<PAGE>
<TABLE>
<S> <C>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 9, 1999 REGISTRATION NO. 333-
333- -01
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
<TABLE>
<S> <C>
COASTAL BANCORP, INC. COASTAL BANCORP CAPITAL TRUST I
(Exact name of Registrant as specified in its charter) (Exact name of Registrant as specified
in its trust agreement)
TEXAS DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
76-0428727 76-0428727
(I.R.S. Employer (I.R.S. Employer
Identification No.) Identification No.)
</TABLE>
------------------------------
COASTAL BANC PLAZA
5718 WESTHEIMER, SUITE 600
HOUSTON, TEXAS 77057
(713) 435-5000
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
----------------------------------
CATHERINE N. WYLIE
CHIEF FINANCIAL OFFICER
COASTAL BANCORP, INC.
COASTAL BANC PLAZA
5718 WESTHEIMER, SUITE 600
HOUSTON, TEXAS 77057
(713) 435-5000
(Name, address, including zip code, and telephone number, including area code,
of agents for service)
----------------------------------
COPIES TO:
<TABLE>
<S> <C>
NORMAN B. ANTIN, ESQ. DAVID S. KATZ, ESQ.
JEFFREY A. KOEPPEL, ESQ. ORRICK, HERRINGTON & SUTCLIFFE LLP
JEFFREY D. HAAS, ESQ. 3050 K STREET, N.W.
ELIAS, MATZ, TIERNAN & HERRICK L.L.P. WASHINGTON, D.C. 20007
734 15TH STREET, N.W. (202) 339-8400
WASHINGTON, D.C. 20005 FAX: (202) 339-8500
(202) 347-0300
FAX: (202) 347-2172
</TABLE>
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after this Registration Statement becomes effective.
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. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(c) under the Securities Act, please check the following
box. / /
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
<TABLE>
<CAPTION>
AMOUNT PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES TO BE PROPOSED MAXIMUM AGGREGATE
TO BE REGISTERED REGISTERED OFFERING PRICE (1) OFFERING PRICE(1)
<S> <C> <C> <C>
Debt Securities of Coastal Bancorp, Inc. (2)
Preferred Stock of Coastal Bancorp, Inc. (3)
Common Stock of Coastal Bancorp, Inc. (4)
Trust Preferred Securities of Coastal Bancorp Capital
Trust I (5)
Guarantees of Trust Preferred Securities by Coastal
Bancorp, Inc. (6)
Total $150,000,000 100% $150,000,000(7)
<CAPTION>
AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES REGISTRATION
TO BE REGISTERED FEE(2)
<S> <C>
Debt Securities of Coastal Bancorp, Inc. (2)
Preferred Stock of Coastal Bancorp, Inc. (3)
Common Stock of Coastal Bancorp, Inc. (4)
Trust Preferred Securities of Coastal Bancorp Capital
Trust I (5)
Guarantees of Trust Preferred Securities by Coastal
Bancorp, Inc. (6)
Total $41,700
</TABLE>
(1) The proposed maximum aggregate offering price has been estimated solely to
calculate the registration fee under Rule 457(o).
(2) Subject to note (7) below, we are registering an indeterminate principal
amount of Debt Securities, which may include Junior Subordinated Debentures
we may issue and sell to Coastal Bancorp Capital Trust I. Such Junior
Subordinated Debentures may later be distributed to the holders of Trust
Preferred Securities. If any Debt Securities are issued at an original issue
discount, then the offering price will be in such greater principal amount
as will result in an aggregate initial offering price not to exceed
$150,000,000 less the dollar amount of any securities previously issued.
(3) Subject to note (7) below, we are registering an indeterminate number of
shares of Preferred Stock.
(4) Subject to note (7) below, we are registering an indeterminate number of
shares of Common Stock.
(5) Subject to note (7) below, we are registering an indeterminate number of
shares of Trust Preferred Securities of Coastal Bancorp Capital Trust I.
(6) We are also registering all other obligations that we may have with respect
to the Trust Preferred Securities issued by Coastal Bancorp Capital Trust I.
No separate consideration will be received for any Guarantees or any other
such obligations.
(7) In no event, will the aggregate initial offering price of all securities
exceed $150,000,000. The aggregate amount of Common Stock registered is
further limited to that which is permissible under Rule 415(a)(4) under the
Securities Act. The registered securities may be sold separately or as units
with other registered securities.
----------------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
This Registration Statement includes a prospectus to be used in connection
with offerings of (a) debt securities issued by Coastal Bancorp, Inc., including
junior subordinated debentures which may be issued to Coastal Bancorp Capital
Trust I, (b) preferred stock issued by Coastal Bancorp, Inc., (c) common stock
issued by Coastal Bancorp, Inc., (d) trust preferred securities issued by
Coastal Bancorp Capital Trust I, and (e) guarantees by Coastal Bancorp, Inc. of
the trust preferred securities issued by Coastal Bancorp Capital Trust I. Each
offering of securities made under this Registration Statement will be made
pursuant to this prospectus, with the specifications of the securities offered
thereby set forth in an accompanying prospectus supplement. The prospectus may
not be used to consummate sales of securities unless accompanied by a prospectus
supplement.
The prospectus supplement for the offering of Series A Preferred Stock to be
issued by Coastal Bancorp, Inc. follows immediately after this Explanatory Note,
which is then followed immediately by the related prospectus for the offering of
the securities referenced in the preceding paragraph.
<PAGE>
- ------------------------------------------------------------------------------
The information in this preliminary prospectus supplement is not complete and
may be changed. We may not sell these securities until the Securities and
Exchange Commission declares our registration statement effective. This
preliminary prospectus supplement and the accompanying prospectus are not an
offer to sell these securities and are not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
- ------------------------------------------------------------------------------
SUBJECT TO COMPLETION, DATED , 1999
PROSPECTUS SUPPLEMENT
(To prospectus dated , 1999)
Shares
COASTAL BANCORP, INC. [LOGO]
% Series A Cumulative Preferred Stock
- --------------------------------------------------------------------------------
- -- For each share of Series A Preferred Stock you own, you will receive cash
dividends from the date of original issuance, in the amount of $_____ per
share each year, which is equivalent to ___% of the $25.00 liquidation
preference. Dividends will be paid on March 31, June 30, September 30 and
December 31 of each year beginning June 30, 1999. The first distribution
will be for less than a full quarter. Distributions will be cumulative.
- -- On and after _______ __, 200 , we may, at our option, redeem the Series A
Preferred Stock by paying holders $25.00 per share, plus any accrued and
unpaid dividends.
- -- The Series A Preferred Stock has no stated maturity and is not subject to
any sinking fund or mandatory redemption and is not convertible into any
other securities.
- -- An application has been made to list the Series A Preferred Stock on the
Nasdaq National Market under the symbol " ."
----------
THIS INVESTMENT INVOLVES RISK. SEE "RISK FACTORS" BEGINNING ON PAGE S- .
THESE SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OBLIGATIONS OF ANY BANK
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENTAL AGENCY.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Per Security Total
<S> <C> <C>
Public Offering Price ............................... $25.00 $
Underwriting Fees ................................... $ $
Proceeds to the Company ............................. $ $
</TABLE>
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OF ANYONE'S INVESTMENT IN THESE SECURITIES OR DETERMINED
IF THIS PROSPECTUS SUPPLEMENT OR PROSPECTUS TO WHICH IT RELATES IS TRUTHFUL OR
COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
U.S. BANCORP PIPER JAFFRAY LEGG MASON WOOD WALKER
INCORPORATED
The date of this prospectus supplement is _____________, 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PROSPECTUS SUPPLEMENT
Summary................................................................. S-2
Risk Factors ........................................................... S-7
Use of Proceeds......................................................... S-10
Capitalization.......................................................... S-11
Management of Coastal Bancorp, Inc. and Coastal Banc.................... S-12
Description of Series A Preferred Stock................................. S-13
Tax Considerations...................................................... S-16
Underwriting............................................................ S-19
Legal Matters........................................................... S-20
Experts................................................................. S-20
PROSPECTUS
About this Prospectus................................................... 1
Where You Can Find More Information..................................... 1
Coastal Bancorp, Inc.................................................... 2
Coastal Bancorp Capital Trust I......................................... 2
Use of Proceeds......................................................... 3
Description of Debt Securities.......................................... 3
Description of Preferred Stock.......................................... 13
Description of Common Stock............................................. 16
Description of Trust Preferred Securities............................... 16
Description of Guarantees............................................... 26
Relationship Among the Trust Preferred Securities, the Junior
Subordinated Debentures and the Guarantees............................ 29
Book-Entry Issuance..................................................... 30
Plan of Distribution.................................................... 32
Legal Matters........................................................... 33
Experts................................................................. 33
</TABLE>
You should rely only on the information contained in, or incorporated by
reference into, this prospectus supplement and the accompanying prospectus. We
have not, and the underwriters have not, authorized any other person to provide
you with different information. This prospectus supplement and the accompanying
prospectus are not an offer to sell, nor are they seeking an offer to buy, this
Series A Preferred Stock in any state where the offer or sale is not permitted.
The information contained in this prospectus supplement and the accompanying
prospectus is accurate only as of the dates of this prospectus supplement and
the accompanying prospectus, but the information may have changed since those
dates.
S-1
<PAGE>
SUMMARY
THE ITEMS IN THE FOLLOWING SUMMARY ARE DESCRIBED IN MORE DETAIL LATER IN THIS
PROSPECTUS SUPPLEMENT, IN THE ACCOMPANYING PROSPECTUS OR IN THE INFORMATION
INCORPORATED BY REFERENCE IN THE ACCOMPANYING PROSPECTUS. THIS SUMMARY PROVIDES
AN OVERVIEW OF SELECTED INFORMATION AND DOES NOT CONTAIN ALL THE INFORMATION YOU
SHOULD CONSIDER. THEREFORE, YOU SHOULD ALSO READ THE MORE DETAILED INFORMATION
SET OUT IN THIS PROSPECTUS SUPPLEMENT, IN THE ACCOMPANYING PROSPECTUS AS WELL AS
THE FINANCIAL STATEMENTS, THE RELATED NOTES AND THE OTHER INFORMATION
INCORPORATED BY REFERENCE INTO THE ACCOMPANYING PROSPECTUS.
BUSINESS OF COASTAL BANCORP, INC.
Coastal Bancorp, Inc. is a financial services company headquartered in Houston,
Texas with $3.0 billion in total assets at December 31, 1998. Our primary
operating subsidiary is Coastal Banc ssb, which is a Texas-chartered, federally
insured state savings bank. We operate through 50 branch offices in metropolitan
Houston, Austin, Corpus Christi, the Rio Grande Valley and small cities in the
southeast quadrant of Texas.
Coastal Banc was acquired in 1986 by an investor group, consisting of a majority
of the current members of the Board of Directors, including Manuel J. Mehos, the
present Chairman of the Board, President and Chief Executive Officer. Coastal
Banc was acquired to take advantage of the failures and consolidation in the
Texas banking and thrift industries. At February 28, 1986, the date of change in
ownership, Coastal Banc had one full service office and total assets of $10.7
million. Since then, we have acquired deposits and branch offices in
transactions with the Federal government and other private institutions. In
1995, we acquired our first commercial bank as part of our strategy to emphasize
commercial banking products and services. By December 31, 1998, our total assets
had increased to $3.0 billion, total deposits were $1.7 billion and
stockholders' equity equaled $112.8 million.
Since our inception, we have pursued a strategy of building our core deposit
base while deploying our funds in assets which provide an attractive return with
acceptable credit risk. In carrying out this strategy, we adhere to four
operating principles:
-- Expand our low cost core deposit base;
-- Minimize interest rate risk;
-- Control credit risk; and
-- Maintain a low level of general overhead expenses.
EXPAND OUR LOW COST CORE DEPOSIT BASE. Through a series of transactions with the
Federal government and private financial institutions, we assumed $1.9 billion
of primarily retail deposits and 58 branches (16 of which were subsequently
closed). We also opened six new branches in the Houston metropolitan area and
one in Austin. In addition, in 1995, we launched a strategy to emphasize
commercial banking products and services. One element of this strategy is to
increase the level of low cost transaction and commercial deposit accounts. At
December 31, 1998, these deposit accounts had increased to $151.2 million, up
from $39.7 million at December 31, 1994.
MINIMIZE INTEREST RATE RISK. Our loans and mortgage-backed securities generally
have variable rates of interest which periodically adjust or reprice. We
minimize our interest rate risk by matching, when possible, the repricing or
maturity of our interest-earning assets to the expected terms of our
liabilities. Our liabilities, which are primarily deposits and borrowings, are
also sensitive to changes in interest rates. We also match, if possible, the
basis or index upon which our assets and liabilities reprice. On certain assets
and liabilities we also use interest rate swap and interest rate cap agreements
to reduce our exposure to fluctuations in interest rates.
CONTROL CREDIT RISK. We control credit risk by holding a substantial portion of
our assets in primarily adjustable rate mortgage-backed securities issued or
guaranteed by government sponsored agencies and first lien single family
residential mortgage loans. At December 31, 1998, $1.3 billion, or 41.9% of
total assets, consisted of mortgage-backed securities and $690.5 million, or
23.2% of total assets, were first lien single family residential mortgage loans.
More recently we have emphasized commercial business lending, which involves
greater credit risk than first
S-2
<PAGE>
lien single family residential mortgage lending. We attempt to minimize this
risk by lending to companies within our market areas who operate in selected
lines of business. We also originate lines of credit to mortgage lenders
nationally, which are secured by first lien single family residential mortgage
loans.
MAINTAIN A LOW LEVEL OF GENERAL OVERHEAD EXPENSES. When we acquire institutions
or branches, we quickly identify and eliminate excess costs, which enables us to
grow while maintaining a low level of overhead expenses. Our ratio of
non-interest expense to average total assets was 1.61% for the year ended
December 31, 1998 (which gives effect to only four months of combined results
from our most recent acquisition). While we expect our costs to increase as we
continue to emphasize commercial banking, we intend to continue to pay careful
attention to controlling our overhead expenses.
STRATEGY. Our strategy is to continue to focus our attention on activities that
enhance our net interest margin and our ability to generate fee income. We
intend to accomplish this objective by:
-- expanding commercial banking products and services at our branches;
-- acquiring financial institutions, particularly commercial banks, and
branches in and adjacent to our market area; and
-- acquiring non-bank financial services companies, such as an investment
banking firm, whose customer base and offered services complement our
commercial banking activities.
In pursuing our strategy, we intend to continue to adhere to our four operating
principles.
OFFICE LOCATION
Our principal executive offices are located at 5718 Westheimer, Suite 600,
Houston, Texas 77057, and our telephone number is (713) 435-5000.
THE OFFERING
<TABLE>
<S> <C>
Securities offered .... _________ shares of ____% Series A Cumulative
Preferred Stock (the "Series A Preferred Stock")
Price per share ....... $25.00
Use of proceeds ....... We will use the proceeds for general corporate
purposes, which may include:
-- acquisitions by either us or Coastal Banc,
although there are presently no agreements or
understandings with respect to any such
acquisition;
-- repurchases in the open market of our common
stock;
-- repurchases in the open market of our 10% Senior
Notes Due 2002; and
-- capital contributions to Coastal Banc to support
growth and to provide working capital.
We may invest the net proceeds temporarily in
short-term investments.
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
Ranking .............. With respect to the payment of dividends and payments
upon liquidation, the Series A Preferred Stock will
rank:
-- equally with any other preferred shares that are
not by their terms subordinated to the Series A
Preferred Stock; and
-- senior to our common stock (the "Common Stock")
and any other of our equity securities which by
their terms rank junior to the Series A Preferred
Stock.
Dividends ............ If you purchase the Series A Preferred Stock, you are
entitled to receive dividends on the Series A
Preferred Stock from the date of original issue.
Dividends are cumulative and will be payable
quarterly in arrears on March 31, June 30, September
30 and December 31 of each year, commencing on June
30, 1999, at the rate of ____% of the liquidation
preference per annum. The first distribution will be
for less than a full quarter. Distributions on the
Series A Preferred Stock will accumulate whether or
not we have earnings, whether or not we have funds
legally available for the payment of such
distributions and whether or not we declare
distributions.
Liquidation rights ... The Series A Preferred Stock will have a liquidation
preference of $25.00 per share, plus accumulated and
unpaid distributions, if any.
Redemption ........... We may not redeem the shares of Series A Preferred
Stock prior to ________ __, 200 . On and after
________ __, 200 , the Series A Preferred Stock will
be redeemable for cash at our option, in whole or in
part, at $25.00 per share, plus distributions
accumulated and unpaid to the redemption date.
Voting rights ........ As a holder of the Series A Preferred Stock, you will
have voting rights only under certain limited
conditions. If we fail to pay dividends to you for
six or more quarterly periods, the holders of the
Series A Preferred Stock (together with any other
preferred shareholders who have the same voting
rights) may elect two additional directors to serve
on our board of directors. They will serve on the
board until all dividends in arrears and for the then
current distribution period have been paid or set
aside for payment.
No conversion ........ The Series A Preferred Stock is not convertible into
or exchangeable for any of our other property or
securities.
Trading .............. We have applied to list the Series A Preferred Stock
on the Nasdaq National Market under the symbol
"______".
Book entry ........... The Series A Preferred Stock will be represented by a
global security that will be deposited with and
registered in the name of The Depository Trust
Company, New York, New York. This means you will not
receive a certificate for the Series A Preferred
Stock.
</TABLE>
S-4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(dollars in thousands, except per share data)
<TABLE>
<CAPTION>
For the Year Ended December 31,
------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA(1):
Interest income ........................................ $ 210,814 $ 201,356 $ 194,611 $ 170,286 $ 129,037
Interest expense ....................................... 143,404 144,423 138,185 126,354 88,519
---------- ---------- ---------- ---------- ----------
Net interest income .................................... 67,410 56,933 56,426 43,932 40,518
Provision for loan losses .............................. 3,100 1,800 1,925 1,664 934
---------- ---------- ---------- ---------- ----------
Net interest income after provision for loan losses .... 64,310 55,133 54,501 42,268 39,584
Writedown of purchased mortgage loan premium ........... (709) -- -- -- --
Gain (loss) on sales of mortgage-backed securities
available-for-sale, net .............................. 1 237 (4) 81 192
Gain on sale of branch office .......................... -- -- 521 -- --
Other noninterest income ............................... 7,580 6,147 5,574 5,081 6,539
---------- ---------- ---------- ---------- ----------
Total noninterest income ............................... 6,872 6,384 6,091 5,162 6,731
---------- ---------- ---------- ---------- ----------
SAIF insurance special assessment ...................... -- -- 7,455 -- --
Other noninterest expense .............................. (48,383) (39,544) (37,927) (29,823) (25,731)
---------- ---------- ---------- ---------- ----------
Total noninterest expense .............................. 48,383 39,544 45,382 29,823 25,731
Income before provision for Federal income taxes
and minority interest ................................ 22,799 21,973 15,210 17,607 20,584
Provision for Federal income taxes ..................... (3,543) (7,822) (5,671) (6,477) (4,333)
Minority interest in income of consolidated
subsidiary .......................................... -- -- -- -- (211)
---------- ---------- ---------- ---------- ----------
Net income before preferred stock dividends ............ 19,256 14,151 9,539 11,130 16,040
Preferred stock dividends of Coastal Banc .............. (2,588) (2,588) (2,588) (2,588) (2,588)
---------- ---------- ---------- ---------- ----------
Net income available to common stockholders ............ $ 16,668 $ 11,563 $ 6,951 $ 8,542 $ 13,452
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Basic earnings per share (2) ........................... $ 2.24 $ 1.55 $ 0.93 $ 1.15 $ 1.81
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Diluted earnings per share (2) ......................... $ 2.18 $ 1.50 $ 0.92 $ 1.14 $ 1.76
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
<CAPTION>
At December 31,
------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets ........................................... $2,982,161 $2,911,410 $2,875,907 $2,786,528 $2,299,769
Loans receivable (3) ................................... 1,538,149 1,261,435 1,229,748 1,098,555 587,032
Mortgage-backed securities held-to-maturity (3) ........ 1,154,116 1,345,090 1,344,587 1,395,753 1,605,839
Mortgage-backed securities available-for-sale .......... 96,609 169,997 180,656 186,414 32,249
Savings deposits ....................................... 1,705,004 1,375,060 1,310,835 1,287,084 1,139,622
Advances from the Federal Home Loan Bank of
Dallas ............................................... 966,720 540,475 409,720 312,186 386,036
Securities sold under agreements to repurchase ......... 100,000 791,760 966,987 993,832 645,379
Senior Notes payable ................................... 50,000 50,000 50,000 50,000 --
Preferred Stock of Coastal Banc ........................ 28,750 28,750 28,750 28,750 28,750
Stockholders' equity ................................... 112,764 104,830 94,148 91,679 84,680
</TABLE>
S-5
<PAGE>
<TABLE>
<CAPTION>
At or For the Year Ended December 31,
------------------------------------------------------------------
1998 1997 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
SELECTED RATIOS:
Performance and other ratios: (1) (4)
Return on average assets ................................ 0.64% 0.49% 0.34% 0.45% 0.71%
Return on average equity ................................ 14.96 11.68 7.50 9.71 16.57
Net interest margin (5) ................................. 2.31 2.02 2.06 1.82 1.84
Interest rate spread (5) ................................ 1.96 1.67 1.72 1.46 1.57
Noninterest expense to average total assets ............. 1.61 1.36 1.61 1.21 1.14
Efficiency ratio (6) .................................... 60.54 58.34 68.84 57.37 53.80
Dividend payout ratio ................................... 14.35 19.83 28.55 18.56 8.83
Average equity to average total assets .................. 3.71 3.41 3.30 3.56 3.59
Asset quality ratios:
Nonperforming assets to total assets (7) ................ 0.99% 0.72% 0.60% 0.68% 0.30%
Nonperforming loans to total loans receivable ........... 1.60 1.40 1.14 1.35 1.04
Allowance for loan losses to nonperforming loans ........ 46.28 41.90 49.02 38.40 35.37
Allowance for loan losses to total loans receivable ..... 0.74 0.59 0.56 0.52 0.37
Net charge-offs to average loans ........................ 0.10 0.10 0.06 0.05 0.06
Ratios of earnings to combined fixed charges and
preferred stock dividends: (8)
Including interest on deposits .......................... 1.14x 1.13x 1.09x 1.12x 1.19x
Excluding interest on deposits .......................... 1.25x 1.23x 1.15x 1.21x 1.33x
Coastal Banc regulatory capital ratios: (9)
Tier 1 capital to total assets .......................... 5.25% 5.52% 5.35% 5.30% 4.54%
Tier 1 capital to risk-weighted assets .................. 9.54 11.46 11.77 12.36 12.37
Total capital to risk-weighted assets ................... 10.23 11.98 12.30 12.84 12.63
</TABLE>
- ----------
(1) Certain 1997, 1996, 1995 and 1994 balances have been reclassified to
conform to the 1998 presentation. Such reclassifications had no effect on
net income or total stockholders' equity.
(2) In April 1998, Coastal declared a 3:2 stock split that was paid on June 15,
1998. All common stock share data have been adjusted to include the effect
of the stock split.
(3) Loans receivable are net of loans in process, premiums, discounts, unearned
interest and loan fees and the allowance for loan losses. Mortgage-backed
securities held-to-maturity are net of premiums and discounts.
(4) Certain ratios were adversely impacted in 1996 by the one-time 1996 SAIF
insurance special assessment. Without the SAIF insurance special
assessment, the affected ratios would be as follows: return on average
assets -- 0.51%; return on average equity -- 12.53%; efficiency ratio --
56.82%; dividend payout ratio -- 16.82%; and noninterest expense to average
total assets -- 1.35%.
(5) Net interest margin represents net interest income as a percentage of
average interest-earning assets. Interest rate spread represents the
difference between the weighted average yield on interest-earning assets
and the weighted average rate on interest-bearing liabilities and
noninterest-bearing savings deposits.
(6) Efficiency ratio represents non-interest expense as a percentage of the
aggregate of net interest income and non-interest income.
(7) Nonperforming assets consist of nonaccrual loans, loans 90 days or more
past due but still accruing, real estate acquired by foreclosure and
repossessed assets.
(8) For purposes of computing these ratios, earnings represent pretax earnings,
before preferred stock dividends, plus fixed charges. Fixed charges and
preferred stock dividends, includes total interest expense, including
and excluding interest on deposits, as applicable, as well as the interest
component of rental expense, debt issuance costs and preferred stock
dividends.
(9) Current Federal Deposit Insurance Corporation regulations require Coastal
Banc to maintain Tier 1 capital equal to at least 4.0% of total assets,
Tier 1 capital equal to at least 4.0% of risk-weighted assets and total
capital equal to at least 8.0% of risk-weighted assets.
S-6
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY READ THE FOLLOWING RISK FACTORS BEFORE YOU DECIDE TO BUY
OUR SERIES A PREFERRED STOCK. YOU SHOULD ALSO CONSIDER THE OTHER INFORMATION IN
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS AS WELL AS THE OTHER
DOCUMENTS INCORPORATED BY REFERENCE INTO THE ACCOMPANYING PROSPECTUS.
INFORMATION CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT
AND THE ACCOMPANYING PROSPECTUS MAY CONSTITUTE "FORWARD-LOOKING STATEMENTS."
STATEMENTS USED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS WHICH USE WORDS
SUCH AS "BELIEVES," "EXPECTS," "MAY," "WILL," "SHOULD," "PROJECTED,"
"CONTEMPLATES" OR "ANTICIPATES" OR THE NEGATIVE OF SUCH TERMS OR OTHER
VARIATIONS MAY CONSTITUTE FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS
ARE INHERENTLY UNCERTAIN, AND THERE IS NO ASSURANCE THAT SUCH FORWARD-LOOKING
STATEMENTS WILL BE ACCURATE. SUCH FORWARD-LOOKING STATEMENTS INCLUDE, WITHOUT
LIMITATION, OUR EXPECTATIONS AND ESTIMATES AS TO OUR BUSINESS OPERATIONS,
INCLUDING GROWTH IN NET INTEREST INCOME AND NET INCOME, AS WELL AS OUR
EXPECTATIONS AND BELIEFS AS TO THE PROJECTED COSTS AND ANTICIPATED TIMETABLE TO
ADDRESS YEAR 2000 COMPLIANCE ISSUES, THE ADEQUACY OF OUR PLANS TO ADDRESS SUCH
ISSUES AND THE IMPACT ON OUR OPERATIONS IN THE EVENT THAT CERTAIN OR ALL OF OUR
PLANS OR THE PLANS OF THIRD PARTIES IN RESPECT OF YEAR 2000 COMPLIANCE ISSUES
PROVE TO BE INADEQUATE. THE STATEMENTS IN THE "RISK FACTORS" SECTION BELOW, AS
WELL AS OTHER STATEMENTS DESCRIBED ELSEWHERE HEREIN, IN THE ACCOMPANYING
PROSPECTUS OR INCORPORATED BY REFERENCE IN THE PROSPECTUS, CONSTITUTE CAUTIONARY
STATEMENTS IDENTIFYING IMPORTANT FACTORS WITH RESPECT TO SUCH FORWARD-LOOKING
STATEMENTS, INCLUDING CERTAIN RISKS AND UNCERTAINTIES, THAT COULD CAUSE ACTUAL
RESULTS TO VARY MATERIALLY FROM THE FUTURE RESULTS COVERED IN SUCH
FORWARD-LOOKING STATEMENTS. OTHER FACTORS, SUCH AS THE GENERAL STATE OF THE
UNITED STATES ECONOMY, COULD ALSO CAUSE ACTUAL RESULTS TO VARY MATERIALLY FROM
THE FUTURE RESULTS COVERED IN SUCH FORWARD-LOOKING STATEMENTS.
RISKS RELATED TO AN INVESTMENT IN THE SERIES A PREFERRED STOCK
OUR ABILITY TO MAKE PAYMENTS ON THE SERIES A PREFERRED STOCK DEPENDS ON THE
OPERATIONS OF OUR SUBSIDIARIES.
We are a holding company and substantially all of our assets are held by our
subsidiaries. Our ability to make payments on the Series A Preferred Stock
depends primarily on the results of operations of our subsidiaries and their
ability to provide funds to us. There are various legal limitations on the
extent to which certain of our subsidiaries may extend credit, pay dividends or
otherwise supply funds to, or engage in transactions with, us or some of our
subsidiaries. We will be unable to make payments to you if we do not receive
funds from our subsidiaries.
Our right to participate in any distribution of the assets of any subsidiary,
including Coastal Banc, upon such subsidiary's liquidation or reorganization or
otherwise, is subject to the prior claims of creditors of that subsidiary,
except to the extent that we may be recognized as a creditor of that subsidiary.
As a consequence, the Series A Preferred Stock will be effectively subordinated
to all existing and future liabilities of our subsidiaries, including the $28.8
million of existing preferred stock of Coastal Banc. Holders of the Series A
Preferred Stock should look only to our assets for dividends on the Series A
Preferred Stock.
WE MAY ISSUE ADDITIONAL PREFERRED STOCK WHICH COULD DILUTE YOUR INTERESTS.
Our Articles of Incorporation, including the Statement of Designations of Rights
and Preferences of the Series A Preferred Stock, do not limit the issuance of
additional series of preferred stock ranking on parity with or junior to the
Series A Preferred Stock. Our Articles of Incorporation require approval by
holders of two-thirds of the outstanding Series A Preferred Stock to issue any
stock of Coastal senior to the Series A Preferred Stock. The issuance of
additional preferred stock on parity with the Series A Preferred Stock could
have the effect of diluting the interests of holders of the Series A Preferred
Stock. None of the provisions relating to the Series A Preferred Stock afford
the holders of the Series A Preferred Stock protection in the event of a highly
leveraged or other transaction that might adversely affect their interests.
S-7
<PAGE>
WE MAY REDEEM THE SERIES A PREFERRED STOCK ON OR AFTER ____, 200 .
We may redeem the Series A Preferred Stock on or after ______, 200 . You should
assume that we will exercise our redemption option if it is otherwise in our
interest to redeem the Series A Preferred Stock. We can exercise this right only
if we receive any required approval by the regulatory agencies which supervise
us.
YOU WILL HAVE LIMITED VOTING RIGHTS.
As a holder of Series A Preferred Stock, you will have voting rights only under
certain limited conditions. If we fail to pay dividends to you for six or more
quarterly periods, the holders of the Series A Preferred Stock (together with
any other preferred shareholders who have the same voting rights) may elect two
additional directors to serve on our board of directors. They will serve on the
board until all dividends in arrears and for the then current distribution
period have been paid or set aside for payment.
THERE MAY BE NO ACTIVE OR LIQUID MARKET FOR THE SERIES A PREFERRED STOCK.
Before this offering, there has been no market for the Series A Preferred Stock.
We plan to list the Series A Preferred Stock on the Nasdaq National Market. We
cannot predict whether an active and liquid trading market for the Series A
Preferred Stock will develop or whether a continued listing of the Series A
Preferred Stock will be available on the Nasdaq National Market. Although the
underwriters have informed us that they intend to make a market in the Series A
Preferred Stock, they are not obligated to do so and any such market-making
activity may be terminated at any time without notice. Future trading prices of
the Series A Preferred Stock will depend on many factors including, among other
things, prevailing interest rates, our operating results and financial
condition, and the market for similar securities.
RISKS RELATING TO COASTAL BANCORP
WE ARE VULNERABLE TO CHANGES IN INTEREST RATES.
Our ability to make a profit, like that of most financial institutions,
substantially depends upon our net interest income, which is the difference
between the interest income we earn on our interest-earning assets (such as
loans and mortgage-backed securities) and the interest expense we pay on our
interest-bearing liabilities (such as deposits and borrowings). Certain assets
and liabilities, however, may react in different degrees to changes in market
interest rates. Further, interest rates on some types of assets and liabilities
may fluctuate prior to changes in broader market interest rates, while rates on
other types may lag behind. Additionally, some of our assets, such as adjustable
rate mortgages, have features, including payment and rate caps, which restrict
changes in their interest rates.
Factors such as inflation, recession, unemployment, money supply, international
disorders, instability in domestic and foreign financial markets, and other
factors beyond our control may affect interest rates. Changes in market interest
rates will also affect the level of voluntary prepayments on our loans and the
receipt of payments on our mortgage-backed securities resulting in the receipt
of proceeds that may be reinvested at a lower rate than the loan or
mortgage-backed security being prepaid. Although we pursue an asset-liability
management strategy designed to control our risk from changes in market interest
rates, changes in interest rates can still have a material adverse effect on our
profitability.
OUR EXPOSURE TO CREDIT RISK WILL INCREASE AS WE INCREASE OUR COMMERCIAL BANKING
ACTIVITIES.
As we increase our focus on commercial banking and increase our net interest
margin, a gradual increase in our consolidated credit risk is likely to occur.
One of our main focuses is to replace lower-yielding first lien single-family
residential mortgage loans and mortgage-backed securities with commercial and
consumer loans. We charge higher interest rates on commercial and consumer loans
than we do on first lien single-family residential mortgage
S-8
<PAGE>
loans because we expect higher loan losses. Generally, commercial loans
(including commercial and multi-family real estate loans) are considered to be
riskier than first lien, single-family residential loans because they have
larger balances to a single borrower or group of related borrowers. In addition,
the borrower's ability to repay a commercial loan depends on the successful
operation of the business or the property securing the loan. In addition,
consumer lending collections are dependent on the borrower's continuing
financial stability, and are more likely to be adversely affected by job loss,
divorce, illness and personal bankruptcy. If we experience loan losses that are
higher than our allowance for loan losses, our profits and financial condition
could be adversely affected.
OUR ALLOWANCE FOR LOAN LOSSES MAY BE INADEQUATE TO COVER LOSSES ACTUALLY
INCURRED, WHICH COULD AFFECT OUR ABILITY TO MAKE PAYMENTS ON THE SERIES A
PREFERRED STOCK.
We maintain an allowance for loan losses in an amount we believe is
sufficient to provide for known and inherent risks in the loan portfolio. If
we incur actual losses on our loans in excess of our allowance for loan
losses, our profitability may be adversely affected and we may be unable to
make payments on the Series A Preferred Stock.
THE CONCENTRATION OF OUR LOAN PORTFOLIO IN TEXAS SUBJECTS US TO RISK TO THE
EXTENT THE TEXAS ECONOMY EXPERIENCES PROBLEMS.
Substantially all of the loans we originate (other than warehouse loans) are
secured by properties located in Texas or are made to businesses which operate
in Texas. As a result, the number of borrowers unable to repay their loans may
be affected by changes in local and economic conditions. Unfavorable economic
conditions in Texas could significantly increase the number of borrowers which
are unable to pay their loans on a timely basis and cause a decline in the value
of the properties securing our loans which could have an adverse effect on our
results of operations and financial condition.
WE MAY FAIL TO IDENTIFY OR CONSUMMATE ADDITIONAL ACQUISITIONS.
Our business strategy has historically relied, in part, upon our ability to
obtain low cost deposits, expand into new markets and enhance our presence in
existing markets by identifying and acquiring branches of other financial
institutions or whole banks that meet our acquisition criteria. In pursuing
these opportunities, we compete with other financial institutions with similar
acquisition strategies, many of which are larger than we are and have greater
financial and other resources than we have. We will compete for potential
acquisitions based on a number of factors, including price, terms and
conditions, size, access to capital and our ability to offer cash, stock or
other forms of consideration. We cannot assure investors that we will be able to
identify suitable acquisition candidates or, once a suitable acquisition
candidate is identified, that we will be able to consummate the acquisition on
terms and conditions acceptable to us.
WE MAY FAIL TO INTEGRATE OUR ACQUISITIONS SUCCESSFULLY.
We have grown through the acquisition of branches of other financial
institutions or of whole banks. To a certain extent, our success is tied to our
ability to integrate the operations, management, products and services of the
entities we acquire. After each acquisition, we must expend substantial
managerial, operating, financial and other resources to integrate these
entities. In particular, we must install and standardize adequate operational
and control systems, deploy or modify certain equipment, implement marketing
efforts in new as well as existing locations and employ and maintain qualified
personnel. Our operating results may be adversely affected if we fail to
properly integrate companies we acquire.
S-9
<PAGE>
COMPETITION WITH OTHER FINANCIAL INSTITUTIONS COULD ADVERSELY AFFECT OUR
PROFITABILITY.
We face substantial competition in purchasing and originating loans and in
attracting deposits. This competition in originating loans comes principally
from banks, other savings institutions, mortgage banking companies and other
lenders and purchasers of loans. Many of our competitors enjoy competitive
advantages including greater financial resources, a wider geographic presence or
more accessible branch office locations, the ability to offer additional
services or more favorable pricing alternatives and lower origination and
operating costs. This competition could result in a decrease in loans originated
or purchased by us that could adversely affect our results of operations.
In attracting deposits, we compete with insured depository institutions such as
savings institutions, credit unions and banks, as well as institutions offering
uninsured investment alternatives including money market funds. These
competitors may offer higher interest rates than we do, which could result in
either our attracting fewer deposits or in our being required to increase our
rates in order to attract deposits. Increased deposit competition could increase
our cost of funds and adversely affect our ability to generate the funds
necessary for our lending operations, thereby adversely affecting our results of
operations.
THE YEAR 2000 ISSUE COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.
The Year 2000 issue is the result of computer programs only being able to use
two digits rather than four to define the applicable year. Thus, date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in system failures or miscalculations, causing
disruptions of operations, including, among others, a temporary inability to
process deposit and loan transactions, effect financings or engage in normal
business activities. We formally initiated a project in the first quarter of
1997 to ensure that operational and financial systems will not be adversely
affected by Year 2000 software problems. The project involves all levels of our
management in identifying the computer applications which could fail or create
erroneous results because of the Year 2000 problem, and in developing contingent
operating systems for these applications. We expect to complete our testing and
remediation by June 1999. However, we cannot assure our investors that the
project will discover and remediate all Year 2000 problems or that our
third-party suppliers and customers will have satisfactorily resolved all of
their Year 2000 issues, and the failure to do so could have a material adverse
effect on our results of operations and financial condition.
CHANGES IN STATUTES AND REGULATIONS COULD ADVERSELY AFFECT US.
We and Coastal Banc are subject to extensive regulation and supervision by
federal and state authorities. Such supervision and regulation establish a
comprehensive framework of activities in which an institution may engage, and
are intended primarily for the protection of the federal deposit insurance fund
and Coastal Banc's depositors. This regulatory structure also provides our
regulators with significant discretion in the performance of their supervisory
and enforcement duties. Any change in such regulation, whether by our regulators
or as a result of legislation subsequently enacted by the Congress of the United
States, could have a substantial impact on Coastal Banc and its operations.
Additional legislation and regulations may be enacted or adopted in the future
that could significantly affect our powers, authority and operations, which
could have a material adverse effect on our operations.
USE OF PROCEEDS
We intend to use the estimated net proceeds of $_________ for general corporate
purposes, which may include:
- -- acquisitions by either us or Coastal Banc, although there are presently no
agreements or understandings with respect to any such acquisition;
- -- repurchases in the open market of our common stock;
- -- repurchases in the open market of our 10% Senior Notes Due 2002; and
- -- capital contributions to Coastal Banc to support growth and to provide
working capital.
We also may invest the net proceeds temporarily in short-term investments.
S-10
<PAGE>
CAPITALIZATION
The following table sets forth our unaudited consolidated capitalization as of
December 31, 1998 and such capitalization, as adjusted, to reflect the sale of
the Series A Preferred Stock and the application of the estimated net proceeds
as described in "Use of Proceeds." You should also read the more detailed
information in this prospectus supplement, the accompanying prospectus, as well
as the financial statements, related notes and other information incorporated by
reference into the prospectus.
<TABLE>
<CAPTION>
December 31, 1998
-----------------
Actual As Adjusted
----------- -----------
<S> <C> <C>
(dollars in thousands)
Total savings deposits ........................................ $ 1,705,004 $ 1,705,004
----------- -----------
Borrowings:
Advances from Federal Home Loan Bank of Dallas ............. $ 966,720 $ 966,720
Securities sold under agreements to repurchase ............. 100,000 100,000
Senior Notes ............................................... 50,000 50,000
----------- -----------
Total borrowings ........................................... $ 1,116,720 $ 1,116,720
----------- -----------
Coastal Banc Preferred Stock, Series A, no par value per share,
5,000,000 shares authorized, 1,150,000 shares issued and
outstanding ................................................. 28,750 28,750
Stockholders' equity:
Preferred stock, no par value per share, 5,000,000 shares
authorized, no shares (actual) and ______ shares of Series A
Preferred Stock (as adjusted), issued and outstanding ....... --
Common stock, par value $0.00667 per share, 45,000,000 shares
authorized, 7,568,255 shares issued and outstanding ....... 50 50
Additional paid-in capital ................................. 33,722 33,722
Retained earnings .......................................... 88,144 88,144
Accumulated other comprehensive loss-
unrealized loss on securities available for sale .......... (1,374) (1,374)
Treasury stock, at cost (499,600 shares) ................... (7,778) (7,778)
----------- -----------
Total stockholders' equity ................................. 112,764
----------- -----------
Total capitalization ....................................... $ 1,258,234 $
----------- -----------
----------- -----------
</TABLE>
S-11
<PAGE>
MANAGEMENT OF COASTAL BANCORP, INC. AND COASTAL BANC
Set forth below is information with respect to the directors and executive
officers of Coastal Bancorp, Inc. and Coastal Banc.
<TABLE>
<CAPTION>
Name Age Title
---- --- -----
<S> <C> <C>
Manuel J. Mehos 44 Chairman of the Board, President and Chief Executive Officer of
Coastal Bancorp and Coastal Banc.
R. Edwin Allday 48 Director of Coastal Bancorp and Coastal Banc.
D. Fort Flowers 37 Director of Coastal Bancorp and Coastal Banc.
Dennis S. Frank 42 Director of Coastal Bancorp and Coastal Banc.
Paul W. Hobby 38 Director of Coastal Bancorp and Coastal Banc.
Robert E. Johnson, Jr. 45 Director of Coastal Bancorp and Coastal Banc.
James C. Niver 69 Director of Coastal Bancorp and Coastal Banc.
John D. Bird 55 Executive Vice President, Chief Administrative Officer and Assistant
Secretary of Coastal Banc.
Gary R. Garrett 52 Executive Vice President and Chief Lending Officer of Coastal Banc.
David R. Graham 55 Executive Vice President - Real Estate Lending of Coastal Banc.
Nancy S. Vadasz 45 Executive Vice President - Market and Product Strategies of Coastal
Banc.
Catherine N. Wylie 44 Executive Vice President and Chief Financial Officer of Coastal
Bancorp and Coastal Banc.
</TABLE>
MANUEL J. MEHOS. Mr. Mehos has been a director since 1986. Mr. Mehos is the
Chairman of the Board, President and Chief Executive Officer of Coastal Bancorp
and Coastal Banc. Mr. Mehos also serves on the Finance Commission of Texas. His
term as a director of Coastal Bancorp will expire in 2000.
R. EDWIN ALLDAY. Mr. Allday has been a director since 1986. Mr. Allday is a
private investor and in September 1993 became a senior consultant with The Dini
Partners, Inc., Houston, Texas, a company that provides counseling in
philanthropy and non-profit company management. Mr. Allday was an independent
consultant for community relations for charitable organizations from March 1990
to June 1993. From August 1988 to March 1990, Mr. Allday was the Chief Operating
Officer of the American Leadership Forum, a non-profit organization located in
Houston, Texas which teaches business leadership skills. From March 1982 to
August 1988, Mr. Allday was the General Manager of Anglia Companies, a
family-owned investment management business in Houston, Texas. His term as a
director of Coastal Bancorp will expire in 2001.
D. FORT FLOWERS, JR. Mr. Flowers has been a director since 1992. Mr. Flowers is
the President of Sentinel Trust Company, a Texas Limited Banking Association,
Houston, Texas, a company that provides fiduciary and investment management
services to affluent families and their closely held corporations and
foundations; Mr. Flowers has held this position since January 1997.
Additionally, Mr. Flowers was Chairman of the Board of DIFCO, Inc., a railroad
car engineering and manufacturing company from 1987 until August 1997, when that
company was sold. His term as a director of Coastal Bancorp will expire in 2001.
DENNIS S. FRANK. Mr. Frank has been a director since 1988. Mr. Frank is the
Chairman of the Board, Chief Executive Officer and President of Silvergate
Bancorp, La Mesa, California, a position he has held since December 1996.
Additionally, he has been the President and Chief Executive Officer of DSF
Management Corp., a private investment company, located in Houston, Texas, since
March 1994. Prior to that, Mr. Frank was the Manager of Coastal's Capital
Markets Division from July 1988 to April 1993 and a consultant to us from April
1993 to April 1994. His term as a director of Coastal Bancorp will expire in
2001.
PAUL W. HOBBY. Mr. Hobby was appointed in February 1999 to fill a vacancy on the
Board. Mr. Hobby is the Chairman and Chief Executive Officer of Hobby Media
Services, Inc., Houston, Texas. Mr. Hobby also serves on
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<PAGE>
the board of directors of various civic, charitable and professional
associations. His term as a director of Coastal Bancorp will expire at our
Annual Meeting of Stockholders scheduled for April 1999 and he will stand for
election at that time.
ROBERT E. JOHNSON, JR. Mr. Johnson has been a director since 1986. Mr. Johnson
is a partner in the law firm of Johnson & Johnson, Austin, Texas. His term as a
director of Coastal Bancorp will expire at our Annual Meeting of Stockholders
scheduled for April 1999.
JAMES C. NIVER. Mr. Niver has been a director since 1986. Mr. Niver is retired.
From 1972 until 1995 he was employed by Century Land Company, Houston, Texas,
and retired as its President. His term as a director of Coastal Bancorp will
expire in 2000.
JOHN D. BIRD. Mr. Bird has been Executive Vice President of Coastal Banc since
August 1993; Chief Administrative Officer since June 1993; and Assistant
Secretary since March 1986; Chief Operations Officer from March 1986 to June
1993; and President and sole stockholder of Coastal Banc Insurance Agency, Inc.,
an affiliate of Coastal Banc, since May 1987.
GARY R. GARRETT. Mr. Garrett has been Executive Vice President of Coastal
Banc since August 1993; Chief Lending Officer since 1995; Senior Vice
President--Mortgage Lending from October 1991 to August 1993.
DAVID R. GRAHAM. Mr. Graham has been Executive Vice President of Coastal Banc
since August 1993. He was also Senior Vice President--Real Estate Lending
Division from May 1988 to August 1993.
NANCY S. VADASZ. Ms. Vadasz has been Executive Vice President of Coastal Banc
since June of 1994 and was Senior Vice President from September 1991 to June
1994.
CATHERINE N. WYLIE. Ms. Wylie has been Executive Vice President of Coastal
Bancorp since July 1994 and of Coastal Banc since August 1993, and has been
Chief Financial Officer of Coastal Bancorp and Coastal Banc since October
1993. She was also Controller of Coastal Banc from April 1989 to October 1993.
DESCRIPTION OF SERIES A PREFERRED STOCK
In addition to the information below, you should also read "Description of
Preferred Stock" in the accompanying prospectus before deciding whether to
invest in the Series A Preferred Stock. However, if the terms set forth in this
prospectus supplement differ from the terms set forth in the prospectus, you
should rely on the terms set forth in this prospectus supplement.
GENERAL
We are authorized to issue up to 5,000,000 shares of preferred stock in one or
more series. Our Board of Directors has the power to determine the number of
shares in each series and fix the preference, conversion and other rights of
such series, including, but not limited to, fixing distribution rights,
distribution rates, voting powers, restrictions, limitations as to
distributions, qualifications and terms and conditions of redemption (including
sinking fund
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provisions), and the liquidation preference, without any further action by our
shareholders, unless such action is required by applicable law. The Series A
Preferred Stock is a series of our preferred stock.
On ________ __, 1999, our Board of Directors adopted resolutions authorizing the
designation and issuance of the Series A Preferred Stock. The following summary
of the terms and provisions of the Series A Preferred Stock does not purport to
be complete and is qualified in its entirety by reference to the relevant
sections of the Articles of Incorporation, including the Statement of
Designations of Rights and Preferences of Series A Preferred Stock, each of
which you may obtain from us.
The registrar, transfer agent and distributions disbursing agent for the Series
A Preferred Stock will be ChaseMellon Shareholder Services, L.L.C.
We have applied to list the Series A Preferred Stock on the Nasdaq National
Market, subject to official notice of issuance.
DIVIDENDS
As a holder of the Series A Preferred Stock, you will be entitled to receive,
when and as authorized by our Board of Directors, out of funds legally available
for the payment of dividends, cumulative cash distributions at the rate of ____%
per annum of the $25.00 liquidation preference (equivalent to a fixed annual
amount of $_____ per share). Dividends on the Series A Preferred Stock will be
cumulative from the date of original issue and will be payable quarterly in
arrears on March 31, June 30, September 30 and December 31 or, if not a business
day, the next business day (each, a "Distribution Payment Date"). The first
distribution on the Series A Preferred Stock will be paid on ________ __, 1999,
which will be for less than a full quarter.
Any distributions payable on the Series A Preferred Stock for any partial period
will be computed on the basis of the actual number of days the Series A
Preferred Stock is outstanding and assuming a 360-day year consisting of twelve
30-day months. Dividends will be payable to holders of record as they appear in
our share records at the close of business on the applicable record date, which
will be the 15th day of the calendar month in which the applicable Distribution
Payment Date falls or such other date designated by our Board of Directors for
the payment of distributions that is not more than 30 or less than 10 days prior
to such Distribution Payment Date (each, a "Distribution Record Date"). For
dividend distributions, the Series A Preferred Stock will rank senior to our
common stock.
No distributions on the Series A Preferred Stock will be authorized by our Board
of Directors or be paid or set apart for payment if such action is restricted or
prohibited by law or by the terms of any agreement of ours, including any
agreement relating to our indebtedness.
Notwithstanding the foregoing, distributions on the Series A Preferred Stock
will accumulate whether or not we have earnings, whether or not there are funds
legally available for the payment of such distributions and whether or not such
distributions are authorized. Accumulated but unpaid distributions on the Series
A Preferred Stock will not bear interest and holders of the Series A Preferred
Stock will not be entitled to any distributions in excess of full cumulative
distributions as described above.
Any distribution payment made on the Series A Preferred Stock will first be
credited against the earliest accumulated but unpaid distribution due with
respect to such shares.
S-14
<PAGE>
LIQUIDATION RIGHTS
If we liquidate, dissolve or wind up our business, you will be entitled to be
paid out of our assets that are legally available for distribution to our
shareholders cash or property (at its fair market value as determined by our
Board of Directors) in the amount of a liquidation preference of $25.00 per
share, plus an amount equal to any accumulated and unpaid distributions to the
date of such liquidation, dissolution or winding up, before any distribution of
assets is made to holders of common stock or any other capital shares that rank
junior to the Series A Preferred Stock as to
liquidation rights. After payment of the full amount of the liquidating
distributions to which they are entitled, the holders of Series A Preferred
Stock will have no right or claim to any of our remaining assets. Our
consolidation or merger with any other entity or the sale, lease, transfer or
conveyance of all or substantially all of our property or business shall not be
deemed to constitute a liquidation, dissolution or winding up of our business.
For liquidation rights, the Series A Preferred Stock will rank senior to our
common stock.
REDEMPTION
We are not permitted to redeem the shares of Series A Preferred Stock prior to
________ __, 200 . On and after ________ __, 200 , we may, at our option upon
not less than 30 or more than 60 days' written notice, redeem the Series A
Preferred Stock, in whole or in part, at any time or from time to time, at a
redemption price of $25.00 per share, plus all accumulated and unpaid
distributions thereon to the date fixed for redemption (except as provided
below), without interest, to the extent we have funds legally available
therefor. In order to have your Series A Preferred Stock redeemed, you must
surrender such Series A Preferred Stock at the place designated in such notice,
at which time you will be entitled to the redemption price and any accrued and
unpaid distributions. If notice of redemption of any Series A Preferred Stock
has been given and if we have set aside the funds necessary for such redemption
in trust for the benefit of the holders of any Series A Preferred Stock so
called for redemption, then from and after the redemption date, distributions
will cease to accrue on such Series A Preferred Stock, such Series A Preferred
Stock will no longer be deemed outstanding and all rights of the holders of such
shares will terminate, except the right to receive the redemption price. If
fewer than all of the outstanding shares of Series A Preferred Stock are to be
redeemed, the Series A Preferred Stock to be redeemed will be selected pro rata
(as nearly as may be practicable without creating fractional shares of Series A
Preferred Stock) or by any other equitable method we choose.
We will mail a notice of redemption, postage prepaid, not less than 30 or more
than 60 days prior to the redemption date, addressed to the respective holders
of record of the Series A Preferred Stock to be redeemed at their respective
addresses as they appear on our share transfer records. No failure to give such
notice or any defect in the notice or in the mailing of the notice will affect
the validity of the proceedings for the redemption of any Series A Preferred
Stock, except as to the holder to whom notice was defective or not given. Each
notice must state:
-- the redemption date;
-- the redemption price;
-- the number of shares of Series A Preferred Stock to be redeemed;
-- the place or places where the certificates evidencing the shares of
Series A Preferred Stock are to be surrendered for payment of the
redemption price; and
-- that distributions on the shares to be redeemed will cease to
accumulate on such redemption date.
If fewer than all the shares of Series A Preferred Stock held by any holder are
to be redeemed, the notice mailed to such holder must also specify the number of
shares of Series A Preferred Stock to be redeemed from such holder.
The holders of Series A Preferred Stock at the close of business on each
Distribution Record Date will be entitled to receive the dividend distribution
payable on the corresponding Distribution Payment Date, even if there has been a
redemption between such Distribution Record Date and the corresponding
Distribution Payment Date or our default
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<PAGE>
in the payment of the distribution due. Except as provided above, we will make
no payment or allowance for unpaid distributions, whether or not in arrears, on
Series A Preferred Stock to be redeemed.
The Series A Preferred Stock has no stated maturity and will not be subject to
any sinking fund or mandatory redemption provisions.
VOTING RIGHTS
The Series A Preferred Stock is not entitled to vote except as expressly
provided in the Articles of Incorporation or the Statement of Designations of
Rights and Preferences of Series A Preferred Stock, or as may be required by
law. In any matter in which the Series A Preferred Stock is entitled to vote,
including any action by written consent, each share of Series A Preferred Stock
will be entitled to one vote.
Whenever distributions on any shares of Series A Preferred Stock are in arrears
for six or more quarterly periods, the holders of such shares of Series A
Preferred Stock (voting together with all other series of preferred stock which
have similar voting rights) will be entitled to vote for the election of two
additional directors to our Board of Directors at a special meeting called by
the holders of record of at least 10% of any series of Series A Preferred Stock
so in arrears or the holders of any other series of preferred stock on parity
with the Series A Preferred Stock so in arrears (unless such request is received
less than 90 days before the date fixed for the next annual or special meeting
of our shareholders) or at the next annual meeting of shareholders, and at each
subsequent annual meeting until all distributions accumulated on such shares of
Series A Preferred Stock for the past distribution periods and the then current
distribution period shall have been fully paid or declared and a sum sufficient
for the payment thereof set aside for payment, at which time the two additional
directors will resign from our Board of Directors. When the holders of Series A
Preferred Stock are entitled to elect two additional directors, the entire Board
of Directors will be increased by two directors.
The approval of two-thirds of the outstanding Series A Preferred Stock voting as
a single class is required in order to amend, alter or repeal any provision of
the Statement of Designations of Rights and Preferences of Series A Preferred
Stock, whether by merger, consolidation or otherwise, so as to materially and
adversely affect the rights, preferences, privileges or voting power of the
holders of shares of Series A Preferred Stock or authorize, reclassify, create,
or increase the authorized or issued amount of any class or series of stock
having rights senior to Series A Preferred Stock or to create, authorize or
issue any obligation or security convertible into or evidencing the right to
purchase such shares. We may create additional classes of Coastal preferred
stock that rank on parity with or junior to the Series A Preferred Stock,
increase the authorized number of shares of such preferred stock and issue
additional series of such preferred stock without the consent of any holders of
Series A Preferred Stock or preferred stock with similar voting rights.
CONVERSION
The shares of Series A Preferred Stock are not convertible into or exchangeable
for any other property or securities of ours.
TAX CONSIDERATIONS
GENERAL
The following discussion of certain U.S. Federal income tax consequences to
holders of Series A Preferred Stock is based upon the provisions of the Internal
Revenue Code of 1986, as amended (the"Code"), applicable Treasury regulations
thereunder, judicial authority and administrative rulings and practice now in
effect. Future legislative, judicial or administrative changes or
interpretations, which may or may not be retroactive, could modify such tax
consequences. We have not requested, and do not intend to request, any rulings
from the Internal Revenue Service
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<PAGE>
(the "IRS") concerning the Federal income tax consequences of an investment in
the Series A Preferred Stock. The summary below does not discuss all aspects of
Federal income taxation that may be relevant to a particular holder in light of
the holder's particular investment circumstances, or to certain types of holders
subject to special treatment under the Federal income tax laws (for example,
dealers in securities, life insurance companies, tax-exempt entities, and
foreign persons), and does not discuss any aspect of state, local or foreign tax
laws.
You are advised to consult with your own tax advisor regarding the consequences
of acquiring, holding or disposing of shares of the Series A Preferred Stock in
light of current tax laws, your particular investment circumstances, and the
application of state, local and foreign tax laws. For purposes of this
discussion, a U.S. person is
-- an individual who is a citizen or resident of the United States for
Federal income tax purposes;
-- a corporation, partnership or other type of entity organized under the
laws of the United States or any political subdivision thereof;
-- an estate whose income is subject to U.S. Federal income tax
regardless of its source; or
-- a trust if a court within the United States is able to exercise
primary supervision of the administration of the trust and one or more
United States fiduciaries have the authority to control all
substantial decisions of the trust.
DIVIDENDS
Distributions on preferred stock which are paid out of current earnings and
profits, or earnings and profits accumulated after 1913, generally constitute
dividends taxable as ordinary income. To the extent that the amount of any
distribution paid on a share of preferred stock exceeds the current or
accumulated earnings and profits for Federal income tax purposes attributable to
that share, such excess will be treated first as a return of capital (rather
than as ordinary income) and will be applied against and reduce your adjusted
tax basis in that share of preferred stock. Any such amount in excess of your
adjusted tax basis will then be taxed as capital gain. For purposes of the
remainder of this discussion, it is assumed that dividends paid on the Series A
Preferred Stock will constitute dividends for U.S. Federal income tax purposes.
Dividends received by corporations generally will be eligible for the dividends
received deduction as specified in Section 243(a)(1) of the Code or any
successor provision. The dividends received deduction is available only with
respect to a dividend received on stock held for more than 45 days (or more than
90 days in the case of a dividend on preferred stock attributable to periods
aggregating in excess of 366 days), including the day of disposition, but
excluding the day of acquisition or any day which is more than 45 days (or 90
days) after the date on which the preferred stock becomes ex-dividend. The
length of time that a corporate stockholder is deemed to have held stock for
these purposes is reduced for periods during which the stockholder's risk of
loss with respect to the stock is diminished by reason of the existence of
certain options, contracts to sell, short sales or other similar transactions.
The amount of the dividends received deduction generally will equal 70 percent
of the amount of the dividends received, subject to reduction in certain events,
including where a corporate holder has indebtedness outstanding that is
"directly attributable to an investment" in portfolio stock. In general, stock
is "portfolio stock" if
-- it is held by a corporate taxpayer; and
-- the corporate taxpayer holds less than 50 percent of either
-- the total voting power of the issuer corporation; or
-- the total value of the issuer corporation.
President Clinton's fiscal year 2000 budget proposal has recently been
introduced. One of its proposals would amend the Code to expand the application
of Code Section 246A to reduce or eliminate the dividends received deduction
where a corporate holder has indebtedness outstanding that is "indirectly"
attributable to an investment in
S-17
<PAGE>
portfolio stock. Another proposal would eliminate the dividends received
deduction for certain dividends paid on nonqualified preferred stock. Generally,
preferred stock is "nonqualified preferred stock" if
-- the holder has the right to require the issuer or a related person to
redeem or purchase the stock;
-- the issuer or a related person is required to redeem or purchase the
stock;
-- the issuer or a related person has the right to redeem or purchase the
stock and, as of the issue date, it is more likely than not that such
right will be exercised; or
-- the dividend rate on the stock varies with reference to interest
rates, commodity prices, or similar indices, regardless of whether
such varying rate is provided as an express term of the stock.
If enacted, the first proposal would apply to stock acquired on or after the
date of enactment, while the second proposal would apply to stock issued on or
after the date of enactment. It is uncertain whether these proposals, or similar
proposals, might be introduced as formal legislation, their likelihood of
enactment or, if enacted, their effective date.
In addition, corporate holders should be aware that dividend income that is not
subject to regular corporate taxation as a consequence of the dividends received
deduction may give rise to alternative minimum tax liability.
Finally, pursuant to Code Section 1059, a corporate holder may be required to
reduce its tax basis in any shares of preferred stock (but not below zero) by
the "nontaxed portion" of any "extraordinary dividend," if it has not held the
underlying stock for more than two years (or without regard to the holding
period in the case of preferred stock structured to avoid application of Section
1059) before the dividend announcement date. The length of time that a corporate
stockholder is deemed to have held stock for these purposes is reduced for
periods during which the stockholder's risk of loss with respect to the stock is
diminished by reason of the existence of certain options, contracts to sell,
short sales or other similar transactions. Extraordinary dividends are
determined by reference to tax basis (as adjusted for prior distributions) or,
if the taxpayer elects, by reference to the fair market value of the shares of
preferred stock as of the day before the ex-dividend date (provided the taxpayer
can establish the fair market value to the satisfaction of the IRS). A dividend
payment generally will be extraordinary if it equals or exceeds 5% of tax basis
(as adjusted) or fair market value, as the case may be. Dividends paid that have
ex-dividend dates within 85 consecutive days are treated as one distribution, as
are dividends paid that have ex-dividend dates within 365 consecutive days if
the aggregate dividends exceed 20% of tax basis (as adjusted) or fair market
value, as the case may be.
DISPOSITIONS, INCLUDING REDEMPTIONS
Any sale, exchange, redemption (except as discussed below) or other disposition
of preferred stock generally will result in taxable gain or loss equal to the
difference between the amount received and the holder's adjusted tax basis in
the preferred stock. Such gain or loss generally will be capital gain or loss
and will be long-term capital gain or loss if the holding period for the
preferred stock exceeds one year. In certain cases, a redemption of preferred
stock may be treated as a dividend, rather than as a payment in exchange for the
preferred stock. In such events, the redemption payment will be treated as
ordinary dividend income to the extent that such payment is made out of current
earnings and profits, or earnings and profits accumulated after 1913 (as
discussed above). The determination of whether the gain will be treated as a
dividend rather than as payment in exchange for the preferred stock will depend
upon whether and to what extent the redemption reduces the holder's percentage
stock ownership interest in the issuer. The redemption will most likely be
treated as an exchange of stock that produces a capital gain if the redemption
either (i) completely terminates the holder's ownership interest or (ii) is "not
essentially equivalent to a dividend" under applicable case law and IRS rulings.
Whether a redemption is "not essentially equivalent to a dividend" with respect
to a holder will depend upon the holder's particular circumstances. The IRS has
ruled that a minority stockholder in a publicly held corporation whose relative
stock interest is minimal and who exercises no control with respect to corporate
affairs is considered to have a "meaningful reduction" if such stockholder has a
reduction in its percentage stock ownership. Accordingly, most redemptions of
preferred stock will generally be
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<PAGE>
treated as an exchange of the stock, thereby producing long-term capital gain if
the holding period for the preferred stock was greater than one year as of the
date of the exchange. However, because of the ambiguities in applying the
foregoing rules, you should consult your tax advisor to determine whether a
redemption of Series A Preferred Stock will be treated as a dividend or as a
payment in exchange for the Series A Preferred Stock.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Payments of dividends on shares of Series A Preferred Stock held of record by
U.S. persons, other than corporations and other exempt holders, are required to
be reported to the IRS.
Backup withholding of U.S. Federal income tax may apply to payments made with
respect to shares of Series A Preferred Stock, as well as payments of proceeds
from the sale of shares of Series A Preferred Stock, to holders that are not
"exempt recipients" and that fail to provide certain identifying information
(such as the taxpayer identification number of the holder) in the manner
required. Individuals generally are not exempt recipients, while corporations
and certain other entities generally are exempt recipients.
CERTAIN STATE AND LOCAL TAX CONSEQUENCES
You may be liable for state and local income taxes with respect to dividends
paid on the Series A Preferred Stock. As many states and localities may not
allow, in whole or in part, a dividends-received deduction to corporations, each
prospective purchaser of shares of Series A Preferred Stock is advised to
consult its own tax advisor in regard to state and local taxes.
UNDERWRITING
The underwriters named below have agreed to buy, subject to the terms of the
purchase agreement, the number of shares of Series A Preferred Stock listed
opposite their names below. The underwriters are committed to purchase and pay
for all of the shares of Series A Preferred Stock if any are purchased.
<TABLE>
<CAPTION>
Number
Underwriters of Shares
------------ ---------
<S> <C>
U.S. Bancorp Piper Jaffray Inc. ...................
Legg Mason Wood Walker, Incorporated .............. ________
Total .........................................
</TABLE>
The underwriters have advised us that they propose to offer the shares of Series
A Preferred Stock to the public at $____ per share. The underwriters propose to
offer the shares to certain dealers at the same price less a concession of not
more than $__ per share. The underwriters may allow and the dealers may reallow
a concession of not more than $__ per share on sales to certain other brokers
and dealers. After the offering, these figures may be changed by the
underwriters.
The following table shows the underwriting fees to be paid to the underwriters
in connection with this offering:
<TABLE>
<CAPTION>
Underwriting Fees
-----------------
<S> <C>
Per share ..............
Total ..................
</TABLE>
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<PAGE>
We have agreed to indemnify the underwriters against certain liabilities,
including civil liabilities under the Securities Act of 1933, as amended, or to
contribute to payment that the underwriters may be required to make in respect
of those liabilities.
To facilitate the offering, the underwriters may engage in transactions that
stabilize, maintain or otherwise affect the price of the Series A Preferred
Stock during and after the offering. Specifically, the underwriters may
over-allot or otherwise create a short position in the Series A Preferred Stock
for their own account by selling more shares of Series A Preferred Stock than
have been sold to them by us. The underwriters may elect to cover any such short
position by purchasing Series A Preferred Stock in the open market. In addition,
the underwriters may stabilize or maintain the price of the Series A Preferred
Stock by bidding for or purchasing Series A Preferred Stock in the open market
and may impose penalty bids. If penalty bids are imposed, selling concessions
allowed to syndicate members or other broker-dealers participating in the
offering are reclaimed if Series A Preferred Stock previously distributed in the
offering are repurchased, whether in connection with stabilization transactions
or otherwise. The effect of these transactions may be to stabilize or maintain
the market price of the Series A Preferred Stock at a level above that which
might otherwise prevail in the open market. The imposition of a penalty bid may
also effect the price of the Series A Preferred Stock to the extent that it
discourages resales of the Series A Preferred Stock. The magnitude or effect of
any stabilization or other transactions is uncertain. These transactions may be
effected on the Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
LEGAL MATTERS
Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C., will pass upon the
validity of the Series A Preferred Stock. Orrick, Herrington & Sutcliffe LLP,
Washington, D.C., will pass upon certain matters for the underwriters in
connection with the offering of the Series A Preferred Stock.
EXPERTS
We incorporate by reference into this prospectus supplement and our
registration statement our consolidated financial statements as of December
31, 1998 and 1997 and for each of the years in the three-year period ended
December 31, 1998. We have relied on the report of KPMG LLP, independent
certified public accountants, also incorporated by reference into this
prospectus supplement and our registration statement, and upon their
authority as experts in accounting and auditing.
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<PAGE>
We will amend and complete the information in this prospectus. We may not sell
any of these securities or accept your offer to buy any of them until the
documentation filed with the SEC relating to these securities has been declared
"effective" by the SEC. This prospectus is not an offer to sell these securities
or our solicitation of your offer to buy these securities in any State or other
jurisdiction where that would not be permitted or legal.
Subject to Completion, Dated April , 1999
$
COASTAL BANCORP, INC.
Debt Securities
Preferred Stock
Common Stock
COASTAL BANCORP CAPITAL TRUST I
Trust Preferred Securities, Fully and Unconditionally Guaranteed as described
herein by Coastal Bancorp, Inc.
----------------
We will provide specific terms of these securities in supplements to this
prospectus. You should read this prospectus and any supplement carefully before
you invest.
We may offer any of the following securities from time to time:
- debt securities, including junior subordinated debentures which we may
issue and sell to Coastal Bancorp Capital Trust I in connection with its
issuance of trust preferred securities;
- preferred stock; and
- common stock.
Coastal Bancorp Capital Trust I may issue its trust preferred securities from
time to time. The trust preferred securities will be fully and unconditionally
guaranteed by us as described in this prospectus.
We will not use this prospectus to confirm sales of any securities unless it is
attached to a prospectus supplement.
------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
About this Prospectus...................................................................................... 1
Where You Can Find More Information........................................................................ 1
Coastal Bancorp, Inc....................................................................................... 2
Coastal Bancorp Capital Trust I............................................................................ 2
Use of Proceeds............................................................................................ 3
Description of Debt Securities............................................................................. 3
Description of Preferred Stock............................................................................. 13
Description of Common Stock................................................................................ 16
Description of Trust Preferred Securities.................................................................. 16
Description of Guarantees.................................................................................. 26
Relationship Among the Trust Preferred Securities, the Junior Subordinated Debentures and the Guarantees... 29
Book-Entry Issuance........................................................................................ 30
Plan of Distribution....................................................................................... 32
Legal Matters.............................................................................................. 33
Experts.................................................................................................... 33
</TABLE>
------------------------
ii
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission utilizing a "shelf" registration process.
Under this shelf registration process, we may sell any combination of the
securities described in this prospectus in one or more offerings up to a total
dollar amount of $150,000,000. This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities, we
will provide a prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement may also add, update
or change information contained in this prospectus. You should read both this
prospectus and any prospectus supplement together with the additional
information described under the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at HTTP://WWW.SEC.GOV. You may also read and copy
any documents we file with the SEC at its public reference facilities at 450
Fifth Street, NW, Washington, DC 20549, 7 World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. You can also obtain copies of the documents at
prescribed rates by writing to the Public Reference Section of the SEC at 450
Fifth Street, NW, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference facilities. Our
SEC filings are also available at the office of the Nasdaq National Market. For
further information on obtaining copies of our public filings at the Nasdaq
National Market, you should call (212) 656-5060.
We "incorporate by reference" into this prospectus the information we file with
the SEC, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus and information that we file subsequently
with the SEC will automatically update this prospectus. We incorporate by
reference the documents listed below and any filings we make with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, as
amended, after initial filing of the registration statement that contains this
prospectus and prior to the time that we sell all the securities offered by this
prospectus:
- Annual Report on Form 10-K for the year ended December 31, 1998.
You may request a copy of these filings (other than an exhibit to a filing
unless that exhibit is specifically incorporated by reference into that filing)
at no cost, by writing to or telephoning us at the following address: 5718
Westheimer, Suite 600, Houston, Texas 77057, Attention: Corporate Secretary,
telephone (713) 435-5000.
You should rely only on the information incorporated by reference or provided in
this prospectus or any prospectus supplement. We have not authorized anyone else
to provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus or any prospectus supplement is accurate
as of any date other than the date on the front of these documents.
1
<PAGE>
COASTAL BANCORP, INC.
Coastal Bancorp, Inc. is a financial services company headquartered in Houston,
Texas with $3.0 billion in total assets at December 31, 1998. Our primary
operating subsidiary is Coastal Banc ssb, which is a Texas-chartered, federally
insured state savings bank. We operate through 50 branch offices in metropolitan
Houston, Austin, Corpus Christi, the Rio Grande Valley and small cities in the
southeast quadrant of Texas.
Coastal Banc was acquired in 1986 by an investor group, consisting of a majority
of the current members of the Board of Directors, including Manuel J. Mehos, the
present Chairman of the Board, President and Chief Executive Officer. Coastal
Banc was acquired to take advantage of the failures and consolidation in the
Texas banking and thrift industries. At February 28, 1986, the date of change in
ownership, Coastal Banc had one full service office and total assets of $10.7
million. Since then, we have acquired deposits and branch offices in
transactions with the Federal government and other private institutions. In
1995, we acquired our first commercial bank as part of our strategy to emphasize
commercial banking products and services. By December 31, 1998, our total assets
had increased to $3.0 billion, total deposits were $1.7 billion and
stockholders' equity equaled $112.8 million.
Our principal executive office is located at 5718 Westheimer, Suite 600,
Houston, Texas 77057 and our telephone number is (713) 435-5000.
COASTAL BANCORP CAPITAL TRUST I
Coastal Bancorp Capital Trust I, which is referred to in this prospectus as the
"Trust," is a statutory business trust formed by us under the Delaware Business
Trust Act. When we are ready to issue and sell trust preferred securities
through the Trust, we will amend the trust agreement we signed in forming the
Trust to read substantially like the form of amended and restated trust
agreement that has been filed with the SEC as an exhibit to the registration
statement of which this prospectus is a part. The trust agreement will be
qualified as an indenture under the Trust Indenture Act of 1939.
We have created the Trust solely to:
- issue and sell its trust preferred securities (including the preferred
securities and the common securities), which represent proportionate
beneficial ownership interests in the Trust and its assets;
- use the proceeds from the sale of the trust securities to buy from us a
series of our junior subordinated debentures, which will be the only
assets of the Trust;
- maintain its status as a grantor trust for federal income tax purposes;
and
- engage in only those other activities necessary or convenient to
accomplish its purposes.
Because the Trust's only assets will be junior subordinated debentures that we
issue to it, our payments on those junior subordinated debentures will be the
only source of funds to be paid to purchasers or owners of the trust preferred
securities.
We will acquire and own all of the common securities of the Trust. The common
securities will have an aggregate liquidation amount of at least 3% of the total
capital of the Trust. The remainder, representing up to 97% of the ownership
interests in the Trust, will be trust preferred securities of the Trust which
may be sold to the public. The common securities and the trust preferred
securities (collectively referred to as the "trust securities") will have
substantially the same terms, including the same priority of payment, and will
receive proportionate payments from the Trust in respect of distributions and
payments upon liquidation, redemption or otherwise at the same times, with one
exception: if we default on the junior subordinated debentures that we issue to
the Trust and do not cure the default within the times specified in the
indenture governing our issuance of our junior subordinated debentures, our
rights to payments as holder of the common securities will be subordinated to
the rights of the holders of the trust preferred securities.
2
<PAGE>
The Trust has a term of approximately 31 years, but may be dissolved earlier as
provided in the trust agreement. We have appointed the following trustees to
conduct the Trust's business and affairs:
- The Bank of New York, as property trustee;
- The Bank of New York (Delaware), as Delaware trustee; and
- Three individuals who are our employees and officers, as administrative
trustees.
We refer to all of these trustees collectively as the "issuer trustees." The
Bank of New York, as property trustee, will act as sole indenture trustee under
the trust agreement for purposes of compliance with the Trust Indenture Act.
Unless we say otherwise in the applicable prospectus supplement, the Bank of New
York will also act as trustee under our guarantee agreement relating to the
trust preferred securities.
We will pay all fees and expenses related to the Trust and the offering of the
trust preferred securities, as well as all of the ongoing costs and expenses of
the Trust. We will not be responsible for the Trust's obligations under the
trust preferred securities. We will fully and unconditionally guarantee the
trust preferred securities to the extent described later in this prospectus.
The Trust has no separate financial statements. The statements would not be
significant to you because the Trust has no independent operations. The Trust
exists solely for the reasons summarized above.
The Trust's principal office is located at c/o Coastal Bancorp, Inc., 5718
Westheimer, Suite 600, Houston, Texas 77057 and its telephone number is (713)
435-5000.
USE OF PROCEEDS
We will use the proceeds from the sale of the securities described in this
prospectus for general corporate purposes, which may include:
- acquisitions by either us or Coastal Banc;
- capital contributions to Coastal Banc to support growth and for working
capital and to fund redemptions, tender offers or repurchases in the open
market of Coastal Banc's outstanding preferred stock or debt obligations,
if any; and
- redemptions, tender offers or repurchases in the open market of our common
or preferred stock or debt obligations, if any.
All of the proceeds from the sale of the trust preferred securities together
with proceeds of the common securities will be invested by the Trust in the
junior subordinated debentures to be issued by us.
DESCRIPTION OF DEBT SECURITIES
The debt securities, including any junior subordinated debentures that we issue
to the Trust, will be our direct unsecured general obligations. The debt
securities will be either senior debt securities, subordinated debt securities
or junior subordinated debt securities, including the junior subordinated
debentures that are issued to the Trust. The debt securities will be issued in
one or more series under an indenture between us and The Bank of New York, as
trustee, and under a securities resolution (which may be in the form of a
resolution or a supplemental indenture) authorizing the particular series.
We have summarized selected provisions of the indenture below. The summary is
not complete. The form of the indenture is filed as an exhibit to the
registration statement of which this prospectus is a part. The securities
resolution for each series will be filed as an exhibit to a document to be
incorporated by reference for the specific offering of securities to which it
relates. You should read the indenture and the applicable securities resolution
for provisions that may be important to you. In the summary below, we have
included references to section numbers in
3
<PAGE>
the indenture so that you can easily find those provisions. The particular terms
of any debt securities we offer will be described in the related prospectus
supplement, along with any applicable modifications of or additions to the
general terms of the debt securities described below and in the indenture. For a
description of the terms of any series of debt securities, you should also
review both the prospectus supplement relating to that series and the
description of the debt securities set forth in this prospectus before making an
investment decision.
GENERAL
The indenture does not significantly limit our operations. In particular, it
does not:
- limit the amount of debt securities that we can issue under the indenture;
- limit the number of series of debt securities that we can issue from time
to time;
- restrict the total amount of debt that we or our subsidiaries may incur;
or
- contain any covenant or other provision that is specifically intended to
afford any holder of the debt securities special protection in the event
of highly leveraged transactions or any other transactions resulting in a
decline in our ratings or credit quality.
As of the date of this prospectus, there are no debt securities outstanding
under the indenture. The ranking of a series of debt securities with respect to
all of our indebtedness will be established by the securities resolution
creating the series. We have previously issued $50.0 million of our Senior Notes
due 2002.
The debt securities covered by this prospectus will only be denominated in U.S.
dollars in registered form without coupons, unless otherwise indicated in the
applicable prospectus supplement.
TERMS
A prospectus supplement and a securities resolution relating to the offering of
any series of debt securities will include specific terms relating to the
offering. The terms will include some or all of the following:
- the designation, aggregate principal amount and denominations of the debt
securities;
- the price at which the debt securities will be issued and, if an index,
formula or other method is used, the method for determining amounts of
principal or interest;
- the maturity date and other dates, if any, on which the principal of the
debt securities will be payable;
- the interest rate or rates, if any, or method of calculating the interest
rate or rates which the debt securities will bear;
- the date or dates from which interest will accrue and on which interest
will be payable, and the record dates for the payment of interest;
- the manner of paying principal and interest on the debt securities;
- the place or places where principal and interest will be payable;
- the terms of any mandatory or optional redemption of the debt securities
by us, including any sinking fund;
- the terms of any conversion or exchange right;
- the terms of any redemption of debt securities at the option of holders;
- any tax indemnity provisions;
- the portion of principal payable upon acceleration of any discounted debt
security (as described below);
- whether and upon what terms debt securities may be defeased (which means
that we would be discharged from our obligations by depositing sufficient
cash or government securities to pay the principal, interest, any premiums
and other sums due to the stated maturity date or a redemption date of the
debt securities of the series);
- whether any events of default or covenants in addition to or instead of
those set forth in the indenture apply;
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- provisions for electronic issuance of debt securities or for debt
securities in uncertificated form;
- the ranking of the debt securities, including the relative degree, if any,
to which the debt securities of such series are subordinated to one or
more other series of debt securities in right of payment, whether
outstanding or not;
- any provisions relating to extending or shortening the date on which the
principal and premium, if any, of the debt securities of the series is
payable;
- any provisions relating to the deferral of payment of any interest;
- if the series of debt securities is to be issued to the Trust, the forms
of the related trust agreement and guarantee agreement;
- the additions or changes, if any, to the indenture with respect to that
series of debt securities to permit or facilitate the issuance of that
series of debt securities to the Trust; and
- any other terms not inconsistent with the provisions of the indenture,
including any covenants or other terms that may be required or advisable
under United States or other applicable laws or regulations, or advisable
in connection with the marketing of the debt securities. (Section 2.01)
We may issue debt securities of any series as registered debt securities, bearer
debt securities or uncertificated debt securities, and in such denominations as
we specify in the securities resolution and prospectus supplement for the
series. (Section 2.01)
In connection with its original issuance, no bearer debt security will be
offered, sold or delivered to any location in the United States. We may deliver
a bearer debt security in definitive form in connection with its original
issuance only if a certificate in a form we specify to comply with United States
laws and regulations is presented to us. (Section 2.04)
A holder of registered debt securities may request registration of a transfer
upon surrender of the debt security being transferred at any agency we maintain
for that purpose and upon fulfillment of all other requirements of the agent.
(Sections 2.03 and 2.07)
We may issue debt securities under the indenture as discounted debt securities
to be offered and sold at a substantial discount from the principal amount of
those debt securities. Special United States federal income tax and other
considerations applicable to discounted debt securities will be described in the
related prospectus supplement. A discounted debt security is a debt security
where the amount of principal due upon acceleration is less than the stated
principal amount. (Sections 1.01 and 2.10)
CONVERSION AND EXCHANGE
The terms, if any, on which debt securities of any series will be convertible
into or exchangeable for our common stock or other equity or debt securities,
property, cash or obligations or a combination of any of the foregoing, will be
summarized in the prospectus supplement relating to the series. The terms may
include provisions for conversion or exchange, either on a mandatory basis, at
the option of the holder or at our option. (Section 9.01)
CERTAIN COVENANTS
Any restrictive covenants which may apply to a particular series of debt
securities will be described in the related prospectus supplement.
RANKING OF DEBT SECURITIES
Unless stated otherwise in a prospectus supplement, the debt securities issued
under the indenture will rank equally and ratably with our other unsecured and
unsubordinated debt. The debt securities will not be secured by any properties
or assets and will represent our unsecured debt.
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We are a holding company and we will depend upon the earnings and cash flow of
our subsidiaries to meet our obligations under the debt securities. Since the
creditors of any of our subsidiaries would generally have a right to receive
payment that is superior to our right to receive payment from the assets of that
subsidiary, holders of our debt securities will be effectively subordinated to
creditors of our subsidiaries. In addition, there are regulatory provisions
which limit the amount of dividends Coastal Banc can pay to us as well as
regulatory provisions which limit Coastal Banc's ability to make loans and
advances to us.
SUCCESSOR OBLIGOR
The indenture provides that, unless otherwise specified in the securities
resolution establishing a series of debt securities, we will not consolidate
with or merge into, or transfer all or substantially all of our assets to,
another company, unless:
- that company is organized under the laws of the United States or a state
thereof or is organized under the laws of a foreign jurisdiction and
consents to the jurisdiction of the courts of the United States or a state
thereof;
- that company assumes by supplemental indenture all of our obligations
under the indenture and the debt securities;
- all required approvals of any regulatory body having jurisdiction over the
transaction shall have been obtained; and
- immediately after the transaction no default exists under the indenture.
The successor shall be substituted for us as if it had been an original party to
the indenture, securities resolutions and debt securities. Thereafter the
successor may exercise our rights and powers under the indenture, the debt
securities and any coupons, and all of our obligations under those documents
will terminate. (Section 5.01)
EXCHANGE OF DEBT SECURITIES
Registered debt securities may be exchanged for an equal principal amount of
registered debt securities of the same series and date of maturity in the
denominations requested by the holders upon surrender of the registered debt
securities at an agency we maintain for that purpose and upon fulfillment of all
other requirements of the agent. (Section 2.07)
DEFAULTS AND REMEDIES
Unless the securities resolution establishing the series provides for different
events of default, in which event the prospectus supplement will describe the
change, an event of default with respect to a series of debt securities will
occur if:
- we default in any payment of interest on any debt securities of that
series when the payment becomes due and payable and the default continues
for a period of 30 days;
- we default in the payment of the principal and premium, if any, of any
debt securities of the series when those payments become due and payable
at maturity or upon redemption, acceleration or otherwise;
- we default in the payment or satisfaction of any sinking fund obligation
with respect to any debt securities of the series as required by the
securities resolution establishing the series and the default continues
for a period of 30 days;
- we default in the performance of any of our other agreements applicable to
the series and the default continues for 60 days after the notice
specified below;
- pursuant to or within the meaning of any Bankruptcy Law we:
- commence a voluntary case,
- consent to the entry of an order for relief against us in an
involuntary case,
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- consent to the appointment of a custodian for us or for all or
substantially all of our property, or
- make a general assignment for the benefit of our creditors;
- a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that remains unstayed and in effect for 60 days and that:
- is for relief against us in an involuntary case;
- appoints a custodian for us or for all or substantially all of our
property; or
- orders us to liquidate; or
- there occurs any other event of default provided for in such series.
(Section 6.01)
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors. The term "Custodian" means any receiver,
trustee, assignee, liquidator or a similar official under any Bankruptcy Law.
(Section 6.01)
A default under the indenture means any event which is, or after notice or
passage of time would be, an event of default under the indenture. A default
under the fourth bullet point above is not an event of default until the Trustee
or the holders of at least 25% in principal amount of the series notify us of
the default and we do not cure the default within the time specified after
receipt of the notice. (Section 6.01)
If an event of default occurs under the indenture and is continuing on a series,
the trustee by notice to us, or (except as provided in the next sentence) the
holders of at least 25% in principal amount of the series by notice both to us
and to the trustee, may declare the principal of and accrued interest on all the
debt securities of the series to be due and payable immediately. In the case of
a series issued to the Trust, if, upon an event of default, the trustee or the
holders of not less than 25% in aggregate principal amount of the series fail to
declare the principal of all the debt securities of that series to be
immediately due and payable, then the holders of 25% in aggregate liquidation
amount of the trust preferred securities then outstanding shall have the right
to do so by notice to us and to the trustee. Discounted debt securities may
provide that the amount of principal due upon acceleration is less than the
stated principal amount.
Except as provided in the next sentence, the holders of a majority in principal
amount of a series of debt securities, by notice to the trustee, may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing events of default on the series have been
cured or waived except nonpayment of principal or interest that has become due
solely because of the acceleration. In the case of a series of debt securities
issued to the Trust, the holders of a majority in aggregate liquidation amount
of the trust preferred securities then outstanding shall also have the right to
rescind the acceleration and its consequences with respect to such series,
subject to the same conditions set forth above. (Section 6.02)
If an event of default occurs and is continuing on a series, the trustee may
pursue any available remedy to collect principal or interest then due on the
series, to enforce the performance of any provision applicable to the series, or
otherwise to protect the rights of the trustee and holders of the series.
(Section 6.03)
In the case of a series issued to the Trust, any holder of the related trust
preferred securities of the Trust shall have the right, upon the occurrence and
continuance of an event of default with respect to the series following our
failure to pay timely interest, principal or premium as described above, to sue
us directly. In that lawsuit, the holder of the related trust preferred
securities can force us to pay to the holder the principal of, and premium, if
any, and interest on, the debt securities having a principal amount equal to the
aggregate liquidation amount of the trust preferred securities held by that
holder. (Section 6.06)
The trustee may require indemnity satisfactory to it before it performs any duty
or exercises any right or power under the indenture or the debt securities which
it reasonably believes may expose it to any loss, liability or
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expense. (Section 7.01) With some limitations, holders of a majority in
principal amount of the debt securities of the series may direct the trustee in
its exercise of any trust or power with respect to that series. (Section 6.05)
Except in the case of default in payment on a series, the trustee may withhold
notice of any continuing default if it determines that withholding the notice is
in the interest of holders of the series. (Section 7.04) We are required to
furnish the trustee annually a brief certificate as to our compliance with all
conditions and covenants under the indenture. (Section 4.04)
The indenture does not have a cross-default provision. Thus, a default by us on
any other debt, including any other series of debt securities, would not
constitute an event of default under the indenture. A securities resolution may
provide for a cross-default provision; in that case, the prospectus supplement
will describe the terms of that provision.
AMENDMENTS AND WAIVERS
The indenture and the debt securities may be amended, and any default may be
waived. Unless the securities resolution provides otherwise, in which event the
prospectus supplement will describe the revised provision, we and the trustee
may amend the debt securities and the indenture with the written consent of the
holders of a majority in principal amount of the debt securities of all series
affected voting as one class. However, in the case of a series of debt
securities issued to the Trust, we are not permitted to adopt an amendment that
adversely affects the holders of the trust preferred securities in any material
respect, and no termination of the indenture shall occur, without the prior
consent of the holders of not less than a majority in aggregate liquidation
amount of the trust preferred securities then outstanding unless and until the
principal (and premium, if any) of the debt securities of that series and all
accrued and unpaid interest thereon have been paid in full. Furthermore, in the
case of a series issued to the Trust, no amendment can be made to the provisions
of the indenture allowing holders of trust preferred securities to sue directly
following our failure to make timely payments on the debt securities as
described above without the prior consent of the holder of each trust preferred
security then outstanding unless and until the principal (and premium, if any)
of the debt securities of the series and all accrued and unpaid interest thereon
have been paid in full. (Section 10.02)
Without the consent of each debt security holder affected, no amendment or
waiver may:
- reduce the principal amount of debt securities whose holders must consent
to an amendment or waiver;
- reduce the interest on or change the time for payment of interest on any
debt security (but this does not affect our right to elect to defer one or
more payments of interest as described below under "Certain Provisions
Relating to Junior Subordinated Debentures Issued to the Trust--Option to
Extend Interest Payment Date");
- change the fixed maturity of any debt security (subject to any right we
may have retained in the securities resolution and described in the
prospectus supplement);
- reduce the principal of any non-discounted debt security or reduce the
amount of the principal of any discounted debt security that would be due
on acceleration thereof;
- make any change that materially adversely affects the right to convert or
exchange any debt security; or
- waive any default in payment of interest on or principal of a debt
security. (Section 10.02)
Without the consent of any debt security holder, we may amend the indenture or
the debt securities:
- to cure any ambiguity, omission, defect, or inconsistency;
- to provide for the assumption of our obligations to debt security holders
by the surviving company in the event of a merger or consolidation
requiring such assumption;
- to provide that specific provisions of the indenture shall not apply to a
series of debt securities not previously issued;
- to create a series of debt securities and establish its terms;
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- to provide for a separate trustee for one or more series of debt
securities; or
- to make any change that does not materially adversely affect the rights of
any debt security holder. (Section 10.01)
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Debt securities of a series may be defeased at any time in accordance with their
terms and as set forth in the indenture and described briefly below, unless the
securities resolution establishing the terms of the series otherwise provides.
Any defeasance may terminate all of our obligations (with limited exceptions)
with respect to a series of debt securities and the indenture ("legal
defeasance"), or it may terminate only our obligations under any restrictive
covenants which may be applicable to a particular series ("covenant
defeasance").
We may exercise our legal defeasance option even though we have also exercised
our covenant defeasance option. If we exercise our legal defeasance option, that
series of debt securities may not be accelerated because of an event of default.
If we exercise our covenant defeasance option, that series of debt securities
may not be accelerated by reference to any restrictive covenants which may be
applicable to that particular series. (Section 8.01)
To exercise either defeasance option as to a series of debt securities, we must:
- irrevocably deposit in trust (the "defeasance trust") with the trustee or
another trustee money or U.S. government obligations;
- deliver a certificate from a nationally recognized firm of independent
accountants expressing their opinion that the payments of principal and
interest when due on the deposited U.S. government obligations, without
reinvestment, plus any deposited money without investment, will provide
cash at the times and in the amounts necessary to pay the principal and
interest when due on all debt securities of the series to maturity or
redemption, as the case may be; and
- comply with certain other conditions. In particular, we must obtain an
opinion of tax counsel that the defeasance will not result in recognition
of any gain or loss to holders for federal income tax purposes.
U.S. government obligations are direct obligations of (a) the United States or
(b) an agency or instrumentality of the United States, the payment of which is
unconditionally guaranteed by the United States, which, in either case (a) or
(b), have the full faith and credit of the United States of America pledged for
payment and which are not callable at the issuer's option. It also includes
certificates representing an ownership interest in such obligations. (Section
8.02)
CERTAIN PROVISIONS RELATING TO JUNIOR SUBORDINATED DEBENTURES ISSUED TO THE
TRUST
GENERAL. The junior subordinated debentures that we issue to the Trust may be
issued in one or more series under the indenture with terms corresponding to the
terms of a series of trust preferred securities issued by the Trust.
Concurrently with the issuance of the Trust's trust preferred securities, the
Trust will invest the proceeds from the sale of the trust preferred securities
and the consideration we pay for the common securities in a series of
corresponding junior subordinated debentures that we will issue to the Trust.
Each series of corresponding junior subordinated debentures:
- will be unsecured;
- will be in the principal amount equal to the aggregate stated liquidation
amount of the preferred securities and the common securities of the Trust;
and
- will rank equally with all other series of junior subordinated debt
securities in terms of priority of payment.
Unless provided otherwise in the prospectus supplement, holders of the trust
preferred securities issued by the Trust that owns a series of corresponding
junior subordinated debentures will have the rights summarized above in
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connection with modifications to the indenture or upon occurrence of a trust
event of default. See "--Amendments and Waivers" and "--Defaults and Remedies,"
above and "Relationship Among the Trust Preferred Securities, The Corresponding
Junior Subordinated Debentures and the Guarantees--Enforcement Rights of Holders
of Trust Preferred Securities."
The prospectus supplement will describe specific terms relating to the offering
of the corresponding junior subordinated debentures. See "--Terms."
Unless otherwise specified in the applicable prospectus supplement, we will
covenant, as to each series of corresponding junior subordinated debentures:
- to maintain, directly or indirectly, 100% ownership of the common
securities of the Trust to which the corresponding junior subordinated
debentures have been issued (provided that certain successors which are
permitted pursuant to the indenture may succeed to our ownership of the
common securities);
- not to voluntarily dissolve, wind-up or liquidate the Trust, except:
- in connection with a distribution of the junior subordinated debentures to
the holders of the trust preferred securities in liquidation of the Trust;
or
- in connection with certain mergers, consolidations or amalgamations
permitted by the related trust agreement; and
- to use our reasonable efforts, consistent with the terms and provisions of
the related trust agreement, to cause the Trust to remain classified as a
grantor trust and not as an association taxable as a corporation for
United States federal income tax purposes.
For additional covenants relating to payment of expenses of the Trust, see
"Description of Trust Preferred Securities--Payment of Expenses."
OPTION TO EXTEND INTEREST PAYMENT DATE. Unless otherwise stated in the
applicable prospectus supplement, we will have the right at any time and from
time to time during the term of any series of corresponding junior subordinated
debentures to defer payments of interest for a specified number of consecutive
interest payment, or extension, periods. No extension period may extend beyond
the maturity date of that series of corresponding junior subordinated
debentures. We may pay at any time all or any portion of the interest accrued to
that point during a deferral period. At the end of the deferral period or at a
redemption date, we will be obligated to pay all interest accrued and unpaid
(together with interest on the unpaid interest to the extent permitted by
applicable law.) United States federal income tax consequences and special
considerations applicable to any corresponding junior subordinated debentures
for which an extension period has been elected will be described in the
applicable prospectus supplement. During any extension period, or while we are
in default, we will be restricted in our ability to make payments or incur
obligations related to our capital stock or debt securities ranking equal to or
below the junior subordinated debentures.
Prior to the termination of any extension period, we may further extend the
interest payment period. However, the deferral period, together with all prior
and further extensions, may not exceed 20 consecutive calendar quarters, end on
a date other than an interest payment date or extend beyond the maturity date of
the junior subordinated debentures. After the termination of any deferral period
and the payment of all amounts due, we may decide to begin a new deferral
period, subject to the above requirements.
If the property trustee is the sole holder of the series of junior subordinated
debentures held by the Trust, we will give the administrative trustee and the
property trustee notice of our selection of any deferral period five business
days prior to the earlier of:
- the next date distributions on the trust preferred securities are payable;
or
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- the date the Trust is required to give notice to the Nasdaq National
Market (or other applicable exchange or self-regulatory organization) or
to holders of the trust preferred securities of the record date or the
date any distribution is payable.
If the property trustee is not the sole holder of the series of junior
subordinated debentures, we will give the debenture holders notice of our
selection of any deferral period ten business days prior to the earliest of:
- the next interest payment date; or
- the date upon which we are required to give notice to the Nasdaq National
Market (or other applicable exchange or self-regulatory organization) or
to holders of the junior subordinated debentures of the record or payment
date of any related interest payment.
REDEMPTION. The junior subordinated debentures and the applicable securities
resolution will provide the terms upon which we can redeem the junior
subordinated debentures at our option, and will specify a date prior to which we
will not be allowed to redeem the junior subordinated debentures, and after
which we will have the right to redeem the junior subordinated debentures, in
whole or in part, upon not less than 30 days nor more than 60 days notice to the
holder of the junior subordinated debentures at a redemption price or prices
stated in the applicable prospectus supplement.
If the junior subordinated debentures are redeemed only in part, they will be
redeemed pro rata or by lot or by any other method selected by the trustee. If a
partial redemption of the corresponding junior subordinated debentures would
result in delisting of the trust preferred securities issued by the Trust from
the Nasdaq National Market or other exchange or self-regulatory organization on
which the trust preferred securities are then listed, we will not be permitted
to effect a partial redemption and may only redeem the corresponding junior
subordinated debentures as a whole.
Except as otherwise specified in the applicable prospectus supplement and
subject to the provisions of the applicable securities resolution, if a Special
Event (as defined below) in respect of the Trust occurs and is continuing, we
have the option to redeem the corresponding junior subordinated debentures held
by the Trust, in whole but not in part, at any time within 90 days thereafter.
If the Trust is the holder of all outstanding corresponding junior subordinated
debentures, the proceeds of the redemption will be used by the Trust to redeem
the corresponding trust preferred securities and common securities in accordance
with their terms.
"Special Event" means a "Tax Event," an "Investment Company Event" or a
"Regulatory Capital Event" as the case may be.
"Tax Event" means that the Trust will have received an opinion of counsel
experienced in such matters to the effect that, as a result of any
- amendment to, or change (including any announced proposed change) in, the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority; or
- official administrative written decision, pronouncement or action or
judicial decision interpreting or applying such laws or regulations;
in each case which amendment or change is effective or which proposed change,
pronouncement, action or decision is announced on or after the date of issuance
of the applicable series of junior subordinated debentures pursuant to the
applicable securities resolution, there is more than an insubstantial risk that:
- the Trust is, or will be within 90 days of the date of the opinion of
counsel, subject to United States Federal income tax with respect to
income received or accrued on the junior subordinated debentures;
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- interest we pay on the corresponding junior subordinated debentures is
not, or will not be within 90 days of the date of the opinion of counsel,
deductible, in whole or in part, for United States Federal income tax
purposes; or
- the Trust is, or will be within 90 days of the date of the opinion of
counsel, subject to more than a de minimis amount of other taxes, duties
or other governmental charges.
"Investment Company Event" means that the Trust will have received an opinion of
counsel experienced in such matters to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority on or after the date of original issuance of the
trust preferred securities by the Trust, the Trust is or will be considered an
"investment company" that is required to be registered under the Investment
Company Act of 1940, as amended.
"Regulatory Capital Event" means that the Trust will have received 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
rules, guidelines or policies of applicable regulatory agencies; or
- any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations
which amendment or change is effective or which pronouncement or decision is
announced on or after the date of the original issuance of the trust preferred
securities, do not constitute, or within 90 days of the date thereof, will not
constitute, Tier 1 Capital (or its then equivalent) applied as if we (or our
successor) were a bank holding company for purposes of the capital adequacy
guidelines of the Board of Governors of the Federal Reserve (or any successor
regulatory authority with jurisdiction over bank holding companies), or any
capital adequacy guidelines as then in effect and applicable to us. There are
currently no capital adequacy guidelines applicable to savings bank holding
companies such as us. The distribution of the junior subordinated debentures in
connection with the termination of the Trust by us shall not in and of itself
constitute a Regulatory Capital Event.
RESTRICTIONS ON CERTAIN PAYMENTS.Unless otherwise provided in the applicable
prospectus supplement, we will promise, as to each series of junior subordinated
debentures issued to the Trust, that we and our subsidiaries will not:
- declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of our capital
stock; or
- make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any of our debt securities (including other junior
subordinated debentures) that rank equally with or junior in interest to
the junior subordinated debentures; or
- make any guarantee payments with respect to any of the debt securities of
any of our subsidiaries if the guarantee ranks equally with or junior in
interest to the junior subordinated debentures
other than:
- dividends or distributions payable in our common stock;
- redemptions or purchases of any rights pursuant to a shareholder rights
plan, if any, or any successor rights agreement, and the declaration of a
dividend of rights or the issuance of stock under a rights agreement in
the future;
- payments under any guarantee relating to the trust preferred securities of
the Trust;
- purchases of common stock related to the issuance of common stock under
any benefit plans for our directors, officers or employees;
- obligations under any dividend reinvestment plan or stock purchase plan;
and
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- purchases of fractional interests in shares of our capital stock pursuant
to a reclassification of our capital stock or the conversion or exchange
provisions of a security being converted or exchanged for our capital
stock.
These restrictions apply only if:
- at that time we have actual knowledge that an event has occurred that (a)
with the giving of notice or the lapse of time, or both, would constitute
an event of default under the indenture with respect to the junior
subordinated debentures of that series and (b) we shall not have taken
reasonable steps to cure the event; or
- the corresponding junior subordinated debentures are held by the Trust
which is the issuer of a series of related trust preferred securities, and
we are in default with respect to payment of any obligations under the
guarantee relating to those trust preferred securities; or
- we shall have given notice of our selection of a deferral of interest
extension period as provided pursuant to the securities resolution with
respect to the corresponding junior subordinated debentures and shall not
have rescinded the notice, or the extension period shall be continuing.
REGARDING THE TRUSTEE
The Bank of New York will act as trustee and registrar for debt securities
issued under the indenture and, unless otherwise indicated in a prospectus
supplement, the trustee will also act as transfer agent and paying agent with
respect to the debt securities. (Section 2.03) We may remove the trustee with or
without cause if we notify the trustee three months in advance and if no default
occurs during the three-month period. (Section 7.07) The trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for us or our affiliates, and may otherwise deal with us or our
affiliates, as if it were not the trustee.
GOVERNING LAW
The laws of the State of New York will govern the indenture and the debt
securities.
DESCRIPTION OF PREFERRED STOCK
GENERAL
This section of the prospectus describes the terms and provisions of our
preferred stock. When we offer to sell a particular series of preferred stock,
we will describe the specific terms of the securities in a supplement to this
prospectus. The prospectus supplement will also indicate whether the terms and
provisions described in this prospectus apply to the particular series of
preferred stock. The preferred stock will be issued under a certificate of
designations relating to each series of preferred stock. It is also subject to
our Articles of Incorporation.
We have summarized the material portions of the certificate of designations
below. The certificate of designations will be filed with the SEC in connection
with an offering of preferred stock.
Our Articles of Incorporation authorize us to issue 5,000,000 shares of
preferred stock, no par value per share. Our Board of Directors is authorized to
designate any series of preferred stock and the powers, preferences and rights
of the preferred stock without further shareholder action. As of April 2, 1999,
we had no shares of preferred stock outstanding. However, on such date, Coastal
Banc had 1,150,000 shares of Series A preferred stock outstanding. See
"--Coastal Banc Preferred Stock."
Our Board of Directors is authorized to determine or fix the following terms for
each series of preferred stock, which will be described in a prospectus
supplement:
- the designation and number of shares;
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- the dividend rate;
- the payment date for dividends;
- whether dividends are cumulative and, if so, the date from which dividends
cumulate;
- redemption rights and the applicable redemption prices;
- amounts payable to holders on our liquidation, dissolution or winding up;
- the amount of the sinking fund, if any;
- whether the shares will be convertible or exchangeable, and, if so, the
prices and terms; and
- whether future shares of the series or any future series or other class of
stock is subject to any restrictions, and, if so, the nature of the
restrictions.
When we issue shares of preferred stock, they will be fully paid and
nonassessable.
DIVIDENDS
The holders of preferred stock will be entitled to receive cash dividends if
declared by our Board of Directors out of funds we can legally use for payment.
The prospectus supplement will indicate the dividend rates and the dates on
which we will pay dividends. The rates may be fixed or variable or both. If the
dividend rate is variable, the formula used to determine the dividend rate will
be described in the prospectus supplement. We will pay dividends to the holders
of record as they appear on the record dates fixed by our Board of Directors.
Our Board will not declare and pay a dividend on any series of preferred stock
unless full dividends for all series of preferred stock ranking equal as to
dividends have been declared or paid and sufficient funds are set aside for
payment. If dividends are not paid in full, we will declare any dividends pro
rata among the preferred stock of each series and any series of preferred stock
ranking equal to any other series as to dividends. A "pro rata" declaration
means that the dividends we declare per share on each series of preferred stock
will bear the same relationship to each other that the full accrued dividends
per share on each series of the preferred stock bear to each other.
Unless all dividends on the preferred stock have been paid in full, we will not
declare or pay any dividends or set aside sums for payment of dividends or
distributions on any common stock or on any class of security ranking junior to
the series of preferred stock, except for dividends or distributions paid for
with securities ranking junior to the preferred stock. We also will not redeem,
purchase, or otherwise acquire any securities ranking junior to the series of
preferred stock as to dividends or liquidation preferences, except by conversion
into or exchange for stock ranking junior to the series of preferred stock.
CONVERTIBILITY
We will not convert or exchange any series of preferred stock for other
securities or property, unless otherwise indicated in the prospectus supplement.
REDEMPTION AND SINKING FUND
We will not redeem or pay into a sinking fund any series of preferred stock,
unless otherwise indicated in the prospectus supplement.
LIQUIDATION RIGHTS
If we voluntarily or involuntarily liquidate, dissolve or wind up our business,
holders of any series of preferred stock will be entitled to receive the
liquidation preference per share specified in the prospectus supplement and all
accrued and unpaid dividends. We will pay these amounts to the holders of each
series of the preferred stock, and all amounts owing on any preferred stock
ranking equally with that series of preferred stock as to distributions upon
liquidation. These payments will be made out of our assets available for
distribution to shareholders before any distribution is made to holders of
common stock or any class of stock ranking junior to the series of preferred
stock as to dividends and liquidation preferences.
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In the event there are insufficient assets to pay the liquidation preferences
for all equally-ranked classes of preferred stock in full, we will allocate
the remaining assets equally among all series of equally-ranked preferred
stock based upon the aggregate liquidation preference for all outstanding
shares for each series. This distribution means that the distribution we pay
to the holders of all shares ranking equal as to distributions if we
dissolve, liquidate or wind up our business will bear the same relationship
to each other that the full distributable amounts for which the holders are
respectively entitled if we dissolve, liquidate or wind up our business bear
to each other. After we pay the full amount of the liquidation preference to
which they are entitled, the holders of shares of a series of preferred stock
will not be entitled to participate in any further distribution of our assets.
VOTING RIGHTS
Holders of preferred stock will not be entitled to vote except under certain
limited circumstances, unless otherwise indicated in the prospectus supplement
or otherwise required by law.
TRANSFER AGENT AND REGISTRAR
The prospectus supplement for each series of preferred stock will name the
transfer agent and registrar.
COASTAL BANC PREFERRED STOCK
Coastal Banc has issued 1,150,000 shares of its Series A preferred stock
("Coastal Banc preferred stock") to the public. The Coastal Banc preferred stock
has the following terms:
- The Coastal Banc preferred stock will not mature unless Coastal Banc
decides to redeem one or both series.
- The Coastal Banc preferred stock ranks senior to the common stock of
Coastal Banc as to dividend rights and rights upon the liquidation,
dissolution or winding up of Coastal Banc.
- Holders of each share of Coastal Banc preferred stock are entitled to
receive quarterly cash dividends, if declared by the Coastal Banc
board, at the rate of $2.25 per year. Dividends on the Coastal Banc
preferred stock are not cumulative. Coastal Banc will not declare and
pay a dividend on the Coastal Banc preferred stock unless full
dividends for all series of preferred stock ranking equal as to
dividends have been declared and paid or a sum sufficient has been set
aside for payment. Unless all dividends on the Coastal Banc preferred
stock have been paid in full, Coastal Banc will not declare or pay any
dividends or set aside funds for payment of dividends on the common
stock of Coastal Banc or on any class of security ranking junior to the
Coastal Banc preferred stock and Coastal Banc will not redeem, purchase
or otherwise acquire any securities ranking junior to the Coastal Banc
preferred stock.
- If Coastal Banc voluntarily or involuntarily liquidates, dissolves or
winds up its business, holders of the Coastal Banc preferred stock will be
entitled to receive $25.00 per share and all accrued and unpaid dividends.
These payments will be made before any distribution is made to holders of
Coastal Banc common stock or any class of stock ranking junior to the
Coastal Banc preferred stock.
- The Coastal Banc preferred stock has been redeemable since December 15,
1998 at a price of $25.00 per share, plus any unpaid dividends.
- If Coastal Banc fails to pay dividends on its preferred stock for six
quarters, the number of directors of Coastal Banc shall be increased by
two and the holders of the Coastal Banc preferred stock will have the
right to vote for and elect such two additional directors. Such voting
rights shall terminate when dividends on the Coastal Banc preferred stock
have been declared and paid or set apart for payment for four consecutive
dividend periods following the election of such additional directors.
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DESCRIPTION OF COMMON STOCK
Our Articles of Incorporation authorize us to issue 45,000,000 shares of common
stock, par value $0.00667 per share. As of April 2, 1999, there were outstanding
6,409,364 shares of common stock.
All outstanding common stock is, and any stock issued under this prospectus will
be, fully paid and nonassessable. Subject to rights of preferred stockholders if
any preferred stock is issued and outstanding, holders of common stock
- are entitled to any dividends validly declared;
- will share ratably in our net assets in the event of a liquidation; and
- are entitled to one vote per share.
The common stock has no conversion rights. Holders of common stock have no
preemption, subscription, redemption, or call rights related to those shares.
ChaseMellon Shareholder Services, L.L.C. is the transfer agent and registrar for
our common stock.
DESCRIPTION OF TRUST PREFERRED SECURITIES
The following section describes the general terms and provisions of the trust
preferred securities to which any prospectus supplement may relate. The
particular terms of the trust preferred securities offered by the Trust and the
extent to which any of these general provisions do not apply to the trust
preferred securities will be described in the prospectus supplement relating to
the trust preferred securities.
Pursuant to the terms of the trust agreement for the Trust, the administrative
trustees are authorized to issue the trust preferred securities and the common
securities on behalf of the Trust. The trust preferred securities and the common
securities are collectively referred to herein as the "trust securities." The
trust securities will represent undivided beneficial ownership interests in the
assets of the Trust. The holders of the trust preferred securities will be
entitled to a preference over holders of the common securities of the Trust in
certain circumstances with respect to distributions and amounts payable on
redemption or liquidation. Holders of trust preferred securities will also have
certain other benefits as described in the corresponding trust agreement.
We have summarized selected provisions of the trust preferred securities and the
trust agreement below. This summary is not complete. The form of trust agreement
has been filed as an exhibit to the registration statement of which this
prospectus forms a part. You should read the form of trust agreement for
provisions that may be important to you. You should also consider applicable
provisions of the Trust Indenture Act.
GENERAL
The trust preferred securities of the Trust will rank equally, and payments on
the trust preferred securities will be made pro rata, with the common securities
of the Trust except as described under "--Subordination of Common Securities."
Legal title to the corresponding junior subordinated debentures will be held by
the property trustee in trust for the benefit of the holders of the related
trust preferred securities and for us as holder of the common securities. The
guarantee agreement we execute for the benefit of the holders of the Trust's
trust preferred securities will be a guarantee on a junior subordinated basis
with respect to the related trust preferred securities but will not guarantee
payment of distributions or amounts payable on redemption or liquidation of the
trust preferred securities when the Trust does not have funds available to make
such payments. See "Description of Guarantees."
DISTRIBUTIONS
Distributions on the trust securities will be cumulative, will accumulate from
the date of original issuance and will be payable on the dates specified in the
applicable prospectus supplement. Except as specified in the applicable
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prospectus supplement, in the event that any date on which distributions are
payable on the trust securities is not a business day, payment of the
distribution will be made on the next succeeding day that is a business day
(without any interest or other payment in respect to the delay), with the
same force and effect as if made on the originally specified date. Each date
on which distributions are payable is referred to in this prospectus as a
distribution date.
The Trust's trust securities represent undivided beneficial ownership interests
in the assets of the Trust. The distributions on each trust security will be
payable at a rate specified in the prospectus supplement for that trust
security. The amount of distributions payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months unless otherwise specified
in the applicable prospectus supplement. Distributions to which holders of trust
securities are entitled will accumulate additional distributions at the rate per
annum specified in the applicable prospectus supplement. Distributions on trust
securities as used in this prospectus includes any additional distributions
unless otherwise stated.
The revenue of the Trust available for distribution to holders of its trust
securities will be limited to payments under the corresponding junior
subordinated debentures it owns. The Trust will invest the proceeds from the
issuance and sale of its trust securities in the corresponding junior
subordinated debentures, and it will have no other assets. See "Description of
Debt Securities--Certain Provisions Relating to Junior Subordinated Debentures
Issued to the Trust." If we do not make interest payments on the corresponding
junior subordinated debentures, the property trustee will not have funds
available to pay distributions on the related trust securities. We have
guaranteed the payment of distributions (if and to the extent the Trust has
funds legally available for the payment of distributions and cash sufficient to
make the payments) on a limited basis as set forth herein under "Description of
Guarantees."
Distributions on the trust securities will be payable to the holders as they
appear on the register of the Trust on the relevant record dates, which, as long
as the trust securities remain in book-entry form, will be one business day
prior to the relevant distribution date. Subject to any applicable laws and
regulations and to the provisions of the trust agreement, each distribution
payment will be made as described under "Book-Entry Issuance." In the event any
trust securities are not in book-entry form, the relevant record date for such
trust securities shall be a date at least 15 days prior to the relevant
distribution date, as specified in the applicable prospectus supplement.
PAYMENT OF EXPENSES
Pursuant to the indenture, we have agreed to pay all debts and obligations
(other than distributions on the trust securities) and all costs and expenses of
the Trust and to pay any and all taxes, duties, assessments or other
governmental charges (other than United States withholding taxes) imposed by the
United States or any other taxing authority. This includes, but is not limited
to, all costs and expenses relating to the organization of the Trust, the fees
and expenses of the property trustee, the Delaware trustee and the
administrative trustees and all costs and expenses relating to the operation of
the Trust. As a result, the net amounts received and retained by the Trust after
paying these fees, expenses, debts and obligations will be equal to the amounts
the Trust would have received and retained had no fees, expenses, debts and
obligations been incurred by or imposed on it.
REDEMPTION OR EXCHANGE
If we repay or redeem, in whole or in part, any junior subordinated debentures
that have been issued to the Trust, whether at maturity or earlier, the proceeds
from the repayment or redemption shall be applied by the property trustee to
redeem a like amount of the trust securities. The property trustee will give not
less than 45 days notice, and the redemption price will be equal to the sum of:
- the aggregate liquidation amount of the trust securities being redeemed;
plus
- accumulated but unpaid distributions on the redeemed trust securities to
the date of redemption; plus
- the related amount of the premium, if any, that we pay upon the concurrent
redemption of corresponding junior subordinated debentures.
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See "Description of Debt Securities--Certain Provisions Relating to Junior
Subordinated Debentures Issued to the Trust--Redemption."
If we are repaying or redeeming less than all of any series of junior
subordinated debentures on a redemption date, then the proceeds from the
repayment or redemption shall be allocated to redeem the related trust
securities pro rata. The amount of premium, if any, that we pay to redeem all or
any part of any series of any corresponding junior subordinated debentures will
also be allocated to the redemption pro rata of the related trust securities.
We will have the right to redeem any series of junior subordinated debentures:
- subject to the conditions described under "description of debt
securities--Certain Provisions Relating to Junior Subordinated Debentures
Issued to the Trust--Redemption"; or
- as may be otherwise specified in the applicable prospectus supplement.
We have the right to dissolve the Trust at any time and, after satisfaction of
any liabilities to creditors of the Trust as provided by applicable law, to
cause the corresponding junior subordinated debentures owned by the Trust to be
distributed to the holders of the related trust securities in liquidation of the
Trust.
If provided in the applicable prospectus supplement, we will have the right to
extend or shorten the maturity of any series of junior subordinated debentures
at the time that we exercise our right to elect to dissolve the Trust and cause
the corresponding junior subordinated debentures to be distributed to the
holders of the related trust securities in liquidation of the Trust. However, we
can extend the maturity only if the conditions specified in the applicable
prospectus supplement are met at the time the election is made and at the time
of the extension.
After the liquidation date fixed for any distribution of corresponding junior
subordinated debentures to the holders of any series of trust securities:
- that series of trust securities will no longer be deemed to be
outstanding;
- The Depositary Trust Company, New York, New York ("DTC"), or its nominee,
as the record holder of the trust securities, will receive a registered
global certificate or certificates representing the corresponding junior
subordinated debentures to be delivered in the distribution; and
- any certificates representing that series of trust securities not held by
DTC or its nominee will be deemed to represent the corresponding junior
subordinated debentures having a principal amount equal to the stated
liquidation amount of that series of trust securities, and bearing accrued
and unpaid interest in an amount equal to the accrued and unpaid
distributions on that series of trust securities until the certificates
are presented to the administrative trustees or their agent for transfer
or reissuance.
We cannot predict the market prices for the trust securities or the
corresponding junior subordinated debentures that may be distributed in exchange
for trust preferred securities. As a result, the trust preferred securities that
an investor may purchase, or the corresponding junior subordinated debentures
that an investor may receive on dissolution and liquidation of the Trust, may
trade at a lower price than the investor paid to purchase the trust preferred
securities.
REDEMPTION AND EXCHANGE PROCEDURES
Any trust securities that are redeemed on any redemption date will receive the
redemption price from the contemporaneous redemption of the corresponding junior
subordinated debentures. Redemptions of the trust securities will be made and
the redemption price will be payable on each redemption date only to the extent
that the Trust has funds on hand available for the payment of such redemption
price. See "Subordination of Common Securities."
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If the Trust gives a notice of redemption in respect of its trust securities,
then, by 12:00 noon, New York City time, on the redemption date, to the extent
that we have deposited with the property trustee by 10:00 a.m., New York City
time, funds sufficient to pay the redemption price, with respect to the trust
preferred securities held by DTC or its nominees, 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 such trust securities. See "Book-Entry
Issuance." If the trust preferred securities are no longer in book-entry form,
the property trustee, to the extent funds are available, will irrevocably
deposit with the paying agent for the trust preferred securities funds
sufficient to pay the applicable redemption price and will give the paying agent
irrevocable instructions and authority to pay the redemption price to the
holders thereof upon surrender of their certificates evidencing the trust
preferred securities.
Nevertheless, 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 on the relevant record dates for the related distribution
dates. If notice of redemption shall have been given and funds deposited as
required, then upon the date of such deposit, all rights of the holders of the
trust securities called for redemption will cease, except the right of the
holders of the trust securities to receive the redemption price, but without
interest on the redemption price, and the trust securities will cease to be
outstanding.
Except as specified in the applicable prospectus supplement, in the event that
any date fixed for redemption of trust securities is not a business day, then
payment of the redemption price payable on such date will be made on the next
succeeding day which is a business day (and without any interest or other
payment in respect of any delay). In the event that payment of the redemption
price in respect of trust securities called for redemption is improperly
withheld or refused and not paid either by the Trust or by us pursuant to the
guarantee as described under "Description of Guarantees," then:
- distributions on those trust securities will continue to accrue at the
then applicable rate, from the redemption date originally established by
the Trust for those trust securities to the date the redemption price is
actually paid; and
- the actual payment date will be the date fixed for redemption for purposes
of calculating the redemption price.
Subject to applicable law (including, without limitation, United States federal
securities law), we or our subsidiaries may at any time and from time to time
purchase outstanding trust preferred securities by tender, in the open market or
by private agreement.
Payment of the redemption price on the trust securities and any distribution of
corresponding junior subordinated debentures to holders of trust securities will
be made to the applicable record holders thereof as they appear on the register
for the trust securities on the relevant record date. Except as provided in the
next sentence, the record date will be one business day prior to the relevant
redemption date or liquidation date, as applicable. However, if any trust
preferred securities are not in book-entry form, the relevant record date for
those trust securities shall be a date at least 15 days prior to the redemption
date or liquidation date, as applicable, as specified in the applicable
prospectus supplement.
If less than all of the trust preferred securities and common securities issued
by the Trust are to be redeemed on a redemption date, then the aggregate
liquidation amount of trust preferred securities and common securities to be
redeemed shall be allocated pro rata to the trust preferred securities and the
common securities based upon the relative liquidation amounts of the two
classes. The particular trust 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 trust preferred securities not
previously called for redemption. The property trustee shall promptly notify the
trust registrar in writing of the trust preferred securities selected for
redemption and, in the case of any trust preferred securities selected for
partial redemption, the liquidation amount to be redeemed. For all purposes of
the trust agreement, unless the context otherwise requires, all provisions
relating to the redemption of trust preferred
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securities shall relate, in the case of any trust preferred securities
redeemed or to be redeemed only in part, to the portion of the aggregate
liquidation amount of trust preferred securities which has been or is to be
redeemed.
Notice of any redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of trust preferred securities and
common securities to be redeemed at the holder's registered address. Unless we
default in payment of the redemption price on the corresponding junior
subordinated debentures, on and after the redemption date interest ceases to
accrue on the corresponding junior subordinated debentures or portions thereof
(and distributions cease to accrue on the related trust preferred securities and
common securities or portions thereof) called for redemption.
If any redemption date is not a business day, then the liquidation amount and
all accrued and unpaid distributions to the date of redemption will be payable
on the next business day (and without any interest or other payment in respect
of any such delay). However, if the business day is in the next calendar year,
the redemption amount will be payable on the preceding business day.
SUBORDINATION OF COMMON SECURITIES
Payment of distributions on, and the redemption price of, the Trust's trust
securities generally shall be made pro rata based on the liquidation amount of
the trust securities. However, if on any distribution date or redemption date an
event of default with respect to any corresponding junior subordinated debenture
shall have occurred and be continuing, then:
- neither we nor the Trust shall pay any distribution on, or redemption
price of, any of the Trust's common securities, and neither we nor the
Trust shall make any other payment on account of the redemption,
liquidation or other acquisition of such common securities, unless
- all accumulated and unpaid distributions on all of the Trust's
outstanding trust preferred securities are paid in cash for all
distribution periods terminating on or prior to any payment on the
common securities, and
- in the case of a payment of the redemption price, the full amount of
the redemption price on all of the Trust's outstanding trust
preferred securities then called for redemption shall have been paid
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 Trust's trust preferred securities then due and payable.
In the case of any event of default with respect to any corresponding junior
subordinated debentures, we (as holder of the Trust's common securities) will be
deemed to have waived any right to act with respect to the event of default
under the trust agreement until the effect of all events of default with respect
to such trust preferred securities has been cured, waived or otherwise
eliminated. Until any events of default under the trust agreement with respect
to the trust preferred securities have been cured, waived or otherwise
eliminated, the property trustee is required to act solely on behalf of the
holders of the trust preferred securities and not on our behalf as holder of the
Trust's common securities, and only the holders of such trust preferred
securities will have the right to direct the property trustee to act on their
behalf.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
Pursuant to the trust agreement, the Trust shall automatically dissolve upon
expiration of its term and shall dissolve on the first to occur of:
- specified events relating to our bankruptcy, dissolution or liquidation;
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- our written direction to the property trustee, as depositor, to dissolve
the Trust and distribute the corresponding junior subordinated debentures
to the holders of the trust securities in exchange for the trust
securities (which direction is optional and wholly within our discretion
as depositor);
- the redemption of all of the Trust's trust securities;
- the entry of an order for the dissolution of the Trust by a court of
competent jurisdiction; and
- expiration of the term of the Trust.
If an early dissolution occurs in any manner except by the redemption of all of
the trust securities, then the Trust will be liquidated by the issuer trustees
as expeditiously as the issuer trustees determine to be possible. Except as
provided in the next sentence, the issuer trustees shall distribute (after
satisfaction of any liabilities to creditors of the Trust as provided by
applicable law) to the holders of such trust securities a like amount of the
corresponding junior subordinated debentures. However, if such a distribution is
determined by the property trustee not to be practical, the holders of the trust
securities will be entitled to receive out of the assets of the Trust available
for distribution to holders (after satisfaction of any liabilities to creditors
of the Trust as provided by applicable law) a liquidation distribution in an
amount equal to, in the case of holders of trust securities, the aggregate of
the liquidation amount plus accrued and unpaid distributions thereon to the date
of payment. If the liquidation distribution can be paid only in part because the
Trust has insufficient assets available to pay in full the aggregate liquidation
distribution, then the amounts payable directly by the Trust on its trust
securities will be paid on a pro rata basis.
As the holder of the Trust's common securities, we will be entitled to receive
distributions upon any liquidation pro rata with the holders of the trust
preferred securities. However, if an event of default relating to the
corresponding junior subordinated debentures has occurred and is continuing, the
trust preferred securities will have a priority over the common securities.
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes a trust "event of default" under the
trust agreement with respect to the trust securities issued thereunder (whatever
the reason for the trust event of default):
- the occurrence of an event of default with respect to a corresponding
series of junior subordinated debentures issued under the indenture to the
trust (see "Description of Debt Securities--Defaults and Remedies"); or
- default by the Trust in the payment of any distribution when it becomes
due and payable, and continuation of the default for a period of 30 days;
or
- default by the Trust in the payment of any redemption price of any trust
security when it becomes due and payable; or
- default in the performance, or breach, in any material respect, of any
covenant or warranty of the Trust in the trust agreement (other than a
default in the payment of any distribution or any redemption price as
provided above), and continuation of that default or breach for a period
of 60 days after there has been given, by registered or certified mail, to
the defaulting issuer trustee or trustees by the holders of at least 25%
in aggregate liquidation preference of the outstanding trust preferred
securities of the Trust, a written notice specifying the default or breach
and requiring it to be remedied and stating that the notice is a "notice
of default" under the trust agreement; or
- the occurrence of specified events of bankruptcy or insolvency with
respect to the property trustee and our failure to appoint a successor
property trustee within 60 days.
Within 60 business days after the occurrence of any trust event of default
actually known to the property trustee, the property trustee is required to
transmit notice of the trust event of default to the holders of the Trust's
trust preferred securities, to the administrative trustees and to us, as
depositor, unless the trust event of default shall have been cured or waived. We
and the administrative trustees are required to file annually with the property
trustee a certificate as to whether or not we each are in compliance with all
the conditions and covenants applicable to us under the trust agreement.
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If an event of default with respect to a corresponding junior subordinated
debenture has occurred and is continuing, the trust preferred securities shall
have a preference over the common securities upon termination of the Trust as
described above. See "--Liquidation Distribution upon Dissolution." The
existence of a trust event of default does not entitle the holders of trust
preferred securities to cause the redemption of the trust preferred securities.
REMOVAL OF ISSUER TRUSTEES
We as the holder of the common securities may remove an issuer trustee at any
time. Unless an event of default with respect to a corresponding junior
subordinated debenture shall have occurred and be continuing, we as the holder
of the common securities may also remove the property trustee or the Delaware
trustee at any time. If a trust event of default resulting from an event of
default with respect to a corresponding junior subordinated debenture has
occurred and is continuing, the property trustee and the Delaware trustee may be
removed at such time by the holders of a majority in liquidation amount of the
outstanding trust preferred securities. In no event will the holders of the
trust preferred securities have the right to vote to appoint, remove or replace
the administrative trustees. That right belongs exclusively to us as the holder
of the common securities. No resignation or removal of an issuer trustee and no
appointment of a successor trustee will be effective until the successor trustee
accepts its appointment in accordance with the provisions of the trust
agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless a trust 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, we (as the holder of the common securities) and the
administrative trustees shall have power to appoint one or more persons either
to act as a co-trustee, jointly with the property trustee, of all or any part of
the trust property, or to act as separate trustee of any such property, in
either case with such powers as may be provided in the instrument of
appointment, and to vest in such person or persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the trust agreement. In case an event of default with respect to a
corresponding junior subordinated debenture has occurred and is continuing, the
property trustee alone will have power to make such an appointment.
MERGER OR CONSOLIDATION OF ISSUER TRUSTEES
Any corporation into which the property trustee, the Delaware trustee or any
administrative trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which such trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of such trustee, shall be the successor of such trustee under the trust
agreement, provided such corporation shall be otherwise qualified and eligible.
MERGERS, CONSOLIDATIONS, CONVERSIONS, AMALGAMATIONS OR REPLACEMENTS OF THE TRUST
The Trust may not merge with or into, consolidate, convert into, amalgamate, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other person, except as
described below, as described in "--Liquidation Distribution upon Dissolution"
or as described in the prospectus supplement with respect to the trust preferred
securities. The Trust may, at our request, with the consent of the
administrative trustees and without the consent of the property trustee, the
Delaware trustee or the holders of the trust preferred securities, merge with or
into, consolidate, convert into, 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, that:
- the successor entity either (a) expressly assumes all of the obligations
of the Trust with respect to the trust securities or (b) substitutes for
the trust securities other successor securities having substantially the
same terms as the trust securities so long as the successor securities
rank the
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same as the trust securities rank in priority with respect to
distributions and payments upon liquidation, redemption and otherwise;
- we expressly appoint a trustee of such successor entity possessing the
same powers and duties as the property trustee as the holder of the
corresponding junior subordinated debentures;
- the successor securities are listed, or any successor securities will be
listed upon notification of issuance, on the Nasdaq National Market or
other organization on which the trust preferred securities are then
listed, if any;
- the merger, consolidation, conversion, amalgamation, replacement,
conveyance, transfer or lease does not cause the trust preferred
securities (including any successor securities) to be downgraded by a
nationally recognized statistical rating organization;
- the merger, consolidation, conversion, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the trust preferred
securities (including any successor securities) in any material respect;
- the successor entity has a purpose substantially similar to that of the
Trust;
- prior to the merger, consolidation, conversion, amalgamation, replacement,
conveyance, transfer or lease, we have received an opinion from
independent counsel to the Trust experienced in such matters to the effect
that
- the merger, consolidation, conversion, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the holders of the trust preferred
securities (including any successor securities) in any material respect;
and
- following the merger, consolidation, conversion, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such
successor entity will be required to register as an investment company
under the Investment Company Act;
- we or any permitted successor or assignee owns all of the common
securities of the successor entity and guarantees the obligations of the
successor entity under the successor securities at least to the extent
provided by the guarantee; and
- The property trustee is given an officer's certificate and an opinion of
counsel each to the effect that all conditions precedent in the Trust
Agreement to such transactions have been satisfied.
Notwithstanding the general provisions described above, the Trust shall not,
except with the consent of holders of 100% in liquidation amount of the trust
preferred securities, merge with or into, consolidate, convert into, amalgamate,
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 merger,
consolidation, conversion, amalgamation, replacement, conveyance, transfer or
lease would cause the Trust or the successor entity to be classified as other
than a grantor trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
The holders of the trust preferred securities will have only the voting rights
described below and under "Description of Guarantees--Amendments and
Assignment," plus any voting rights required by law.
The trust agreement may be amended from time to time by us, the property trustee
and the administrative trustees, without the consent of the holders of the trust
preferred securities:
- to cure any ambiguity, correct or supplement any provisions in the trust
agreement that may be inconsistent with any other provision, or to address
matters or questions arising under the trust agreement in a way which is
consistent with the other provisions of the trust agreement; or
- to modify, eliminate or add to any provisions of the trust agreement if
necessary to ensure that the Trust will be classified for United States
federal income tax purposes as a grantor trust or to
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ensure that the Trust will not be required to register as an
"investment company" under the Investment Company Act.
However, in the case of the first clause, the action must not adversely affect
in any material respect the interests of any holder of trust securities. Any
amendment of the trust agreement becomes effective when we give notice of the
amendment to the holders of the trust securities.
The trust agreement may be amended by us and the issuer trustees with:
- the consent of holders representing not less than a majority (based upon
liquidation amounts) of the outstanding trust preferred securities; and
- receipt by the issuer trustees of an opinion of counsel experienced in
such matters to the effect that the amendment or the exercise of any power
granted to the issuer trustees in accordance with the amendment will not
affect the Trust's status as a grantor trust for United States federal
income tax purposes or the Trust's exemption from status as an "investment
company" under the Investment Company Act.
However, without the consent of each holder of trust preferred securities, no
amendment may:
- change the amount or timing of any distribution on the trust preferred
securities or reduce the amount payable on redemption thereof or otherwise
adversely affect the amount of any distribution required to be made in
respect of the trust preferred securities as of a specified date; or
- restrict the right of a holder of trust preferred securities to sue for
the enforcement of any distribution payment.
The property trustee is required to notify each holder of trust securities
whenever the property trustee is notified of a default with respect to the
corresponding junior subordinated debentures. Furthermore, so long as any junior
subordinated debentures are held by the property trustee, the issuer trustees
are not permitted to:
- direct the time, method and place of conducting any proceeding for any
remedy available to the trustee under the indenture, or execute any trust
or power conferred on the property trustee with respect to the
corresponding junior subordinated debentures;
- waive any past default that is waivable under the indenture governing the
junior subordinated debentures;
- exercise any right to rescind or annul a declaration that the principal of
all the corresponding junior subordinated debentures shall be due and
payable; or
- give a required consent to any amendment, modification or termination of
the indenture, the applicable securities resolution or the corresponding
junior subordinated debentures;
unless, in each case, they first obtain the approval of the holders of a
majority in aggregate liquidation amount of all outstanding trust preferred
securities. However, where the indenture requires the consent of each affected
holder of corresponding junior subordinated debentures, the property trustee
cannot give the consent without first obtaining the consent of each holder of
the related trust preferred securities. The issuer trustees cannot revoke any
action previously authorized or approved by a vote of the holders of the trust
preferred securities except by subsequent vote of the holders of the trust
preferred securities.
In addition to obtaining approval of the holders of the trust preferred
securities as described above, the issuer trustees are required to obtain an
opinion of counsel to the effect that the proposed action will not cause the
Trust to be classified as a corporation for United States federal income tax
purposes.
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Any required approval of holders of trust preferred securities may be given
either at a meeting of holders of trust preferred securities or pursuant to a
written consent. The property trustee must notify record holders of trust
preferred securities of any meeting in the manner set forth in the trust
agreement.
No vote or consent of the holders of preferred securities will be required for
the Trust to redeem and cancel the trust preferred securities in accordance with
the trust agreement.
Whenever holders of trust preferred securities are entitled to vote or consent
under any of the circumstances described above, neither we nor the issuer
trustees will be permitted to vote. For purposes of any vote or consent, any of
the trust preferred securities that we own (or that are owned by the issuer
trustees or our affiliates) will be treated as if they were not outstanding.
PAYMENT AND PAYING AGENCY
The depositary for the trust securities will make payments in respect of the
trust securities by crediting the relevant accounts at the depositary on the
applicable distribution dates. If the Trust's trust securities are not held by
the depositary, then the paying agent will mail checks to registered holders of
the trust securities as their addresses appear on its Register. Unless otherwise
specified in the applicable prospectus supplement, the paying agent shall
initially be the property trustee and any co-paying agent chosen by the property
trustee and acceptable to the administrative trustees and to us. The paying
agent can resign upon 30 days' written notice to the property trustee and to us.
If the property trustee resigns as paying agent, the administrative trustees
will appoint a bank or trust company acceptable to the administrative trustees
and to us to act as paying agent.
REGISTRAR AND TRANSFER AGENT
Unless otherwise specified in the applicable prospectus supplement, the property
trustee will act as registrar and transfer agent for the trust preferred
securities.
The Trust will register transfers of trust preferred securities without charge,
but will require payment of any tax or other governmental charges that may be
imposed in connection with any transfer or exchange. The Trust will not register
transfers of their trust preferred securities after the relevant trust preferred
securities are called for redemption.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The property trustee undertakes to perform only the duties that are specifically
set forth in the trust agreement, other than during the continuance of a trust
event of default. After a trust event of default, the property trustee is
required to 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 has no obligation to exercise any of its powers
under the trust agreement at the request of any holder of trust preferred
securities unless it is offered reasonable indemnity against the costs, expenses
and liabilities that it might incur by doing so. If no trust event of default
has occurred and is continuing and the property trustee is required to decide
between alternative courses of action, construe ambiguous provisions in the
trust agreement or is unsure of the application of any provision of the trust
agreement, then we will have the right to tell the property trustee which action
to take unless the matter is one on which holders of trust preferred securities
are entitled to vote. If we don't give any directions, the property trustee will
take whatever action it deems advisable and in the best interests of the holders
of the trust securities. The property trustee will have no liability except for
its own bad faith, negligence or willful misconduct.
MISCELLANEOUS
The administrative trustees are authorized and directed to operate the Trust in
such a way that:
- no Trust will be:
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- deemed to be an "investment company" required to be registered under the
Investment Company Act; or
- classified as an association taxable as a corporation for United States
federal income tax purposes; and
- the corresponding junior subordinated debentures will be treated as our
indebtedness for United States federal income tax purposes.
We and the administrative trustees are authorized to take any lawful action
(consistent with the certificate of trust of the Trust and the trust agreement)
that we and the administrative trustees determine in our discretion to be
necessary or desirable for these purposes, as long as the action does not
materially and adversely affect the interests of the holders of the related
trust preferred securities.
Holders of the trust preferred securities have no preemptive or similar rights.
The Trust may not borrow money or issue debt or mortgage or pledge any of its
assets.
DESCRIPTION OF GUARANTEES
When the trust securities are issued, we will execute and deliver a guarantee
agreement for the benefit of the holders of the trust preferred securities. The
guarantee agreement will be qualified as an indenture under the Trust Indenture
Act. The Bank of New York will act as guarantee trustee under the guarantee for
the purposes of compliance with the Trust Indenture Act, and will hold the
guarantee for the benefit of the holders of the Trust's trust preferred
securities.
We have summarized certain provisions of the guarantees below. This summary is
not complete. The form of the guarantee agreement has been filed as an exhibit
to the registration statement of which this prospectus forms a part, and you
should read the guarantee agreement for provisions that may be important to you.
GENERAL
We will promise to pay the guarantee payments to the holders of the trust
preferred securities, as and when due, regardless of any defense, right of
set-off or counterclaim that the Trust may have or assert other than the defense
of payment. The guarantee payments will rank equal to the corresponding junior
subordinated debentures and will be junior and subordinated to our senior debt
and subordinated debt. The guarantee payments include the following, to the
extent not paid by or on behalf of the Trust:
- any accumulated and unpaid distributions required to be paid on the trust
preferred securities, but only if and to the extent that the Trust has
funds on hand available for the distributions at that time;
- the redemption price with respect to any trust preferred securities called
for redemption, if and to the extent that the Trust has funds on hand
available to pay the redemption price at that time; or
- upon a voluntary or involuntary dissolution, winding up or liquidation of
the Trust (unless the corresponding junior subordinated debentures are
distributed to the holders of the trust preferred securities), the lesser
of:
- the liquidation distribution; and
- the amount of assets of the Trust remaining available for distribution to
holders of trust preferred securities after satisfaction of liabilities to
creditors of the Trust as required by applicable law.
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Our obligation to make a guarantee payment may be satisfied either by our direct
payment of the required amounts to the holders of the trust preferred securities
or by causing the Trust to pay them.
The guarantee will be an irrevocable guarantee on a junior subordinated basis of
the Trust's obligations under the trust preferred securities, but will apply
only to the extent that the Trust has funds sufficient to make the required
payments. The guarantee is a guarantee of payment, not a guarantee of
collection.
If we do not make interest payments on the corresponding junior subordinated
debentures held by the Trust, the Trust will not be able to pay distributions
on the trust preferred securities. The guarantee will rank subordinate and
junior in right of payment to all of our senior indebtedness and subordinated
indebtedness. See "--Status of the Guarantees." Because we are a holding
company, our right to participate in any distribution of assets of any
subsidiary upon such subsidiary's liquidation or reorganization or otherwise
is subject to the prior claims of creditors of that subsidiary, except to the
extent we may be recognized as a creditor of that subsidiary. Accordingly,
our obligations under the guarantee effectively will be subordinated to all
existing and future liabilities of our subsidiaries, including $28.75 million
of Coastal Banc preferred stock, and all liabilities of any of our future
subsidiaries. Claimants should look only to our assets for payments under the
guarantee. For more information, please refer to "Description of Debt
Securities--General" and "--Ranking of Debt Securities." The guarantee does
not limit our ability to incur or issue other secured or unsecured debt,
including senior and subordinated indebtedness, whether under the indenture,
any other indenture that we may enter into in the future or otherwise. Except
as otherwise provided in the applicable prospectus supplement, we and our
subsidiaries are not limited in the amount of secured or unsecured debt that
we may have outstanding.
Our obligations described herein and in any accompanying prospectus supplement,
through the guarantee agreement, the trust agreement, the corresponding junior
subordinated debentures, and the applicable securities resolution under the
indenture, taken together, constitute our full, irrevocable and unconditional
guarantee of payments due on the trust preferred securities. No single document
standing alone or operating in conjunction with fewer than all of the other
documents constitutes the guarantee. It is only the combined operation of these
documents that has the effect of providing a full, irrevocable and unconditional
guarantee of the Trust's obligations under the trust preferred securities. See
"Description of Trust Preferred Securities," and "Description of Debt
Securities--Certain Provisions Relating to Junior Subordinated Debentures Issued
to the Trust."
STATUS OF THE GUARANTEES
The guarantee will constitute our unsecured obligation and will rank subordinate
and junior in right of payment to all of our senior debt and subordinated debt.
The guarantee will rank equally with all other guarantees we issue relating to
trust preferred securities issued by the Trust. The guarantee will constitute a
guarantee of payment and not of collection (i.e., the guaranteed party may
institute a legal proceeding directly against us as the guarantor to enforce its
rights under the guarantee without first suing anyone else). Each guarantee will
be held for the benefit of the holders of the related trust preferred
securities. The guarantee will be discharged only by payment of the guarantee
payments in full (to the extent not paid by the Trust) or by distribution of the
corresponding junior subordinated debentures to the holders of the trust
preferred securities. None of the guarantees places a limitation on the amount
of additional senior indebtedness or subordinated indebtedness that we may
incur. We expect from time to time to incur additional indebtedness constituting
senior indebtedness or subordinated indebtedness.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights of
holders of the related trust preferred securities in any material respect (in
which case no vote will be required), no guarantee may be amended without the
prior approval of the holders of not less than a majority of the aggregate
liquidation amount of the related outstanding trust preferred securities. The
manner of obtaining any required approval will be as set forth under
"Description of Trust Preferred Securities--Voting Rights; Amendment of Trust
Agreement." All guarantees and
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agreements contained in each guarantee agreement will bind our successors,
assigns, receivers, trustees and representatives and will benefit the holders
of the related trust preferred securities then outstanding.
EVENTS OF DEFAULT
We will be in default under any guarantee agreement if (a) we don't make
required payments or (b) we are notified that we haven't performed some other
obligation.
The holders of a majority in aggregate liquidation amount of the related trust
preferred securities have the right:
- to direct the time, method and place of conducting any proceeding for any
remedy available to the guarantee trustee in respect of the guarantee
agreement; or
- to direct the exercise of any power conferred upon the guarantee trustee
under the guarantee agreement.
Holders of a majority in aggregate liquidation amount of the related trust
preferred securities also have the right to waive any past event of default and
its consequences.
Any holder of the trust preferred securities may institute a legal proceeding
directly against us to enforce the Trust's rights under the guarantee agreement
without first instituting a legal proceeding against the Trust, the guarantee
trustee or anyone else.
As guarantor, we are required to file annually with the guarantee trustee a
certificate stating whether or not we are in compliance with all the conditions
and covenants applicable to us under the guarantee agreement.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The guarantee trustee promises to perform only the duties that are specifically
set forth in each guarantee agreement, other than during the occurrence and
continuance of a default by us in performance of any guarantee. After we default
and while the default continues, the guarantee trustee 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 any
guarantee agreement at the request of any holder of any preferred securities
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that it might incur by doing so.
TERMINATION OF THE GUARANTEES
The guarantee will terminate upon full payment of the redemption price of the
related trust preferred securities, upon full payment of the amounts payable
upon liquidation of the Trust or upon distribution of corresponding junior
subordinated debentures to the holders of the related trust preferred
securities. The guarantee will continue to be effective or will be reinstated,
as the case may be, if at any time any holder of the related trust preferred
securities must restore payment of any sums paid under the trust preferred
securities or the guarantee.
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GOVERNING LAW
The guarantee agreement will be governed by and construed in accordance with the
laws of the State of New York.
RELATIONSHIP AMONG THE TRUST PREFERRED SECURITIES,
THE CORRESPONDING JUNIOR SUBORDINATED DEBENTURES
AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
We irrevocably guarantee payments of distributions and other amounts due on the
trust preferred securities (to the extent the trust has funds available for the
payment of the distributions) as and to the extent set forth under "Description
of Guarantees." Taken together, our obligations under each series of
corresponding junior subordinated debentures, the related securities resolution,
the indenture, the trust agreement and the guarantee agreement provide, in
the aggregate, a full, irrevocable and unconditional guarantee of payments of
distributions and other amounts due on the related series of trust preferred
securities. No single document standing alone or operating in conjunction
with fewer than all of the other documents constitutes the full guarantee. It
is only the combined operation of these documents that has the effect of
providing a full, irrevocable and unconditional guarantee of the Trust's
obligations under the trust preferred securities.
If and to the extent that we do not make payments on any series of corresponding
junior subordinated debentures, the Trust will not pay distributions or other
amounts due on its trust preferred securities. The guarantee does not cover
payment of distributions when the Trust does not have sufficient funds to pay
the distributions. In that event, the remedy for a holder of a series of trust
preferred securities is to institute a legal proceeding directly against us for
enforcement of payment of the distributions to such holder. Our obligations
under the guarantee are subordinate and junior in right of payment to all of our
senior indebtedness and subordinated indebtedness.
SUFFICIENCY OF PAYMENTS
As long as all payments are made when due on each series of corresponding junior
subordinated debentures, those payments will be sufficient to cover
distributions and other payments due on the related trust preferred securities.
This is primarily because:
- the aggregate principal amount of each series of corresponding junior
subordinated debentures will be equal to the sum of the aggregate stated
liquidation amount of the related trust securities;
- the interest rate and interest and other payment dates on each series of
corresponding junior subordinated debentures will match the distribution
rate and distribution and other payment dates for the related trust
securities;
- we, as borrower, have promised to pay any and all costs, expenses and
liabilities of the Trust except the Trust's obligations under its trust
securities; and
- the trust agreement provides that the Trust will not engage in any
activity that is not consistent with the limited purposes of the Trust.
We have the right to set-off any payment we are otherwise required to make under
the indenture if and to the extent we have already made, or are concurrently
making, a payment under the guarantee agreement.
ENFORCEMENT RIGHTS OF HOLDERS OF TRUST PREFERRED SECURITIES
A holder of any trust preferred security may institute a legal proceeding
directly against us to enforce its rights under the guarantee agreement without
first instituting a legal proceeding against the guarantee trustee, the Trust or
anyone else.
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Our default or event of default under any other senior or subordinated
indebtedness would not necessarily constitute a trust event of default. However,
in the event of payment defaults under, or acceleration of, our senior or
subordinated indebtedness, the subordination provisions of the applicable
securities resolution will provide that no payments may be made in respect of
the corresponding junior subordinated debentures until the senior or
subordinated indebtedness has been paid in full or any payment default
thereunder has been cured or waived. Our failure to make required payments on
any series of corresponding junior subordinated debentures would constitute a
trust event of default.
LIMITED PURPOSE OF THE TRUST
The Trust's trust securities evidence undivided beneficial ownership interests
in the assets of the Trust, and the Trust exists for the sole purposes of
issuing its trust securities, investing the proceeds in corresponding junior
subordinated debentures and engaging in only those other activities necessary,
convenient or incidental to those purposes. A principal difference between the
rights of a holder of a trust security and a holder of a corresponding junior
subordinated debenture is that a holder of a junior subordinated debenture is
entitled to receive from us the principal amount of and interest accrued on
corresponding junior subordinated debentures held, while a holder of trust
securities is entitled to receive distributions from the Trust (or from us
under the guarantee agreement) if and to the extent the Trust has funds
available for the payment of the distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution of the Trust involving the
liquidation of the corresponding junior subordinated debentures, the holders of
the related trust securities will be entitled to receive the liquidation
distribution in cash, out of assets of the Trust (and after satisfaction of
creditors of the Trust as provided by applicable law). See "Description of Trust
Preferred Securities--Liquidation Distribution upon Dissolution." If we become
subject to any voluntary or involuntary liquidation or bankruptcy, the property
trustee, as holder of the corresponding junior subordinated debentures, would be
one of our junior subordinated creditors. The property trustee would be
subordinated in right of payment to all of our senior indebtedness and
subordinated indebtedness, but it would be entitled to receive payment in full
of principal and interest before our stockholders receive payments or
distributions. We are the guarantor under each guarantee agreement and pursuant
to the indenture, as borrower, have agreed to pay all costs, expenses and
liabilities of the Trust (other than the Trust's obligations to the holders of
its trust securities). Accordingly, in the event of our liquidation or
bankruptcy the positions of a holder of trust preferred securities and of a
holder of corresponding junior subordinated debentures are expected to be
substantially the same relative to our other creditors and to our stockholders.
BOOK-ENTRY ISSUANCE
BOOK ENTRY SYSTEM
We may issue debt securities, the trust preferred securities and corresponding
junior subordinated debentures of a series and preferred stock under a
book-entry system in the form of one or more global securities. We will register
the global securities in the name of a depositary or its nominee and deposit the
global securities with that depositary. Unless we state otherwise in the
prospectus supplement, DTC will be the depositary if we use a depositary.
DTC has advised us as follows:
- DTC is
- a limited purpose trust company organized under the laws of the State of
New York;
- a "banking organization" within the meaning of the New York banking law
or a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
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- a "clearing agency" registered pursuant to the provisions of Section 17A
of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
DTC was created to hold securities of its participants and to facilitate the
clearance and settlement of securities transactions among its participants
through electronic book entry changes in accounts of its participants,
eliminating the need for physical movements of securities certificates. DTC's
participants include securities brokers and dealers, banks, trust companies,
clearing corporations and others, some of whom own DTC. Access to DTC's
book-entry system is also available to others that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Following the issuance of a global security in registered form, the depositary
will credit the accounts of its participants with the securities issued upon our
instructions. Only persons who hold directly or indirectly through financial
institutions that are participants in the depositary can hold beneficial
interests in the global securities.
Since the laws of some jurisdictions require certain types of purchasers to take
physical delivery of such securities in definitive form, you may encounter
difficulties in your ability to own, transfer or pledge beneficial interests in
a global security.
So long as the depositary or its nominee is the registered owner of a global
security, we and/or the trustee, as applicable, will treat the depositary as the
sole owner or holder of the securities for purposes of the applicable indenture.
Therefore, except as set forth below, you will not be entitled to have
securities registered in your name or to receive physical delivery of
certificates representing the securities. Accordingly, you will have to rely on
the procedures of the depositary and the participant in the depositary through
whom you hold your beneficial interest in order to exercise any rights of a
holder under the applicable indenture. We understand that under existing
practices, the depositary would act upon the instructions of a participant or
authorize that participant to take any action that a holder is entitled to take.
We will make all payments of principal, premium and interest on the securities
to the depositary. We expect that the depositary will then credit participants'
accounts proportionately with these payments on the payment date and that the
participants will in turn credit their customers in accordance with their
customary practices. Neither we nor the trustee will be responsible for making
any payments to participants or customers of participants or for maintaining any
records relating to the holdings of participants and their customers and you
will have to rely on the procedures of the depositary and its participants.
Global securities are generally not transferrable. We will issue physical
certificates to beneficial owners of a global security if:
- The depositary notifies us that it is unwilling or unable to continue as
depositary and we do not appoint a successor within 90 days;
- The depositary ceases to be a clearing agency registered under the
Exchange Act and we do not appoint a successor within 90 days; or
- We decide in our sole discretion that we do not want to have the
securities of the particular series in question represented by global
securities.
DTC may discontinue providing its services as securities depositary with respect
to any of the trust preferred securities or the junior subordinated debentures
at any time by giving reasonable notice to the relevant Issuer Trustee and us.
In the event that a successor securities depositary is not obtained, definitive
trust preferred securities or junior subordinated debentures certificates
representing such trust preferred securities or junior subordinated debentures
are required to be printed and delivered. We, at our option, may decide to
discontinue use the system of book-entry transfers through DTC (or a successor
depositary). After a Debenture Event of Default, the holders of a majority in
liquidation preference of trust preferred securities or aggregate principal
amount of junior subordinated debentures may determine to discontinue the system
of book-entry transfers through DTC. In
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any such event, definitive certificates for such trust preferred securities
or junior subordinated debentures will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system has
been obtained from sources that we and the Trust we believe to be accurate but
neither the Trust nor we assume any responsibility for the accuracy thereof.
Neither we nor the Trust have any responsibility for the performance by DTC or
its participants of their respective obligations as described herein or under
the rules and procedures governing their respective operations.
PLAN OF DISTRIBUTION
We (or, in the case of the trust preferred securities, junior subordinated
indentures and the guarantees, we and the Trust) may sell the securities
described in this prospectus through agents, underwriters, dealers or directly
to purchasers.
Agents who we (or, in the case of the trust preferred securities, junior
subordinated indentures and the guarantees, we and the Trust) designate may
solicit offers to purchase the securities.
- We will name any agent involved in offering or selling the securities, and
any commissions that we will pay to the agent, in our prospectus
supplement.
- Unless we indicate otherwise in our prospectus supplement, our agents will
act on a best efforts basis for the period of their appointment.
- Our agents may be deemed to be underwriters under the Securities Act of
any of the securities that they offer or sell.
We (or, in the case of the trust preferred securities, junior subordinated
indentures and the guarantees, we and the Trust) may use an underwriter or
underwriters in the offer or sale of the securities.
- If we and/or the Trust use an underwriter or underwriters, we and/or the
Trust and/or the Trust will execute an underwriting agreement with the
underwriter or underwriters at the time that we reach an agreement for the
sale of the securities.
- We and/or the Trust will include the names of the specific managing
underwriter or underwriters, as well as any other underwriters, and the
terms of the transactions, including the compensation the underwriters and
dealers will receive, in the prospectus supplement.
- The underwriters will use our prospectus supplement to sell the
securities.
We (or, in the case of the trust preferred securities, junior subordinated
indentures and the guarantees, we and the Trust) may use a dealer to sell the
securities.
- If we and/or the Trust use a dealer, we, as principal, will sell the
securities to the dealer.
- The dealer will then sell the securities to the public at varying prices
that the dealer will determine at the time it sells the securities.
- We and/or the Trust will include the name of the dealer and the terms of
the transactions with the dealer in the prospectus supplement.
We (or, in the case of the trust preferred securities, junior subordinated
indentures and the guarantees, we and the Trust) may solicit directly offers to
purchase the securities, and we and/or the Trust may directly sell the
securities to institutional or other investors. We will describe the terms of
our direct sales in our prospectus supplement.
We (or, in the case of the trust preferred securities, junior subordinated
indentures and the guarantees, we and the Trust) may indemnify agents,
underwriters, and dealers against certain liabilities, including liabilities
under the Securities Act. Our agents, underwriters, and dealers, or their
affiliates, may be customers of, engage in transactions with or perform services
for us, in the ordinary course of business.
32
<PAGE>
We (or, in the case of the trust preferred securities, junior subordinated
indentures and the guarantees, we and the Trust) may authorize our agents and
underwriters to solicit offers by certain institutions to purchase the
securities at the public offering price under delayed delivery contracts.
- If we and/or the Trust use delayed delivery contracts, we will disclose
that we are using them in the prospectus supplement and will tell you when
we will demand payment and delivery of the securities under the delayed
delivery contracts.
- These delayed delivery contracts will be subject only to the conditions
that we set forth in the prospectus supplement.
- We will indicate in our prospectus supplement, the commission that
underwriters and agents soliciting purchases of the securities under
delayed contracts will be entitled to receive.
LEGAL MATTERS
Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C., will pass upon the
validity of our securities and certain other legal matters in connection with
our offering of our securities, unless we indicate otherwise in a prospectus
supplement. Richards, Layton & Finger, P.A., Wilmington, Delaware, will pass
upon the validity under Delaware law of the Trust's trust securities, unless we
indicate otherwise in a prospectus supplement.
EXPERTS
We incorporate by reference into this prospectus and our registration statement
our consolidated financial statements as of December 31, 1998 and 1997 and for
each of the years in the three-year period ended December 31, 1998. We have
relied on the report of KPMG LLP, independent certified public accountants, also
incorporated by reference into this prospectus and our registration statement,
and upon their authority as experts in accounting and auditing.
Documents incorporated by reference in the future in this prospectus will
include financial statements, related schedules, if required, and independent
auditors' reports. The financial statements and schedules will have been
audited to the extent and for the periods identified in the reports by the
firm submitting the report. If audited financials are incorporated by
reference, it will be based on reports given on the authority of the issuing
firm as experts in accounting and auditing.
33
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
SEC registration fee.............................................. $ 41,700
NASD fee.......................................................... 15,500
Legal fees and expenses........................................... 225,000
Trustees' fees and expenses....................................... 10,000
Accounting fees and expenses...................................... 60,000
Printing expenses................................................. 75,000
Miscellaneous expenses............................................ 50,000
---------
Total............................................................. $ 477,200*
---------
---------
</TABLE>
- ------------------------
* All amounts are estimated except for the registration fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is incorporated under the Texas Business Corporation Act, of
which Section 2.02-1 provides as follows:
2.02-1 POWER TO INDEMNIFY AND TO PURCHASE INDEMNITY INSURANCE; DUTY TO
INDEMNIFY.
-- A. In this article:
(1) "Corporation" includes any domestic or foreign predecessor entity of
the corporation in a merger, consolidation, or other transaction in which
the liabilities of the predecessor are transferred to the corporation by
operation of law and in any other transaction in which the corporation
assumes the liabilities of the predecessor but does not specifically exclude
liabilities that are the subject matter of this article.
(2) "Director" means any person who is or was a director of the
corporation and any person who, while a director of the corporation, is or
was serving at the request of the corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other
enterprise.
(3) "Expenses" include court costs and attorneys' fees.
(4) "Official capacity" means
(a) when used with respect to a director, the office of director in
the corporation, and
(b) when used with respect to a person other than a director, the
elective or appointive office in the corporation held by the officer or
the employment or agency relationship undertaken by the employee or agent
in behalf of the corporation, but
(c) in both paragraphs (a) and (b) does not include service for any
other foreign or domestic corporation or any partnership, joint venture,
sole proprietorship, trust, employee benefit plan, or other enterprise.
(5) "Proceeding" means any threatened, pending, or completed action,
suit, or proceeding, whether civil, criminal, administrative, arbitrative,
or investigative, any appeal in such an action, suit, or proceeding, and any
inquiry or investigation that could lead to such an action, suit, or
proceeding.
B. A corporation may indemnify a person who was, is, or is threatened to be
made a named defendant or respondent in a proceeding because the person is or
was a director only if it is determined in accordance with Section F of this
article that the person:
(1) conducted himself in good faith;
<PAGE>
(2) reasonably believed:
(a) in the case of conduct in his official capacity as a director of
the corporation, that his conduct was in the corporation's best
interests; and
(b) in all other cases, that his conduct was at least not opposed to
the corporation's best interests; and
(3) in the case of any criminal proceeding, had no reasonable cause to
believe his conduct was unlawful.
C. Except to the extent permitted by Section E of this article, a director
may not be indemnified under Section B of this article in respect of a
proceeding:
(1) in which the person is found liable on the basis that personal
benefit was improperly received by him, whether or not the benefit resulted
from an action taken in the person's official capacity; or
(2) in which the person is found liable to the corporation.
D. The termination of a proceeding by judgment, order, settlement, or
conviction, or on a plea of nolo contendere or its equivalent is not of itself
determinative that the person did not meet the requirements set forth in Section
B of this article. A person shall be deemed to have been found liable in respect
of any claim, issue or matter only after the person shall have been so adjudged
by a court of competent jurisdiction after exhaustion of all appeals therefrom.
E. A person may be indemnified under Section B of this article against
judgments, penalties (including excise and similar taxes), fines, settlements,
and reasonable expenses actually incurred by the person in connection with the
proceeding, but if the person is found liable to the corporation or is found
liable on the basis that personal benefit was improperly received by the person,
the indemnification (1) is limited to reasonable expenses actually incurred by
the person in connection with the proceeding and (2) shall not be made in
respect of any proceeding in which the person shall have been found liable for
willful or intentional misconduct in the performance of his duty to the
corporation.
F. A determination of indemnification under Section B of this article must
be made:
(1) by a majority vote of a quorum consisting of directors who at the
time of the vote are not named defendants or respondents in the proceeding;
(2) if such a quorum cannot be obtained, by a majority vote of a
committee of the board of directors, designated to act in the matter by a
majority vote of all directors, consisting solely of two or more directors
who at the time of the vote are not named defendants or respondents in the
proceeding;
(3) by special legal counsel selected by the board of directors or a
committee of the board by vote as set forth in Subsection (1) or (2) of this
section, or, if such a quorum cannot be obtained and such a committee cannot
be established, by a majority vote of all directors; or
(4) by the shareholders in a vote that excludes the shares held by
directors who are named defendants or respondents in the proceeding.
G. Authorization of indemnification and determination as to reasonableness
of expenses must be made in the same manner as the determination that
indemnification is permissible, except that if the determination that
indemnification is permissible is made by special legal counsel, authorization
of indemnification and determination as to reasonableness of expenses must be
made in the manner specified by Subsection (3) of Section F of this article for
the selection of special legal counsel. A provision contained in the articles of
incorporation, the bylaws, a resolution of shareholders or directors, or an
agreement that makes mandatory the indemnification permitted under Section B of
this article shall be deemed to constitute authorization of indemnification in
the manner required by this section even though such provision may not have been
adopted or authorized in the same manner as the determination that
indemnification is permissible.
II-2
<PAGE>
H. A corporation shall indemnify a director against reasonable expenses
incurred by him in connection with a proceeding in which he is a named defendant
or respondent because he is or was a director if he has been wholly successful,
on the merits or otherwise, in the defense of the proceeding.
I. If, in a suit for the indemnification required by Section H of this
article, a court of competent jurisdiction determines that the director is
entitled to indemnification under that section, the court shall order
indemnification and shall award to the director the expenses incurred in
securing the indemnification.
J. If, upon application of a director, a court of competent jurisdiction
determines, after giving any notice the court considers necessary, that the
director is fairly and reasonably entitled to indemnification in view of all the
relevant circumstances, whether or not he has met the requirements set forth in
Section B of this article or has been found liable in the circumstances
described by Section C of this article, the court may order the indemnification
that the court determines is proper and equitable; but if the person is found
liable to the corporation or is found liable on the basis that personal benefit
was improperly received by the person, the indemnification shall be limited to
reasonable expenses actually incurred by the person in connection with the
proceeding.
K. Reasonable expenses incurred by a director who was, is, or is threatened
to be made a named defendant or respondent in a proceeding may be paid or
reimbursed by the corporation, in advance of the final disposition of the
proceeding and without the determination specified in Section F of this article
or the authorization or determination specified in Section G of this article,
after the corporation receives a written affirmation by the director of his good
faith belief that he has met the standard of conduct necessary for
indemnification under this article and a written undertaking by or on behalf of
the director to repay the amount paid or reimbursed if it is ultimately
determined that he has not met that standard or if it is ultimately determined
that indemnification of the director against expenses incurred by him in
connection with that proceeding is prohibited by Section E of this article. A
provision contained in the articles of incorporation, the bylaws, a resolution
of shareholders or directors, or an agreement that makes mandatory the payment
or reimbursement permitted under this section shall be deemed to constitute
authorization of that payment or reimbursement.
L. The written undertaking required by Section K of this article must be an
unlimited general obligation of the director but need not be secured. It may be
accepted without reference to financial ability to make repayment.
M. A provision for a corporation to indemnify or to advance expenses to a
director who was, is, or is threatened to be made a named defendant or
respondent in a proceeding, whether contained in the articles of incorporation,
the bylaws, a resolution of shareholders or directors, an agreement, or
otherwise, except in accordance with Section R of this article, is valid only to
the extent it is consistent with this article as limited by the articles of
incorporation, if such a limitation exists.
N. Notwithstanding any other provision of this article, a corporation may
pay or reimburse expenses incurred by a director in connection with his
appearance as a witness or other participation in a proceeding at a time when he
is not a named defendant or respondent in the proceeding.
O. An officer of the corporation shall be indemnified as, and to the same
extent, provided by Sections H, I, and J of this article for a director and is
entitled to seek indemnification under those sections to the same extent as a
director. A corporation may indemnify and advance expenses to an officer,
employee, or agent of the corporation to the same extent that it may indemnify
and advance expenses to directors under this article.
P. A corporation may indemnify and advance expenses to persons who are not
or were not officers, employees, or agents of the corporation but who are or
were serving at the request of the corporation as a director, officer, partner,
venturer, proprietor, trustee, employee, agent, or similar functionary of
another foreign or domestic corporation, partnership, joint venture, sole
proprietorship, trust, employee benefit
II-3
<PAGE>
plan, or other enterprise to the same extent that it may indemnify and advance
expenses to directors under this article.
Q. A corporation may indemnify and advance expenses to an officer, employee,
agent, or person identified in Section P of this article and who is not a
director to such further extent, consistent with law, as may be provided by its
articles of incorporation, bylaws, general or specific action of its board of
directors, or contract or as permitted or required by common law.
R. A corporation may purchase and maintain insurance or another arrangement
on behalf of any person who is or was a director, officer, employee, or agent of
the corporation or who is or was serving at the request of the corporation as a
director, officer, partner, venturer, proprietor, trustee, employee, agent, or
similar functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or any other
enterprise, against any liability asserted against him and incurred by him in
such a capacity or arising out of his status as such a person, whether or not
the corporation would have the power to indemnify him against that liability
under this article. If the insurance or other arrangement is with a person or
entity that is not regularly engaged in the business of providing insurance
coverage, the insurance or arrangement may provide for payment of a liability
with respect to which the corporation would not have the power to indemnify the
person only if including coverage for the additional liability has been approved
by the shareholders of the corporation. Without limiting the power of the
corporation to procure or maintain any kind of insurance or other arrangement, a
corporation may, for the benefit of persons indemnified by the corporation, (1)
create a trust fund; (2) establish any form of self-insurance; (3) secure its
indemnity obligation by grant of a security interest or other lien on the assets
of the corporation; or (4) establish a letter of credit, guaranty, or surety
arrangement. The insurance or other arrangement may be procured, maintained, or
established within the corporation or with any insurer or other person deemed
appropriate by the board of directors regardless of whether all or part of the
stock or other securities of the insurer or other person are owned in whole or
part by the corporation. In the absence of fraud, the judgment of the board of
directors as to the terms and conditions of the insurance or other arrangement
and the identity of the insurer or other person participating in an arrangement
shall be conclusive and the insurance or arrangement shall not be voidable and
shall not subject the directors approving the insurance or arrangement to
liability, on any ground, regardless of whether directors participating in the
approval are beneficiaries of the insurance or arrangement.
S. Any indemnification of or advance of expenses to a director in accordance
with this article shall be reported in writing to the shareholders with or
before the notice or waiver of notice of the next shareholders' meeting or with
or before the next submission to shareholders of a consent to action without a
meeting pursuant to Section A, Article 9.10, of this Act and, in any case,
within the 12-month period immediately following the date of the indemnification
or advance.
T. For purposes of this article, the corporation is deemed to have requested
a director to serve an employee benefit plan whenever the performance by him of
his duties to the corporation also imposes duties on or otherwise involves
services by him to the plan or participants or beneficiaries of the plan. Excise
taxes assessed on a director with respect to an employee benefit plan pursuant
to applicable law are deemed fines. Action taken or omitted by him with respect
to an employee benefit plan in the performance of his duties for a purpose
reasonably believed by him to be in the interest of the participants and
beneficiaries of the plan is deemed to be for a purpose which is not opposed to
the best interests of the corporation.
U. The articles of incorporation of a corporation may restrict the
circumstances under which the corporation is required or permitted to indemnify
a person under Section H, I, J, O, P, or Q of this article.
* * *
II-4
<PAGE>
Article VIII of the Registrant's Articles of Incorporation provides as
follows:
ARTICLE VIII
INDEMNIFICATION, ETC. OF OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS
A. LIMITATION OF LIABILITY. No director shall be personally liable to the
Corporation or its stockholders for monetary damages for any act or omission by
such director as a director; provided that a director's liability shall not be
eliminated to the extent provided by Section 7.06B. of the Texas Miscellaneous
Corporation Laws Act or any successor provision thereto. No amendment to or
repeal of this Subsection (A) to Article VIII shall apply to or have any effect
on the liability or alleged liability of any director of the Corporation for or
with respect to any acts or omissions of such director occurring prior to such
amendment.
B. INDEMNIFICATION. The Corporation shall indemnify any person who was or
is a party or is threatened to be a made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative,
arbitrative or investigative, by reason of the fact that such person is or was a
director, officer, employee or agent of the Corporation or any predecessor of
the Corporation, or is or was serving at the request of the Corporation or any
predecessor of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against liability and expenses (including court costs and attorney's fees),
judgments, fines, excise taxes and amounts paid in satisfaction, settlement or
compromise actually and reasonably incurred by such person in connection with
such action, suit or proceeding to the full extent authorized by law.
C. ADVANCEMENT OF EXPENSES. Reasonable expenses incurred by a director,
officer, employee or agent of the Corporation in defending a civil or criminal
action, suit or proceeding described in Article VIII.B. shall be paid by the
Corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the Board of Directors only upon receipt of written
affirmation by or on behalf of such person of his good faith belief that he has
met the standard of conduct necessary for indemnification under relevant law and
a written undertaking to repay such amount if it shall ultimately be determined
that the person has not met that standard or if it is ultimately determined that
indemnification of the person against expenses incurred by him in connection
with that proceeding is prohibited by relevant law.
D. OTHER RIGHTS AND REMEDIES. The indemnification provided by this Article
VIII shall not be deemed to exclude any other rights to which those seeking
indemnification or advancement of expenses may be entitled under the
Corporation's Articles of Incorporation, any insurance or other agreement, vote
of stockholders or disinterested directors or otherwise, both as to actions in
their official capacity and as to actions in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such person; provided that no indemnification
shall be made to or on behalf of an individual if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action as adjudicated and (i) the person is found liable on the
basis that personal benefit was improperly received by him; (ii) the person is
found liable to the Corporation; or (iii) the person is found liable for willful
or intentional misconduct in the performance of his duty to the Corporation;
provided, however, that persons found liable under clauses (i) and (ii) above,
may still be indemnified solely as to reasonable expenses actually incurred by
such person in connection with the proceeding.
E. INSURANCE. Upon resolution passed by the Board, the Corporation may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Corporation, or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or another enterprise, against
any liability asserted against
II-5
<PAGE>
him or incurred by him in any such capacity, or arising out of his status,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article or the Act.
F. MODIFICATION. The duties of the Corporation to indemnify and to advance
expenses to a director or officer provided in this Article VIII shall be in the
nature of a contract between the Corporation and each such director or officer,
and no amendment or repeal of any provision of this Article VIII shall alter, to
the detriment of such director or officer, the right of such person to the
advance of expenses or indemnification related to a claim based on an act or
failure to act which took place prior to such amendment or repeal.
G. PROCEEDINGS INITIATED BY INDEMNIFIED PERSONS. Notwithstanding any other
provision of this Article VIII, the Corporation shall not indemnify a director,
officer, employee or agent for any liability incurred in an action, suit or
proceeding initiated by (which shall not be deemed to include counter-claims or
affirmative defenses) or participated in as an intervenor or amicus curiae by
the person seeking indemnification unless such initiation of or participation in
the action, suit or proceeding is authorized, either before or after its
commencement, by the affirmative vote of a majority of the directors then in
office.
* * *
II-6
<PAGE>
Article XI of the Registrant's Bylaws provide as follows:
ARTICLE XI
PERSONAL LIABILITY OF DIRECTORS; INDEMNIFICATION
(a) A director of the Corporation shall not be personally liable for
monetary damages for action taken, or any failure to take action, as a director,
to the extent set forth in the Corporation's Articles of Incorporation, which
provisions are incorporated herein with the same affect as if they were set
forth herein.
(b) The Corporation shall indemnify any person who is a director, agent,
officer, employee or agent of the Corporation to the extent set forth in the
Corporation's Articles of Incorporation, which provisions are incorporated
herein with the same affect as if they were set forth herein.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement for preferred stock offering
1.2 Form of Underwriting Agreement for debt securities, trust preferred securities or common stock*
4.1 Form of Indenture (including form of certificate of debt security)
4.2 Form of certificate of designation of series of preferred stock
4.3 Certificate of Trust of Coastal Bancorp Capital Trust I
4.4 Form of Amended and Restated Declaration of Trust of Coastal Bancorp Capital Trust I (including form
of trust preferred security certificate)
4.5 Form of Guarantee of Coastal Bancorp relating to the trust preferred securities
5.1 Opinion and consent of Elias, Matz, Tiernan & Herrick L.L.P.
5.2 Opinion of Richards, Layton & Finger, P.A.*
8.0 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. as to certain federal income tax matters*
12.1 Computation of ratio of earnings to combined fixed charges and preferred stock dividends (excluding
interest on deposits)
12.2 Computation of ratio of earnings to combined fixed charges and preferred stock dividends (including
interest on deposits)
23.1 Consent of KPMG LLP
23.2 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.2)*
24 Power of Attorney of certain officers, directors and trustees (located on the signature page hereto)
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under the Indentures
25.2 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under the Declaration of
Trust of Coastal Bancorp Capital Trust I
25.3 Form T-1 Statement of Eligibility of The Bank of New York under the Guarantee for the benefit of the
holders of the Trust Preferred Securities
</TABLE>
- ------------------------
* To be filed as an exhibit to a document to be incorporated by reference for
the specific offering of securities, if any, to which it relates.
II-7
<PAGE>
ITEM 17. UNDERTAKINGS
Each of the Registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
Registration Statement; (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any
facts or events arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the Registration Statement; (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement; provided, however, that the undertakings set forth in clauses (i) and
(ii) above do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports filed
by the Registrants pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from the registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
Each of the undersigned Registrants hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of a Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of each
undersigned Registrant pursuant to the provisions, or otherwise, each Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by each undersigned Registrant of
expenses incurred or paid by a director, officer of controlling person of each
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, each Registrant will, unless in the opinion of its
counsel the matter has been settled by the controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
For purposes of determining any liability under the Securities Act of 1933, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrants pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective.
For the purpose of determining any liability under the Securities Act of 1933,
each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Coastal Bancorp,
Inc. certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas on the 9th day of April 1999.
COASTAL BANCORP, INC.
By: /s/ MANUEL J. MEHOS
-----------------------------------------
Manuel J. Mehos
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated. Each of the directors and/or officers of Coastal Bancorp, Inc.
whose signature appears below hereby appoints Manuel J. Mehos and Catherine N.
Wylie, and each of them severally, as his or her attorney-in-fact to sign in his
or her name and behalf, in any and all capacities stated below and to file with
the Securities and Exchange Commission any and all amendments, including
post-effective amendments, to this Registration Statement on Form S-3, making
such changes in the Registration Statement as appropriate, and generally to do
all such things in their behalf in their capacities as directors and/or officers
to enable Coastal Bancorp, Inc. to comply with the provisions of the Securities
Act of 1933, and all requirements of the Securities and Exchange Commission.
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
Chairman of the Board,
/s/ MANUEL J. MEHOS President and Chief
- ------------------------------ Chief Executive Officer April 9, 1999
Manuel J. Mehos (Chief Operating
Officer)
Executive Vice President
/s/ CATHERINE N. WYLIE and Chief Financial
- ------------------------------ Officer (Chief Financial April 9, 1999
Catherine N. Wylie Officer)
/s/ ROBERT EDWIN ALLDAY
- ------------------------------ Director April 9, 1999
Robert Edwin Allday
/s/ D. FORT FLOWERS, JR.
- ------------------------------ Director April 9, 1999
D. Fort Flowers, Jr.
/s/ DENNIS S. FRANK
- ------------------------------ Director April 9, 1999
Dennis S. Frank
II-9
<PAGE>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
/s/ ROBERT E. JOHNSON, JR.
- ------------------------------ Director April 9, 1999
Robert E. Johnson, Jr.
/s/ JAMES C. NIVER
- ------------------------------ Director April 9, 1999
James C. Niver
/s/ PAUL W. HOBBY
- ------------------------------ Director April 9, 1999
Paul W. Hobby
II-10
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, Coastal Bancorp
Capital Trust I certifies that it has reasonable grounds to believe that it
meets all the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, State of Texas, on the 9th day of April
1999.
COASTAL BANCORP CAPITAL TRUST I
By: /s/ MANUEL J. MEHOS
-----------------------------------------
Manuel J. Mehos
ADMINISTRATIVE TRUSTEE
By: /s/ CATHERINE N. WYLIE
-----------------------------------------
Catherine N. Wylie
ADMINISTRATIVE TRUSTEE
By: /s/ LINDA B. FRAZIER
-----------------------------------------
Linda B. Frazier
ADMINISTRATIVE TRUSTEE
II-11
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1 Form of Underwriting Agreement for preferred stock offering
1.2 Form of Underwriting Agreement for debt securities, trust preferred securities or common stock*
4.1 Form of Indenture (including form of certificate of debt security)
4.2 Form of certificate of designation of series of preferred stock
4.3 Certificate of Trust of Coastal Bancorp Capital Trust I
4.4 Form of Amended and Restated Declaration of Trust of Coastal Bancorp Capital Trust I (including form
of trust preferred security certificate)
4.5 Form of Guarantee of Coastal Bancorp relating to the trust preferred securities
5.1 Opinion and consent of Elias, Matz, Tiernan & Herrick L.L.P.
5.2 Opinion of Richards, Layton & Finger, P.A.*
8.0 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. as to certain federal income tax matters*
12.1 Computation of ratio of earnings to combined fixed charges and preferred stock dividends (excluding
interest on deposits)
12.2 Computation of ratio of earnings to combined fixed charges and preferred stock dividends (including
interest on deposits)
23.1 Consent of KPMG LLP
23.2 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included in Exhibit 5.1)
23.3 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.2)*
24 Power of Attorney of certain officers, directors and trustees (located on the signature page hereto)
25.1 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under the Indentures
25.2 Form T-1 Statement of Eligibility of The Bank of New York to act as trustee under the Declaration of
Trust of Coastal Bancorp Capital Trust I
25.3 Form T-1 Statement of Eligibility of The Bank of New York under the Guarantee for the benefit of the
holders of the Trust Preferred Securities
</TABLE>
- ------------------------
* To be filed as an exhibit to a document to be incorporated by reference for
the specific offering of securities, if any, to which it relates.
<PAGE>
Exhibit 1.1
[__________] SHARES
COASTAL BANCORP, INC.
__% SERIES A CUMULATIVE PREFERRED STOCK
PURCHASE AGREEMENT
__________ __, 1999
U.S. BANCORP PIPER JAFFRAY INC.
LEGG MASON WOOD WALKER, INCORPORATED
c/o U.S.Bancorp Piper Jaffray Inc.
Piper Jaffray Tower
222 South Ninth Street
Minneapolis, Minnesota 55402
Gentlemen:
Coastal Bancorp, Inc. (the "Company"), a Texas corporation, proposes to
issue and sell to the several Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of [__________] shares (the "Firm Shares") of __%
Series A Cumulative Preferred Stock, liquidation value $25.00 per share (the
"Securities") of the Company.
The Company hereby confirms that the Firm Shares consist of authorized
but unissued shares of preferred stock to be issued and sold by the Company. The
Company hereby confirms its agreement with respect to the sale of the Securities
to the several Underwriters.
1. REGISTRATION STATEMENT AND PROSPECTUS. A registration statement on
Form S-3 (File No. 333-___________) with respect to the Securities, including a
preliminary form of prospectus, has been prepared by the Company in conformity
with the requirements of the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations ("Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder and has been filed with the
Commission; one or more amendments to such registration statement have also been
so prepared and have been, or will be, so filed; and, if the Company has elected
to rely upon Rule 462(b) of the Rules and Regulations to increase the size of
the offering registered under the Act, the Company will prepare and file with
the Commission a registration statement with respect to such increase pursuant
to Rule 462(b). Copies of such registration statement(s) and amendments and each
related preliminary prospectus have been delivered to you.
If the Company has elected not to rely upon Rule 430A of the Rules and
Regulations, the Company has prepared and will promptly file an amendment to the
registration statement and an amended prospectus (including a term sheet meeting
the requirements of Rule 434 of the Rules and Regulations). If the Company has
elected to rely upon Rule 430A of the Rules and Regulations, it will prepare and
file a prospectus (or a term sheet meeting the requirements of Rule 434)
pursuant to Rule 424(b) that discloses the information previously omitted from
the prospectus in reliance upon Rule 430A. Such registration statement as
amended at the time it is
<PAGE>
or was declared effective by the Commission, and, in the event of any amendment
thereto after the effective date and prior to the Closing Date (as hereinafter
defined), such registration statement as so amended (but only from and after the
effectiveness of such amendment), including a registration statement (if any)
filed pursuant to Rule 462(b) of the Rules and Regulations increasing the size
of the offering registered under the Act and information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to
Rules 430A(b) and 434(d) of the Rules and Regulations, is hereinafter called the
"Registration Statement." The prospectus included in the Registration Statement
at the time it is or was declared effective by the Commission is hereinafter
called the "Prospectus," except that if any prospectus (including any term sheet
meeting the requirements of Rule 434 of the Rules and Regulations provided by
the Company for use with a prospectus subject to completion within the meaning
of Rule 434 in order to meet the requirements of Section 10(a) of the Rules and
Regulations) filed by the Company with the Commission pursuant to Rule 424(b)
(and Rule 434, if applicable) of the Rules and Regulations or any other such
prospectus provided to the Underwriters by the Company for use in connection
with the offering of the Securities (whether or not required to be filed by the
Company with the Commission pursuant to Rule 424(b) of the Rules and
Regulations) differs from the prospectus on file at the time the Registration
Statement is or was declared effective by the Commission, the term "Prospectus"
shall refer to such differing prospectus (including any term sheet within the
meaning of Rule 434 of the Rules and Regulations) from and after the time such
prospectus is filed with the Commission or transmitted to the Commission for
filing pursuant to such Rule 424(b) (and Rule 434, if applicable) or from and
after the time it is first provided to the Underwriters by the Company for such
use. The term "Preliminary Prospectus" as used herein means any preliminary
prospectus included in the Registration Statement prior to the time it becomes
or became effective under the Act and any prospectus subject to completion as
described in Rule 430A or 434 of the Rules and Regulations.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
(a) The Company, represents and warrants to, and agrees with,
the several Underwriters as follows:
(i) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission and each
Preliminary Prospectus, at the time of filing thereof, did not contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; except that the foregoing shall not apply to statements
in or omissions from any Preliminary Prospectus in reliance upon, and
in conformity with, written information furnished to the Company by any
Underwriter specifically for use in the preparation thereof.
(ii) As of the time the Registration Statement (or
any post-effective amendment thereto, including a registration
statement, if any, filed pursuant to Rule 462(b) of the Rules and
Regulations increasing the size of the offering registered under the
Act) is or was declared effective by the Commission, upon the filing or
first delivery to the Underwriters of the Prospectus (or any supplement
to the Prospectus (including any term sheet meeting the requirements of
Rule 434 of the Rules and Regulations)) and at the Closing Date (as
hereinafter defined), (A) the Registration Statement and Prospectus (in
each case, as so amended and/or supplemented) conformed or will conform
in all material respects to the requirements of the Act and the Rules
and Regulations, (B) the Registration Statement (as so amended) did not
or will not include
2
<PAGE>
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and (C) the Prospectus (as so supplemented) did
not or will not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which
they are or were made, not misleading; except that the foregoing shall
not apply to statements in or omissions from any such document in
reliance upon, and in conformity with, written information furnished to
the Company by any Underwriter specifically for use in the preparation
thereof. If the Registration Statement has been declared effective by
the Commission, no stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceeding for that
purpose has been initiated or, to the Company's knowledge, threatened
by the Commission.
(iii) The financial statements of the Company,
together with the notes thereto, incorporated by reference in the
Registration Statement and Prospectus comply in all material respects
with the requirements of the Act and fairly present the financial
condition of the Company as of the dates indicated and the results of
operations and changes in cash flows for the periods therein specified
in conformity with generally accepted accounting principles
consistently applied throughout the periods involved (except as
otherwise stated therein); and the supporting schedules incorporated by
reference in the Registration Statement present fairly the information
required to be stated therein. No other financial statements or
schedules are required to be included or incorporated by reference in
the Registration Statement or Prospectus. KPMG LLP, which has expressed
its opinion with respect to the financial statements and schedules
filed as a part of the Registration Statement and incorporated by
reference in the Registration Statement and Prospectus, are independent
public accountants as required by the Act and the Rules and
Regulations.
(iv) Each of the Company and its subsidiaries has
been duly organized and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation. Each of
the Company and its subsidiaries has full corporate power and authority
to own its properties and conduct its business as currently being
carried on and as described in the Registration Statement and the
Prospectus, and is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction in which it owns or
leases real property or in which the conduct of its business makes such
qualification necessary and in which the failure to so qualify would
have a material adverse effect upon the business, condition (financial
or otherwise) property, prospects, net worth or results of operations
of the Company and its subsidiaries, taken as a whole (a "Material
Adverse Effect").
(v) Except as contemplated in the Prospectus,
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, neither the Company nor
any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, or declared or paid any dividends or made any
distribution of any kind with respect to its capital stock except for
regular dividends paid on the Company's common stock and the Series B
Preferred Stock of Coastal Banc ssb; and there has not been any change
in the capital stock (other than a change in the number of outstanding
shares of common stock due to the issuance of shares upon the exercise
of outstanding options or warrants), or any material change in the
short-term or long-term debt, or any issuance of options, warrants,
convertible securities or other rights to purchase the capital stock,
of the Company or any
3
<PAGE>
of its subsidiaries, or any change having a Material Adverse Effect,
or any development involving a prospective change having a Material
Adverse Effect.
(vi) Except as set forth in the Prospectus, there is
not pending or, to the knowledge of the Company, threatened or
contemplated, any action, suit or proceeding to which the Company or
any of its subsidiaries is a party before or by any court or
governmental agency, authority or body, or any arbitrator, which might
result in a Material Adverse Effect.
(vii) There are no contracts or documents of the
Company or any of its subsidiaries that are required to be filed as
exhibits to the Registration Statement by the Act or by the Rules and
Regulations that have not been so filed.
(viii) This Agreement has been duly authorized,
executed and delivered by the Company, and constitutes a valid, legal
and binding obligation of the Company, enforceable in accordance with
its terms, except as rights to indemnity hereunder may be limited by
federal or state securities laws and except as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the rights of creditors generally or of depositary
institutions the accounts of which are insured by the Federal Deposit
Insurance Corporation ("FDIC") and subject to general principles of
equity. The execution, delivery and performance of this Agreement and
the consummation of the transactions herein contemplated will not
result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute, any agreement or instrument
to which the Company is a party or by which it is bound or to which any
of its property is subject, the Company's charter or by-laws, or any
order, rule, regulation or decree of any court or governmental agency
or body having jurisdiction over the Company or any of its properties
except for such statute, agreement instrument, order, rule, regulation
or decree the breach or violation of which will not have Material
Adverse Effect; no consent, approval, authorization or order of, or
filing with, any court or governmental agency or body is required for
the execution, delivery and performance of this Agreement or for the
consummation of the transactions contemplated hereby, including the
issuance or sale of the Securities by the Company, except such as may
be required under the Act or state securities or blue sky laws; and the
Company has full corporate power and authority to enter into this
Agreement and to authorize, issue and sell the Securities as
contemplated by this Agreement.
(ix) All of the issued and outstanding shares of
capital stock of the Company are duly authorized and validly issued,
fully paid and nonassessable, have been issued in material compliance
with all federal and state securities laws, were not issued in
violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities; the Securities which may be sold
hereunder by the Company have been duly authorized and, when issued,
delivered and paid for in accordance with the terms hereof, will have
been validly issued and will be fully paid and nonassessable; and the
capital structure of the Company conform to the descriptions thereof in
the Registration Statement and Prospectus. Except as otherwise stated
in the Registration Statement and Prospectus, there are no preemptive
rights or other rights to subscribe for or to purchase, or any
restriction upon the voting or transfer of, any Securities pursuant to
the Company's charter, by-laws or any agreement or other instrument to
which the Company is a party or by which the Company is bound. Neither
the filing of the Registration Statement nor the offering or sale of
the Securities as contemplated by this Agreement gives rise to any
rights for or relating to the registration of the Securities or
4
<PAGE>
other securities of the Company. All of the issued and outstanding
shares of capital stock of each of the Company's subsidiaries have been
duly and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise described in the Registration
Statement and Prospectus and except for any directors' qualifying
shares, the Company owns of record and beneficially, free and clear of
any security interests, claims, liens, proxies, equities or other
encumbrances, all of the issued and outstanding shares of such stock.
Except as described in the Registration Statement and the Prospectus,
there are no options, warrants, agreements, contracts or other rights
in existence to purchase or acquire from the Company or any subsidiary
of the Company any shares of the capital stock of the Company or any
subsidiary of the Company.
(x) The Company and each of its subsidiaries each
holds, and is operating in compliance with, all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates
and orders of any governmental or self-regulatory body required for the
conduct of its business except where such failure to be in such
compliance would have a Material Adverse Effect, and all such
franchises, grants, authorizations, licenses, permits, easements,
consents, certifications and orders are valid and in full force and
effect except where the failure to be in full force and effect would
not have a Material Adverse Effect; and the Company and each of its
subsidiaries is in compliance with all applicable federal, state, local
and foreign laws, regulations, orders and decrees, except where such
failure to be in such compliance would have a Material Adverse Effect.
(xi) The Company and its subsidiaries each has good
and marketable title to all property described in the Registration
Statement and Prospectus as being owned by them, in each case free and
clear of all liens, claims, security interests or other encumbrances
except such as are described in the Registration Statement and the
Prospectus and except where the existence of any such liens, claims,
security interest or encumbrance would not materially interfere with
the use made or proposed to be made of such property; the property held
under lease by the Company and its subsidiaries is held by them under
valid, subsisting and enforceable leases with only such exceptions with
respect to any particular lease as do not interfere in any material
respect with the conduct of the business of the Company or its
subsidiaries; the Company and each of its subsidiaries each owns or
possesses, and is each operating in compliance in all material respects
with, all patents, patent applications, trademarks, service marks,
tradenames, trademark registrations, service mark registrations,
copyrights, licenses, inventions, trade secrets and rights required to
conduct the business of the Company and its subsidiaries as currently
carried on and as described in the Registration Statement and
Prospectus; except as stated in the Registration Statement and
Prospectus, no name which the Company or any of its subsidiaries uses
and no other aspect of the business of the Company or any of its
subsidiaries will involve or give rise to any infringement of, or
license or similar fees for, any patents, patent applications,
trademarks, service marks, tradenames, trademark registrations, service
mark registrations, copyrights, licenses, inventions, trade secrets or
other similar rights of others material to the business or prospects of
the Company and neither the Company nor any of its subsidiaries has
received any notice alleging any such infringement or fee.
(xii) Neither the Company nor any of its subsidiaries
is in violation of its respective charter or by-laws or in breach of or
otherwise in default in the performance of any material obligation,
agreement or condition contained in any bond, debenture, note,
indenture, loan agreement or any other material contract, lease or
other instrument
5
<PAGE>
to which it is subject or by which any of them may be bound, or to
which any of the material property or assets of the Company or any of
its subsidiaries is subject.
(xiii) The Company and its subsidiaries have each
filed all federal, state, local and foreign income and franchise tax
returns required to be filed and are not in default in the payment of
any taxes which were payable pursuant to said returns or any
assessments with respect thereto, other than any which the Company or
any of its subsidiaries is contesting in good faith.
(xiv) The Company has not distributed and will not
distribute any prospectus or other offering material in connection with
the offering and sale of the Securities other than any Preliminary
Prospectus or the Prospectus or other materials permitted by the Act to
be distributed by the Company.
(xv) The Firm Shares, upon issuance, delivery and
payment therefor in the manner described herein, will be duly
authorized, validly issued, fully paid and non-assessable and will
conform to the descriptions thereof contained in the Registration
Statement and the Prospectus.
(xvi) The Securities have been conditionally approved
for listing on the Nasdaq National Market and, on the date the
Registration Statement became or becomes effective, the Company's
Registration Statement on Form 8-A or other applicable form under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
became or will become effective.
(xvii) Other than Coastal Banc ssb,
[_______________], the Company owns no capital stock or
other equity or ownership or proprietary interest in any
corporation, partnership, association, trust or other entity.
(xviii) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that
(A) transactions are executed in accordance with management's general
or specific authorization; (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain accountability
for assets; (C) access to assets is permitted only in accordance with
management's general or specific authorization; and (D) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(xix) Other than as contemplated by this Agreement,
the Company has not incurred any liability for any finder's or broker's
fee or agent's commission in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated
hereby.
(xx) The Company and each of its subsidiaries are in
compliance in all material respects with all laws applicable to it
which are administered by and regulations of the Federal Reserve Board,
the FDIC, the Office of Thrift Supervision, the Texas Savings and Loan
Department and any other federal or state bank regulatory authority
with jurisdiction over the Company or any of its subsidiaries (the
"Bank Regulatory Authorities"), other than where such failures to
comply would not have a Material Adverse Effect. Neither the Company
nor any of its subsidiaries is a party to
6
<PAGE>
any written agreement or memorandum of understanding with, or a party
to any commitment letter or similar undertaking to, or is subject to
any order or directive by, or is a recipient of any extraordinary
supervisory letter from, or has adopted any board resolutions at the
request of, any Bank Regulatory Authority which restricts materially
the conduct of its business, or in any matter relates to its capital
adequacy, its credit policies or its management, nor have any of them
been advised by any Bank Regulatory Authority that it is contemplating
issuing or requesting (or is considering the appropriateness of issuing
or requesting) any such order, decree, agreement, memorandum of
understanding, extraordinary supervisory letter, commitment letter or
similar submission, or any such board resolutions.
(xxii) Neither the Company nor any of its
subsidiaries is an "investment company" within the meaning of such term
under the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder.
(b) Any certificate signed by any officer of the Company and
delivered to you or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby.
3. PURCHASE, SALE AND DELIVERY OF SECURITIES.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell [_______________] Firm Shares to the
several Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto. The purchase price for each Firm Share
shall be $[______] per share. The obligation of each Underwriter to the Company
shall be to purchase from the Company that number of Firm Shares (to be adjusted
by the Underwriters to avoid fractional shares) which represents the same
proportion of the number of Firm Shares to be sold by the Company pursuant to
this Agreement as the number of Firm Shares set forth opposite the name of such
Underwriter in Schedule I hereto represents to the total number of Firm Shares
to be purchased by all Underwriters pursuant to this Agreement. In making this
Agreement, each Underwriter is contracting severally and not jointly; except as
provided in paragraph (b) of this Section 3 and in Section 8 hereof, the
agreement of each Underwriter is to purchase only the respective number of Firm
Shares specified in Schedule I.
The Firm Shares will be delivered by the Company to you
against payment of the purchase price therefor by certified or official bank
check or other same day funds payable to the order of the Company, at the
offices of U.S. Bancorp Piper Jaffray Inc., Piper Jaffray Tower, 222 South Ninth
Street, Minneapolis, Minnesota, or such other location as may be mutually
acceptable, at 9:00 a.m. Central time on the third (or if the Securities are
priced, as contemplated by Rule 15c6-1(c) under the Exchange Act, after 4:30
p.m. Eastern time, the fourth) full business day following the date hereof, or
at such other time and date as you and the Company determine pursuant to Rule
15c6-1(a) under the Exchange Act, such time and date of delivery being herein
referred to as the "Closing Date." If the Underwriters so elect, delivery of the
Firm Shares may be made by credit through full fast transfer to the accounts at
The Depository Trust Company designated by the Underwriters. Certificates
representing the Firm Shares, in definitive form and in such denominations and
registered in such names as you may request upon at least two business days'
prior notice to the Company, will be made available for checking and packaging
not later than 10:30 a.m., Central time, on the business day next preceding the
Closing Date at the
7
<PAGE>
offices of U.S. Bancorp Piper Jaffray Inc., Piper Jaffray Tower, 222 South Ninth
Street, Minneapolis, Minnesota, or such other location as may be mutually
acceptable.
(b) It is understood that you may each (but shall not be
obligated to) make payment to the Company, on behalf of any other Underwriter
for the Securities to be purchased by such Underwriter. Any such payment by you
shall not relieve any such Underwriter of any of its obligations hereunder.
Nothing herein contained shall constitute any of the Underwriters an
unincorporated association or partner with the Company.
4. COVENANTS.
The Company covenants and agrees with the several Underwriters
as follows:
(a) If the Registration Statement has not already been
declared effective by the Commission, the Company will use its best efforts to
cause the Registration Statement and any post-effective amendments thereto to
become effective as promptly as possible; the Company will notify you promptly
of the time when the Registration Statement or any post-effective amendment to
the Registration Statement has become effective or any supplement to the
Prospectus (including any term sheet within the meaning of Rule 434 of the Rules
and Regulations) has been filed and of any request by the Commission for any
amendment or supplement to the Registration Statement or Prospectus or
additional information; if the Company has elected to rely on Rule 430A of the
Rules and Regulations, the Company will prepare and file a Prospectus (or term
sheet within the meaning of Rule 434 of the Rules and Regulations) containing
the information omitted therefrom pursuant to Rule 430A of the Rules and
Regulations with the Commission within the time period required by, and
otherwise in accordance with the provisions of, Rules 424(b), 430A and 434, if
applicable, of the Rules and Regulations; if the Company has elected to rely
upon Rule 462(b) of the Rules and Regulations to increase the size of the
offering registered under the Act, the Company will prepare and file a
registration statement with respect to such increase with the Commission within
the time period required by, and otherwise in accordance with the provisions of,
Rule 462(b); the Company will prepare and file with the Commission, promptly
upon your request, any amendments or supplements to the Registration Statement
or Prospectus (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations) that, in your opinion, may be necessary or advisable in
connection with the distribution of the Securities by the Underwriters; and the
Company will not file any amendment or supplement to the Registration Statement
or Prospectus (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations) to which you shall reasonably object by notice to the
Company after having been furnished a copy a reasonable time prior to the
filing.
(b) The Company will advise you, promptly after it shall
receive notice or obtain knowledge thereof, of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration Statement, 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 any
such purpose; and the Company will promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such a stop order
should be issued.
(c) Within the time during which a prospectus (including any
term sheet within the meaning of Rule 434 of the Rules and Regulations) relating
to the Securities is required to be delivered under the Act, the Company will
comply as far as it is able with all requirements imposed upon it by the Act, as
now and hereafter amended, and by the Rules and Regulations, as from time to
time in force, so far as necessary to permit the continuance of sales
8
<PAGE>
of or dealings in the Securities as contemplated by the provisions hereof and
the Prospectus. If during such period any event occurs as a result of which the
Prospectus would include an untrue statement of a material fact or omit to state
a material fact necessary to make the statements therein, in the light of the
circumstances then existing, not misleading, or if during such period it is
necessary to amend the Registration Statement or supplement the Prospectus to
comply with the Act, the Company will promptly notify you and will amend the
Registration Statement or supplement the Prospectus (at the expense of the
Company) so as to correct such statement or omission or effect such compliance.
(d) The Company will use its best efforts to qualify the
Securities for sale under the securities laws of such jurisdictions as you
reasonably designate and to continue such qualifications in effect so long as
required for the distribution of the Securities, except that the Company shall
not be required in connection therewith to qualify as a foreign corporation or
to execute a general consent to service of process in any state.
(e) The Company will furnish to the Underwriters copies of the
Registration Statement (three of which will be signed and will include all
exhibits), each Preliminary Prospectus, the Prospectus, and all amendments and
supplements (including any term sheet within the meaning of Rule 434 of the
Rules and Regulations) to such documents, in each case as soon as available and
in such quantities as you may from time to time reasonably request.
(f) During a period of five years commencing with the date
hereof, the Company will furnish to the Underwriters copies of all periodic and
special reports furnished to the stockholders of the Company, and all
information, documents and reports filed with the Commission, the National
Association of Securities Dealers, Inc., Nasdaq or any securities exchange.
(g) The Company will make generally available to the holders
of the Securities as soon as practicable, but in any event not later than 15
months after the end of the Company's current fiscal quarter, an earnings
statement (which need not be audited) covering a 12-month period beginning after
the effective date of the Registration Statement that shall satisfy the
provisions of Section 11(a) of the Act and Rule 158 of the Rules and
Regulations.
(h) The Company, whether or not the transactions contemplated
hereunder are consummated or this Agreement is prevented from becoming effective
under the provisions of Section 9(a) hereof or is terminated, will pay or cause
to be paid (i) all expenses (including transfer taxes allocated to the
respective transferees) incurred in connection with the delivery to the
Underwriters of the Securities, (ii) all expenses and fees (including, without
limitation, fees and expenses of the Company's accountants and counsel but,
except as otherwise provided below, not including fees of the Underwriters'
counsel) in connection with the preparation, printing, filing, delivery, and
shipping of the Registration Statement (including the financial statements
therein and all amendments, schedules, and exhibits thereto), the Securities,
each Preliminary Prospectus, the Prospectus, and any amendment thereof or
supplement thereto, and the printing, delivery, and shipping of this Agreement
and other underwriting documents, including Blue Sky Memoranda, (iii) all filing
fees and fees and disbursements of the Underwriters' counsel incurred in
connection with the qualification of the Securities for offering and sale by the
Underwriters or by dealers under the securities or blue sky laws of the states
and other jurisdictions which you shall designate in accordance with Section
4(d) hereof, (iv) the fees and expenses of any transfer agent or registrar, (v)
the filing fees incident to any required review by the National Association of
Securities Dealers, Inc. of the terms of the sale of the Securities, (vi)
listing fees, if any, and (vii) all other costs and expenses incident to the
performance of its
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obligations hereunder that are not otherwise specifically provided for herein.
If the sale of the Securities provided for herein is not consummated by reason
of action by the Company pursuant to Section 9(a) hereof which prevents this
Agreement from becoming effective, or by reason of any failure, refusal or
inability on the part of the Company to perform any agreement on its part to be
performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled by the Company is not fulfilled, the Company
will reimburse the several Underwriters for all out-of-pocket disbursements
(including fees and disbursements of counsel) incurred by the Underwriters in
connection with their investigation, preparing to market and marketing the
Securities or in contemplation of performing their obligations hereunder. The
Company shall not in any event be liable to any of the Underwriters for loss of
anticipated profits from the transactions covered by this Agreement.
(i) The Company will apply the net proceeds from the sale of
the Securities to be sold by it hereunder for the purposes set forth in the
Prospectus and will file such reports with the Commission with respect to the
sale of the Securities and the application of the proceeds therefrom as may be
required in accordance with Rule 463 of the Rules and Regulations.
(j) The Company will not, without your prior written consent,
offer for sale, sell, contract to sell, grant any option for the sale of or
otherwise issue or dispose of any Securities or any securities convertible into
or exchangeable for, or any options or rights to purchase or acquire,
Securities, except to the Underwriters pursuant to this Agreement for a period
of 180 days after the commencement of the public offering of the Securities by
the Underwriters.
(k) The Company has not taken and will not take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities, and has not effected any sales of securities of the Company
which are required to be disclosed in response to Item 701 of Regulation S-K
under the Act which have not been so disclosed in the Registration Statement.
(l) The Company will not incur any liability for any finder's
or broker's fee or agent's commission in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters hereunder are subject to the accuracy, as of the date
hereof and at the Closing Date (as if made at such Closing Date), of and
compliance with all representations, warranties and agreements of the Company
contained herein, to the performance by the Company of its obligations hereunder
and to the following additional conditions:
(a) The Registration Statement shall have become effective not
later than 5:00 p.m., Central time, on the date of this Agreement, or such later
time and date as the Underwriters shall approve and all filings required by
Rules 424, 430A and 434 of the Rules and Regulations shall have been timely
made; no stop order suspending the effectiveness of the Registration Statement
or any amendment thereof shall have been issued; no proceedings for the issuance
of such an order shall have been initiated or threatened; and any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to your
satisfaction.
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(b) No Underwriter shall have advised the Company that the
Registration Statement or the Prospectus, or any amendment thereof or supplement
thereto (including any term sheet within the meaning of Rule 434 of the Rules
and Regulations), contains an untrue statement of fact which, in your opinion,
is material, or omits to state a fact which, in your opinion, is material and is
required to be stated therein or necessary to make the statements therein not
misleading.
(c) Except as contemplated in the Prospectus, subsequent to
the respective dates as of which information is given in the Registration
Statement and the Prospectus, neither the Company nor any of its subsidiaries
shall have incurred any material liabilities or obligations, direct or
contingent, or entered into any material transactions, or declared or paid any
dividends or made any distribution of any kind with respect to its capital stock
except for regular dividends paid on the Company's common stock and Series B
Preferred Stock of Coastal Bank ssb; and there shall not have been any change in
the capital stock (other than a change in the number of outstanding shares of
common stock due to the issuance of shares upon the exercise of outstanding
options or warrants), or any material change in the short-term or long-term debt
of the Company, or any issuance of options, warrants, convertible securities or
other rights to purchase the capital stock of the Company or any of its
subsidiaries, or any change having a Material Adverse Effect or any development
involving a prospective change having a Material Adverse Effect.
(d) On the Closing Date, there shall have been furnished to
the several Underwriters the opinion of Elias, Matz, Tiernan & Herrick L.L.P.,
special counsel for the Company, dated such Closing Date and addressed to you,
to the effect that:
(i) Each of the Company and its subsidiaries has been
duly organized and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation. Each of
the Company and its subsidiaries has full corporate power and authority
to own its properties and conduct its business as currently being
carried on and as described in the Registration Statement and
Prospectus, and, to the best of such counsel's knowledge, is duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which it owns or leases real property
or in which the conduct of its business makes such qualification
necessary except where the failure to so qualify would not have a
Material Adverse Effect.
(ii) The capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus
under the caption "Capitalization." All of the issued and outstanding
shares of the capital stock of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. The Securities
to be issued and sold by the Company hereunder have been duly
authorized and, when issued, delivered and paid for in accordance with
the terms of this Agreement, will have been validly issued and will be
fully paid and nonassessable. Except as otherwise stated in the
Registration Statement and Prospectus, there are no preemptive rights
or other rights to subscribe for or to purchase, or any restriction
upon the voting or transfer of, any of the Securities pursuant to the
Company's charter or by-laws or, to the best of such counsel's
knowledge, any agreement or other instrument to which the Company is a
party or by which the Company is bound. To the best of such counsel's
knowledge, neither the filing of the Registration Statement nor the
offering or sale of the Securities as contemplated by this Agreement
gives rise to any rights for or relating to the registration of any
shares of common stock or other securities of the Company.
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(iii) All of the issued and outstanding shares of
capital stock of each of the Company's subsidiaries have been duly and
validly authorized and issued and are fully paid and nonassessable,
and, to the best of such counsel's knowledge, except as otherwise
described in the Registration Statement and Prospectus or in the
documents incorporated therein by reference and except for directors'
qualifying shares, the Company owns of record and beneficially, free
and clear of any security interests, claims, liens, proxies, equities
or other encumbrances, all of the issued and outstanding shares of such
stock. To the best of such counsel's knowledge, except as described in
the Registration Statement and Prospectus or in the documents
incorporated therein by reference, there are no options, warrants,
agreements, contracts or other rights in existence to purchase or
acquire from the Company or any subsidiary any shares of the capital
stock of the Company or any subsidiary of the Company.
(iv) The Registration Statement has become effective
under the Act and, to the best of such counsel's knowledge, no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose has been instituted or,
to the knowledge of such counsel, threatened by the Commission.
(v) The descriptions in the Registration Statement
and Prospectus of statutes, legal and governmental proceedings,
contracts and other documents are accurate and fairly present in all
material respects such statutes, legal and governmental proceedings,
contracts and other documents; and to the best of such counsel's
knowledge, there are no statutes or legal or governmental proceedings
required to be described in the Prospectus that are not described
therein or in the documents incorporated therein by reference as
required, or to the best of such counsel's knowledge, there are no
contracts or documents of a character required to be described in the
Registration Statement or Prospectus or filed as exhibits to the
Registration Statement that are not described therein or in the
documents incorporated therein by reference or filed as exhibits as
required.
(vi) The Company has full corporate power and
authority to enter into this Agreement, and this Agreement has been
duly authorized, executed and delivered by the Company and constitutes
a valid, legal and binding obligation of the Company enforceable in
accordance with its terms (except as rights to indemnity hereunder may
be limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting the rights of creditors generally or
depositary institutions the accounts of which are insured the FDIC and
subject to general principles of equity); the execution, delivery and
performance of this Agreement and the consummation of the transactions
herein contemplated will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any
statute, rule or regulation, any agreement or instrument known to such
counsel to which the Company is a party or by which it is bound or to
which any of its property is subject, the Company's charter or by-laws
or, any order or decree known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or any
of its properties (except for such statutes, agreements, instruments,
orders, rules, regulations or decrees the breach or violation of which
would not have a Material Adverse Effect); and no consent, approval,
authorization or order of, or filing with, any court or governmental
agency or body is required for the execution, delivery and performance
of this Agreement or for the consummation of the transactions
contemplated hereby, including the issuance or sale of the Securities
by the Company, except such as may be required under the Act or state
securities laws.
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(vii) To the best of such counsel's knowledge,
neither the Company nor any of its subsidiaries is in violation of its
respective charter or by-laws. To the best of such counsel's knowledge,
neither, the Company nor any of its subsidiaries is in breach of or
otherwise in default in the performance of any material obligation,
agreement or condition contained in any bond, debenture, note,
indenture, loan agreement or any other material contract, lease or
other instrument to which it is subject or by which any of them may be
bound, or to which any of the material property or assets of the
Company or any of its subsidiaries is subject.
(viii) The Registration Statement and the Prospectus,
and any amendment thereof or supplement thereto, comply as to form in
all material respects with the requirements of the Act and the Rules
and Regulations.
(ix) Such other matters as you may reasonably
request.
In rendering such opinion such counsel may rely (i) as to
matters of law other than federal law, upon the opinion or opinions of local
counsel provided that the extent of such reliance is specified in such opinion
and that such counsel shall state that such opinion or opinions of local counsel
are satisfactory to them and that they believe they and you are justified in
relying thereon and (ii) as to matters of fact, to the extent such counsel deems
reasonable, upon certificates of officers of the Company and its subsidiaries
provided that the extent of such reliance is specified in such opinion.
(e) On the Closing Date, there shall have been furnished to
you, as Underwriters, the letter of Elias, Matz, Tiernan & Herrick L.L.P.,
special counsel for the Company, dated the Closing Date and addressed to you, to
the effect that on the basis of conferences with officers of the Company,
examination of documents referred to in the Registration Statement and
Prospectus and such other procedures as such counsel deemed appropriate, nothing
has come to the attention of such counsel that causes such counsel to believe
that the Registration Statement or any amendment thereof, at the time the
Registration Statement became effective and as of such Closing Date (including
any Registration Statement filed under Rule 462(b) of the Rules and
Regulations), contained any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus (as of its date and as
of such Closing Date), as amended or supplemented, includes any untrue statement
of material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; it being understood that such counsel need express no opinion as
to the financial statements, notes to financial statements, schedules or other
financial, statistical or accounting data included or incorporated by reference
in any of the documents mentioned in this clause.
(f) On the Closing Date, there shall have been furnished to
you, as Underwriters, the opinion of Linda B. Frazier, Counsel to the Company,
dated such Closing Date and addressed to you, to the effect that:
(i) Each of the Company and its subsidiaries has been
duly organized and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation. Each of
the Company and its subsidiaries has full corporate power and authority
to own its properties and conduct its business as currently being
carried on and as described in the Registration Statement and
Prospectus, and is duly
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qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which it owns or leases real
property or in which the conduct of its business makes such
qualification necessary except where the failure to so qualify would
not have a Material Adverse Effect.
(ii) The capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus
under the caption "Capitalization." All of the issued and outstanding
shares of the capital stock of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. The Securities
to be issued and sold by the Company hereunder have been duly
authorized and, when issued, delivered and paid for in accordance with
the terms of this Agreement, will have been validly issued and will be
fully paid and nonassessable. Except as otherwise stated in the
Registration Statement and Prospectus, there are no preemptive rights
or other rights to subscribe for or to purchase, or any restriction
upon the voting or transfer of, any of the Securities pursuant to the
Company's charter or by-laws or any agreement or other instrument to
which the Company is a party or by which the Company is bound. Neither
the filing of the Registration Statement nor the offering or sale of
the Securities as contemplated by this Agreement gives rise to any
rights for or relating to the registration of any shares of common
stock or other securities of the Company.
(iii) All of the issued and outstanding shares of
capital stock of each of the Company's subsidiaries have been duly and
validly authorized and issued and are fully paid and nonassessable,
and, except as otherwise described in the Registration Statement and
Prospectus or in the documents incorporated therein by reference and
except for directors' qualifying shares, the Company owns of record and
beneficially, free and clear of any security interests, claims, liens,
proxies, equities or other encumbrances, all of the issued and
outstanding shares of such stock. Except as described in the
Registration Statement and Prospectus or in the documents incorporated
therein by reference, there are no options, warrants, agreements,
contracts or other rights in existence to purchase or acquire from the
Company or any subsidiary any shares of the capital stock of the
Company or any subsidiary of the Company.
(iv) The Company has full corporate power and
authority to enter into this Agreement, and this Agreement has been
duly authorized, executed and delivered by the Company and constitutes
a valid, legal and binding obligation of the Company enforceable in
accordance with its terms (except as rights to indemnity hereunder may
be limited by federal or state securities laws and except as such
enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting the rights of creditors generally or
depositary institutions the accounts of which are insured the FDIC and
subject to general principles of equity); the execution, delivery and
performance of this Agreement and the consummation of the transactions
herein contemplated will not result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any
statute, rule or regulation, any agreement or instrument to which the
Company is a party or by which it is bound or to which any of its
property is subject, the Company's charter or by-laws or any order or
decree of any court or governmental agency or body having jurisdiction
over the Company or any of their respective properties (except for such
statutes, agreements, instruments, orders, rules, regulations or
decreed the breach or violation of which would not have a Material
Adverse Effect); and no consent, approval, authorization or order of,
or filing with, any court or governmental agency or body is required
for the execution, delivery and performance of this Agreement or for
the consummation of the transactions contemplated
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hereby, including the issuance or sale of the Securities by the
Company, except such as may be required under the Act or state
securities laws.
(v) The Company and each of its subsidiaries holds,
and is operating in compliance in all material respects with, all
franchises, grants, authorizations, licenses, permits, easements,
consents, certificates and orders of any governmental or
self-regulatory body required for the conduct of its business and all
such franchises, grants, authorizations, licenses, permits, easements,
consents, certifications and orders are valid and in full force and
effect.
(vi) Neither the Company nor any of its subsidiaries
is in violation of its respective charter or by-laws. Neither, the
Company nor any of its subsidiaries is in breach of or otherwise in
default in the performance of any material obligation, agreement or
condition contained in any bond, debenture, note, indenture, loan
agreement or any other material contract, lease or other instrument to
which it is subject or by which any of them may be bound, or to which
any of the material property or assets of the Company or any of its
subsidiaries is subject.
(vii) Such other matters as you may reasonably
request.
In rendering such opinion such counsel may rely as to matters
of law other than federal law, upon the opinion or opinions of local counsel
provided that the extent of such reliance is specified in such opinion and that
such counsel shall state that such opinion or opinions of local counsel are
satisfactory to them and that they believe they and you are justified in relying
thereon.
(g) On the Closing Date, there shall have been furnished to
the several Underwriters such opinion or opinions from Orrick, Herrington &
Sutcliffe LLP, counsel for the several Underwriters, dated such Closing Date and
addressed to you, with respect to the validity of the Securities, the
Registration Statement, the Prospectus and other related matters as you
reasonably may request, and such counsel shall have received such papers and
information as they request to enable them to pass upon such matters.
(h) On the Closing Date the several Underwriters shall have
received a letter of KPMG LLP, dated such Closing Date and addressed to you,
confirming that they are independent public accountants within the meaning of
the Act and are in compliance with the applicable requirements relating to the
qualifications of accountants under Rule 2-01 of Regulation S-X of the
Commission, and stating, as of the date of such letter (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date not
more than five days prior to the date of such letter), the conclusions and
findings of said firm with respect to the financial information and other
matters covered by its letter delivered to you concurrently with the execution
of this Agreement, and the effect of the letter so to be delivered on such
Closing Date shall be to confirm the conclusions and findings set forth in such
prior letter.
(i) On the Closing Date, there shall have been furnished to
the several Underwriters, a certificate, dated such Closing Date and addressed
to the Underwriters, signed by the chief executive officer and by the chief
financial officer of the Company, to the effect that:
(i) The representations and warranties of the Company
in this Agreement are true and correct, in all material respects, as if
made at and as of such
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Closing Date, and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to such Closing Date;
(ii) No stop order or other order suspending the
effectiveness of the Registration Statement or any amendment thereof or
the qualification of the Securities for offering or sale has been
issued, and no proceeding for that purpose has been instituted or, to
the best of their knowledge, is contemplated by the Commission or any
state or regulatory body; and
(iii) The signers of said certificate have carefully
examined the Registration Statement and the Prospectus, and any
amendments thereof or supplements thereto (including any term sheet
within the meaning of Rule 434 of the Rules and Regulations), and (A)
such documents contain all statements and information required to be
included therein, the Registration Statement, or any amendment thereof,
does not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Prospectus, as
amended or supplemented, does not include any untrue statement of
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, (B) since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an
amended or supplemented prospectus which has not been so set forth, (C)
subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, neither the Company or
any of its subsidiaries has incurred any material liabilities or
obligations, direct or contingent, or entered into any material
transactions, not in the ordinary course of business, or declared or
paid any dividends or made any distribution of any kind with respect to
its capital stock (except for regular dividends paid on the Company's
common stock or the Series B Preferred Stock of Coastal Banc, ssb), and
except as disclosed in the Prospectus, there has not been any change in
the capital stock (other than a change in the number of outstanding
shares of common stock due to the issuance of shares upon the exercise
of outstanding options or warrants), or any material change in the
short-term or long-term debt, or any issuance of options, warrants,
convertible securities or other rights to purchase the capital stock,
of the Company, or any of its subsidiaries, or any Material Adverse
Effect or any development involving a prospective Material Adverse
Effect, and (D) except as stated in the Registration Statement and the
Prospectus, there is not pending, or, to the knowledge of the Company,
threatened or contemplated, any action, suit or proceeding to which the
Company or any of its subsidiaries is a party before or by any court or
governmental agency, authority or body, or any arbitrator, which might
result in any Material Adverse Effect
(j) The Company shall have furnished to you and counsel for
the Underwriters such additional documents, certificates and evidence as you or
they may have reasonably requested.
(k) The Company shall have furnished to you and counsel for
the Underwriters such documents, certificates or evidence reasonably
satisfactory to them indicating that the Firm Shares have been approved for
listing on the Nasdaq National Market.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are satisfactory
in form and substance to you and counsel
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for the Underwriters. The Company will furnish you with such conformed copies of
such opinions, certificates, letters and other documents as you shall reasonably
request.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company, agrees to indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise (including in settlement of any litigation if such settlement is
effected with the written consent of the Company), insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon an untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, including the information deemed
to be a part of the Registration Statement at the time of effectiveness pursuant
to Rules 430A and 434(d) of the Rules and Regulations, if applicable, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto
(including any term sheet within the meaning of Rule 434 of the Rules and
Regulations), or arise out of or are based upon 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 will reimburse each Underwriter
for any legal or other expenses reasonably incurred by it in connection with
investigating or defending against such loss, claim, damage, liability or
action; PROVIDED, HOWEVER, that the Company shall not be liable in any such case
to the extent that any such loss, claim, damage, liability or action 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 any such amendment or supplement, in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter specifically for use in the preparation thereof.
In addition to their other obligations under this Section
6(a), the Company agrees that, as an interim measure during the pendency of any
claim, action, investigation, inquiry or other proceeding arising out of or
based upon any statement or omission, or any alleged statement or omission,
described in this Section 6(a), it will reimburse each Underwriter on a monthly
basis for all reasonable legal fees or other expenses incurred in connection
with investigating or defending any such claim, action, investigation, inquiry
or other proceeding, notwithstanding the absence of a judicial determination as
to the propriety and enforceability of the Company's obligation to reimburse the
Underwriters for such expenses and the possibility that such payments might
later be held to have been improper by a court of competent jurisdiction. To the
extent that any such interim reimbursement payment is so held to have been
improper, the Underwriter that received such payment shall promptly return it to
the party or parties that made such payment, together with interest, compounded
daily, determined on the basis of the prime rate (or other commercial lending
rate for borrowers of the highest credit standing) announced from time to time
by U.S. Bank, National Association, Minneapolis, Minnesota (the "Prime Rate").
Any such interim reimbursement payments which are not made to an Underwriter
within 30 days of a request for reimbursement shall bear interest at the Prime
Rate from the date of such request. This indemnity agreement shall be in
addition to any liabilities which the Company may otherwise have.
(b) Each Underwriter will indemnify and hold harmless the
Company against any losses, claims, damages or liabilities to which the Company
may become subject, under the Act or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Underwriter), insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement, any
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Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto
(including any term sheet within the meaning of Rule 434 of the Rules and
Regulations), or arise out of or are based upon 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, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any such amendment or supplement, in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter, specifically for use in the preparation thereof, and
will reimburse the Company for any legal or other expenses reasonably incurred
by the Company or in connection with investigating or defending against any such
loss, claim, damage, liability or action.
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof, but the omission so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
that it may have to any indemnified party (except to the extent the indemnifying
party was unaware of such action and has been prejudiced in any material respect
by such failure or otherwise forfeits substantive rights or defenses by reason
of such failure or from any liability which it may have to any indemnified party
otherwise than under subsections (a) or (c) above). In case any such action
shall be brought against any indemnified party, and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in, and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party, and after notice from the
indemnifying party to such indemnified party of the indemnifying party's
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; PROVIDED, HOWEVER,
that if, in the sole judgment of the Underwriters, it is advisable for the
Underwriters to be represented as a group by separate counsel, the Underwriters
shall have the right to employ a single counsel to represent all Underwriters
who may be subject to liability arising from any claim in respect of which
indemnity may be sought by the Underwriters under subsection (a) of this Section
6, in which event the reasonable fees and expenses of such separate counsel
shall be borne by the indemnifying party or parties and reimbursed to the
Underwriters as incurred (in accordance with the provisions of the second
paragraph in subsection (a) above). An indemnifying party shall not be obligated
under any settlement agreement relating to any action under this Section 6 to
which it has not agreed in writing.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above, (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Underwriters on the other from the
offering of the Securities or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and the Underwriters on
the other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same
18
<PAGE>
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set forth in 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 or the Underwriters and the parties' relevant intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this subsection (d)
were to be determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
first sentence of this subsection (d). The amount paid by an indemnified party
as a result of the losses, claims, damages or liabilities referred to in the
first sentence of this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending against any action or claim which is the subject of
this subsection (d). Notwithstanding the provisions of this subsection (d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Firm Shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations in
this subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint.
(e) The obligations of the Company under this Section 6 shall
be in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act. The obligations of the
Underwriters under this Section 6 shall be in addition to any liability that the
respective Underwriters may otherwise have and shall extend, upon the same terms
and conditions, to each director of the Company (including any person who, with
his consent, is named in the Registration Statement as about to become a
director of the Company), to each officer of the Company who has signed the
Registration Statement and to each person, if any, who controls the Company
within the meaning of the Act.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties, and agreements of the Company herein or in
certificates delivered pursuant hereto, and the agreements of the several
Underwriters and the Company contained in Section 6 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter or any controlling person thereof, or the
Company or any of its officers, directors, or controlling persons, or any
controlling person thereof, and shall survive delivery of, and payment for, the
Securities to and by the Underwriters hereunder.
8. SUBSTITUTION OF UNDERWRITERS.
(a) If any Underwriter or Underwriters shall fail to take up
and pay for the amount of Firm Shares agreed by such Underwriter or Underwriters
to be purchased hereunder, upon tender of such Firm Shares in accordance with
the terms hereof, and the amount of Firm Shares not purchased does not aggregate
more than 10% of the total amount of Firm Shares set forth in Schedule I hereto,
the remaining Underwriters shall be obligated to take up and pay for (in
proportion to their respective underwriting obligations hereunder as set forth
in Schedule I
19
<PAGE>
hereto except as may otherwise be determined by you) the Firm Shares that the
withdrawing or defaulting Underwriters agreed but failed to purchase.
(b) If any Underwriter or Underwriters shall fail to take up
and pay for the amount of Firm Shares agreed by such Underwriter or Underwriters
to be purchased hereunder, upon tender of such Firm Shares in accordance with
the terms hereof, and the amount of Firm Shares not purchased aggregates more
than 10% of the total amount of Firm Shares set forth in Schedule I hereto, and
arrangements satisfactory to you for the purchase of such Firm Shares by other
persons are not made within 36 hours thereafter, this Agreement shall terminate.
In the event of any such termination the Company shall not be under any
liability to any Underwriter (except to the extent provided in Section 4(h) and
Section 6 hereof) nor shall any Underwriter (other than an Underwriter who shall
have failed, otherwise than for some reason permitted under this Agreement, to
purchase the amount of Firm Shares agreed by such Underwriter to be purchased
hereunder) be under any liability to the Company (except to the extent provided
in Section 6 hereof).
If Firm Shares to which a default relates are to be purchased
by the non-defaulting Underwriters or by any other party or parties or the
Company shall have the right to postpone the Closing Date for not more than
seven business days in order that the necessary changes in the Registration
Statement, Prospectus and any other documents, as well as any other
arrangements, may be effected. As used herein, the term "Underwriter" includes
any person substituted for an Underwriter under this Section 8.
9. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION.
(a) This Agreement shall become effective at 10:00 a.m.,
Central time, on the first full business day following the effective date of the
Registration Statement, or at such earlier time after the effective time of the
Registration Statement as you in your discretion shall first release the
Securities for sale to the public; PROVIDED, HOWEVER, that if the Registration
Statement is effective at the time this Agreement is executed, this Agreement
shall become effective at such time as you in your discretion shall first
release the Securities for sale to the public. For the purpose of this Section,
the Securities shall be deemed to have been released for sale to the public upon
release by you of the publication of a newspaper advertisement relating thereto
or upon release by you of telexes offering the Securities for sale to securities
dealers, whichever shall first occur. By giving notice as hereinafter specified
before the time this Agreement becomes effective, the several Underwriters or
the Company may prevent this Agreement from becoming effective without liability
of any party to any other party, except that the provisions of Section 4(h) and
Section 6 hereof shall at all times be effective.
(b) The several Underwriters shall have the right to terminate
this Agreement by giving notice as hereinafter specified at any time at or prior
to the Closing Date, if (i) the Company shall have failed, refused or been
unable, at or prior to such Closing Date, to perform any agreement on its part
to be performed hereunder, (ii) any other condition of the Underwriters'
obligations hereunder is not fulfilled, (iii) trading on the New York Stock
Exchange or the American Stock Exchange shall have been wholly suspended, (iv)
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required, on the New York Stock
Exchange or the American Stock Exchange, by such Exchange or by order of the
Commission or any other governmental authority having jurisdiction, (v) a
banking moratorium shall have been declared by Federal, New York or Texas
authorities, or (vi) there has occurred any material adverse change in the
financial markets in the United States or an outbreak of major hostilities (or
an escalation thereof) in which the United
20
<PAGE>
States is involved, a declaration of war by Congress, any other substantial
national or international calamity or any other event or occurrence of a similar
character shall have occurred since the execution of this Agreement that, in
your judgment, makes it impractical or inadvisable to proceed with the
completion of the sale of and payment for the Firm Shares. Any such termination
shall be without liability of any party to any other party except that the
provisions of Section 4(h) and Section 6 hereof shall at all times be effective.
(c) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section, the
Company shall be notified promptly by you by telephone or telegram, confirmed by
letter. If the Company elects to prevent this Agreement from becoming effective,
you shall be notified by the Company by telephone or telegram, confirmed by
letter.
10. INFORMATION FURNISHED BY UNDERWRITERS. The statements set forth in
the last paragraph of the cover page and under the caption "Underwriting" in any
Preliminary Prospectus and in the Prospectus constitute the written information
furnished by or on behalf of the Underwriters referred to in Section 2 and
Section 6 hereof.
11. NOTICES. Except as otherwise provided herein, all communications
hereunder shall be in writing or by telegraph and, if to the Underwriters, shall
be mailed, telegraphed or delivered to the Underwriters c/o U.S. Bancorp Piper
Jaffray Inc., Piper Jaffray Tower, 222 South Ninth Street, Minneapolis,
Minnesota 55402, except that notices given to an Underwriter pursuant to Section
6 hereof shall be sent to such Underwriter at the address stated in the
Underwriters' Questionnaire furnished by such Underwriter in connection with
this offering; if to the Company, shall be mailed, telegraphed or delivered to
it at Coastal Banc Plaza, 5718 Westheimer, Suite 600, Houston, Texas 77057,
Attention: Catherine N. Wylie, Chief Financial Officer. All notices given by
telegram shall be promptly confirmed by letter. Any party to this Agreement may
change such address for notices by sending to the parties to this Agreement
written notice of a new address for such purpose.
12. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and assigns and the controlling persons, officers and
directors referred to in Section 6. Nothing in this Agreement is intended or
shall be construed to give to any other person, firm or corporation any legal or
equitable remedy or claim under or in respect of this Agreement or any provision
herein contained. The term "successors and assigns" as herein used shall not
include any purchaser, as such purchaser, of any of the Securities from any of
the several Underwriters.
13. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota.
[Signature Page Follows]
21
<PAGE>
Please sign and return to the Company the enclosed duplicates
of this letter whereupon this letter will become a binding agreement between the
Company and the several Underwriters in accordance with its terms.
Very truly yours,
COASTAL BANCORP, INC.
By
--------------------------------
Catherine N. Wylie
Chief Financial Officer
Confirmed as of the date first
above mentioned.
U.S. BANCORP PIPER JAFFRAY INC.
By
------------------------------
Managing Director
LEGG MASON WOOD WALKER, INCORPORATED
By
------------------------------
Managing Director
22
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Underwriter Number of Firm Shares
- ----------- ---------------------
<S> <C>
U.S. Bancorp Piper Jaffray Inc. .................. [________]
Legg Mason Wood Walker, Incorporated.............. [________]
--------------
Total............................................. [________]
--------------
--------------
</TABLE>
<PAGE>
EXHIBIT 4.1
[FORM OF INDENTURE]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COASTAL BANCORP, INC.
DEBT SECURITIES
---------------------
INDENTURE
DATED AS OF [ ], 1999
------------------------
THE BANK OF NEW YORK, AS TRUSTEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PARTIAL CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
INDENTURE SECTION TIA SECTION
- ----------------- -----------
<S> <C>
2.05 ................................................. 317(b)
2.06 ................................................. 312(a), 313(c)
2.11 ................................................. 316(a) (last sentence)
4.04 ................................................. 314(a)(4)
4.05 ................................................. 314(a)(1)
6.03 ................................................. 317(a)(1)
6.04 ................................................. 316(a)(1)(B)
6.05 ................................................. 316(a)(1)(A)
6.07 ................................................. 317(a)(1)
7.01 ................................................. 315(a), 315(d)
7.04 ................................................. 315(b)
7.05 ................................................. 313(a), 313(d)
7.07 ................................................. 310(a), 310(b)
7.09 ................................................. 310(a)(2)
8.02 ................................................. 310(a), 310(b)
10.04 ................................................. 316(c)
11.01 ................................................. 318(a)
11.02 ................................................. 313(c)
11.03 ................................................. 314(c)(1),
314(c)(2)
11.04 ................................................. 314(e)
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE 1--DEFINITIONS
<S> <C> <C>
SECTION 1.01. Definitions.................................................... 1
SECTION 1.02. Other Definitions.............................................. 4
SECTION 1.03. Rules of Construction.......................................... 4
ARTICLE 2--THE SECURITIES
SECTION 2.01. Issuable in Series............................................. 5
SECTION 2.02. Execution and Authentication................................... 7
SECTION 2.03. Registrar and Transfer, Paying and Conversion Agents and
Other Agents.............................................. 8
SECTION 2.04. Bearer Securities.............................................. 9
SECTION 2.05. Paying Agent to Hold Money in Trust ........................... 9
SECTION 2.06. Securityholder Lists........................................... 10
SECTION 2.07. Transfer and Exchange.......................................... 10
SECTION 2.08. Replacement Securities......................................... 11
SECTION 2.09. Outstanding Securities......................................... 11
SECTION 2.10. Discounted Debt Securities..................................... 12
SECTION 2.11. Treasury Securities............................................ 12
SECTION 2.12. Global Securities.............................................. 12
SECTION 2.13. Temporary Securities........................................... 12
SECTION 2.14. Cancellation................................................... 13
SECTION 2.15. Defaulted Interest............................................. 13
SECTION 2.16 CUSIP Numbers.................................................. 13
ARTICLE 3--REDEMPTION
SECTION 3.01. Notices to Trustee............................................. 13
SECTION 3.02. Selection of Securities to Be Redeemed......................... 14
SECTION 3.03. Notice of Redemption........................................... 14
SECTION 3.04. Effect of Notice of Redemption................................. 15
SECTION 3.05. Payment of Redemption Price.................................... 15
SECTION 3.06. Securities Redeemed in Part.................................... 16
ARTICLE 4--COVENANTS
SECTION 4.01. Payment of Securities.......................................... 16
SECTION 4.02. Overdue Interest............................................... 16
SECTION 4.03. No Lien Created, etc........................................... 16
SECTION 4.04. Compliance Certificate......................................... 16
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 4.05. SEC Reports.................................................... 17
SECTION 4.06. Costs and Expenses of COASTAL Trusts........................... 17
SECTION 4.07 Statement by Officers as to Default............................ 17
ARTICLE 5--SUCCESSORS
SECTION 5.01. When Company May Merge, etc.................................... 18
ARTICLE 6--DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.............................................. 18
SECTION 6.02. Acceleration................................................... 20
SECTION 6.03. Other Remedies................................................. 20
SECTION 6.04. Waiver of Past Defaults........................................ 21
SECTION 6.05. Control by Majority............................................ 21
SECTION 6.06. Limitation on Suits............................................ 21
SECTION 6.07. Collection Suit by Trustee..................................... 22
SECTION 6.08. Priorities..................................................... 22
ARTICLE 7--TRUSTEE
SECTION 7.01. Rights of Trustee.............................................. 22
SECTION 7.02. Individual Rights of Trustee................................... 24
SECTION 7.03. Trustee's Disclaimer........................................... 24
SECTION 7.04. Notice of Defaults............................................. 24
SECTION 7.05. Reports by Trustee to Holders.................................. 24
SECTION 7.06. Compensation and Indemnity..................................... 24
SECTION 7.07. Replacement of Trustee......................................... 25
SECTION 7.08. Successor Trustee by Merger, etc............................... 26
SECTION 7.09. Trustee's Capital and Surplus.................................. 26
ARTICLE 8--DISCHARGE OF INDENTURE
SECTION 8.01. Defeasance..................................................... 26
SECTION 8.02. Conditions to Defeasance....................................... 27
SECTION 8.03. Application of Trust Money..................................... 28
SECTION 8.04. Repayment to Company........................................... 28
SECTION 8.05 Deposited Money and U.S. Government Obligations
to Be Held in Trust; Miscellaneous Provisions.............. 28
</TABLE>
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<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE 9--CONVERSION
<S> <C> <C>
SECTION 9.01. Conversion Privilege............................................ 29
SECTION 9.02. Conversion Procedure............................................ 29
SECTION 9.03. Taxes on Conversion............................................. 30
SECTION 9.04. Company Determination Final..................................... 30
SECTION 9.05. Trustee's and Conversion Agent's Disclaimer..................... 30
SECTION 9.06. Company to Provide Conversion Securities........................ 31
SECTION 9.07. Cash Settlement Option.......................................... 31
SECTION 9.08. Adjustment in Conversion Rate for Change in Capital Stock....... 32
SECTION 9.09. Adjustment in Conversion Rate for Common Stock Issued
Below Market Price.......................................... 33
SECTION 9.10. Adjustment for Other Distributions.............................. 35
SECTION 9.11. Voluntary Adjustment............................................ 36
SECTION 9.12. When Adjustment May Be Deferred................................. 36
SECTION 9.13. When No Adjustment Required..................................... 36
SECTION 9.14. Notice of Adjustment............................................ 37
SECTION 9.15. Notice of Certain Transactions.................................. 37
SECTION 9.16. Reorganization of the Company................................... 37
ARTICLE 10--AMENDMENTS
SECTION 10.01. Without Consent of Holders...................................... 38
SECTION 10.02. With Consent of Holders......................................... 38
SECTION 10.03. Compliance with Trust Indenture Act............................. 39
SECTION 10.04. Effect of Consents.............................................. 39
SECTION 10.05. Notation on or Exchange of Securities........................... 40
SECTION 10.06. Trustee Protected............................................... 40
ARTICLE 11--MISCELLANEOUS
SECTION 11.01. Trust Indenture Act............................................. 40
SECTION 11.02. Notices......................................................... 40
SECTION 11.03. Certificate and Opinion as to Conditions
Precedent....................................................... 42
SECTION 11.04. Statements Required in Certificate or
Opinion.................................................... 42
SECTION 11.05. Rules by Company and Agents..................................... 42
SECTION 11.06. Legal Holidays.................................................. 42
SECTION 11.07. No Recourse Against Others...................................... 43
SECTION 11.08. Duplicate Originals............................................. 43
SECTION 11.09. Governing Law................................................... 43
</TABLE>
-iv-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SIGNATURES......................................................................... S-1
EXHIBIT A: A Form of Registered Security................................... A-1
EXHIBIT B: A Form of Bearer Security....................................... B-1
Notes to Exhibits A and B
EXHIBIT C: Assignment Form................................................. C-1
EXHIBIT D: Conversion Notice............................................... D-1
</TABLE>
-v-
<PAGE>
INDENTURE dated as of [ ], 1999 between COASTAL BANCORP INC., a Texas
corporation (hereinafter called the "COMPANY"), and THE BANK OF NEW YORK (the
"TRUSTEE").
Each party agrees as follows for the benefit of the Holders (as defined
below) of the Company's debt securities issued under this Indenture:
ARTICLE 1--DEFINITIONS
SECTION 1.01. Definitions.
"AFFILIATE" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company.
"AGENT" means any Registrar, Transfer Agent, Paying Agent, Conversion
Agent or other Agent appointed by the Company.
"AUTHORIZED NEWSPAPER" means a newspaper that is:
(1) printed in the English language or in an official language of
the country of publication;
(2) customarily published on each business day in the place of
publication; and
(3) of general circulation in the relevant place or in the financial
community of such place.
Whenever successive publications in an Authorized Newspaper are
required, they may be made on the same or different business days and in the
same or different Authorized Newspapers.
"BEARER SECURITY" means a Security payable to bearer.
"BOARD" means the Board of Directors of the Company or an authorized
committee of the Board.
"BUSINESS DAY" means any day other than a legal holiday.
"CAPITAL STOCK" means any and all shares, interests, participations or
other equivalents (however designated) of capital stock of any person and all
warrants or options to acquire such capital stock.
"COASTAL TRUST" means a statutory business trust created under Delaware
law pursuant to a trust agreement executed by the Company, as depositor of such
COASTAL Trust, and the trustees of such COASTAL Trust named therein and pursuant
to a certificate of trust filed with the Delaware Secretary of State, which
COASTAL Trust exists for the purposes of (i) issuing and selling
<PAGE>
its trust securities, (ii) using the proceeds from the sale of such trust
securities to acquire a series of Securities issued by the Company under this
Indenture and (iii) engaging in only those other activities necessary,
convenient or incidental thereto.
"COMMON STOCK" means the Common Stock, par value $0.00667 per share, of
the Company.
"COMPANY" means the party named as such above until a successor
replaces it and thereafter means the successor.
"CONVERSION RATE" means such number or amount of shares of Common Stock
or other equity or debt securities for which $1,000 aggregate principal amount
of Securities of any series is convertible, initially as stated in the
Securities Resolution authorizing the series and as adjusted pursuant to the
terms of this Indenture and the Securities Resolution.
"COUPON" means an interest coupon for a Bearer Security.
"DEFAULT" means any event which is, or after notice or passage of time,
or both, would be, an Event of Default (as defined below).
"DISCOUNTED DEBT SECURITY" means a Security where the amount of
principal due upon acceleration is less than the stated principal amount.
"HOLDER" or "SECURITYHOLDER" means the person in whose name a
Registered Security is registered and the bearer of a Bearer Security or coupon.
"INDENTURE" means this Indenture and any Securities Resolution as
amended from time to time.
"LIEN" means any mortgage, pledge, security interest or other lien.
"OFFICER" means the Chairman, any Vice-Chairman, the President, the
Chief Financial Officer, any Executive or Senior Vice President, any
Vice-President, the Treasurer or any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by two Officers of
the Company, and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion from legal counsel who is
acceptable to the Trustee, and delivered to the Trustee. Unless otherwise
provided herein, the counsel may be an employee of or counsel to the Company.
"PRINCIPAL" of a debt security means the principal of the security plus
the premium, if and when applicable, on the security.
2
<PAGE>
"REGISTERED SECURITY" means a Security registered as to principal and
interest by the Registrar.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means the debt securities issued under this Indenture.
"SECURITIES RESOLUTION" means a resolution adopted by the Board or by a
committee of Officers or an Officer pursuant to Board delegation authorizing a
series or a supplemental indenture authorizing a series executed by an
authorized Officer.
"SERIES" means a series of Securities or the Securities of the series.
"SUBSIDIARY" means a corporation a majority of whose Voting Stock is
owned by the Company or a Subsidiary.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code 77aaa-
77bbbb), as amended.
"TRADING DAY" means each day on which the securities exchange or
quotation system which is used to determine the Market Price is open for trading
or quotation.
"TRUSTEE" means the party named as such above until a successor
replaces it and thereafter means the successor.
"TRUST OFFICER" shall mean, when used with respect to the Trustee, any
officer within the corporate trust department of the Trustee, including any vice
president, assistant vice president, assistant secretary, assistant treasurer,
trust officer or any other officer of the Trustee who customarily performs
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such person's knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration of this
Indenture.
"TRUST SECURITIES" means securities issued by a COASTAL Trust.
"UNITED STATES" means the United States of America, its territories and
possessions and other areas subject to its jurisdiction.
"VOTING STOCK" means capital stock having voting power under ordinary
circumstances to elect directors.
"YIELD TO MATURITY" means the yield to maturity on a Security at the
time of its issuance or at the most recent determination of interest on the
Security.
3
<PAGE>
SECTION 1.02. Other Definitions.
TERM DEFINED IN SECTION
"ACTUAL KNOWLEDGE" 7.01
"BANKRUPTCY LAW" 6.01
"CONDITIONAL REDEMPTION" 3.04
"CONVERSION AGENT" 2.03
"CONVERSION DATE" 9.02
"CONVERSION NOTICE" 9.02
"CONVERSION RIGHT" 9.01
"CUSTODIAN" 6.01
"EVENT OF DEFAULT" 6.01
"LEGAL HOLIDAY" 11.06
"MARKET PRICE" 9.07
"PAYING AGENT" 2.03
"PRICE PER SHARE" 9.09
"REGISTRAR" 2.03
"TRANSFER AGENT" 2.03
"TREASURY REGULATIONS" 2.04
"U.S. GOVERNMENT OBLIGATIONS" 8.02
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles in the United States;
(3) generally accepted accounting principles are those applicable
from time to time;
(4) all terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC
rule under the TIA have the meanings assigned to them by such
definitions;
(5) "or" is not exclusive; and
(6) words in the singular include the plural, and in the plural
include the singular.
4
<PAGE>
ARTICLE 2--THE SECURITIES
SECTION 2.01. Issuable in Series.
The aggregate principal amount of Securities that may be issued under
this Indenture is unlimited. The Securities may be issued from time to time in
one or more series. Each series shall be created by a Securities Resolution that
establishes the terms of the series, which may include the following:
<TABLE>
<S> <C>
(1) the title of the series;
(2) the aggregate principal amount of the series;
(3) the interest rate or rates, if any, or method of calculating
the interest rate or rates;
(4) the date from which interest will accrue;
(5) the record dates for interest payable on Registered Securities;
(6) the dates when principal and interest are payable;
(7) the manner of paying principal and interest;
(8) the places where principal and interest are payable;
(9) the Registrar, Transfer Agent and Paying Agent;
(10) the terms of any mandatory or optional redemption by the
Company including any sinking fund;
(11) the terms of any redemption at the option of Holders;
(12) the denominations in which Securities are issuable;
(13) whether Securities will be issuable as Registered Securities,
Bearer Securities or uncertificated Securities;
(14) whether and upon what terms Registered Securities, Bearer
Securities and uncertificated Securities may be exchanged;
(15) whether any Securities will be represented by a Security in
global form;
(16) the terms of any global Security;
5
<PAGE>
(17) the terms of any tax indemnity;
(18) if amounts of principal or interest may be determined by
reference to an index, formula or other method, the manner for
determining such amounts;
(19) provisions for electronic issuance of Securities or for
Securities in uncertificated form;
(20) the portion of principal payable upon acceleration of a
Discounted Debt Security;
(21) whether any Events of Default or covenants in addition to or in
lieu of those set forth in this Indenture apply;
(22) whether and upon what terms Securities may be defeased;
(23) the forms of the Securities or any coupon, which may be in the
form of Exhibit A or B;
(24) any terms that may be required by or advisable under U.S. or
other applicable laws or regulations;
(25) whether and upon what terms the Securities will be convertible
into or exchangeable for Common Stock of the Company or other
equity or debt securities, which may include the terms provided
in Article 9;
(26) the ranking of the Securities, including the relative degree,
if any, to which the Securities of such series shall be
subordinated to one or more other series of Securities in right
of payment, whether outstanding or not;
(27) any provisions relating to extending or shortening the date on
which the principal and premium, if any, of the Securities of
such series is payable;
(28) any provisions relating to the deferral of payment of any
interest;
(29) if such Securities are to be issued to a COASTAL Trust, the
forms of the related trust agreement and guarantee agreement
relating thereto;
(30) 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 such Securities to a
COASTAL Trust; and
(31) any other terms not inconsistent with this Indenture.
</TABLE>
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All Securities of one series need not be issued at the same time and,
unless otherwise provided, a series may be reopened for issuances of additional
Securities of such series.
Unless otherwise stated herein or in the applicable Securities
Resolutions, the creation and issuance of a series and the authentication and
delivery thereof are not subject to any conditions precedent.
SECTION 2.02. Execution and Authentication.
Two Officers shall sign the Securities by manual or facsimile
signature. The Company's seal shall be reproduced on the Securities. An Officer
shall sign any coupons by facsimile signature.
If an Officer whose signature is on a Security or its coupons no longer
holds that office at the time the Security is authenticated or delivered, the
Security and coupons shall nevertheless be valid.
A Security and its coupons shall not be valid until the Security is
authenticated by the manual signature of the Trustee. The signature shall be
conclusive evidence that the Security has been authenticated under this
Indenture.
Each Registered Security shall be dated the date of its authentication.
Each Bearer Security shall be dated the date of its original issuance or as
provided in the Securities Resolution.
Securities may have notations, legends or endorsements required by law,
stock exchange rule, agreement or usage.
In the event Securities are issued in electronic or other
uncertificated form, such Securities may be validly issued without the
signatures or seal contemplated by this Section 2.02.
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. Except as otherwise provided in this
Article Two, the Trustee shall thereupon authenticate and make available for
delivery said Securities to or upon the written order of the Company. In
authenticating such Securities, and accepting the additional responsibilities
under this Indenture in relation to such Securities, the Trustee shall be
entitled to receive, and shall be fully protected in relying upon:
(a) a copy of the Securities Resolution pursuant to which the terms
and form of the Securities were established;
(b) an executed supplemental indenture, if any;
(c) an Officers' Certificate delivered in accordance with Section
11.03; and
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<PAGE>
(d) an Opinion of Counsel from outside counsel knowledgeable in such
matters which shall state:
(1) that the form of such Securities has been established by a
supplemental indenture or by or pursuant to a Securities
Resolution in accordance with Sections 2.01 and 2.02 and in
conformity with the provisions of this Indenture;
(2) that the terms of such Securities have been established in
accordance with Section 2.01 and in conformity with the
other provisions of this Indenture;
(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,
reorganization and other laws of general applicability
relating to or affecting the enforcement of creditors'
rights and to general equity principles; and
(4) that all laws and requirements in respect of the execution
and delivery by the Company of such Securities have been
complied with.
The Trustee shall have the right to decline to authenticate and deliver
any Securities under this Section if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if the Trustee in good
faith shall determine that such action would expose the Trustee to personal
liability to existing Holders.
SECTION 2.03. Registrar and Transfer, Paying and Conversion Agents and
Other Agents.
The Company shall maintain an office or agency where Securities may be
authenticated, where Securities may be presented for registration of transfer or
for exchange ("TRANSFER AGENT"), where Securities may be presented for payment
("PAYING AGENT") and where Securities may be presented for conversion
("CONVERSION AGENT"). Whenever the Company must issue or deliver Securities
pursuant to this Indenture, the Trustee shall authenticate the Securities at the
Company's written request. The Transfer Agent shall keep a register of the
Securities and of their transfer and exchange.
The Company may appoint more than one Transfer Agent, Paying Agent or
Conversion Agent or other Agent for a series. The Company shall notify the
Trustee of the name and address of any Agent not a party to this Indenture. If
the Company does not appoint or maintain a Transfer Agent, Paying Agent or
Conversion Agent for a series, the Trustee shall act as such.
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<PAGE>
SECTION 2.04. Bearer Securities.
U.S.laws and Treasury Regulations restrict sales or exchanges of and
payments on Bearer Securities. Therefore, except as provided below:
(1) Bearer Securities will be offered, sold or delivered only
outside the United States and will be delivered in connection
with their original issuance only upon presentation of a
certificate in a form prescribed by the Company to comply with
U.S. laws and regulations.
(2) Bearer Securities will not be issued in exchange for Registered
Securities.
(3) All payments of principal and interest (including original issue
discount) on Bearer Securities will be made outside the United
States by a Paying Agent located outside the United States
unless the Company determines that:
(A) such payments may not be made by such Paying Agent because
the payments are illegal or prevented by exchange controls
as described in Treasury Regulation 1.163-5(c)(2)(v); and
(B) making the payments in the United States would not have an
adverse tax effect on the Company.
If there is a change in the relevant provisions of U.S. laws or
Treasury Regulations or the judicial or administrative interpretation thereof, a
restriction set forth in paragraph (1), (2) or (3) above will not apply to a
series if the Company determines that the relevant provisions no longer apply to
the series or that failure to comply with the relevant provisions would not have
an adverse tax effect on the Company or on Securityholders or cause the series
to be treated as "registration- required" obligations under U.S. law.
The Company shall notify the Trustee of any determinations by the
Company under this Section.
"TREASURY REGULATIONS" means regulations of the U.S. Treasury
Department under the Internal Revenue Code of 1986, as amended.
SECTION 2.05. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent for a series other than
the Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of the persons entitled thereto all money held by the Paying Agent for
the payment of principal of or interest on the series, and will notify the
Trustee of any default by the Company in making any such payment.
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<PAGE>
While any such default continues, the Trustee may require a Paying
Agent to pay all money so held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent shall have no further liability for the
money.
If the Company or an Affiliate acts as Paying Agent for a series, it
shall segregate and hold as a separate trust fund all money held by it as Paying
Agent for the series.
The Company may elect not to exchange or register the transfer of any
Security for a period of 15 days before a selection of Securities to be
redeemed.
SECTION 2.06. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Transfer Agent, the Company shall
furnish to the Trustee semiannually and at such other times as the Trustee may
request a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Holders of Registered Securities and
Holders of Bearer Securities whose names are on the list referred to below.
The Transfer Agent shall keep a list of the names and addresses of
Holders of Bearer Securities who file a request to be included on such list. A
request will remain in effect for two years but successive requests may be made.
Whenever the Company or the Trustee is required to mail a notice to all
Holders of Registered Securities of a series, it also shall mail the notice to
Holders of Bearer Securities of the series whose names are on the list.
Whenever the Company is required to publish a notice to all Holders of
Bearer Securities of a series, it also shall mail the notice to such of them
whose names are on the list.
SECTION 2.07. Transfer and Exchange.
Where Registered Securities of a series are presented to the Transfer
Agent with a request to register a transfer or to exchange them for an equal
principal amount of Registered Securities of other denominations of the same
series, the Transfer Agent shall register the transfer or make the exchange if
its requirements for such transactions are met. Where Bearer Securities of a
series are presented to the Transfer Agent with a request to exchange them for
an equal principal amount of Bearer Securities of other denominations of the
same series, the Transfer Agent shall make the exchange if its requirements for
such transactions are met.
The Transfer Agent may require a Holder to pay a sum sufficient to
cover any taxes imposed on a transfer or exchange.
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<PAGE>
If a series provides for Registered and Bearer Securities and for their
exchange, Bearer Securities may be exchanged for Registered Securities and
Registered Securities may be exchanged for Bearer Securities as provided in the
Securities or the Securities Resolution if the requirements of the Transfer
Agent for such transactions are met and in the case of the exchange of
registered securities for bearer securities if Section 2.04 permits the
exchange.
SECTION 2.08. Replacement Securities.
If the Holder of a Security or coupon claims that it has been lost,
destroyed or wrongfully taken, then, in the absence of notice to the Company or
the Trustee that the Security or coupon has been acquired by a bona fide
purchaser, the Company shall issue a replacement Security or coupon if the
Company and the Trustee receive:
(1) evidence satisfactory to them of the loss, destruction or
taking;
(2) an indemnity bond satisfactory to them; and
(3) payment of a sum sufficient to cover their expenses and any
taxes for replacing the Security or coupon.
A replacement Security shall have coupons attached corresponding to those, if
any, on the replaced Security.
Every replacement Security or coupon is an additional obligation of the
Company.
SECTION 2.09. Outstanding Securities.
The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation, and those described in this Section as not outstanding.
If a Security is replaced pursuant to Section 2.08, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If Securities are considered paid under Section 4.01, they cease to be
outstanding and interest on them ceases to accrue.
A Security does not cease to be outstanding because the Company or an
Affiliate holds the Security.
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<PAGE>
SECTION 2.10. Discounted Debt Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, the principal
amount of a Discounted Debt Security shall be the amount of principal that would
be due as of the date of such determination if payment of the Security were
accelerated on that date.
SECTION 2.11. Treasury Securities.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or an Affiliate shall be disregarded, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only Securities which a Trust Officer of the
Trustee actually knows are so owned shall be so disregarded.
SECTION 2.12. Global Securities.
If the Securities Resolution so provides, the Company may issue some or
all of the Securities of a series in temporary or permanent global form. A
global Security may be in registered form, in bearer form with or without
coupons or in uncertificated form. A global Security shall represent that amount
of Securities of a series as specified in the global Security or as endorsed
thereon from time to time. At the Company's request, the Transfer Agent shall
endorse a global Security to reflect the amount of any increase or decrease in
the Securities represented thereby.
The Company may issue a global Security only to a depository designated
by the Company. A depository may transfer a global Security only as a whole to
its nominee or to a successor depository.
The Securities Resolution may establish, among other things, the manner
of paying principal and interest on a global Security and whether and upon what
terms a beneficial owner of an interest in a global Security may exchange such
interest for definitive Securities.
The Company, an Affiliate, the Trustee and any Agent shall not be
responsible for any acts or omissions of a depository, for any depository
records of beneficial ownership interests or for any transactions between the
depository and beneficial owners.
SECTION 2.13. Temporary Securities.
Until definitive Securities of a series are ready for delivery, the
Company may use temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Temporary Securities
may be in global form. Temporary Bearer Securities may have one or more coupons
or no coupons. Without unreasonable delay, the Company shall deliver definitive
Securities in exchange for temporary Securities.
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<PAGE>
SECTION 2.14. Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Transfer Agent and the Paying Agent shall forward to the
Trustee any Securities and coupons surrendered to them for payment, exchange or
registration of transfer. The Trustee shall cancel all Securities or coupons
surrendered for payment, registration of transfer, exchange or cancellation. The
Trustee also will cancel all Bearer Securities and unmatured coupons unless the
Company requests the Trustee to hold the same for redelivery. Any Bearer
Securities so held shall be considered delivered for cancellation under Section
2.09.
Unless the Securities Resolution otherwise provides, the Company may
not issue new Securities to replace Securities that the Company has paid or that
the Company has delivered to the Trustee for cancellation.
SECTION 2.15. Defaulted Interest.
If the Company defaults in a payment of interest on Registered
Securities, it need not pay the defaulted interest to Holders on the regular
record date. The Company may fix a special record date for determining Holders
entitled to receive defaulted interest, or the Company may pay defaulted
interest in any other lawful manner.
SECTION 2.16. 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 notices
of redemption 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 Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Securities, and any such redemption shall not be affected
by any defect in or omission of such numbers. The Company will promptly notify
the Trustee of any change in the "CUSIP" numbers.
ARTICLE 3--REDEMPTION
SECTION 3.01. Notices to Trustee.
Securities of a series that are redeemable before maturity shall be
redeemable in accordance with their terms and, unless the Securities Resolution
otherwise provides, in accordance with this Article.
In the case of a redemption by the Company, the Company shall notify
the Trustee of the redemption date and the principal amount of Securities to be
redeemed. The Company shall notify the Trustee at least 45 days before the
redemption date unless a shorter notice is satisfactory to the Trustee.
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<PAGE>
If the Company is required to redeem Securities, it may reduce the
principal amount of Securities required to be redeemed to the extent that it is
permitted a credit against such redemption requirement by the terms of the
Securities Resolution and notifies the Trustee of the amount of such credit and
the basis for it. If the reduction is based on a credit for acquired or redeemed
Securities that the Company has not previously delivered to the Trustee for
cancellation, the Company shall deliver the Securities at the same time as the
notice.
SECTION 3.02. Selection of Securities to Be Redeemed.
If less than all the Securities of a series are to be redeemed, the
Trustee shall select the Securities to be redeemed by a method the Trustee
considers fair and appropriate. The Trustee shall make the selection from
Securities of the series outstanding not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities having
denominations larger than the minimum denomination for the series. Securities
and portions thereof selected for redemption shall be in amounts equal to the
minimum denomination for the series or an integral multiple thereof. Provisions
of this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption.
SECTION 3.03. Notice of Redemption.
At least 30 but not more than 60 days before a redemption date, the
Company shall mail a notice of redemption by first-class mail to each Holder of
Registered Securities whose Securities are to be redeemed.
If Bearer Securities are to be redeemed, the Company shall publish a
notice of redemption in an Authorized Newspaper as provided in the Securities.
A notice shall identify the Securities of the series (including CUSIP
number) to be redeemed and shall state:
<TABLE>
<S> <C>
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption, together with all
coupons, if any, maturing after the redemption date, must be
surrendered to the Paying Agent to collect the redemption price;
(5) that interest on Securities called for redemption ceases to
accrue on and after the redemption date;
(6) whether the redemption by the Company is mandatory or optional;
and
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<PAGE>
(7) whether the redemption is conditional as provided in Section
3.04, and if so, the terms of the conditions, and that, if the
conditions are not satisfied or are not waived by the Company,
the Securities will not be redeemed and such a failure to redeem
will not constitute an Event of Default.
</TABLE>
A redemption notice given by publication need not identify Registered
Securities to be redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense.
SECTION 3.04. Effect of Notice of Redemption.
Except as provided below, once notice of redemption is given,
Securities called for redemption become due and payable on the redemption date
at the redemption price stated in the notice.
A notice of redemption may provide that it is subject to the occurrence
of any event before the date fixed for such redemption as described in such
notice ("CONDITIONAL REDEMPTION"), and such notice of Conditional Redemption
shall be of no effect unless all such conditions to the redemption have occurred
on or before such date or have been waived by the Company in its sole
discretion.
SECTION 3.05. Payment of Redemption Price.
Prior to 10:00 a.m., New York City time, on the redemption date, the
Company shall deposit with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Securities to be redeemed on
that date.
When the Holder of a Security surrenders it for redemption in
accordance with the redemption notice, the Company shall pay to the Holder on
the redemption date the redemption price and accrued interest to such date,
except that:
(1) the Company will pay any such interest (except defaulted
interest) to Holders on the record date of Registered Securities
if the redemption date occurs on an interest payment date; and
(2) the Company will pay any such interest to Holders of coupons
that mature on or before the redemption date upon surrender of
such coupons to the Paying Agent.
Coupons maturing after the redemption date on a called Security are
void absent a payment default on that date. Nevertheless, if a Holder surrenders
for redemption a Bearer Security missing any such coupons, the Company may
deduct the face amount of such coupons from the redemption price. If thereafter
the Holder surrenders to the Paying Agent the missing coupons, the Company will
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return the amount so deducted. The Company may waive surrender of the missing
coupons if it receives an indemnity bond satisfactory to the Company.
SECTION 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Company
shall deliver to the Holder a new Security of the same series equal in principal
amount to the unredeemed portion of the Security surrendered.
ARTICLE 4--COVENANTS
SECTION 4.01. Payment of Securities.
The Company shall pay the principal of and interest on a series in
accordance with the terms of the Securities for the series, any related coupons,
and this Indenture. Principal and interest on a series shall be considered paid
on the date due if the Paying Agent for the series holds, prior to 10:00 a.m.,
New York City time, on that date money sufficient to pay all principal and
interest then due on the series.
SECTION 4.02. Overdue Interest.
Unless the Securities Resolution otherwise provides, the Company shall
pay interest on overdue principal of a Security of a series at the rate (or
Yield to Maturity in the case of a Discounted Debt Security) borne by the
series; the Company shall pay interest on overdue installments of interest at
the same rate or Yield to Maturity to the extent lawful.
SECTION 4.03. No Lien Created, etc.
This Indenture and the Securities do not create a Lien, charge or
encumbrance on any property of the Company or any Subsidiary.
SECTION 4.04. Compliance Certificate.
The Company shall deliver to the Trustee, within 120 days after the
end of each fiscal year of the Company, a brief certificate signed by the
principal executive officer, principal financial officer or principal accounting
officer of the Company, as to the signer's knowledge of the Company's compliance
with all conditions and covenants under this Indenture (determined without
regard to any period of grace or requirement of notice provided herein) and if
the Company shall not be in compliance, specifying such non-compliance and the
nature and status thereof.
Any other obligor on the Securities shall also deliver to the Trustee
such a certificate as to its compliance with this Indenture within 120 days
after the end of each of its fiscal years.
The certificates need not comply with Section 11.04.
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SECTION 4.05. SEC Reports.
The Company shall file with the Trustee, within 15 days after the
Company is required to file the same with the SEC, copies of the annual reports
and of the information, documents, and other reports (or such portions of the
foregoing as the SEC may prescribe) which the Company is required to file with
the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Any other obligor on the Securities shall do likewise as to the above
items which it is required to file with the SEC pursuant to those sections.
Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
SECTION 4.06. Costs and Expenses of COASTAL Trusts.
The Company shall pay all debts and obligations (other than with
respect to the Trust Securities) and all costs and expenses of any COASTAL Trust
(including, but not limited to, all costs and expenses relating to the
organization of the applicable COASTAL Trust, the fees and expenses of any
trustee or trustees for the COASTAL Trust and all costs and expenses relating to
the operation of the applicable COASTAL Trust (other than with respect to the
Trust Securities)) and to pay any and all taxes, duties, assessments or other
governmental charges of whatever nature (other than United States withholding
taxes) imposed by the United States or any other taxing authority, so that the
net amounts received and retained by the applicable COASTAL Trust after paying
such fees, expenses, debts and obligations will be equal to the amounts the
applicable COASTAL Trust would have received and retained had no such fees,
expenses, debts and obligations been incurred by or imposed on the applicable
COASTAL Trust.
SECTION 4.07. Statement by Officers as to Default or Event of Default.
The Company shall deliver to the Trustee, as soon as possible and in
any event within five days after the Company becomes aware of the occurrence of
any Event of Default or Default, an Officers' Certificate setting forth the
details of such Event of Default or Default and the action which the Company has
taken or proposes to take with respect thereto.
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ARTICLE 5--SUCCESSORS
SECTION 5.01. When Company May Merge, etc.
Unless the Securities Resolution establishing a Series otherwise
provides, the Company shall not consolidate with or merge into any person in any
transaction in which the Company is not the survivor, or transfer all or
substantially all of its assets to any person, unless:
(1) the person is organized under the laws of the United States or a
State thereof or is organized under the laws of a foreign
jurisdiction and consents to the jurisdiction of the courts of
the United States or a State thereof;
(2) the person assumes by supplemental indenture all the obligations
of the Company under this Indenture, the Securities and any
coupons;
(3) all required approvals of any regulatory body having
jurisdiction over the transaction shall have been obtained;
(4) immediately after the transaction no Default exists; and
(5) the Company provides an Officers' Certificate and an Opinion of
Counsel from outside counsel knowledgeable in such matters to
the effect that all the provisions in this Section 5.01 have
been complied with.
The successor shall be substituted for the Company, and thereafter all
obligations of the Company under this Indenture, the Securities and any coupons
shall terminate.
ARTICLE 6--DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.
Unless the Securities Resolution otherwise provides, an "EVENT OF
DEFAULT" on a series occurs if:
(1) the Company defaults in any payment of interest on any
Securities of the series when the same becomes due and payable
and the Default continues for a period of 30 days;
(2) the Company defaults in the payment of the principal and
premium, if any, of any Securities of the series when the same
becomes due and payable at maturity or upon redemption,
acceleration or otherwise;
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<PAGE>
(3) the Company defaults in the payment or satisfaction of any
sinking fund obligation with respect to any Securities of the
series as required by the Securities Resolution establishing
such series and the Default continues for a period of 30 days;
(4) the Company defaults in the performance of any of its other
agreements applicable to the series and the Default continues
for 60 days after the notice specified below;
(5) the Company pursuant to or within the meaning of any Bankruptcy
Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it in
an involuntary case,
(C) consents to the appointment of a Custodian for it or for all
or substantially all of its property, or
(D) makes a general assignment for the benefit of its creditors;
(6) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case,
(B) appoints a Custodian for the Company or for all or
substantially all of its property, or
(C) orders the liquidation of the Company;
and the order or decree remains unstayed and in effect for 60
days; or
(7) there occurs any other Event of Default provided for in the
series.
The term "BANKRUPTCY LAW" means Title 11, U.S. Code or any similar
Federal or State law for the relief of debtors. The term "CUSTODIAN" means any
receiver, trustee, assignee, liquidator or a similar official under any
Bankruptcy Law.
A Default under clause (4) is not an Event of Default until the Trustee
or the Holders of at least 25% in principal amount of the series notify the
Company of the Default and the Company does not cure the Default within the time
specified after receipt of the notice. The notice must specify the Default,
demand that it be remedied and state that the notice is a "Notice of Default."
If Holders notify the Company of a Default, they shall notify the Trustee at the
same time.
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The failure to redeem any Security subject to a Conditional Redemption
is not an Event of Default if any event on which such redemption is so
conditioned does not occur and is not waived before the scheduled redemption
date.
SECTION 6.02. Acceleration.
If an Event of Default occurs and is continuing on a series, the
Trustee by notice to the Company, or the Holders of at least 25% in principal
amount of the series (or, in the case of a series issued to a COASTAL Trust, so
long as any of the related preferred securities of such COASTAL Trust remain
outstanding, if, upon such Event of Default, the Trustee or the Holders of not
less than 25% in aggregate principal amount of such series fail to declare the
principal of all the Securities of such series to be so immediately due and
payable, the holders of 25% in aggregate liquidation amount of such preferred
securities then outstanding shall have such right) by notice to the Company and
the Trustee, may declare the principal of and accrued interest on all the
Securities of the series to be due and payable immediately. Discounted Debt
Securities may provide that the amount of principal due upon acceleration is
less than the stated principal amount.
The Holders of a majority in principal amount of the series by notice
to the Trustee may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default on the series have been cured or waived except nonpayment of
principal or interest that has become due solely because of the acceleration;
provided, that in the case of a series issued to a COASTAL Trust, so long as any
of the related preferred securities of such COASTAL Trust remain outstanding,
the holders of a majority in aggregate liquidation amount of such preferred
securities then outstanding shall instead have such right to rescind the of
acceleration and its consequences with respect to such series, subject to the
same conditions set forth above.
SECTION 6.03. Other Remedies.
If an Event of Default occurs and is continuing on a series, the
Trustee may pursue any available remedy to collect principal or interest then
due on the series, to enforce the performance of any provision applicable to the
series, or otherwise to protect the rights of the Trustee and Holders of the
series.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or coupons or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
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<PAGE>
SECTION 6.04. Waiver of Past Defaults.
Unless the Securities Resolution otherwise provides, the Holders of a
majority in principal amount of a series (or, in the case of a series issued to
a COASTAL Trust, so long as any of the related preferred securities of such
COASTAL Trust remain outstanding, the holders of a majority in aggregate
liquidation amount of such preferred securities then outstanding) by notice to
the Trustee may waive an existing Default on the series and its consequences
except:
(1) a Default in the payment of the principal of or interest on the
series, or
(2) a Default in respect of a provision that under Section 10.02
cannot be amended without the consent of each Securityholder
affected.
SECTION 6.05. Control by Majority.
The Holders of a majority in principal amount of a series may direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee, or of exercising any trust or power conferred on the Trustee,
with respect to such series. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture or if the Trustee in good
faith shall determine that the action or direction might involve the Trustee in
personal liability.
SECTION 6.06. Limitation on Suits.
A Securityholder of a series may pursue a remedy with respect to the
series only if:
(1) the Holder gives to the Trustee notice of a continuing Event of
Default on the series;
(2) the Holders of at least 25% in principal amount of the series
make a request to the Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holders of a majority in principal
amount of the series do not give the Trustee a direction
inconsistent with such request.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
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In the case of a series issued to a COASTAL Trust, any holder of the
related preferred securities of such COASTAL Trust shall have the right, upon
the occurrence and continuance of an Event of Default described in Sections
6.01(1) and (2) hereof with respect to such series, to institute a suit directly
against the Company to enforce payment to such holder of the principal of, and
premium, if any, and interest on, the Securities having a principal amount equal
to the aggregate liquidation amount of such preferred securities held by such
holder.
SECTION 6.07. Collection Suit by Trustee.
If an Event of Default in payment of interest, principal or sinking
fund specified in Section 6.01(1), (2) or (3) occurs and is continuing on a
series, the Trustee may recover judgment in its own name and as trustee of an
express trust against the Company for the whole amount of principal and interest
remaining unpaid on the series.
SECTION 6.08. Priorities.
If the Trustee collects any money for a series pursuant to this
Article, it shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.06;
Second: to Securityholders of the series for amounts due and unpaid for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable for principal and interest,
respectively; and
Third: to the Company.
The Trustee may fix a payment date for any payment to Securityholders.
ARTICLE 7--TRUSTEE
SECTION 7.01. Rights of Trustee.
(1) The Trustee may conclusively rely on any document believed by it
to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter
stated in the document.
(2) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in
good faith in reliance on the Certificate or Opinion of Counsel.
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(3) The Trustee may act through agents or attorneys and shall not be
responsible for the misconduct or negligence of any agent
appointed with due care.
(4) The Trustee shall not be liable for any action it takes or omits
to take in good faith in accordance with a direction received by
it pursuant to Section 6.05.
(5) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with
the Company. Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by
law.
(6) The Trustee shall have no duty with respect to a Default unless
a Trust Officer has actual knowledge of the Default. As used
herein, the term "actual knowledge" means the actual fact or
statement of knowing, without any duty to make any investigation
with regard thereto.
(7) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized and
within its powers.
(8) Any Agent shall have the same rights and be protected to the
same extent as if it were Trustee.
(9) The Trustee shall not be required to give any bond or surety in
respect of the performance of its powers and duties hereunder.
(10) 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 it 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.
(11) The Trustee may consult with counsel of its selection and shall
not be held liable in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance on the
advice of such counsel or any Opinion of Counsel from such
counsel.
(12) 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
that it reasonably believes may expose it to any loss, liability
or expense, unless such Holders shall have offered to the
Trustee security or indemnity satisfactory to the Trustee
against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
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SECTION 7.02. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities or coupons and may otherwise deal with the
Company or an Affiliate with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights.
SECTION 7.03. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities or any coupons; it shall not be accountable for
the Company's use of the proceeds from the Securities; it shall not be
responsible for any statement in the Securities or any coupons; it shall not be
responsible for any overissue; it shall not be responsible for determining
whether the form and terms of any Securities or coupons were established in
conformity with this Indenture; it shall not be responsible for determining
whether any Securities were issued in accordance with this Indenture; and it
shall not be responsible for the acts or omissions of any other Trustees
appointed hereunder.
SECTION 7.04. Notice of Defaults.
If a Default occurs and is continuing on a series and if the Trustee
has actual knowledge of such Default, the Trustee shall mail a notice of the
Default within 90 days after it occurs to Holders of Registered Securities of
the series. Except in the case of a Default in payment on a series, the Trustee
may withhold the notice if and so long as a committee of its Trust Officers in
good faith determines that withholding the notice is in the interest of Holders
of the series. The Trustee shall withhold notice of a Default described in
Section 6.01(4) until at least 60 days after it occurs.
SECTION 7.05. Reports by Trustee to Holders.
Any report required by TIA Section 313(a) to be mailed to
Securityholders shall be mailed by the Trustee on or before May 15th of each
year.
A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange on which any Securities are
listed. The Company shall notify the Trustee when any Securities are listed on a
stock exchange.
SECTION 7.06. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services as the Trustee and the Company shall from time to
time agree in writing. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Company shall
reimburse the Trustee upon request for all expenses incurred by it. Such
expenses shall include the reasonable compensation and expenses of the Trustee's
agents and counsel.
The Company shall indemnify each of the Trustee or any predecessor
Trustee and their agents for, and to hold them harmless against, any and all
loss, damage, claims, liability or expense, including
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taxes (other than taxes based upon, measured by or determined by the income of
the Trustee), arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses of defending itself against any claim (whether asserted by the Company,
or any Holder or any other Person) or liability in connection with the exercise
or performance of any of its powers or duties hereunder, except to the extent
that such loss, damage, claim, liability or expense is due to its own negligence
or bad faith. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. The Company shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and the
Company shall pay the reasonable fees and expenses of such counsel. The Company
need not pay for any settlement made without its consent.
The Company need not reimburse any expense or indemnify against any
loss or liability incurred by the Trustee through its own negligence or willful
misconduct.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities and any coupons on all money
or property held or collected by the Trustee, except that held in trust to pay
principal or interest on particular securities.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(5) or (6) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section shall survive any termination or
discharge of this Indenture (including without limitation any termination under
any Bankruptcy Law) and the resignation or removal of the Trustee.
SECTION 7.07. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign by so notifying the Company. The Holders of a
majority in principal amount of the Securities may remove the Trustee by so
notifying the Trustee and may appoint a successor Trustee with the Company's
consent.
The Company may remove the Trustee if:
(1) the Trustee fails to comply with TIA Section 310(a) or
Section 310(b) or with Section 7.09;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a Custodian or other public officer takes charge of the Trustee
or its property;
(4) the Trustee becomes incapable of acting; or
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(5) an event of the kind described in Section 6.01(5) or (6) occurs
with respect to the Trustee.
The Company also may remove the Trustee with or without cause if the
Company so notifies the Trustee three months in advance and if no Default occurs
during the three-month period.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee.
If a successor Trustee does not take office within 30 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of a majority in principal amount of the Securities may petition, at the
expense of the Company, any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with TIA Section 310(a) or Section
310(b) or with Section 7.09, any Securityholder may petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of Registered Securities. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor Trustee,
subject to the lien provided for in Section 7.06.
SECTION 7.08. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.09. Trustee's Capital and Surplus.
The Trustee at all times shall have a combined capital and surplus of
at least $50,000,000 as set forth in its most recent published report of
financial condition.
ARTICLE 8--DISCHARGE OF INDENTURE
SECTION 8.01. Defeasance.
Securities of a series may be defeased in accordance with their terms
and, unless the Securities Resolution otherwise provides, in accordance with
this Article.
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The Company at any time may terminate as to a series all of its
obligations under this Indenture, the Securities of the series ("legal
defeasance option"). The Company at any time may terminate as to a series its
obligations, if any, under any restrictive covenants which may be applicable to
a particular series ("covenant defeasance option"). However, in the case of the
legal defeasance option, the Company's obligations in Sections 2.03, 2.04, 2.05,
2.06, 2.07, 2.08, 7.06, 7.07 and 8.04 shall survive until the Securities of the
series are no longer outstanding; thereafter the Company's obligations in
Section 7.06 shall survive.
The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option. If the Company exercises
its legal defeasance option, a series may not be accelerated because of an Event
of Default. If the Company exercises its covenant defeasance option, a series
may not be accelerated by reference to any restrictive covenants as to which the
covenant defeasance option applicable to such series has been so exercised.
The Trustee upon request shall acknowledge in writing the discharge of
those obligations or restrictions that the Company terminates by defeasance.
SECTION 8.02. Conditions to Defeasance.
The Company may exercise as to a series its legal defeasance option or
its covenant defeasance option if:
(1) the Company irrevocably deposits in trust with the Trustee or
another trustee money or U.S. Government Obligations;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing
their opinion that the payments of principal and interest when
due on the deposited U.S. Government Obligations without
reinvestment plus any deposited money without investment will
provide cash at such times and in such amounts as will be
sufficient to pay principal and interest when due on all the
Securities of the series to maturity or redemption, as the case
may be;
(3) immediately after the deposit no Default exists;
(4) the deposit does not constitute a default under any other
agreement binding on the Company;
(5) the deposit does not cause the Trustee to have a conflicting
interest under TIA Section 310(a) or Section 310(b) as to
another series;
(6) the Company delivers to the Trustee an Opinion of Counsel from
outside counsel knowledgeable in such matters to the effect that
Holders of the series will not
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recognize income, gain or loss for Federal income tax purposes
as a result of the defeasance;
(7) 91 days pass after the deposit is made and during the 91-day
period no Default specified in Section 6.01(5) or (6) occurs
that is continuing at the end of the period; and
(8) the Company provides an Officers' Certificate and an Opinion of
Counsel from outside counsel knowledgeable in such matters to
the effect that all conditions precedent pursuant to this
Section 8.02 have been satisfied.
Before or after a deposit the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
"U.S. GOVERNMENT OBLIGATIONS" means direct obligations of (i) the
United States or (ii) an agency or instrumentality of the United States, the
payment of which is unconditionally guaranteed by the United States, which, in
either case, have the full faith and credit of the United States pledged for
payment and which are not callable at the issuer's option, or certificates
representing an ownership interest in such obligations.
SECTION 8.03. Application of Trust Money.
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Section 8.02. It shall apply the deposited money
and the money from U.S. Government Obligations through the Paying Agent and in
accordance with this Indenture to the payment of principal and interest on
Securities of the defeased series.
SECTION 8.04. Repayment to Company.
The Trustee and the Paying Agent shall promptly turn over to the
Company upon request any excess money or securities held by them at any time.
The Trustee and the Paying Agent shall pay to the Company upon written
request any money held by them for the payment of principal or interest that
remains unclaimed for two years. After payment to the Company, Securityholders
entitled to the money must look to the Company for payment as unsecured general
creditors unless an abandoned property law designates another person.
SECTION 8.05. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Miscellaneous Provisions.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S.Government Obligations
deposited pursuant to Section 8.02 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of outstanding Securities.
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ARTICLE 9--CONVERSION
SECTION 9.01. Conversion Privilege.
If the Securities Resolution establishing the terms of a series of
securities so provides, Securities of any series may be convertible at the
option of the holders into or for Common Stock or other equity or debt
securities (a "CONVERSION RIGHT"). The Securities Resolution may establish,
among other things, the Conversion Rate, provisions for adjustments to the
Conversion Rate and limitations upon exercise of the Conversion Right.
Unless the Securities Resolution otherwise provides, a Holder may
convert a portion of a Security if the portion is $1,000 or an integral
multiples thereof. Provisions of this Indenture that apply to the conversion of
the aggregate principal amount of a Security also apply to conversion of a
portion of it.
The Securities Resolution providing for Securities with a Conversion
Right may establish any terms in addition to, or other than (including terms
inconsistent with), those set forth in this Article 9 with respect to the
conversion of the Securities established thereby (other than those of Section
9.16).
SECTION 9.02. Conversion Procedure.
To convert a Security a Holder must satisfy all requirements in the
Securities or the Securities Resolution and (i) complete and manually sign the
conversion notice (the "CONVERSION NOTICE") provided for in the Securities
Resolution or the Security (or complete and manually sign a facsimile thereof)
and deliver such notice to the Conversion Agent or any other office or agency
maintained for such purpose, (ii) surrender the Security to the Conversion Agent
or at such other office or agency by physical delivery, (iii) if required,
furnish appropriate endorsements and transfer documents, and (iv) if required,
pay all transfer or similar taxes. The date on which such notice shall have been
received by and the Security shall have been so surrendered to the Conversion
Agent is the "CONVERSION DATE." Such Conversion Notice shall be irrevocable and
may not be withdrawn by a Holder for any reason.
The Company will complete settlement of any conversion of Securities
not later than the fifth Business Day following the Conversion Date in respect
of the cash portion elected to be delivered in lieu of the securities into which
the Security is convertible and not later than the seventh business day
following the Conversion Date in respect of the portion to be settled in such
securities.
If any Security is converted between the record date for the payment of
interest and the next succeeding interest payment date, such Security must be
accompanied by funds equal to the interest payable on such succeeding interest
payment date on the principal amount so converted (unless such Security shall
have been called for redemption during such period, in which case no such
payment shall be required). A Security converted on an interest payment date
need not be accompanied by any payment, and the interest on the principal amount
of the Security being converted will be paid
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on such interest payment date to the registered holder of such Security on the
immediately preceding record date. Subject to the aforesaid right of the
registered holder to receive interest, no payment or adjustment will be made on
conversion for interest accrued on the converted Security or for interest,
dividends or other distributions payable on any security issued on conversion.
If a Holder converts more than one Security at the same time, the
securities into which the Security is convertible issuable or cash payable upon
the conversion shall be based on the total principal amount of the Securities
converted.
Upon surrender of a Security that is converted in part the Trustee
shall authenticate for the Holder a new Security equal in principal amount to
the unconverted portion of the Security surrendered; except that if a global
Security is so surrendered the Trustee shall authenticate and, if applicable,
deliver to the depository a new global Security in a denomination equal to and
in exchange for the unconverted portion of the principal of the global Security
so surrendered.
If the last day on which a Security may be converted is a Legal Holiday
in a place where a Conversion Agent is located, the Security may be surrendered
to that Conversion Agent on the next succeeding day that is not a Legal Holiday.
SECTION 9.03. Taxes on Conversion.
If a Holder of a Security exercises a Conversion Right, the Company
shall pay any documentary, stamp or similar issue or transfer tax due on the
issue of the securities into which the Security is convertible upon the
conversion. However, the Holder shall pay any such tax which is due because
securities or other property are issued in a name other than the Holder's name.
Nothing herein shall preclude any income tax or other withholding required by
law or regulations.
SECTION 9.04. Company Determination Final.
Any determination that the Board of Directors makes pursuant to this
Article 9 or consistent with terms provided for in any Securities Resolution is
conclusive, absent manifest error.
SECTION 9.05. Trustee's and Conversion Agent's Disclaimer.
The Trustee (and each Conversion Agent other than the Company) has no
duty to determine when or if an adjustment under this Article 9 or any
Securities Resolution should be made, how it should be made or calculated or
what it should be. The Trustee (and each Conversion Agent other than the
Company) makes no representation as to the validity or value of any securities
issued upon conversion of Securities. The Trustee (and each Conversion Agent
other than the Company) shall not be responsible for the Company's failure to
comply with this Article 9 or any provision of a Securities Resolution relating
to a Conversion Right.
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SECTION 9.06. Company to Provide Conversion Securities.
The Company shall reserve out of its authorized but unissued Common
Stock or its Common Stock held in treasury sufficient shares to permit the
conversion of all of the Securities convertible into Common Stock. The Company
shall arrange and make available for issuance upon conversion the full amount of
any other securities into which the Securities are convertible to permit such
conversion of the Securities.
All shares of Common Stock or other equity securities of any person
which may be issued upon conversion of the Securities shall be validly issued,
fully paid and non-assessable.
The Company will comply with all securities laws regulating the offer
and delivery of securities upon conversion of Securities.
SECTION 9.07. Cash Settlement Option.
If the Securities Resolution so provides, the Company may elect to
satisfy, in whole or in part, a Conversion Right of Securities convertible into
Common Stock or other securities of any person by the delivery of cash. The
amount of cash to be delivered shall be equal to the Market Price on the last
Trading Day preceding the applicable Conversion Date of a share of Common Stock
or other securities of any person into which the Securities are convertible
multiplied by the number of shares of Common Stock or the number of shares or
principal amount of other securities into which the Securities are convertible,
respectively, in respect of which the Company elects to deliver cash. If the
Company elects to satisfy, in whole or in part, a Conversion Right by the
delivery of shares of Common Stock or other securities, no fractional shares or
portion of other securities will be delivered. Instead, the Company will pay
cash based on the Market Price for such fractional share of Common Stock or
portion of other securities.
The "MARKET PRICE" of the Common Stock into which Securities or other
equity securities into which the Securities are convertible may be converted
pursuant to a Securities Resolution or this Article 9 on any Trading Day means
the weighted average per share sale price for all sales of the Common Stock or
other equity securities on such Trading Day (or, if the information necessary to
calculate such weighted average per share sale price is not reported, the
average of the high and low sale prices, or if no sales are reported, the
average of the bid and ask prices or, if more than one in either case, the
average of the average bid and average ask prices), as reported in the composite
transactions for the New York Stock Exchange, or if the Common Stock or other
equity securities into which the Securities are convertible are not listed or
admitted to trading on such exchange, as reported in the composite transactions
for the principal national or regional United States securities exchange on
which the Common Stock or other equity securities into which the Securities are
convertible are listed or admitted to trading or, if the Common Stock or other
equity securities into which the Securities are convertible are not listed or
admitted to trading on a United States national or regional securities exchange,
as reported by Nasdaq or by the National Quotation
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Bureau Incorporated, or if not so reported, as determined in the manner set
forth in the appropriate Securities Resolution. In the absence of such
quotations, the Company shall be entitled to determine the Market Price on the
basis of such quotations as it considers appropriate.
The "MARKET PRICE" of any debt security into which Securities are
convertible shall be determined as set forth in the applicable Securities
Resolution.
SECTION 9.08. Adjustment in Conversion Rate for Change in Capital Stock.
If the Securities are convertible into Common Stock and the Company:
(1) pays a dividend or makes a distribution on its Common Stock in
shares of its Common Stock;
(2) subdivides its outstanding shares of Common Stock into a greater
number of shares;
(3) combines its outstanding shares of Common Stock into a smaller
number of shares;
(4) pays a dividend or makes a distribution on its Common Stock in
shares of its Capital Stock other than Common Stock; or
(5) issues by reclassification of its Common Stock any shares of its
Capital Stock,
then the conversion privilege and the Conversion Rate in effect immediately
prior to such action shall be adjusted so that the Holder of a Security
thereafter converted may receive the number of shares of Capital Stock of the
Company (or, at the Company's option, an equivalent amount in cash) which he
would have owned immediately following such action if he had converted the
Security immediately prior to such action.
The adjustment shall become effective immediately after the record date
in the case of a dividend or distribution and immediately after the effective
date in the case of a subdivision, combination or reclassification.
If the security into which the Securities are convertible is other than
Common Stock of the Company, the conversion rate shall be subject to adjustment
as set forth in the applicable Securities Resolution.
If after an adjustment a Holder of a Security may, upon conversion,
receive shares of two or more classes of Capital Stock of the Company or other
securities, the Board of Directors of the Company shall determine the allocation
of the adjusted Conversion Rate between or among the classes of Capital Stock or
other securities. After such allocation, the conversion privilege and the
Conversion Rate of each class of Capital Stock or other securities shall
thereafter be subject to
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adjustment on terms comparable to those applicable to Common Stock in this
Article or in such Securities Resolution.
SECTION 9.09. Adjustment in Conversion Rate for Common Stock Issued Below
Market Price.
If the Securities are convertible into Common Stock, and the Company
issues to all holders of Common Stock rights, options or warrants to subscribe
for or purchase shares of Common Stock, or any securities convertible into or
exchangeable for shares of Common Stock, or rights, options or warrants to
subscribe for or purchase such convertible or exchangeable securities at a Price
Per Share (as defined and determined according to the formula given below) lower
than the current Market Price on the date of such issuance, the Conversion Rate
shall be adjusted in accordance with the following formula:
AC = CC . (O + N)
-------
O.R - M
where:
AC = the adjusted Conversion Rate.
CC = the then current Conversion Rate.
O = the number of shares of Common Stock outstanding
immediately prior to such issuance (which number shall
include shares owned or held by or for the account of the
Company).
N = the "Number of Shares," which (i) in the case of rights,
options or warrants to subscribe for or purchase shares of
Common Stock or of securities convertible into or
exchangeable for shares of Common Stock, is the maximum
number of shares of Common Stock initially issuable upon
exercise, conversion or exchange thereof; and (ii) in the
case of rights, options or warrants to subscribe for or
purchase convertible or exchangeable securities, is the
maximum number of shares of Common Stock initially
issuable upon the conversion or exchange of the
convertible or exchangeable securities issuable upon the
exercise of such rights, options or warrants.
R = the proceeds received or receivable by the Company,
which (i) in the case of rights, options or warrants to
subscribe for or purchase shares of Common Stock or of
securities convertible into or exchangeable for shares of
Common Stock, is the aggregate amount received or
receivable by the Company in consideration for the sale
and issuance of such rights, options, warrants or
convertible or
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exchangeable securities, plus the minimum aggregate amount
of additional consideration, other than the convertible or
exchangeable securities, payable to the Company upon
exercise, conversion or exchange thereof; and (ii) in the
case of rights, options or warrants to subscribe for or
purchase convertible or exchangeable securities, is the
aggregate amount received or receivable by the Company in
consideration for the sale and issuance of such rights,
options or warrants, plus the minimum aggregate
consideration payable to the Company upon the exercise
thereof, plus the minimum aggregate amount of additional
consideration, other than the convertible or exchangeable
securities, payable upon the conversion or exchange of the
convertible or exchangeable securities; PROVIDED, that in
each case the proceeds received or receivable by the
Company shall be deemed to be the amount of gross cash
proceeds without deducting therefrom any compensation paid
or discount allowed in the sale, underwriting or purchase
thereof by underwriters or dealers or others performing
similar services or any expenses incurred in connection
therewith.
M = the current Market Price per share of Common Stock on
the date of issue of the rights, options or warrants to
subscribe for or purchase shares of Common Stock or the
securities convertible into or exchangeable for shares of
Common Stock or the rights, options or warrants to
subscribe for or purchase convertible or exchangeable
securities.
"PRICE PER SHARE" shall be defined and determined
according to the following formula:
P = R
-
N
where:
P = Price Per Share
and R and N have the meanings assigned above.
If the Company shall issue rights, options, warrants or convertible or
exchangeable securities with respect to its Common Stock for a consideration
consisting, in whole or in part, of property other than cash the amount of such
consideration shall be determined in good faith by the Board of Directors whose
determination shall be conclusive and evidenced by a resolution of the Board of
Directors filed with the Trustee.
The adjustment shall be made successively whenever any such additional
rights, options, warrants or convertible or exchangeable securities with respect
to its Common Stock are issued, and shall become effective immediately after the
date of issue of such shares, rights, options, warrants or convertible or
exchangeable securities.
34
<PAGE>
To the extent that such rights, options or warrants to acquire Common
Stock expire unexercised or to the extent any convertible or exchangeable
securities with respect to its Common Stock are redeemed by the Company or
otherwise cease to be convertible or exchangeable into shares of Common Stock,
the Conversion Rate shall be readjusted to the Conversion Rate which would then
be in effect had the adjustment made upon the date of issuance of such rights,
options, warrants or convertible or exchangeable securities been made upon the
basis of the issuance of rights, options or warrants to subscribe for or
purchase only the number of shares of Common Stock as to which such rights,
options or warrants were actually exercised and the number of shares of Common
Stock that were actually issued upon the conversion or exchange of the
convertible or exchangeable securities.
If the Securities are convertible into securities other than the Common
Stock, any adjustment in the Conversion Rate required for the issuance or sale
of the securities into which the Securities are convertible shall be made as set
forth in the Securities Resolution.
SECTION 9.10. Adjustment for Other Distributions.
If the Securities are initially convertible into Common Stock and the
Company distributes to all holders of its Common Stock any of its assets or debt
securities or any rights or warrants to purchase assets or debt securities of
the Company, the Conversion Rate shall be adjusted in accordance with the
following formula:
AC = CC . (O . M)
------------------
( (O . M) - F)
where:
AC = the adjusted Conversion Rate.
CC = the then current Conversion Rate.
O = the number of shares of Common Stock outstanding on the
record date mentioned below (which number shall include
shares owned or held by or for the account of the
Company).
M = the current Market Price per share of Common Stock on
the record date mentioned below.
F = the fair market value on the record date of the assets,
securities, rights or warrants distributed. The Board of
Directors of the Company shall determine the fair market
value.
The adjustment shall become effective immediately after the record date
for the determination of stockholders entitled to receive the distribution.
35
<PAGE>
If the securities into which the Securities are convertible are other
than Common Stock, any adjustments for such other distribution shall be made as
set forth in the Securities Resolution.
This Section does not apply to cash dividends or distributions or to
reclassifications or distributions referred to in Section 9.08. Also, this
Section does not apply to shares issued below Market Price referred to in
Section 9.09.
SECTION 9.11. Voluntary Adjustment.
The Company at any time may increase the Conversion Rate, temporarily
or otherwise, by any amount but in no event shall such Conversion Rate result in
the issuance of Capital Stock at a price less than the par value of such Capital
Stock at the time such increase is made.
SECTION 9.12. When Adjustment May Be Deferred.
No adjustment in the Conversion Rate need be made unless the adjustment
would require a change of at least 1% in the Conversion Rate. Any adjustments
that are not made due to the immediately preceding sentence shall be carried
forward and taken into account in any subsequent adjustment; PROVIDED, that any
adjustment carried forward shall be deferred not in excess of three years,
whereupon any adjustment to the Conversion Rate will be effected.
All calculations under this Article 9 shall be made to the nearest cent
or to the nearest 1/100th of a share, as the case may be.
SECTION 9.13. When No Adjustment Required.
Except as set forth in Section 9.09, no adjustment in the Conversion
Rate shall be made because the Company issues, in exchange for cash, property or
services, shares of Common Stock, or any securities convertible into shares of
Common Stock, or securities carrying the right to purchase shares of Common
Stock or such convertible securities.
No adjustment in the Conversion Rate need be made for rights to
purchase or the sale of Common Stock pursuant to a Company plan providing for
reinvestment of dividends or interest.
No adjustment in the Conversion Rate need be made for a change in the
par value of the Common Stock or other securities having a par value.
No adjustment need be made for a transaction referred to in Section
9.08, 9.09 or 9.10 if Securityholders are to participate in the transaction on a
basis and with notice that the Board of Directors determines to be fair and
appropriate in light of the basis and notice on which holders of Common Stock or
other securities into which the Securities are convertible participate in the
transaction.
36
<PAGE>
SECTION 9.14. Notice of Adjustment.
Whenever the Conversion Rate is adjusted, the Company shall promptly
mail to Holders of Securities affected a notice of the adjustment. The Company
shall file with the Trustee an Officers' Certificate or a certificate from the
Company's independent public accountants stating the facts requiring the
adjustment and the manner of computing it. The certificate shall be conclusive
evidence that the adjustment is correct, absent manifest error.
SECTION 9.15. Notice of Certain Transactions.
If:
(1) the Company proposes to take any action that would require an
adjustment in the Conversion Rate,
(2) the Company proposes to take any action that would require a
supplemental indenture pursuant to Section 9.16, or
(3) there is a proposed liquidation or dissolution of the Company or
of the issuer of any other security into which the Securities
are convertible,
the Company shall mail to registered Holders of Securities of any affected
series a notice stating the proposed record date for a dividend or distribution
or the proposed effective date of a subdivision, combination, reclassification,
consolidation, merger, transfer, lease, liquidation or dissolution. The Company
shall mail the notice at least 15 days before such date. Failure to mail the
notice or any defect in it shall not affect the validity of the transaction.
SECTION 9.16. Reorganization of the Company.
If the Company is a party to a transaction subject to Section 5.01, the
successor corporation (if other than the Company) shall enter into a
supplemental indenture which shall provide that the Holder of a Security may
convert it into the kind and amount of securities, cash or other assets which he
would have owned immediately after the consolidation, merger or transfer if he
had converted the Security immediately before the effective date of the
transaction. The supplemental indenture shall provide for adjustments which
shall be as nearly equivalent as may be practical to the adjustments provided
for in this Article. The successor company shall mail to Holders of Securities
of any affected series a notice briefly describing the supplemental indenture.
If this Section applies, Sections 9.08, 9.09 and 9.10 do not apply.
37
<PAGE>
ARTICLE 10--AMENDMENTS
SECTION 10.01. Without Consent of Holders.
The Company and the Trustee may amend this Indenture or the Securities
without the consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5 or Section 9.16;
(3) to provide that specific provisions of this Indenture shall not
apply to a series not previously issued;
(4) to create a series and establish its terms;
(5) to provide for a separate Trustee for one or more series; or
(6) to make any change that does not materially adversely affect the
rights of any Securityholder.
SECTION 10.02. With Consent of Holders.
Unless the Securities Resolution otherwise provides, the Company and
the Trustee may amend this Indenture, the Securities and any coupons with the
written consent of the Holders of a majority in principal amount of the
Securities of all series affected by the amendment voting as one class; provided
that, in the case of a series issued to a COASTAL Trust, so long as any of the
related preferred securities of such COASTAL Trust remains outstanding, 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, without the prior consent of the holders of not less than a majority in
aggregate liquidation amount of such preferred securities then outstanding
unless and until the principal (and premium, if any) of the Securities of such
series and all accrued and unpaid interest thereon have been paid in full; and
provided further that, in the case a series issued to a COASTAL Trust, so long
as any of the related preferred securities of such COASTAL Trust remain
outstanding, no amendment shall be made to the third paragraph of Section 6.06
of this Indenture without the prior written consent of the holders of each such
preferred security then outstanding unless and until the principal (and premium,
if any) of the Securities of such series and all accrued and unpaid interest
thereon have been paid in full. However, without the consent of each
Securityholder affected, an amendment under this Section may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
38
<PAGE>
(2) reduce the interest on or change the time for payment of
interest on any Security (except an election to defer interest
in accordance with the applicable Securities Resolutions and
Section 2.01(30) hereof);
(3) change the fixed maturity of any Security;
(4) reduce the principal of any non-Discounted Debt Security or
reduce the amount of principal of any Discounted Debt Security
that would be due upon an acceleration thereof;
(5) change the currency in which principal or interest on a Security
is payable;
(6) make any change that materially adversely affects the right to
convert or exchange any Security; or
(7) make any change in Section 6.04 or 10.02, except to increase the
amount of Securities whose Holders must consent to an amendment
or waiver or to provide that other provisions of this Indenture
cannot be amended or waived without the consent of each
Securityholder affected thereby.
An amendment of a provision included solely for the benefit of one or
more series does not affect Securityholders of any other series.
Securityholders need not consent to the exact text of a proposed
amendment or waiver; it is sufficient if they consent to the substance thereof.
SECTION 10.03. Compliance with Trust Indenture Act.
Every amendment pursuant to Section 10.01 or 10.02 shall be set forth
in a supplemental indenture (except any amendment pursuant to Section 10.01(4),
which may be set forth in a Securities Resolution) that complies with the TIA.
If a provision of the TIA requires or permits a provision of this
Indenture and the TIA provision is amended, then the Indenture provision shall
be automatically amended to like effect.
SECTION 10.04. Effect of Consents.
An amendment or waiver becomes effective in accordance with its terms
and thereafter binds every Securityholder entitled to consent to it.
A consent to an amendment or waiver by a Holder of a Security is a
continuing consent by the Holder and every subsequent Holder of a Security that
evidences the same debt as the consenting Holder's Security. Any Holder or
subsequent Holder may revoke the consent as to his Security if the Trustee
receives notice of the revocation before the amendment or waiver becomes
effective.
39
<PAGE>
The Company may fix a record date for the determination of Holders of
Registered Securities entitled to give a consent. The record date shall not be
less than 10 nor more than 60 days prior to the first written solicitation of
Securityholders.
SECTION 10.05. Notation on or Exchange of Securities.
The Company or the Trustee may place an appropriate notation about an
amendment or waiver on any Security thereafter authenticated. The Company may
issue in exchange for affected Securities new Securities that reflect the
amendment or waiver.
SECTION 10.06. Trustee Protected.
The Trustee need not sign any supplemental indenture that adversely
affects its rights. The Trustee shall be provided with, and shall be fully
protected in relying upon, an Opinion of Counsel and an Officers' Certificate
each stating that the execution of any amendment or supplement or waiver is
authorized or permitted by this Indenture, and that such amendment or supplement
or waiver constitutes the legal, valid and binding obligation of the Company.
ARTICLE 11--MISCELLANEOUS
SECTION 11.01. Trust Indenture Act.
The provisions of TIA Sections 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein
unless expressly excluded by this Indenture) are a part of and govern this
Indenture, whether or not expressly set forth herein.
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control. If any provision of this Indenture
modifies or excludes any provision of the TIA that may be so modified or
excluded, the latter provision shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be.
SECTION 11.02. Notices.
Any notice by one party to another is duly given if in writing and
delivered in person, sent by facsimile transmission confirmed by mail or mailed
by first-class mail to the other's address shown below:
40
<PAGE>
Company:
Coastal Bancorp, Inc.
Coastal Banc Plaza
5718 Westheimer, Suite 600
Houston, Texas 77057
Fax: (713) 435-5327
Attention: [ ]
Trustee:
The Bank of New York
101 Barclay Street
21st Floor
New York, New York 10286
Fax: (212) 815-5917
Attention: Corporate Trust Trustee Administration
A party by notice to the other parties may designate additional or
different addresses for subsequent notices.
Any notice mailed to a Securityholder shall be mailed to his address
shown on the register kept by the Transfer Agent or on the list referred to in
Section 2.06. Failure to mail a notice to a Securityholder or any defect in a
notice mailed to a Securityholder shall not affect the sufficiency of the notice
mailed to other Securityholders or the sufficiency of any published notice.
If a notice is mailed or sent in the manner provided above within the
time prescribed, it is duly given, whether or not the addressee receives it,
provided however, that notices mailed or sent to the Trustee shall be duly given
upon the Trustee's receipt of such notice.
If the Company mails a notice to Securityholders, it shall mail a copy
to the Trustee and each Agent at the same time.
If in the Company's opinion it is impractical to mail a notice required
to be mailed or to publish a notice required to be published, the Company may
give such substitute notice as the Trustee approves. Failure to publish a notice
as required or any defect in it shall not affect the sufficiency of any mailed
notice.
All notices shall be in the English language, except that any published
notice may be in an official language of the country of publication.
A "notice" includes any communication required by this Indenture.
41
<PAGE>
SECTION 11.03. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take
any action under this Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.04. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained
in such certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.
SECTION 11.05. Rules by Company and Agents.
The Company may make reasonable rules for action by or a meeting of
Securityholders. An Agent may make reasonable rules and set reasonable
requirements for its functions.
SECTION 11.06. Legal Holidays.
A "LEGAL HOLIDAY" is a Saturday, a Sunday or a day on which banking
institutions in Houston, Texas or New York, New York are not permitted or not
required to be open or a day on which the Federal Reserve Bank of New York is
not open. If a payment date is a Legal Holiday at a place of payment, unless the
Securities Resolution establishing a series otherwise provides with respect to
Securities of the series, payment may be made at that place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
42
<PAGE>
SECTION 11.07. No Recourse Against Others.
All liability described in the Securities of any director, officer,
employee or stockholder, as such, of the Company is waived and released.
SECTION 11.08. Duplicate Originals.
The parties may sign any number of copies of this Indenture. One signed
copy is enough to prove this Indenture.
SECTION 11.09. Governing Law.
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE,
THE SECURITIES AND ANY COUPONS, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES THEREOF.
43
<PAGE>
S-1
SIGNATURES
Dated: [ ], 1999 COASTAL BANCORP, INC.
By
------------------------------------------
Name:
Title:
Dated: [ ], 1999 THE BANK OF NEW YORK, as Trustee
By
------------------------------------------
Name:
Title:
44
<PAGE>
EXHIBIT A
A Form of Registered Security
No. [$]
COASTAL BANCORP, INC.
[Title of Security]
COASTAL BANCORP, INC.
promises to pay to
-------------------------
or registered assigns
the principal sum of Dollars on ,
------- -------------- ----
Interest Payment Dates:
------------------------
Record Dates:
----------------------------------
THE BANK OF NEW YORK
Transfer Agent and Paying Agent
COASTAL BANCORP, INC.
By
-----------------------------------------
[Title of Authorized Officer]
By
-----------------------------------------
[Title of the Authorized Officer]
(SEAL)
Authenticated:
Dated:
THE BANK OF NEW YORK,
as Trustee
By
-------------------------------------
Authorized Signatory
A-1
<PAGE>
COASTAL BANCORP, INC.
[Title of Security]
[Explanatory Notes follow Exhibit B]
1. INTEREST./1/
Coastal Bancorp, Inc. ("Company"), a Texas corporation, promises to pay
interest on the principal amount of this Security at the rate per annum
shown above. The Company will pay interest on and ________ of each year
commencing _________, ____. Interest on the Securities will accrue from
the most recent date to which interest has been paid or, if no interest
has been paid, from _________, ____. Interest will be computed on the
basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT.
The Company will pay interest on the Securities to the persons who are
registered Holders of Securities at the close of business on the record
date for the next interest payment date, except as otherwise provided in
the Indenture. Holders must surrender Securities to a Paying Agent to
collect principal payments. The Company will pay principal and interest
in money of the United States that at the time of payment is legal
tender for payment of public and private debts. The Company may pay
principal and interest by check payable in such money. It may mail an
interest check to a holder's registered address.
3. SECURITIES AGENTS.
Initially, The Bank of New York, Attention: Corporate Trust Trustee
Administration, will act as Paying Agent and Transfer Agent. The Company
may change any Paying Agent or Transfer Agent without notice or provide
for more than one such agent. The Company or any Affiliate may act in
any such capacity. Subject to certain conditions, the Company may change
the Trustee.
4. INDENTURE.
The Company issued the securities of this series ("Securities") under an
Indenture dated as of [ ], 1999 ("Indenture") between the Company and
The Bank of New York (the "Trustee"). The terms of the Securities
include those stated in the Indenture and in the Securities Resolution
creating the Securities and those made part of the Indenture by the
Trust Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb).
Securityholders are referred to the Indenture, the Securities Resolution
and the Act for a statement of such terms.
A-2
<PAGE>
5. OPTIONAL REDEMPTION./2/
On or after _______, the Company may redeem all the Securities at any
time or some of them from time to time at the following redemption
prices (expressed in percentages of principal amount), plus accrued
interest to the redemption date.
If redeemed during the 12-month period beginning,
YEAR PERCENTAGE YEAR PERCENTAGE
and thereafter at 100%.
6. MANDATORY REDEMPTION./3/
The Company will redeem $_____ principal amount of Securities on and on
each thereafter through ____ at a redemption price of 100% of principal
amount, plus accrued interest to the redemption date./4/ The Company may
reduce the principal amount of Securities to be redeemed pursuant to
this paragraph by subtracting 100% of the principal amount (excluding
premium) of any Securities (i) that the Company has acquired or that the
Company has redeemed other than pursuant to this paragraph and (ii) that
the Company has delivered to the Registrar for cancellation. The Company
may so subtract the same Security only once.
7. ADDITIONAL OPTIONAL REDEMPTION./5/
In addition to redemptions pursuant to the above paragraph(s), the
Company may redeem not more than $_____ principal amount of Securities
on _____ and on each ____ thereafter through _______ at a redemption
price of 100% of principal amount, plus accrued interest to the
redemption date.
8. NOTICE OF REDEMPTION./6/
Notice of redemption will be mailed at least 30 but not more than 60
days before the redemption date to each holder of Securities to be
redeemed at his registered address.
A notice of redemption may provide that it is subject to the occurrence
of any event before the date fixed for such redemption as described in
such notice ("Conditional Redemption") and such notice of Conditional
Redemption shall be of no effect unless all such conditions to the
redemption have occurred before such date or have been waived by the
Company.
A-3
<PAGE>
9. CONVERSION./7/
A Holder of a Security may convert it into Common Stock of the Company
or cash, or a combination thereof, at the Company's option, at any time
before the close of business on ___________, or, if the Security is
called for redemption, the Holder may convert it at any time before the
close of business on the redemption date. The initial Conversion Rate is
____________ (or an equivalent amount in cash) per $1,000 principal
amount of the Securities, subject to adjustment as provided in Article 9
of the Indenture./8/ The Company will deliver a check in lieu of any
fractional share. On conversion no payment or adjustment for interest
accrued on the Securities will be made nor for dividends on the Common
Stock issued on conversion. If any Security is converted between the
record date for the payment of interest and the next succeeding interest
payment date, such Security must be accompanied by funds equal to the
interest payable on such succeeding interest payment date on the
principal amount so converted (unless such Security shall have been
called for redemption, in which case no such payment shall be required).
A Security converted on an interest payment date need not be accompanied
by any payment, and the interest on the principal amount of the Security
being converted will be paid on such interest payment date to the
registered holder of such Security on the immediately preceding record
date. To convert a Security a Holder must (1) complete and sign the
conversion notice on the back of the Security, (2) surrender the
Security to a Conversion Agent, (3) furnish appropriate endorsements and
transfer documents if required by the Registrar or Conversion Agent and
(4) pay any transfer or similar tax if required. A Holder may convert a
portion of a Security if the portion is $1,000 or an integral multiple
of $1,000.
10. DENOMINATIONS, TRANSFER, EXCHANGE.
The Securities are in registered form without coupons in denominations
of $1,000/9/ and whole multiples of $1,000. The transfer of Securities
may be registered and Securities may be exchanged as provided in the
Indenture. The Transfer Agent may require a holder, among other things,
to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or the Indenture. The Transfer Agent
need not exchange or register the transfer of any Security or portion
of a Security selected for redemption. Also, it need not exchange or
register the transfer of any Securities for a period of 15 days before
a selection of Securities to be redeemed.
11. PERSONS DEEMED OWNERS.
The registered holder of a Security may be treated as its owner for all
purposes.
A-4
<PAGE>
12. AMENDMENTS AND WAIVERS.
Subject to certain exceptions, the Indenture or the Securities may be
amended with the consent of the holders of a majority in principal
amount of the securities of all series affected by the amendment./10/
Subject to certain exceptions, a default on a series may be waived with
the consent of the holders of a majority in principal amount of the
series.
Without the consent of any Securityholder, the Indenture or the
Securities may be amended, among other things, to cure any ambiguity,
omission, defect or inconsistency; to provide for assumption of Company
obligations to Securityholders; or to make any change that does not
materially adversely affect the rights of any Securityholder.
13. RESTRICTIVE COVENANTS./11/
The Securities are unsecured general obligations of the Company limited
to $____________ principal amount. The Indenture does not limit other
unsecured debt.
14. SUCCESSORS.
When a successor assumes all the obligations of the Company under the
Securities and the Indenture, the Company will be released from those
obligations.
15. DEFEASANCE PRIOR TO REDEMPTION OR MATURITY./12/
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities and the Indenture if
the Company deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities
to redemption or maturity. U.S. Government Obligations are securities
backed by the full faith and credit of the United States of America or
certificates representing an ownership interest in such Obligations.
16. DEFAULTS AND REMEDIES.
An Event of Default/13/ includes: default for 60 days in payment of
interest on the Securities; default in payment of principal on the
Securities; default in payment or satisfaction of any sinking fund
obligation; default by the Company for a specified period after notice
to it in the performance of any of its other agreements applicable to
the Securities; certain events of bankruptcy or insolvency; and any
other Event of Default provided for in the series. If an Event of
Default occurs and is continuing, the Trustee or the holders of at least
25% in principal amount of the Securities may declare the principal/14/
of all the Securities to be due and payable immediately.
A-5
<PAGE>
Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may require indemnity
satisfactory to it before it enforces the Indenture or the Securities.
Subject to certain limitations, holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Securityholders notice of
any continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in their
interests. The Company must furnish an annual compliance certificate to
the Trustee.
17. TRUSTEE DEALINGS WITH COMPANY.
The Bank of New York, the Trustee under the Indenture, in its individual
or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise
deal with the Company or its Affiliates, as if it were not Trustee.
18. NO RECOURSE AGAINST OTHERS.
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each Securityholder
by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Securities.
19. AUTHENTICATION.
This Security shall not be valid until authenticated by a manual
signature of the Registrar.
20. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by
the entirety), JT TEN (=joint tenants with right of survivorship and not
as tenants in common), CUST (=custodian), U/G/M/A (=Uniform Gifts to
Minors Act) and U/T/M/A (=Uniform Transfers to Minors Act).
A-6
<PAGE>
EXHIBIT B
A Form of Bearer Security
No. [$]
COASTAL BANCORP, INC.
---------------------
[Title of Security]
COASTAL BANCORP, INC.
- ---------------------
promises to pay to
- -------------------------------------------------
bearer
the principal sum of Dollars on ,
--------- ----------- ----
Interest Payment Dates:
-------------------------
Record Dates:
-----------------------------------
THE BANK OF NEW YORK
- -------------------------------
Transfer Agent and Paying Agent
COASTAL BANCORP, INC.
By
---------------------------------------------------
[Title of Authorized Officer]
By
---------------------------------------------------
[Title of the Authorized Officer]
(SEAL)
Authenticated:
-------------------------
Dated:
---------------------------------
THE BANK OF NEW YORK
Trustee
By
---------------------------------------------------
Authorized Signatory
B-1
<PAGE>
COASTAL BANCORP, INC.
[Title of Security]
[Explanatory Notes follow Exhibit B]
1. INTEREST./1/
COASTAL BANCORP, INC. ("Company"), a Wisconsin corporation, promises to
pay to bearer interest on the principal amount of this Security at the
rate per annum shown above. The Company will pay interest on ___ and of
each year commencing _________, ____. Interest on the Securities will
accrue from the most recent date to which interest has been paid or, if
no interest has been paid, from _________, ____. Interest will be
computed on the basis of a 360-day year of twelve 30-day months.
2. METHOD OF PAYMENT.
Holders must surrender Securities and any coupons to a Paying Agent to
collect principal and interest payments. The Company will pay principal
and interest in money of the United States that at the time of payment
is legal tender for payment of public and private debts. The Company may
pay principal and interest by check payable in such money.
3. SECURITIES AGENTS.
Initially, The Bank of New York, Attention: Corporate Trust Trustee
Administration, will act as Transfer Agent, Paying Agent and Registrar.
The Company may change any Paying Agent or Transfer Agent without notice
or provide for more than one such agent. The Company or any Affiliate
may act in any such capacity. Subject to certain conditions, the Company
may change the Trustee.
4. INDENTURE.
The Company issued the securities of this series ("Securities") under an
Indenture dated as of [ ], 1999 ("Indenture") between the Company and
The Bank of New York (the "Trustee"). The terms of the Securities
include those stated in the Indenture and the Securities Resolution and
those made part of the Indenture by the Trust Indenture Act of 1939 (15
U.S. Code Sections 77aaa-77bbbb). Securityholders are referred to the
Indenture, the Securities Resolution and the Act for a statement of such
terms.
B-2
<PAGE>
5. OPTIONAL REDEMPTION./2/
On or after ________, the Company may redeem all the Securities at any
time or some of them from time to time at the following redemption
prices (expressed in percentages of principal amount), plus accrued
interest to the redemption date. If redeemed during the 12-month period
beginning,
YEAR PERCENTAGE YEAR PERCENTAGE
---- ---------- ---- ----------
and thereafter 100%.
6. MANDATORY REDEMPTION./3/
The Company will redeem $______ principal amount of Securities on and on
each____thereafter through____at a redemption price of 100% of principal
amount, plus accrued interest to the redemption date./4/ The Company may
reduce the principal amount of Securities to be redeemed pursuant to
this paragraph by subtracting 100% of the principal amount (excluding
premium) of any Securities (i) that the Company has acquired or that the
Company has redeemed other than pursuant to this paragraph and (ii) that
the Company has delivered to the Registrar for cancellation. The Company
may so subtract the same Security only once.
7. ADDITIONAL OPTIONAL REDEMPTION./5/
In addition to redemptions pursuant to the above paragraph(s), the
Company may redeem not more than $____principal amount of Securities
on ____and on each____thereafter through_____at a redemption price
of 100% of principal amount, plus accrued interest to the redemption
date.
8. NOTICE OF REDEMPTION./6/
Notice of redemption will be published once in an Authorized Newspaper
in the City of New York and if the Securities are listed on any stock
exchange located outside the United States and such stock exchange so
requires, in any other required city outside the United States at least
30 but not more than 60 days before the redemption date. Notice of
redemption also will be mailed to holders who have filed their names and
addresses with the Transfer Agent within the two preceding years. A
holder of Securities may miss important notices if he fails to maintain
his name and address with the Transfer Agent.
A notice of redemption may provide that it is subject to the occurrence
of any event before the date fixed for such redemption as described in
such notice ("Conditional Redemption") and such notice of Conditional
Redemption shall be of no effect unless all such conditions to the
redemption have occurred before such date or have been waived by the
Company.
B-3
<PAGE>
9. CONVERSION./7/
A Holder of a Security may convert it into Common Stock of the Company
or cash, or a combination thereof, at the Company's option, at any time
before the close of business on ___________, or, if the Security is
called for redemption, the Holder may convert it at any time before the
close of business on the redemption date. The initial Conversion Rate is
____________ (or an equivalent amount in cash) per $1,000 principal
amount of the Securities, subject to adjustment as provided in Article 9
of the Indenture./8/ The Company will deliver a check in lieu of any
fractional share. On conversion no payment or adjustment for interest
accrued on the Securities will be made nor for dividends on the Common
Stock issued on conversion. If any Security is converted between the
record date for the payment of interest and the next succeeding interest
payment date, such Security must be accompanied by funds equal to the
interest payable on such succeeding interest payment date on the
principal amount so converted (unless such Security shall have been
called for redemption, in which case no such payment shall be required).
A Security converted on an interest payment date need not be accompanied
by any payment, and the interest on the principal amount of the Security
being converted will be paid on such interest payment date to the
registered holder of such Security on the immediately preceding record
date.
To convert a Security a Holder must (1) complete and sign the conversion
notice on the back of the Security, (2) surrender the Security to a
Conversion Agent, (3) furnish appropriate endorsements and transfer
documents if required by the Registrar or Conversion Agent and (4) pay
any transfer or similar tax if required. A Holder may convert a portion
of a Security if the portion is $1,000 or an integral multiple of
$1,000.
10. DENOMINATIONS, TRANSFER, EXCHANGE.
The Securities are in bearer form with coupons in denominations of
$5,000/9/ and whole multiples of $5,000. The Securities may be
transferred by delivery and exchanged as provided in the Indenture. Upon
an exchange, the Transfer Agent may require a holder, among other
things, to furnish appropriate documents and to pay any taxes and fees
required by law or the Indenture. The Transfer Agent need not exchange
any Security or portion of a Security selected for redemption. Also, it
need not exchange any Securities for a period of 15 days before a
selection of Securities to be redeemed.
11. PERSONS DEEMED OWNERS.
The holder of a Security or coupon may be treated as its owner for all
purposes.
B-4
<PAGE>
12. AMENDMENTS AND WAIVERS.
Subject to certain exceptions, the Indenture or the Securities may be
amended with the consent of the holders of a majority in principal
amount of the securities of all series affected by the amendment./10/
Subject to certain exceptions, a default on a series may be waived with
the consent of the holders of a majority in principal amount of the
series.
Without the consent of any Securityholder, the Indenture or the
Securities may be amended, among other things, to cure any ambiguity,
omission, defect or inconsistency; to provide for assumption of Company
obligations to Securityholders; or to make any change that does not
materially adversely affect the rights of any Securityholder.
13. RESTRICTIVE COVENANTS./11/
The Securities are unsecured general obligations of the Company limited
to $_____ principal amount. The Indenture does not limit other unsecured
debt.
14. SUCCESSORS.
When a successor assumes all the obligations of the Company under the
Securities, any coupons and the Indenture, the Company will be released
from those obligations.
15. DEFEASANCE PRIOR TO REDEMPTION OR MATURITY./12/
Subject to certain conditions, the Company at any time may terminate
some or all of its obligations under the Securities, any coupons and the
Indenture if the Company deposits with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity. U.S. Government Obligations are
securities backed by the full faith and credit of the United States of
America or certificates representing an ownership interest in such
Obligations.
16. DEFAULTS AND REMEDIES.
An Event of Default/13/ includes: default for 60 days in payment of
interest on the Securities; default in payment of principal on the
Securities; default in payment or satisfaction of any sinking fund
obligation; default by the Company for a specified period after notice
to it in the performance of any of its other agreements applicable to
the Securities; certain events of bankruptcy or insolvency; and any
other Event of Default provided for in the series. If an Event of
Default occurs and is continuing, the Trustee or the holders of at least
25% in principal amount of the Securities may declare the principal/14/
of all the Securities to be due and payable immediately. Securityholders
may not enforce the Indenture or the Securities except as provided in
the Indenture. The Trustee may require indemnity satisfactory to it
before it enforces the Indenture or the Securities. Subject to certain
limitations, holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any
B-5
<PAGE>
trust or power. The Trustee may withhold from Securityholders notice of
any continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in their
interests. The Company must furnish annual compliance certificates to
the Trustee.
17. TRUSTEE DEALINGS WITH COMPANY.
The Bank of New York, the Trustee under the Indenture, in its individual
or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise
deal with the Company or its Affiliates, as if it were not Trustee.
18. NO RECOURSE AGAINST OTHERS.
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under
the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. Each Securityholder
by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issue of the
Securities.
19. AUTHENTICATION.
This Security shall not be valid until authenticated by a manual
signature of the Registrar.
20. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as: TEN COM (=tenants in common), TEN ENT (=tenants by
the entirety), JT TEN (=joint tenants with right of survivorship and not
as tenants in common), CUST (=custodian), U/G/M/A (=Uniform Gifts to
Minors Act) and U/T/M/A (=Uniform Transfers to Minors Act).
B-6
<PAGE>
$
-------------
[$]
-----------
Due
----------
COASTAL BANCORP, INC.
[Title of Security]
Unless the Security attached to this coupon has been called for
redemption, Coastal Bancorp, Inc. ("Company") will pay to bearer, upon
surrender, the amount shown hereon when due. This coupon may be surrendered for
payment to any Paying Agent listed on the back of this coupon unless the Company
has replaced such Agent. Payment may be made by check. This coupon represents
months' interest.
COASTAL BANCORP, INC.
By
------------------------------------
[REVERSE OF COUPON]
PAYING AGENTS
B-7
<PAGE>
NOTES TO EXHIBITS A AND B
1 If the Security is not to bear interest at a fixed rate per annum, insert a
description of the manner in which the rate of interest is to be determined.
If the Security is not to bear interest prior to maturity, so state.
2 If applicable. If the Security is to be subject to a nonrefunding
restriction, insert a brief summary thereof. If the redemption is to be
subject to a condition, insert a brief summary thereof.
3 Such provisions as are applicable, if any.
4 If the Security is a Discounted Debt Security, insert amount to be redeemed
or method of calculating such amount.
5 If applicable. Also insert, if applicable, provisions for repayment of
Securities at the option of the Securityholder.
6 If applicable.
7 If applicable. If convertible into securities other than Common Stock,
insert appropriate summary.
8 If additional or different adjustment provisions apply so specify.
9 If applicable. Insert additional or different denominations and terms as
appropriate.
10 If different terms apply, insert a brief summary thereof.
11 If applicable. If additional or different covenants apply, insert a brief
summary thereof.
12 If applicable. If different defeasance terms apply, insert a brief summary
thereof.
13 If additional or different Events of Default apply, insert a brief summary
thereof.
14 If the Security is a Discounted Debt Security, set forth the amount due and
payable upon an Event of Default.
Note: U.S. tax law may require certain legends on Discounted Debt and Bearer
Securities.
B-8
<PAGE>
EXHIBIT C
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
- -----------------------------------------------
: :
:-----------------------------------------:
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint ____________________________ agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
Date: Your Signature:
------------------- -------------------------------------
----------------------------------------------
(Sign exactly as your name(s) appear(s) on the
other side of this Security)
Signature(s) guaranteed by:
----------------------------------------------------
(All signatures must be guaranteed by an "eligible
guarantor institution" as defined by Rule 17Ad-15
of the Securities Exchange Act of 1934, as amended)
C-1
<PAGE>
EXHIBIT D
CONVERSION NOTICE
To convert this Security, check the box:
/ /
To convert only part of this Security, state the amount (must be in integral
multiples of $1,000);
$
-----------------------------
If you want the securities delivered upon conversion made out in another
person's name, fill in the form below:
(Insert other person's Social Security or Tax I.D. Number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type other person's name, address and zip code)
Date: Signature(s):
------------------- -------------------------------------
- ----------------------------------------------
(Sign exactly as your name(s) appear(s) on the
other side of this Security)
Signature(s) guaranteed by:
----------------------------------------------------
(All signatures must be guaranteed by an "eligible
guarantor institution" as defined by Rule 17Ad-15
of the Securities Exchange Act of 1934, as amended)
D-1
<PAGE>
<PAGE>
Exhibit 4.2
STATEMENT OF DESIGNATIONS OF THE RIGHTS AND PREFERENCES FOR
THE
_____% SERIES A CUMULATIVE PREFERRED STOCK
(Liquidation Value $25.00 Per Share)
OF
COASTAL BANCORP, INC.
The undersigned DOES HEREBY CERTIFY that the following resolution was
duly adopted by the Board of Directors (the "Board of Directors") of Coastal
Bancorp, Inc., a Texas corporation (hereinafter the "Company"), at a meeting
duly convened and held on ________, 1999, at which a quorum was present and
acting throughout:
"RESOLVED that pursuant to the authority expressly granted to and
vested in this Board of Directors by Article V of the Articles of Incorporation
of the Company (the "Articles"), the Board of Directors hereby authorizes the
creation of a series of ____% Series A Cumulative Preferred Stock, no par value
per share, of the Company upon the terms and conditions set forth herein and
hereby fixes the designation and number of shares thereof and fixes the other
powers, preferences and relative, participating, optional or other special
rights, and the qualifications, limitations and restrictions thereof (in
addition to those set forth in the Articles which may be applicable to the ___%
Series A Cumulative Preferred Stock) as follows:
1. DESIGNATION AND AMOUNT; FRACTIONAL SHARES. There shall be a
series of preferred stock of the Company designated as "___% Series A
Cumulative Preferred Stock" and the number of shares constituting such
series shall be _________. Such series is referred to herein as the
"Series A Preferred Stock." The Series A Preferred Stock is issuable
solely in whole shares.
2. LIQUIDATION VALUE AND ISSUE PRICE. The liquidation value of
each such share is $25.00 and the issue price of each such share is
$25.00.
3. DIVIDENDS.
(a) The holders of Series A Preferred Stock shall be
entitled to receive, when, as and if declared by the Board of
Directors or, to the extent permitted by applicable law, a
duly authorized committee thereof, out of funds at the time
legally available therefor, cumulative cash dividends at a
rate of ___% per annum ($____ per annum), which shall be
payable when, as and if declared by the Board of Directors in
cash quarterly in arrears on the last day of March, June,
September and December of each year, commencing June 30, 1999
(each, a "Dividend Payment Date") (except that if any such
date is a Saturday, Sunday or legal holiday, then such
dividend shall be payable on the next day that is not a
Saturday, Sunday or legal holiday) to holders of record as
they appear upon the stock transfer books of the Company on
the 15th day of the calendar month in which the applicable
Dividend Payment Date falls or on such other record date, not
more than thirty calendar days nor less than ten
<PAGE>
calendar days preceding the applicable Dividend Payment Date,
as is fixed by the Board of Directors or, to the extent
permitted by applicable law, a duly authorized committee
thereof (each, a "Record Date"). For purposes hereof, the term
"legal holiday" shall mean any day on which banking
institutions are authorized or required by law to close in New
York, New York or Houston, Texas. The Series A Preferred Stock
will not participate in dividends with the Company's common
stock, $0.00667 par value per share (the "Common Stock").
(b) Dividends on the shares of Series A Preferred
Stock shall commence to accrue and shall be cumulative from
the most recent Dividend Payment Date with respect to which
dividends have been paid, whether or not in any Dividend
Period or Periods there shall be funds of the Company legally
available for the payment of such dividends. Accumulations of
dividends on the Series A Preferred Shares will not bear
interest.
(c) As used herein, (i) the term "Initial Dividend
Period" shall mean the period from and including the date of
distribution to the initial holders of the Series A Preferred
Stock (the "Date of Original Issue") to and excluding June 30,
1999, (ii) the term "Subsequent Dividend Period" shall mean
the applicable period from and including June 30 to and
excluding the next September 30, from and including September
30 to and excluding the next December 31, from and including
December 31 to and excluding the next March 31, from and
including March 31 to and excluding the next June 30, or, in
each such case as to particular shares of the Series A
Preferred Stock such shorter period during which such shares
of the Series A Preferred Stock are outstanding (excluding the
last day of such shorter period), and (iii) the term "Dividend
Period" shall mean the Initial Dividend Period or any
Subsequent Dividend Period, as the context requires.
(d) The amount of dividends payable on each share of
the Series A Preferred Stock for each full quarterly Dividend
Period during which such share was outstanding shall be $____.
For the Initial Dividend Period, and for any Subsequent
Dividend Period for which the Board of Directors or, to the
extent permitted by applicable law, a duly authorized
committee thereof, declares a dividend and during which such
share was not outstanding for a full quarterly Dividend
Period, the amount of dividends payable on each such share of
the Series A Preferred Stock shall be computed by multiplying
$____ by a fraction, the numerator of which shall be the
number of days (but in no event more than 90 days with respect
to any one calendar quarter) in such Dividend Period that such
share was outstanding (excluding the last such day) and the
denominator of which shall be 360.
(e) No full dividends shall be declared and paid or
set apart for payment on preferred stock of the Company of any
series ranking, as to dividends, on a parity with the Series A
Preferred Stock (the "Parity Dividend Stock") during any
calendar
-2-
<PAGE>
quarter unless full cumulative dividends on the Series A
Preferred Stock for all prior Dividend Periods have been or
contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof is set apart for such
payment. When dividends are not so paid in full (or a sum
sufficient for such full payment is not so set apart) upon the
Series A Preferred Stock and any other Parity Dividend Stock,
dividends upon shares of Series A Preferred Stock and
dividends on such other Parity Dividend Stock payable during
such calendar quarter shall be declared and set apart pro rata
so that the amount of such dividends so payable per share on
the Series A Preferred Stock and such other Parity Dividend
Stock shall in all cases bear to each other the same ratio
that full dividends for the then-current calendar quarter on
the shares of Series A Preferred Stock (which shall include
any accumulation in respect of unpaid dividends for prior
Dividend Periods) and full dividends, including required or
permitted accumulations, if any, on shares of such other
Parity Dividend Stock, bear to each other.
(f) If full cumulative dividends on the Series A
Preferred Stock have not been declared and paid or set apart
for payment for all prior Dividend Periods and for the
Dividend Payment Date falling in the then-current Dividend
Period, the following restrictions shall be applicable: (i) no
dividend or distribution may be declared, set aside or paid on
any shares of stock of any series ranking, as to dividends,
junior to the Series A Preferred Stock (the "Junior Dividend
Stock"), other than in shares of Junior Dividend Stock, (ii)
the Company may not repurchase, redeem or otherwise acquire
(including by payment to or made available for a sinking fund
for the redemption of) any shares of its Junior Dividend Stock
(except by conversion into or exchange for Junior Dividend
Stock), and (iii) the Company may not, directly or indirectly,
repurchase, redeem or otherwise acquire (except by conversion
into or exchange for Junior Dividend Stock) any shares of any
Parity Dividend Stock, otherwise than pursuant to pro rata
offers to purchase or a concurrent redemption of all, or a pro
rata portion, of the outstanding shares of Series A Preferred
Stock and such other Parity Dividend Stock.
4. LIQUIDATION PREFERENCE.
(a) In the event of a liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary,
each holder of a share of Series A Preferred Stock shall be
entitled to receive out of the net assets of the Company
available for distribution to its stockholders, an amount
equal to $25.00 per share, plus an amount equal to all
dividends accrued and unpaid to the date of such liquidation,
without interest, and no more, before any payment shall be
made or any assets distributed to the holders of Common Stock
or any other stock ranking junior to the Series A Preferred
Stock as to the rights upon liquidation, dissolution or
winding up of the ('Junior Liquidation Stock"); PROVIDED,
HOWEVER, that such rights shall accrue to the holders of
Series A Preferred Stock only in the event that the
-3-
<PAGE>
Company's payments with respect to the shares of capital stock
of the Company hereafter issued ranking senior as to rights
upon liquidation, dissolution or winding up to the Series A
Preferred Stock (the "Senior Liquidation Stock") are fully
met. The entire net assets of the Company available for
distribution after the preferences of the Senior Liquidation
Stock upon liquidation, dissolution or winding up are fully
met shall be distributed ratably among the holders of the
Series A Preferred Stock and any other class or series of the
Company's capital stock hereafter issued having parity as to
rights upon liquidation, dissolution or winding up with the
Series A Preferred Stock in proportion to the respective
preferential amounts to which each is entitled (but only to
the extent of such preferential amounts). After payment in
full of the preferences of the shares of the Series A
Preferred Stock upon liquidation, dissolution or winding up,
the holders of such shares in their capacity as such shall not
be entitled to any further participation in any distribution
of assets by the Company. Neither a consolidation or merger of
the Company with or into another corporation nor a merger of
any other corporation with or into the Company, nor a sale or
transfer of all or any part of the Company's assets for cash,
securities or other property will be considered a liquidation,
dissolution or winding up of the Company.
(b) Written notice of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, stating
a payment date and the place where the distributable amounts
shall be payable, shall be given by first class mail, postage
prepaid, not more than sixty calendar days nor less than
twenty calendar days prior to the payment date stated therein,
to the holders of the Series A Preferred Stock at their
respective addresses as the same shall appear upon the stock
transfer books of the Company.
5. REDEMPTION AT OPTION OF THE COMPANY
(a) The Series A Preferred Stock may not be redeemed
by the Company prior to April __, 200 . On or after April __,
200 , the Series A Preferred Stock may be redeemed by the
Company, at its option on any date set by the Board of
Directors or, to the extent permitted by applicable law, a
duly authorized committee thereof, in whole or in part, out of
funds legally available therefor, at any time or from time to
time, at $25.00 per share, plus, in each case, an amount in
cash equal to accrued and unpaid dividends (whether or not
earned or declared) thereon, if any, from the Dividend Payment
Date next preceding the date fixed for redemption to but
excluding the date fixed for redemption, without interest (a
"Redemption Date"), such sum being hereinafter referred to as
the "Redemption Price." In case of the redemption of less than
all of the then outstanding shares of Series A Preferred
Stock, the Company shall designate the shares to be redeemed
pro rata, by lot or by a substantially equivalent method
selected by the Board of Directors or, to the extent permitted
by applicable law, a duly authorized committee thereof.
-4-
<PAGE>
(b) Not more than sixty calendar days nor less than
thirty calendar days prior to the Redemption Date, notice by
first class mail, postage prepaid, shall be given to the
holders of record of shares of the Series A Preferred Stock to
be redeemed, addressed to such holders at their last addresses
as shown upon the stock transfer books of the Company. Each
such notice of redemption shall be irrevocable and shall
specify the date fixed for redemption, the number of shares of
Series A Preferred Stock to be redeemed, and if less than all
the shares held by such holder are to be redeemed, the number
of such shares to be redeemed from such holder, the Redemption
Price, the place or places of payment, that payment will be
made upon presentation and surrender of the certificates
representing shares of Series A Preferred Stock, and that on
and after the Redemption Date dividends will cease to accrue
on such shares.
(c) Any notice that is mailed as herein provided
shall be conclusively presumed to have been duly given,
whether or not the holder of shares of Series A Preferred
Stock receives such notice; and failure to give such notice by
mail, or any defect in such notice to the holders of any
shares designated for redemption shall not affect the validity
of the proceedings for the redemption of any other shares of
Series A Preferred Stock. On or after the date fixed for
redemption as stated in such notice, each holder of the shares
called for redemption shall surrender the certificate
evidencing such shares to the Company at the place designated
in such notice and shall thereupon be entitled to receive
payment of the Redemption Price for each such share. If less
than all the shares evidenced by any such surrendered
certificate are redeemed, a new certificate shall be issued
evidencing the unredeemed shares. Notice having been given as
aforesaid, if on the date fixed for redemption, funds
necessary for the redemption shall be available therefor and
shall have been irrevocably deposited or set aside, then
notwithstanding that the certificates evidencing any shares so
called for redemption shall not have been surrendered,
dividends with respect to the shares so called shall cease to
accrue as of 5:00 p.m. (Houston, Texas time) on the day before
the date fixed for redemption, such shares shall no longer be
deemed outstanding, the holders thereof shall cease to be
stockholders of the Company with respect to such shares and
all rights whatsoever with respect to the shares so called for
redemption (except the right of the holders to receive the
Redemption Price for each share without interest upon
surrender of their certificates therefor) shall terminate. If
funds legally available for such purpose are not sufficient
for redemption of the shares of Series A Preferred Stock which
were to be redeemed, then the certificates evidencing such
shares shall not be deemed to be surrendered, such shares
shall remain outstanding and the right of holders of shares of
Series A Preferred Stock thereafter shall continue to be only
those of a holder of shares of the Series A Preferred Stock.
-5-
<PAGE>
6. NO SINKING FUND
The shares of Series A Preferred Stock shall not be
subject to the operation of any mandatory purchase, retirement
or sinking fund.
7. VOTING RIGHTS.
(a) The holders of Series A Preferred Stock will not
have any voting rights except as set forth below or as
otherwise from time to time required by law. In connection
with any right to vote, each holder of Series A Preferred
Stock will have one vote for each such share held, and will
not be entitled to cumulative voting in any election of
directors. Any shares of Series A Preferred Stock held by the
Company or any entity controlled by the Company shall not have
voting rights hereunder and shall not be counted in
determining the presence of a quorum.
(b) Whenever dividends on the Series A Preferred
Stock have not been paid for six Dividend Periods (whether or
not consecutive), (i) the number of members of the Board of
Directors shall be increased by two, effective as of the time
of election of such directors as hereinafter provided, and
(ii) the holders of the Series A Preferred Stock (voting
separately as a class with all other affected classes or
series of the Parity Dividend Stock, if any, upon which like
voting rights have been conferred and are exercisable) will
have the exclusive right to vote for and elect (by a plurality
vote) such two additional directors of the Company at any
meeting of stockholders of the Company at which directors are
to be elected held during the period such dividends remain in
arrears. The right of the holders of the Series A Preferred
Stock to vote for such two additional directors shall
terminate when all dividends on the Series A Preferred Stock
which have accumulated with respect to the prior Dividend
Periods and the current Dividend Period have been declared and
paid or set aside for payment.
The foregoing right of the holders of the Series A
Preferred Stock with respect to the election of two directors
may be exercised at any annual meeting of stockholders or at
any special meeting of stockholders held for such purpose by
the holders of a plurality of the shares of Series A Preferred
Stock and such Parity Dividend Stock present and voting, in
person or by proxy, at such meeting, or by written consent of
the holders of a majority of the outstanding shares of Series
A Preferred Stock and such Parity Dividend Stock without a
meeting. Unless such action shall have been taken by written
consent as aforesaid, the Chairman of the Board or the
President of the Company shall, within twenty calendar days
after the delivery to the Company at its principal office of a
written request for a special meeting signed by the holders of
at least 10% of all outstanding shares of the Series A
Preferred Stock, call a special meeting of the holders of the
Series A Preferred Stock to be held within sixty calendar days
after the delivery of such request for the
-6-
<PAGE>
purpose of electing such additional directors, provided that
no such special meeting shall be required to be held during
the ninety calendar day period preceding the date fixed for
the annual meeting of stockholders (or if no such date has
been established, an assumed date which is based on the date
of the immediately preceding annual meeting of stockholders).
Any director who shall have been elected by holders
of the Series A Preferred Stock and Parity Dividend Stock
entitled to vote thereon shall hold office for a term expiring
(subject to the earlier payment, or declaration and setting
aside for payment of all dividends on the Series A Preferred
Stock which have accumulated with respect to the prior
Dividend Periods and the then current Dividend Period as
described below) at the next annual meeting of stockholders of
the Company and during such term may be removed at any time,
either for or without cause, by, and only by, the affirmative
vote of the holders of record of a majority of the shares of
the Series A Preferred Stock and such Parity Dividend Stock
present and voting, in person or by proxy, at a special
meeting of such stockholders called for such purpose, or by
written consent without a meeting of the holders of record of
a majority of the outstanding shares of Series A Preferred
Stock and such Parity Dividend Stock, and any vacancy created
by such removal also may be filled at such meeting or by such
written consent. A meeting for the removal of a director
elected by the holders of the Series A Preferred Stock and
such Parity Dividend Stock and the filling of the vacancy
created thereby shall be called by the Chairman of the Board
or the President of the Company within twenty calendar days
after receipt of a request therefor signed by the holders of
at least 10% of all outstanding shares of Series A Preferred
Stock. Such meeting shall be held within sixty calendar days
after the delivery of such request, provided that no such
meeting shall be required to be held during the ninety-day
period preceding the date fixed for the annual meeting of
stockholders (or if no such date has been established, an
assumed date which is based on the date of the immediately
preceding annual meeting of stockholders).
Upon payment, or declaration and setting aside for
payment, of all dividends on the Series A Preferred Stock
which have accumulated with respect to the prior Dividend
Periods and the current Dividend Period occurring after the
date of the initial election of directors elected by the
holders of Series A Preferred Stock and the Parity Dividend
Stock entitled to vote thereon pursuant to Section 7(b)
hereof, the terms of office of all such directors then in
office shall, without further action, thereupon terminate
unless otherwise required by law. Upon such termination the
number of directors constituting the Board of Directors of the
Company shall, without further action, be reduced by two,
subject always to the increase of the number of directors
pursuant to the foregoing provisions in the case of the future
right of holders of the Series A Preferred Stock and such
Parity Dividend Stock to elect directors as provided above.
-7-
<PAGE>
Any vacancy caused by the death or resignation of a
director who shall have been elected in accordance with this
subparagraph (b) may be filled by appointment made by the
remaining director so elected or, if not so filled, by a
vote of holders of a plurality of the shares of the Series A
Preferred Stock and such Parity Dividend Stock present and
voting, in person or by proxy, at a meeting called for such
purpose, or by written consent without a meeting of the
holders of record of a majority of the outstanding shares of
Series A Preferred Stock and such Parity Dividend Stock.
Unless such vacancy shall have been filled by appointment
made by the remaining director or by written consent as
aforesaid, such meeting shall be called by the Chairman of
the Board or the President of the Company at the earliest
practicable date after such death or resignation, and in any
event within twenty calendar days after receipt of a written
request signed by the holders of record of at least 10% of
the outstanding shares of the Series A Preferred Stock and
Parity Dividend Stock. Notwithstanding the provisions of
this paragraph, no such special meeting shall be required to
be held during the ninety calendar day period preceding the
date fixed for the annual meeting of stockholders (or if no
such date has been established, an assumed date which is
based on the date of the immediately preceding annual
meeting of stockholders).
(c) So long as the Series A Preferred Stock is
outstanding the Company shall not, without the affirmative
vote or consent of the holders of at least 66 2/3% of all
outstanding shares of the Series A Preferred Stock voting
separately as a class, (i) amend, alter or repeal any
provision of the Articles of Incorporation of the Company
(including this Statement of Designations) so as to affect
adversely the relative rights, preferences, qualifications,
limitations or restrictions of the Series A Preferred Stock or
(ii) create, authorize, issue, reclassify or increase the
authorized or issued amount, of any class or series of stock
of the Company that is senior or superior as to dividend
rights or rights upon liquidation, dissolution or winding up
of the Company to the Series A Preferred Stock, or which
possesses rights to vote separately as one class with the
Series A Preferred Stock on the basis of more than one vote
for each $25.00 of liquidation preference thereof (excluding
any liquidation preference for accrued but unpaid dividends),
or any security convertible into such a senior security. A
class vote on the part of the Series A Preferred Stock shall,
without limitation, specifically not be deemed to be required
(except as otherwise required by law or resolution of the
Board of Directors) in connection with: (a) the authorization,
issuance or increase in the authorized or issued amount of any
shares of any other class or series of stock which ranks
junior to, or in parity with, the Series A Preferred Stock in
respect of the payment of dividends or distributions upon
liquidation, dissolution or winding up of the Company; or (b)
the authorization, issuance or increase in the amount of any
notes, commercial paper, bonds, mortgages, debentures or other
obligations of the Company.
-8-
<PAGE>
No vote of the Series A Preferred Stock shall be
required if the Series A Preferred Stock is to be redeemed
in whole on a Redemption Date occurring on or prior to the
date of occurrence of any event otherwise requiring a class
vote by the Series A Preferred Stock.
(d) At any meeting of the holders of the Series A
Preferred Stock, the presence in person or by proxy of the
holders of a majority of the total number of shares of the
Series A Preferred Stock and any Parity Dividend Stock
entitled to vote thereat shall be required to constitute a
quorum; in the absence of a quorum, a majority of the holders
present in person or by proxy shall have power to adjourn the
meeting from time to time without notice other than an
announcement at the meeting, until a quorum shall be present.
(e) The directors elected by the holders of the
Series A Preferred Stock and any such Parity Dividend Stock
entitled to vote thereon shall be entitled to one vote per
director on any matter.
8. RANKING. Any class or classes of stock of the Company shall
be deemed to rank:
(i) prior to the Series A Preferred Stock,
as to dividends or as to distribution of assets upon
liquidation, dissolution or winding up, if the
holders of such class shall be entitled to the
receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of
Series A Preferred Stock,
(ii) on a parity with the Series A Preferred
Stock, as to dividends or as to distribution of
assets upon liquidation, dissolution or winding up,
whether or not the dividend rates, dividend payment
dates or redemption or liquidation prices per share
thereof are different from those of the Series A
Preferred Stock, if the holders of such class of
stock and the Series A Preferred Stock shall be
entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or
winding up, as the case may be, in proportion to
their respective amounts of accrued and unpaid
dividends per share or liquidation prices, without
preferences or priority one over the other, and
(iii) junior to the Series A Preferred
Stock, as to dividends or as to the distribution of
assets upon liquidation, dissolution or winding up,
if such stock shall be Common Stock or if the holders
of Series A Preferred Stock shall be entitled to
receipt of dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of
shares of such stock.
-9-
<PAGE>
9. STATUS OF ACQUIRED SHARES. Shares of Series A Preferred
Stock redeemed by the Company, or otherwise acquired by the
Company, will be restored to the status of authorized but
unissued shares of the Company's preferred stock, without
designation as to class, and may thereafter be issued, but not
as shares of Series A Preferred Stock.
10. CONVERSION AND PREEMPTIVE RIGHTS. The Series A Preferred
Stock is not entitled to any conversion, preemptive or subscription
rights in respect of any securities of the Company.
11. SEVERABILITY OF PROVISIONS. Whenever possible, each
provision hereof shall be interpreted in a manner as to be effective
and valid under applicable law, but if any provision hereof is held to
be prohibited by or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity,
without invalidating or otherwise adversely affecting the remaining
provisions hereof. If a court of competent jurisdiction should
determine that a provision hereof would be valid or enforceable if a
period of time were extended or shortened or a particular percentage
were increased or decreased, then such court may make such change as
shall be necessary to render the provision in question effective and
valid under applicable law.
IN WITNESS WHEREOF, the Company has caused this Certificate to be made
under the seal of the Company and signed by Manuel J. Mehos, its Chief Executive
Officer, and attested by Linda B. Frazier, its Secretary, this __ day of
_______, 1999.
COASTAL BANCORP, INC.
By:
----------------------------------------
Manuel J. Mehos, Chief Executive Officer
Attest:
- --------------------------------
Linda B. Frazier, Secretary
-10-
<PAGE>
Exhibit 4.3
CERTIFICATE OF TRUST
OF
COASTAL BANCORP CAPITAL TRUST I
This Certificate of Trust is being executed as of March 4,
1999 for the purposes of organizing a business trust pursuant to the Delaware
Business Trust Act, 12 DEL. C. Sections 3801 ET SEQ. (the "Act").
The undersigned hereby certifies as follows:
1. NAME. The name of the business trust is "Coastal Bancorp
Capital Trust I" (the "Trust").
2. DELAWARE TRUSTEE. The name and business address of the
Delaware trustee of the Trust meeting the requirements of Section 3807 of the
Act are as follows:
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
3. EFFECTIVE. This Certificate of Trust shall be effective
immediately upon filing in the Office of the Secretary of State of the State of
Delaware.
<PAGE>
IN WITNESS WHEREOF, the undersigned being all of the trustees of the
Trust, have duly executed this Certificate of Trust as of the day and year first
above written.
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: _/s/Mary Jane Morrissey_____________
Name: _Mary Jane Morrissey__________
Title: __Authorized Signatory_______
ADMINISTRATIVE TRUSTEE
__/s/ Manuel J. Mehos________________________
Name: Manuel J. Mehos
ADMINISTRATIVE TRUSTEE
__/s/Catherine N. Wylie_____________________
Name: Catherine N. Wylie
ADMINISTRATIVE TRUSTEE
__/s/Linda B. Frazier_______________________
Name: Linda B. Frazier
<PAGE>
Exhibit 4.4
---------------------------------------
---------------------------------------
AMENDED AND RESTATED DECLARATION
OF TRUST
COASTAL BANCORP CAPITAL TRUST I
Dated as of March __, 1999
---------------------------------------
---------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 DEFINITIONS.......................................................................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION..................................................... 8
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES....................................................... 8
SECTION 2.3 REPORTS BY THE PROPERTY TRUSTEE...................................................... 9
SECTION 2.4 PERIODIC REPORTS TO PROPERTY TRUSTEE................................................. 9
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT..................................... 9
SECTION 2.6 EVENTS OF DEFAULT; WAIVER............................................................ 9
SECTION 2.7 EVENT OF DEFAULT; NOTICE............................................................. 11
ARTICLE III
ORGANIZATION
SECTION 3.1 NAME................................................................................. 12
SECTION 3.2 OFFICE............................................................................... 12
SECTION 3.3 PURPOSE.............................................................................. 12
SECTION 3.4 AUTHORITY............................................................................ 12
SECTION 3.5 TITLE TO PROPERTY OF THE TRUST....................................................... 13
SECTION 3.6 POWERS AND DUTIES OF THE ADMINISTRATIVE TRUSTEES..................................... 13
SECTION 3.7 PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES................................. 16
SECTION 3.8 POWERS AND DUTIES OF THE PROPERTY TRUSTEE............................................ 17
SECTION 3.9 CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY TRUSTEE.......................... 19
SECTION 3.10 CERTAIN RIGHTS OF PROPERTY TRUSTEE................................................... 21
SECTION 3.11 DELAWARE TRUSTEE..................................................................... 23
SECTION 3.12 EXECUTION OF DOCUMENTS............................................................... 23
SECTION 3.13 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES............................... 23
SECTION 3.14 DURATION OF TRUST.................................................................... 24
SECTION 3.15 MERGERS.............................................................................. 24
ARTICLE IV
SPONSOR
SECTION 4.1 SPONSOR'S PURCHASE OF COMMON SECURITIES.............................................. 26
SECTION 4.2 RESPONSIBILITIES OF THE SPONSOR...................................................... 26
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
SECTION 4.3 RIGHT TO PROCEED..................................................................... 26
ARTICLE V
TRUSTEES
SECTION 5.1 NUMBER OF TRUSTEES: APPOINTMENT OF CO-TRUSTEE........................................ 27
SECTION 5.2 DELAWARE TRUSTEE..................................................................... 27
SECTION 5.3 PROPERTY TRUSTEE; ELIGIBILITY........................................................ 28
SECTION 5.4 CERTAIN QUALIFICATIONS OF ADMINISTRATIVE TRUSTEES AND DELAWARE TRUSTEE
GENERALLY............................................................................ 29
SECTION 5.5 ADMINISTRATIVE TRUSTEES.............................................................. 29
SECTION 5.6 DELAWARE TRUSTEE..................................................................... 29
SECTION 5.7 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES..................................... 30
SECTION 5.8 VACANCIES AMONG TRUSTEES............................................................. 31
SECTION 5.9 EFFECT OF VACANCIES.................................................................. 31
SECTION 5.10 MEETINGS............................................................................. 32
SECTION 5.11 DELEGATION OF POWER.................................................................. 32
SECTION 5.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.......................... 33
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 DISTRIBUTIONS........................................................................ 33
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 GENERAL PROVISIONS REGARDING SECURITIES.............................................. 33
SECTION 7.2 EXECUTION AND AUTHENTICATION......................................................... 34
SECTION 7.3 FORM AND DATING...................................................................... 34
SECTION 7.4 REGISTRAR AND PAYING AGENT........................................................... 36
SECTION 7.5 PAYING AGENT TO HOLD MONEY IN TRUST.................................................. 36
SECTION 7.6 REPLACEMENT SECURITIES............................................................... 37
SECTION 7.7 OUTSTANDING PREFERRED SECURITIES..................................................... 37
SECTION 7.8 PREFERRED SECURITIES IN TREASURY..................................................... 37
SECTION 7.9 TEMPORARY SECURITIES................................................................. 37
SECTION 7.10 CANCELLATION......................................................................... 38
SECTION 7.11 CUSIP NUMBERS........................................................................ 39
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 DISSOLUTION AND TERMINATION OF TRUST................................................. 39
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 TRANSFER OF SECURITIES............................................................... 40
SECTION 9.2 TRANSFER PROCEDURES AND RESTRICTIONS................................................. 41
SECTION 9.3 DEEMED SECURITY HOLDERS.............................................................. 44
SECTION 9.4 BOOK ENTRY INTERESTS................................................................. 45
SECTION 9.5 NOTICES TO CLEARING AGENCY........................................................... 45
SECTION 9.6 APPOINTMENT OF SUCCESSOR CLEARING AGENCY............................................. 45
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 LIABILITY............................................................................ 46
SECTION 10.2 EXCULPATION.......................................................................... 46
SECTION 10.3 FIDUCIARY DUTY....................................................................... 47
SECTION 10.4 INDEMNIFICATION...................................................................... 48
SECTION 10.5 OUTSIDE BUSINESSES................................................................... 50
SECTION 10.6 COMPENSATION; FEES................................................................... 51
ARTICLE XI
ACCOUNTING
SECTION 11.1 FISCAL YEAR.......................................................................... 51
SECTION 11.2 CERTAIN ACCOUNTING MATTERS........................................................... 51
SECTION 11.3 BANKING.............................................................................. 52
SECTION 11.4 WITHHOLDING.......................................................................... 52
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 AMENDMENTS........................................................................... 53
SECTION 12.2 MEETINGS OF THE HOLDERS; ACTION BY WRITTEN CONSENT................................... 54
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE................................... 56
SECTION 13.2 REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE................................... 57
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 NOTICES.............................................................................. 58
SECTION 14.2 GOVERNING LAW........................................................................ 59
SECTION 14.3 INTENTION OF THE PARTIES............................................................. 59
SECTION 14.4 HEADINGS............................................................................. 59
SECTION 14.5 SUCCESSORS AND ASSIGNS............................................................... 59
SECTION 14.6 PARTIAL ENFORCEABILITY............................................................... 60
SECTION 14.7 COUNTERPARTS......................................................................... 60
ANNEX I TERMS OF SECURITIES.................................................................. I-1
EXHIBIT A-1 FORM OF PREFERRED SECURITY CERTIFICATE............................................... A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE.................................................. A2-1
EXHIBIT B SPECIMEN OF DEBENTURE................................................................ B-1
EXHIBIT C UNDERWRITING AGREEMENT .............................................................. C-1
</TABLE>
iv
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Section of
Trust Indenture Act Section of
of 1939, as amended Declaration
- ------------------- -----------
<S> <C>
310(a)............................................................. 5.3
310(b)............................................................. 5.3(c), 5.3(d)
311(a)............................................................. 2.2(b)
311(b)............................................................. 2.2(b)
312(a)............................................................. 2.2(a)
312(b)............................................................. 2.2(b)
313................................................................ 2.3
314(a)............................................................. 2.4; 3.6(j)
314(c)............................................................. 2.5
315(a)............................................................. 3.9
315(b)............................................................. 2.7(a)
315(c)............................................................. 3.9(a)
315(d)............................................................. 3.9(b)
316(a)............................................................. 2.6
316(c)............................................................. 3.6(e)
317(a)............................................................. 3.8(e); 3.8(h)
317(b)............................................................. 3.8(i); 7.5
</TABLE>
- ---------------
* This Cross-Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms or provisions.
v
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
COASTAL BANCORP CAPITAL TRUST I
March __, 1999
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of March __, 1999, by the Trustees (as defined herein), the Sponsor
(as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;
WHEREAS, the Trustees (other than the Property Trustee (as defined
herein)) and the Sponsor established Coastal Bancorp Capital Trust I (the
"Trust"), a trust formed under the Delaware Business Trust Act pursuant to a
Declaration of Trust dated as of February __, 1999 (the "Original Declaration"),
and a Certificate of Trust filed with the Secretary of State of the State of
Delaware on February __, 1999, for the sole purpose of issuing and selling
certain securities representing undivided beneficial interests in the assets of
the Trust and investing the proceeds thereof in certain Debentures of the
Debenture Issuer (each as hereinafter defined), and engaging in only those other
activities necessary, advisable or incidental thereto; and
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory business trust under the Business Trust Act
and that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration.
<PAGE>
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 DEFINITIONS.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Declaration unless otherwise defined in this Declaration
or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"ADMINISTRATIVE TRUSTEE" has the meaning set forth in Section
5.1(b).
"AFFILIATE" has the same meaning as given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"AGENT" means any Paying Agent or Registrar.
"AUTHORIZED OFFICER" of a Person means any other Person that is
authorized to legally bind such former Person.
"BOOK ENTRY INTEREST" means a beneficial interest in a Global
Certificate registered in the name of a Clearing Agency or its nominee,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.
"BUSINESS DAY" means any day other than a Saturday or a Sunday or a
day on which banking institutions in the City of New York or the City of
Houston, Texas are authorized or required by law or executive order to close.
2
<PAGE>
"BUSINESS TRUST ACT" means Chapter 38 of Title 12 of the
Delaware Code, 12 DEL. CODE Section 3801 eT Seq., as it may be amended from
time to time, or any successor legislation.
"CLEARING AGENCY" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as depositary
for the Preferred Securities and in whose name or in the name of a nominee of
that organization shall be registered a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Preferred
Securities.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"CLOSING TIME" means the "Closing Time" under the Underwriting
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, or any successor legislation.
"COMMISSION" means the United States Securities and Exchange
Commission as from time to time constituted, or if any time after the execution
of this Declaration such Commission is not existing and performing the duties
now assigned to it under applicable Federal securities laws, then the body
performing such duties at such time.
"COMMON SECURITIES" has the meaning specified in Section 7.1(a).
"COMMON SECURITIES GUARANTEE" means the guarantee agreement dated
as of March __, 1999 of the Sponsor in respect of the Common Securities.
"COMPANY INDEMNIFIED PERSON" means (a) any Administrative Trustee;
(b) any Affiliate of any Administrative Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Administrative Trustee; or (d) any officer, employee or agent of the Trust or
its Affiliates.
"CORPORATE TRUST OFFICE" means the office of the Property Trustee
at which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Agreement is located at 101 Barclay Street, 21st Floor West,
New York, New York 10286.
"COVERED PERSON" means: (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"DEBENTURES" means the ____% Junior Subordinated Deferrable
Interest Debentures due March __, 2029 of the Debenture Issuer issued pursuant
to the Indenture.
3
<PAGE>
"DEBENTURE ISSUER" means Coastal Bancorp, Inc., a Texas
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer
of the Debentures under the Indenture.
"DEBENTURE TRUSTEE" means The Bank of New York, a New York banking
corporation, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"DEFAULT" means an event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"DEFINITIVE PREFERRED SECURITIES" shall have the meaning set forth
in Section 7.3(c).
"DELAWARE TRUSTEE" has the meaning set forth in Section 5.2.
"DIRECT ACTION" shall have the meaning set forth in Section 3.8(e).
"DISTRIBUTION" means a distribution payable to Holders in
accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"EVENT OF DEFAULT" in respect of the Securities means an Event of
Default (as defined in the Indenture) that has occurred and is continuing in
respect of the Debentures.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"FIDUCIARY INDEMNIFIED PERSON" has the meaning set forth in Section
10.4(b).
"FISCAL YEAR" has the meaning set forth in Section 11.1.
"GLOBAL PREFERRED SECURITY" has the meaning set forth in Section
7.3(a).
"HOLDER" means a Person in whose name a Security is registered,
such Person being a beneficial owner within the meaning of the Business Trust
Act.
"INDEMNIFIED PERSON" means a Company Indemnified Person or a
Fiduciary Indemnified Person.
"INDENTURE" means the Indenture dated as of March __, 1999, among
the Debenture Issuer and the Debenture Trustee, as amended from time to time.
4
<PAGE>
"INVESTMENT COMPANY" means an investment company as defined in the
Investment Company Act.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940,
as amended from time to time, or any successor legislation.
"LEGAL ACTION" has the meaning set forth in Section 3.6(g).
"LIST OF HOLDERS" has the meaning set forth in Section 2.2(a).
"MAJORITY IN LIQUIDATION AMOUNT" means, with respect to the Trust
Securities, except as provided in the terms of the Preferred Securities or by
the Trust Indenture Act, Holder(s) of outstanding Trust Securities voting
together as a single class or, as the context may require, Holders of
outstanding Preferred Securities or Holders of outstanding Common Securities
voting separately as a class, who are the record owners of more than 50% of the
aggregate liquidation amount of all outstanding Securities of the relevant
class.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a
certificate signed by any of the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, the Chief Financial Officer, a Vice President, the
Comptroller, the Secretary or an Assistant Secretary of such Person. Any
Officers' Certificate delivered by the Trust shall be signed by at least one
Administrative Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Declaration shall
include:
(a) a statement that each officer signing the Certificate has read
the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
an employee of the Sponsor, and who shall be acceptable to the Property Trustee.
"PAYING AGENT" has the meaning specified in Section 7.4.
"PAYMENT AMOUNT" has the meaning specified in Section 6.1.
5
<PAGE>
"PERSON" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other entity
of whatever nature.
"PREFERRED SECURITY BENEFICIAL OWNER" means, with respect to a Book
Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"PREFERRED SECURITIES" means the ____% Cumulative Trust Preferred
Securities.
"PREFERRED SECURITIES GUARANTEE" means the guarantee agreement
dated as of March __, 1999 of the sponsor in respect of the Preferred
Securities.
"PROPERTY TRUSTEE" has the meaning set forth in Section 5.3(a).
"PROPERTY TRUSTEE ACCOUNT" has the meaning set forth in Section
3.8(c)(i).
"PROSPECTUS" has the meaning set forth in Section 3.6(b)(i).
"QUORUM" means a majority of the Administrative Trustees or, if
there are only two Administrative Trustees, both of them.
"REGISTRAR" has the meaning set forth in Section 7.4.
"REGISTRATION STATEMENT" has the meaning set forth in Section
3.6(b)(i).
"RELATED PARTY" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that owns,
directly or indirectly, 100% of the outstanding voting securities of the
Sponsor.
"RESPONSIBLE OFFICER" means any officer within the Corporate Trust
Office of the Property Trustee with direct responsibility for the administration
of this Declaration and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"RULE 3a-5" means Rule 3a-5 under the Investment Company Act, or
any successor rule or regulation.
"SECURITIES" or "TRUST SECURITIES" means the Common Securities and
the Preferred Securities.
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"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.
"SECURITIES GUARANTEES" means the Common Securities Guarantee and
the Preferred Securities Guarantee.
"SPECIAL EVENT" has the meaning set forth in Section 4(c) of Annex
I hereto.
"SPONSOR" means Coastal Bancorp., Inc., a Texas corporation, or any
successor entity resulting from any merger, consolidation, amalgamation or other
business combination, in its capacity as sponsor of the Trust.
"SUCCESSOR ENTITY" has the meaning set forth in Section 3.15(b)(i).
"SUPER MAJORITY" has the meaning set forth in Section 2.6(a)(ii).
"10% IN LIQUIDATION AMOUNT" means, with respect to the Trust
Securities, except as provided in the terms of the Preferred Securities or by
the Trust Indenture Act, Holder(s) of outstanding Trust Securities voting
together as a single class or, as the context may require, Holders of
outstanding Preferred Securities or Holders of outstanding Common Securities
voting separately as a class, who are the record owners of 10% or more of the
aggregate liquidation amount of all out standing Securities of the relevant
class.
"TREASURY REGULATIONS" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"TRUSTEE" or "TRUSTEES" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue as a trustee in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended from time to time, or any successor legislation.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement for the
initial offering and sale of Preferred Securities in the form of Exhibit C.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration in order for this
Declaration to be qualified under the Trust Indenture Act and shall, to the
extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(d) The application of the Trust Indenture Act to this Declaration
shall not affect the Trust's classification as a grantor trust for United States
federal income tax purposes and the nature of the Securities as equity
securities representing undivided beneficial interests in the assets of the
Trust.
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES.
(a) Each of the Sponsor and the Administrative Trustees on behalf
of the Trust shall provide the Property Trustee, unless the Property Trustee is
Registrar for the Securities, (i) within 14 days after each record date for
payment of Distributions, a list, in such form as the Property Trustee may
reasonably require, of the names and addresses of the Holders ("List of
Holders") as of such record date, PROVIDED THAT neither the Sponsor nor the
Administrative Trustees on behalf of the Trust shall be obligated to provide
such List of Holders at any time that the List of Holders does not differ from
the most recent List of Holders given to the Property Trustee by the Sponsor and
the Administrative Trustees on behalf of the Trust, and (ii) at any other time,
within 30 days of receipt by the Trust of a written request for a List of
Holders as of a date no more than 14 days before such List of Holders is given
to the Property Trustee. The Property Trustee shall preserve, in as current a
form as is reasonably practicable, all information contained in Lists of Holders
given to it or which it receives in the capacity as Paying Agent (if acting in
such capacity), PROVIDED THAT the Property Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
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SECTION 2.3 REPORTS BY THE PROPERTY TRUSTEE.
Within 60 days after May 15 of each year, commencing May 15,
1999, the Property Trustee shall provide to the Holders of the Preferred
Securities such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313
of the Trust Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO PROPERTY TRUSTEE.
Each of the Sponsor and the Administrative Trustees on behalf of
the Trust shall provide to the Property Trustee such documents, reports and
information as are required by Section 314 (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314(a)(4) of the Trust
Indenture Act, such compliance certificate to be delivered annually on or
before 120 days after the end of each fiscal year of the Sponsor. Delivery of
such documents, reports and information to the Property Trustee is for
informational purposes only and the Property Trustee's receipt of such shall
not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Sponsor's
compliance with any of its covenants hereunder (as to which the Property
Trustee is entitled to rely exclusively on Officers' Certificates).
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
Each of the Sponsor and the Administrative Trustees on behalf of
the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent provided for in this Declaration that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) of the Trust Indenture Act may be given in the form of an
Officers' Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER.
(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, PROVIDED THAT, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
aggregate principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least the
proportion in aggregate liquidation amount of the Preferred Securities
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that the relevant Super Majority represents of the aggregate principal
amount of the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act. Upon such waiver,
any such default shall cease to exist, and any Event of Default with respect
to the Preferred Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend
to any subsequent or other default or an Event of Default with respect to the
Preferred Securities or impair any right consequent thereon. Any waiver by
the Holders of the Preferred Securities of an Event of Default with respect
to the Preferred Securities shall also be deemed to constitute a waiver by
the Holders of the Common Securities of any such Event of Default with
respect to the Common Securities for all purposes of this Declaration without
any further act, vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, PROVIDED THAT, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders
of the Common Securities are deemed to have waived such Event of Default
under the Declaration as provided below in this Section 2.6(b), the Event
of Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to have waived
such Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration may only be
waived by the vote of the Holders of at least the proportion in aggregate
liquidation amount of the Common Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding;
PROVIDED FURTHER, the Holders of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to
the Common Securities and their consequences if all Events of Default with
respect to the Preferred Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely
on behalf of the Holders of the Preferred Securities and only the Holders of
the Preferred Securities will have the right to direct the Property Trustee
in accordance with the terms of the Securities. The foregoing provisions of
this Section 2.6(b) shall be in lieu of Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act.
Subject to the foregoing provisions of this Section 2.6(b), upon such waiver,
any such default shall cease to exist and any
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Event of Default with respect to the Common Securities arising therefrom shall
be deemed to have been cured for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or Event of Default with
respect to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee, at the direction of the Holders of the Preferred
Securities, constitutes a waiver of the corresponding Event of Default under
this Declaration. The foregoing provisions of this Section 2.6(c) shall be in
lieu of Section 316(a)(1)(B) of the Trust Indenture Act and such Section
316(a)(1)(B) of the Trust Indenture Act is hereby expressly excluded from
this Declaration and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 EVENT OF DEFAULT; NOTICE.
(a) The Property Trustee shall, within 90 days after the occurrence
of a Default (as such term is defined in the Indenture) actually known to a
Responsible Officer, transmit by mail, first class postage prepaid, to the
Holders of the Preferred Securities, the Administrative Trustees and the
Sponsor, notices of all Defaults with respect to the Securities actually known
to a Responsible Officer, unless such Defaults have been cured before the giving
of such notice; PROVIDED THAT, except for a default in the payment of principal
of or interest (including Compounded Interest and Additional Sums (as such terms
are defined in the Indenture) if any, on any of the Debentures, the Property
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer in good faith determines that the withholding of such notice
is in the interests of the Holders. The Sponsor and the Administrative Trustees
shall file annually with the Property Trustee a certification as to whether or
not they are in compliance with all the conditions and covenants applicable to
them under this Declaration.
(b) The Property Trustee shall not be deemed to have knowledge of
any default except:
(i) a default under Sections 5.01(a) (other than the payment of
Compounded Interest and Additional Sums) and 5.01(b) of the Indenture; or
(ii) any default as to which the Property Trustee shall have
received written notice or of which a Responsible Officer charged with the
administration of the Declaration shall have actual knowledge.
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ARTICLE III
ORGANIZATION
SECTION 3.1 NAME.
The Trust is named "Coastal Bancorp Capital Trust I"" as such name
may be modified from time to time by the Administrative Trustees following
written notice to the Delaware Trustee, the Property Trustee and the Holders.
The Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Administrative Trustees.
SECTION 3.2 OFFICE.
The address of the principal office of the Trust is c/o The Bank of
New York, 101 Barclay Street, New York, New York 10286. On ten Business Days
written notice to the Delaware Trustee, the Property Trustee and the Holders of
Securities, the Administrative Trustees may designate another principal office.
SECTION 3.3 PURPOSE.
The exclusive purposes and functions of the Trust are (a) to issue
and sell the Securities, (b) use the proceeds from the sale of the Securities to
acquire the Debentures, and (c) except as otherwise limited herein, to engage in
only those other activities necessary, advisable or incidental thereto. The
Trust shall not borrow money, issue debt or reinvest proceeds derived from
investments, mortgage or pledge any of its assets, or otherwise undertake (or
permit to be undertaken) any activity that would cause the Trust not to be
classified for United States federal income tax purposes as a grantor trust.
By the acceptance of this Trust, none of the Trustees, the Sponsor
or the Holders of the Securities will take any position which is contrary to the
classification of the Trust as a grantor trust for United States federal income
tax purposes.
SECTION 3.4 AUTHORITY.
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Administrative Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Administrative Trustees in accordance with their powers
shall constitute the act of and serve to bind the Trust and an action taken by
the Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no Person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
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SECTION 3.5 TITLE TO PROPERTY OF THE TRUST.
Except as provided in Section 3.8 with respect to the Debentures
and the Property Trustee Account or as otherwise provided in this Declaration,
legal title to all assets of the Trust shall be vested in the Trust. The Holders
shall not have legal title to any part of the assets of the Trust, but shall
have an undivided beneficial interest in the assets of the Trust.
SECTION 3.6 POWERS AND DUTIES OF THE ADMINISTRATIVE TRUSTEES.
The Administrative Trustees shall have the exclusive power, duty
and authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with this
Declaration; PROVIDED, HOWEVER, that except as contemplated in Section 7.1(a),
(i) the Trust may issue no more than one series of Preferred Securities and no
more than one series of Common Securities, (ii) there shall be no interests in
the Trust other than the Securities, and (iii) the issuance of Securities shall
be limited to a simultaneous issuance of both the Preferred Securities and
Common Securities at the Closing Time;
(b) in connection with the issuance and sale of the Preferred
Securities at the direction of the Sponsor, to:
(i) prepare and execute a Prospectus (the "Prospectus") in
preliminary and final form prepared by the Sponsor, in relation to the
offering and sale of the Preferred Securities and to execute and file with
the Commission a Registration Statement (the "Registration Statement"),
including any amendments thereto, for the offering and sale of the
Preferred Securities;
(ii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary, in order to
qualify or register all or part of the Preferred Securities in any State in
which the Sponsor has determined to qualify or register such Preferred
Securities for sale;
(iii) execute and file an application, prepared by the Sponsor, to
permit the Preferred Securities to trade or be quoted or listed in or on
the Nasdaq National Market System or any other securities exchange or
quotation system.
(iv) execute and deliver letters, documents or instruments with DTC
and other Clearing Agencies relating to the Preferred Securities;
(v) execute and file with the Commission a registration statement
on Form 8-A, including any amendments thereto, prepared by the Sponsor,
relating to the registration of the Preferred Securities under Section
12(b) or (g) of the Exchange Act; and
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(vi) execute and enter into the Underwriting Agreement providing
for the sale of the Preferred Securities;
(c) to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; PROVIDED, HOWEVER, that the
Administrative Trustees shall cause legal title to the Debentures to be held of
record in the name of the Property Trustee for the benefit of the Holders;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of ss. 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Preferred Securities and Holders of Common Securities
as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required
of the Administrative Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action, or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;
(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants to conduct the services that the Administrative Trustees have
authority to conduct directly and pay reasonable compensation for such
services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by Section 314(a)(4) of
the Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Administrative Trustee;
(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar for
the Securities or to appoint a Paying Agent for the Securities as provided in
Section 7.4 except for such time as such power to appoint a Paying Agent is
vested in the Property Trustee;
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(m) to give prompt written notice to the Property Trustee and to
Holders of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest payment
period under the Indenture;
(n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders or to enable the Trust
to effect the purposes for which the Trust was created;
(o) to take any action, not inconsistent with this Declaration or
with applicable law, that the Administrative Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of the
Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States federal
income tax purposes as a grantor trust; and
(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for
United States federal income tax purposes;
(p) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Administrative Trustees, on
behalf of the Trust; and
(q) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Administrative Trustees must exercise the powers set forth in
this Section 3.6 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 3.3, and the Administrative Trustees shall not
take any action that is inconsistent with the purposes and functions of the
Trust set forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall have
none of the powers or the authority of the Property Trustee set forth in Section
3.8.
The Administrative Trustees shall take all actions on behalf of the
Trust that are not specifically required by this Declaration to be taken by any
other Trustee.
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Any expenses incurred by the Administrative Trustees pursuant to
this Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES.
(a) The Trust shall not, and the Trustees (including the Property
Trustee and the Delaware Trustee) shall not, engage in any activity other than
as required or authorized by this Declaration. The Trust shall not:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders pursuant to
the terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to vary
the Trust assets or the terms of the Securities in any way whatsoever,
except as otherwise expressly provided herein;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities;
(vii) other than as provided in this Declaration or Annex I, (A)
direct the time, method and place of conducting any proceeding with respect
to any remedy available to the Debenture Trustee, or exercising any trust
or power conferred upon the Debenture Trustee with respect to the
Debentures, (B) waive any past default that is waivable under the Indenture
or (C) exercise any right to rescind or annul any declaration that the
principal of all the Debentures shall be due and payable; or
(viii) consent to any amendment, modification or termination of the
Indenture or the Debentures where such consent shall be required unless the
Trust shall have received (A) an opinion of independent tax counsel
experienced in such matters to the effect that such amendment, modification
or termination will not cause more than an insubstantial risk that for
United States federal income tax purposes the Trust will not be classified
as a grantor trust, and (B) an opinion of Counsel from a firm recognized to
be experts in such matters, to the effect that the amendment, modification
or termination will not cause more than an insubstantial risk that the
Trust will be deemed to be an investment company required to be registered
under the Investment Company Act of 1940, as amended.
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SECTION 3.8 POWERS AND DUTIES OF THE PROPERTY TRUSTEE.
(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the
Holders. The right, title and interest of the Property Trustee to the Debentures
shall vest automatically in each Person who may hereafter be appointed as
Property Trustee in accordance with Section 5.7. Such vesting and cessation of
title shall be effective whether or not conveyancing documents with regard to
the Debentures have been executed and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Administrative Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing trust
account (the "Property Trustee Account") in the name of and under the
exclusive control of the Property Trustee on behalf of the Holders and,
upon the receipt of payments of funds made in respect of the Debentures
held by the Property Trustee, deposit such funds into the Property Trustee
Account and make payments or cause the Paying Agent to make payments to the
Holders from the Property Trustee Account in accordance with Section 6.1.
Funds in the Property Trustee Account shall be held uninvested until
disbursed in accordance with this Declaration. The Property Trustee Account
shall be an account that is maintained with a banking institution the
rating on whose long-term unsecured indebtedness is rated in one of four
highest rating categories by a "nationally recognized statistical rating
organization", as that term is defined for purposes of Rule 436(g)(2) under
the Securities Act;
(ii) engage in such ministerial activities as shall be necessary or
appropriate to effect the redemption of the Trust Securities to the extent
the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the
Administrative Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as shall be necessary or appropriate
to effect the distribution of the Debentures to Holders upon the occurrence
of certain events set forth in Sections 2.7 and 8.1 hereof.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities.
(e) Subject to Section 3.9(a), the Property Trustee shall take any
Legal Action which arises out of or in connection with an Event of Default of
which a Responsible Officer has actual knowledge or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture Act. If an
Event of Default has occurred and is continuing and such event is attributable
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to the failure of the Debenture Issuer to pay the principal of or interest
(including Compounded Interest and Additional Sums (each as defined in
Indenture), if any) on the Debentures on the date such principal or interest
(including Compounded Interest and Additional Sums, if any) is otherwise payable
(or in the case of redemption, on the redemption date), then a Holder of
Preferred Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or interest (including Compounded
Interest and Additional Sums, if any), if any, on the Debentures having a
principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such Holder (a "Direct Action") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Holders of the Common Securities will be subrogated to the rights
of such Holder of Preferred Securities to the extent of any payment made by the
Debenture Issuer to such Holder of Preferred Securities in such Direct Action.
Except as provided in the preceding sentence, the Holders of Preferred
Securities will not be able to exercise directly any other remedy available to
the holders of the Debentures.
(f) The Property Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated and the proceeds of
the liquidation distributed to the Holders pursuant to the terms of the
Securities; or
(ii) a successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.7 (a "Successor
Property Trustee").
(g) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible Officer
occurs and is continuing, the Property Trustee shall, for the benefit of
Holders, enforce its rights as holder of the Debentures subject to the rights of
the Holders pursuant to the terms of such Securities.
(h) The Property Trustee shall be authorized to undertake any
actions set forth in Section 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent,
the Property Trustee may authorize one or more Persons to act as additional
Paying Agents and to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. Any
such additional Paying Agent may be removed by the Property Trustee at any
time the Property Trustee remains as Paying Agent and a successor Paying
Agent or additional Paying Agents may be (but are not required to be)
appointed at any time by the Property Trustee while the Property Trustee is
so acting as Paying Agent.
(j) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Administrative
Trustees set forth in Section 3.6.
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Notwithstanding anything expressed or implied to the contrary in
this Declaration or any Annex or Exhibit hereto, (i) the Property Trustee must
exercise the powers set forth in this Section 3.8 in a manner that is consistent
with the purposes and functions of the Trust set out in Section 3.3 and (ii) the
Property Trustee shall not take any action that is inconsistent with the
purposes and functions of the Trust set out in Section 3.3.
SECTION 3.9 CERTAIN DUTIES AND RESPONSIBILITIES OF THE PROPERTY TRUSTEE.
(a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and in the Securities and no implied covenants shall be read
into this Declaration against the Property Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6) of
which a Responsible Officer has actual knowledge, the Property Trustee shall
exercise such of the rights and powers vested in it by this Declaration, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Property Trustee shall
be determined solely by the express provisions of this Declaration
and in the Securities and the Property Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Declaration and in the Securities, and
no implied covenants or obligations shall be read into this
Declaration or the Securities against the Property Trustee; and
(B) in the absence of bad faith on the part of the Property
Trustee, the Property Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Property
Trustee and conforming to the requirements of this Declaration;
PROVIDED, HOWEVER, that in the case of any such certificates or
opinions that by any provision hereof are specifically required to be
furnished to the Property Trustee, the Property Trustee shall be under
a duty to examine the same to determine whether or not they conform to
the requirements of this Declaration (but need not confirm or
investigate the accuracy of mathematical calculations or other facts
stated therein);
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(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Property Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Property Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of not less than a Majority in liquidation
amount of the Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the Property Trustee under
this Declaration;
(iv) no provision of this Declaration shall require the Property
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that the repayment of such funds or liability is not
reasonably assured to it under the terms of this Declaration or indemnity
reasonably satisfactory to the Property Trustee against such risk or
liability is not reasonably assured to it;
(v) the Property Trustee's sole duty with respect to the custody,
safe keeping and physical preservation of the Debentures and the Property
Trustee Account shall be to deal with such property in a similar manner as
the Property Trustee deals with similar property for its own account,
subject to the protections and limitations on liability afforded to the
Property Trustee under this Declaration and the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for or
with respect to the value, genuineness, existence or sufficiency of the
Debentures or the payment of any taxes or assessments levied thereon or in
connection therewith;
(vii) the Property Trustee shall not be liable for any interest on
any money received by it except as it may otherwise agree in writing with
the Sponsor. Money held by the Property Trustee need not be segregated from
other funds held by it except in relation to the Property Trustee Account
maintained by the Property Trustee pursuant to Section 3.8(c)(i) and except
to the extent otherwise required by law;
(viii) the Property Trustee shall not be responsible for monitoring
the compliance by the Administrative Trustees or the Sponsor with their
respective duties under this Declaration, nor shall the Property Trustee
be liable for any act, omission, default or misconduct of the
Administrative Trustees or the Sponsor; and
(ix) the Property Trustee shall not be deemed to have notice of any
Event of Default unless a Responsible Officer of the Property Trustee has
actual knowledge thereof or unless written notice of any event which is in
fact such a default is received by the Property Trustee at the Corporate
Trust Office of the Property Trustee, and such notice refer ences the
Securities and this Declaration.
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SECTION 3.10 CERTAIN RIGHTS OF PROPERTY TRUSTEE.
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Sponsor or the Administrative
Trustees contemplated by this Declaration may be sufficiently evidenced by
an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and conclusively rely
upon an Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or securities
laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other experts
of its selection and the advice or opinion of such counsel and experts with
respect to legal matters or advice within the scope of such experts' area
of expertise shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion, such counsel may be
counsel to the Sponsor or any of its Affiliates, and may include any of its
employees. The Property Trustee shall have the right at any time to seek
instructions concerning the administration of this Declaration from any
court of competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the request
or direction of any Holder, unless such Holder shall have provided to the
Property Trustee security and indemnity, reasonably satisfactory to the
Property Trustee, against the costs, expenses (including reasonable
attorneys' fees and expenses and the expenses of the Property Trustee's
agents, nominees or custodians) and liabilities that might be incurred by
it in complying with such request or direction, including such reasonable
advances as may be requested by the Property Trustee provided, that,
nothing contained in this Section 3.10(a)(vi) shall be taken to relieve the
Property Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this
Declaration;
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(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Trust, personally or by agent or
attorney at the sole cost of the Sponsor and shall incur no liability or
additional liability of any kind by reason of such inquiry or
investigation;
(viii) the Property Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents, custodians, nominees or attorneys and the Property Trustee shall
not be responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders, and the signature of the
Property Trustee or its agents alone shall be sufficient and effective to
perform any such action and no third party shall be required to inquire as
to the authority of the Property Trustee to so act or as to its compliance
with any of the terms and provisions of this Declaration, both of which
shall be conclusively evidenced by the Property Trustee's or its agent's
taking such action;
(x) whenever in the administration of this Declaration the Property
Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the
Property Trustee (i) may request instructions from the Holders which
instructions may only be given by the Holders of the same proportion in
liquidation amount of the Securities as would be entitled to direct the
Property Trustee under the terms of the Securities in respect of such
remedy, right or action, (ii) may refrain from enforcing such remedy or
right or taking such other action until such instructions are received and
(iii) shall be protected in conclusively relying on or acting in or
accordance with such instructions;
(xi) except as otherwise expressly provided by this Declaration,
the Property Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Declaration;
(xii) the Property Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith, without
negligence, and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Declaration; and
(xiii) the rights, privileges, protections, immunities and benefits
given to the Property Trustee, including, without limitation, its right to
be indemnified, are extended to,
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and shall be enforceable by, the Property Trustee in each of its capacities
hereunder, and to each agent, custodian and other Person employed to act
hereunder.
(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Property Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Property Trustee
shall be construed to be a duty.
SECTION 3.11 DELAWARE TRUSTEE.
Notwithstanding any other provision of this Declaration other
than Section 5.2, the Delaware Trustee shall not be entitled to exercise any
powers, nor shall the Delaware Trustee have any of the duties and
responsibilities of the Administrative Trustees or the Property Trustee
described in this Declaration. Except as set forth in Section 5.2, the
Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of Section 3807 of the Business Trust Act. In the
event the Delaware Trustee shall at any time be required to take any action
or perform any duty hereunder, the Delaware Trustee shall be entitled to the
benefits of Section 3.9(b)(ii)-(viii) and Section 3.10. No implied covenants
or obligations shall be read into this Declaration against the Delaware
Trustee.
SECTION 3.12 EXECUTION OF DOCUMENTS.
Unless otherwise determined by the Administrative Trustees, and
except as otherwise required by the Business Trust Act or this Declaration, any
Administrative Trustee is authorized to execute on behalf of the Trust any
documents that the Administrative Trustees have the power and authority to
execute pursuant to Section 3.6; PROVIDED THAT the Registration Statement
referred to in Section 3.6(b)(i), including any amendments thereto, shall be
signed by all of the Administrative Trustees.
SECTION 3.13 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration, the Debentures or the Securities.
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SECTION 3.14 DURATION OF TRUST.
The Trust, unless dissolved pursuant to the provisions of Article
VIII hereof, shall continue without dissolution until March __, 2030.
SECTION 3.15 MERGERS.
(a) The Trust may not merge with or into, consolidate, amalgamate
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, except as described in Section
3.15(b) and (c) of this Declaration or Section 3 of Annex I.
(b) The Trust may, at the request of the Sponsor, with the consent
of the Administrative Trustees or, if there are more than two, a majority of
the Administrative Trustees and without the consent of the Holders, the Delaware
Trustee or the Property Trustee, merge with or into, consolidate, amalgamate or
be replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to, a trust organized as such under the
laws of any State; PROVIDED THAT:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the
Securities rank with respect to Distributions and payments upon
liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of the Successor
Entity that possesses the same powers and duties as the Property Trustee
as the holder of the Debentures;
(iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or with another organization on which the Preferred
Securities are then listed or quoted, if any;
(iv) if the Preferred Securities (including any Successor
Securities) are rated by any nationally recognized statistical rating
organization prior to such transaction, such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not cause the
Preferred Securities (including any Successor Securities), or if the
Debentures are so rated, the Debentures, to be downgraded by any nationally
recognized statistical rating organization;
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(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders (including the holders of any
Successor Securities) in any material respect (other than with respect to
any dilution of such Holders' interests in the new entity);
(vi) such Successor Entity has a purpose substantially identical to
that of the Trust;
(vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has received an
opinion of an independent counsel to the Trust experienced in such matters
to the effect that:
(A) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders (including the holders of
any Successor Securities) in any material re spect (other than with
respect to any dilution of the Holders' interest in the new entity);
and
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor the
Successor Entity will be required to register as an Investment
Company;
(viii) the Sponsor or any permitted successor or assignee owns all
of the common securities of such Successor Entity and guarantees the
obligations of such Successor Entity under the Successor Securities at
least to the extent provided by the Preferred Securities Guarantee and the
Common Securities Guarantee; and
(ix) there shall have been furnished to the Property Trustee an
Officer's Certificate and an Opinion of Counsel, each to the effect that
all conditions precedent in this Declaration to such transaction have been
satisfied.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets as an entirety or substantially as
an entirety to, any other Person or permit any other Person to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Trust or the Successor Entity not to be classified as a grantor trust for United
States federal income tax purposes.
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ARTICLE IV
SPONSOR
SECTION 4.1 SPONSOR'S PURCHASE OF COMMON SECURITIES.
At the Closing Time, the Sponsor will purchase all of the Common
Securities then issued by the Trust, in an amount equal to at least 3% of the
total capital of the Trust, at the same time as the Preferred Securities are
issued and sold.
SECTION 4.2 RESPONSIBILITIES OF THE SPONSOR.
In connection with the issue and sale of the Preferred Securities,
the Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare the Prospectus and to prepare and file the
Registration Statement with the Commission, including any amendments thereto and
to pay any registration fees in connection therewith;
(b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and to do
any and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
(c) if deemed necessary or advisable by the Sponsor, to prepare for
filing by the Trust an application to permit the Preferred Securities to trade
or be quoted or listed in or on the Nasdaq Stock Market's National Market or any
other securities exchange, quotation system;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A, including any amendments thereto, relating
to the registration of the Preferred Securities under Section 12(b) or (g) of
the Exchange Act; and
(e) to negotiate the terms of the Underwriting Agreement providing
for the sale of the Preferred Securities.
SECTION 4.3 RIGHT TO PROCEED.
The Sponsor acknowledges the rights of the Holders of Preferred
Securities, in the event that a failure of the Trust to pay Distributions on the
Preferred Securities is attributable to the failure of the Debenture Issuer to
pay interest or principal on the Debentures, to institute a proceeding directly
against the Debenture Issuer for enforcement of its payment obligations on the
Debentures.
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ARTICLE V
TRUSTEES
SECTION 5.1 NUMBER OF TRUSTEES: APPOINTMENT OF CO-TRUSTEE.
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities; PROVIDED, HOWEVER, that, the number of
Trustees shall in no event be less than two (2); PROVIDED FURTHER that (1) one
Trustee shall satisfy the requirements of the Delaware Trustee pursuant to
Section 5.2; (2) there shall be at least one Trustee who is an officer of the
Sponsor (an "Administrative Trustee"); and (3) one Trustee shall be the Property
Trustee for so long as this Declaration is required to qualify as an indenture
under the Trust Indenture Act, and such Trustee may also serve as Delaware
Trustee if it meets the applicable requirements. Notwithstanding the above,
unless an Event of Default shall have occurred and be continuing, at any time or
times, for the purpose of meeting the legal requirements of the Trust Indenture
Act or of any jurisdiction in which any part of the Trust's property may at the
time be located, the Holders of a Majority in liquidation amount of the Common
Securities acting as a class at a meeting of the Holders of the Common
Securities, and the Administrative Trustees shall have power to appoint one or
more Persons either to act as a co-trustee, jointly with the Property Trustee,
of all or any part of the Trust's property, or to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such Person or Persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of this Declaration. In case an Event of Default has
occurred and is continuing, the Property Trustee alone shall have power to make
any such appointment of a co-trustee.
SECTION 5.2 DELAWARE TRUSTEE.
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the requirements
of applicable law, PROVIDED THAT, if the Property Trustee has its principal
place of business in the State of Delaware and otherwise meets the requirements
of applicable law, then the Property Trustee shall also be the Delaware Trustee
and Section 3.11 shall have no application.
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SECTION 5.3 PROPERTY TRUSTEE; ELIGIBILITY.
(a) There shall at all times be one Trustee (the "Property
Trustee") which shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to above,
then for the purposes of this Section 5.3(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
(b) If at any time the Property Trustee shall cease to be eligible
to so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of ss. 310(b) of the Trust
Indenture Act, the Property Trustee and the Holder of the Common Securities
(as if it were the obligor referred to in Section 310(b) of the Trust
Indenture Act) shall in all respects comply with the provisions of Section
310(b) of the Trust Indenture Act.
(d) The Preferred Securities Guarantee and the Indenture shall be
deemed to be specifically described in this Declaration for purposes of clause
(i) of the first proviso contained in Section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
The Bank of New York
101 Barclay Street
21st Floor West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
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SECTION 5.4 CERTAIN QUALIFICATIONS OF ADMINISTRATIVE TRUSTEES AND DELAWARE
TRUSTEE GENERALLY.
Each Administrative Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural person
who is at least 21 years of age or a legal entity that shall act through one or
more Authorized Officers.
SECTION 5.5 ADMINISTRATIVE TRUSTEES.
The initial Administrative Trustees shall be:
Manuel J. Mehos
Catherine N. Wylie
Linda B. Frazier
(a) Except as expressly set forth in this Declaration and except if
a meeting of the Administrative Trustees is called with respect to any matter
over which the Administrative Trustees have power to act, any power of the
Administrative Trustees may be exercised by, or with the consent of, any one
such Administrative Trustee.
(b) An Administrative Trustee shall have the authority set forth in
Section 3.12 to execute on behalf of the Trust any documents which the
Administrative Trustees have the power and authority to cause the Trust to
execute pursuant to Section 3.6.
(c) An Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purposes of signing any documents which the Administrative
Trustees have power and authority to cause the Trust to execute pursuant to
Section 3.6.
SECTION 5.6 DELAWARE TRUSTEE.
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
White Clay Center
Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
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SECTION 5.7 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES.
(a) Subject to Section 5.7(b) of this Declaration and to Section
6(b) of Annex I hereto, Trustees may be appointed or removed without cause at
any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities, by vote of the Holders of
a Majority in liquidation amount of the Common Securities voting as a class
at a meeting of the Holders of the Common Securities; and
(iii) if an Event of Default shall have occurred and be continuing
after the issuance of the Securities, with respect to the Property Trustee
or the Delaware Trustee, by vote of Holders of a Majority in liquidation
amount of the Preferred Securities voting as a class at a meeting of
Holders of the Preferred Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.7(a) until a Successor Property Trustee
("Successor Property Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Property Trustee
and delivered to the Administrative Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed
in accordance with this Section 5.7(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections 5.2
and 5.4 (a "Successor Delaware Trustee") has been appointed and has
accepted such appointment by written instrument executed by such Successor
Delaware Trustee and delivered to the Administrative Trustees and the
Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; PROVIDED, HOWEVER,
that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and
has accepted such appointment by instrument executed by such Successor
Property Trustee and delivered to the Trust, the Sponsor and the
resigning Property Trustee; or
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(B) until the assets of the Trust have been completely
liquidated and the proceeds thereof distributed to the Holders; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(d) The Holders of the Common Securities or, if an Event of Default
shall have occurred and be continuing after the issuance of the Securities, the
Holders of the Preferred Securities shall use their best efforts to promptly
appoint a Successor Delaware Trustee or Successor Property Trustee, as the case
may be, if the Property Trustee or the Delaware Trustee delivers an instrument
of resignation in accordance with this Section 5.7.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.7 within 60 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
(g) At the time of resignation or removal of the Property Trustee
or the Delaware Trustee, the Debenture Issuer shall pay to such Trustee any
amounts that may be owed to such Trustee pursuant to Section 10.4.
SECTION 5.8 VACANCIES AMONG TRUSTEES.
If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 5.1, or if the number of Trustees is
increased pursuant to Section 5.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Administrative Trustees or, if
there are more than two, a majority of the Administrative Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.7.
SECTION 5.9 EFFECT OF VACANCIES.
The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to dissolve, terminate
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or annul the Trust. Whenever a vacancy in the number of Administrative Trustees
shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 5.7, the Administrative
Trustees in office, regardless of their number, shall have all the powers
granted to the Administrative Trustees and shall discharge all the duties
imposed upon the Administrative Trustees by this Declaration.
SECTION 5.10 MEETINGS.
If there is more than one Administrative Trustee, meetings of the
Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may be
held at a time and place fixed by resolution of the Administrative Trustees,
PROVIDED, HOWEVER, that meetings of the Administrative Trustees shall not be
held in any jurisdiction which would subject the Trust to taxation under the
laws of such jurisdiction. Notice of any in-person meetings of the
Administrative Trustees shall be hand delivered or otherwise delivered in
writing (including by facsimile, with a hard copy by overnight courier) not less
than 24 hours before such meeting. Notice of any telephonic meetings of the
Administrative Trustees or any committee thereof shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting. Notices shall
contain a brief statement of the time, place and anticipated purposes of the
meeting. The presence (whether in person or by telephone) of an Administrative
Trustee at a meeting shall constitute a waiver of notice of such meeting except
where an Administrative Trustee attends a meeting for the express purpose of
objecting to the transaction of any activity on the ground that the meeting has
not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Administrative Trustees may be taken at a meeting
by vote of a majority of the Administrative Trustees present (whether in person
or by telephone) and eligible to vote with respect to such matter, provided that
a Quorum is present, or without a meeting by the unanimous written consent of
the Administrative Trustees. In the event there is only one Administrative
Trustee, any and all action of such Administrative Trustee shall be evidenced by
a written consent of such Administrative Trustee.
SECTION 5.11 DELEGATION OF POWER.
(a) Any Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purpose of executing any documents contemplated in Section
3.6, including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing; and
(b) the Administrative Trustees shall have power to delegate from
time to time to such of their number or to officers of the Trust the doing of
such things and the execution of such instruments either in the name of the
Trust or the names of the Administrative Trustees or otherwise as the
Administrative Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the Trust, as set
forth herein.
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SECTION 5.12 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any Person into which the Property Trustee or the Delaware Trustee
or any Administrative Trustee that is not a natural person, as the case may be,
may be merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the Property
Trustee or the Delaware Trustee, as the case may be, shall be a party, or any
Person succeeding to all or substantially all the corporate trust business of
the Property Trustee or the Delaware Trustee, as the case may be, shall be the
successor of the Property Trustee or the Delaware Trustee, as the case may be,
hereunder, provided such 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.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 DISTRIBUTIONS.
Holders shall receive Distributions in accordance with the
applicable terms of the relevant Holder's Securities. If and to the extent that
the Debenture Issuer makes a payment of interest (including Compounded Interest
and Additional Sums) or principal on the Debentures held by the Property Trustee
or any other payments with respect to the Debentures held by the Property
Trustee (the amount of any such payment being a "Payment Amount"), the Property
Trustee shall and is directed, to the extent funds are available for that
purpose, to make a distribution (a "Distri bution") of the Payment Amount to
Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 GENERAL PROVISIONS REGARDING SECURITIES.
(a) The Administrative Trustees shall on behalf of the Trust issue
one class of capital securities representing undivided beneficial interests in
the assets of the Trust having such terms as are set forth in Annex I-B (the
"Preferred Securities") and one class of common securities representing
undivided beneficial interests in the assets of the Trust having such terms as
are set forth in Annex I-A (the "Common Securities"). The Trust shall issue no
securities or other interests in the assets of the Trust other than the Trust
Securities.
(b) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
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(c) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and non-assessable undivided beneficial interests in the assets of
the Trust.
(d) Every Person, by virtue of having become a Holder or a
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have ex pressly assented and agreed to the terms
of, and shall be bound by, this Declaration.
SECTION 7.2 EXECUTION AND AUTHENTICATION.
(a) The Securities shall be signed on behalf of the Trust by an
Administrative Trustee by manual or facsimile signature. In case any
Administrative Trustee of the Trust who shall have signed any of the Securities
shall cease to be such Administrative Trustee before the Securities so signed
shall be delivered by the Trust, such Securities nevertheless may be delivered
as though the person who signed such Securities had not ceased to be such
Administrative Trustee; and any Securities may be signed on behalf of the Trust
by such persons who, at the actual date of execution of such Security, shall be
the Administrative Trustees of the Trust, although at the date of the execu tion
and delivery of the Declaration any such person was not such an Administrative
Trustee.
(b) One Administrative Trustee shall sign the Preferred Securities
for the Trust by manual or facsimile signature. Unless otherwise determined by
the Trust, such signature shall, in the case of Common Securities, be a manual
signature.
A Preferred Security shall not be valid until authenticated by the
manual signature of an authorized signatory of the Property Trustee. The
signature shall be conclusive evidence that the Preferred Security has been
authenticated under this Declaration.
Upon a written order of the Trust signed by one Administrative
Trustee, the Property Trustee shall authenticate the Preferred Securities for
original issue. The aggregate number of Preferred Securities outstanding at any
time shall not exceed the number set forth in the terms in Annex I hereto except
as provided in Section 7.6.
The Property Trustee may appoint an authenticating agent acceptable
to the Trust to authenticate Preferred Securities. An authenticating agent may
authenticate Preferred Securities whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as the
Property Trustee to deal with the Sponsor or an Affiliate.
SECTION 7.3 FORM AND DATING.
The Preferred Securities and the Property Trustee's certificate of
authentication shall be substantially in the form of Exhibit A-1 and the Common
Securities shall be substantially in the form of Exhibit A-2, each of which is
hereby incorporated in and expressly made a part of this
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Declaration. Certificates representing the Securities may be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Administrative Trustees, as evidenced by their execution
thereof. The Securities may have letters, CUSIP or other numbers, notations or
other marks of identification or designation and such legends or endorsements
required by law, stock exchange rule, agreements to which the Trust is subject,
if any, or usage (provided that any such notation, legend or endorsement is in a
form acceptable to the Trust). The Trust at the direction of the Sponsor shall
furnish any such legend to the Property Trustee in writing. Each Preferred
Security shall be dated the date of its authentication. The terms and provisions
of the Securities set forth in Annex I and the forms of Securities set forth in
Exhibits A-1 and A-2 are part of the terms of this Declaration and to the extent
applicable, the Property Trustee and the Sponsor, by their execution and
delivery of this Declaration, expressly agree to such terms and provisions and
to be bound thereby.
(a) GLOBAL SECURITIES. The Preferred Securities shall be issued in
the form of one or more permanent global Securities in definitive, fully
registered form without distribution coupons as set forth in Exhibit A-1 hereto
(a "Global Preferred Security"), which shall be deposited on behalf of the
purchasers of the Preferred Securities represented thereby with the Property
Trustee, as custodian for the Clearing Agency, and registered in the name of the
Clearing Agency or a nominee of the Clearing Agency, duly executed by the Trust
and authenticated by the Property Trustee as hereinafter provided. The number of
Preferred Securities represented by a Global Preferred Security may from time to
time be increased or decreased by adjustments made on the records of the
Property Trustee and the Clearing Agency or its nominee as hereinafter provided.
(b) BOOK-ENTRY PROVISIONS. This Section 7.3(b) shall apply only to
the Global Preferred Securities and such other Preferred Securities in global
form as may be authorized by the Trust to be deposited with or on behalf of the
Clearing Agency.
The Trust shall execute and the Property Trustee shall, in
accordance with this Section 7.3, authenticate and make available for delivery
initially one or more Global Preferred Securities that (i) shall be registered
in the name of Cede & Co. or other nominee of such Clearing Agency and (ii)
shall be delivered by the Trustee to such Clearing Agency or pursuant to such
Clearing Agency's written instructions or held by the Property Trustee as
custodian for the Clearing Agency.
Members of, or participants in, the Clearing Agency
("Participants") shall have no rights under this Declaration with respect to any
Global Preferred Security held on their behalf by the Clearing Agency or by the
Property Trustee as the custodian of the Clearing Agency or under such Global
Preferred Security, and the Clearing Agency may be treated by the Trust, the
Property Trustee and any agent of the Trust or the Property Trustee as the
absolute owner of such Global Preferred Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trust, the
Property Trustee or any agent of the Trust or the Property Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Clearing Agency or impair, as between the Clearing Agency and its
Participants, the operation of customary practices
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of such Clearing Agency governing the exercise of the rights of a holder of a
beneficial interest in any Global Preferred Security.
(c) DEFINITIVE PREFERRED SECURITIES. Except as provided in Section
7.9 or 9.2(d)(i), owners of beneficial interests in a Global Preferred Security
will not be entitled to receive physical delivery of certificated Preferred
Securities ("Definitive Preferred Securities").
(d) AUTHORIZED DENOMINATIONS. The Preferred Securities are issuable
only in denominations of $25 and any integral multiple thereof.
SECTION 7.4 REGISTRAR AND PAYING AGENT.
The Trust shall maintain in the Borough of Manhattan, The City of
New York, (i) an office or agency where Preferred Securities may be presented
for registration of transfer ("Registrar") and (ii) an office or agency where
Preferred Securities may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Preferred Securities and of their
transfer. The Trust may appoint the Registrar and the Paying Agent and may
appoint one or more co-registrars and one or more additional paying agents in
such other locations as it shall determine. The term "Registrar" includes any
additional registrar and "Paying Agent" includes any additional paying agent.
The Trust may change any Paying Agent, Registrar or co-registrar without prior
notice to any Holder. The Paying Agent shall be permitted to resign as Paying
Agent upon 30 days' written notice to the Administrative Trustees. The Trust
shall notify the Property Trustee of the name and address of any Agent not a
party to this Declaration. If the Trust fails to appoint or maintain another
entity as Registrar or Paying Agent, the Property Trustee shall act as such. The
Trust or any of its Affiliates may act as Paying Agent or Registrar. The Trust
shall act as Paying Agent and Registrar for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar and
Paying Agent for the Preferred Securities.
SECTION 7.5 PAYING AGENT TO HOLD MONEY IN TRUST.
The Trust shall require each Paying Agent other than the Property
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Property Trustee all money held by the Paying Agent
for the payment of liquidation amounts or Distributions, and will notify the
Property Trustee if there are insufficient funds for such purpose. While any
such insufficiency continues, the Property Trustee may require a Paying Agent to
pay all money held by it to the Property Trustee. The Trust at any time may
require a Paying Agent to pay all money held by it to the Property Trustee and
to account for any money disbursed by it. Upon payment over to the Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust)
shall have no further liability for the monies previously held by it. If the
Trust or the Sponsor or an Affiliate of the Trust or the Sponsor acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent.
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SECTION 7.6 REPLACEMENT SECURITIES.
If a Holder claims that a Security owned by it has been lost,
destroyed or wrongfully taken or if such Security is mutilated and is
surrendered to the Trust or in the case of the Preferred Securities to the
Property Trustee, the Trust shall issue and the Property Trustee shall, upon
written order of the Trust, authenticate a replacement Security if the Property
Trustee's and the Trust's requirements, as the case may be, are met. An
indemnity bond must be provided by the Holder which, in the judgment of the
Property Trustee, is sufficient to protect the Trustees, the Sponsor, the Trust
or any authenticating agent from any loss which any of them may suffer if a
Security is replaced. The Trust may charge such Holder for its expenses in
replacing a Security.
Every replacement Security is an additional beneficial interest in
the Trust.
SECTION 7.7 OUTSTANDING PREFERRED SECURITIES.
The Preferred Securities outstanding at any time are all the
Preferred Securities authenticated by the Property Trustee except for those
cancelled by it, those delivered to it for cancellation and those described in
this Section as not outstanding.
If a Preferred Security is replaced, paid or purchased pursuant to
Section 7.6 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased Preferred
Security is held by a bona fide purchaser.
If Preferred Securities are considered paid in accordance with the
terms of this Declaration, they cease to be outstanding and Distributions on
them shall cease to accumulate.
A Preferred Security does not cease to be outstanding because one
of the Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
SECTION 7.8 PREFERRED SECURITIES IN TREASURY.
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Preferred
Securities owned by the Trust, the Sponsor or an Affiliate of the Sponsor, as
the case may be, shall be disregarded and deemed not to be outstanding, except
that for the purposes of determining whether the Property Trustee shall be fully
protected in relying on any such direction, waiver or consent, only Securities
which a Responsible Officer of the Property Trustee actually knows are so owned
shall be so disregarded.
SECTION 7.9 TEMPORARY SECURITIES.
(a) Until Definitive Preferred Securities are ready for delivery,
the Trust may prepare and, in the case of the Preferred Securities, the Property
Trustee shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of Definitive Preferred Securities
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but may have variations that the Trust considers appropriate for temporary
Securities. Without unreasonable delay, the Trust shall prepare and, in the case
of the Preferred Securities, the Property Trustee shall authenticate Definitive
Preferred Securities in exchange for temporary Securities.
(b) A Global Preferred Security deposited with the Clearing Agency
or with the Property Trustee as custodian for the Clearing Agency pursuant to
Section 7.3 shall be transferred to the beneficial owners thereof in the form of
Definitive Preferred Securities only if such transfer complies with Section 9.2
and (i) the Clearing Agency notifies the Sponsor that it is unwilling or unable
to continue as Clearing Agency for such Global Preferred Security or if at any
time such Clearing Agency ceases to be a "clearing agency" registered under the
Exchange Act and a clearing agency is not appointed by the Sponsor within 90
days of such notice, (ii) a Default or an Event of Default has occurred and is
continuing or (iii) the Trust at its sole discretion elects to cause the
issuance of Definitive Preferred Securities.
(c) Any Global Preferred Security that is transferable to the
beneficial owners thereof in the form of Definitive Preferred Securities
pursuant to this Section 7.9 shall be surrendered by the Clearing Agency to the
Property Trustee located in the Borough of Manhattan, The City of New York, to
be so transferred, in whole or from time to time in part, without charge, and
the Property Trustee shall authenticate and make available for delivery, upon
such transfer of each portion of such Global Preferred Security, an equal
aggregate liquidation amount of Securities of authorized denominations in the
form of certificated Preferred Securities. Any portion of a Global Preferred
Security in transferred pursuant to this Section shall be registered in such
names as the Clearing Agency shall direct.
(d) Subject to the provisions of Section 7.9(c), the Holder of a
Global Preferred Security may grant proxies and otherwise authorize any Person,
including Participants and Persons that may hold interests through Participants,
to take any action which such Holder is entitled to take under this Declaration
or the Securities.
(e) In the event of the occurrence of any of the events specified
in Section 7.9(b), the Trust will promptly make available to the Property
Trustee a reasonable supply of certifi cated Preferred Securities in fully
registered form without distribution coupons.
SECTION 7.10 CANCELLATION.
The Trust at any time may deliver Preferred Securities to the
Property Trustee for cancellation. The Registrar and Paying Agent shall forward
to the Property Trustee any Preferred Securities surrendered to them for
registration of transfer, redemption, or payment. The Property Trustee shall
promptly cancel all Preferred Securities, surrendered for registration of
transfer, redemption, payment, replacement or cancellation and shall dispose of
cancelled Preferred Securities in accordance with its customary procedures
unless the Trust otherwise directs. The Trust may not issue new Preferred
Securities to replace Preferred Securities that it has paid or that have been
delivered to the Property Trustee for cancellation.
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SECTION 7.11 CUSIP NUMBERS.
The Trust in issuing the Preferred Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Property Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders of
Preferred Securities; PROVIDED that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Preferred Securities or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Preferred Securities, and any such redemption shall not be affected by any
defect in or omission of such numbers. The Sponsor will promptly notify the
Property Trustee of any change in the CUSIP numbers.
ARTICLE VIII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 8.1 DISSOLUTION AND TERMINATION OF TRUST.
(a) The Trust shall automatically dissolve and be wound up in
accordance with applicable law:
(i) upon the occurrence of an Event of Default with respect to the
Sponsor as described in Section 501(d) or (e) of the Indenture;
(ii) upon the filing of a certificate of dissolution or liquidation
or its equivalent with respect to the Sponsor; or the revocation of the
Sponsor's charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) following the distribution of a Like Amount of the Debentures
to the Holders, PROVIDED THAT, the Property Trustee has received written
notice from the Sponsor directing the Property Trustee to dissolve the
Trust (which direction is optional, and except as otherwise expressly
provided below, within the discretion of the Sponsor) and PROVIDED,
FURTHER, that such direction and such distribution is conditioned on (a)
the receipt of any required regulatory approval and (b) the Administrative
Trustees' receipt of an opinion of an independent tax counsel experienced
in such matters, which opinion may rely on published rulings of the
Internal Revenue Service, to the effect that the Holders will not recognize
any gain or loss for United States federal income tax purposes as a result
of the dissolution of the Trust and the distribution of Debentures.
(iv) upon the entry of a decree of judicial dissolution of the
Trust by a court of competent jurisdiction;
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(v) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been
paid to the Holders in accordance with the terms of the Securities; or
(vi) the expiration of the term of the Trust provided in Section
3.14.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), but within 30 days of such event, notice of such
dissolution shall be given to the Holders and upon completion of the winding up
of Trust, the Administrative Trustees shall file a certificate of cancellation
with the Secretary of State of the State of Delaware and the Trust shall
terminate.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 TRANSFER OF SECURITIES.
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. To the fullest extent permitted by applicable law,
any transfer or purported transfer of any Security not made in accordance with
this Declaration shall be null and void.
(b) The Administrative Trustees shall provide for the registration
of Preferred Securities and of the transfer of Preferred Securities, which will
be effected without charge but only upon payment (with such indemnity as the
Administrative Trustees may require) in respect of any tax or other governmental
charges that may be imposed in relation to it. Upon surrender for registra tion
of transfer of any Preferred Securities, the Administrative Trustees shall cause
one or more new Preferred Securities to be issued in the name of the designated
transferee or transferees. Every Preferred Security surrendered for registration
of transfer shall be accompanied by a written in strument of transfer in form
satisfactory to the Administrative Trustees and the Sponsor duly executed by
the Holder or such Holder's attorney duly authorized in writing. Each Preferred
Security surrendered for registration of transfer shall be canceled by the
Property Trustee. A transferee of a Preferred Security shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Preferred Security. By acceptance of a Preferred Security,
each transferee shall be bound by this Declaration.
(c) The Holder of the Common Securities may not transfer the Common
Securities except (a) in connection with transactions permitted under Section
10.01 of the Indenture, or (b) to the Sponsor or an Affiliate thereof in
compliance with applicable law (including the
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Securities Act and applicable state securities and blue sky laws). To the
fullest extent permitted by law, any attempted transfer of the Common Securities
other than as set forth in the immediately preceding sentence shall be void. For
so long as the Trust Securities remain outstanding, the Sponsor will covenant
(i) to directly or indirectly maintain 100% direct or indirect ownership of the
Common Securities of the Trust; PROVIDED, HOWEVER, that any permitted successor
of the Sponsor under the Indenture may succeed to the Sponsor's ownership of
such Common Securities, (ii) to use its reasonable efforts to cause the Trust
(a) to remain a business trust, except in connection with the distribution of
Debentures to the Holders of Trust Securities in liquidation of the Trust, the
redemption of all of the Trust Securities, or certain mergers, consolidations or
amalgamations, each as permitted by this Declaration, and (b) to otherwise
continue to be classified as a grantor trust for United States federal income
tax purposes and (iii) to use its reasonable efforts to cause each holder of
Trust Securities to be treated as owning an undivided beneficial interest in the
Debentures.
SECTION 9.2 TRANSFER PROCEDURES AND RESTRICTIONS.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE PREFERRED SECURITIES. When
Definitive Preferred Securities are presented to the Registrar or co-registrar
(x) to register the transfer of such Definitive Preferred
Securities; or
(y) to exchange such Definitive Preferred Securities which became
mutilated, destroyed, defaced, stolen or lost, for an equal number of
Definitive Preferred Securities,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
PROVIDED, HOWEVER, that the Definitive Preferred Securities surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer in form reasonably satisfactory to the
Administrative Trustees and the Registrar or co-registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing;
(b) RESTRICTIONS ON TRANSFER OF A DEFINITIVE PREFERRED SECURITY FOR A
BENEFICIAL INTEREST IN A GLOBAL PREFERRED SECURITY. A Definitive Preferred
Security may not be exchanged for a beneficial interest in a Global Preferred
Security except upon satisfaction of the requirements set forth below. Upon
receipt by the Property Trustee of a Definitive Preferred Security, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Property Trustee and the Administrative Trustees, together
with written instructions directing the Property Trustee to make, or to direct
the Clearing Agency to make, an adjustment on its books and records with respect
to the appropriate Global Preferred Security to reflect an increase in the
number of the Preferred Securities represented by such Global Preferred
Security, then the Property Trustee shall cancel such Definitive Preferred
Security and cause, or direct the Clearing Agency to cause, the aggregate number
of Preferred Securities represented by the appropriate Global Preferred Security
to be increased accordingly. If no Global Preferred Securities are then
outstanding, the Trust shall
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issue and the Property Trustee shall authenticate, upon written order of any
Administrative Trustee, an appropriate number of Preferred Securities in global
form.
(c) TRANSFER AND EXCHANGE OF GLOBAL PREFERRED SECURITIES. Subject
to Section 9.2(d), the transfer and exchange of Global Preferred Securities or
beneficial interests therein shall be effected through the Clearing Agency, in
accordance with this Declaration (including applicable restrictions on transfer
set forth herein, if any) and the procedures of the Clearing Agency therefor.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL PREFERRED
SECURITY FOR A DEFINITIVE PREFERRED SECURITY.
(i) Any Person having a beneficial interest in a Global Preferred
Security may upon request, but only upon 20 days prior notice to the
Property Trustee, and if accompanied by the information specified below,
exchange such beneficial interest for a Definitive Preferred Security
representing the same number of Preferred Securities. Upon receipt by the
Property Trustee from the Clearing Agency or its nominee on behalf of any
Person having a beneficial interest in a Global Preferred Security of
written instructions or such other form of instructions as is customary for
the Clearing Agency or the Person designated by the Clearing Agency as
having such a beneficial interest in a Global Preferred Security and a
certification from the transferor (in a form substantially similar to that
attached hereto as the form of "Assignment" in Exhibit A-1), which may be
submitted by facsimile, then the Property Trustee will cause the aggregate
number of Preferred Securities represented by Global Preferred Securities
to be reduced on its books and records and, following such reduction, the
Trust will execute and the Property Trustee will authenticate and make
available for delivery to the transferee a Definitive Preferred Security.
(ii) Definitive Preferred Securities issued in exchange for a
beneficial interest in a Global Preferred Security pursuant to this Section
9.2(d) shall be registered in such names and in such authorized
denominations as the Clearing Agency, pursuant to instructions from its
Clearing Agency Participants or otherwise, shall instruct the Property
Trustee in writing. The Property Trustee shall deliver such Preferred
Securities to the Persons in whose names such Preferred Securities are so
registered in accordance with such instructions of the Clearing Agency.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL PREFERRED
SECURITIES. Notwithstanding any other provisions of this Declaration (other than
the provisions set forth in subsection (e) of this Section 9.2 and subsection
(b) of Section 7.9), a Global Preferred Security may not be transferred as a
whole except by the Clearing Agency to a nominee of the Clearing Agency or
another nominee of the Clearing Agency or by the Clearing Agency or any such
nominee to a successor Clearing Agency or a nominee of such successor Clearing
Agency.
(f) AUTHENTICATION OF DEFINITIVE PREFERRED SECURITIES. If at any
time:
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(i) there occurs a Default or an Event of Default which is
continuing, or
(ii) the Trust, in its sole discretion, notifies the Property
Trustee in writing that it elects to cause the issuance of Definitive
Preferred Securities under this Declaration,
then the Trust will execute, and the Property Trustee, upon receipt of a written
order of the Trust signed by one Administrative Trustee requesting the
authentication and delivery of Definitive Preferred Securities to the Persons
designated by the Trust, will authenticate and make available for delivery
Definitive Preferred Securities, equal in number to the number of Preferred
Securities represented by the Global Preferred Securities, in exchange for such
Global Preferred Securities.
(g) CANCELLATION OR ADJUSTMENT OF GLOBAL PREFERRED SECURITY. At
such time as all beneficial interests in a Global Preferred Security have either
been exchanged for Definitive Preferred Securities to the extent permitted by
this Declaration or redeemed, repurchased or canceled in accordance with the
terms of this Declaration, such Global Preferred Security shall be canceled by
the Property Trustee. At any time prior to such cancellation, if any beneficial
interest in a Global Preferred Security is exchanged for Definitive Preferred
Securities, Preferred Securities represented by such Global Preferred Security
shall be reduced and an adjustment shall be made on the books and records of the
Clearing Agency and the Registrar, to reflect such reduction.
(h) OBLIGATIONS WITH RESPECT TO TRANSFERS OF PREFERRED SECURITIES.
(i) To permit registrations of transfers, the Trust shall execute
and the Property Trustee shall authenticate Definitive Preferred Securities
and Global Preferred Securities at the Registrar's or co-registrar's
request in accordance with the terms of this Declaration.
(ii) Registrations of transfers will be effected without charge,
but only upon payment (with such indemnity as the Trust or the Sponsor may
require) in respect of any tax or other governmental charge that may be
imposed in relation to it.
(iii) The Registrar or co-registrar shall not be required to
register the transfer of (a) Preferred Securities during a period beginning
at the opening of business 15 days before the day of mailing of a notice of
redemption or any notice of selection of Preferred Securities for
redemption and ending at the close of business on the day of such mailing;
or (b) any Preferred Security so selected for redemption in whole or in
part, except the unredeemed portion of any Preferred Security being
redeemed in part.
(iv) Prior to the due presentation for registration of transfer of
any Preferred Security, the Trust, the Property Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the Person in whose
name a Preferred Security is registered as the absolute owner of such
Preferred Security for the purpose of receiving Distributions on such
Preferred Security (subject to Section 2(c) of Annex I) and for all other
purposes whatsoever,
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and none of the Trust, the Property Trustee, the Paying Agent, the
Registrar or any co-registrar shall be affected by notice to the contrary.
(v) All Preferred Securities issued upon any registration of
transfer pursuant to the terms of this Declaration shall evidence the same
security and shall be entitled to the same benefits under this Declaration
as the Preferred Securities surrendered upon such registration of transfer.
(i) NO OBLIGATION OF THE PROPERTY TRUSTEE.
(i) The Property Trustee shall have no responsibility or obligation
to any beneficial owner of a Global Preferred Security, a Clearing Agency
Participant in the Clearing Agency or other Person with respect to the
accuracy of the records of the Clearing Agency or its nominee or of any
Clearing Agency Participant thereof, with respect to any ownership interest
in the Preferred Securities or with respect to the delivery to any Clearing
Agency Participant, beneficial owner or other Person (other than the
Clearing Agency) of any notice (including any notice of redemption) or the
payment of any amount, under or with respect to such Preferred Securities.
All notices and communications to be given to the Holders and all payments
to be made to Holders under the Preferred Securities shall be given or made
only to or upon the order of the registered Holders (which shall be the
Clearing Agency or its nominee in the case of a Global Preferred Security).
The rights of beneficial owners in any Global Preferred Security shall be
exercised only through the Clearing Agency subject to the applicable rules
and procedures of the Clearing Agency. The Property Trustee may
conclusively rely and shall be fully protected in relying upon information
furnished by the Clearing Agency or any agent thereof with respect to its
Clearing Agency Participants and any beneficial owners.
(ii) The Property Trustee and the Registrar shall have no
obligation or duty to monitor, determine or inquire as to compliance with
any restrictions on transfer imposed under this Declaration or under
applicable law with respect to any transfer of any interest in any
Preferred Security (including any transfers between or among Clearing
Agency Participants or beneficial owners in any Global Preferred Security)
other than to require delivery of such certificates and other documentation
or evidence as are expressly required by, and to do so if and when
expressly required by, the terms of this Declaration, and to examine the
same to determine substantial compliance as to form with the express
requirements hereof.
SECTION 9.3 DEEMED SECURITY HOLDERS.
The Trustees may treat the Person in whose name any Security shall
be registered on the books and records of the Trust as the sole owner of such
Security for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Security on the part of any Person, whether
or not the Trust shall have actual or other notice thereof.
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SECTION 9.4 BOOK ENTRY INTERESTS.
Global Preferred Securities shall initially be registered on the
books and records of the Trust in the name of Cede & Co., the nominee of the
Clearing Agency, and no Preferred Security Beneficial Owner will receive a
definitive Preferred Security Certificate representing such Preferred Security
Beneficial Owner's interests in such Global Preferred Securities, except as
provided in Section 7.9 and Section 9.2. Unless and until definitive, fully
registered Preferred Securities certificates have been issued to the Preferred
Security Beneficial Owners pursuant to Section 7.9 and Section 9.2:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment
of Distributions on the Global Preferred Securities and receiving
approvals, votes or consents hereunder) as the Holder of the Preferred
Securities and the sole holder of the Global Certificates and shall have no
obligation to the Preferred Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the Preferred Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Preferred Security
Beneficial Owners and the Clearing Agency and/or the Clearing Agency
Participants and the Clearing Agency shall receive and transmit payments of
Distributions on the Global Certificates to such Clearing Agency
Participants. DTC will make book entry transfers among the Clearing Agency
Participants.
SECTION 9.5 NOTICES TO CLEARING AGENCY.
Whenever a notice or other communication to the Preferred Security
Holders is required under this Declaration, the Trustees shall give all such
notices and communications specified herein to be given to the Holders of
Global Preferred Securities to the Clearing Agency, and shall have no notice
obligations to the Preferred Security Beneficial Owners.
SECTION 9.6 APPOINTMENT OF SUCCESSOR CLEARING AGENCY.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the
Administrative Trustees may, in their sole discretion, appoint a successor
Clearing Agency with respect to such Preferred Securities.
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ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 LIABILITY.
(a) Except as expressly set forth in this Declaration, the
Securities Guarantees and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders which shall be made
solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder any deficit upon
dissolution or termination of the Trust or otherwise.
(b) The Debenture Issuer shall be liable for all of the debts and
obligations of the Trust (other than in respect of the payment of principal and
interest on the Securities) to the extent not satisfied out of the Trust's
assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders shall be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under
the General Corporation Law of the State of Delaware.
SECTION 10.2 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed
or omitted by such Indemnified Person in good faith on behalf of the Trust
and in a manner such Indemnified Person reasonably believed to be within the
scope of the authority conferred on such Indemnified Person by this
Declaration or by law, except that an Indemnified Person shall be liable for
any such loss, damage or claim incurred by reason of such Indemnified
Person's negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and, if selected by such Indemnified Person,
has been selected by such Indemnified Person with reasonable care on behalf of
the Trust, including in formation, opinions, reports or statements as to the
value and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders might properly be paid.
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SECTION 10.3 FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a manner
that is, or provides terms that are, fair and reasonable to the Trust or
any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and factors
as it desires, including its own interests, and shall have no duty or
obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration.
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SECTION 10.4 INDEMNIFICATION.
(a) (i) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Trust) by
reason of the fact that he is or was a Company Indemnified Person against
expenses (including attorneys' fees and expenses), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Trust, and, with respect to any criminal action or
proceeding, had no reason able cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of NOLO CONTENDERE or its
equivalent, shall not, of itself, create a presumption that the Company
Indemnified Person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment in its
favor by reason of the fact that he is or was a Company Indemnified Person
against expenses (including attorneys' fees and expenses) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the Trust and
except that no such indemnification shall be made in respect of any claim,
issue or matter as to which such Company Indemnified Person shall have been
adjudged to be liable to the Trust unless and only to the extent that the
Court of Chancery of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such Person is
fairly and reasonably entitled to indemnity for such expenses which such
Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any
claim, issue or matter therein, he shall be indemnified, to the full extent
permitted by law, against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Debenture
Issuer only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person
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is proper in the circumstances because he has met the applicable standard
of conduct set forth in paragraphs (i) and (ii). Such determination shall
be made (1) by the Administrative Trustees by a majority vote of a Quorum
consisting of such Administrative Trustees who were not parties to such
action, suit or proceeding, (2) if such a Quorum is not obtainable, or,
even if obtainable, if a Quorum of disinterested Administrative Trustees so
directs, by independent legal counsel in a written opinion, or (3) by the
Common Security Holder of the Trust.
(v) Expenses (including attorneys' fees and expenses) incurred by a
Company Indemnified Person in defending a civil, criminal, administrative
or investigative action, suit or proceeding referred to in paragraphs (i)
and (ii) of this Section 10.4(a) shall be paid by the Debenture Issuer in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such Company Indemnified
Person to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Debenture Issuer as authorized in
this Section 10.4(a). Notwithstanding the foregoing, no advance shall be
made by the Debenture Issuer if a determination is reasonably and promptly
made (i) by the Administrative Trustees by a majority vote of a Quorum of
disinterested Administrative Trustees, (ii) if such a Quorum is not
obtainable, or, even if obtainable, if a Quorum of disinterested
Administrative Trustees so directs, by independent legal counsel in a
written opinion or (iii) the Common Security Holder of the Trust, that,
based upon the facts known to the Administrative Trustees, counsel or the
Common Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person did
not believe to be in or not opposed to the best interests of the Trust, or,
with respect to any criminal proceeding, that such Company Indemnified
Person believed or had reasonable cause to believe his conduct was
unlawful. In no event shall any advance be made in instances where the
Administrative Trustees, independent legal counsel or Common Security
Holder reasonably determine that such person deliberately breached his duty
to the Trust or its Common or Preferred Security Holders.
(vi) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other paragraphs of this Section 10.4(a) shall
not be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the Debenture
Issuer or Preferred Security Holders of the Trust or otherwise, both as to
action in his official capacity and as to action in another capacity while
holding such office. All rights to indemnification under this Section
10.4(a) shall be deemed to be provided by a contract between the Debenture
Issuer and each Company Indemnified Person who serves in such capacity at
any time while this Section 10.4(a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights or
obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company Indemnified
Person against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as
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such, whether or not the Debenture Issuer would have the power to indemnify
him against such liability under the provisions of this Section 10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the
Trust" shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in
a consolidation or merger, so that any person who is or was a director,
trustee, officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee,
officer, employee or agent of another entity, shall stand in the same
position under the provisions of this Section 10.4(a) with respect to the
resulting or surviving entity as he would have with respect to such
constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided
by, or granted pursuant to, this Section 10.4(a) shall, unless
otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a Company Indemnified Person and shall inure to
the benefit of the heirs, executors and administrators of such a
person.
(b) The Debenture Issuer agrees to indemnify the (i) Property
Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee
or the Delaware Trustee, and (iv) any officers, directors, shareholders,
members, partners, employees, representatives, custodians, nominees or agents of
the Property Trustee or the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense including taxes (other than taxes based on the income
of such Fiduciary Indemnified Person) incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or adminis
tration of the trust or trusts hereunder, including the costs and expenses
(including reasonable legal fees and expenses) of defending itself against or
investigating any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 10.4(b) shall survive the resignation or
removal of the Property Trustee or the Delaware Trustee and the satisfaction and
discharge of this Declaration.
SECTION 10.5 OUTSIDE BUSINESSES.
Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee (subject to Section 5.3(c)) may engage in or possess an
interest in other business ventures of any nature or description, independently
or with others, similar or dissimilar to the business of the Trust, and the
Trust and the Holders shall have no rights by virtue of this Declaration in and
to such independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the Trust,
shall not be deemed wrongful or improper. No Covered Person, the Sponsor, the
Delaware Trustee, or the Property Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee shall have the right to take for its own
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account (individually or as a partner or fiduciary) or to recommend to others
any such particular investment or other opportunity. Any Covered Person, the
Delaware Trustee and the Property Trustee may engage or be interested in any
financial or other transaction with the Sponsor or any Affiliate of the Sponsor,
or may act as depositary for, trustee or agent for, or act on any committee or
body of holders of, securities or other obligations of the Sponsor or its
Affiliates.
SECTION 10.6 COMPENSATION; FEES.
The Debenture Issuer agrees:
(a) to pay to the Trustees from time to time such compensation for
all services rendered by them hereunder as the parties shall agree in writing
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); and
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this
Declaration (including the reasonable compensation and the expenses and
disbursements of their respective agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith.
The provisions of this Section 10.6 shall survive the dissolution
of the Trust and the termination of this Declaration and the removal or
resignation of any Trustee.
No Trustee may claim any lien or charge on any property of the
Trust as a result of any amount due pursuant to this Section 10.6.
ARTICLE XI
ACCOUNTING
SECTION 11.1 FISCAL YEAR.
The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.
SECTION 11.2 CERTAIN ACCOUNTING MATTERS.
(a) At all times during the existence of the Trust, the
Administrative Trustees shall keep, or cause to be kept, full books of account,
records and supporting documents, which shall reflect in reasonable detail, each
transaction of the Trust. The books of account shall be maintained on the
accrual method of accounting, in accordance with generally accepted accounting
principles, consistently applied. The books of account and the records of the
Trust shall be examined by and
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reported upon as of the end of each Fiscal Year of the Trust by a firm of
independent certified public accountants selected by the Administrative
Trustees.
(b) The Administrative Trustees shall cause to be duly
prepared and delivered to each of the Holders, any annual United States federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Administrative Trustees shall
endeavor to deliver all such information statements within 30 days after the end
of each Fiscal Year of the Trust.
(c) The Administrative Trustees shall cause to be duly
prepared and filed with the appropriate taxing authority, an annual United
States federal income tax return, on a Form 1041 or such other form required by
United States federal income tax law, and any other annual income tax returns
required to be filed by the Administrative Trustees on behalf of the Trust with
any state or local taxing authority.
SECTION 11.3 BANKING.
The Trust may maintain one or more bank accounts in the name and
for the sole benefit of the Trust; PROVIDED, HOWEVER, that all payments of funds
in respect of the Debentures held by the Property Trustee shall be made directly
to the Property Trustee Account and no other funds of the Trust shall be
deposited in the Property Trustee Account. The sole signatories for such
accounts shall be designated by the Administrative Trustees; PROVIDED, HOWEVER,
that the Property Trustee shall designate the signatories for the Property
Trustee Account.
SECTION 11.4 WITHHOLDING.
The Trust and the Administrative Trustees shall comply with all
withholding require ments under United States federal, state and local law. The
Trust shall request, and the Holders shall provide to the Trust, such forms or
certificates as are necessary to establish an exemption from withholding with
respect to each Holder, and any representations and forms as shall reasonably be
requested by the Trust to assist it in determining the extent of, and in
fulfilling, its withholding obligations. The Administrative Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to Distributions or allocations to any Holder, the amount withheld shall
be deemed to be a Distribution in the amount of the withholding to the Holder.
In the event of any claimed over withholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may reduce
subsequent Distributions by the amount of such withholding.
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 AMENDMENTS.
(a) Except as otherwise provided in this Declaration (including
Section 7 of the Annex I hereto) or by any applicable terms of the Securities,
this Declaration may only be amended by a written instrument approved and
executed by:
(i) the Administrative Trustees (or if there are more than two
Administrative Trustees a majority of the Administrative Trustees);
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, the Property Trustee;
and
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware Trustee.
(b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:
(i) unless the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration and that the interests of any Holder of
Securities will not be materially affected by such amendment
(including the terms of the Securities); and
(B) an Opinion of Counsel (who may be counsel to the Sponsor
or the Trust) that such amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the Securities)
and that all conditions precedent, if any, in this Declaration to the
execution and delivery of such amendment have been satisfied,
PROVIDED, HOWEVER, that the Property Trustee shall not be required to sign any
such amendment which affects the rights, powers, duties, obligations or
immunities of the Property Trustee; and
(ii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor trust;
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(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act;
(c) At such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder may be effected only with such
additional requirements as may be set forth in the terms of such Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders;
(e) Article Four shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities and;
(f) The rights of the holders of the Common Securities under
Article Five to increase or decrease the number of, and appoint and remove
Trustees shall not be amended without the consent of the Holders of a Majority
in liquidation amount of the Common Securities; and
(g) Notwithstanding Section 12.1(c), this Declaration may be
amended without the consent of the Holders to:
(i) cure any ambiguity, correct or supplement any provision in this
Declaration that may be inconsistent with any other provision of this
Declaration or to make any other provisions with respect to matters or
questions arising under this Declaration which shall not be inconsistent
with the other provisions of the Declaration; and
(ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the Trust
will be classified for United States federal income tax purposes as a
grantor trust at all times that any Securities are outstanding or to ensure
that the Trust will not be required to register as an Investment Company
under the Investment Company Act;
PROVIDED, HOWEVER, that in each case such action shall not adversely affect in
any material respect the interests of the Holders, and any amendments of this
Declaration shall become effective when notice thereof is given to the Holders.
SECTION 12.2 MEETINGS OF THE HOLDERS; ACTION BY WRITTEN CONSENT.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Administrative Trustees (or as provided in the terms
of the Securities) to consider and act on
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any matter on which Holders of such class of Securities are entitled to act
under the terms of this Declaration, the terms of the Securities or the rules of
any stock exchange on which the Preferred Securities are listed or admitted for
trading. The Administrative Trustees shall call a meeting of the Holders of such
class if directed to do so by the Holders of at least 10% in liquidation amount
of such class of Securities. Such direction shall be given by delivering to the
Administrative Trustees one or more notices in writing stating that the signing
Holders wish to call a meeting and indicating the general or specific purpose
for which the meeting is to be called. Any Holders calling a meeting shall
specify in writing the Securities held by the Holders exercising the right to
call a meeting and only those Securities specified shall be counted for purposes
of determining whether the required percentage set forth in the second sentence
of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders:
(i) notice of any such meeting shall be given to all the Holders
having a right to vote there at at least seven days and not more than 60
days before the date of such meeting. Whenever a vote, consent or approval
of the Holders is permitted or required under this Declaration or the rules
of any stock exchange on which the Preferred Securities are listed or
admitted for trading, such vote, consent or approval may be given at a
meeting of the Holders. Any action that may be taken at a meeting of the
Holders may be taken without a meeting if a consent in writing setting
forth the action so taken is signed by the Holders owning not less than the
minimum amount of Securities in liquidation amount that would be necessary
to authorize or take such action at a meeting at which all Holders having a
right to vote thereon were present and voting. The Administrative Trustees
may specify that any written ballot submitted to the Holder of Securities
for the purpose of taking any action without a meeting shall be returned
to the Trust within the time specified by the Administrative Trustees;
(ii) each Holder may authorize any Person to act for it by
proxy on all matters in which a Holder is entitled to participate,
including waiving notice of any meeting, or voting or participating at
a meeting. No proxy shall be valid after the expiration of 11 months
from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the Holder executing it.
Except as otherwise provided herein, all matters relating to the
giving, voting or validity of proxies shall be governed by the General
Corporation Law of the State of Delaware relating to proxies, and
judicial interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders shall be conducted by the
Administrative Trustees or by such other Person that the Administrative
Trustees may designate; and
(iv) unless the Business Trust Act, this Declaration, the terms of
the Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Preferred
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Securities are then listed or trading, otherwise provides, the
Administrative Trustees, in their sole discretion, shall establish all
other provisions relating to meetings of Holders, including notice of the
time, place or purpose of any meeting at which any matter is to be voted on
by any Holders, waiver of any such notice, action by consent without a
meeting, the establishment of a record date, quorum requirements, voting
in person or by proxy or any other matter with respect to the exercise of
any such right to vote, PROVIDED, HOWEVER, the meetings of Holders shall
not be held in any jurisdiction which would subject the Trust to taxation
under the laws of such jurisdiction.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 REPRESENTATIONS AND WARRANTIES OF PROPERTY TRUSTEE.
The Trustee that acts as initial Property Trustee represents and
warrants to the Trust, to the Holders of Securities and to the Sponsor at the
date of this Declaration, and each Successor Property Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor Property
Trustee's acceptance of its appointment as Property Trustee that:
(a) The Property Trustee is a New York banking corporation, a
national banking association or a bank or trust company organized under the laws
of any State of the United States or the District of Columbia, in any case with
trust powers and authority to execute and deliver, and to carry out and perform
its obligations under the terms of, this Declaration;
(b) The execution, delivery and performance by the Property Trustee
of this Declaration has been duly authorized by all necessary corporate action
on the part of the Property Trustee. This Declaration has been duly executed and
delivered by the Property Trustee and constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) The execution, delivery and performance of this Declaration by
the Property Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Property Trustee; and
(d) 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 per formance by the Property Trustee of this
Declaration.
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SECTION 13.2 REPRESENTATIONS AND WARRANTIES OF DELAWARE TRUSTEE.
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust, to the Holders of Securities and to the Sponsor at the
date of this Declaration, and each Successor Delaware Trustee represents and
warrants to the Trust and the Sponsor at the time of the Successor Delaware
Trustee's acceptance of its appointment as Delaware Trustee that:
(a) The Delaware Trustee is duly organized, validly existing and in
good standing under the laws of the State of Delaware or the United States,
with trust power and authority to execute and deliver, and to carry out and
perform its obligations under the terms of, this Declaration;
(b) The execution, delivery and performance by the Delaware Trustee
of this Declaration has been duly authorized by all necessary corporate action
on the part of the Delaware Trustee. This Declaration has been duly executed and
delivered by the Delaware Trustee and consti tutes a legal, valid and binding
obligation of the Delaware Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the dis cretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law);
(c) No consent, approval or authorization of, or registration with
or notice to, any federal banking authority is required for the execution,
delivery or performance by the Delaware Trustee of this Declaration; and
(d) The Delaware Trustee is a natural person who is a resident of
the State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware.
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ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 NOTICES.
All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by first class mail, overnight courier service or confirmed telecopy,
as follows:
(a) if given to the Trust, in care of the Administrative Trustees
at the Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Property Trustee, the Delaware Trustee and the
Holders):
Coastal Bancorp Capital Trust I
c/o Administrative Trustees
Coastal Banc Plaza
5718 Westheimer, Suite 600
Houston, Texas 77057
Attention: Catherine N. Wylie
Administrative Trustee
Telecopy: (713) 435-5327
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as Delaware Trustee may give notice of to the
Holders):
The Bank of New York (Delaware)
c/o The Bank of New York
101 Barclay Street
21st Floor West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telecopy: (212) 815-5917
(c) if given to the Property Trustee, at the Property Trustee's
mailing address set forth below (or such other address as the Property Trustee
may give notice of to the Holders):
The Bank of New York
101 Barclay Street
21st Floor West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telecopy: (212) 815-5917
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(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice to the Property Trustee and the Trust):
Coastal Bancorp, Inc.
Coastal Banc Plaza
5718 Westheimer, Suite 600
Houston, Texas 77057
Attention: Catherine N. Wylie
Chief Financial Officer
Telecopy: (713) 435-5327
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 14.2 GOVERNING LAW.
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of Delaware
and all rights and remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 14.3 INTENTION OF THE PARTIES.
It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted to further this intention of
the parties.
SECTION 14.4 HEADINGS.
Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.
SECTION 14.5 SUCCESSORS AND ASSIGNS
Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and
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agreements in this Declaration by the Sponsor and the Trustees shall bind and
inure to the benefit of their respective successors and assigns, whether so
expressed.
SECTION 14.6 PARTIAL ENFORCEABILITY.
If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 14.7 COUNTERPARTS.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
COASTAL BANCORP CAPITAL TRUST I
------------------------------------
Manuel J. Mehos, as Administrative Trustee
------------------------------------
Catherine N. Wylie, as Administrative Trustee
------------------------------------
Linda B. Frazier, as Administrative Trustee
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By:
----------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Property Trustee
By:
----------------------------------
Name:
Title:
COASTAL BANCORP, INC.,
as Sponsor and Debenture Issuer
By:
----------------------------------
Catherine N. Wylie
Chief Financial Officer
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ANNEX I
TERMS OF
____% CUMULATIVE TRUST PREFERRED SECURITIES
____% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of March __, 1999 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Securities are set out below (each
capitalized term used but not defined herein has the meaning set forth in the
Declaration or, if not defined in such Declaration, as defined in the Prospectus
referred to below in Section 2(c) of this Annex I):
1. DESIGNATION AND NUMBER.
(a) PREFERRED SECURITIES. 2,000,000____% Cumulative Trust Preferred
Securities of the Trust with an aggregate liquidation amount with respect to the
assets of the Trust of fifty million dollars ($50,000,000) and each with a
liquidation amount with respect to the assets of the Trust of $25 per security,
are hereby designated for the purposes of identification only as Preferred
Securities. The certificates evidencing the Preferred Securities shall be
substantially in the form of Exhibit A-1 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice or to conform to the rules of any exchange or
quotation system on or in which the Preferred Securities are listed, traded or
quoted.
(b) COMMON SECURITIES. ______ Common Securities of the Trust with
an aggregate liquidation amount with respect to the assets of the Trust of
______________ dollars ($_______), and a liquidation amount with respect to the
assets of the Trust of $25 per security, are hereby designated for the purposes
of identification only as Common Securities. The certificates evidencing the
Common Securities shall be substantially in the form of Exhibit A-2 to the
Declaration, with such changes and additions thereto or deletions therefrom as
may be required by ordinary usage, custom or practice.
2. DISTRIBUTIONS.
(a) Distributions payable on each Security will be fixed at a rate
per annum of ____% (the "Coupon Rate") of the liquidation amount of $25 per
Security (the "Liquidation Amount"), such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions in
arrears for more than one quarterly period will bear additional distributions
thereon compounded quarterly at the Coupon Rate (to the extent permitted by
applicable law). A Distribution is payable only to the extent that payments are
made in respect of the Debentures held
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by the Property Trustee and to the extent the Property Trustee has funds on hand
legally available therefor.
(b) Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or
duly provided for or, if no Distributions have been paid or duly provided for,
from March __, 1999, and will be payable quarterly in arrears on the last day of
March, June, September and December of each year, commencing on June 30, 1999
(each, a "Distribution Date"), except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months and for any period less than a full calendar month on the
basis of the actual number of days elapsed in such month based on a 30-day
month. As long as no Event of Default has occurred and is continuing under the
Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures for a period not exceeding 20 consecutive
quarterly periods, including the first such quarterly period during such period
(each an "Extension Period"), during which Extension Period no interest shall be
due and payable on the Debentures, PROVIDED THAT no Extension Period shall end
on a date other than an Interest Payment Date for the Debentures or extend
beyond the Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, Distributions will
continue to accumulate with additional Distributions thereon (to the extent
permitted by applicable law but not at a rate greater than the rate at which
interest is then accruing on the Debentures) at the Coupon Rate compounded
quarterly during any such Extension Period. Prior to the termination of any such
Extension Period, the Debenture Issuer may further defer payments of interest by
further extending such Extension Period; PROVIDED THAT such further deferment
shall only be permitted to the extent that such Extension Period, together with
all extensions occurring both before and after such deferment, does not exceed
20 consecutive quarterly periods, including the first quarterly period during
such Extension Period, or extend beyond the Maturity Date of the Debentures.
Upon the termination of any Extension Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Extension Period, subject to the
above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the close of
business on the 15th day of the month in which the relevant Distribution Date
occurs, which Distribution Dates correspond to the interest payment dates on the
Debentures. Subject to any applicable laws and regulations and the provisions of
the Declaration, each such payment in respect of the Global Preferred Securities
will be made as described under the heading "Description of Trust Preferred
Securities -- Global Trust Preferred Securities" and "Book-Entry Issuance" in
the Prospectus dated March __, 1999, of the Debenture Issuer and the Trust
relating to the Securities and the Debentures. Payments in respect of Preferred
Securities held in certificated form will be made by check mailed to the Holder
entitled thereto. The relevant record dates for the Common Securities shall be
the same as the record dates for the Preferred Securities. Distributions payable
on any Securities that are not punctually paid on any Distribution Date, as a
result of the Debenture Issuer having failed to make a payment under the
Debentures, will cease to be payable to the Holder on the relevant record date,
and such defaulted Distribution will instead be payable to the Person in whose
name such Securities are registered on
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the special record date or other specified date determined in accordance with
the Indenture. If any date on which Distributions are payable on the Securities
is not a Business Day, then payment of the Distribution payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay), except that if such
next succeeding Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day with the same
force and effect as if made on such date.
(d) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION.
In the event of any dissolution of the Trust or the Sponsor
otherwise gives notice of its election to dissolve the Trust pursuant to Section
8.1(a)(iii) of the Declaration, the Trust shall be liquidated by the
Administrative Trustees as expeditiously as the Administrative Trustees
determine to be possible by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to the Holders a Like
Amount (as defined below) of the Debentures, unless such distribution is
determined by the Property Trustee not to be practicable, in which event such
Holders will be entitled to receive Pro Rata out of the assets of the Trust
legally available for distribution to Holders, after satisfaction of liabilities
to creditors of the Trust as provided by applicable law, an amount equal to the
aggregate of the liquidation amount of $25 per Security plus accumulated and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the
Securities, Securities having a Liquidation Amount equal to that portion of
principal amount of Debentures to be contemporaneously redeemed in accordance
with their terms and (ii) with respect to a distribution of Debentures upon the
dissolution or liquidation of the Trust, Debentures having a principal amount
equal to the Liquidation Amount of the Securities of the Holder to whom such
Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution can be
paid only in part because the Trust has insufficient assets on hand legally
available to pay in full the aggregate Liquidation Distribution, then the
amounts payable directly by the Trust on the Securities shall be paid on a Pro
Rata basis.
4. REDEMPTION AND DISTRIBUTION.
(a) Upon the repayment of the Debentures in whole or in part, at
maturity or upon early redemption (either at the option of the Debenture Issuer
or pursuant to a Special Event, as described below), the proceeds from such
repayment shall be simultaneously applied by the Property
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Trustee (subject to the Property Trustee having received written notice no later
than 45 days prior to such repayment) to redeem a Like Amount of the Securities
at a redemption price equal to the accrued and unpaid interest on the Securities
to be so redeemed to the date fixed for redemption, plus 100% of the principal
amount thereof (the "Redemption Price").
(b) In the case of an optional redemption, if fewer than all the
outstanding Securities are to be so redeemed, the Securities to be redeemed will
be determined as described in Section 4(f)(ii) below.
The Debenture Issuer shall have the right (subject to the
conditions in the Indenture) to elect to redeem the Debentures in whole or in
part at any time on or after March __, 2004, upon not less than 30 days and not
more than 60 days written notice, at the Redemption Price and, simultaneous
with such redemption, to cause a Like Amount of the Securities to be redeemed by
the Trust at the Redemption Price on a Pro Rata basis or such other method as
the Property Trustee shall deem appropriate, subject to the receipt of prior
approval of any applicable regulatory agency if it is then required under
applicable regulatory requirements.
(c) If at any time an Investment Company Event, a Tax Event or a
Regulatory Capital Event (each as defined below, and each a "Special Event")
occurs and shall be continuing, the Debenture Issuer shall have the right
(subject to the conditions set forth in the Indenture) upon not less than 30 nor
more than 60 days written notice, to redeem the Debentures in whole, but not in
part, within the 90 days following the occurrence of such Special Event (the "90
Day Period"), and, simultaneous with such redemption, to cause a Like Amount of
the Securities to be redeemed by the Trust at the Redemption Price on a Pro Rata
basis or such other method as the Property Trustee shall deem appropriate, in
each case subject to the receipt of prior approval of any applicable regulatory
agency if it is then required under applicable regulatory requirements.
"Investment Company Event" means the receipt by the Sponsor of an
Opinion of Counsel, rendered by a law firm experienced in such matters, to the
effect that, as a result of change in law or regulation or a change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, the Trust is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act of 1940, as amended, which change becomes effective on or
after the date of original issuance of the Preferred Securities of the Coastal
Bancorp Capital Trust I.
A "Regulatory Capital Event" shall occur at any time that the
Sponsor shall have received an opinion of independent bank regulatory counsel
experienced in such matters to the effect that, as a result of (a) any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any rules, guidelines or
policies of applicable regulatory agencies or (b) any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or such pronouncement or
decision is announced on or after the date of Declaration, the Preferred
Securities do not constitute, or within 90 days of the date thereof, will not
constitute, Tier I Capital
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(or its then equivalent) applied as if the Sponsor (or its successor) were a
bank holding company for purposes of the capital adequacy guidelines of the
Board of Governors of the Federal Reserve (or any successor regulatory authority
with jurisdiction over bank holding companies), or any capital adequacy
guidelines as then in effect and applicable to the Sponsor; PROVIDED, HOWEVER,
that the distribution of the Junior Subordinated Debentures in connection with a
termination of the Trust by the Sponsor shall not in and of itself constitute a
Regulatory Capital Event.
"Tax Event" shall occur upon receipt by the Sponsor and the Trust
of an Opinion of Counsel from counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws or any regulations thereunder of the United
States or any political subdivision or taxing authority thereof or therein, or
as a result of any official administrative pronouncement or judicial decision
interpreting or applying such laws or regulations, which amendment or change is
effective or which pronouncement or decision is announced on or after the date
of the Declaration, there is more than an insubstantial risk that (i) the Trust
is, or will be within 90 days of the date of such opinion, subject to United
States federal income tax with respect to income received or accrued on the
Debentures, (ii) interest payable by the Debenture Issuer on the Debentures is
not, or within 90 days of the date of such opinion, will not be, deductible by
the Debenture Issuer, in whole or in part, for United States federal income tax
purposes, or (iii) the Trust is, or will be within 90 days of the date of such
opinion, subject to more than a DE MINIMIS amount of other taxes, duties or
other governmental charges.
(d) On and from the date fixed by the Administrative Trustees for
any distribution of Debentures and liquidation of the Trust: (i) the Securities
will no longer be deemed to be outstanding, (ii) the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee), as the Holder of the
Preferred Securities, will receive a registered global certificate or
certificates representing the Debentures to be delivered upon such distribution
and (iii) any certificates repre senting Securities not held by the Clearing
Agency or its nominee (or any successor Clearing Agency or its nominee) will be
deemed to represent beneficial interests in a Like Amount of Debentures until
such certificates are presented to the Debenture Issuer or its agent for
transfer or reissue.
(e) The Trust may not redeem fewer than all the outstanding
Securities unless all accumulated and unpaid Distributions have been paid on all
Securities for all quarterly Distribution periods terminating on or before the
date of redemption.
(f) The procedure with respect to redemptions or distributions of
Securities shall be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder to be redeemed
or exchanged not fewer than 30 nor more than 60 days before the date fixed
for redemption or exchange thereof which, in the case of a redemption, will
be the date fixed for redemption of the Debentures. For purposes of the
calculation of the date of redemption or exchange and the dates on which
notices are given pursuant to this
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Section 4(f)(i), a Redemption/Distribution Notice shall be deemed to be
given on the day such notice is first mailed by first-class mail, postage
prepaid, to Holders. Each Redemption/Distribution Notice shall be
addressed to the Holders at the address of each such Holder appearing in
the books and records of the Trust. No defect in the
Redemption/Distribution Notice or in the mailing of either thereof with
respect to any Holder shall affect the validity of the redemption or
exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities
are to be redeemed, the particular Securities to be redeemed shall be
selected on a Pro Rata basis (based upon Liquidation Amounts), or such
other method as the Property Trustee shall deem appropriate, not more than
60 days prior to the date fixed for redemption from the outstanding
Preferred Securities not previously called for redemption, provided,
however, that with respect to Holders that would be required to hold less
than 100 but more than zero Securities as a result of such pro rata
redemption, the Trust shall redeem Securities of each such Holder so that
after such redemption such Holder shall hold either 100 Securities or such
Holder no longer holds any Securities and shall use such method (including,
without limitation, by lot) as the Trust shall deem fair and appropriate,
provided, further, that any such proration may be made on the basis of the
aggregate Liquidation Amount of Securities held by each Holder thereof and
may be made by making such adjustments as the Trust deems fair and
appropriate in order that only Securities in denominations of $25 or
integral multiples thereof shall be redeemed. In respect of Preferred
Securities registered in the name of and held of record by the Clearing
Agency or its nominee (or any successor Clearing Agency or its nominee) or
any nominee, the distribution of the proceeds of such redemption will be
made to the Clearing Agency and disbursed by such Clearing Agency in
accordance with the procedures applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice (which notice will be irrevocable), then (A)
with respect to Preferred Securities issued in book-entry form, by 12:00
noon, New York City time, on the redemption date, provided that the
Debenture Issuer has paid the Property Trustee a sufficient amount of cash
in connection with the related redemption or maturity of the Debentures by
10:00 a.m., New York City time, on the maturity date or the date of
redemption, as the case requires, the Property Trustee will deposit
irrevocably with the Clearing Agency or its nominee (or successor Clearing
Agency or its nominee) funds sufficient to pay the Redemption Price with
respect to such Preferred Securities and will give the Clearing Agency
irrevocable instructions and authority to pay the Redemption Price to the
relevant Clearing Agency Participants, and (B) with respect to Preferred
Securities issued in certificated form and Common Securities, provided that
the Debenture Issuer has paid the Property Trustee a sufficient amount of
cash in connection with the related redemption or maturity of the
Debentures, the Property Trustee will pay the Redemption Price to the
Holders by check mailed to the address of the relevant Holder appearing on
the books and records of the Trust on the redemption date. If a
Redemption/Distribution Notice shall have been given and funds deposited as
required, if applicable, then immediately prior to the close of business on
the date of such deposit, or on
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the redemption date, as applicable, Distributions will cease to accumulate
on the Securities so called for redemption and all rights of Holders so
called for redemption will cease, except the right of the Holders of such
Securities to receive the Redemption Price, but without interest on such
Redemption Price, and such Securities shall cease to be outstanding.
(iv) Payment of accumulated and unpaid Distributions on the
Redemption Date of the Securities will be subject to the rights of Holders
on the close of business on a regular record date in respect of a
Distribution Date occurring on or prior to such Redemption Date.
Neither the Administrative Trustees nor the Trust shall be
required to register or cause to be registered the transfer of (i) any
Securities beginning on the opening of business 15 days before the day of
mailing of a notice of redemption and ending at the close of business on
the day of such mailing or (ii) any Securities selected for redemption
except the unredeemed portion of any Security being redeemed. If any date
fixed for redemption of Securities is not a Business Day, then payment of
the Redemption Price payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such next succeeding
Business Day falls in the next calendar year, such payment shall be made on
the immediately preceding Business Day, with the same force and effect as
if made on such date fixed for redemption. If payment of the Redemption
Price in respect of any Securities is improperly withheld or refused and
not paid either by the Property Trustee or by the Sponsor as guarantor
pursuant to the relevant Securities Guarantee, Distributions on such
Securities will continue to accumulate from the original redemption date
to the actual date of payment, in which case the actual payment date will
be considered the date fixed for redemption for purposes of calculating the
Redemption Price.
(v) Redemption/Distribution Notices shall be sent by the Property
Trustee on behalf of the Trust to (A) in respect of the Preferred
Securities, the Clearing Agency or its nominee (or any successor Clearing
Agency or its nominee) if the Global Certificates have been issued or, if
Definitive Preferred Security Certificates have been issued, to the Holder
there of, and (B) in respect of the Common Securities to the Holder
thereof.
(vi) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws and banking
laws), provided the acquiror is not the Holder of the Common Securities or
the obligor under the Indenture, the Sponsor or any of its subsidiaries may
at any time and from time to time purchase outstanding Preferred Securities
by tender, in the open market or by private agreement.
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5. VOTING RIGHTS - PREFERRED SECURITIES.
(a) Except as provided under Sections 5(b),6(b)and 7 and as
otherwise required by law and the Declaration, the Holders of the Preferred
Securities will have no voting rights.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a majority in liquidation amount
of all outstanding Preferred Securities; PROVIDED, HOWEVER, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior approval of each Holder of the Preferred Securities. The Trustees
shall not revoke any action previously authorized or approved by a vote of the
Holders of the Preferred Securities except by subsequent vote of such Holders.
Subject to Section 2.7 of the Declaration, the Property Trustee shall notify
each Holder of Preferred Securities of any notice of default with respect to the
Debentures. In addition to obtaining the foregoing approvals of such Holders of
the Preferred Securities, prior to taking any of the foregoing actions, the
Trustees shall obtain an opinion of counsel experienced in such matters to the
effect that the Trust will not be classified as an association taxable as a
corporation for United States federal income tax purposes on account of such
action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or interest on the Debentures on the due date (or in the
case of redemption, on the redemption date), then a Holder of Preferred
Securities may directly institute a proceeding for enforcement of payment to
such Holder of the principal of or interest on a Like Amount of Debentures (a
"Direct Action") on or after the respective due date specified in the
Debentures. In connection with such Direct Action, the Common Securities Holder
will be subrogated to the rights of such Holder of Preferred Securities to the
extent of any payment made by the Debenture Issuer to such Holder of Preferred
Securities in such Direct Action. Except as provided in the second preceding
sentence, the Holders of Preferred Securities will not be able to exercise
directly any other remedy available to the holders of the Debentures.
Any approval or direction of Holders of Preferred Securities may be
given at a separate meeting of Holders of Preferred Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Administrative Trustees will cause a notice of
any meeting at which Holders of Preferred Securities are entitled to vote to be
mailed to each Holder of record of Preferred Securities. Each such notice will
include a statement setting forth (i) the date of such meeting, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote and (iii) instructions for the delivery of
proxies.
I-8
<PAGE>
No vote or consent of the Holders of the Preferred Securities will
be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of
such vote or consent, be treated as if they were not outstanding.
6. VOTING RIGHTS - COMMON SECURITIES.
(a) Except as provided under Sections 6(b),6(c),and 7 as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Unless an Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by the holder of the Common
Securities. If an Event of Default has occurred and is continuing, the Property
Trustee and the Delaware Trustee may be removed at such time by the holders of a
Majority in liquidation amount of the outstanding Preferred Securities. In no
event will the holders of the Preferred Securities have the right to vote to
appoint, remove or replace, or increase or decrease the number of, the
Administrative Trustees, which voting rights are vested exclusively in the
Sponsor as the holder of the Common Securities. No resignation or removal of a
Trustee and no appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance with the
provisions of the Declaration.
(c) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 5.07 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a Majority in liquidation amount
of all outstanding Common Securities; PROVIDED, HOWEVER, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior approval of each Holder of the Common Securities. The Trustees shall
not revoke any action previously authorized or approved by a vote of the Holders
of the Common Securities except by subsequent vote of such Holders. Subject to
Section 2.7 of the Declaration, the Property Trustee shall notify each Holder of
Common Securities of any notice of default with respect to the Debentures. In
addition to obtaining the foregoing approvals of such Holders of the Common
Securities, prior to taking any of the foregoing actions, the Trustees shall
obtain an opinion of counsel experienced in such matters to the effect that the
Trust will not be classified as an association taxable as a corporation for
United States federal income tax purposes on account of such action.
I-9
<PAGE>
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or interest on the Debentures on the due date (or in the
case of redemption, on the redemption date), then a Holder of Common Securities
may institute a Direct Action for enforcement of payment to such Holder of the
principal of or interest on a Like Amount of Debentures on or after the
respective due date specified in the Debentures. In connection with Direct
Action, the rights of the Common Securities Holder will be subordinated to the
rights of such Holder of Preferred Securities to the extent of any payment made
by the Debenture Issuer to such Holder of Common Securities in such Direct
Action. Except as provided in the second preceding sentence, the Holders of
Common Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent . The Administrative Trustees will cause a notice of
any meeting at which Holders of Common Securities are entitled to vote to be
mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote and (iii) instructions for the delivery of
proxies.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. AMENDMENTS TO DECLARATION AND INDENTURE.
In addition to the requirements set out in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor,
the Property Trustee and the Administrative Trustees, without the consent of the
Holders (i) to cure any ambiguity, correct or supplement any provisions in the
Declaration that may be inconsistent with any other provisions, or to make any
other provisions with respect to matters or questions arising under the
Declaration which shall not be inconsistent with the other provisions of the
Declaration or (ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the Trust will
be classified for United States federal income tax purposes as a grantor trust
at all times that any Securities are outstanding or to ensure that the Trust
will not be required to register as an "Investment Company" under the Investment
Company Act PROVIDED, HOWEVER, that in each case such action shall not adversely
affect in any material respect the interests of any Holder. Any amendments of
the Declaration pursuant to the immediately preceding sentence shall become
effective when notice thereof is given to the Holders. Under the circumstances
referred to in Section 12.1(c) of the Declaration, the Declaration also may be
amended by the Trustees and the Sponsor with (i) the consent of Holders
representing a Majority in liquidation amount of all outstanding Securities, and
(ii) receipt by the Trustees of an Opinion of Counsel to the effect that such
amendment or the exercise of any power granted to the Trustees in accordance
with such amendment will
I-10
<PAGE>
not affect the Trust's status as a grantor trust for United States federal
income tax purposes or the Trust's exemption from status as an Investment
Company under the Investment Company Act, PROVIDED THAT, without the consent of
each Holder of Trust Securities, the Declaration may not be amended to (i)
change the amount or timing of any Distribution on the Trust Securities or
otherwise adversely affect the amount of any Distribution required to be made in
respect of the Trust Securities as of a specified date or (ii) restrict the
right of a holder of Trust Securities to institute suit for the enforcement of
any such payment on or after such date.
8. PRO RATA.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
according to the aggregate liquidation amount of the Securities held by the
relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Declaration has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate liquidation
amount of Common Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Common Securities outstanding. In any such
proration, the Trust may make such adjustments as may be appropriate in order
that only securities in authorized denominations shall be redeemed (subject to
the minimum block requirements of Section 9.2(n) of the Declaration).
9. RANKING.
The Preferred Securities rank PARI PASSU with the Common Securities
and payment thereon shall be made Pro Rata with the Common Securities, except
that, if an Event of Default under the Declaration occurs and is continuing, no
payments in respect of Distributions on, or payments upon liquidation,
redemption or otherwise with respect to, the Common Securities shall be made
until the Holders of the Preferred Securities shall be paid in full the
Distributions, Redemption Price, Liquidation Distribution and other payments to
which they are entitled at such time.
10. ACCEPTANCE OF SECURITIES GUARANTEE AND INDENTURE.
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
I-11
<PAGE>
11. NO PREEMPTIVE RIGHTS.
The Holders shall have no preemptive or similar rights to subscribe
for any additional securities.
12. MISCELLANEOUS.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee, the Common Securities Guarantee (as may be appropriate)
and the Indenture (including any supplemental indenture) to a Holder without
charge upon written request to the Sponsor at its principal place of business.
I-12
<PAGE>
EXHIBIT A-1
FORM OF ____% CUMULATIVE TRUST PREFERRED SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE DECLARATION
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGE ABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION 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.
Aggregate Liquidation
Number of Amount: $__________
Preferred Securities:
_________ CUSIP NO. ___________
Certificate Evidencing ____% Cumulative Trust Preferred Securities
of
Coastal Bancorp Capital Trust I
____% Cumulative Trust Preferred Securities
(liquidation amount $25 per Preferred Security)
Coastal Bancorp Capital Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
Cede & Co. (the "Holder") is the registered owner of $__________ in aggregate
liquidation amount of Preferred Securities of the Trust repre senting undivided
beneficial interests in the assets of the Trust designated the ____% Cumulative
Trust Preferred Securities (liquidation amount $25 per Preferred Security) (the
"Preferred Securiti es"). Subject to the Declaration (as defined below), the
Preferred Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this cer tificate
duly endorsed and in proper form for transfer. The designation, rights,
privileges, restric tions, preferences and other terms and provisions of the
Preferred Securities represented hereby are issued and shall in all respects be
subject to the provisions of the Amended and Restated Declaration
A1-1
<PAGE>
of Trust of the Trust dated as of March __, 1999, as the same may be amended
from time to time (the "Declaration"), including the designation of the terms of
the Preferred Securities as set forth in Annex I to the Declaration. Capitalized
terms used but not defined herein shall have the meaning given them in the
Declaration. The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee, the Common Securities Guarantee (as may be appropriate),
and the Indenture (including any supplemental indenture) to a Holder without
charge upon written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Preferred Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Preferred Securities
as evidence of indirect benefi cial ownership in the Debentures.
This Certificate shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to principles of conflicts of
laws.
A1-2
<PAGE>
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
COASTAL BANCORP CAPITAL TRUST I
By:
-------------------------------
Catherine N. Wylie
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the within-mentioned
Declaration.
THE BANK OF NEW YORK
as Property Trustee
Dated: _____ __, 1999
By:
-------------------------------
Authorized Signatory
A1-3
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be fixed at a
rate per annum of ____% (the "Coupon Rate") of the liquidation amount of $25 per
Preferred Security, such rate being the rate of interest payable on the
Debentures to be held by the Property Trustee. Distributions in arrears for more
than one quarterly period will bear interest thereon compounded quarterly at the
Coupon Rate (to the extent permitted by applicable law). A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Property Trustee and to the extent the Property Trustee has funds on
hand legally available therefor.
Distributions on the Preferred Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or
duly provided for, if no Distributions have been paid or duly provided for, from
March __, 1999 and will be payable quarterly in arrears, on the last day of
March, July, September and December of each year, commencing on June 30, 1999,
except as otherwise described below. Distributions will be computed on the basis
of a 360-day year consisting of twelve 30-day months and, for any period less
than a full calendar month, the number of days elapsed in such month based on a
30-day month. As long as no Event of Default has occurred and is continuing
under the Indenture, the Debenture Issuer has the right under the Indenture to
defer payments of interest by extending the interest payment period at any time
and from time to time on the Debentures for a period not exceeding 20
consecutive calendar quarterly periods, including the first such quarterly
period during such extension period (each an "Extension Period"), PROVIDED THAT
no Extension Period shall end on a date other than an Interest Payment Date for
the Debentures or extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions also will be deferred. Despite such
deferral, quarterly Distributions will continue to accumulate with interest
thereon (to the extent permitted by applicable law, but not at a rate exceeding
the rate of interest then accruing on the Debentures) at the Coupon Rate
compounded quarterly during any such Extension Period. Prior to the termination
of any such Extension Period, the Debenture Issuer may further defer payments of
interest by further extending such Extension Period; PROVIDED THAT such further
deferment shall only be permitted to the extent that such Extension Period,
together with all extensions occurring both before and after such deferment,
does not exceed 20 consecutive quarterly periods, including the first quarterly
period during such Extension Period, end on a date other than an Interest
Payment Date for the Debentures or extend beyond the Maturity Date of the
Debentures. Payments of accumulated Distributions will be payable to Holders as
they appear on the books and records of the Trust on the first record date after
the end of the Extension Period. Upon the termination of any Extension Period
and the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
Subject to the receipt of any required regulatory approval and to
certain other conditions set forth in the Declaration and the Indenture, the
Property Trustee may, at the direction of the Sponsor, at any time liquidate the
Trust and cause the Debentures to be distributed to the holders of the
Securities in liquidation of the Trust or, simultaneous with any redemption of
the Debentures, cause a Like Amount of the Securities to be redeemed by the
Trust.
A1-4
<PAGE>
The Preferred Securities shall be redeemable as provided in the Declaration.
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
________________________________________________________________________________
___________________________________________________________ agent to transfer
this Preferred Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date:
-----------------------
Signature:
- ------------------------------------------------------------
(Sign exactly as your name appears on the other side of this Preferred
Security Certificate)
Signature Guarantee*:
-------------------------
- --------
* Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities and Exchange Act of 1934, as amended.
A1-5
<PAGE>
Schedule A ***
The initial number of Preferred Securities evidenced by the Certificate to
which this Schedule is attached is _______ (having an aggregate liquidation
amount of $______). The notations in the following table evidence decreases and
increases in the number of Preferred Securities evidenced by such Certificate.
<TABLE>
<CAPTION>
Number of Preferred
Decrease in Number Increase in Number Securities Remaining
of Preferred Securi- of Preferred Securi- after such Decrease or Notation by
ties ties Increase Registrar
<S> <C> <C> <C>
</TABLE>
* Append to Global Preferred Securities only.
A1-6
<PAGE>
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS COMMON SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS COMMON SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS COMMON SECURI TY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH COASTAL BANCORP, INC.
(THE "COMPANY") OR ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS
PREFERRED SECURITY (OR ANY PREDECESSOR OF THIS PREFERRED SECURITY) ONLY (A) TO
THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS COMMON SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITU TIONAL BUYER"
(AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501
UNDER THE SECURI TIES ACT THAT IS ACQUIRING THIS COMMON SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CON NECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (E) PURSUANT TO ANY
OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS COMMON
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST. SUCH HOLDER
FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS COMMON SECURITY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
A2-1
<PAGE>
THIS COMMON SECURITY IS NOT TRANSFERABLE EXCEPT AS SET FORTH IN
SECTION 9.1(c) OF THE AMENDED AND RESTATED DECLARATION OF TRUST OF THE COASTAL
BANCORP CAPITAL TRUST I, DATED AS OF MARCH __, 1999, AS THE SAME MAY BE AMENDED
FROM TIME TO TIME.
A2-2
<PAGE>
Certificate Evidencing Common Securities
of
Coastal Bancorp Capital Trust I
____% Common Securities
(liquidation amount $25 per Common Security)
Coastal Bancorp Capital Trust I, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
Coastal Bancorp, Inc. (the "Holder") is the registered owner of ______ common
securities of the Trust representing undivided beneficial interests in the
assets of the Trust designated the ____% Common Securities (liquidation amount
$25 per Common Security) (the "Common Securities"). Subject to the limitations
in Section 9.1(c) of the Declaration (as defined below), the Common Securities
are transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly en dorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Common Securities represented
hereby are issued and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of March __,
1999, as the same may be amended from time to time (the "Declara tion"),
including the designation of the terms of the Common Securities as set forth in
Annex I to the Declaration. Capitalized terms used but not defined herein shall
have the meaning given them in the Declaration. The Sponsor will provide a copy
of the Declaration, the Common Securities Guarantee, the Preferred Securities
Guarantee (as may be appropriate) and the Indenture (including any supplemental
indenture) to a Holder without charge upon written request to the Sponsor at its
principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is enti tled to the benefits thereunder and to the benefits of
the Common Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
This Certificate shall be governed by and construed in accordance with
the laws of the State of Delaware, without regard to principles of conflicts of
laws.
A2-3
<PAGE>
IN WITNESS WHEREOF, the Trust has executed this certificate this ____
day of March, 1999.
COASTAL BANCORP CAPITAL TRUST I
By:
------------------------------
Catherine N. Wylie
Administrative Trustee
A2-4
<PAGE>
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate
per annum of 9.28% (the "Coupon Rate") of the liquidation amount of $25 per
Common Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
quarterly period will bear interest thereon compounded quarterly at the Coupon
Rate (to the extent permitted by applicable law). A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Property Trustee and to the extent the Property Trustee has funds available
therefor.
Distributions on the Common Securities will be cumulative, will accrue
from the most recent date to which Distributions have been paid or duly provided
for or, if no Distributions have been paid or duly provided for, from March __,
1999 and will be payable quarterly in arrears, on the last day of March, July,
September and December of each year, commencing on June 30, 1999, except as
otherwise described below. Distributions will be computed on the basis of a
360-day year consisting of twelve 30-day months and, for any period less than a
full calendar month, the number of days elapsed in such month. As long as no
Event of Default has occurred and is continu ing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of interest
by extending the interest payment period at any time and from time to time on
the Debentu res for a period not exceeding 20 consecutive calendar quarterly
periods, including the first such quarterly period during such extension period
(each an "Extension Period"), PROVIDED THAT no Exten sion Period shall end on a
date other than an Interest Payment Date for the Debentures or extend beyond the
Maturity Date of the Debentures. As a consequence of such deferral,
Distributions also will be deferred. Despite such deferral, Distributions will
continue to accumulate with interest there on (to the extent permitted by
applicable law, but not at a rate exceeding the rate of interest then accruing
on the Debentures) at the Coupon Rate compounded quarterly during any such
Extension Period. Prior to the termination of any such Extension Period, the
Debenture Issuer may further defer payments of interest by further extending
such Extension Period; PROVIDED THAT such further deferment shall only be
permitted to the extent that such Extension Period, together with all exten
sions occurring both before and after such deferment, does not exceed 20
consecutive quarterly periods, including the first quarterly period during such
Extension Period, or end on a date other than an Interest Payment Date for the
Debentures or extend beyond the Maturity Date of the Debentures. Payments of
accrued Distributions will be payable to Holders as they appear on the books and
records of the Trust on the first record date after the end of the Extension
Period. Upon the termina tion of any Extension Period and the payment of all
amounts then due, the Debenture Issuer may commence a new Extension Period,
subject to the above requirements.
Subject to the receipt of any required regulatory approval and to
certain other condi tions set forth in the Declaration and the Indenture, the
Property Trustee may, at the direction of the Sponsor, at any time liquidate the
Trust and cause the Debentures to be distributed to the holders to the
Securities in liquidation of the Trust or, simultaneous with any redemption of
the Debentures, cause a Like Amount of the Securities to be redeemed by the
Trust.
A2-5
<PAGE>
Under certain circumstances, the right of the holders of the Common
Securities shall be subordinate to the rights of the holders of the Preferred
Securities (as defined in the Declaration), as provided in the Declaration.
The Common Securities shall be redeemable as provided in the
Declaration.
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
_______________________________________________________________________________
_______________________________________________________________________________
___________________________________________________________ agent to transfer
this Common Security Certificate on the books of the Trust. The agent may
substitute another to act for him or her.
Date:
------------------------
Signature:
------------------------------------
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
A2-6
<PAGE>
EXHIBIT B
SPECIMEN OF DEBENTURE
B-1
<PAGE>
EXHIBIT C
UNDERWRITING AGREEMENT
C-1
<PAGE>
Exhibit 4.5
-----------------------------------
-----------------------------------
TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT
COASTAL BANCORP, INC.
Dated as of March __, 1999
-----------------------------------
-----------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS AND INTERPRETATION....................................................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION..................................................... 5
SECTION 2.2 LISTS OF HOLDERS OF SECURITIES....................................................... 6
SECTION 2.3 REPORTS BY THE TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE.......................... 6
SECTION 2.4 PERIODIC REPORTS TO TRUST PREFERRED SECURITIES GUARANTEE
TRUSTEE.......................................................................... 6
SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT..................................... 7
SECTION 2.6 EVENTS OF DEFAULT; WAIVER............................................................ 7
SECTION 2.7 EVENT OF DEFAULT; NOTICE............................................................. 7
SECTION 2.8 CONFLICTING INTERESTS................................................................ 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE TRUST PREFERRED SECURITIES GUARANTEE
TRUSTEE.......................................................................... 8
SECTION 3.2 CERTAIN RIGHTS OF TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE....................... 10
SECTION 3.3. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF TRUST PREFERRED SECURITIES
GUARANTEE........................................................................ 12
ARTICLE IV
TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE; ELIGIBILITY............................ 12
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUST PREFERRED SECURITIES
GUARANTEE TRUSTEE................................................................ 13
</TABLE>
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ARTICLE V
GUARANTEE
SECTION 5.1 GUARANTEE............................................................................ 14
SECTION 5.2 WAIVER OF NOTICE AND DEMAND.......................................................... 14
SECTION 5.3 OBLIGATIONS NOT AFFECTED............................................................. 14
SECTION 5.4 RIGHTS OF HOLDERS.................................................................... 15
SECTION 5.5 GUARANTEE OF PAYMENT................................................................. 15
SECTION 5.6 SUBROGATION.......................................................................... 15
SECTION 5.7 INDEPENDENT OBLIGATIONS.............................................................. 16
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 LIMITATION OF TRANSACTIONS........................................................... 16
SECTION 6.2 RANKING.............................................................................. 17
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION.......................................................................... 17
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 EXCULPATION.......................................................................... 17
SECTION 8.2 INDEMNIFICATION...................................................................... 18
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 SUCCESSORS AND ASSIGNS............................................................... 18
SECTION 9.2 AMENDMENTS........................................................................... 18
SECTION 9.3 NOTICES.............................................................................. 19
SECTION 9.4 BENEFIT.............................................................................. 20
SECTION 9.5 GOVERNING LAW........................................................................ 20
</TABLE>
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TRUST PREFERRED SECURITIES GUARANTEE AGREEMENT
This Trust Preferred Securities Guarantee Agreement (the "Trust
Preferred Securities Guarantee"), dated as of March __, 1999, is executed and
delivered by Coastal Bancorp, Inc., a Texas corporation (the "Guarantor"), and
The Bank of New York, a New York banking corporation, as trustee (the "Trust
Preferred Securities Guarantee Trustee"), for the benefit of the Holders (as
defined herein) from time to time of the Trust Preferred Securities (as defined
herein) of Coastal Bancorp Capital Trust I, a Delaware statutory business trust
(the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of March __, 1999, among the trustees of the Issuer,
the Guarantor, as sponsor, and the holders from time to time of undivided
beneficial interests in the assets of the Issuer, the Issuer is issuing on the
date hereof, _______ trust preferred securities, having an aggregate
liquidation amount of $__________, such trust preferred securities being
designated the ___% Trust Preferred Securities (collectively the "Trust
Preferred Securities"); and
WHEREAS, as incentive for the Holders to purchase the Trust Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Trust Preferred Securities Guarantee, to pay to the
Holders the Guarantee Payments (as defined below) and to make certain other
payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is executing and delivering a guarantee
agreement (the "Common Securities Guarantee"), with substantially identical
terms to this Trust Preferred Securities Guarantee, for the benefit of the
holders of the Common Securities (as defined herein), except that if an Event of
Default (as defined in the Declaration) has occurred and is continuing, the
rights of holders of the Common Securities to receive Guarantee Payments under
the Common Securities Guarantee are subordinated, to the extent and in the
manner set forth in the Common Securities Guarantee, to the rights of holders of
Trust Preferred Securities to receive Guarantee Payments under this Trust
Preferred Securities Guarantee;
NOW, THEREFORE, in consideration of the purchase by each Holder, which
purchase the Guarantor hereby acknowledges shall benefit the Guarantor, the
Guarantor executes and delivers this Trust Preferred Securities Guarantee for
the benefit of the Holders.
<PAGE>
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 DEFINITIONS AND INTERPRETATION
In this Trust Preferred Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Trust Preferred Securities
Guarantee but not defined in the preamble above have the
respective meanings assigned to them in this Section 1.1;
(b) Terms defined in the Declaration as at the date of execution
of this Trust Preferred Securities Guarantee have the same
meaning when used in this Trust Preferred Securities Guarantee
unless otherwise defined in this Trust Preferred Securities
Guarantee;
(c) a term defined anywhere in this Trust Preferred Securities
Guarantee has the same meaning throughout;
(d) all references to "the Trust Preferred Securities Guarantee"
or "this Trust Preferred Securities Guarantee" are to this
Trust Preferred Securities Guarantee as modified,
supplemented or amended from time to time;
(e) all references in this Trust Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this
Trust Preferred Securities Guarantee, unless otherwise
specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Trust Preferred Securities Guarantee, unless
otherwise defined in this Trust Preferred Securities Guarantee
or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"AFFILIATE" has the same meaning as given to that term in Rule 405
under the Securities Act of 1933, as amended, or any successor rule thereunder.
"BUSINESS DAY" means any day other than a Saturday or a Sunday, or a
day on which banking institutions in The City of New York or Houston, Texas are
authorized or required by law or executive order to close.
"TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE" means The Bank of New
York, a New York banking corporation, until a Successor Trust Preferred
Securities Guarantee Trustee has been
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appointed and has accepted such appointment pursuant to the terms of this Trust
Preferred Securities Guarantee and thereafter means each such Successor Trust
Preferred Securities Guarantee Trustee.
"COMMON SECURITIES" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"CORPORATE TRUST OFFICE" means the office of the Trust Preferred
Securities Guarantee Trustee at which the corporate trust business of the Trust
Preferred Securities Guarantee Trustee shall, at any particular time, be
principally administered, which office at the date of execution of this
Agreement is located at 101 Barclay Street, New York, New York 10286.
"COVERED PERSON" means any Holder of Trust Preferred Securities.
"DEBENTURES" means the series of subordinated debt securities of the
Guarantor designated the ____% Junior Subordinated Deferrable Interest
Debentures due March __, 2029 held by the Property Trustee (as defined in the
Declaration) of the Issuer.
"EVENT OF DEFAULT" means a default by the Guarantor on any of its
payment or other obligations under this Trust Preferred Securities Guarantee;
provided, however, that except with respect to a default in payment of any
Guarantee Payment, the Guarantor shall have received notice of default and shall
not have cured such default within 60 days after receipt of such notice.
"GUARANTEE PAYMENTS" means the following payments or distributions,
without duplication, with respect to the Trust Preferred Securities, to the
extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Trust Preferred Securities to the extent the Issuer has funds on hand
legally avail able therefor at such time, (ii) the redemption price, including
all accumulated and unpaid Distributions to the date of redemption (the
"Redemption Price") to the extent the Issuer has funds on hand legally available
therefor at such time, with respect to any Trust Preferred Securities called for
redemption by the Issuer and (iii) upon a voluntary or involuntary termination
and liquidation of the Issuer (other than in connection with the distribution of
Debentures to the Holders in exchange for Trust Preferred Securities as provided
in the Declaration), the lesser of (a) the aggregate of the liquidation amount
and all accumulated and unpaid Distributions on the Trust Preferred Securities
to the date of payment, to the extent the Issuer has funds on hand legally
available therefor, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer. If an Event
of Default has occurred and is continuing, no Guarantee Payments under the
Common Securities Guarantee with respect to the Common Securities or any
guarantee payment under any Other Common Securities Guarantees shall be made
until the Holders shall be paid in full the Guarantee Payments to which they are
entitled under this Trust Preferred Securities Guarantee.
"HOLDER" shall mean any holder, as registered on the books and records
of the Issuer, of any Trust Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage of Trust Preferred
Securities have given any request, notice, consent or waiver
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hereunder, "Holder" shall not include the Guarantor or any Person actually known
to a Responsible Officer of the Trust Preferred Securities Guarantee Trustee to
be an Affiliate of the Guarantor.
"INDEMNIFIED PERSON" means the Trust Preferred Securities Guarantee
Trustee, any Affiliate of the Trust Preferred Securities Guarantee Trustee, or
any officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Trust Preferred
Securities Guarantee Trustee.
"INDENTURE" means the Indenture dated as of March __, 1999, among the
Guarantor (the "Debenture Issuer") and The Bank of New York, as trustee (the
"Indenture Trustee"), pursuant to which the Debentures are to be issued to the
Property Trustee of the Issuer.
"INDENTURE EVENT OF DEFAULT" shall mean any event specified in Section
5.01 of the Indenture.
"MAJORITY IN LIQUIDATION AMOUNT OF THE TRUST PREFERRED SECURITIES"
means, except as provided by the Declaration or by the Trust Indenture Act, a
vote by Holder(s) of more than 50% of the aggregate liquidation amount of all
Trust Preferred Securities.
"OFFICERS' CERTIFICATE" means, with respect to the Guarantor, a
certificate signed by any of the Chairman, a Vice Chairman, the Chief Executive
Officer, the President, a Vice President, the Comptroller, the Secretary or an
Assistant Secretary of the Guarantor. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this Trust
Preferred Securities Guarantee (other than pursuant to Section 314(d)(4) of the
Trust Indenture Act) shall include:
(a) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(b) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(c) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"OTHER COMMON SECURITIES GUARANTEES" shall have the same meaning as
"Other Guarantees" as defined in the Common Securities Guarantee.
"OTHER DEBENTURES" means all junior subordinated debentures issued by
the Guarantor from time to time and sold to trusts to be established by the
Guarantor (if any), in each case similar to the Issuer.
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"OTHER GUARANTEES" means all guarantees to be issued by the Guarantor
with respect to trust preferred securities (if any) similar to the Trust
Preferred Securities issued by other trusts to be established by the Guarantor
(if any), in each case similar to the Issuer.
"PERSON" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"RESPONSIBLE OFFICER" means, with respect to the Trust Preferred
Securities Guarantee Trustee, any officer within the Corporate Trust Office of
the Trust Preferred Securities Guarantee Trustee with direct responsibility for
the administration of this Trust Preferred Securities Guarantee and also means,
with respect to a particular corporate trust matter, any other officer to whom
such matter is referred because of that officer's knowledge of and familiarity
with the particular subject.
"SUCCESSOR TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE" means a
successor Trust Preferred Securities Guarantee Trustee possessing the
qualifications to act as Trust Preferred Securities Guarantee Trustee under
Section 4.1.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as
amended.
"TRUST SECURITIES" means the Common Securities and the Trust Preferred
Securities, collectively.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 TRUST INDENTURE ACT; APPLICATION
(a) This Trust Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this Trust
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions; and
(b) if and to the extent that any provision of this Trust Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
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SECTION 2.2 LISTS OF HOLDERS OF SECURITIES
(a) The Guarantor shall provide the Trust Preferred Securities
Guarantee Trustee (unless the Trust Preferred Securities Guarantee Trustee is
otherwise the registrar of the Trust Preferred Securities) with a list, in such
form as the Trust Preferred Securities Guarantee Trustee may reasonably
require, of the names and addresses of the Holders ("List of Holders") as of
such date, (i) within 14 days after each record date for payment of
Distributions, as defined in the Declaration, and (ii) at any other time within
30 days of receipt by the Guarantor of a written request for a List of Holders
as of a date no more than 14 days before such List of Holders is given to the
Trust Preferred Securities Guarantee Trustee, PROVIDED, that the Guarantor shall
not be obligated to provide such List of Holders at any time the List of Holders
does not differ from the most recent List of Holders given to the Trust
Preferred Securities Guarantee Trustee by the Guarantor. The Trust Preferred
Securities Guarantee Trustee may destroy any List of Holders previously given to
it on receipt of a new List of Holders.
(b) The Trust Preferred Securities Guarantee Trustee shall comply with
its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.3 REPORTS BY THE TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE
Within 60 days after May 15 of each year, commencing May 15, 1999, the
Trust Preferred Securities Guarantee Trustee shall provide to the Holders such
reports as are required by Section 313 of the Trust Indenture Act, if any, in
the form and in the manner provided by Section 313 of the Trust Indenture Act.
The Trust Preferred Securities Guarantee Trustee shall also comply with the
other requirements of Section 313 of the Trust Indenture Act.
SECTION 2.4 PERIODIC REPORTS TO TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE
The Guarantor shall provide to the Trust Preferred Securities
Guarantee Trustee such documents, reports and information as required by Section
314 (if any) and the compliance certificate required by Section 314 of the
Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act, provided that such compliance
certificate shall be delivered on or before 120 days after the end of each
fiscal year of the Guarantor. Delivery of such reports, information and
documents to the Trust Preferred Securities Guarantee Trustee is for
informational purposes only and the Trust Preferred Securities Guarantee
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Guarantor's compliance with any of its covenants
hereunder (as to which the Trust Preferred Securities Guarantee Trustee is
entitled to rely exclusively on Officers' Certificates).
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SECTION 2.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT
The Guarantor shall provide to the Trust Preferred Securities
Guarantee Trustee such evidence of compliance with any conditions precedent, if
any, provided for in this Trust Preferred Securities Guarantee that relate to
any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.6 EVENTS OF DEFAULT; WAIVER
The Holders of a Majority in liquidation amount of Trust Preferred
Securities may, by vote, on behalf of all Holders, waive any past Event of
Default and its consequences. Upon such waiver, any such Event of Default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Trust Preferred Securities Guarantee,
but no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon.
SECTION 2.7 EVENT OF DEFAULT; NOTICE
(a) The Trust Preferred Securities Guarantee Trustee shall, within 90
days after the occurrence of any default with respect to the obligations of the
Guarantor under this Trust Preferred Securities Guarantee, mail by first class
postage prepaid, to all Holders, notices of all defaults actually known to a
Responsible Officer, unless such defaults have been cured before the giving of
such notice; provided, that, except in the case of default in the timing or
payment of any Guarantee Payment, the Trust Preferred Securities Guarantee
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
and/or a Responsible Officer of the Trust Preferred Securities Guarantee Trustee
in good faith determines that the withholding of such notice is in the interests
of the Holders.
(b) The Trust Preferred Securities Guarantee Trustee shall not be
deemed to have knowledge of any Event of Default unless the Trust Preferred
Securities Guarantee Trustee shall have received written notice from the
Guarantor, or a Responsible Officer charged with the administration of this
Trust Preferred Securities Guarantee shall have obtained actual knowledge, of
such Event of Default.
SECTION 2.8 CONFLICTING INTERESTS
The Declaration shall be deemed to be specifically described
in this Trust Preferred Securities Guarantee for the purposes of clause (i) of
the first proviso contained in Section 310(b) of the Trust Indenture Act.
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF
TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE
SECTION 3.1 POWERS AND DUTIES OF THE TRUST PREFERRED SECURITIES GUARANTEE
TRUSTEE
(a) This Trust Preferred Securities Guarantee shall be held by the
Trust Preferred Securities Guarantee Trustee for the benefit of the Holders, and
the Trust Preferred Securities Guarantee Trustee shall not transfer this Trust
Preferred Securities Guarantee to any Person except a Holder exercising his or
her rights pursuant to Section 5.4(b) or to a Successor Trust Preferred
Securities Guarantee Trustee on acceptance by such Successor Trust Preferred
Securities Guarantee Trustee of its appointment to act as Successor Trust
Preferred Securities Guarantee Trustee. The right, title and interest of the
Trust Preferred Securities Guarantee Trustee shall automatically vest in any
Successor Trust Preferred Securities Guarantee Trustee, and such vesting and
succession of title shall be effective whether or not conveyancing documents
have been executed and delivered pursuant to the appointment of such Successor
Trust Preferred Securities Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer has
occurred and is continuing, the Trust Preferred Securities Guarantee Trustee
shall enforce this Trust Preferred Securities Guarantee for the benefit of the
Holders.
(c) The Trust Preferred Securities Guarantee Trustee, before the
occurrence of any Event of Default and after the curing of all Events of Default
that may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Trust Preferred Securities Guarantee, and no
implied covenants shall be read into this Trust Preferred Securities Guarantee
against the Trust Preferred Securities Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section 2.6)
and is actually known to a Responsible Officer, the Trust Preferred Securities
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Trust Preferred Securities Guarantee, and use the same degree of care and
skill in its exercise thereof, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs.
(d) No provision of this Trust Preferred Securities Guarantee shall be
construed to relieve the Trust Preferred Securities Guarantee Trustee from
liability for its own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after the
curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Trust Preferred Securities
Guarantee Trustee shall be determined solely by the express provisions
of this Trust Preferred Securities Guarantee, and the Trust Preferred
Securities Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
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set forth in this Trust Preferred Securities Guarantee, and no implied
covenants or obligations shall be read into this Trust Preferred
Securities Guarantee against the Trust Preferred Securities Guarantee
Trustee; and
(B) in the absence of bad faith on the part of the Trust
Preferred Securities Guarantee Trustee, the Trust Preferred Securities
Guarantee Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Trust Preferred
Securities Guarantee Trustee and conforming to the requirements of
this Trust Preferred Securities Guarantee; but in the case of any such
certificates or opinions that by any provision hereof are specifically
required to be furnished to the Trust Preferred Securities Guarantee
Trustee, the Trust Preferred Securities Guarantee Trustee shall be
under a duty to examine the same to determine whether or not they
conform to the requirements of this Trust Preferred Securities
Guarantee (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein);
(ii) the Trust Preferred Securities Guarantee Trustee shall not be
liable for any error of judgment made in good faith by a Responsible
Officer, unless it shall be proved that the Trust Preferred Securities
Guarantee Trustee was negligent in ascertaining the pertinent facts upon
which such judgment was made;
(iii) the Trust Preferred Securities Guarantee Trustee shall not be
liable with respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders of a Majority in
liquidation amount of the Trust Preferred Securities relating to the time,
method and place of conducting any proceeding for any remedy available to
the Trust Preferred Securities Guarantee Trustee, or exercising any trust
or power conferred upon the Trust Preferred Securities Guarantee Trustee
under this Trust Preferred Securities Guarantee; and
(iv) no provision of this Trust Preferred Securities Guarantee shall
require the Trust Preferred Securities Guarantee Trustee to expend or risk
its own funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of its rights or
powers, if the Trust Preferred Securities Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Trust
Preferred Securities Guarantee or indemnity, reasonably satisfactory to the
Trust Preferred Securities Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
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SECTION 3.2 CERTAIN RIGHTS OF TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE
(a) Subject to the provisions of Section 3.1:
(i) The Trust Preferred Securities Guarantee Trustee may conclusively
rely, and shall be fully protected in acting or refraining from acting,
upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be
genuine and to have been signed, sent or presented by the proper party or
parties.
(ii) Any direction or act of the Guarantor contemplated by this Trust
Preferred Securities Guarantee may be sufficiently evidenced by an
Officers' Certificate.
(iii) Whenever, in the administration of this Trust Preferred
Securities Guarantee, the Trust Preferred Securities Guarantee Trustee
shall deem it desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the Trust Preferred
Securities Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Guarantor.
(iv) The Trust Preferred Securities Guarantee Trustee shall have no
duty to see to any recording, filing or registration of any instrument (or
any rerecording, refiling or registration thereof).
(v) The Trust Preferred Securities Guarantee Trustee may consult with
counsel of its selection, and the advice or opinion of such counsel with
respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in accordance with such advice or opinion. Such
counsel may be counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Trust Preferred Securities Guarantee
Trustee shall have the right at any time to seek instructions concerning
the administration of this Trust Preferred Securities Guarantee from any
court of competent jurisdiction.
(vi) The Trust Preferred Securities Guarantee Trustee shall be under
no obligation to exercise any of the rights or powers vested in it by this
Trust Preferred Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Trust Preferred
Securities Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Trust Preferred Securities Guarantee Trustee, against
the costs, expenses (including attorneys' fees and expenses and the
expenses of the Trust Preferred Securities Guarantee Trustee's agents,
nominees or custodians) and liabilities that might be incurred by it in
complying with such request or direction, including such reasonable
advances as may be requested by the Trust Preferred Securities Guarantee
Trustee; provided that, nothing contained in this Section 3.2(a)(vi) shall
be taken to relieve the Trust Preferred Securities
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Guarantee Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this Trust
Preferred Securities Guarantee.
(vii) The Trust Preferred Securities Guarantee Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document, but the Trust Preferred
Securities Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(viii) The Trust Preferred Securities Guarantee Trustee may execute
any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, nominees, custodians or attorneys,
and the Trust Preferred Securities Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder.
(ix) Any action taken by the Trust Preferred Securities Guarantee
Trustee or its agents hereunder shall bind the Holders, and the signature
of the Trust Preferred Securities Guarantee Trustee or its agents alone
shall be sufficient and effective to perform any such action. No third
party shall be required to inquire as to the authority of the Trust
Preferred Securities Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Trust Preferred Securities
Guarantee, both of which shall be conclusively evidenced by the Trust
Preferred Securities Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Trust Preferred Securities
Guarantee the Trust Preferred Securities Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Trust Preferred Securities
Guarantee Trustee (i) may request instructions from the Holders of a
Majority in liquidation amount of the Trust Preferred Securities, (ii) may
refrain from enforcing such remedy or right or taking such other action
until such instructions are received and (iii) shall be protected in
conclusively relying on or acting in accordance with such instructions.
(xi) The Trust Preferred Securities Guarantee Trustee shall not be
liable for any action taken, suffered, or omitted to be taken by it in good
faith, without negligence, and reasonably believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Trust Preferred Securities Guarantee.
(b) No provision of this Trust Preferred Securities Guarantee shall be
deemed to impose any duty or obligation on the Trust Preferred Securities
Guarantee Trustee to perform any act or acts or exercise any right, power, duty
or obligation conferred or imposed on it in any jurisdiction in which it shall
be illegal, or in which the Trust Preferred Securities Guarantee Trustee
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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 Trust Preferred
Securities Guarantee Trustee shall be construed to be a duty.
SECTION 3.3. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF TRUST PREFERRED
SECURITIES GUARANTEE
The recitals contained in this Trust Preferred Securities Guarantee
shall be taken as the statements of the Guarantor, and the Trust Preferred
Securities Guarantee Trustee does not assume any responsibility for their
correctness. The Trust Preferred Securities Guarantee Trustee makes no
representation as to the validity or sufficiency of this Trust Preferred
Securities Guarantee.
ARTICLE IV
TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE
SECTION 4.1 TRUST PREFERRED SECURITIES GUARANTEE TRUSTEE; ELIGIBILITY
(a) There shall at all times be a Trust Preferred Securities Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.1(a)(ii), the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Trust Preferred Securities Guarantee Trustee
shall cease to be eligible to so act under Section 4.1(a), the Trust Preferred
Securities Guarantee Trustee shall immediately resign in the manner and with the
effect set out in Section 4.2(c).
(c) If the Trust Preferred Securities Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Trust Preferred Securities Guarantee Trustee and
Guarantor shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act, subject to the penultimate paragraph thereof.
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<PAGE>
SECTION 4.2 APPOINTMENT, REMOVAL AND RESIGNATION OF TRUST PREFERRED SECURITIES
GUARANTEE TRUSTEE
(a) Subject to Section 4.2(b), the Trust Preferred Securities
Guarantee Trustee may be appointed or removed without cause at any time by the
Guarantor except during an Event of Default.
(b) The Trust Preferred Securities Guarantee Trustee shall not be
removed in accordance with Section 4.2(a) until a Successor Trust Preferred
Securities Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor Trust Preferred
Securities Guarantee Trustee and delivered to the Guarantor.
(c) The Trust Preferred Securities Guarantee Trustee shall hold office
until a Successor Trust Preferred Securities Guarantee Trustee shall have been
appointed or until its removal or resignation. The Trust Preferred Securities
Guarantee Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Trust Preferred
Securities Guarantee Trustee and delivered to the Guarantor, which resignation
shall not take effect until a Successor Trust Preferred Securities Guarantee
Trustee has been appointed and has accepted such appointment by instrument in
writing executed by such Successor Trust Preferred Securities Guarantee Trustee
and delivered to the Guarantor and the resigning Trust Preferred Securities
Guarantee Trustee.
(d) If no Successor Trust Preferred Securities Guarantee Trustee shall
have been appointed and accepted appointment as provided in this Section 4.2
within 60 days after delivery of an instrument of removal or resignation, the
Trust Preferred Securities Guarantee Trustee resigning or being removed may
petition any court of competent jurisdiction for appointment of a Successor
Trust Preferred Securities Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Trust Preferred Securities Guarantee Trustee.
(e) No Trust Preferred Securities Guarantee Trustee shall be liable
for the acts or omissions to act of any Successor Trust Preferred Securities
Guarantee Trustee.
(f) Upon termination of this Trust Preferred Securities Guarantee or
removal or resignation of the Trust Preferred Securities Guarantee Trustee
pursuant to this Section 4.2, the Guarantor shall pay to the Trust Preferred
Securities Guarantee Trustee all amounts due to the Trust Preferred Securities
Guarantee Trustee accrued to the date of such termination, removal or
resignation.
13
<PAGE>
ARTICLE V
GUARANTEE
SECTION 5.1 GUARANTEE
The Guarantor irrevocably and unconditionally agrees to pay in full to
the Holders the Guarantee Payments (without duplication of amounts theretofore
paid by the Issuer), as and when due, regardless of any defense, right of
set-off or counterclaim that the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Guarantor to the Holders or by causing the Issuer to pay
such amounts to the Holders.
SECTION 5.2 WAIVER OF NOTICE AND DEMAND
The Guarantor hereby waives notice of acceptance of this Trust
Preferred Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.3 OBLIGATIONS NOT AFFECTED
The obligations, covenants, agreements and duties of the Guarantor
under this Trust Preferred Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Trust Preferred Securities to be
performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution (as
defined in the Declaration) or any other sums payable under the terms of the
Trust Preferred Securities or the extension of time for the performance of any
other obligation under, arising out of, or in connection with, the Trust
Preferred Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum payable
that results from the extension of any interest payment period on the Debentures
permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Trust Preferred
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
14
<PAGE>
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Trust Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred;
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.3 that the obligations of the Guarantor with respect to the
Guarantee Payments shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 RIGHTS OF HOLDERS
(a) The Holders of a Majority in liquidation amount of the Trust
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trust Preferred
Securities Guarantee Trustee in respect of this Trust Preferred Securities
Guarantee or exercising any trust or power conferred upon the Trust Preferred
Securities Guarantee Trustee under this Trust Preferred Securities Guarantee.
(b) If the Trust Preferred Securities Guarantee Trustee fails to
enforce such Trust Preferred Securities Guarantee, any Holder may institute a
legal proceeding directly against the Guarantor to enforce the Trust Preferred
Securities Guarantee Trustee's rights under this Trust Preferred Securities
Guarantee, without first instituting a legal proceeding against the Issuer, the
Trust Preferred Securities Guarantee Trustee or any other person or entity. The
Guarantor waives any right or remedy to require that any action be brought first
against the Issuer or any other person or entity before proceeding directly
against the Guarantor.
SECTION 5.5 GUARANTEE OF PAYMENT
This Trust Preferred Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 5.6 SUBROGATION
The Guarantor shall be subrogated to all (if any) rights of the
Holders against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Trust Preferred
15
<PAGE>
Securities Guarantee; provided, however, that the Guarantor shall not (except to
the extent required by mandatory provisions of law) be entitled to enforce or
exercise any right that it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Trust Preferred Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Trust Preferred Securities Guarantee. If
any amount shall be paid to the Guarantor in violation of the preceding
sentence, the Guarantor agrees to hold such amount in trust for the Holders and
to pay over such amount to the Holders.
SECTION 5.7 INDEPENDENT OBLIGATIONS
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Trust 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 Trust
Preferred Securities Guarantee notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 LIMITATION OF TRANSACTIONS
So long as any Trust Preferred Securities remain outstanding, the
Guarantor shall not (i) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any
of the Guarantor's capital stock (which includes common and preferred stock),
(ii) make any payment of principal, interest or premium, if any, on or repay or
repurchase or redeem any debt securities of the Guarantor (including any Other
Debentures) that rank PARI PASSU with or junior in right of payment to the
Debentures or (iii) make any guarantee pay ments with respect to any guarantee
by the Guarantor of the debt securities of any subsidiary of the Guarantor
(including Other Guarantees) if such guarantee ranks PARI PASSU with or junior
in right of payment to the Debentures (other than (a) dividends or distributions
in shares of, or options, war rants, rights to subscribe for or purchase shares
of, common stock of the Guarantor, (b) any declaration of a dividend in
connection with the implementation of a stockholders' rights plan, or the issu
ance of stock under any such plan in the future, or the redemption or repurchase
of any such rights pursuant thereto, (c) payments under the Trust Preferred
Securities Guarantee, (d) the purchase of fractional shares resulting from a
reclassification of the Guarantor's capital stock, (e) the purchase of
fractional interests in shares of the Guarantor's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged and (f) purchases of common stock related to the
issuance of common stock or rights under any of the Guarantor's benefit plans
for its directors, officers or employees or any of the Guarantor's dividend
reinvestment plans) if at such time (i) there shall have occurred any event of
which the Guarantor has actual knowledge that (a) is, or with the giving of
notice or the lapse of time, or both, would be an Indenture Event of Default and
(b) in respect of which the Guarantor shall not have taken reason-
16
<PAGE>
able steps to cure, (ii) if such Debentures are held by the Property Trustee,
the Guarantor shall be in default with respect to its payment of any obligations
under this Trust Preferred Securities Guarantee or (iii) the Guarantor shall
have given notice of its election of the exercise of its right to extend the
interest payment period pursuant to Section 16.01 of the Indenture and any such
extension shall be continuing.
SECTION 6.2 RANKING
This Trust Preferred Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right of
payment to Senior and Subordinated Indebtedness (as defined in the Indenture),
to the same extent and in the same manner that the Debentures are subordinated
to Senior and Subordinated Indebtedness pursuant to the Indenture, (ii) PARI
PASSU with the Debentures, the Other Debentures, the Common Securities Guarantee
and any Other Guarantee and any Other Common Securities Guarantee, and (iii)
senior to the Guarantor's capital stock.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION
This Trust Preferred Securities Guarantee shall terminate (i) upon
full payment of the Redemption Price (as defined in the Declaration) of all
Trust Preferred Securities or (ii) upon liquidation of the Issuer, the full
payment of the amounts payable in accordance with the Declaration or the
distribution of the Debentures to the Holders and the holders of Common
Securities. Notwithstanding the foregoing, this Trust Preferred Securities
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid under the
Trust Preferred Securities or under this Trust Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1 EXCULPATION
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Guarantor or any Covered Person for any loss,
damage or claim incurred by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Trust Preferred
Securities Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such Indemnified
Person by this Trust Preferred Securities Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
17
<PAGE>
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders might properly be paid.
SECTION 8.2 INDEMNIFICATION
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 8.2 shall survive the termination of this
Trust Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 SUCCESSORS AND ASSIGNS
All guarantees and agreements contained in this Trust Preferred
Securities Guarantee shall bind the successors, assigns, receivers, trustees and
representatives of the Guarantor and shall inure to the benefit of the Holders
then outstanding.
SECTION 9.2 AMENDMENTS
Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Trust Preferred Securities Guarantee may only be amended with
the prior approval of the Holders of a Majority in liquidation amount of the
Trust Preferred Securities (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined). The provisions of
the Declaration with respect to consents to amendments thereof (whether at a
meeting or otherwise) shall apply to the giving of such approval.
Prior to executing any amendment hereto, the Trust Preferred
Securities Guarantee Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Trust Preferred Securities Guarantee Agreement.
18
<PAGE>
SECTION 9.3 NOTICES
All notices provided for in this Trust Preferred Securities Guarantee
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Issuer, in care of the Administrative Trustee at
the Issuer's mailing address set forth below (or such other address as the
Issuer may give notice of to the Holders and the Trust Preferred Securities
Guarantee Trustee):
Coastal Bancorp Capital Trust I
Coastal Banc Plaza
5718 Westheimer
Suite 600
Houston, TX 77057
Attention: Catherine N. Wylie
Administrative Trustee
Telecopy: (713) 435-5000
(b) If given to the Trust Preferred Securities Guarantee Trustee, at
the Trust Preferred Securities Guarantee Trustee's mailing address set forth
below (or such other address as the Trust Preferred Securities Guarantee Trustee
may give notice of to the Holders and the Issuer):
The Bank of New York
101 Barclay Street
21st Floor West
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telecopy: (212) 815-5917
(c) If given to the Guarantor, at the Guarantor's mailing address set
forth below (or such other address as the Guarantor may give notice of to the
Holders and the Trust Preferred Securities Guarantee Trustee):
Coastal Bancorp, Inc.
Coastal Banc Plaza
5718 Westheimer
Suite 600
Houston, TX 77057
Attention: Catherine N. Wylie
Chief Financial Officer
Telecopy: (713) 435-5000
19
<PAGE>
(d) If given to any Holder, at the address set forth on the books and
records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.4 BENEFIT
This Trust Preferred Securities Guarantee is solely for the benefit of
the Holders and, subject to Section 3.1(a), is not separately transferable from
the Trust Preferred Securities.
SECTION 9.5 GOVERNING LAW
THIS TRUST PREFERRED SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
20
<PAGE>
THIS TRUST PREFERRED SECURITIES GUARANTEE is executed as of the day
and year first above written.
COASTAL BANCORP, INC. as Guarantor
By:
--------------------------------
Catherine N. Wylie
Chief Financial Officer
THE BANK OF NEW YORK, as Trust Preferred
Securities Guarantee Trustee
By:
--------------------------------
Name:
Title:
21
<PAGE>
EXHIBIT 5.1
Law Offices of
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
12th Floor
734 15th Street, N.W.
Washington, DC 20005
Telephone No. (202) 347-0300
April 9, 1999
Board of Directors
Coastal Bancorp, Inc.
Coastal Banc Plaza
5718 Westheimer, Suite 600
Houston, Texas 77057
Ladies and Gentlemen:
We are providing this opinion in connection with the Registration
Statement of Coastal Bancorp, Inc. (the "Company") on Form S-3 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act"), with respect to the proposed offering from time to time, together or
separately, of up to $150,000,000 of the Company's: (i) debt securities,
including any junior subordinated debentures issued to the Coastal Bancorp
Capital Trust I (the "Trust")("Debt Securities"); (ii) preferred stock, no par
value per share ("Preferred Stock"); (iii) common stock, par value $0.00667 per
share ("Common Stock"); (iv) trust preferred securities of the Trust ("Trust
Preferred Securities"); and (v) the guarantees by the Company of any Trust
Preferred Securities issued by the Trust pursuant to one or more Guarantee
Agreements to be executed by the Company (the "Guarantees"). The Debt
Securities, the Preferred Stock, the Common Stock, the Trust Preferred
Securities and the Guarantees are collectively referred to herein as the
"Offered Securities."
We have examined (i) the Registration Statement; (ii) the Company's
Articles of Incorporation and Bylaws, as amended to date; (iii) the proposed
form of Indenture for the Debt Securities (including, as exhibits, proposed
forms of the Registered Security and the Bearer Security thereunder) from the
Company to The Bank of New York, as Trustee (the "Indenture"), providing for the
issuance of the Debt Securities from time to time in one or more series pursuant
to the terms of one or more Securities Resolutions (as defined in the Indenture)
creating such series; (iv) other exhibits to the Registration Statement relating
to the Offered Securities; (v) corporate proceedings of the Company relating to
the Registration Statement, the Indenture and the transactions contemplated
thereby; and (vi) such other documents, and such matters of law, as we have
deemed necessary in order to render this opinion.
For purposes of this opinion, we have assumed that (i) no change occurs
in applicable law or the pertinent facts and (ii) the provisions of "blue sky"
and other securities laws as may be applicable will have been complied with to
the extent required.
<PAGE>
Coastal Bancorp, Inc.
April 9, 1999
Page 2
On the basis of and subject to the foregoing, we advise you that, in our
opinion:
When (i) the Registration Statement has become effective under the Act,
(ii) the terms of any class or series of Offered Securities have been
authorized by appropriate action of the Company in a manner that would
not violate any applicable law or result in a default under or breach of
any agreement or instrument binding upon the Company and so as to comply
with any requirement or restriction imposed by a court or a governmental
or regulatory body having jurisdiction over the Company, (iii) any such
class or series of Offered Securities has been duly issued and sold, and
payment has been received for such Offered Securities in the manner
contemplated in the Registration Statement and any prospectus supplement
relating thereto, then the Offered Securities (excluding the Trust
Preferred Securities) will be duly authorized and legally issued and
will constitute valid and binding obligations of the Company enforceable
in accordance with their respective terms, subject to (x) bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium and other
similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, (y) general principles of equity
(regardless of whether considered in a proceeding at law or in equity)
and (z) the qualification that the remedy of specific performance and
injunctive or other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding may be brought.
The foregoing opinion is limited to the Federal securities laws of the
United States and the corporate and contract laws of the States of New York and
Texas, and we are expressing no opinion as to the effect of the laws of any
other jurisdiction.
As to the legality of the Trust Preferred Securities to be issued by the
Trust, you will receive the opinion of Richards, Layton & Finger, P.A., special
Delaware counsel to the Trust and the Company, in connection with any future
offering of such Trust Preferred Securities pursuant to the Registration
Statement. We are expressing no opinion with respect to any matters addressed in
such opinion.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus constituting a part thereof. In giving our consent,
we do not admit that we are "experts" within the meaning of Section 11 of the
Act, or that we come within the category of persons whose consent is required by
Section 7 of the Act or the rules and regulations of the Commission thereunder.
Very truly yours,
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By: /s/ Norman B. Antin
--------------------------------------
Norman B. Antin, a Partner
<PAGE>
Exhibit 8.0
Law Offices of
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
12th Floor
734 15th Street, N.W.
Washington, D.C. 20005
Telephone No. (202) 347-0300
April 9, 1999
Board of Directors
Coastal Bancorp, Inc.
Coastal Banc Plaza
5718 Westheimer, Suite 600
Houston, TX 77057
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
As special federal tax counsel to Coastal Bancorp, Inc. (the "Company")
in connection with the issuance by the Company of shares of its Series A
Cumulative Redeemable Preferred Stock pursuant to the Prospectus and Prospectus
Supplement contained in the Registration Statement, and assuming the operative
documents described in the Prospectus will be performed in accordance with the
terms described therein, we hereby confirm to you our opinion as set forth under
the heading "Tax Considerations" in the Prospectus Supplement, subject to the
limitations set forth therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to us under the heading "Tax
Considerations" in the Prospectus Supplement.
Very truly yours,
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By: /s/ Norman B. Antin
-----------------------------------
Norman B. Antin, a Partner
<PAGE>
Exhibit 12.1
COASTAL BANCORP, INC.
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS EXCLUDING INTEREST ON DEPOSITS
YEAR ENDED DECEMBER 31,
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net income before preferred stock dividends 19,256 14,151 9,539 11,130 16,040
Income tax expense 3,543 7,822 5,671 6,477 4,333
--------------------------------------------------------------------------------
Pretax earnings before preferred stock dividends 22,799 21,973 15,210 17,607 20,373
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Fixed charges:
One-third of rental expense which
approximates the interest factor 888 763 667 488 446
Interest on borrowed funds 77,276 81,512 78,109 69,638 50,392
Amortization of debt issuance costs 376 376 376 188 -
--------------------------------------------------------------------------------
Total fixed charges 78,540 82,651 79,152 70,314 50,838
--------------------------------------------------------------------------------
Preferred stock dividends 2,588 2,588 2,588 2,588 2,588
Total fixed charges and preferred --------------------------------------------------------------------------------
stock dividends 81,128 85,239 81,740 72,902 53,426
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Earnings (for ratio calculation) 101,339 104,624 94,362 87,921 71,211
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Ratio of earnings to fixed charges
and preferred stock dividends 1.25 1.23 1.15 1.21 1.33
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 12.2
COASTAL BANCORP, INC.
COMPUTATION OF CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED
STOCK DIVIDENDS INCLUDING INTEREST ON DEPOSITS
YEAR ENDED DECEMBER 31,
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net income before preferred stock dividends 19,256 14,151 9,539 11,130 16,040
Income tax expense 3,543 7,822 5,671 6,477 4,333
--------------------------------------------------------------------------------
Pretax earnings before preferred stock dividends 22,799 21,973 15,210 17,607 20,373
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Fixed charges:
One-third of rental expense which
approximates the interest factor 888 763 667 488 446
Interest on deposits 66,127 62,911 60,076 56,717 38,126
Interest on borrowed funds 77,276 81,512 78,109 69,638 50,392
Amortization of debt issuance costs 376 376 376 188 -
--------------------------------------------------------------------------------
Total fixed charges 144,667 145,562 139,228 127,031 88,964
--------------------------------------------------------------------------------
Preferred stock dividends 2,588 2,588 2,588 2,588 2,588
Total fixed charges and preferred --------------------------------------------------------------------------------
stock dividends 147,255 148,150 141,816 129,619 91,552
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Earnings (for ratio calculation) 167,466 167,535 154,438 144,638 109,337
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Ratio of earnings to fixed charges
and preferred stock dividends 1.14 1.13 1.09 1.12 1.19
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 23.1
The Board of Directors
Coastal Bancorp, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus supplement
and prospectus.
/s/KPMG LLP
Houston, Texas
April 8, 1999
<PAGE>
Exhibit 25.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) |__|
---------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
---------------
COASTAL BANCORP INC.
(Exact name of obligor as specified in its charter)
Texas 76-0428727
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Coastal Banc Plaza
5718 Westheimer, Suite 600
Houston, Texas 77057
(Address of principal executive offices) (Zip code)
---------------
Junior Subordinated Deferrable Interest Debentures
(Title of the indenture securities)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
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>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
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 9th day of March, 1999.
THE BANK OF NEW YORK
By: /s/ Mary LaGumina
---------------------------
Name: Mary LaGumina
Title: Assistant Vice President
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
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 9th day of March, 1999.
THE BANK OF NEW YORK
By: /s/ Mary LaGumina
---------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
<PAGE>
Exhibit 7
- -------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1998, published in accordance with
a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.. $3,951,273
Interest-bearing balances........................... 4,134,162
Securities:
Held-to-maturity securities......................... 932,468
Available-for-sale securities....................... 4,279,246
Federal funds sold and Securities purchased under
agreements to resell................................ 3,161,626
Loans and lease financing receivables:
Loans and leases, net of unearned
income............................................ 37,861,802
LESS: Allowance for loan and
lease losses...................................... 619,791
LESS: Allocated transfer risk
reserve........................................... 3,572
Loans and leases, net of unearned income,
allowance, and reserve............................ 37,238,439
Trading Assets......................................... 1,551,556
Premises and fixed assets (including capitalized
leases)............................................. 684,181
Other real estate owned................................ 10,404
Investments in unconsolidated subsidiaries and
associated companies................................ 196,032
Customers' liability to this bank on acceptances
outstanding......................................... 895,160
Intangible assets...................................... 1,127,375
Other assets........................................... 1,915,742
------------
Total assets........................................... $60,077,664
------------
------------
LIABILITIES
Deposits:
In domestic offices................................. $27,020,578
Noninterest-bearing................................. 11,271,304
Interest-bearing.................................... 15,749,274
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................ 17,197,743
Noninterest-bearing................................. 103,007
Interest-bearing.................................... 17,094,736
Federal funds purchased and Securities sold under
agreements to repurchase............................ 1,761,170
Demand notes issued to the U.S.Treasury................ 125,423
Trading liabilities.................................... 1,625,632
Other borrowed money:
With remaining maturity of one year or less......... 1,903,700
With remaining maturity of more than one year
through three years............................... 0
With remaining maturity of more than three years.... 31,639
Bank's liability on acceptances executed and
outstanding......................................... 900,390
Subordinated notes and debentures...................... 1,308,000
Other liabilities...................................... 2,708,852
------------
Total liabilities...................................... 54,583,127
------------
------------
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 764,443
Undivided profits and capital reserves................. 3,542,168
Net unrealized holding gains (losses) on
available-for-sale securities....................... 82,367
Cumulative foreign currency translation adjustments.... (29,725)
------------
Total equity capital................................... 5,494,537
------------
Total liabilities and equity capital................... $60,077,664
------------
------------
</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi }
Gerald L. Hassell } Directors
Alan R. Griffith }
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 25.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) |__|
------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
------------------
COASTAL BANCORP CAPITAL TRUST I
(Exact name of obligor as specified in its charter)
Delaware 76-0428727
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Coastal Banc Plaza
5718 Westheimer, Suite 600
Houston, Texas 77057
(Address of principal executive offices) (Zip code)
------------------
Trust Preferred Securities
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, 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 9th day of March, 1999.
THE BANK OF NEW YORK
By: /s/ Mary LaGumina
---------------------------------
Name: Mary LaGumina
Title: Assistant Vice President
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, 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 9th day of March, 1999.
THE BANK OF NEW YORK
By: /S/ MARY LAGUMINA
---------------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
<PAGE>
Exhibit 7
- -------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1998, published in accordance with
a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.. $3,951,273
Interest-bearing balances........................... 4,134,162
Securities:
Held-to-maturity securities......................... 932,468
Available-for-sale securities....................... 4,279,246
Federal funds sold and Securities purchased under
agreements to resell................................ 3,161,626
Loans and lease financing receivables:
Loans and leases, net of unearned
income............................................ 37,861,802
LESS: Allowance for loan and
lease losses...................................... 619,791
LESS: Allocated transfer risk
reserve........................................... 3,572
Loans and leases, net of unearned income,
allowance, and reserve............................ 37,238,439
Trading Assets......................................... 1,551,556
Premises and fixed assets (including capitalized
leases)............................................. 684,181
Other real estate owned................................ 10,404
Investments in unconsolidated subsidiaries and
associated companies................................ 196,032
Customers' liability to this bank on acceptances
outstanding......................................... 895,160
Intangible assets...................................... 1,127,375
Other assets........................................... 1,915,742
------------
Total assets........................................... $60,077,664
------------
------------
LIABILITIES
Deposits:
In domestic offices................................. $27,020,578
Noninterest-bearing................................. 11,271,304
Interest-bearing.................................... 15,749,274
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................ 17,197,743
Noninterest-bearing................................. 103,007
Interest-bearing.................................... 17,094,736
Federal funds purchased and Securities sold under
agreements to repurchase............................ 1,761,170
Demand notes issued to the U.S.Treasury................ 125,423
Trading liabilities.................................... 1,625,632
Other borrowed money:
With remaining maturity of one year or less......... 1,903,700
With remaining maturity of more than one year
through three years............................... 0
With remaining maturity of more than three years.... 31,639
Bank's liability on acceptances executed and
outstanding......................................... 900,390
Subordinated notes and debentures...................... 1,308,000
Other liabilities...................................... 2,708,852
------------
Total liabilities...................................... 54,583,127
------------
------------
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 764,443
Undivided profits and capital reserves................. 3,542,168
Net unrealized holding gains (losses) on
available-for-sale securities....................... 82,367
Cumulative foreign currency translation adjustments.... (29,725)
------------
Total equity capital................................... 5,494,537
------------
Total liabilities and equity capital................... $60,077,664
------------
------------
</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi }
Gerald L. Hassell } Directors
Alan R. Griffith }
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 25.3
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) |__|
-------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
One Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
-------------------
COASTAL BANCORP INC.
(Exact name of obligor as specified in its charter)
Texas 76-0428727
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Coastal Banc Plaza
5718 Westheimer, Suite 600
Houston, Texas 77057
(Address of principal executive offices) (Zip code)
-------------------
Guarantee of Trust Preferred Securities of
Coastal Bancorp Capital Trust I
(Title of the indenture securities)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
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>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION,
ARE INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO
RULE 7A-29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17
C.F.R. 229.10(D).
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, 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 9th day of March, 1999.
THE BANK OF NEW YORK
By: /s/ Mary LaGumina
---------------------------------
Name: Mary LaGumina
Title: Assistant Vice President
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, 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 9th day of March, 1999.
THE BANK OF NEW YORK
By: /S/ MARY LAGUMINA
---------------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
<PAGE>
Exhibit 7
- -------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the Federal Reserve
System, at the close of business December 31, 1998, published in accordance with
a call made by the Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin.. $3,951,273
Interest-bearing balances........................... 4,134,162
Securities:
Held-to-maturity securities......................... 932,468
Available-for-sale securities....................... 4,279,246
Federal funds sold and Securities purchased under
agreements to resell................................ 3,161,626
Loans and lease financing receivables:
Loans and leases, net of unearned
income............................................ 37,861,802
LESS: Allowance for loan and
lease losses...................................... 619,791
LESS: Allocated transfer risk
reserve........................................... 3,572
Loans and leases, net of unearned income,
allowance, and reserve............................ 37,238,439
Trading Assets......................................... 1,551,556
Premises and fixed assets (including capitalized
leases)............................................. 684,181
Other real estate owned................................ 10,404
Investments in unconsolidated subsidiaries and
associated companies................................ 196,032
Customers' liability to this bank on acceptances
outstanding......................................... 895,160
Intangible assets...................................... 1,127,375
Other assets........................................... 1,915,742
-------------
Total assets........................................... $60,077,664
-------------
-------------
LIABILITIES
Deposits:
In domestic offices................................. $27,020,578
Noninterest-bearing................................. 11,271,304
Interest-bearing.................................... 15,749,274
In foreign offices, Edge and Agreement
subsidiaries, and IBFs............................ 17,197,743
Noninterest-bearing................................. 103,007
Interest-bearing.................................... 17,094,736
Federal funds purchased and Securities sold under
agreements to repurchase............................ 1,761,170
Demand notes issued to the U.S.Treasury................ 125,423
Trading liabilities.................................... 1,625,632
Other borrowed money:
With remaining maturity of one year or less......... 1,903,700
With remaining maturity of more than one year
through three years............................... 0
With remaining maturity of more than three years.... 31,639
Bank's liability on acceptances executed and
outstanding......................................... 900,390
Subordinated notes and debentures...................... 1,308,000
Other liabilities...................................... 2,708,852
-------------
Total liabilities...................................... 54,583,127
-------------
-------------
EQUITY CAPITAL
Common stock........................................... 1,135,284
Surplus................................................ 764,443
Undivided profits and capital reserves................. 3,542,168
Net unrealized holding gains (losses) on
available-for-sale securities....................... 82,367
Cumulative foreign currency translation adjustments.... (29,725)
-------------
Total equity capital................................... 5,494,537
-------------
Total liabilities and equity capital................... $60,077,664
-------------
-------------
</TABLE>
I, Thomas J. Mastro, Senior Vice President and Comptroller of the
above-named bank do hereby declare that this Report of Condition has been
prepared in conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true to the best of my knowledge and
belief.
Thomas J. Mastro
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyi }
Gerald L. Hassell } Directors
Alan R. Griffith }
- --------------------------------------------------------------------------------
