed.
(b) Certain Transfers and Exchanges. Trust Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Trust Agreement. Any transfer or purported transfer of any
Trust Security not made in accordance with this Trust Agreement shall be null
and void.
(i) Non Global Security to Non Global Security. A Trust Security
that is not a Global Preferred Security may be transferred, in whole or
in part, to a Person who takes delivery in the form of another Trust
Security that is not a Global Security as provided in Section 5.5(a).
(ii) Free Transferability. Subject to this Section 5.5, Preferred
Securities shall be freely transferable.
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(iii) Exchanges Between Global Preferred Security and Non-Global
Preferred Security. A beneficial interest in a Global Preferred
Security may be exchanged for a Preferred Security that is not a
Global Preferred Security as provided in Section 5.4.
SECTION 5.6. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered to
the Securities Registrar, or if the Securities Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate and (b) there shall be delivered to the Securities Registrar and
the Administrators such security or indemnity as may be required by them to
save each of them harmless, then in the absence of notice that such Trust
Securities Certificate shall have been acquired by a bona fide purchaser, the
Administrators, or any one of them, on behalf of the Issuer Trust shall execute
and make available for delivery, and the Property Trustee shall authenticate,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Trust Securities Certificate, a new Trust Securities Certificate of like class,
tenor and denomination. In connection with the issuance of any new Trust
Securities Certificate under this Section, the Administrators or the Securities
Registrar may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Trust Securities Certificate issued pursuant to this Section shall constitute
conclusive evidence of an undivided beneficial interest in the assets of the
Issuer Trust corresponding to that evidenced by the lost, stolen or destroyed
Trust Certificate, as if originally issued, whether or not the lost, stolen or
destroyed Trust Securities Certificate shall be found at any time.
SECTION 5.7. Persons Deemed Holders.
The Issuer Trustees, the Securities Registrar or the Depositor shall
treat the Person in whose name any Trust Securities are issued as the owner of
such Trust Securities for the purpose of receiving Distributions and for all
other purposes whatsoever, and none of the Issuer Trustees, the Administrators,
the Securities Registrar [nor the Depositor] shall be bound by any notice to
the contrary.
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SECTION 5.8. Access to List of Holders' Names and Addresses.
Each Holder and each Owner shall be deemed to have agreed not to hold the
Depositor, the Property Trustee, or the Administrators accountable by reason of
the disclosure of its name and address, regardless of the source from which
such information was derived.
SECTION 5.9. Maintenance of Office or Agency.
The Property Trustee shall designate, with the consent of the
Administrators, which consent shall not be unreasonably withheld, an office or
offices or agency or agencies where Preferred Securities Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Issuer Trustees in respect of the Trust Securities
Certificates may be served. The Property Trustee initially designates its
Corporate Trust Office at Four Albany Street, New York, NY 10006, Attention:
Corporate Trust and Agency Group - Corporate Market Services, as its corporate
trust office for such purposes. The Property Trustee shall give prompt written
notice to the Depositor, the Administrators and to the Holders of any change in
the location of the Securities Register or any such office or agency.
SECTION 5.10. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Holders from the Payment
Account and shall report the amounts of such Distributions to the Property
Trustee and the Administrators. Any Paying Agent shall have the revocable
power to withdraw funds from the Payment Account solely for the purpose of
making the Distributions referred to above. The Property Trustee may revoke
such power and remove any Paying Agent in its sole discretion. The Paying
Agent shall initially be the Property Trustee. Any Person acting as Paying
Agent shall be permitted to resign as Paying Agent upon 30 days' written notice
to the Administrators, and the Property Trustee. In the event that the
Property Trustee shall no longer be the Paying Agent or a successor Paying
Agent shall resign or its authority to act be revoked, the Property Trustee
shall appoint a successor (which shall be a bank or trust company) that is
reasonably acceptable to the Administrators to act as Paying Agent. Such
successor Paying Agent or any additional Paying Agent appointed by the
Administrators shall execute and deliver to the Issuer Trustees an instrument
in which such successor Paying Agent or additional Paying Agent shall agree
with the Issuer Trustees that as Paying Agent, such successor Paying Agent or
additional Paying Agent will hold all sums, if any, held by it for payment to
the Holders in trust for the benefit of the Holders entitled thereto
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until such sums shall be paid to such Holders. The Paying Agent shall return
all unclaimed funds to the Property Trustee and upon removal of a Paying Agent
such Paying Agent shall also return all funds in its possession to the Property
Trustee. The provisions of Sections 8.1, 8.3 and 8.6 herein shall apply to the
Bank also in its role as Paying Agent, for so long as the Bank shall act as
Paying Agent and, to the extent applicable, to any other paying agent appointed
hereunder. Any reference in this Trust Agreement to the Paying Agent shall
include any co-paying agent chosen by the Property Trustee unless the context
requires otherwise.
SECTION 5.11. Ownership of Common Securities by Depositor.
At each Time of Delivery, the Depositor shall acquire and retain
beneficial and record ownership of the Common Securities except (i) in
connection with a consolidation or merger of the Depositor into another
corporation or any conveyance, transfer or lease by the Depositor of its
properties and assets substantially as an entirety to any Person, pursuant to
Section 8.1 of the Indenture, or (ii) a transfer to an Affiliate of the
Depositor in compliance with applicable law (including the Securities Act and
applicable state securities and blue sky laws). To the fullest extent
permitted by law, any attempted transfer of the Common Securities shall be
void. The Administrators shall cause each Common Securities Certificate issued
to the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT
TRANSFERABLE EXCEPT TO A SUCCESSOR IN INTEREST TO THE DEPOSITOR OR AN
AFFILIATE OF THE DEPOSITOR IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11
OF THE TRUST AGREEMENT."
SECTION 5.12. Notices to Clearing Agency.
To the extent that a notice or other communication to the Holders is
required under this Trust Agreement, for so long as Preferred Securities are
represented by a Global Preferred Securities Certificate, the Administrators
and the Issuer Trustees shall give all such notices and communications
specified herein to be given to the Clearing Agency, and shall have no
obligations to the Owners.
SECTION 5.13. Rights of Holders.
(a) The legal title to the Trust Property is vested exclusively in the
Property Trustee (in its capacity as such) in accordance with Section 2.9, and
the Holders shall not have any right or title therein other than the undivided
beneficial ownership interest in the assets of the Issuer Trust conferred by
their Trust Securities and they shall have no right to call for any partition
or division of property, profits or rights of the Issuer Trust except as
described below. The Trust
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Securities shall be personal property giving only the rights specifically set
forth therein and in this Trust Agreement. The Trust Securities shall have no
preemptive or similar rights and when issued and delivered to Holders against
payment of the purchase price therefor will be fully paid and nonassessable by
the Issuer Trust. The Holders of the Trust Securities, in their capacities as
such, shall be entitled to the same limitation of personal liability extended
to stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.
(b) For so long as any Preferred Securities remain Outstanding, if, upon
a Debenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Junior Subordinated
Debentures fail to declare the principal of all of the Junior Subordinated
Debentures to be immediately due and payable, the Holders of at least 25% in
Liquidation Amount of the Preferred Securities then Outstanding shall have such
right to make such declaration by a notice in writing to the Property Trustee,
the Depositor and the Debenture Trustee.
At any time after such a declaration of acceleration with respect to the
Junior Subordinated Debentures has been made and before a judgment or decree
for payment of the money due has been obtained by the Debenture Trustee as
provided in the Indenture, the Holders of a majority in Liquidation Amount of
the Preferred Securities, by written notice to the Property Trustee, the
Depositor and the Debenture Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Depositor has paid or deposited with the Debenture Trustee
a sum sufficient to pay
(A) all overdue installments of interest on all of the Junior
Subordinated Debentures,
(B) any accrued Additional Interest on all of the Junior
Subordinated Debentures,
(C) the principal of (and premium, if any, on) any Junior
Subordinated Debentures which have become due otherwise than by such
declaration of acceleration and interest and Additional Interest
thereon at the rate borne by the Junior Subordinated Debentures, and
(D) all sums paid or advanced by the Debenture Trustee under
the Indenture and the reasonable compensation, expenses,
disbursements and advances of
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the Debenture Trustee and the Property Trustee, their agents and
counsel; and
(ii) all Events of Default with respect to the Junior Subordinated
Debentures, other than the non-payment of the principal of the
Junior Subordinated Debentures which has become due solely by such
acceleration, have been cured or waived as provided in Section 5.13
of the Indenture.
If the Property Trustee fails to annul any such declaration and waive
such default, the Holders of at least a Majority in Liquidation Amount of the
Preferred Securities shall also have the right to rescind and annul such
declaration and its consequences by written notice to the Depositor, the
Property Trustee and the Debenture Trustee, subject to the satisfaction of the
conditions set forth in Clause (i) and (ii) of this Section 5.13.
The Holders of at least a Majority in Liquidation Amount of the Preferred
Securities may, on behalf of the Holders of all the Preferred Securities, waive
any past default under the Indenture, except a default in the payment of
principal or interest (unless such default has been cured and a sum sufficient
to pay all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Debenture Trustee) or a default in
respect of a covenant or provision which under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Junior
Subordinated Debentures. No such rescission shall affect any subsequent
default or impair any right consequent thereon.
Upon receipt by the Property Trustee of written notice declaring such an
acceleration, or rescission and annulment thereof, by Holders of the Preferred
Securities all or part of which is represented by Global Preferred Securities,
a record date shall be established for determining Holders of Outstanding
Preferred Securities entitled to join in such notice, which record date shall
be at the close of business on the day the Property Trustee receives such
notice. The Holders on such record date, or their duly designated proxies, and
only such Persons, shall be entitled to join in such notice, whether or not
such Holders remain Holders after such record date; provided, that, unless such
declaration of acceleration, or rescission and annulment, as the case may be,
shall have become effective by virtue of the requisite percentage having joined
in such notice prior to the day which is 90 days after such record date, such
notice of declaration of acceleration, or rescission and annulment, as the case
may be, shall automatically and without further action by any Holder be
canceled and of no
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further effect. Nothing in this paragraph shall prevent a Holder, or a proxy
of a Holder, from giving, after expiration of such 90-day period, a new written
notice of declaration of acceleration, or rescission and annulment thereof, as
the case may be, that is identical to a written notice which has been canceled
pursuant to the proviso to the preceding sentence, in which event a new record
date shall be established pursuant to the provisions of this Section 5.13(b).
(c) For so long as any Preferred Securities remain Outstanding, to the
fullest extent permitted by law and subject to the terms of this Trust
Agreement and the Indenture, upon a Debenture Event of Default specified in
Section 5.1(1) or 5.1(2) of the Indenture, any Holder of Preferred Securities
shall have the right to institute a proceeding directly against the Depositor,
pursuant to Section 5.9 of the Indenture, for enforcement of payment to such
Holder of the principal amount of or interest on Junior Subordinated Debentures
having an aggregate principal amount equal to the aggregate Liquidation Amount
of the Preferred Securities of such Holder (a "Direct Action"). Except as set
forth in Sections 5.13(b) and 5.13 (c), the Holders of Preferred Securities
shall have no right to exercise directly any right or remedy available to the
holders of, or in respect of, the Junior Subordinated Debentures.
ARTICLE VI
ACTS OF HOLDERS; MEETINGS; VOTING
SECTION 6.1. Limitations on Holder's Voting Rights.
(a) Except as provided in this Trust Agreement and in the Indenture and
as otherwise required by law, no Holder of Preferred Securities shall have any
right to vote or in any manner otherwise control the administration, operation
and management of the Issuer Trust or the obligations of the parties hereto,
nor shall anything herein set forth or contained in the terms of the Trust
Securities Certificates be construed so as to constitute the Holders from time
to time as members of an association.
(b) So long as any Junior Subordinated Debentures are held by the
Property Trustee on behalf of the Issuer Trust, the Property Trustee shall not
(i) direct the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee, or executing any trust or power
conferred on the Property Trustee with respect to such Junior Subordinated
Debentures, (ii) waive any past default that may be waived under Section 5.13
of the Indenture, (iii) exercise any right to rescind or annul a declaration
that the principal of all the
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Junior Subordinated Debentures shall be due and payable or (iv) consent to any
amendment, modification or termination of the Indenture or the Junior
Subordinated Debentures, where such consent shall be required, without, in each
case, obtaining the prior approval of the Holders of at least a Majority in
Liquidation Amount of the Preferred Securities, provided, however, that where a
consent under the Indenture would require the consent of each Holder of Junior
Subordinated Debentures affected thereby, no such consent shall be given by the
Property Trustee without the prior written consent of each Holder of Preferred
Securities. The Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of Preferred Securities, except
by a subsequent vote of the Holders of Preferred Securities. The Property
Trustee shall notify all Holders of the Preferred Securities of any notice of
default received with respect to the Junior Subordinated Debentures. In
addition to obtaining the foregoing approvals of the Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Issuer Trustees
shall, at the expense of the Depositor, obtain an Opinion of Counsel
experienced in such matters to the effect that such action will not cause the
Issuer Trust to be taxable as a corporation for United States Federal income
tax purposes.
(c) If any proposed amendment to the Trust Agreement provides for, or
the Issuer Trust otherwise proposes to effect, (i) any action that would
adversely affect in any material respect the interests, powers, preferences or
special rights of the Preferred Securities, whether by way of amendment to the
Trust Agreement or otherwise, or (ii) the dissolution of the Issuer Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
Outstanding Trust Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a Majority in Liquidation
Amount of the Preferred Securities. Notwithstanding any other provision of
this Trust Agreement, no amendment to this Trust Agreement may be made if, as
a result of such amendment, it would cause the Issuer Trust to be taxable as a
corporation for United States Federal income tax purposes.
SECTION 6.2. Notice of Meetings.
Notice of all meetings of the Holders, stating the time, place and
purpose of the meeting, shall be given by the Property Trustee pursuant to
Section 10.8 to each Holder of record, at his registered address, at least 15
days and not more than 90 days before the meeting. At any such meeting, any
business properly before the meeting may be so considered whether or not
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stated in the notice of the meeting. Any adjourned meeting may be held as
adjourned without further notice.
SECTION 6.3. Meetings of Holders.
No annual meeting of Holders is required to be held. The Property
Trustee, however, shall call a meeting of Holders to vote on any matter upon
the written request of the Holders of record of 25% of the aggregate
Liquidation Amount of the Preferred Securities and the Administrators or the
Property Trustee may, at any time in their discretion, call a meeting of
Holders of Preferred Securities to vote on any matters as to which Holders are
entitled to vote.
Holders of at least a Majority in Liquidation Amount of the Preferred
Securities, present in person or represented by proxy, shall constitute a
quorum at any meeting of Holders of the Preferred Securities.
If a quorum is present at a meeting, an affirmative vote by the Holders
of record present, in person or by proxy, holding Preferred Securities
representing at least a Majority in Liquidation Amount of the Preferred
Securities held by the Holders present, either in person or by proxy, at such
meeting shall constitute the action of the Holders of Preferred Securities,
unless this Trust Agreement requires a greater number of affirmative votes.
SECTION 6.4. Voting Rights.
Holders shall be entitled to one vote for each $25 of Liquidation Amount
represented by their Outstanding Trust Securities in respect of any matter as
to which such Holders are entitled to vote.
SECTION 6.5. Proxies, etc.
At any meeting of Holders, any Holder entitled to vote thereat may vote
by proxy, provided that no proxy shall be voted at any meeting unless it shall
have been placed on file with the Property Trustee, or with such other officer
or agent of the Issuer Trust as the Property Trustee may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to
a resolution of the Property Trustee, proxies may be solicited in the name of
the Property Trustee or one or more officers of the Property Trustee. Only
Holders of record shall be entitled to vote. When Trust Securities are held
jointly by several persons, any one of them may vote at any meeting in person
or by proxy in respect of such Trust Securities, but if more than one of them
shall be present at such meeting in person or by proxy, and such joint owners
or
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their proxies so present disagree as to any vote to be cast, such vote shall
not be received in respect of such Trust Securities. A proxy purporting to be
executed by or on behalf of a Holder shall be deemed valid unless challenged at
or prior to its exercise, and the burden of proving invalidity shall rest on
the challenger. No proxy shall be valid more than three years after its date
of execution.
SECTION 6.6. Holder Action by Written Consent.
Any action which may be taken by Holders at a meeting may be taken
without a meeting if Holders holding at least a Majority in Liquidation Amount
of all Trust Securities entitled to vote in respect of such action (or such
larger proportion thereof as shall be required by any other provision of this
Trust Agreement) shall consent to the action in writing.
SECTION 6.7. Record Date for Voting and Other Purposes.
For the purposes of determining the Holders who are entitled to notice of
and to vote at any meeting or by written consent, or to participate in any
distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrators or Property Trustee may from time to time fix a
date, not more than 90 days prior to the date of any meeting of Holders or the
payment of a distribution or other action, as the case may be, as a record date
for the determination of the identity of the Holders of record for such
purposes.
SECTION 6.8. Acts of Holders.
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Trust Agreement to be given, made or
taken by Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent
duly appointed in writing; and, except as otherwise expressly provided herein,
such action shall become effective when such instrument or instruments are
delivered to the Property Trustee. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Trust Agreement and (subject to
Section 8.1) conclusive in favor of the Issuer Trustees, if made in the manner
provided in this Section.
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The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by
a certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such
instrument or writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Issuer Trustee or Administrator receiving the
same deems sufficient.
The ownership of Trust Securities shall be proved by the Securities
Register.
Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Trust Security shall bind every future Holder of
the same Trust Security and the Holder of every Trust Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Issuer
Trustees, the Administrators or the Issuer Trust in reliance thereon, whether
or not notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Holder entitled hereunder to take any
action hereunder with regard to any particular Trust Security may do so with
regard to all or any part of the Liquidation Amount of such Trust Security or
by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise among the Holders, the Administrators or the
Issuer Trustees with respect to the authenticity, validity or binding nature of
any request, demand, authorization, direction, consent, waiver or other Act of
such Holder or Issuer Trustee under this Article VI, then the determination of
such matter by the Property Trustee shall be conclusive with respect to such
matter.
A Holder may institute a legal proceeding directly against the Depositor
under the Guarantee Agreement to enforce its rights under the Guarantee
Agreement without first instituting a legal proceeding against the Guarantee
Trustee (as defined in the Guarantee Agreement), the Issuer Trust, any Issuer
Trustee, any Administrator or any person or entity.
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SECTION 6.9. Inspection of Records.
Upon reasonable notice to the Administrators and the Property Trustee,
the records of the Issuer Trust shall be open to inspection by Holders during
normal business hours for any purpose reasonably related to such Holder's
interest as a Holder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
SECTION 7.1. Representations and Warranties of the Property Trustee and
the Delaware Trustee.
The Property Trustee and the Delaware Trustee, each severally on behalf
of and as to itself, hereby represents and warrants for the benefit of the
Depositor and the Holders that:
(a) The Property Trustee is a banking corporation with trust powers,
duly organized, validly existing and in good standing under the laws of New
York, with trust power and authority to execute and deliver, and to carry out
and perform its obligations under the terms of this Trust Agreement.
(b) The execution, delivery and performance by the Property Trustee of
this Trust Agreement has been duly authorized by all necessary corporate action
on the part of the Property Trustee; and this Trust Agreement has been duly
executed and delivered by the Property Trustee, and constitutes a legal, valid
and binding obligation of the Property Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(c) The execution, delivery and performance of this Trust Agreement by
the Property Trustee does not conflict with or constitute a breach of the
certificate of incorporation or by-laws of the Property Trustee.
(d) At the Time of Delivery, the Property Trustee has not knowingly
created any liens or encumbrances on the Trust Securities.
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(e) No consent, approval or authorization of, or registration with or
notice to, any New York State or federal banking authority is required for the
execution, delivery or performance by the Property Trustee, of this Trust
Agreement.
(f) The Delaware Trustee is duly organized, validly existing and in good
standing under the laws of the State of Delaware, with trust power and
authority to execute and deliver, and to carry out and perform its obligations
under the terms of, the Trust Agreement.
(g) The execution, delivery and performance by the Delaware Trustee of
this Trust Agreement has been duly authorized by all necessary corporate action
on the part of the Delaware Trustee; and this Trust Agreement has been duly
executed and delivered by the Delaware Trustee, and constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency, and other similar laws affecting creditors' right
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(h) The execution, delivery and performance of this Trust Agreement by
the Delaware Trustee does not conflict with or constitute a breach of the
certificate of incorporation or by-laws of the Delaware Trustee.
(i) No consent, approval or authorization of, or registration with or
notice to any state or Federal banking authority is required for the execution,
delivery or performance by the Delaware Trustee, of this Trust Agreement.
(j) The Delaware Trustee is an entity which has its principal place of
business in the State of Delaware.
SECTION 7.2. Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of the
Holders that:
(a) the Trust Securities Certificates issued at the Time of Delivery on
behalf of the Issuer Trust have been duly authorized and will have been duly
and validly executed, and, subject to payment therefor, issued and delivered
by the Issuer Trustees pursuant to the terms and provisions of, and in
accordance with the requirements of, this Trust Agreement, and the Holders
will be, as of each such date, entitled to the benefits of this Trust
Agreement; and
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(b) there are no taxes, fees or other governmental charges payable by
the Issuer Trust (or the Issuer Trustees on behalf of the Issuer Trust) under
the laws of the State of Delaware or any political subdivision thereof in
connection with the execution, delivery and performance by either the Property
Trustee or the Delaware Trustee, as the case may be, of this Trust Agreement.
ARTICLE VIII
THE ISSUER TRUSTEES; THE ADMINISTRATORS
SECTION 8.1. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Issuer Trustees and the
Administrators shall be as provided by this Trust Agreement and, in the case of
the Property Trustee, by the Trust Indenture Act. Notwithstanding the
foregoing, no provision of this Trust Agreement shall require the Issuer
Trustees or the Administrators to expend or risk their own funds or otherwise
incur any financial liability in the performance of any of their duties
hereunder, or in the exercise of any of their rights or powers, if they shall
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it or
them. Whether or not therein expressly so provided, every provision of this
Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Issuer Trustees or the Administrators shall be
subject to the provisions of this Section. Nothing in this Trust Agreement
shall be construed to release an Administrator from liability for his or its own
negligent action, his or its own negligent failure to act, or his or its own
willful misconduct. To the extent that, at law or in equity, an Issuer Trustee
or Administrator has duties and liabilities relating to the Issuer Trust or to
the Holders, such Issuer Trustee or Administrator shall not be liable to the
Issuer Trust or to any Holder for such Issuer Trustee's or Administrator's good
faith reliance on the provisions of this Trust Agreement. The provisions of
this Trust Agreement, to the extent that they restrict the duties and
liabilities of the Issuer Trustees and Administrators otherwise existing at law
or in equity, are agreed by the Depositor and the Holders to replace his or
such other duties and liabilities of the Issuer Trustees and Administrators.
(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.
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Each Holder, by his or its acceptance of a Trust Security, agrees that he or it
will look solely to the revenue and proceeds from the Trust Property to the
extent legally available for distribution to it or him as herein provided and
that neither the Issuer Trustees nor the Administrators are personally liable to
it or him for any amount distributable in respect of any Trust Security or for
any other liability in respect of any Trust Security. This Section 8.1(b) does
not limit the liability of the Issuer Trustees expressly set forth elsewhere in
this Trust Agreement or, in the case of the Property Trustee, in the Trust
Indenture Act.
(c) The Property Trustee, before the occurrence of any Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Trust Agreement (including pursuant to Section 10.10), and no implied covenants
shall be read into this Trust Agreement against the Property Trustee. If an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 5.13 of the Indenture), the Property Trustee shall enforce this Trust
Agreement for the benefit of the Holders and shall exercise such of the rights
and powers vested in it by this Trust Agreement, and use the same degree of
care and skill in its exercise thereof, as a prudent person would exercise or
use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Trust Agreement shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall
be determined solely by the express provisions of this Trust
Agreement (including pursuant to Section 10.10), and the Property
Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Trust
Agreement (including pursuant to Section 10.10); and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Trust Agreement;
but in the case
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of any such certificates or opinions that by any provision hereof or
of the Trust Indenture Act are specifically required to be furnished
to the Property Trustee, the Property Trustee shall be under a duty
to examine the same to determine whether or not they conform to the
requirements of this Trust Agreement;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of at least a Majority in Liquidation
Amount of the Preferred Securities relating to the time, method and place
of conducting any proceeding for any remedy available to the Property
Trustee, or exercising any trust or power conferred upon the Property
Trustee under this Trust Agreement;
(iv) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Junior Subordinated
Debentures and the Payment Account shall be to deal with such Property in
a similar manner as the Property Trustee deals with similar property for
its own account, subject to the protections and limitations on liability
afforded to the Property Trustee under this Trust Agreement and the Trust
Indenture Act;
(v) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree with the
Depositor; and money held by the Property Trustee need not be segregated
from other funds held by it except in relation to the Payment Account
maintained by the Property Trustee pursuant to Section 3.1 and except to
the extent otherwise required by law;
(vi) the Property Trustee shall not be responsible for monitoring
the compliance by the Administrators or the Depositor with their
respective duties under this Trust Agreement, nor shall the Property
Trustee be liable for the default or misconduct of any other Issuer
Trustee, the Administrators or the Depositor; and
(vii) no provision of this Trust Agreement shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of
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any of its rights or powers, if the Property Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Trust
Agreement or adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) The Administrators shall not be responsible for monitoring the
compliance by the Issuer Trustee or the Depositor with their respective duties
under this Trust Agreement, nor shall either Administrator be liable for the
default or misconduct of any other Administrator, the Issuer Trustees or the
Depositor.
SECTION 8.2. Certain Notices.
Within five Business Days after the occurrence of any Event of Default
actually known to a Responsible Officer of the Property Trustee, the Property
Trustee shall transmit, in the manner and to the extent provided in Section
10.8, notice of such Event of Default to the Holders and the Administrators,
unless such Event of Default shall have been cured or waived.
Within five Business Days after the receipt of notice of the Depositor's
exercise of its right to defer the payment of interest on the Junior
Subordinated Debentures pursuant to the Indenture, the Property Trustee shall
transmit, in the manner and to the extent provided in Section 10.8, notice of
such exercise to the Holders and the Administrators, unless such exercise shall
have been revoked.
SECTION 8.3. Certain Rights of Property Trustee.
Subject to the provisions of Section 8.1:
(a) the Property Trustee may rely and shall be fully protected in acting
or refraining from acting in good faith upon any resolution, Opinion of
Counsel, certificate, written representation of a Holder or transferee,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any direction or act of the Depositor contemplated by this Trust
Agreement shall be sufficiently evidenced by an Officers' Certificate;
(c) the Property Trustee shall have no duty to see to any recording,
filing or registration of any instrument (including
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any financing or continuation statement or any filing under tax or securities
laws) or any re-recording, refiling or reregistration thereof;
(d) the Property Trustee may consult with counsel of its own choosing
(which counsel may be counsel to the Depositor or any of its Affiliates, and may
include any of its employees) and the advice of such counsel shall be full and
complete authorization and protection in respect of any action taken suffered or
omitted by it hereunder in good faith and in reliance thereon and in accordance
with such advice; the Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Agreement from any
court of competent jurisdiction;
(e) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Holders pursuant to this Trust Agreement, unless such
Holders shall have offered to the Property Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction; provided that,
nothing contained in this Section 8.3(e) shall be taken to relieve the Property
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Trust Agreement;
(f) the Property Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, note or other evidence of indebtedness or other paper or document,
unless requested in writing to do so by one or more Holders, but the Property
Trustee may make such further inquiry or investigation into such facts or
matters as it may see fit;
(g) the Property Trustee may execute any of the trusts or powers
hereunder or perform any of its duties hereunder either directly or by or
through its agents or attorneys, provided that the Property Trustee shall not
be responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(h) whenever in the administration of this Trust Agreement the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request instructions from the Holders (which
instructions may only be given by the Holders of the same
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proportion in Liquidation Amount of the Trust Securities as would be entitled
to direct the Property Trustee under the terms of the Trust Securities in
respect of such remedy, right or action), (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received, and (iii) shall be fully protected in acting in accordance with such
instructions; and
(i) except as otherwise expressly provided by this Trust Agreement, the
Property Trustee shall not be under any obligation to take any action that is
discretionary under the provisions of this Trust Agreement.
No provision of this Trust Agreement shall be deemed to impose any duty
or obligation on any Issuer Trustee or Administrator to perform any act or acts
or exercise any right, power, duty or obligation conferred or imposed on it, in
any jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to any Issuer Trustee
or Administrator shall be construed to be a duty.
SECTION 8.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Issuer Trust, and the Issuer Trustees
and the Administrators do not assume any responsibility for their correctness.
The Issuer Trustees and the Administrators shall not be accountable for the use
or application by the Depositor of the proceeds of the Junior Subordinated
Debentures.
SECTION 8.5. May Hold Securities.
Except as provided in the definition of the term "Outstanding" in Article
I, the Administrators, any Issuer Trustee or any other agent of any Issuer
Trustee or the Issuer Trust, in its individual or any other capacity, may
become the owner or pledgee of Trust Securities and, subject to Sections 8.8
and 8.13, may otherwise deal with the Issuer Trust with the same rights it
would have if it were not an Administrator, Issuer Trustee or such other agent.
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SECTION 8.6. Compensation; Indemnity; Fees.
The Depositor, as borrower, agrees:
(a) to pay to the Issuer Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) to reimburse the Issuer Trustees upon request for all reasonable
expenses, disbursements and advances incurred or made by the Issuer Trustees in
accordance with any provision of this Trust Agreement (including the reasonable
compensation, expenses and disbursements of its agents and counsel), except
any such expense, disbursement or advance as may be attributable to their
negligence or willful misconduct; and
(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless (i) each Issuer Trustee, (ii) each Administrator, (iii) any
Affiliate of any Issuer Trustee, (iv) any officer, director, shareholder,
employee, representative or agent of any Issuer Trustee, and (v) any employee
or agent of the Issuer Trust, (referred to herein as an "Indemnified Person")
from and against any loss, damage, liability, tax, penalty, expense or claim of
any kind or nature whatsoever incurred by such Indemnified Person arising out
of or in connection with the creation, operation or dissolution of the Issuer
Trust or any act or omission performed or omitted by such Indemnified Person in
good faith on behalf of the Issuer Trust and in a manner such Indemnified
Person reasonably believed to be within the scope of authority conferred on
such Indemnified Person by this Trust Agreement, except that no Indemnified
Person shall be entitled to be indemnified in respect of any loss, damage or
claim incurred by such Indemnified Person by reason of negligence or willful
misconduct with respect to such acts or omissions.
The provisions of this Section 8.6 shall survive the termination of this
Trust Agreement.
No Issuer Trustee may claim any lien or charge on any Trust Property as a
result of any amount due pursuant to this Section 8.6.
The Depositor, any Administrator and any Issuer Trustee may engage in or
possess an interest in other business ventures of any nature or description,
independently or with others, similar or dissimilar to the business of the
Issuer Trust, and the Issuer Trust and the Holders of Trust Securities shall
have no rights by virtue of this Trust Agreement in and to such
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independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Issuer Trust, shall not be deemed wrongful or improper. Neither the Depositor,
any Administrator, nor any Issuer Trustee shall be obligated to present any
particular investment or other opportunity to the Issuer Trust even if such
opportunity is of a character that, if presented to the Issuer Trust, could be
taken by the Issuer Trust, and the Depositor, any Administrator or any Issuer
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Issuer Trustee may engage or be interested in any
financial or other transaction with the Depositor or any Affiliate of the
Depositor, or may act as depository for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the
Depositor or its Affiliates.
SECTION 8.7. Corporate Property Trustee Required; Eligibility of Trustees
and Administrators.
(a) There shall at all times be a Property Trustee hereunder with
respect to the Trust Securities. The Property Trustee shall be a Person that
is a national or state chartered bank and eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000. If any such Person publishes reports of condition at least
annually, pursuant to law or to the requirements of its supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such Person shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published.
If at any time the Property Trustee with respect to the Trust Securities shall
cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter
specified in this Article. At the time of appointment, the Property Trustee
must have securities rated in one of the three highest rating categories by a
nationally recognized statistical rating organization.
(b) There shall at all times be one or more Administrators hereunder.
Each Administrator shall be either a natural person who is at least 21 years of
age or a legal entity that shall act through one or more persons authorized to
bind that entity. An employee, officer or Affiliate of the Depositor may serve
as an Administrator.
(c) There shall at all times be a Delaware Trustee. The Delaware
Trustee shall either be (i) a natural person who is at least 21 years of age
and a resident of the State of Delaware or
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(ii) a legal entity with its principal place of business in the State of
Delaware and that otherwise meets the requirements of applicable Delaware law
that shall act through one or more persons authorized to bind such entity.
SECTION 8.8. Conflicting Interests.
(a) If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property Trustee shall
either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Trust Agreement.
(b) The Guarantee Agreement and the Indenture shall be deemed to be
sufficiently described in this Trust Agreement for the purposes of clause (i)
of the first proviso contained in Section 310(b) of the Trust Indenture Act.
SECTION 8.9. Co-Trustees and Separate Trustee.
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust Property
may at the time be located, the Property Trustee shall have power to appoint,
and upon the written request of the Property Trustee, the Depositor and the
Administrators shall for such purpose join with the Property Trustee in the
execution, delivery, and performance of all instruments and agreements
necessary or proper to appoint, one or more Persons approved by the Property
Trustee either to act as co-trustee, jointly with the Property Trustee, of all
or any part of such Trust Property, or to the extent required by law to act as
separate trustee of any such property, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. Any
co-trustee or separate trustee appointed pursuant to this Section shall either
be (i) a natural person who is at least 21 years of age and a resident of the
United States or (ii) a legal entity with its principal place of business in
the United States that shall act through one or more persons authorized to bind
such entity.
Should any written instrument from the Depositor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged and delivered
by the Depositor.
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Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(a) The Trust Securities shall be executed by one or more
Administrators, and the Trust Securities shall be executed and delivered and
all rights, powers, duties, and obligations hereunder in respect of the custody
of securities, cash and other personal property held by, or required to be
deposited or pledged with, the Property Trustees specified hereunder, shall be
exercised, solely by the Property Trustee and not by such co-trustee or
separate trustee.
(b) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by such
appointment shall be conferred or imposed upon and exercised or performed by
the Property Trustee and such co-trustee or separate trustee jointly, as shall
be provided in the instrument appointing such co-trustee or separate trustee,
except to the extent that under any law of any jurisdiction in which any
particular act is to be performed, the Property Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by such co-trustee or separate
trustee.
(c) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may accept the
resignation of or remove any co-trustee or separate trustee appointed under
this Section, and, in case a Debenture Event of Default has occurred and is
continuing, the Property Trustee shall have power to accept the resignation of,
or remove, any such co-trustee or separate trustee without the concurrence of
the Depositor. Upon the written request of the Property Trustee, the Depositor
shall join with the Property Trustee in the execution, delivery and performance
of all instruments and agreements necessary or proper to effectuate such
resignation or removal. A successor to any co-trustee or separate trustee so
resigned or removed may be appointed in the manner provided in this Section.
(d) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Property Trustee or any other
trustee hereunder.
(e) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.
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(f) Any Act of Holders delivered to the Property Trustee shall be deemed
to have been delivered to each such co-trustee and separate trustee.
SECTION 8.10. Resignation and Removal; Appointment of Successor.
No resignation or removal of any Issuer Trustee (the "Relevant Trustee")
and no appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 8.11.
Subject to the immediately preceding paragraph, a Relevant Trustee may
resign at any time by giving written notice thereof to the Holders. The
Relevant Trustee shall appoint a successor by requesting from at least three
Persons meeting the eligibility requirements its expenses and charges to serve
as the successor Trustee on a form provided by the Administrators, and selecting
the Person who agrees to the lowest expenses and charges. If the instrument of
acceptance by the successor Trustee required by Section 8.11 shall not have
been delivered to the Relevant Trustee within 60 days after the giving of such
notice of resignation, the Relevant Trustee may petition, at the expense of the
Issuer Trust, any court of competent jurisdiction for the appointment of a
successor Trustee.
The Property Trustee or the Delaware Trustee may be removed at any time
by Act of the Holders of at least a Majority in Liquidation Amount of the
Preferred Securities, delivered to the Relevant Trustee (in its individual
capacity and on behalf of the Issuer Trust) (i) for cause (including upon the
occurrence of an Event of Default described in subparagraph (f) of the
definition thereof with respect to the Relevant Trustee), or (ii) if a
Debenture Event of Default shall have occurred and be continuing at any time.
If any Relevant Trustee shall resign, it shall appoint its successor.
If a resigning Relevant Trustee shall fail to appoint a successor, or if a
Relevant Trustee shall be removed or become incapable of acting as Issuer
Trustee, or if any vacancy shall occur in the office of any Issuer Trustee for
any cause, the Holders of the Preferred Securities, by Act of the Holders of
record of not less than 25% in aggregate Liquidation Amount of the Preferred
Securities then Outstanding delivered to such Relevant Trustee, shall promptly
appoint a successor Trustee or Trustees, and such successor Issuer Trustee shall
comply with the applicable requirements of Section 8.11. If no successor
Trustee shall have been so appointed by the Holders of the Preferred Securities
and accepted appointment in the manner required by Section 8.11, any Holder, on
behalf of
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himself and all others similarly situated, or any other Issuer Trustee, may
petition any court in the State of Delaware for the appointment of a successor
Trustee.
The Property Trustee shall give notice of each resignation and each
removal of an a Relevant Trustee and each appointment of a successor Trustee
to all Holders in the manner provided in Section 10.8 and shall give notice to
the Depositor and to the Administrators. Each notice shall include the name
of the Relevant Trustee and the address of its Corporate Trust Office if it
is the Property Trustee.
Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Delaware Trustee who is a natural person dies or
becomes, in the opinion of the Holders of the Common Securities, incompetent or
incapacitated, the vacancy created by such death, incompetence or incapacity
may be filled by the Property Trustee following the procedures regarding
expenses and charges set forth above (with the successor in each case being a
Person who satisfies the eligibility requirement for Administrators or Delaware
Trustee, as the case may be, set forth in Section 8.7).
SECTION 8.11. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee, the retiring
Relevant Trustee and each such successor Trustee with respect to the Trust
Securities shall execute, acknowledge and deliver an amendment hereto wherein
each successor Trustee shall accept such appointment and which (a) shall contain
such provisions as shall be necessary or desirable to transfer and confirm to,
and to vest in, each successor Trustee all the rights, powers, trusts and duties
of the retiring Trustee with respect to the Trust Securities and the Issuer
Trust, and (b) shall add to or change any of the provisions of this Trust
Agreement as shall be necessary to provide for or facilitate the administration
of the Issuer Trust by more than one Relevant Trustee, it being understood that
nothing herein or in such amendment shall constitute such Relevant co-trustees
and upon the execution and delivery of such amendment the resignation or removal
of the retiring Relevant Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the Relevant Trustee; but, on request of the Issuer Trust or any successor
Trustee such Relevant Trustee shall duly assign, transfer and deliver to such
successor Trustee all Trust Property, all proceeds thereof and money held by
such Relevant Trustee hereunder with respect to the Trust Securities and the
Trust.
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Upon request of any such successor Trustee, the Issuer Trust shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts
referred to in the first or second preceding paragraph, as the case may be.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
SECTION 8.12. Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Property Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Relevant
Trustee shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of such Relevant Trustee, shall be the successor
of such Relevant Trustee hereunder, provided that such Person shall be
otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties
hereto.
SECTION 8.13. Preferential Collection of Claims Against Depositor or
Issuer Trust.
If and when the Property Trustee shall be or become a creditor of the
Depositor (or any other obligor upon the Trust Securities), the Property
Trustee shall be subject to the provisions of the Trust Indenture Act regarding
the collection of claims against the Depositor (or any such other obligor) as
is required by the Trust Indenture Act.
SECTION 8.14. Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other similar judicial
proceeding relative to the Issuer Trust or any other obligor upon the Trust
Securities or the property of the Issuer Trust or of such other obligor, the
Property Trustee (irrespective of whether any Distributions on the Trust
Securities shall then be due and payable and irrespective of whether the
Property Trustee shall have made any demand on the Issuer Trust for the payment
of any past due Distributions) shall be entitled and empowered, to the fullest
extent permitted by law, by intervention in such proceeding or otherwise:
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(a) to file and prove a claim for the whole amount of any Distributions
owning and unpaid in respect of the Trust Securities and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Property Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or compensation affecting
the Trust Securities or the rights of any Holder thereof or to authorize the
Property Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 8.15. Reports by Property Trustee.
(a) Not later than January 31 of each year commencing with January 31,
1998, the Property Trustee shall transmit to all Holders in accordance with
Section 10.8, and to the Depositor, a brief report dated as of the immediately
preceding December 31 with respect to:
(i) its eligibility under Section 8.7 or, in lieu thereof, if to
the best of its knowledge it has continued to be eligible under said
Section, a written statement to such effect; and
(ii) any change in the property and funds in its possession as
Property Trustee since the date of its last report and any action taken
by the Property Trustee in the performance of its duties hereunder which
it has not previously reported and which in its opinion materially
affects the Trust Securities.
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(b) In addition the Property Trustee shall transmit to Holders such
reports concerning the Property Trustee and its actions under this Trust
Agreement as may be required pursuant to the Trust Indenture Act at the times
and in the manner provided pursuant thereto as set forth in Section 10.10 of
this Trust Agreement.
(c) A copy of each such report shall, at the time of such transmission
to Holders, be filed by the Property Trustee with the Depositor.
SECTION 8.16. Reports to the Property Trustee.
The Depositor and the Administrators on behalf of the Issuer Trust shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314(a) of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act, as set forth in Section 10.10 of this Trust Agreement. The Depositor and
the Administrators shall annually file with the Property Trustee a certificate
specifying whether such Person is in compliance with all the terms and
covenants applicable to such Person hereunder.
SECTION 8.17. Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrators on behalf of the Issuer
Trust shall provide to the Property Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Trust Agreement that
relate to any of the matters set forth in Section 314(c) of the Trust Indenture
Act as set forth in Section 10.10 of this Trust Agreement. Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) of the
Trust Indenture Act shall be given in the form of an Officers' Certificate.
SECTION 8.18. Number of Issuer Trustees.
(a) The number of Issuer Trustees shall be two. The Property Trustee
and the Delaware Trustee may be the same Person.
(b) If an Issuer Trustee ceases to hold office for any reason, a vacancy
shall occur. The vacancy shall be filled with an Issuer Trustee appointed in
accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of an Issuer Trustee shall not
operate to annul the Issuer Trust.
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SECTION 8.19. Delegation of Power.
(a) Any Administrator may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section
2.7(a) or making any governmental filing; and
(b) The Administrators shall have power to delegate from time to time to
such of their number the doing of such things and the execution of such
instruments either in the name of the Issuer Trust or the names of the
Administrators or otherwise as the Administrators may deem expedient, to the
extent such delegation is not prohibited by applicable law or contrary to the
provisions of this Trust Agreement.
SECTION 8.20. Appointment of Administrators.
(a) The Administrators (other than the initial Administrators) shall be
appointed by the Holders of a Majority in Liquidation Amount of the Common
Securities and all Administrators (including the initial Administrators) may be
removed by the Holders of a Majority in Liquidation Amount of the Common
Securities or may resign at any time. Each Administrator shall sign an
agreement agreeing to comply with the terms of this Trust Agreement. If at
any time there is no Administrator, the Property Trustee or any Holder who has
been a Holder of Trust Securities for at least six months may petition any
court of competent jurisdiction for the appointment of one or more
Administrators.
(b) Whenever a vacancy in the number of Administrators shall occur,
until such vacancy is filled by the appointment of an Administrator in
accordance with this Section 8.20, the Administrators in office, regardless of
their number (and notwithstanding any other provision of this Agreement), shall
have all the powers granted to the Administrators and shall discharge all the
duties imposed upon the Administrators by this Trust Agreement.
(c) Notwithstanding the foregoing, or any other provision of this Trust
Agreement, in the event any Administrator or a Delaware Trustee who is a
natural person dies or becomes, in the opinion of the Holders of a Majority in
Liquidation Amount of the Common Securities, incompetent, or incapacitated, the
vacancy created by such death, incompetence or incapacity may be filled by the
remaining Administrators, if there were at least two of them prior to such
vacancy, and by the Depositor, if there were not two such Administrators
immediately prior to such vacancy (with the successor in each case being a
Person who
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satisfies the eligibility requirement for Administrators or Delaware Trustee,
as the case may be, set forth in Section 8.7).
(d) Except as otherwise provided in this Trust Agreement, or by
applicable law, any one Administrator may execute any document or otherwise take
any action which the Administrators are authorized to take under this Trust
Agreement.
ARTICLE IX
DISSOLUTION, LIQUIDATION AND MERGER
SECTION 9.1. Dissolution Upon Expiration Date.
Unless earlier dissolved, the Issuer Trust shall automatically dissolve
on ________ __, 2028 (the "Expiration Date"), following the distribution of the
Trust Property in accordance with Section 9.4.
SECTION 9.2. Early Termination.
The first to occur of any of the following events is an "Early
Termination Event":
(a) the occurrence of the appointment of a receiver or other similar
official in any liquidation, insolvency or similar proceeding with respect to
the Depositor or all or substantially all of its property, or a court or other
governmental agency shall enter a decree or order and such decree or order
shall remain unstayed and undischarged for a period of 60 days, unless the
Depositor shall transfer the Common Securities as provided by Section 5.11, in
which case this provision shall refer instead to any such successor Holder of
the Common Securities;
(b) the written direction to the Property Trustee from the Holder of the
Common Securities at any time to dissolve the Issuer Trust and to distribute
the Junior Subordinated Debentures to Holders in exchange for the Preferred
Securities (which direction, subject to Section 9.4(a), is optional and wholly
within the discretion of the Holders of the Common Securities);
(c) the redemption of all of the Preferred Securities in connection with
the redemption of all the Junior Subordinated Debentures; and
(d) the entry of an order for dissolution of the Issuer Trust by a court
of competent jurisdiction.
SECTION 9.3. Dissolution.
The respective obligations and responsibilities of the Issuer Trustees,
the Administrators and the Issuer Trust created and continued hereby shall
terminate upon the latest to occur of the following: (a) the distribution by
the Property Trustee to
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Holders of all amounts required to be distributed hereunder upon the
liquidation of the Issuer Trust pursuant to Section 9.4, or upon the redemption
of all of the Trust Securities pursuant to Section 4.2, (b) the payment of any
expenses owed by the Issuer Trust, and (c) the discharge of all administrative
duties of the Administrators, including the performance of any tax reporting
obligations with respect to the Issuer Trust or the Holders.
SECTION 9.4. Liquidation.
(a) If an Early Termination Event specified in clause (a), (b) or (d) of
Section 9.2 occurs or upon the Expiration Date, the Issuer Trust shall be
liquidated by the Property Trustee as expeditiously as the Property Trustee
determines to be possible by distributing, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, to each Holder a
Like Amount of Junior Subordinated Debentures, subject to Section 9.4(d).
Notice of liquidation shall be given by the Property Trustee by first-class
mail, postage prepaid, mailed not later than 15 nor more than 45 days prior to
the Liquidation Date to each Holder of Trust Securities at such Holder's
address appearing in the Securities Register. All notices of liquidation
shall:
(i) state the Liquidation Date;
(ii) state that, from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust Securities
Certificates not surrendered for exchange will be deemed to represent a Like
Amount of Junior Subordinated Debentures; and
(iii) provide such information with respect to the mechanics by
which Holders may exchange Trust Securities Certificates for Junior
Subordinated Debentures, or if Section 9.4(d) applies receive a Liquidation
Distribution, as the Administrators or the Property Trustee shall deem
appropriate.
(b) Except where Section 9.2(c) or 9.4(d) applies, in order to effect
the liquidation of the Issuer Trust and distribution of the Junior Subordinated
Debentures to Holders, the Property Trustee shall establish a record date for
such distribution (which shall be not more than 30 days prior to the
Liquidation Date) and, either itself acting as exchange agent or through the
appointment of a separate exchange agent, shall establish such procedures as it
shall deem appropriate to effect the distribution of Junior Subordinated
Debentures in exchange for the Outstanding Trust Securities Certificates.
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(c) Except where Section 9.2(c) or 9.4(d) applies, after the Liquidation
Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii)
the Clearing Agency for the Preferred Securities or its nominee, as the
registered holder of the Global Preferred Securities Certificate, shall receive
a registered global certificate or certificates representing the Junior
Subordinated Debentures to be delivered upon such distribution with respect to
Preferred Securities held by the Clearing Agency or its nominee, and, (iii) any
Trust Securities Certificates not held by the Clearing Agency for the Preferred
Securities or its nominee as specified in clause (ii) above will be deemed to
represent Junior Subordinated Debentures having a principal amount equal to the
stated Liquidation Amount of the Trust Securities represented thereby and
bearing accrued and unpaid interest in an amount equal to the accumulated and
unpaid Distributions on such Trust Securities until such certificates are
presented to the Securities Registrar for transfer or reissuance.
(d) If, notwithstanding the other provisions of this Section 9.4, whether
because of an order for dissolution entered by a court of competent jurisdiction
or otherwise, distribution of the Junior Subordinated Debentures is not
practical, or if any Early Termination Event specified in clause (c) of Section
9 occurs, the Trust Property shall be liquidated, and the Issuer Trust shall be
dissolved by the Property Trustee in such manner as the Property Trustee
determines. In such event, on the date of the dissolution of the Issuer Trust,
Holders will be entitled to receive out of the assets of the Issuer Trust
available for distribution to Holders, after satisfaction of liabilities to
creditors of the Issuer Trust as provided by applicable law, an amount equal to
the aggregate of Liquidation Amount per Trust Security plus accumulated and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If, upon any such dissolution, the Liquidation
Distribution can be paid only in part because the Issuer Trust has insufficient
assets available to pay in full the aggregate Liquidation Distribution, then,
subject to the next succeeding sentence, the amounts payable by the Issuer Trust
on the Trust Securities shall be paid on a pro rata basis (based upon
Liquidation Amounts). The Holders of the Common Securities will be entitled to
receive Liquidation Distributions upon any such dissolution pro rata (determined
as aforesaid) with Holders of Preferred Securities, except that, if a Debenture
Event of Default has occurred and is continuing, the Preferred Securities shall
have a priority over the Common Securities as provided in Section 4.3.
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SECTION 9.5. Mergers, Consolidations, Amalgamations or Replacements of
the Issuer Trust.
The Issuer Trust may not merge with or into, consolidate, amalgamate, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except pursuant to this Section
9.5. At the request of the Holders of the Common Securities, and with the
consent of the Holders of at least a Majority in Liquidation Amount of the
Preferred Securities, the Issuer Trust may merge with or into, consolidate,
amalgamate, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to a trust organized as such under the laws
of any State; provided, however, that (i) such successor entity either (a)
expressly assumes all of the obligations of the Issuer Trust with respect to the
Preferred Securities or (b) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor Securities have the same
priority as the Preferred Securities with respect to distributions and payments
upon liquidation, redemption and otherwise, (ii) a trustee of such successor
entity possessing the same powers and duties as the Property Trustee is
appointed to hold the Junior Subordinated Debentures, (iii) such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease does not
cause the Preferred Securities (including any Successor Securities) to be
downgraded by any nationally recognized statistical rating organization if the
Preferred Securities were rated by any nationally recognized statistical rating
organization immediately prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the holders of the Preferred
Securities (including any Successor Securities) in any material respect, (v)
such successor entity has a purpose substantially identical to that of the
Issuer Trust, (vi) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Issuer Trustee has received an
Opinion of Counsel from independent counsel experienced in such matters to the
effect that (a) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights preferences
and privileges of the holders of the Preferred Securities (including any
Successor Securities) in any material respect, and (b) following such merger,
consolidation, amalgamation, replacement, conveyance, transfer or lease, neither
the Issuer Trust nor such successor entity will be required to register as an
"investment company" under the Investment Company Act and (vii) the Depositor or
any permitted transferee to whom it has transferred the Common Securities
hereunder own all of the Common Securities of such successor entity and
guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the Guarantee Agreement.
Notwithstanding the foregoing, the
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Issuer Trust shall not, except with the consent of holders of 100% in
Liquidation Amount of the Preferred Securities, consolidate, amalgamate, merge
with or into, or be replaced by or convey, transfer or lease its properties and
assets substantially as an entirety to any other entity or permit any other
entity to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Issuer Trust or the successor entity to be taxable as a
corporation for United States Federal income tax purposes.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Limitation of Rights of Holders.
Except as set forth in Section 9.2, the death or incapacity of any person
having an interest, beneficial or otherwise, in Trust Securities shall not
operate to terminate this Trust Agreement, nor entitle the legal
representatives or heirs of such person or any Holder for such person, to claim
an accounting, take any action or bring any proceeding in any court for a
partition or winding-up of the arrangements contemplated hereby, nor otherwise
affect the rights, obligations and liabilities of the parties hereto or any of
them. Any merger or similar agreement shall be executed by the Administrators
on behalf of the Trust.
SECTION 10.2. Amendment.
(a) This Trust Agreement may be amended from time to time by the
Property Trustee and the Holders of a Majority in Liquidation Amount of the
Common Securities, without the consent of any Holder of the Preferred
Securities (i) to cure any ambiguity, correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make
any other provisions with respect to matters or questions arising under this
Trust Agreement, provided, however, that such amendment shall not adversely
affect in any material respect the interests of any Holder or (ii) to modify,
eliminate or add to any provisions of this Trust Agreement to such extent as
shall be necessary to ensure that the Issuer Trust will not be taxable as a
corporation for United States Federal income tax purposes at any time that any
Trust Securities are Outstanding or to ensure that the Issuer Trust will not be
required to register as an investment company under the Investment Company Act.
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(b) Except as provided in Section 10.2(c) hereof, any provision of this
Trust Agreement may be amended by the Property Trustee and the Holders of a
Majority in Liquidation Amount of the Common Securities with (i) the consent of
Holders of at least a Majority in Liquidation Amount of the Preferred
Securities and (ii) receipt by the Issuer Trustees of an Opinion of Counsel to
the effect that such amendment or the exercise of any power granted to the
Issuer Trustees in accordance with such amendment will not cause the Issuer
Trust to be taxable as a corporation for United States federal income tax
purposes or affect the Issuer Trust's exemption from status of an "investment
company" under the Investment Company Act.
(c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Holder (such consent being
obtained in accordance with Section 6.3 or 6.6 hereof), this Trust Agreement
may not be amended to (i) change the amount or timing of any Distribution on
the Trust Securities or otherwise adversely affect the amount of any
Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a Holder to institute suit for the
enforcement of any such payment on or after such date.
(d) Notwithstanding any other provisions of this Trust Agreement, no
Issuer Trustee shall enter into or consent to any amendment to this Trust
Agreement which would cause the Issuer Trust to fail or cease to qualify for
the exemption from status as an "investment company" under the Investment
Company Act or be taxable as a corporation for United States Federal income tax
purposes.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor and the Administrators, this Trust
Agreement may not be amended in a manner which imposes any additional
obligation on the Depositor or the Administrators.
(f) In the event that any amendment to this Trust Agreement is made, the
Administrators or the Property Trustee shall promptly provide to the Depositor
a copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee shall be
required to enter into any amendment to this Trust Agreement which affects its
own rights, duties or immunities under this Trust Agreement. The Property
Trustee shall be entitled to receive an Opinion of Counsel and an Officers'
Certificate stating that any amendment to this Trust Agreement is in compliance
with this Trust Agreement.
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(h) Any amendments to this Trust Agreement shall become effective when
notice of such amendment is given to the holders of the Trust Securities.
SECTION 10.3. Separability.
In case any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 10.4. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
HOLDERS, THE ISSUER TRUST, THE DEPOSITOR, THE ISSUER TRUSTEES AND THE
ADMINISTRATORS WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES
SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
DELAWARE.
SECTION 10.5. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day
that is not a Business Day, then such payment need not be made on such date but
may be made on the next succeeding day that is a Business Day (except as
otherwise provided in Sections 4.2(d)), with the same force and effect as
though made on the date fixed for such payment, and no Distributions shall
accumulate on such unpaid amount for the period after such date.
SECTION 10.6. Successors.
This Trust Agreement shall be binding upon and shall inure to the benefit
of any successor to the Depositor, the Issuer Trust, the Administrators and any
Issuer Trustee, including any successor by operation of law. Except in
connection with a consolidation, merger or sale involving the Depositor that is
permitted under Article VIII of the Indenture and pursuant to which the
assignee agrees in writing to perform the Depositor's obligations hereunder,
the Depositor shall not assign its obligations hereunder.
SECTION 10.7. Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
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SECTION 10.8. Reports, Notices and Demands.
Any report, notice, demand or other communication that by any provision
of this Trust Agreement is required or permitted to be given or served to or
upon any Holder or the Depositor may be given or served in writing by deposit
thereof, first class postage prepaid, in the United States mail, hand delivery
or facsimile transmission, in each case, addressed, (a) in the case of a Holder
of Preferred Securities, to such Holder as such Holder's name and address may
appear on the Securities Register; and (b) in the case of the Holder of Common
Securities or the Depositor, to JeffBanks, Inc., 1609 Walnut Street,
Philadelphia, Pennsylvania 19103, Attention: Office of the Secretary,
facsimile no.: (215) 564-6820 or to such other address as may be specified in
a written notice by the Depositor to the Property Trustee. Such notice, demand
or other communication to or upon a Holder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission. Such notice, demand or other communication to or upon the
Depositor shall be deemed to have been sufficiently given or made only upon
actual receipt of the writing by the Depositor.
Any notice, demand or other communication which by any provision of this
Trust Agreement is required or permitted to be given or served to or upon the
Issuer Trust, the Property Trustee, the Delaware Trustee, the Administrators,
or the Issuer Trust shall be given in writing addressed (until another address
is published by the Issuer Trust) as follows: (a) with respect to the Property
Trustee to Bankers Trust Company, Four Albany Street, 4th Floor, New York, NY
10006, Attention: Corporate Trust and Agency Group Corporate Market Services;
(b) with respect to the Delaware Trustee to Bankers Trust (Delaware), 1001
Jefferson Street, Suite 550, Wilmington, Delaware 19801, Attention: Chairman;
and (c) with respect to the Administrators, to them at the address above for
notices to the Depositor, marked "Attention: Office of the Secretary". Such
notice, demand or other communication to or upon the Issuer Trust or the
Property Trustee shall be deemed to have been sufficiently given or made only
upon actual receipt of the writing by the Issuer Trust, the Property Trustee,
or such Administrator.
SECTION 10.9 Agreement Not to Petition.
Each of the Issuer Trustees, the Administrators and the Depositor agree
for the benefit of the Holders that, until at least one year and one day after
the Issuer Trust has been dissolved in accordance with Article IX, they shall
not file, or join in the filing of, a petition against the Issuer Trust under
any bankruptcy, insolvency, reorganization or other
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similar law (including, without limitation, the United States Bankruptcy Code)
(collectively, "Bankruptcy Laws") or otherwise join in the commencement of any
proceeding against the Issuer Trust under any Bankruptcy Law. In the event the
Depositor takes action in violation of this Section 10.9, the Property Trustee
agrees, for the benefit of Holders, that at the expense of the Depositor, it
shall file an answer with the bankruptcy court or otherwise properly contest
the filing of such petition by the Depositor against the Issuer Trust or the
commencement of such action and raise the defense that the Depositor has agreed
in writing not to take such action and should be estopped and precluded
therefrom and such other defenses, if any, as counsel for the Issuer Trustee or
the Issuer Trust may assert. If any Issuer Trustee or Administrator takes
action in violation of this Section 10.9, the Depositor agrees, for the benefit
of the Holders, that at the expense of the Depositor, it shall file an answer
with the bankruptcy court or otherwise properly contest the filing of such
petition by such Person against the Depositor or the commencement of such
action and raise the defense that such Person has agreed in writing not to take
such action and should be estopped and precluded therefrom and such other
defenses, if any, as counsel for the Issuer Trustee or the Issuer Trust may
assert. The provisions of this Section 10.9 shall survive the termination of
this Trust Agreement.
SECTION 10.10. Trust Indenture Act; Conflict with Trust Indenture Act.
(a) Trust Indenture Act; Application. (i) This Trust Agreement is
subject to the provisions of the Trust Indenture Act that are required to be a
part of this Trust Agreement and shall, to the extent applicable, be governed
by such provisions; (ii) if and to the extent that any provision of this Trust
Agreement limits, qualifies or conflicts with the duties imposed by Sections
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control; (iii) for purposes of this Trust Agreement, the Property Trustee, to
the extent permitted by applicable law and/or the rules and regulations of the
Commission, shall be the only Issuer Trustee which is a trustee for the
purposes of the Trust Indenture Act; and (iv) the application of the Trust
Indenture Act to this Trust Agreement shall not affect the nature of the
Preferred Securities and the Common Securities as equity securities
representing undivided beneficial interests in the assets of the Issuer Trust.
(b) Lists of Holders of Preferred Securities. (i) Each of the Depositor
and the Administrators on behalf of the Trust shall provide the Property
Trustee with such information as is required under Section 312(a) of the Trust
Indenture Act at the times and in the manner provided in Section 312(a) and
(ii) the Property
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Trustee shall company with its obligations under Sections 310(b), 311 and
312(b) of the Trust Indenture Act.
(c) Reports by the Property Trustee. Within 60 days after [May 15] of
each year, the Property Trustee shall provide to the Holders of the Trust
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form, in the manner and at the times provided by Section
313 of the Trust Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
(d) Periodic Reports to Property Trustee. Each of the Depositor and the
Administrators on behalf of the Issuer Trust shall provide to the Property
Trustee, the Commission and the Holders of the Trust Securities, as applicable,
such documents, reports and information as required by Section 314(a)(1) -(3)
(if any) of the Trust Indenture Act and the compliance certificates required
by Section 314(a)(4) and (c) of the Trust Indenture Act (provided that any
certificate to be provided pursuant to Section 314(a)(4) of the Trust Indenture
Act shall be provided within 120 days of the end of each fiscal year of the
Issuer Trust.
(e) Evidence of Compliance with Conditions Precedent. Each of the
Depositor and the Administrators on behalf of the Issuer Trust shall provide to
the Property Trustee such evidence of compliance with any conditions precedent,
if any, provided for in this Trust Agreement which relate to any of the matters
set forth in Section 314(c) of the Trust Indenture Act. Any certificate or
opinion required to be given pursuant to Section 314(c) shall comply with
Section 314(e) of the Trust Indenture Act.
(f) Disclosure of Information. The disclosure of information as to the
names and addresses of the Holders of Trust Securities in accordance with
Section 312 of the Trust Indenture Act, regardless of the source from which
such information was derived, shall not be deemed to be a violation of any
existing law or any law hereafter enacted which does not specifically refer to
Section 312 of the Trust Indenture Act, nor shall the Property Trustee be held
accountable by reason of mailing any material pursuant to a request made under
Section 312(b) of the Trust Indenture Act.
SECTION 10.11. Acceptance of Terms of Trust Agreement, Guarantee and
Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A HOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE HOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST
SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT, THE
<PAGE> 76
- 71 -
GUARANTEE AGREEMENT AND THE INDENTURE, AND THE AGREEMENT TO THE SUBORDINATION
PROVISIONS AND OTHER TERMS OF THE GUARANTEE AGREEMENT AND THE INDENTURE, AND
SHALL CONSTITUTE THE AGREEMENT OF THE ISSUER TRUST, SUCH HOLDER AND SUCH OTHERS
THAT THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING,
OPERATIVE AND EFFECTIVE AS BETWEEN THE ISSUER TRUST AND SUCH HOLDER AND SUCH
OTHERS.
<PAGE> 77
- 72 -
JEFFBANKS, INC.
as Depositor
By:
-------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
as Property Trustee
By:
-------------------------------
Name:
Title:
BANKERS TRUST (DELAWARE),
as Delaware Trustee and not
in its individual capacity
By:
-------------------------------
Name:
Title:
Subscribed to and Accepted by,
as the Initial Administrators:
-------------------------------
[Name]
-------------------------------
[Name]
<PAGE> 78
EXHIBIT A
[INSERT CERTIFICATE OF TRUST FILED WITH DELAWARE]
<PAGE> 79
EXHIBIT B
[INSERT FORM OF CERTIFICATE DEPOSITARY AGREEMENT]
<PAGE> 80
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE
DEPOSITOR OR AN AFFILIATE OF THE DEPOSITOR
IN COMPLIANCE WITH APPLICABLE LAW AND
SECTION 5.11 OF THE TRUST AGREEMENT
Certificate Number Number of Common Securities
C-__
Certificate Evidencing Common Securities
of
JBI Capital Trust I
___ % Common Securities
(liquidation amount $25 per Common Security)
JBI Capital Trust I, a statutory business trust formed under
the laws of the State of Delaware (the "Issuer Trust"), hereby certifies
that JeffBanks, Inc. (the "Holder") is the registered owner of _________
(_____) common securities of the Issuer Trust representing undivided
beneficial interests in the Issuer Trust and has designated the % Common
Securities (liquidation amount $25 per Common Security) (the "Common
Securities"). Except in accordance with Section 5.11 of the Trust Agreement
(as defined below) the Common Securities are not transferable and any
attempted transfer hereof other than in accordance therewith shall be void.
The designations, rights, privileges, restrictions, preferences and other
terms and provisions of the Common Securities are set forth in, and this
certificate and the Common Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended
and Restated Trust Agreement of the Issuer Trust, dated as of January ,
1997, as the same may be amended from time to time (the "Trust Agreement")
among JeffBanks, Inc, as Depositor, Bankers Trust Company, as Property
Trustee, Bankers Trust (Delaware), as Delaware Trustee, and the Holders of
Trust Securities, including the designation of the terms of the Common
Securities as set forth therein. The Issuer Trust will furnish a copy of
the Trust Agreement to the Holder without charge upon
<PAGE> 81
written request to the Issuer Trust at its principal place of business or
registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
Terms used but not defined herein have the meanings set forth in the
Trust Agreement.
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this ___ day of ______________, ____.
JBI CAPITAL TRUST I
By:
---------------------------------
Name:
Administrator
<PAGE> 82
EXHIBIT D
[IF THE PREFERRED SECURITIES CERTIFICATE IS TO BE A GLOBAL PREFERRED
SECURITIES CERTIFICATE, INSERT -- This Preferred Securities Certificate is a
Global Preferred Securities Certificate within the meaning of the Trust
Agreement hereinafter referred to and is registered in the name of a
Depositary or a nominee of a Depositary. This Preferred Security
Certificate is exchangeable for Preferred Securities Certificates registered
in the name of a person other than the Depositary or its nominee only in the
limited circumstances described in the Trust Agreement and may not be
transferred except as a whole by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary, except in the limited circumstances described in
the Trust Agreement.
Unless this Preferred Security Certificate is presented by an
authorized representative of The Depository Trust Company, a New York
Corporation ("DTC"), to JeffBanks Capital Trust I or its agent for
registration of transfer, exchange or payment, and any Preferred Security
Certificate issued is registered in the name of such nominee as is requested
by an authorized representative of DTC (and any payment is made to such
entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO A
PERSON IS WRONGFUL inasmuch as the registered owner hereof, has an interest
herein.]
NO EMPLOYEE BENEFIT OR OTHER PLAN OR INDIVIDUAL RETIREMENT ACCOUNT
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED (THE "CODE") (EACH, A "PLAN"), NO ENTITY WHOSE UNDERLYING ASSETS
INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY (A
"PLAN ASSET ENTITY"), AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN, MAY
ACQUIRE OR HOLD THIS PREFERRED SECURITIES CERTIFICATE OR ANY INTEREST
HEREIN, UNLESS SUCH PURCHASE OR HOLDING IS COVERED BY THE EXEMPTIVE RELIEF
AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS
EXEMPTION ("PTCE") 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE
EXEMPTION WITH RESPECT TO SUCH PURCHASE OR HOLDING AND, IN THE CASE OF ANY
PURCHASER OR HOLDER RELYING ON ANY EXEMPTION OTHER THAN
<PAGE> 83
PTCE 96-23, 95-60, 91-38, 90-1 OR 84-14, HAS COMPLIED WITH ANY REQUEST BY
THE DEPOSITOR OR THE ISSUER TRUST FOR AN OPINION OF COUNSEL OR OTHER
EVIDENCE WITH RESPECT TO THE APPLICABILITY OF SUCH EXEMPTION. ANY PURCHASER
OR HOLDER OF THIS PREFERRED SECURITIES CERTIFICATE OR ANY INTEREST HEREIN
WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING HEREOF THAT
EITHER (A) THE PURCHASER AND HOLDER ARE NOT A PLAN OR A PLAN ASSET ENTITY
AND IS NOT PURCHASING SUCH SECURITIES ON BEHALF OF OR WITH "PLAN ASSETS" OF
ANY PLAN, OR (B) THE PURCHASE AND HOLDING OF THE PREFERRED SECURITIES IS
COVERED BY THE EXEMPTIVE RELIEF PROVIDED BY PTCE 96-23, 95-60, 91-38, 90-1
OR 84-14 OR ANOTHER APPLICABLE EXEMPTION.
CERTIFICATE NUMBER NUMBER OF PREFERRED SECURITIES
P-__
CUSIP NO. ________________________
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
JBI CAPITAL TRUST I
_______ % PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
JBI Capital Trust I, a statutory business trust formed under the laws
of the State of Delaware (the "Issuer Trust"), hereby certifies that (the
"Holder") is the registered owner of) ( ) preferred
securities of the Trust representing a preferred undivided beneficial
interest in the assets of the Issuer Trust and has designated the JeffBanks
Capital Trust I _____ % Preferred Securities (liquidation amount $25 per
Preferred Security) (the "Preferred Securities"). The Preferred Securities
are transferable on the books and records of the Issuer Trust, in person or
by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer as provided in Section 5.5 of the
Trust Agreement (as defined below). The designations, rights, privileges,
restrictions, preferences and other terms and provisions of the Preferred
Securities are set forth in, and this
<PAGE> 84
certificate and the Preferred Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended
and Restated Trust Agreement of the Issuer Trust, dated as of January ,
1997, as the same may be amended from time to time (the "Trust Agreement"),
among JeffBanks, Inc., as Depositor, Bankers Trust Company, as Property
Trustee, Bankers Trust (Delaware), as Delaware Trustee, and the Holders of
Trust Securities, including the designation of the terms of the Preferred
Securities as set forth therein. The Holder is entitled to the benefits of
the Guarantee Agreement entered into by JeffBanks, Inc., a Pennsylvania
corporation, and Bankers Trust Company, as guarantee trustee, dated as of
January __, 1997 (the "Guarantee Agreement"), to the extent provided
therein. The Issuer Trust will furnish a copy of the Issuer Trust Agreement
and the Guarantee Agreement to the Holder without charge upon written
request to the Issuer Trust at its principal place of business or registered
office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrators of the Issuer Trust has
executed this certificate this day of , .
JBI CAPITAL TRUST I
By:
----------------------------------
Name:
Administrator
COUNTERSIGNED AND REGISTERED:
BANKERS TRUST COMPANY,
as Securities Registrar
By:
------------------------
Name:
Authorized Signatory
<PAGE> 85
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Security to:
---------------------------------------------------------
(Insert assignee's social security or tax
identification number)
---------------------------------------------------------
---------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
--------------------------------
---------------------------------------------------------
agent to transfer this Preferred Security Certificate on the books of the
Issuer Trust. The agent may substitute another to act for him or her.
Date:
----------------------
Signature:
-----------------------------------------------
(Sign exactly as your name appears on
the other side of this Preferred Security
Certificate)
The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant
to S.E.C. Rule 17Ad-15.
<PAGE> 1
EXHIBIT 4.4
==============================================================================
GUARANTEE AGREEMENT
Between
JEFFBANKS, INC.
(as Guarantor)
and
BANKERS TRUST COMPANY
(as Trustee)
dated as of
_______ ____, 1997
==============================================================================
<PAGE> 2
JBI CAPITAL TRUST I
Certain Sections of this Guarantee Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
Trust Indenture Guarantee Agreement
Act Section Section
- --------------- -------------------
Section 310 (a) (1)........................ 4.1 (a)
(a) (2)........................ 4.1 (a)
(a) (3)........................ Not Applicable
(a) (4)........................ Not Applicable
(b)............................ 2.8, 4.1 (c)
Section 311 (a)............................ Not Applicable
(b)............................ Not Applicable
Section 312 (a)............................ 2.2 (a)
(b)............................ 2.2 (b)
(c)............................ Not Applicable
Section 313 (a)............................ 2.3
(a) (4)........................ 2.3
(b)............................ 2.3
(c)............................ 2.3
(d)............................ 2.3
Section 314 (a)............................ 2.4
(b)............................ 2.4
(c) (1)........................ 2.5
(c) (2)........................ 2.5
(c) (3)........................ 2.5
(e)............................ 1.1, 2.5, 3.2
Section 315 (a)............................ 3.1 (d)
(b)............................ 2.7
(c)............................ 3.1 (c)
(d)............................ 3.1 (d)
(e)............................ Not Applicable
Section 316 (a)............................ 1.1, 2.6, 5.4
(a) (1) (A).................... 5.4
(a) (1) (B).................... 5.4
(a) (2)........................ Not Applicable
(b)............................ 5.3
(c)............................ Not Applicable
Section 317 (a) (1)........................ Not Applicable
(a) (2)........................ Not Applicable
(b)............................ Not Applicable
Section 318 (a)............................ 2.1
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of the Guarantee Agreement.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I. DEFINITIONS
Section 1.1. Definitions................................ 2
ARTICLE II. TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application........... 5
Section 2.2. List of Holders............................ 6
Section 2.3. Reports by the Guarantee Trustee........... 6
Section 2.4. Periodic Reports to Guarantee Trustee...... 6
Section 2.5. Evidence of Compliance with Conditions
Precedent.................................. 6
Section 2.6. Events of Default; Waiver.................. 7
Section 2.7. Event of Default; Notice................... 7
Section 2.8. Conflicting Interests...................... 7
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE
TRUSTEE
Section 3.1. Powers and Duties of the Guarantee
Trustee.................................... 7
Section 3.2. Certain Rights of Guarantee Trustee........ 9
Section 3.3. Indemnity.................................. 11
Section 3.4. Expenses................................... 11
ARTICLE IV. GUARANTEE TRUSTEE
Section 4.1. Guarantee Trustee; Eligibility............. 11
Section 4.2. Appointment, Removal and Resignation
of the Guarantee Trustee................... 12
ARTICLE V. GUARANTEE
Section 5.1. Guarantee.................................. 13
Section 5.2. Waiver of Notice and Demand................ 13
Section 5.3. Obligations Not Affected................... 13
Section 5.4. Rights of Holders.......................... 14
Section 5.5. Guarantee of Payment....................... 15
Section 5.6. Subrogation................................ 15
Section 5.7. Independent Obligations.................... 15
ARTICLE VI. COVENANTS AND SUBORDINATION
Section 6.1. Subordination.............................. 16
Section 6.2. Pari Passu Guarantees...................... 16
ARTICLE VII. TERMINATION
Section 7.1. Termination................................ 16
</TABLE>
- i -
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VIII. MISCELLANEOUS
Section 8.1. Successors and Assigns..................... 16
Section 8.2. Amendments................................. 17
Section 8.3. Notices.................................... 17
Section 8.4. Benefit.................................... 18
Section 8.5. Interpretation............................. 18
Section 8.6. Governing Law.............................. 19
Section 8.7. Counterparts............................... 19
</TABLE>
- ii -
<PAGE> 5
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of January ____, 1997 is executed
and delivered by JEFFBANKS, INC., a Pennsylvania corporation (the "Guarantor"),
having its principal office at 1609 Walnut Street, Pennsylvania 19103, and
BANKERS TRUST COMPANY, a New York banking corporation, as trustee (the
"Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Preferred Securities (as defined herein) of JBI Capital
Trust I, a Delaware statutory business trust (the "Issuer Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of January ____, 1997, among JeffBanks, Inc., as
Depositor, Bankers Trust Company, as Property Trustee (the "Property Trustee"),
Bankers Trust (Delaware), as Delaware Trustee (the "Delaware Trustee")
(collectively, the "Issuer Trustees") and the Holders from time to time of
preferred undivided beneficial ownership interests in the assets of the Issuer
Trust, the Issuer Trust is issuing $22,000,000 aggregate Liquidation Amount (as
defined herein) of its _____% Preferred Securities, Liquidation Amount $25 per
capital security (the "Preferred Securities"), representing preferred undivided
beneficial ownership interests in the assets of the Issuer Trust and having the
terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities will be issued by the Issuer Trust
and the proceeds thereof, together with the proceeds from the issuance of the
Issuer Trust's Common Securities (as defined herein), will be used to purchase
the Junior Subordinated Debentures due _________ ____, 2027 (as defined in the
Trust Agreement) (the "Junior Subordinated Debentures") of the Guarantor which
will be deposited with Bankers Trust Company, as Property Trustee under the
Trust Agreement, as trust assets; and
WHEREAS, as incentive for the Holders to purchase Preferred Securities
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth herein, to pay to the Holders of the Preferred Securities the
Guarantee Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase of Preferred
Securities by each Holder, which purchase the Guarantor hereby acknowledges
shall benefit the Guarantor, and intending to be legally bound hereby, the
Guarantor executes and delivers this Guarantee Agreement for the benefit of the
Holders from time to time of the Preferred Securities.
<PAGE> 6
ARTICLE I. DEFINITIONS
SECTION 1.1. Definitions.
As used in this Guarantee Agreement, the terms set forth below shall,
unless the context otherwise requires, have the following meanings.
Capitalized terms used but not otherwise defined herein shall have the meanings
assigned to such terms in the Trust Agreement as in effect on the date hereof.
"Additional Amounts" has the meaning specified in the Trust
Agreement.
"Affiliate" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Common Securities" means the securities representing common
undivided beneficial interests in the assets of the Issuer Trust.
"Distributions" means preferential cumulative cash distributions
accumulating from January ____, 1997 and payable quarterly in arrears on the
_____ day of _________, _________, _________ and _________ of each year,
commencing _________ ____, 1997, at the annual rate of _____% of the
Liquidation Amount.
"Event of Default" means (i) a default by the Guarantor in any of its
payment obligations under this Guarantee Agreement, or (ii) a default by the
Guarantor in any other obligation hereunder that remains unremedied for 30
days.
"Guarantee Agreement" means this Guarantee Agreement, as modified,
amended or supplemented from time to time.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Issuer Trust: (i) any accrued and unpaid
Distributions (as defined in the Trust Agreement) required to be paid on the
Preferred
- 2 -
<PAGE> 7
Securities, to the extent the Issuer Trust shall have funds on hand available
therefor at such time, (ii) the Redemption Price, with respect to the Preferred
Securities called for redemption by the Issuer Trust to the extent that the
Issuer Trust shall have funds on hand available therefor at such time, and
(iii) upon a voluntary or involuntary termination, winding-up or liquidation of
the Issuer Trust, unless Junior Subordinated Debentures are distributed to the
Holders, the lesser of (a) the aggregate of the Liquidation Amount and all
accumulated and unpaid Distributions to the date of payment to the extent the
Issuer Trust shall have funds on hand available to make such payment at such
time and (b) the amount of assets of the Issuer Trust remaining available for
distribution to Holders in liquidation of the Issuer Trust (in either case, the
"Liquidation Distribution").
"Guarantee Trustee" means Bankers Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Guarantor" shall have the meaning specified in the first paragraph
of this Guarantee Agreement.
"Holder" means any holder, as registered on the books and records of
the Issuer Trust, of any Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor, the Guarantee Trustee, or any
Affiliate of the Guarantor or the Guarantee Trustee.
"Indenture" means the Junior Subordinated Indenture dated as of
January ____, 1997, between JeffBanks, Inc. and Bankers Trust Company, as
trustee, as may be modified, amended or supplemented from time to time.
"Issuer Trust" shall have the meaning specified in the first
paragraph of this Guarantee Agreement.
"Liquidation Amount" means the stated amount of $25 per Capital
Security.
"Majority in Liquidation Amount of the Preferred Securities" means,
except as provided by the Trust Indenture Act, Preferred Securities representing
more than 50% of the aggregate Liquidation Amount of all then outstanding
Preferred Securities issued by the Issuer Trust.
- 3 -
<PAGE> 8
"Like Amount" means (a) with respect to a redemption of Preferred
Securities, Preferred Securities having a Liquidation Amount equal to the
principal amount of Junior Subordinated Debentures to be contemporaneously
redeemed in accordance with the Indenture, the proceeds of which will be used
to pay the Redemption Price of such Preferred Securities, (b) with respect to a
distribution of Junior Subordinated Debentures to Holders of Preferred
Securities in connection with a dissolution or liquidation of the Issuer Trust,
Junior Subordinated Debentures having a principal amount equal to the
Liquidation Amount of the Preferred Securities of the Holder to whom such
Junior Subordinated Debentures are distributed, and (c) with respect to any
distribution of Additional Amounts to Holders of Preferred Securities, Junior
Subordinated Debentures having a principal amount equal to the Liquidation
Amount of the Preferred Securities in respect of which such distribution
is made.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by the Chairman and Chief Executive Officer, President or a
Vice President, and by the Treasurer, an Associate Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of such Person, and
delivered to the Guarantee Trustee. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Guarantee Agreement shall include:
(a) a statement by each officer signing the Officers' Certificate
that such officer has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer in rendering the Officers'
Certificate;
(c) a statement that such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of such officer, such
condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever
nature.
"Preferred Securities" shall have the meaning specified in the first
recital of this Guarantee Agreement.
"Redemption Date" means, with respect to any Preferred Security to be
redeemed, the date fixed for such redemption by or pursuant to the Trust
Agreement; provided that each Junior Subordinated Debenture Redemption Date (as
such term is defined in the Indenture) and the stated maturity of
- 4 -
<PAGE> 9
the Junior Subordinated Debentures shall be a Redemption Date for a Like Amount
of Preferred Securities.
"Redemption Price" shall have the meaning specified in the Trust
Agreement.
"Responsible Officer" means, when used with respect to the Guarantee
Trustee, any officer assigned to the Corporate Trust Office, including any
managing director, vice president, assistant vice president, assistant
treasurer, assistant secretary or any other officer of the Guarantee Trustee
customarily performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration of
this Indenture, and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
"Senior Indebtedness" shall have the meaning specified in the
Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Agreement" means the Amended and Restated Trust Agreement,
dated January ____, 1997, executed by JeffBanks, Inc., as Depositor, Bankers
Trust (Delaware), as Delaware Trustee, and Bankers Trust Company, as Property
Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 (15
U.S.C. Sections 77aaa-77bbbb), as amended.
ARTICLE II. TRUST INDENTURE ACT
SECTION 2.1. Trust Indenture Act; Application.
If any provision hereof limits, qualifies or conflicts with a
provision of the Trust Indenture Act that is required under such Act to be a
part of and govern this Guarantee Agreement, the provision of the Trust
Indenture Act shall control. If any provision of this Guarantee Agreement
modifies or excludes any provision of the Trust Indenture Act that may be so
modified or excluded, the latter provision shall be deemed to apply to this
Guarantee Agreement as so modified or excluded, as the case may be.
- 5 -
<PAGE> 10
SECTION 2.2. List of Holders.
(a) The Guarantor will furnish or cause to be furnished to the
Guarantee Trustee:
(i) semi-annually, not more than 15 days after January 15 and
July 15 in each year, a list, in such form as the Guarantee Trustee may
reasonably require, of the names and addresses of the Holders as of such
January 15 and July 15; and
(ii) at such other times as the Guarantee Trustee may request
in writing, within 30 days after the receipt by the Guarantor of any such
request, a list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished.
(b) The Guarantee Trustee shall comply with the requirements of
Section 312(b) of the Trust Indenture Act.
SECTION 2.3. Reports by the Guarantee Trustee.
Not later than January 31 of each year, commencing January 31, 1998,
the Guarantee Trustee shall provide to the Holders such reports, if any, as are
required by Section 313 of the Trust Indenture Act in the form and in the
manner provided by Section 313 of the Trust Indenture Act. The Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.4. Periodic Reports to the Guarantee Trustee.
The Guarantor shall provide to the Guarantee Trustee, and the Holders
such documents, reports and information, if any, as required by Section 314 of
the Trust Indenture Act and the compliance certificate required by Section 314
of the Trust Indenture Act, in the form, in the manner and at the times
required by Section 314 of the Trust Indenture Act.
SECTION 2.5. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this
Guarantee Agreement that relate to any of the matters set forth in Section
314(c) of the Trust Indenture Act. Any certificate or opinion required to be
given by an officer pursuant to Section 314(c)(1) may be given in the form of
an Officers' Certificate.
- 6 -
<PAGE> 11
SECTION 2.6. Events of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote, on behalf of the Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Guarantee Agreement, but
no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent therefrom.
SECTION 2.7. Event of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders, notices of all Events of Default known to the Guarantee Trustee,
unless such Events of Default have been cured before the giving of such notice;
provided that, except in the case of a default in the payment of a Guarantee
Payment, the Guarantee Trustee shall be protected in withholding such notice if
and so long as the Board of Directors, the executive committee or a trust
committee of directors and/or Responsible Officers of the Guarantee Trustee in
good faith determines that the withholding of such notice is in the interests
of the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default unless a Responsible Officer charged with the
administration of this Guarantee Agreement shall have received written notice
of such Event of Default.
SECTION 2.8. Conflicting Interests.
The Trust Agreement shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III. POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 3.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee Agreement shall be held by the Guarantee Trustee
for the benefit of the Holders, and the Guarantee Trustee shall not transfer
this Guarantee Agreement to any Person except 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 hereunder. The right, title
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<PAGE> 12
and interest of the Guarantee Trustee, as such, hereunder shall automatically
vest in any Successor Guarantee Trustee, upon acceptance by such Successor
Guarantee Trustee of its appointment hereunder, and such vesting and cessation
of title shall be effective whether or not conveyancing documents have been
executed and delivered pursuant to the appointment of such Successor Guarantee
Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall be obligated to perform only such duties as are specifically set forth in
this Guarantee Agreement (including pursuant to Section 2.1), and no implied
covenants shall be read into this Guarantee Agreement against the Guarantee
Trustee. If an Event of Default has occurred (that has not been cured or
waived pursuant to Section 2.6), the Guarantee Trustee shall exercise such of
the rights and powers vested in it by this Guarantee Agreement, and use the
same degree of care and skill in its exercise thereof, as a prudent person
would exercise or use under the circumstances in the conduct of his or her own
affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act or its own willful misconduct, except that:
(i) Prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this Guarantee
Agreement (including pursuant to Section 2.1), and the Guarantee Trustee shall
not be liable except for the performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement (including pursuant to
Section 2.1); and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Guarantee Trustee and conforming
to the requirements of this Guarantee Agreement; but in the case of any such
certificates or opinions that by any provision hereof or of the Trust Indenture
Act are specifically required to be furnished
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<PAGE> 13
to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements
of this Guarantee Agreement;
(ii) The Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee Trustee,
unless it shall be proved that the Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) The Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in Liquidation Amount
of the Preferred Securities relating to the time, method and place of conducting
any proceeding for any remedy available to the Guarantee Trustee, or exercising
any trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and
(iv) No provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers if the Guarantee Trustee shall have reasonable
grounds for believing that the repayment of such funds or liability is not
assured to it under the terms of this Guarantee Agreement or adequate indemnity
against such risk or liability is not reasonably assured to it.
SECTION 3.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) The Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document reasonably believed by it to be genuine
and to have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers' Certificate
unless otherwise prescribed herein.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting to take any action
hereunder, the Guarantee Trustee
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<PAGE> 14
(unless other evidence is herein specifically prescribed) may, in the absence
of bad faith on its part, request and conclusively rely upon an Officers'
Certificate which, upon receipt of such request from the Guarantee Trustee,
shall be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee may consult with legal counsel, and
the advice or written opinion of such legal counsel with respect to legal
matters shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted to be taken by it hereunder in good faith
and in accordance with such advice or opinion. Such legal counsel may be legal
counsel to the Guarantor or any of its Affiliates and may be one of its
employees. The Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement from any
court of competent jurisdiction.
(v) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee Agreement
at the request or direction of any Holder, unless such Holder shall have
provided to the Guarantee Trustee such security and indemnity as would satisfy
a reasonable person in the position of the Guarantee Trustee, against the
costs, expenses (including attorneys' fees and expenses) and liabilities that
might be incurred by it in complying with such request or direction, including
such reasonable advances as may be requested by the Guarantee Trustee.
(vi) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(vii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys, and the Guarantee Trustee shall not be
responsible for any negligence or wilful misconduct 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 instructions from the Holders,
(B) may refrain
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<PAGE> 15
from enforcing such remedy or right or taking such other action until such
instructions are received and (C) shall be fully protected in acting in
accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on
it in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee
Trustee shall be construed to be a duty to act in accordance with such power
and authority.
SECTION 3.3. Indemnity.
The Guarantor agrees to indemnify the Guarantee Trustee for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence, wilful misconduct or bad faith on the part of the Guarantee
Trustee, arising out of or in connection with the acceptance or administration
of this Guarantee Agreement, including the 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.
SECTION 3.4. Expenses.
The Guarantor shall from time to time reimburse the Guarantee Trustee
for its reasonable expenses and costs (including reasonable attorneys' or
agents' fees) incurred in connection with the performance of its duties
hereunder.
ARTICLE IV. GUARANTEE TRUSTEE
SECTION 4.1. Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000, and shall be a corporation meeting the requirements of Section
310(c) of the Trust Indenture
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<PAGE> 16
Act. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the supervising or examining
authority, then, for the purposes of this Section and to the extent permitted
by the Trust Indenture Act, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible
to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 4.2(b).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2. Appointment, Removal and Resignation of the Guarantee
Trustee.
(a) No resignation or removal of the Guarantee Trustee and no
appointment of a Successor Guarantee Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the Successor Guarantee
Trustee by written instrument executed by the Successor Guarantee Trustee and
delivered to the Holders and the Guarantee Trustee.
(b) Subject to the immediately preceding paragraph, a Guarantee
Trustee may resign at any time by giving written notice thereof to the Holders.
The Guarantee Trustee shall appoint a successor by requesting from at least
three Persons meeting the eligibility requirements such Person's expenses and
charges to serve as the Guarantee Trustee, and selecting the Person who agrees
to the lowest expenses and charges. If the instrument of acceptance by the
Successor Guarantee Trustee shall not have been delivered to the Guarantee
Trustee within 60 days after the giving of such notice of resignation, the
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for the appointment of a Successor Guarantee Trustee.
(c) The Guarantee Trustee may be removed for cause at any time by
Act (within the meaning of Section 6.8 of the Trust Agreement) of the Holders
of at least a Majority in Liquidation Amount of the Preferred Securities,
delivered to the Guarantee Trustee.
(d) If a resigning Guarantee Trustee shall fail to appoint a
successor, or if a Guarantee Trustee shall be removed or
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<PAGE> 17
become incapable of acting as Guarantee Trustee, or if any vacancy shall occur
in the office of any Guarantee Trustee for any cause, the Holders of the
Preferred Securities, by Act of the Holders of record of not less than 25% in
aggregate Liquidation Amount of the Preferred Securities then outstanding
delivered to such Guarantee Trustee, shall promptly appoint a successor
Guarantee Trustee. If no Successor Guarantee Trustee shall have been so
appointed by the Holders of the Preferred Securities and such appointment
accepted by the Successor Guarantee Trustee, any Holder, on behalf of himself
and all others similarly situated, may petition any court of competent
jurisdiction for the appointment of a Successor Guarantee Trustee.
ARTICLE V. GUARANTEE
SECTION 5.1. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full
on a subordinated basis as set forth in Section 6.1 hereof to the Holders the
Guarantee Payments (without duplication of amounts theretofore paid by or on
behalf of the Issuer Trust), as and when due, regardless of any defense, right
of set-off or counterclaim which the Issuer Trust may have or assert, except
the defense of payment. The Guarantor's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the Guarantor to
the Holders or by causing the Issuer Trust to pay such amounts to the Holders.
The Guarantor shall give prompt written notice to the Guarantee Trustee in the
event it makes any direct payment hereunder.
SECTION 5.2. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Guarantee Trustee, the Issuer Trust or any other Person before proceeding
against the Guarantor, protest, notice of nonpayment, notice of dishonor,
notice of redemption and all other notices and demands.
SECTION 5.3. Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer Trust of any express or implied
agreement, covenant, term or condition
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<PAGE> 18
relating to the Preferred Securities to be performed or observed by the Issuer
Trust;
(b) the extension of time for the payment by the Issuer Trust of all
or any portion of the Distributions (other than an extension of time for
payment of Distributions that results from the extension of any interest
payment period on the Junior Subordinated Debentures as so provided in the
Indenture), Redemption Price, Liquidation Distribution or any other sums
payable under the terms of the Preferred Securities or the extension of time for
the performance of any other obligation under, arising out of, or in connection
with, the Preferred Securities;
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Issuer Trust granting indulgence or extension of
any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or readjustment
of debt of, or other similar proceedings affecting, the Issuer Trust or any of
the assets of the Issuer Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor (other than
payment of the underlying obligation), it being the intent of this Section 5.3
that the obligations of the Guarantor hereunder shall be absolute and
unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain the consent of, the Guarantor with respect to the happening of any of
the foregoing.
SECTION 5.4. Rights of Holders.
The Guarantor expressly acknowledges that: (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
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<PAGE> 19
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 Trust or any other Person.
SECTION 5.5. Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of
collection. This Guarantee Agreement will not be discharged except by payment
of the Guarantee Payments in full (without duplication of amounts theretofore
paid by the Issuer Trust) or upon the distribution of Junior Subordinated
Debentures to Holders as provided in the Trust Agreement.
SECTION 5.6. Subrogation.
The Guarantor shall be subrogated to all rights (if any) of the
Holders against the Issuer Trust in respect of any amounts paid to the Holders
by the Guarantor under this Guarantee Agreement; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee Agreement, at the time of any such
payment, any amounts are due and unpaid under this Guarantee Agreement. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION 5.7. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer Trust with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
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<PAGE> 20
ARTICLE VI. COVENANTS AND SUBORDINATION
SECTION 6.1. Subordination.
This Guarantee Agreement will constitute an unsecured obligation of
the Guarantor and will rank subordinate and junior in right of payment to all
Senior Indebtedness of the Guarantor to the extent and in the manner set forth
in the Indenture with respect to the Junior Subordinated Debentures, and the
provisions of Article XIII of the Indenture will apply, mutatis mutandis, to
the obligations of the Guarantor hereunder. The obligations of the Guarantor
hereunder do not constitute Senior Indebtedness of the Guarantor.
SECTION 6.2. Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall
rank pari passu with any similar guarantee agreements issued by the Guarantor
on behalf of the holders of preferred or capital securities issued by the
Issuer Trust and with any other security, guarantee or other obligation that is
expressly stated to rank pari passu with the obligations of the Guarantor under
this Guarantee Agreement.
ARTICLE VII. TERMINATION
SECTION 7.1. Termination.
This Guarantee Agreement shall terminate and be of no further force
and effect upon (i) full payment of the Redemption Price of all Preferred
Securities, (ii) the distribution of Junior Subordinated Debentures to the
Holders in exchange for all of the Preferred Securities or (iii) full payment of
the amounts payable in accordance with Article IX of the Trust Agreement upon
liquidation of the Issuer Trust. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder is required to repay any sums paid with respect
to Preferred Securities or this Guarantee Agreement.
ARTICLE VIII. MISCELLANEOUS
SECTION 8.1. Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives of
the Guarantor and shall inure to the benefit of the Holders of the Preferred
Securities then
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<PAGE> 21
outstanding. Except in connection with a consolidation, merger or sale
involving the Guarantor that is permitted under Article VIII of the Indenture
and pursuant to which the assignee agrees in writing to perform the Guarantor's
obligations hereunder, the Guarantor shall not assign its obligations
hereunder, and any purported assignment that is not in accordance with these
provisions shall be void.
SECTION 8.2. Amendments.
Except with respect to any changes that do not materially adversely
affect the rights of the Holders (in which case no consent of the Holders will
be required), this Guarantee Agreement may only be amended with the prior
approval of the Holders of not less than a Majority in Liquidation Amount of
the Preferred Securities. The provisions of Article VI of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of such approval.
SECTION 8.3. Notices.
Any notice, request or other communication required or permitted to
be given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied (confirmed by delivery of the original) or
mailed by first class mail as follows:
(a) if given to the Guarantor, to the address or telecopy number set
forth below or such other address or telecopy number or to the attention of
such other Person as the Guarantor may give notice to the Holders:
JeffBanks, Inc.
1609 Walnut Street
Philadelphia, Pennsylvania 19103
Facsimile No.: (215) 564-5040
Attention: Office of the Secretary
(b) if given to the Issuer Trust, in care of the Guarantee Trustee,
at the Issuer Trust's (and the Guarantee Trustee's) address set forth below or
such other address or telecopy number or to the attention of such other Person
as the Guarantee Trustee on behalf of the Issuer Trust may give notice to the
Holders:
c/o JeffBanks, Inc.
1609 Walnut Street
Philadelphia, Pennsylvania 19103
Facsimile No.: (215) 564-5040
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<PAGE> 22
Attention: Office of the Secretary
with a copy to:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group;
Corporate Market Services
(c) if given to the Guarantee Trustee:
Bankers Trust Company
Four Albany Street - 4th Floor
New York, New York 10006
Facsimile No.: (212) 250-6961
Attention: Corporate Trust and Agency Group
Corporate Market Services
(d) if given to any Holder, at the address set forth on the books
and records of the Issuer Trust.
All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid, except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 8.4. Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and
is not separately transferable from the Preferred Securities.
SECTION 8.5. Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not
defined in the preamble hereto have the respective meanings assigned to them in
Section 1.1;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
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<PAGE> 23
(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.
SECTION 8.7. Counterparts.
This instrument may be executed in any number of counterparts, each
of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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<PAGE> 24
THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
JEFFBANKS, INC.
By:
--------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
as Guarantee Trustee
and not in its individual capacity
By:
--------------------------------
Name:
Title:
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<PAGE> 1
Exhibit 5.1
[LETTERHEAD OF RICHARDS, LAYTON & FINGER]
January 24, 1997
JBI Capital Trust I
c/o JeffBanks, Inc.
1609 Walnut Street
Philadelphia, Pennsylvania 19103
Re: JBI Capital Trust I
Ladies and Gentlemen:
We have acted as special Delaware counsel for JBI Capital Trust I, a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust (the "Certificate"), as filed
in the office of the Secretary of State of the State of Delaware (the
"Secretary of State") on January 21, 1997;
(b) The Trust Agreement of the Trust, dated as of January 21, 1997,
between JeffBanks, Inc., a Pennsylvania corporation (the "Company"), and the
trustee of the Trust named therein;
(c) The Registration Statement (the "Registration Statement") on Form
S-3, including a prospectus (the "Prospectus") relating to the __% Preferred
Securities of the Trust representing preferred undivided beneficial interests
in the Trust (each, a "Preferred Security" and collectively, the "Preferred
Securities"), as filed by the Company and the Trust as set forth therein with
the Securities and Exchange Commission on January 21, 1997;
<PAGE> 2
JBI Capital Trust I
January 24, 1997
Page 2
(d) A form of Amended and Restated Trust Agreement of the Trust, to be
entered into among the Company, the trustees of the Trust named therein, and
the holders, from time to time, of undivided beneficial interests in the Trust
(the "Trust Agreement"), attached as an exhibit to the Registration Statement;
and
(e) A Certificate of Good Standing for the Trust, dated January 24,
1997, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed above, and we have assumed that there exists no
provision in any document that we have not reviewed that bears upon or is
inconsistent with the opinions stated herein. We have conducted no independent
factual investigation of our own but rather have relied solely upon the
foregoing documents, the statements and information set forth therein and the
additional matters recited or assumed herein, all of which we have assumed to be
true, complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement constitutes the entire agreement among the parties thereto with
respect to the subject matter thereof, including with respect to the creation,
operation and termination of the Trust, and that the Trust Agreement and the
Certificate are in full force and effect and have not been amended, (ii) except
to the extent provided in paragraph 1 below, the due creation or due
organization or due formation, as the case may be, and valid existence in good
standing of each party to the documents examined by us under the laws of the
jurisdiction governing its creation, organization or formation, (iii) the legal
capacity of natural persons who are parties to the documents examined by us,
(iv) that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (v) the due authorization, execution and delivery by all parties
thereto of all documents examined by us, (vi) the receipt by each Person to
whom a Preferred Security is to be issued by the Trust (collectively, the
"Preferred Security Holders") of a Preferred Security Certificate for such
Preferred Security and the payment for the Preferred Security acquired by it,
in accordance with the Trust Agreement and the Prospectus, and (vii) that the
Preferred Securities are issued and sold to the Preferred Security Holders in
accordance with the Trust Agreement and the Prospectus. We have not
participated in the preparation of the Registration Statement and assume no
responsibility for its contents.
<PAGE> 3
JBI Capital Trust I
January 24, 1997
Page 3
This opinion is limited to the laws of the State of Delaware (excluding
the securities laws of the State of Delaware), and we have not considered and
express no opinion on the laws of any other jurisdiction, including federal
laws and rules and regulations relating thereto. Our opinions are rendered only
with respect to Delaware laws and rules, regulations and orders thereunder
which are currently in effect.
Based upon the foregoing, and upon our examination of such questions of
law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act, 12 Del. C.
Section 3801, et seq.
2. The Preferred Securities will represent valid and, subject to
the qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended
to stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition,
we hereby consent to the use of our name under the heading "Validity of
Securities" in the Prospectus. In giving the foregoing consents, we do not
thereby admit that we come within the category of Persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the
rules and regulations of the Securities and Exchange Commission thereunder.
Except as stated above, without our prior written consent, this opinion may not
be furnished or quoted to, or relied upon by, any other Person for any purpose.
Very truly yours,
EAM
<PAGE> 1
EXHIBIT 5.2
January 24, 1997
JeffBanks, Inc.
1609 Walnut Street
Philadelphia, PA 19103
Gentlemen/Ladies:
We have acted as counsel to JeffBanks, Inc. ("JBI") in connection with
the preparation and filing by JBI and JBI Capital Trust I (the "Trust") of a
registration statement (the "Registration Statement") on Form S-3 under the
Securities Act of 1933, as amended (the "Act"), with respect to the offer and
sale of certain of the Trust's Preferred Securities (liquidation amount $25 per
Preferred Security) (the "Preferred Securities") and certain of JBI's Junior
Subordinated Debentures (the "Debentures") and the related Guarantee Agreement
by and between JBI and Bankers Trust, as trustee (the "Guarantee"). In
connection therewith, you have requested our opinion as to certain matters
referred to below.
In our capacity as such counsel, we have familiarized ourselves with
the actions taken by JBI in connection with the registration of the Debentures
and the Guarantee. We have examined the originals or certified copies of such
records, agreements, certificates of public officials and others, and such
other documents, including the Registration Statement and the amendment
thereto, as we have deemed relevant and necessary as a basis for the opinions
hereinafter expressed. In such examination, we have assumed the genuineness of
all signatures on original documents and the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
copies submitted to us as conformed or photostatic copies, and the authenticity
of the originals of such latter documents. We are attorneys admitted to
practice before the courts of the United States and the courts of the
Commonwealth of Pennsylvania and, accordingly, we express no opinion with
respect to matters governed by the laws of any jurisdiction other than the
federal laws of the United States or the internal laws of the Commonwealth of
Pennsylvania.
Based upon and subject to the foregoing, we are of the opinion that:
1. JBI is a corporation which has been duly formed and is validly
subsisting in good standing under the laws of the
<PAGE> 2
JeffBanks, Inc.
January 24, 1997
Page 2
Commonwealth of Pennsylvania. JBI has full power and authority to issue the
Debentures and enter into the Guarantee.
2. When issued (with respect to the Debentures), or executed
and delivered (with respect to the Guarantee), as set forth in the Registration
Statement, the Debentures and the Guarantee will be the valid and binding
obligations of JBI.
We consent to the references to this opinion and to Ledgewood Law Firm,
P.C. in the Prospectus included as part of the Registration Statement under the
caption "Validity of Securities," and to the inclusion of this opinion as an
exhibit to the Registration Statement.
Very truly yours,
LEDGEWOOD LAW FIRM, P.C.
:ls
<PAGE> 1
EXHIBIT 8.1
January __, 1997
JeffBanks, Inc.
1609 Walnut Street
Philadelphia, PA 19103
Re: JeffBanks, Inc.
JBI Capital Trust I
Registration Statement on Form S-3
(Registration No. 333-20111-01)
----------------------------------
Gentlemen:
We have acted as counsel to JeffBanks, Inc., a Pennsylvania
corporation, in connection with the registration statement of JeffBanks, Inc.
("JBI") and JBI Capital Trust I (the "Trust") on Form S-3 (Registration No.
333-20111-01), as amended (the "Registration Statement"), of which a prospectus
(the "Prospectus") is a part, filed by JBI and the Trust with the United States
Securities and Exchange Commission under the Securities Act of 1933, as
amended. This opinion is furnished pursuant to the requirements of Item
601(b)(8) of Regulation S-K.
In connection with the opinion rendered below, we have examined the
Registration Statement and certain other documents that we have deemed
necessary to examine in order to issue the opinions set forth below. In
rendering our opinion, we have assumed that each of the documents referenced
above has been duly authorized, executed, and delivered, is authentic, if an
original, or accurate, if a copy, and has not been amended after execution
thereof subsequent to our review.
We express no opinions except as set forth below and our opinion is
based solely upon the facts as set forth in the Registration Statement.
Accordingly, we express no opinion as to tax matters that may arise if, for
example, the facts are not as set forth in the Prospectus.
Our opinion is also based on the current provisions of the Internal
Revenue Code of 1986, as amended, applicable Treasury Regulations promulgated
thereunder, and rulings,
<PAGE> 2
JeffBanks, Inc.
January ___, 1997
Page 2
procedures and other pronouncements published by the United States Internal
Revenue Service. Such laws, regulations, rulings and pronouncements, and
judicial and administrative interpretations thereof are subject to change at
any time, and any such change may adversely affect the continuing validity of
the opinion set forth below.
Based on the foregoing, we hereby adopt and incorporate by reference
the opinion set forth in the Prospectus under the caption "Certain Federal
Income Tax Consequences."
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the use of our name in the
Prospectus under the caption "Certain Federal Income Tax Consequences."
The foregoing opinion is limited to the federal income tax matters
addressed herein, and no other opinions are rendered with respect to other
federal tax matters or to any issues arising under the tax laws of any state,
locality, or foreign country. We undertake no obligation to update the
opinions expressed herein after the date of this letter.
Sincerely,
LEDGEWOOD LAW FIRM, P.C.
<PAGE> 1
EXHIBIT 25.1
- -----------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT
OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE PURSUANT TO SECTION 305(b)(2)
-----------
------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
<TABLE>
<S> <C>
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
</TABLE>
BANKERS TRUST COMPANY
LEGAL DEPARTMENT
130 LIBERTY STREET, 31ST FLOOR
NEW YORK, NEW YORK 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
<TABLE>
<S> <C>
JEFFBANKS, INC. JBI CAPITAL TRUST I
(Exact name of obligor as specified in its charter) (Exact name of Co-Registrant as specified in its charter)
PENNSYLVANIA 23-2189480 DELAWARE APPLIED FOR
(State or other jurisdiction of (I.R.S. employer (State or other jurisdiction of (I.R.S. employer
Incorporation or organization) Identification no.) incorporation or organization) Identification no.)
1609 WALNUT STREET C/O JEFFBANKS, INC.
PHILADELPHIA, PENNSYLVANIA 19103 1609 WALNUT STREET
(Address, including zip code PHILADELPHIA, PENNSYLVANIA 19103
of principal executive offices) (Address, including zip code of
principal executive offices)
</TABLE>
CAPITAL SECURITIES OF JBI CAPITAL TRUST I
JUNIOR SUBORDINATED DEBENTURES OF JEFFBANKS, INC.
GUARANTEE OF JEFFBANKS, INC. OF CERTAIN OBLIGATIONS UNDER THE CAPITAL
SECURITIES
(Title of the indenture securities)
<PAGE> 2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee.
(a) Name and address of each examining or supervising
authority to which it is subject.
<TABLE>
<CAPTION>
NAME ADDRESS
<S> <C>
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
</TABLE>
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
ITEM 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the Trustee, describe each
such affiliation.
None.
ITEM 3. -15. NOT APPLICABLE
ITEM 16. LIST OF EXHIBITS.
EXHIBIT 1 - Restated Organization Certificate of Bankers
Trust Company dated August 7, 1990,
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated
June 21, 1995 - Incorporated herein by
reference to Exhibit 1 filed with Form T-1
Statement, Registration No. 33-65171, and
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated
March 20, 1996, copy attached.
EXHIBIT 2 - Certificate of Authority to commence business
- Incorporated herein by reference to Exhibit
2 filed with Form T-1 Statement, Registration
No. 33-21047.
EXHIBIT 3 - Authorization of the Trustee to exercise
corporate trust powers - Incorporated herein
by reference to Exhibit 2 filed with Form T-1
Statement, Registration No. 33-21047.
EXHIBIT 4 - Existing By-Laws of Bankers Trust Company,
as amended on September 17, 1996 -
Incorporated herein by reference to Exhibit
4 filed with Form T-1 Statement,
Registration No. 333-15263.
-2-
<PAGE> 3
EXHIBIT 5 - Not applicable.
EXHIBIT 6 - Consent of Bankers Trust Company required
by Section 321(b) of the Act. -
Incorporated herein by reference to
Exhibit 4 filed with Form T-1 Statement,
Registration No. 22-18864.
EXHIBIT 7 - A copy of the latest report of condition
of Bankers Trust Company dated as of
September 30, 1996.
EXHIBIT 8 - Not Applicable.
EXHIBIT 9 - Not Applicable.
-3-
<PAGE> 4
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in The City of New York, and State of New York,
on the 21st day of January, 1997.
BANKERS TRUST COMPANY
By: /s/ KEVIN WEEKS
----------------------
Kevin Weeks
Assistant Treasurer
-4-
<PAGE> 5
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in The City of New York, and State of New York,
on the 21st day of January, 1997.
BANKERS TRUST COMPANY
By: Kevin Weeks
Kevin Weeks
Assistant Treasurer
-5-
<PAGE> 6
<TABLE>
<S> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 9/30/96 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-1
City, State ZIP: New York, NY 10006 11
FDIC Certificate No.: 0 0 6 2 3
</TABLE>
CONSOLIDATED REPORT OF CONDITION FOR INSURED COMMERCIAL
AND STATE-CHARTERED SAVINGS BANKS SEPTEMBER 30, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<TABLE>
<CAPTION>
---------------
C400
Dollar Amounts in Thousands RCFD Bil Mil Thou
<S> <C>
ASSETS / / / / / / / / / / / / /
1. Cash and balances due from depository institutions (from Schedule RC-A): / / / / / / / / / /
a. Noninterest-bearing balances and currency and coin(1) ................ 0081 809,000 1.a.
b. Interest-bearing balances(2) ......................................... 0071 4,453,000 1.b.
2. Securities: / / / / / / / / / /
a. Held-to-maturity securities (from Schedule RC-B, column A) ........... 1754 0 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D).......... 1773 4,133,000 2.b.
3 Federal funds sold and securities purchased under agreements to resell in
domestic offices of the bank and of its Edge and Agreement subsidiaries, / / / / / / / / / /
and in IBFs: / / / / / / / / / /
a. Federal funds sold ................................................... 0276 5,933,000 3.a.
b. Securities purchased under agreements to resell ...................... 0277 413,000 3.b.
4. Loans and lease financing receivables: / / / / / / / / / /
a. Loans and leases, net of unearned income (from Schedule
RC-C) RCFD 2122 27,239,000 / / / / / / / / / / 4.a.
b. LESS: Allowance for loan and lease losses...RCFD 3123 917,000 / / / / / / / / / / 4.b.
c. LESS: Allocated transfer risk reserve ......RCFD 3128 0 / / / / / / / / / / 4.c.
d. Loans and leases, net of unearned income, / / / / / / / / / /
allowance, and reserve (item 4.a minus 4.b and 4.c) ................... 2125 26,322,000 4.d.
5. Assets held in trading accounts ........................................... 3545 36,669,000 5.
6. Premises and fixed assets (including capitalized leases) .................. 2145 870,000 6.
7. Other real estate owned (from Schedule RC-M) .............................. 2150 215,000 7.
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) 2130 212,000 8.
9. Customers' liability to this bank on acceptances outstanding .............. 2155 577,000 9.
10. Intangible assets (from Schedule RC-M) .................................... 2143 18,000 10.
11. Other assets (from Schedule RC-F).......................................... 2160 8,808,000 11.
12. Total assets (sum of items 1 through 11) .................................. 2170 89,432,000 12.
</TABLE>
- ---------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held in trading accounts.
<PAGE> 7
<TABLE>
<S> <C> <C> <C> <C>
Legal Title of Bank: Bankers Trust Company Call Date: 9/30/96 ST-BK: 36-4840 FFIEC 031
Address: 130 Liberty Street Vendor ID: D CERT: 00623 Page RC-2
City, State Zip: New York, NY 10006 12
FDIC Certificate No.: 0 0 6 2 3
</TABLE>
SCHEDULE RC--CONTINUED
<TABLE>
<CAPTION>
<S> <C>
Dollar Amounts in Thousands / / / / / / / / Bil Mil Thou __ __
LIABILITIES / / / / / / / / // / / / / /
13. Deposits: / / / / / / / / / / / / / /
a. In domestic offices (sum of totals of columns A and C
from Schedule RC-E, part I) RCON 2200 9,391,000 13.a.
(1) Noninterest-bearing(1) ........RCON 6631 2,734,000..... / / / / / / / / / / / / / / 13.a.(1)
(2) Interest-bearing ...............RCON 6636 6,657,000..... / / / / / / / / / / / / / / 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries,
and IBFs (from Schedule RC-E / / / / / / / / / / / / / / / /
part II) RCFN 2200 23,385,000 13.b.
(1) Noninterest-bearing ...........RCFN 6631 654,000 / / / / / / / / / / / / / / / / 13.b.(1)
(2) Interest-bearing ..............RCFN 6636 22,731,000 / / / / / / / / / / / / / / / / / / / 13.b.(2)
14. Federal funds purchased and securities sold under agreements to / / / / / / / / / / /
repurchase in domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs: / / / / / / / / / / / / /
a. Federal funds purchased ............................................ RCFD 0278 3,090,000 14.a.
b. Securities sold under agreements to repurchase ..................... RCFD 0279 99,000 14.b.
15. a. Demand notes issued to the U.S. Treasury ........................... RCON 2840 0 15.a.
b. Trading liabilities ................................................ RCFD 3548 18,326,000 15.b.
16. Other borrowed money: / / / / / / / / / / / / / / /
a. With original maturity of one year or less ......................... RCFD 2332 17,476,000 16.a.
b. With original maturity of more than one year ....................... RCFD 2333 2,771,000 16.b.
17. Mortgage indebtedness and obligations under capitalized leases .......... RCFD 2910 31,000 17.
18. Bank's liability on acceptances executed and outstanding ................ RCFD 2920 577,000 18.
19. Subordinated notes and debentures ....................................... RCFD 3200 1,228,000 19.
20. Other liabilities (from Schedule RC-G) .................................. RCFD 2930 8,398,000 20.
21. Total liabilities (sum of items 13 through 20) .......................... RCFD 2948 84,772,000 21.
/ / / / / / / / / / / / / /
22. Limited-life preferred stock and related surplus ........................ RCFD 3282 0 22.
EQUITY CAPITAL / / / / / / / / / / / / / /
23. Perpetual preferred stock and related surplus ........................... RCFD 3838 500,000 23.
24. Common stock ............................................................ RCFD 3230 1,002,000 24.
25. Surplus (exclude all surplus related to preferred stock) ................ RCFD 3839 527,000 25.
26. a. Undivided profits and capital reserves ............................. RCFD 3632 3,017,000 26.a.
b. Net unrealized holding gains (losses) on available-for-sale
securities ......................................................... RCFD 8434 ( 16,000) 26.b.
27. Cumulative foreign currency translation adjustments ..................... RCFD 3284 ( 370,000) 27.
28. Total equity capital (sum of items 23 through 27) ....................... RCFD 3210 4,660,000 28.
29. Total liabilities, limited-life preferred stock, and equity capital / / / / / / / / / / / / / /
(sum of items 21, 22, and28)............................................. RCFD 3300 89,432,000 29.
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
<TABLE>
<S> <C> <C> <C>
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
auditors as of any date during 1995 .................................................... RCFD 6724 N/A M.1
</TABLE>
<TABLE>
<S> <C>
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by
with generally accepted auditing standards by a certified other external auditors (may be required by state
public accounting firm which submits a report on the bank chartering authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by
conducted in accordance with generally accepted auditing external auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial
submits a report on the consolidated holding company statements by external auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation
3 = Directors' examination of the bank conducted in work)
accordance with generally accepted auditing standards 8 = No external audit work
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
- ---------------------
(1) Including total demand deposits and noninterest-bearing time and
savings deposits.
<PAGE> 8
STATE OF NEW YORK,
BANKING DEPARTMENT
I, PETER M. PHILBIN, Deputy Superintendent of Bank of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY UNDER
SECTION 8005 OF THE BANKING LAW," dated March 20, 1996, providing for an
increase in authorized capital stock from $1,351,666,670 consisting of
85,166,667 shares with a par value of $10 each designated as Common Stock and
500 shares with a par value of $1,000,000 each designated as Series Preferred
Stock to $1,501,666,670 consisting of 100,166,667 shares with a par value of
$10 each designated as Common Stock and 500 shares with a par value of
$1,000,000 each designated as Series Preferred Stock.
WITNESS, my hand and official seal of the Banking Department at the City of New
York,
this 21ST day of MARCH in the Year of our
Lord one thousand nine hundred and
NINETY-SIX.
Peter M. Philbin
-----------------------------------
Deputy Superintendent of Banks
<PAGE> 9
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a
Managing Director and an Assistant Secretary of Bankers Trust Company, do
hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby
amended to increase the aggregate number of shares which the corporation shall
have authority to issue and to increase the amount of its authorized capital
stock in conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock
outstanding, which reads as follows:
"III. The amount of capital stock which the corporation is hereafter
to have is One Billion, Three Hundred Fifty One Million, Six Hundred
Sixty-Six Thousand, Six Hundred Seventy Dollars ($1,351,666,670),
divided into Eighty-Five Million, One Hundred Sixty-Six Thousand, Six
Hundred Sixty-Seven (85,166,667) shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter
to have is One Billion, Five Hundred One Million, Six Hundred
Sixty-Six Thousand, Six Hundred Seventy Dollars ($1,501,666,670),
divided into One Hundred Million, One Hundred Sixty Six Thousand, Six
Hundred Sixty-Seven (100,166,667) shares with a par value of $10 each
designated as Common Stock and 500 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
<PAGE> 10
6. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
20th day of March , 1996.
James T. Byrne, Jr.
----------------------------------------
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
----------------------------------------
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows
the contents thereof, and that the statements herein contained are true.
Lea Lahtinen
--------------------------
Lea Lahtinen
Sworn to before me this 20th day
of March, 1996.
Sandra L. West
- --------------------------
Notary Public
SANDRA L. WEST Counterpart filed in the
Notary Public State of New York Office of the Superintendent of
No. 31-4942101 Banks, State of New York,
Qualified in New York County This 21st day of March, 1996
Commission Expires September 19, 1996
