<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 26, 1996.
REGISTRATION NO. 333-03943
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
STANDARD FEDERAL BANCORPORATION, INC.
(Exact name of registrant as specified in its charter)
MICHIGAN
(State or other jurisdiction of
incorporation or organization)
38-2899274
(I.R.S. Employer
Identification No.)
2600 WEST BIG BEAVER ROAD
TROY, MICHIGAN 48084
(810) 643-9600
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------
JOSEPH KRUL
SENIOR VICE PRESIDENT
STANDARD FEDERAL BANCORPORATION, INC.
2600 WEST BIG BEAVER ROAD
TROY, MICHIGAN 48084
(810) 637-2530
(Name, address, including zip code, and telephone number,
including area code, agent for service of process)
------------------------
COPIES TO:
PAUL R. RENTENBACH, ESQ.
DYKEMA GOSSETT P.L.L.C.
400 RENAISSANCE CENTER
DETROIT, MICHIGAN 48243
DANIEL M. ROSSNER, ESQ.
BROWN & WOOD
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date
of this Registration Statement as determined by market conditions.
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, please check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
SUBJECT TO COMPLETION, DATED JUNE 26, 1996
PRELIMINARY PRICING SUPPLEMENT
(TO PROSPECTUS DATED JULY , 1996 AND
PROSPECTUS SUPPLEMENT DATED JULY , 1996)
$100,000,000
STANDARD FEDERAL BANCORPORATION, INC.
% FIXED RATE SUBORDINATED NOTES DUE JULY , 2006
[STANDARD FEDERAL LOGO]
The % Fixed Rate Subordinated Notes Due July , 2006 (the "Notes"), are
part of a series of Subordinated Medium-Term Notes of Standard Federal
Bancorporation, Inc. (the "Company") described in the accompanying Prospectus
and Prospectus Supplement. Interest on the Notes will be payable semiannually in
arrears on each January and July to the holder of record on each December
and June , respectively, commencing on January , 1997 and will be a per
annum rate equal to %. The Notes will mature on July , 2006, and will not
be subject to redemption prior to maturity. The Notes will be issued in
book-entry form through the facilities of The Depository Trust Company in
minimum denominations of $1,000 and integral multiples thereof.
The Notes will be unsecured and will be subordinated to all Senior
Indebtedness (as defined in the accompanying Prospectus) of the Company. PAYMENT
OF PRINCIPAL OF THE NOTES MAY BE ACCELERATED ONLY IN THE CASE OF CERTAIN EVENTS
INVOLVING THE BANKRUPTCY, INSOLVENCY OR REORGANIZATION OF THE COMPANY. THERE IS
NO RIGHT OF ACCELERATION IN THE CASE OF DEFAULT IN THE PAYMENT OF PRINCIPAL OF
OR INTEREST ON THE NOTES OR THE PERFORMANCE OF ANY OTHER OBLIGATION OF THE
COMPANY UNDER THE NOTES.
------------------------
SEE "RISK FACTORS" ON PAGE S-3 OF THE ACCOMPANYING PROSPECTUS SUPPLEMENT FOR
CERTAIN CONSIDERATIONS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN
INVESTMENT IN THE NOTES OFFERED HEREBY.
------------------------
THE SUBORDINATED NOTES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS
OF ANY SAVINGS BANK OR NON-BANK SUBSIDIARY OF THE COMPANY AND ARE NOT INSURED
BY THE SAVINGS ASSOCIATION INSURANCE FUND OR THE BANK INSURANCE FUND OF
THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PRICING SUPPLEMENT
OR THE ACCOMPANYING PROSPECTUS AND PROSPECTUS SUPPLEMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
<S> <C> <C> <C>
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Per Note........................... % % %
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Total.............................. $ $ $
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</TABLE>
(1) Plus accrued interest, if any, from July , 1996.
(2) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Supplemental Plan of Distribution".
(3) Before deducting expenses payable by the Company estimated at $ .
------------------------
The Notes are offered by the several Underwriters, subject to prior sale,
when, as and if issued to and accepted by them and subject to certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the Notes will be made in book-entry form through the facilities of
The Depository Trust Company on or about July , 1996.
------------------------
MERRILL LYNCH & CO.
LEHMAN BROTHERS
SMITH BARNEY INC.
UBS SECURITIES LLC
FIRST OF MICHIGAN CORPORATION
KEEFE, BRUYETTE & WOODS
MCDONALD & COMPANY
SECURITIES, INC.
RONEY & CO.
------------------------
The date of this Pricing Supplement is July , 1996.
THIS PRELIMINARY PRICING SUPPLEMENT AND THE INFORMATION CONTAINED HEREIN IS
SUBJECT TO COMPLETION OR AMENDMENT AND PROSPECTIVE PURCHASERS ARE REFERRED
TO THE FINAL PRICING SUPPLEMENT FOR DEFINITIVE INFORMATION ON ANY MATTER
CONTAINED HEREIN. THIS PRELIMINARY PRICING SUPPLEMENT SHALL NOT CONSTITUTE
AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE
ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION
OR SALE WOULD BE UNLAWFUL OR UNAUTHORIZED.
<PAGE> 3
THE COMPANY
On May 1, 1995, Standard Federal Bancorporation, Inc. (the "Company"),
became the holding company for Standard Federal Bank (the "Bank"), a federally
chartered savings bank founded in 1893. The Bank converted to a publicly owned
stock chartered thrift institution in January 1987 and since then has
significantly increased its banking franchise. This growth has been achieved not
only through in-market mergers and acquisitions, but also by aggressively
developing its core businesses. Through a consistent focus on retail and
wholesale residential mortgage lending, retail deposit gathering, consumer
lending and residential mortgage loan servicing, the Bank has been able to
maintain its net interest margin, increase recurring fee income, maintain a high
level of asset quality and control its operating expenses. As a result, the
Company has experienced increased profitability over the past several years.
The Bank has significantly expanded its branch network geographically
through 21 mergers and acquisitions over the past 16 years. With $13.5 billion
in assets at March 31, 1996, the Company is the seventh largest publicly traded
thrift-related financial services organization, in terms of assets, in the
United States. With deposits of $9.4 billion at March 31, 1996, the Company,
through the Bank, has the largest deposit base of all thrift institutions
headquartered in the Midwest. These statistics do not reflect the Company's
acquisition of Bell Bancorp, Inc. ("Bell"), which was completed on June 7, 1996
(See "Recent Developments -- Acquisition of Bell Bancorp, Inc."). For purposes
of federal Prompt Corrective Action regulations, the Bank's regulators
categorized the Bank as well-capitalized, the highest possible rating,
throughout all of 1995.
The Company is primarily a consumer-oriented financial services
organization. Its principal business consists of obtaining funds in the form of
deposits and borrowings and investing those funds in various types of loans and
marketable securities. The origination of single-family home mortgage loans is
the Bank's primary lending activity. The Bank has been the largest originator,
based on dollar value, of single-family home mortgage loans in Michigan for
seven consecutive years. In 1995, the Bank was the tenth largest mortgage
originator, based upon dollar value, in the United States. The Bank also makes
consumer loans and non-real estate commercial loans and, to a much lesser
extent, commercial real estate loans. The Bank also conducts business through a
nationwide mortgage banking correspondent network.
The Bank currently (following the acquisition of Bell) conducts its retail
banking business from 180 full-service Banking Centers and 12 retail Home
Lending Centers located in Michigan, Illinois, Indiana and Ohio. The Bank's
largest concentration of branch offices is in southeast Michigan, where it has
four offices in the city of Detroit and 105 offices in the suburban Detroit
area. The Bank also has ten offices in north-central Michigan, five offices in
northern Michigan, 32 offices in the southwest Michigan/northwest Indiana
region, 11 offices in northeast Indiana, 14 offices in the greater Chicago,
Illinois market area and 11 offices in northwest Ohio. At March 31, 1996, the
largest percentage of loans held or serviced by the Bank related to properties
located in southeast Michigan. The Bank has 27 wholesale Loan Production Offices
which conduct business with correspondents nationwide. The Bank also owns and
operates over 370 automated teller machines located throughout its retail market
areas.
The primary operating objective of the Company is to maximize both net
interest income and net income over the long term, while taking into
consideration both credit risk and interest rate risk. In pursuit of these
objectives, the Company follows the strategy of acquiring assets for investment
purposes and retaining portions of its loan production. The Company attempts to
achieve reasonable spreads through matching such assets with deposits and a
number of other funding sources. The Company has never made any foreign loans,
not does it participate as an investor in high-yield financing, highly leveraged
transactions or non-investment grade securities.
The Company's executive office is located at 2600 West Big Beaver Road,
Troy, Michigan 48084, and its telephone number at such office is (810) 643-9600.
USE OF PROCEEDS
The Company plans to use a portion of the net proceeds of this offering to
repay certain short term borrowings incurred after the Bell acquisition to
maintain the Bank's status as "well-capitalized" as of June 30, 1996. In
addition, the Company plans to invest a substantial portion of the net proceeds
of this offering in the Bank. All additional net proceeds will be retained by
the Company for general corporate purposes. In addition to the capital needs
arising from the recently completed Bell acquisition, additional capital could
be required if and when currently proposed legislation to resolve differences in
federal deposit insurance assessments between commercial banks and thrifts is
enacted. See "Recent Developments".
PS-2
<PAGE> 4
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1996, and as adjusted as of such date to give effect to (i) the
issuance of the Notes offered by this Pricing Supplement and the accompanying
Prospectus Supplement and Prospectus and (ii) the acquisition of Bell on June 7,
1996. This capitalization table should be read in conjunction with the financial
statements and related notes incorporated by reference in this Pricing
Supplement and the accompanying Prospectus Supplement and Prospectus.
<TABLE>
<CAPTION>
At March 31, 1996
Historical As Adjusted
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(In Thousands)
<S> <C> <C>
FHLB Advances and Other Borrowings:
Due within one year $1,203,756 $1,213,756
Due in 1 year to 2 years 8,992 8,992
Due in 2 years to 3 years 1,382,702 1,382,702
Due in 3 years to 4 years 13,482 13,482
Due in over 4 years 27,772 127,772
---------- ----------
2,636,704 2,746,704
Stockholders' Equity:
Serial preferred stock, no par value per share; 50,000,000
shares authorized; none issued -- --
Common stock, no par value per share; 150,000,000 shares
authorized; 31,289,495 shares issued and outstanding at
March 31, 1996 234,401 234,401
Retained earnings, partially restricted 689,910 689,910
Unrealized net gain on mortgage-backed securities available for
sale 14,932 14,932
---------- ----------
Total stockholders' equity 939,243 939,243
---------- ----------
Total liabilities and stockholders' equity $3,575,947 $3,685,947
========== ==========
</TABLE>
The following table sets forth (i) historical capital ratios of the Bank at
March 31, 1996, (ii) pro forma capital ratios for each of the Company and the
Bank after giving effect to the Bell acquisition, the issuance of the Notes and
the contribution of the net proceeds from the offering to the Notes by the
Company to the Bank following repayment of the short term borrowings incurred
after the Bell acquisition, and (iii) existing regulatory requirements. See
"Recent Developments."
<TABLE>
<CAPTION>
The Company(1) The Bank Regulatory
Actual Pro forma Actual Pro forma Requirement(1)
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<S> <C> <C> <C> <C> <C>
Core capital ratio 5.96% 4.85% 5.88% 5.48% 1.50%
Tangible capital ratio 5.83% 4.73% 5.75% 5.36% 3.00%
Tier 1 risk-based ratio 12.14% 9.90% 11.98% 11.19% 4.00%
Risk-based capital ratio 12.60% 10.38% 12.43% 11.66% 8.00%
</TABLE>
(1) OTS capital regulations do not apply to savings and loan holding companies.
Ratios for the Company have been computed as if OTS regulations applicable
to the Bank applied to the Company.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges was 2.21 for the quarter ended March
31, 1996, and 2.01 for the year ended December 31, 1995. This ratio was
calculated by dividing the sum of fixed charges into the sum of earnings,
excluding interest on deposits. The ratio of earnings to fixed charges,
including interest on deposits, was 1.33 for the quarter ended March 31, 1996,
and 1.31 for the year ended December 31, 1995. For information related to prior
years, see "Ratio of Earnings to Fixed Charges" in the accompanying Prospectus.
PS-3
<PAGE> 5
CONSOLIDATED SUMMARY FINANCIAL DATA
The following tables set forth certain historical consolidated summary
financial data of the Company, which should be read in conjunction with, and is
qualified by reference to, the more detailed financial and other documents
incorporated herein by reference. See "Incorporation of Certain Documents by
Reference" in the Prospectus, including specifically the Company's Annual Report
on Form 10-K for the year ended December 31, 1995, the Company's Notice of
Annual Meeting and Proxy Statement for its meeting held on April 23, 1996, and
the Company's Form 10-Q for the Quarter Ended March 31, 1996. The pro forma data
reflects the Bell acquisition which was completed on June 7, 1996. See "Recent
Developments."
<TABLE>
<CAPTION>
Pro Forma
Quarter Ended Year Ended
(In thousands, Quarter Ended March 31, March 31, December 31, Year Ended December 31,
except per share data) 1996 1995 1996 1995 1995 1994
- -----------------------------------------------------------------------------------------------------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C> <C> <C>
SUMMARY STATEMENT OF
OPERATIONS:
Total interest income $ 242,487 $ 215,361 $ 270,949 $1,037,295 $ 925,703 $ 774,996
Total interest expense 154,361 136,615 175,502 684,249 603,219 444,349
------------ ------------ ------------ ----------- ------------ ------------
Net interest income 88,126 78,746 95,447 353,046 322,484 330,647
Provision for (recovery of)
losses 605 (1,025) 1,410 4,702 1,304 184
------------ ------------ ------------ ----------- ------------ ------------
Net interest income after
provision for (recovery of)
losses 87,521 79,771 94,037 348,344 321,180 330,463
Non-interest income 18,235 15,909 19,303 68,246 65,033 54,667
Other expenses 54,165 50,326 61,490 226,343 198,012 198,527
------------ ------------ ------------ ----------- ------------ ------------
Income before provision for
federal income taxes 51,591 45,354 51,850 190,247 188,201 186,603
Provision for federal income
taxes 19,400 16,300 19,900 71,000 68,700 67,600
------------ ------------ ------------ ----------- ------------ ------------
Net income 32,191 29,054 31,950 119,247 119,501 119,003
============ ============ ============ =========== ============ ============
Earnings per share $ 1.00 $ 0.90 $ 0.99 $ 3.69 $ 3.70 $ 3.70
============ ============ ============ =========== ============ ============
Dividends per share $ 0.19 $ 0.17 $ 0.19 $ 0.70 $ 0.70 $ 0.62
============ ============ ============ =========== ============ ============
Dividend payout ratio 19.00% 18.89% 19.19% 18.97% 18.92% 16.76%
============ ============ ============ =========== ============ ============
PERFORMANCE RATIOS:
Return on average assets 0.95% 0.95% N/A N/A 0.93% 1.05%
Return on average equity 13.89% 14.10% N/A N/A 13.93% 15.68%
Interest rate spread during
the period 2.46% 2.50% N/A N/A 2.36% 2.90%
Net interest margin on
average earning assets 2.73% 2.75% N/A N/A 2.64% 3.11%
Operating expense ratio 49.69% 50.10% N/A N/A 48.63% 48.60%
Earnings to fixed charges:
Including interest on
deposits 1.33x 1.33x 1.29x 1.28x 1.31x 1.42x
Excluding interest on
deposits 2.21x 2.02x 2.17x 1.97x 2.01x 2.48x
<CAPTION>
(In thousands, Year Ended December 31,
except per share data) 1993 1992 1991
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<S> <C> <C> <C>
SUMMARY STATEMENT OF
OPERATIONS:
Total interest income $ 715,059 $ 758,181 $ 828,801
Total interest expense 426,428 498,586 616,996
------------ ----------- -----------
Net interest income 288,631 259,595 211,805
Provision for (recovery of)
losses 11,311 11,728 11,990
------------ ----------- -----------
Net interest income after
provision for (recovery of)
losses 277,320 247,867 199,815
Non-interest income 53,965 44,514 45,435
Other expenses 151,323 143,468 138,960
------------ ----------- -----------
Income before provision for
federal income taxes 179,962 148,913 106,290
Provision for federal income
taxes 64,400 53,300 40,488
------------ ----------- -----------
Net income 115,562 95,613 65,802
============ =========== ===========
Earnings per share $ 3.60 $ 3.00 $ 2.11
============ =========== ===========
Dividends per share $ 0.54 $ 0.46 $ 0.40
============ =========== ===========
Dividend payout ratio 15.00% 15.33% 18.96%
============ =========== ===========
PERFORMANCE RATIOS:
Return on average assets 1.17% 1.00% 0.70%
Return on average equity 17.61% 16.93% 13.37%
Interest rate spread during
the period 2.86% 2.62% 2.15%
Net interest margin on
average earning assets 3.10% 2.89% 2.38%
Operating expense ratio 44.08% 47.44% 52.71%
Earnings to fixed charges:
Including interest on
deposits 1.42x 1.30x 1.17x
Excluding interest on
deposits 2.31x 1.85x 1.46x
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
At March 31, At March 31, At December 31,
1996 1995 1996 1995 1994
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<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets $13,505,427 $12,469,998 $15,256,282 $13,275,608 $12,076,933
Investment securities 218,395 567,807 170,224 227,774 369,049
Mortgage-backed securities 2,941,299 2,456,330 3,166,158 3,189,433 2,527,476
Loans receivable 9,666,512 8,821,466 11,026,068 9,197,725 8,488,385
Cost in excess of fair value
of net assets acquired 137,813 147,696 204,087 135,874 151,381
Deposits 9,449,204 8,484,960 11,047,261 9,151,929 8,150,121
Borrowings 2,636,704 2,812,870 2,746,704 2,818,217 2,772,715
Stockholders' equity 939,243 836,745 939,243 916,263 812,824
Equity-to-asset ratio 6.95% 6.71% 6.16% 6.90% 6.73%
Book value per share 30.02 26.54 30.02 29.38 25.79
Tangible book value per
share 25.61 21.78 23.50 25.02 20.93
Share price at end of period 42.50 26.88 42.50 39.38 24.00
CAPITAL RATIOS:
Core capital ratio 5.88% 5.74% 5.48% 5.82% 6.10%
Tangible capital ratio 5.75% 5.56% 5.36% 5.67% 5.53%
Tier 1 risk-based ratio 11.98% 11.46% 11.19% [TO COME]
Risk-based capital ratio 12.43% 11.91% 11.66% 12.53% 12.83%
ASSET QUALITY:
Nonperforming assets to
total assets 0.45% 0.45% N/A 0.39% 0.43%
Allowance coverage of
nonperforming loans 64.95% 74.22% N/A 75.13% 85.51%
Ratio of allowances to total
loans 0.38% 0.39% N/A 0.38% 0.41%
Ratio of net charge-offs to
average loans (0.02)% (0.02)% N/A 0.01% 0.02%
<CAPTION>
At December 31,
1993 1992 1991
- ----------------------------------------------------------------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Total assets $10,905,397 $9,544,731 $9,513,922
Investment securities 316,379 543,149 939,328
Mortgage-backed securities 2,438,169 3,175,781 3,918,852
Loans receivable 7,435,063 5,247,577 4,048,668
Cost in excess of fair value
of net assets acquired 149,914 120,568 128,960
Deposits 7,790,555 6,527,603 6,188,550
Borrowings 1,989,350 2,081,312 2,474,762
Stockholders' equity 710,500 609,071 524,765
Equity-to-asset ratio 6.52% 6.38% 5.52%
Book value per share 22.68 19.56 16.98
Tangible book value per
share 17.41 15.54 12.67
Share price at end of period 30.00 23.25 18.25
CAPITAL RATIOS:
Core capital ratio 6.01% 6.14% 5.25%
Tangible capital ratio 5.08% 5.14% 4.18%
Tier 1 risk-based ratio [TO COME]
Risk-based capital ratio 12.74% 13.53% 11.81%
ASSET QUALITY:
Nonperforming assets to
total assets 0.71% 0.75% 0.73%
Allowance coverage of
nonperforming loans 66.61% 46.70% 44.63%
Ratio of allowances to total
loans 0.45% 0.53% 0.58%
Ratio of net charge-offs to
average loans 0.18% 0.17% 0.09%
</TABLE>
PS-4
<PAGE> 6
RECENT DEVELOPMENTS
RESULTS OF OPERATIONS -- FIRST QUARTER OF 1996
The Company's net income totaled $32.2 million, or $1.00 per share, during
the three months ended March 31, 1996. This represents an annualized return on
average assets ("ROA") of 0.95% and an annualized return on average
stockholders' equity ("ROE") of 13.89%. This earning performance represents an
increase of 11% when compared to the $29.1 million, or $0.90 per share, recorded
during the same period in 1995 (ROA of 0.95% and ROE of 14.10%).
Net interest income increased 12% during the first quarter of 1996,
totaling $88.1 million, compared to $78.7 million recorded in the same period
last year. The Company's net interest margin was 2.73% of average earning assets
during the first quarter of 1996, compared to 2.75% during the same period in
1995, and 2.61% during the fourth quarter of 1995.
During the first three months of 1996, the Company's provision for losses
totaled $0.6 million. During this same time period, the Company's non-performing
assets increased by $9.0 million, or 17%, while its allowance for loan losses
increased by 3%. The Company's ratio of non-performing assets to total assets
for the first quarter of 1996 was 0.45%. This increase in non-performing assets
is primarily attributable to increasing consumer delinquencies for all types of
loans nationwide. Nonetheless, the Company's non-performing assets remain below
industry averages. The adequacy of the allowance for loan losses is evaluated
regularly and is determined by management's judgment concerning the amount of
risk inherent in the Company's various portfolios. At March 31, 1996, secured
non-performing assets totaled % of total non-performing assets.
Total operating expenses were $54.2 million for the quarter ended March 31,
1996, an increase of 8% compared to $50.3 million incurred during the same
period in 1995. The ratio of general and administrative expenses to average
assets for the quarter ended March 31, 1996, was 1.48%, compared to 1.52% for
the same period in 1995. This decrease in the expense ratio is the result of
efficiencies realized from comparatively higher mortgage lending volumes.
RESULTS OF OPERATIONS -- YEAR ENDED DECEMBER 31, 1995
The Company's 1995 net income totaled $119.5 million, or $3.70 per share,
representing an ROA of 0.93% and an ROE of 13.93%. This earnings performance is
comparable to the $119.0 million, or $3.70 per share, recorded for the year
ended December 31, 1994 (ROA of 1.05% and ROE of 15.68%).
Net interest income decreased 2.5% during the year ended December 31, 1995,
totaling $322.5 million compared to the $330.6 million recorded during 1994. The
Company's net interest margin was 2.64% of average earning assets during the
year ended December 31, 1995, compared to 3.11% during the same period in 1994.
During 1995, the Company's provision for losses totaled $1.3 million.
During this same time period, the Company's non-performing assets increased by
$0.2 million, or less than 1%, while its allowances for loan losses increased by
$0.4 million, or 1%. The Company's 1995 year-end ratio of non-performing assets
to total assets of 0.39% is low when compared to either industry standards or
the Company's capital levels. At December 31, 1995, secured non-performing
assets totaled 97.3% of total non-performing assets.
Total operating expenses were $198.0 million for the year ended December
31, 1995, compared to $198.5 million incurred during 1994. The ratio of general
and administrative expenses to average assets for the year ended December 31,
1995 was 1.42%, compared to 1.62% for the same period in 1994. This decrease in
the expense ratio is due to efficiencies realized from acquisitions completed in
1995 and significantly increased volume of single-family mortgage loan
originations.
ACQUISITION OF BELL BANCORP, INC.
On June 7, 1996, the Company completed its acquisition of Bell. The
purchase price, including payments made with respect to outstanding stock
options, approximated $354.5 million. Bell, through its principal subsidiary,
Bell Federal Savings and Loan Association ("Bell Federal"), operated 14
full-service branch offices in the greater Chicago, Illinois, market, and had
total assets of $1.9 billion and total deposits of $1.6 billion at June 7, 1996.
The
PS-5
<PAGE> 7
transaction is being accounted for as a purchase and is anticipated to result in
goodwill (excess of purchase price over the underlying market value of assets
and liabilities) of between approximately $75.0 and $80.0 million.
PROPOSED LEGISLATION REGARDING BIF-SAIF DISPARITY
Various Committees of Congress and various federal regulatory banking
agencies, including the FDIC, are currently discussing changes to the federal
deposit insurance system to narrow or eliminate the difference in financial
characteristics between the Bank Insurance Fund ("BIF") and the Savings
Association Insurance Fund ("SAIF"). One of the proposals being discussed would,
among other things, assess savings associations, such as the Bank, a one-time
fee to bring the SAIF fund into parity with the BIF fund. In the event that such
a proposal was to become law, the Bank would then be required to record a
one-time charge to earnings of approximately $57.0 million, or $1.77 per share,
after-tax, based on aggregate March 31, 1995, insured deposit balances.
Thereafter, the Bank's annual deposit insurance expense would be reduced for the
foreseeable future by approximately 80% to 100% of current premiums. A premium
reduction of this magnitude would represent annual after-tax cost savings to the
Company of approximately $11.0 million to $14.9 million (i.e., $0.37 per share
to $0.46 per share), based upon the actual aggregate 1995 deposit insurance
premiums incurred by the Bank and Bell. If such a proposal is enacted during the
second half of 1996, and the Bank then recognizes this one-time charge to its
earnings and, therefore, its capital as well, without the additional capital to
be contributed by the Company to the Bank from the net proceeds of this
offering, the Bank could temporarily fall below the minimum levels of capital
necessary to be categorized as "well capitalized" by the federal banking
agencies.
PROPOSED LEGISLATION ELIMINATING THE THRIFT CHARTER
Legislation which would generally require federal savings associations,
such as the Bank, to convert to a national bank or a state charter has been
proposed in Congress. In addition, such proposal would require that all savings
and loan holding companies, such as the Company, convert to bank holding
companies. It is uncertain to what extent existing powers of savings
associations, such as the Bank, and savings and loan holding companies, such as
the Company, would be grandfathered. In addition, unless such legislation
provides otherwise, a charter conversion could result in recapture of deductions
for bad debt previously taken by a federal association for tax purposes. It is
uncertain whether such proposed legislation will be passed, and, if passed, in
what form it will be passed. As a result, management cannot accurately assess
the effect such legislation might have on the Company.
PROPOSED LEGISLATION REGARDING BAD DEBT RESERVES
Under Section 593 of the Internal Revenue Code of 1986, as amended (the
"Code"), certain thrift institutions, such as the Bank, are permitted to
establish a tax reserve for bad debts and to make annual additions thereto,
which additions may, within specified limitations, be deducted in arriving at
their taxable income. Under legislation proposed both by Congress and by
President Clinton, Section 593 would be repealed thereby permitting the Bank to
deduct bad debts only as they occur. In addition, the Bank would be required to
recapture over a six-year period the excess of the balance of its bad debt
reserves as of December 31, 1995 over the balance of such reserves as of
December 31, 1987. However, under the proposed legislation, such recapture
requirements would be suspended for each of two successive taxable years
beginning January 1, 1996, in which the Bank originates a minimum amount of
certain residential loans based upon the average of the principal amounts of
such loans made by the Bank during its six taxable years preceding 1996. The
Bank has previously recorded a liability relating to the possible recapture of
the applicable portion of the Bank's bad debt reserve, in accordance with
generally accepted accounting principles. It is anticipated that any recapture
of the Bank's bad debt reserves pursuant to such legislation, if enacted as
proposed, would not have a material adverse effect on the Company's consolidated
financial condition or results of operations.
PS-6
<PAGE> 8
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the Medium-Term Notes as set
forth and described in the accompanying Prospectus and Prospectus Supplement, to
which description reference is hereby made.
The % Fixed Rate Subordinated Notes Due July , 2006 (the "Notes") are
part of a series of Subordinated Medium-Term Notes of Standard Federal
Bancorporation, Inc. (the "Company"), described in the accompanying Prospectus
and Prospectus Supplement. The Notes will bear interest at the rate per annum
shown on the cover of this Pricing Supplement from July , 1996, or from the
most recent date to which interest has been paid. Interest will be payable
semiannually on January and July of each year, commencing, January , 1997,
to the person in whose names the Notes are registered at the close of business
on the preceding December or June , as the case may be. Interest payable at
maturity will be payable to the person to whom principal shall be payable. The
Notes will mature on July , 2006, and may not be redeemed prior to maturity.
The Notes will be issued in book-entry form through the facilities of The
Depository Trust Company in minimum denominations of $1,000 and integral
multiples thereof. See "Description of the Notes" in the accompanying Prospectus
Supplement.
The indebtedness of the Company evidenced by the Notes, including principal
and interest, in unsecured and subordinate and junior in right of payment of the
Company's Senior Indebtedness (as defined in Prospectus). In the event of any
insolvency, receivership, conservatorship, reorganization, readjustment of debt,
marshalling of assets and liabilities or similar proceedings or any liquidation
or winding-up of or relating to the Company, whether voluntary or involuntary,
all of the Company's Senior Indebtedness shall be entitled to be paid in full
before any payment shall be made on account of the principal of or interest on
the Notes. In the event of any such proceeding, after payment in full of all
sums owing with respect to such Senior Indebtedness, the holders of the Notes,
together with the holders of any obligations of the Company ranking on a parity
with the Notes, shall be entitled to be paid from the remaining assets of the
Company the unpaid principal of, and the unpaid interest on, the Notes or such
other obligations before payment or other distribution, whether in cash,
property, or otherwise, shall be made on account of any capital stock or any
obligations of the Company ranking junior to the Notes.
Upon completion of this offering, the Company will have no outstanding
obligations as of such date which would rank on a parity with or subordinate to
the Notes.
As described in the accompanying Prospectus, payment of the principal of
the Subordinated Notes may be accelerated only in the case of certain events
involving the bankruptcy, insolvency or reorganization of the Company. THERE IS
NO RIGHT OF ACCELERATION IN THE CASE OF DEFAULT IN THE PAYMENT OF PRINCIPAL OF
OR INTEREST ON THE NOTES OR THE PERFORMANCE OF ANY OTHER OBLIGATION OF THE
COMPANY UNDER THE NOTES.
Settlement for the Notes will be made by the Underwriters in immediately
available funds. As long as the Notes are represented by Global Securities, all
payments of principal and interest will be made by the Company in immediately
available funds, provided the Depositary makes its Same-Day Funds Settlement
System available to the Company.
Secondary trading in long-term notes and debentures of corporate issuers is
generally settled in clearing house or next-day funds. In contrast, as long as
the Notes are represented by Global Securities registered in the name of the
Depositary or its nominee, the Notes will trade in the Depositary's Same-Day
Funds Settlement System, and secondary market trading activity in the Notes will
therefore be required by the Depositary to settle in immediately available
funds. No assurance can be given as to the effect, if any, of settlement in
immediately available funds on trading activity in the Notes.
Any certificate for the Notes will bear the following legend: "This Note is
not a savings account, deposit or other obligation of a savings bank and is not
insured by the Savings Association Insurance Fund or the Bank Insurance Fund of
the Federal Deposit Insurance Corporation or any other government agency."
PS-7
<PAGE> 9
SUPPLEMENTAL PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Terms Agreement,
Agreement, dated July , 1996, which incorporates provisions from the
Distribution Agreement, dated July , 1996, the Company has agreed to sell to
each of the Underwriters named below (the "Underwriters"), and each of the
Underwriters has severally agreed to purchase, the respective principal amount
of the Notes set forth opposite its name below:
<TABLE>
<CAPTION>
Principal Amount
Underwriter of Notes
- ----------------------------------------------------------------------------- ----------------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated $
Lehman Brothers Inc.
Smith Barney Inc.
UBS Securities LLC
First of Michigan Corporation
Keefe, Bruyette & Woods, Inc.
McDonald & Company Securities, Inc.
Roney & Co. LLC
------------
Total $100,000,000
============
</TABLE>
The Underwriters have advised the Company that they propose to offer the
Notes directly to the public at the public offering price set forth on the cover
page of this Pricing Supplement, and to certain dealers at such price less a
concession not in excess of 0. % of the principal amount per Note. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of 0. % of the principal amount per Note to certain other dealers. After the
initial public offering, the public offering price, concession and discount may
be changed.
The Notes are a new issue of securities with no established trading market.
The Company has been advised by the Underwriters that they intend to make a
market in the Notes but are not obligated to do so and may discontinue any
market making at any time without notice. The Notes will not be listed on any
stock exchange, and there can be no assurance that there will be a secondary
market for the Notes or that there will be liquidity in such market if one
develops.
The Company has agreed to indemnify the several Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Plan of Distribution" in the accompanying Prospectus and
Prospectus Supplement.
PS-8
<PAGE> 10
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE
IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 26, 1996
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JULY , 1996)
$200,000,000
STANDARD FEDERAL BANCORPORATION, INC.
MEDIUM-TERM NOTES
DUE NINE MONTHS OR MORE FROM DATE OF ISSUE
[STANDARD FEDERAL LOGO]
Standard Federal Bancorporation, Inc. (the "Company"), may offer from
time to time up to $200,000,000 aggregate initial offering price, or the
equivalent thereof in one or more foreign or composite currencies, of its Senior
Medium-Term Notes (the "Senior Notes") and Subordinated Medium-Term Notes (the
"Subordinated Notes") Due Nine Months or More From Date of Issue (collectively,
the "Notes"). Such aggregate initial offering price is subject to reduction as a
result of the sale by the Company of other Debt Securities described in the
accompanying Prospectus. Each Note will mature on any day nine months or more
from the date of issue, as specified in the applicable pricing supplement hereto
(each, a "Pricing Supplement"), and may be subject to redemption at the option
of the Company or repayment at the option of the Holder thereof, in each case,
(Continued on next page.)
------------------------
SEE "RISK FACTORS" ON PAGE S-3 FOR A DISCUSSION OF CERTAIN RISKS THAT SHOULD
BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NOTES OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT, THE
PROSPECTUS OR ANY SUPPLEMENT HERETO. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
PRICE TO AGENT'S DISCOUNTS PROCEEDS TO
PUBLIC(1) AND COMMISSIONS(1)(2) COMPANY(1)(3)
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Per Note............................ 100% .125% - .750% 99.875% - 99.25%
- ----------------------------------------------------------------------------------------------------------
Total(4)............................ $200,000,000 $250,000 - $1,500,000 $199,750,000 - $198,500,000
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Lehman Brothers Inc., Smith Barney Inc., UBS Securities LLC, First of
Michigan Corporation, Keefe, Bruyette & Woods, Inc., McDonald & Company
Securities, Inc., and Roney & Co. LLC (the "Agents"), may purchase Notes, as
principal, from the Company, for resale to investors and other purchasers at
varying prices relating to prevailing market prices at the time of resale as
determined by the applicable Agent, or, if so specified in the applicable
Pricing Supplement, for resale at a fixed offering price. Unless otherwise
specified in the applicable Pricing Supplement, any Note sold to an Agent as
principal will be purchased by such Agent at a price equal to 100% of the
principal amount thereof less a percentage of the principal amount equal to
the commission applicable to an agency sale (as described below) of a Note
of identical maturity. If agreed to by the Company and an Agent, such Agent
may utilize its reasonable efforts on an agency basis to solicit offers to
purchase the Notes at 100% of the principal amount thereof, unless otherwise
specified in the applicable Pricing Supplement. The Company will pay a
commission to the Agent, ranging from .125% to .75% of the principal amount
of a Note, depending upon its stated maturity, sold through such Agent.
Commissions with respect to Notes with stated maturities in excess of 30
years that are sold through an Agent will be negotiated between the Company
and such Agent at the time of such sale. See "Plan of Distribution."
(2) The Company has agreed to indemnify the Agents against, and to provide
contribution with respect to, certain liabilities, including liabilities
under the Securities Act of 1933, as amended. See "Plan of Distribution."
(3) Before deducting expenses payable by the Company estimated at $610,000.
(4) Or the equivalent thereof in one or more foreign or composite currencies.
------------------------
The Notes are being offered on a continuous basis by the Company to or
through the Agents. Unless otherwise specified in the applicable Pricing
Supplement, the Notes will not be listed on any securities exchange and there
can be no assurance that the Notes offered hereby will be sold or that there
will be a secondary market for the Notes or that there will be liquidity in such
market if one develops. The Company reserves the right to cancel or modify the
offer made hereby without notice. The Company or an Agent, if it solicits the
offer on an agency basis, may reject any offer to purchase Notes in whole or in
part. See "Plan of Distribution."
------------------------
MERRILL LYNCH & CO.
LEHMAN BROTHERS
SMITH BARNEY INC.
UBS SECURITIES LLC
FIRST OF MICHIGAN CORPORATION
KEEFE, BRUYETTE & WOODS
MCDONALD & COMPANY
SECURITIES, INC.
RONEY & CO.
------------------------
The date of this Prospectus Supplement is July , 1996.
<PAGE> 11
(Continued from previous page)
in whole or in part, prior to its Stated Maturity Date, as specified in the
applicable Pricing Supplement. In addition, each Note may be denominated and/or
payable in United States dollars or a foreign or composite currency, as
specified in the applicable Pricing Supplement. The Notes, other than Foreign
Currency Notes, will be issued in minimum denominations of $1,000 and integral
multiples thereof, unless otherwise specified in the applicable Pricing
Supplement, while Foreign Currency Notes will be issued in the minimum
denominations specified in the applicable Pricing Supplement. The Subordinated
Notes will be subordinated to all existing and future Senior Indebtedness (as
defined in the accompanying Prospectus) of the Company. See "Description of Debt
Securities -- Subordination" in the accompanying Prospectus.
Unless otherwise specified in the applicable Pricing Supplement, Notes will
bear interest at fixed rates ("Fixed Rate Notes") or at floating rates
("Floating Rate Notes"). The applicable Pricing Supplement will specify whether
a Floating Rate Note is a Regular Floating Rate Note, a Floating Rate/Fixed Rate
Note or an Inverse Floating Rate Note and whether the rate of interest thereon
is determined by reference to one or more of the CD Rate, the CMT Rate, the
Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the Federal
Funds Rate, LIBOR, the Prime Rate or the Treasury Rate (each, an "Interest Rate
Basis"), or any other interest rate basis or formula, as adjusted by any Spread
and/or Spread Multiplier. Interest on each Floating Rate Note will accrue from
its date of issue and, unless otherwise specified in the applicable Pricing
Supplement, will be payable monthly, quarterly, semiannually or annually in
arrears, as specified in the applicable Pricing Supplement, and on the Maturity
Date. Unless otherwise specified in the applicable Pricing Supplement, the rate
of interest on each Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually, as specified in the applicable Pricing
Supplement. Interest on each Fixed Rate Note will accrue from its date of issue
and, unless otherwise specified in the applicable Pricing Supplement, will be
payable semiannually in arrears on July 1 and January 1 of each year and on the
Maturity Date. Notes may also be issued that do not bear any interest currently
or that bear interest at a below market rate. See "Description of Notes."
The interest rate, or formula for the determination of the interest rate,
if any, applicable to each Note and the other variable terms thereof will be
established by the Company on the date of issue of such Note and will be
specified in the applicable Pricing Supplement. Interest rates or formula and
other terms of Notes are subject to change by the Company, but no change will
affect any Note already issued or as to which an offer to purchase has been
accepted by the Company.
Each Note will be issued in fully registered book-entry form (a "Book-Entry
Note") or in certificated form (a "Certificated Note"), as specified in the
applicable Pricing Supplement. Each Book-Entry Note will be represented by one
or more fully registered global securities (the "Global Securities") deposited
with or on behalf of The Depository Trust Company (the "Depositary") and
registered in the name of the Depositary or the Depositary's nominee. Interests
in the Global Securities will be shown on, and transfers thereof will be
effected only through, records maintained by the Depositary (with respect to its
participants) and the Depositary's participants (with respect to beneficial
owners).
THE NOTES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS OF ANY
SAVINGS BANK OR NON-BANK SUBSIDIARY OF THE COMPANY AND ARE NOT INSURED BY THE
SAVINGS ASSOCIATION INSURANCE FUND OR THE BANK INSURANCE FUND OF THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
------------------------
IN CONNECTION WITH AN OFFERING OF NOTES PURCHASED BY AN AGENT AS PRINCIPAL ON A
FIXED OFFERING PRICE BASIS, SUCH AGENT MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF NOTES AT A LEVEL ABOVE THAT
WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE> 12
RISK FACTORS
This Prospectus Supplement does not describe all of the risks of an
investment in Notes that result from such Notes being denominated or payable in
or determined by reference to a currency or composite currency other than United
States dollars or to one or more interest rate, currency or other indices or
formulas. Such Notes are not an appropriate investment for investors who are
unsophisticated with respect to foreign currency transactions or transactions
involving the applicable interest rate index or currency index or other indices
or formulas.
STRUCTURE RISKS
An investment in Notes indexed, as to principal, premium, if any, and/or
interest, if any, to one or more currencies or composite currencies (including
exchange rates and swap indices between currencies or composite currencies),
commodities, interest rates or other indices or formulas, either directly or
inversely, entails significant risks that are not associated with similar
investments in a conventional fixed rate or floating rate debt security. Such
risks include, without limitation, the possibility that such indices or formulas
may be subject to significant changes, that the resulting interest rate will be
less than that payable on a conventional fixed rate or floating rate debt
security issued by the Company at the same time, that the repayment of principal
and/or premium, if any, can occur at times other than that expected by the
investor, and that the investor could lose all or a substantial portion of
principal and/or premium, if any, payable on the Maturity Date (as defined under
"Description of Notes -- General"). Such risks depend on a number of
interrelated factors, including economic, financial and political events, over
which the Company has no control. Additionally, if the formula used to determine
the amount of principal, premium, if any, and/or interest, if any, payable with
respect to such Notes contains a multiplier or leverage factor, the effect of
any change in the applicable index or indices or formula or formulas will be
magnified. In recent years, values of certain indices and formulas have been
highly volatile and such volatility may be expected to continue in the future.
Fluctuations in the value of any particular index or formula that have occurred
in the past are not necessarily indicative, however, of fluctuations that may
occur in the future.
Any optional redemption feature of Notes might affect the market value of
such Notes. Since the Company may be expected to redeem such Notes when
prevailing interest rates are relatively low, an investor might not be able to
reinvest the redemption proceeds at an effective interest rate as high as the
interest rate on such Notes.
The Notes will not have an established trading market when issued, and
there can be no assurance of a secondary market for the Notes or the liquidity
of such market if one develops. See "Plan of Distribution."
The secondary market for Notes will be affected by a number of factors
independent of the creditworthiness of the Company and the value of the
applicable index or indices or formula or formulas, including the complexity and
volatility of each such index or formula, the method of calculating the
principal, premium, if any, and/or interest, if any, in respect of such Notes,
the time remaining to the maturity of such Notes, the outstanding amount of such
Notes, any redemption features of such Notes, the amount of other debt
securities linked to such index or formula and the level, direction and
volatility of market interest rates generally. Such factors also will affect the
market value of such Notes. In addition, certain Notes may be designed for
specific investment objectives or strategies and, therefore, may have a more
limited secondary market and experience more price volatility than conventional
debt securities. Investors may not be able to sell such Notes readily or at
prices that will enable investors to realize their anticipated yield. No
investor should purchase Notes unless such investor understands and is able to
bear the risk that such Notes may not be readily saleable, that the value of
such Notes will fluctuate over time and that such fluctuations may be
significant.
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in Foreign Currency Notes (as defined under "Description of
Notes -- General") entails significant risks that are not associated with a
similar investment in a debt security denominated and payable in United States
dollars. Such risks include, without limitation, the possibility of significant
changes in the rate of exchange between the United States dollar and the
Specified Currency (as defined below under "Description of Notes -- General")
and the possibility of the imposition or modification of exchange controls by
the applicable governments or monetary authorities. Such risks generally depend
on factors over which the Company has no control, such as economic, financial
and political events and the supply and demand for the applicable currencies or
S-3
<PAGE> 13
composite currencies. In addition, if the formula used to determine the amount
of principal, premium, if any, and/or interest, if any, payable with respect to
Foreign Currency Notes contains a multiplier or leverage factor, the effect of
any change in the applicable currencies or composite currencies will be
magnified. In recent years, rates of exchange between the United States dollar
and foreign currencies or composite currencies have been highly volatile and
such volatility may be expected in the future. Fluctuations in any particular
exchange rate that have occurred in the past are not necessarily indicative,
however, of fluctuations that may occur in the future. Depreciation of the
Specified Currency applicable to a Foreign Currency Note against the United
States dollar would result in a decrease in the United States dollar-equivalent
yield of such Foreign Currency Note, in the United States dollar-equivalent
value of the principal and premium, if any, payable on the Maturity Date of such
Foreign Currency Note, and, generally, in the United States dollar-equivalent
market value of such Foreign Currency Note.
Governments or monetary authorities have imposed from time to time, and may
in the future impose or revise, exchange controls at or prior to the date on
which any payment of principal of, or premium, if any, or interest, if any, on,
a Foreign Currency Note is due, which could affect exchange rates as well as the
availability of the Specified Currency on such date. Even if there are no
exchange controls, it is possible that the Specified Currency would not be
available on the applicable payment date due to other circumstances beyond the
control of the Company. In such cases, the Company will be entitled to satisfy
its obligations in respect of such Foreign Currency Note in United States
dollars. See "Special Provisions Relating to Foreign Currency Notes --
Availability of Specified Currency."
CREDIT RATINGS
Any credit ratings assigned to the Company's medium-term note program may
not reflect the potential impact of all risks related to structure and other
factors on the market value of the Notes. Accordingly, prospective investors
should consult their own financial and legal advisors as to the risks entailed
by an investment in the Notes and the suitability of such Notes in light of
their particular circumstances.
DESCRIPTION OF NOTES
The Senior Notes will be issued as a series of Debt Securities under an
Indenture, dated as of July 1, 1996, as amended or supplemented from time to
time (the "Senior Indenture"), and the Subordinated Notes will be issued as a
series of Debt Securities under an Indenture dated as of July 1, 1996, as
amended or supplemented from time to time (the "Subordinated Indenture" and
collectively with the Senior Indenture, the "Indenture") between the Company and
The Chase Manhattan Bank, N.A., as trustee (the "Trustee"). The Indenture is
subject to, and governed by, the Trust Indenture Act of 1939, as amended. The
following summary of certain provisions of the Notes and the Indenture does not
purport to be complete and is qualified in its entirety by reference to the
actual provisions of the Notes and the Indenture. Capitalized terms used but not
defined herein shall have the meanings given to them in the accompanying
Prospectus, the Notes or the Indenture, as the case may be. The term "Debt
Securities," as used in this Prospectus Supplement, refers to all debt
securities, including the Notes, issued and issuable from time to time under the
Indenture. The following description of Notes will apply to each Note offered
hereby unless otherwise specified in the applicable Pricing Supplement.
GENERAL
The Notes will be unsecured obligations of the Company. The Senior Notes
will rank on a parity with other unsecured and unsubordinated indebtedness of
the Company. The Subordinated Notes will be subordinate in right of payment to
all existing and future Senior Indebtedness of the Company as described under
"Description of Debt Securities -- Subordination" in the accompanying
Prospectus. The Indenture does not limit the aggregate initial offering price of
Debt Securities that may be issued thereunder and Debt Securities may be issued
thereunder from time to time in one or more series up to the aggregate initial
offering price from time to time authorized by the Company for each series. The
Company may, from time to time, without the consent of the Holders of the Notes,
provide for the issuance of Notes or other Debt Securities under the Indenture
in addition to the $200,000,000 aggregate initial offering price of Notes
offered hereby.
The Notes are currently limited to up to $200,000,000 aggregate initial
offering price, or the equivalent thereof in one or more foreign or composite
currencies. The Notes will be offered on a continuous basis and will mature on
S-4
<PAGE> 14
any day nine months or more from their dates of issue (each, a "Stated Maturity
Date"), as specified in the applicable Pricing Supplement. Unless otherwise
specified in the applicable Pricing Supplement, interest-bearing Notes will
either be Fixed Rate Notes or Floating Rate Notes, as specified in the
applicable Pricing Supplement. Notes may also be issued that do not bear any
interest currently or that bear interest at a below market rate.
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will be denominated in, and payments of principal, premium, if any, and/or
interest, if any, will be made in, United States dollars. The Notes also may be
denominated in, and payments of principal, premium, if any, and/or interest, if
any, may be made in, one or more foreign currencies or composite currencies
("Foreign Currency Notes"). See "Special Provisions Relating to Foreign Currency
Notes -- Payment of Principal, Premium, if any, and Interest, if any." The
currency or composite currency in which a Note is denominated, whether United
States dollars or otherwise, is herein referred to as the "Specified Currency."
References herein to "United States dollars," "U.S. dollars" or "$" are to the
lawful currency of the United States of America (the "United States").
Unless otherwise specified in the applicable Pricing Supplement, purchasers
are required to pay for the Notes in the applicable Specified Currencies. At the
present time, there are limited facilities in the United States for the
conversion of United States dollars into foreign currencies or composite
currencies and vice versa, and commercial banks do not generally offer
non-United States dollar checking or savings account facilities in the United
States. Each applicable Agent is prepared to arrange for the conversion of
United States dollars into the Specified Currency in which the related Foreign
Currency Note is denominated in order to enable the purchaser to pay for such
Foreign Currency Note, provided that a request is made to such Agent on or prior
to the fifth Business Day (as hereinafter defined) preceding the date of
delivery of such Foreign Currency Note, or by such other day as determined by
such Agent. Each such conversion will be made by an Agent on such terms and
subject to such conditions, limitations and charges as such Agent may from time
to time establish in accordance with its regular foreign exchange practices. All
costs of exchange will be borne by the purchaser of each such Foreign Currency
Note. See "Special Provisions Relating to Foreign Currency Notes."
Interest rates offered by the Company with respect to the Notes may differ
depending upon, among other things, the aggregate principal amount of Notes
purchased in any single transaction. Interest rates or formula and other terms
of Notes are subject to change by the Company from time to time, but no such
change will affect any Note already issued or as to which an offer to purchase
has been accepted by the Company.
Each Note will be issued in fully registered form as a Book-Entry Note or a
Certificated Note. The authorized denominations of each Note other than a
Foreign Currency Note will be $1,000 and integral multiples thereof, unless
otherwise specified in the applicable Pricing Supplement, while the authorized
denominations of each Foreign Currency Note will be specified in the applicable
Pricing Supplement.
Payments of principal of, and premium, if any, and interest, if any, on,
Book-Entry Notes will be made by the Company through the Trustee to the
Depositary. See "-- Book-Entry Notes." Unless otherwise specified in the Pricing
Supplement, in the case of Certificated Notes, payment of principal and premium,
if any, due on the Stated Maturity Date or any prior date on which the
principal, or an installment of principal, of each Certificated Note becomes due
and payable, whether by the declaration of acceleration, notice of redemption at
the option of the Company, notice of the Holder's option to elect repayment or
otherwise (the Stated Maturity Date or such prior date, as the case may be, is
herein referred to as the "Maturity Date" with respect to the principal of the
applicable Note repayable on such date) will be made in immediately available
funds upon presentation and surrender thereof (or, in the case of any repayment
on an Optional Repayment Date, upon presentation and surrender thereof and a
duly completed election form in accordance with the provisions described below)
at the office or agency maintained by the Company for such purpose in the
Borough of Manhattan, the City of New York. The office of the Trustee in the
Borough of Manhattan, the City of New York, will initially be designated as such
office or agency. Payment of interest, if any, due on the Maturity Date of each
Certificated Note will be made to the person to whom payment of the principal
and premium, if any, shall be made. Payment of interest, if any, due on each
Certificated Note on any Interest Payment Date (as hereinafter defined) other
than the Maturity Date will be made by check mailed to the address of the Holder
entitled thereto as such address shall appear in the Security Register of the
Company. Notwithstanding the foregoing, a Holder of $10,000,000 (or, if the
applicable Specified Currency is other than United States dollars, the
equivalent thereof in such Specified Currency) or more in aggregate principal
amount of Notes
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(whether having identical or different terms and provisions) will be entitled to
receive interest payments, if any, on any Interest Payment Date other than the
Maturity Date by wire transfer of immediately available funds if appropriate
wire transfer instructions have been received in writing by the Trustee not less
than 15 days prior to such Interest Payment Date. Any such wire transfer
instructions received by the Trustee shall remain in effect until revoked by
such Holder. For special payment terms applicable to Foreign Currency Notes, see
"Special Provisions Relating to Foreign Currency Notes -- Payment of Principal,
Premium, if any, and Interest, if any."
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law, regulation or executive order to close in The
City of New York; provided, however, that, with respect to Foreign Currency
Notes, such day is also not a day on which banking institutions are authorized
or required by law, regulation or executive order to close in the Principal
Financial Center (as hereinafter defined) of the country issuing the Specified
Currency (or, in the case of European Currency Units ("ECU"), is not a day that
appears as an ECU non-settlement day on the display designated as "ISDE" on the
Reuter Monitor Money Rates Service (or a day so designated by the ECU Banking
Association) or, if ECU non-settlement days do not appear on that page (and are
not so designated), is not a day on which payments in ECU cannot be settled in
the international interbank market); provided, further, that, with respect to
Notes as to which LIBOR is an applicable Interest Rate Basis, such day is also a
London Business Day (as hereinafter defined). "London Business Day" means (i) if
the Index Currency (as hereinafter defined) is other than ECU, any day on which
dealings in such Index Currency are transacted in the London interbank market or
(ii) if the Index Currency is ECU, any day that does not appear as an ECU
non-settlement day on the display designated as "ISDE" on the Reuter Monitor
Money Rates Service (or a day so designated by the ECU Banking Association) or,
if ECU non-settlement days do not appear on that page (and are not so
designated), is not a day on which payments in ECU cannot be settled in the
international interbank market.
"Principal Financial Center" means the capital city of the country issuing
the Specified Currency or, solely with respect to the calculation of LIBOR, the
Index Currency, except that with respect to United States dollars, Australian
dollars, Deutsche marks, Dutch guilders, Italian lire, Swiss francs and ECUs,
the Principal Financial Center shall be The City of New York, Sydney, Frankfurt,
Amsterdam, Milan, Zurich and Luxembourg, respectively.
Book-Entry Notes may be transferred or exchanged only through the
Depositary. See "-- Book-Entry Notes." Registration of transfer or exchange of
Certificated Notes will be made at the office or agency maintained by the
Company for such purpose in the Borough of Manhattan, The City of New York. No
service charge will be made by the Company or the Trustee for any such
registration of transfer or exchange of Notes, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith (other than exchanges pursuant to the
Indenture not involving any transfer).
REDEMPTION AT THE OPTION OF THE COMPANY
Unless otherwise specified in the applicable Pricing Supplement, the Notes
will not be subject to any sinking fund. The Notes will be redeemable at the
option of the Company prior to the Stated Maturity Date only if an Initial
Redemption Date is specified in the applicable Pricing Supplement. If so
specified, the Notes will be subject to redemption at the option of the Company
on any date on and after the applicable Initial Redemption Date in whole or from
time to time in part in increments of $1,000 or such other minimum denomination
specified in such Pricing Supplement (provided that any remaining principal
amount thereof shall be at least $1,000 or such minimum denomination), at the
applicable Redemption Price (as hereinafter defined), together with unpaid
interest accrued to the date of redemption, on notice given not more than 60 nor
less than 30 calendar days prior to the date of redemption and in accordance
with the provisions of the Indenture. "Redemption Price," with respect to a
Note, means an amount equal to the Initial Redemption Percentage specified in
the applicable Pricing Supplement (as adjusted by the Annual Redemption
Percentage Reduction, if applicable) multiplied by the unpaid principal amount
to be redeemed. The Initial Redemption Percentage, if any, applicable to a Note
shall decline at each anniversary of the Initial Redemption Date by an amount
equal to the applicable Annual Redemption Percentage Reduction, if any, until
the Redemption Price is equal to 100% of the unpaid principal amount to be
redeemed. See also "-- Original Issue Discount Notes."
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REPAYMENT AT THE OPTION OF THE HOLDER
The Notes will be repayable by the Company at the option of the Holders
thereof prior to the Stated Maturity Date only if one or more Optional Repayment
Dates are specified in the applicable Pricing Supplement. If so specified, the
Notes will be subject to repayment at the option of the Holders thereof on any
Optional Repayment Date in whole or from time to time in part in increments of
$1,000 or such other minimum denomination specified in the applicable Pricing
Supplement (provided that any remaining principal amount thereof shall be at
least $1,000 or such other minimum denomination), at a repayment price equal to
100% of the unpaid principal amount to be repaid, together with unpaid interest
accrued to the date of repayment. For any Note to be repaid, such Note must be
received, together with the form thereon entitled "Option to Elect Repayment"
duly completed, by the Trustee at its Corporate Trust Office (or such other
address of which the Company shall from time to time notify the Holders) not
more than 60 nor less than 30 calendar days prior to the date of repayment.
Exercise of such repayment option by the Holder will be irrevocable. See also
"-- Original Issue Discount Notes."
Only the Depositary may exercise the repayment option in respect of Global
Securities representing Book-Entry Notes. Accordingly, Beneficial Owners (as
hereinafter defined) of Global Securities that desire to have all or any portion
of the Book-Entry Notes represented by such Global Securities repaid must
instruct the Participant (as hereinafter defined) through which they own their
interest to direct the Depositary to exercise the repayment option on their
behalf by delivering the related Global Security and duly completed election
form to the Trustee as aforesaid. In order to ensure that such Global Security
and election form are received by the Trustee on a particular day, the
applicable Beneficial Owner must so instruct the Participant through which it
owns its interest before such Participant's deadline for accepting instructions
for that day. Different firms may have different deadlines for accepting
instructions from their customers. Accordingly, Beneficial Owners should consult
the Participants through which they own their interest for the respective
deadlines for such Participants. All instructions given to Participants from
Beneficial Owners of Global Securities relating to the option to elect repayment
shall be irrevocable. In addition, at the time such instructions are given, each
such Beneficial Owner shall cause the Participant through which it owns its
interest to transfer such Beneficial Owner's interest in the Global Security or
Securities representing the related Book-Entry Notes, on the Depositary's
records, to the Trustee. See "-- Book-Entry Notes."
If applicable, the Company will comply with the requirements of Rule 14e-1
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
any other securities laws or regulations in connection with any such repayment.
The Company may at any time purchase Notes at any price or prices in the
open market or otherwise. Notes so purchased by the Company may, at the
discretion of the Company, be held, resold or surrendered to the Trustee for
cancellation.
INTEREST
General
Unless otherwise specified in the applicable Pricing Supplement, each
interest-bearing Note will bear interest from its date of issue at the rate per
annum, in the case of a Fixed Rate Note, or pursuant to the interest rate
formula, in the case of a Floating Rate Note, in each case as specified in the
applicable Pricing Supplement, until the principal thereof is paid or duly made
available for payment. Unless otherwise specified in the applicable Pricing
Supplement, interest payments in respect of Fixed Rate Notes and Floating Rate
Notes will equal the amount of interest accrued from and including the
immediately preceding Interest Payment Date in respect of which interest has
been paid or duly made available for payment (or from and including the date of
issue, if no interest has been paid or duly made available for payment) to but
excluding the applicable Interest Payment Date or the Maturity Date, as the case
may be (each, an "Interest Period").
Interest on Fixed Rate Notes and Floating Rate Notes will be payable in
arrears on each Interest Payment Date and on the Maturity Date in United States
dollars ($). Unless otherwise specified in the applicable Pricing Supplement,
the first payment of interest on any such Note originally issued between a
Record Date (as hereinafter defined) and the related Interest Payment Date will
be made on the Interest Payment Date immediately following the next succeeding
Record Date to the Holder on such next succeeding Record Date. Unless otherwise
specified in the
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applicable Pricing Supplement, a "Record Date" shall be the fifteenth calendar
day (whether or not a Business Day) immediately preceding the related Interest
Payment Date.
Fixed Rate Notes
Unless otherwise specified in the applicable Pricing Supplement, interest
on Fixed Rate Notes will be payable on January 1 and July 1 of each year (each,
an "Interest Payment Date") and on the Maturity Date in United States dollars
($). Unless otherwise specified in the applicable Pricing Supplement, interest
on Fixed Rate Notes will be computed on the basis of a 360-day year of twelve
30-day months.
If any Interest Payment Date or the Maturity Date of a Fixed Rate Note
falls on a day that is not a Business Day, the required payment of principal,
premium, if any, and/or interest will be made on the next succeeding Business
Day as if made on the date such payment was due, and no interest will accrue on
such payment for the period from and after such Interest Payment Date or the
Maturity Date, as the case may be, to the date of such payment on the next
succeeding Business Day.
Floating Rate Notes
Unless otherwise specified in the applicable Pricing Supplement, Floating
Rate Notes will be issued as described below. The applicable Pricing Supplement
will specify certain terms with respect to which each Floating Rate Note is
being delivered, including: whether such Floating Rate Note is a "Regular
Floating Rate Note," a "Floating Rate/Fixed Rate Note" or an "Inverse Floating
Rate Note," the Fixed Rate Commencement Date, if applicable, Fixed Interest
Rate, if applicable, Interest Rate Basis or Bases, Initial Interest Rate, if
any, Initial Interest Reset Date, Interest Reset Period and Dates, Interest
Payment Period and Dates, Index Maturity, Maximum Interest Rate and/or Minimum
Interest Rate, if any, and Spread and/or Spread Multiplier, if any, as such
terms are defined below. If one or more of the applicable Interest Rate Bases is
LIBOR or the CMT Rate, the applicable Pricing Supplement will also specify the
Index Currency, if any, and Designated LIBOR Page or the Designated CMT Maturity
Index and Designated CMT Telerate Page, respectively, as such terms are defined
below. Interest will be paid in United States dollars ($).
The interest rate borne by the Floating Rate Notes will be determined as
follows:
(i) Unless such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note" or an "Inverse Floating Rate Note" or as having an
Addendum attached or having "Other/Additional Provisions" apply relating to
a different interest rate formula, such Floating Rate Note will be
designated as a "Regular Floating Rate Note" and, except as described below
or in the applicable Pricing Supplement, will bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases (a)
plus or minus the applicable Spread, if any, and/or (b) multiplied by the
applicable Spread Multiplier, if any. Commencing on the Initial Interest
Reset Date, the rate at which interest on such Regular Floating Rate Note
shall be payable shall be reset as of each Interest Reset Date; provided,
however, that the interest rate in effect for the period, if any, from the
date of issue to the Initial Interest Reset Date will be the Initial
Interest Rate.
(ii) If such Floating Rate Note is designated as a "Floating
Rate/Fixed Rate Note," then, except as described below or in the applicable
Pricing Supplement, such Floating Rate Note will bear interest at the rate
determined by reference to the applicable Interest Rate Basis or Bases (a)
plus or minus the applicable Spread, if any, and/or (b) multiplied by the
applicable Spread Multiplier, if any. Commencing on the Initial Interest
Reset Date, the rate at which interest on such Floating Rate/Fixed Rate
Note shall be payable shall be reset as of each Interest Reset Date;
provided, however, that (y) the interest rate in effect for the period, if
any, from the date of issue to the Initial Interest Reset Date will be the
Initial Interest Rate and (z) the interest rate in effect for the period
commencing on the Fixed Rate Commencement Date to the Maturity Date shall
be the Fixed Interest Rate, if such rate is specified in the applicable
Pricing Supplement or, if no such Fixed Interest Rate is specified, the
interest rate in effect thereon on the day immediately preceding the Fixed
Rate Commencement Date.
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(iii) If such Floating Rate Note is designated as an "Inverse Floating
Rate Note," then, except as described below or in the applicable Pricing
Supplement, such Floating Rate Note will bear interest at the Fixed
Interest Rate minus the rate determined by reference to the applicable
Interest Rate Basis or Bases (a) plus or minus the applicable Spread, if
any, and/or (b) multiplied by the applicable Spread Multiplier, if any;
provided, however, that, unless otherwise specified in the applicable
Pricing Supplement, the interest rate thereon will not be less than zero.
Commencing on the Initial Interest Reset Date, the rate at which interest
on such Inverse Floating Rate Note shall be payable shall be reset as of
each Interest Reset Date; provided, however, that the interest rate in
effect for the period, if any, from the date of issue to the Initial
Interest Reset Date will be the Initial Interest Rate.
The "Spread" is the number of basis points to be added to or subtracted
from the related Interest Rate Basis or Bases applicable to such Floating Rate
Note. The "Spread Multiplier" is the percentage of the related Interest Rate
Basis or Bases applicable to such Floating Rate Note by which such Interest Rate
Basis or Bases will be multiplied to determine the applicable interest rate on
such Floating Rate Note. The "Index Maturity" is the period to maturity of the
instrument or obligation with respect to which the related Interest Rate Basis
or Bases will be calculated.
Unless otherwise specified in the applicable Pricing Supplement, the
interest rate with respect to each Interest Rate Basis will be determined in
accordance with the applicable provisions below. Except as set forth above or in
the applicable Pricing Supplement, the interest rate in effect on each day shall
be (i) if such day is an Interest Reset Date, the interest rate determined as of
the Interest Determination Date (as hereinafter defined) immediately preceding
such Interest Reset Date or (ii) if such day is not an Interest Reset Date, the
interest rate determined as of the Interest Determination Date immediately
preceding the most recent Interest Reset Date.
Interest on Floating Rate Notes will be determined by reference to the
applicable Interest Rate Basis or Interest Rate Bases, which may, as described
below, include (i) the CD Rate, (ii) the CMT Rate, (iii) the Commercial Paper
Rate, (iv) the Eleventh District Cost of Funds Rate, (v) the Federal Funds Rate,
(vi) LIBOR, (vii) the Prime Rate, (viii) the Treasury Rate, or (ix) such other
Interest Rate Basis or interest rate formula as may be specified in the
applicable Pricing Supplement; provided, however, that the interest rate in
effect on a Floating Rate Note for the period, if any, from the date of issue to
the Initial Interest Reset Date will be the Initial Interest Rate; provided,
further, that with respect to a Floating Rate/Fixed Rate Note the interest rate
in effect for the period commencing on the Fixed Rate Commencement Date to the
Maturity Date shall be the Fixed Interest Rate, if such rate is specified in the
applicable Pricing Supplement or, if no such Fixed Interest Rate is specified,
the interest rate in effect thereon on the day immediately preceding the Fixed
Rate Commencement Date.
The applicable Pricing Supplement will specify whether the rate of interest
on the related Floating Rate Note will be reset daily, weekly, monthly,
quarterly, semiannually or annually or on such other specified basis (each, an
"Interest Reset Period") and the dates on which such rate of interest will be
reset (each, an "Interest Reset Date"). Unless otherwise specified in the
applicable Pricing Supplement, the Interest Reset Dates will be, in the case of
Floating Rate Notes which reset: (i) daily, each Business Day; (ii) weekly, the
Wednesday of each week (with the exception of weekly reset Floating Rate Notes
as to which the Treasury Rate is an applicable Interest Rate Basis, which will
reset the Tuesday of each week, except as described below); (iii) monthly, the
third Wednesday of each month (with the exception of monthly reset Floating Rate
Notes as to which the Eleventh District Cost of Funds Rate is an applicable
Interest Rate Basis, which will reset on the first calendar day of the month);
(iv) quarterly, the third Wednesday of March, June, September and December of
each year; (v) semiannually, the third Wednesday of the two months specified in
the applicable Pricing Supplement; and (vi) annually, the third Wednesday of the
month specified in the applicable Pricing Supplement; provided however, that,
with respect to Floating Rate/Fixed Rate Notes, the rate of interest thereon
will not reset after the applicable Fixed Rate Commencement Date. If any
Interest Reset Date for any Floating Rate Note would otherwise be a day that is
not a Business Day, such Interest Reset Date will be postponed to the next
succeeding Business Day, except that in the case of a Floating Rate Note as to
which LIBOR is an applicable Interest Rate Basis and such Business Day falls in
the next succeeding calendar month, such Interest Reset Date will be the
immediately preceding Business Day. In addition, in the case of a Floating Rate
Note as to which the Treasury Rate is an applicable Interest Rate Basis and the
Interest Determination Date would otherwise fall on an Interest Reset Date, then
such Interest Reset Date will be postponed to the next succeeding Business Day.
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The interest rate applicable to each Interest Reset Period commencing on
the related Interest Reset Date will be the rate determined as of the applicable
Interest Determination Date and calculated on or prior to the Calculation Date
(as hereinafter defined), except with respect to LIBOR and the Eleventh District
Cost of Funds Rate, which will be calculated as of such Interest Determination
Date. The "Interest Determination Date" with respect to the CD Rate, the CMT
Rate, the Commercial Paper Rate, the Federal Funds Rate and the Prime Rate will
be the second Business Day immediately preceding the applicable Interest Reset
Date; the "Interest Determination Date" with respect to the Eleventh District
Cost of Funds Rate will be the last working day of the month immediately
preceding the applicable Interest Reset Date on which the Federal Home Loan Bank
of San Francisco (the "FHLB of San Francisco") publishes the Index (as
hereinafter defined); and the "Interest Determination Date" with respect to
LIBOR will be the second London Business Day immediately preceding the
applicable Interest Reset Date, unless the Index Currency is British pounds
sterling, in which case the "Interest Determination Date" will be the applicable
Interest Reset Date. With respect to the Treasury Rate, the "Interest
Determination Date" will be the day in the week in which the applicable Interest
Reset Date falls on which day Treasury Bills (as hereinafter defined) are
normally auctioned (Treasury Bills are normally sold at an auction held on
Monday of each week, unless that day is a legal holiday, in which case the
auction is normally held on the following Tuesday, except that such auction may
be held on the preceding Friday); provided, however, that if an auction is held
on the Friday of the week preceding the applicable Interest Reset Date, the
Interest Determination Date will be such preceding Friday. The "Interest
Determination Date" pertaining to a Floating Rate Note the interest rate of
which is determined by reference to two or more Interest Rate Bases will be the
most recent Business Day which is at least two Business Days prior to the
applicable Interest Reset Date for such Floating Rate Note on which each
Interest Rate Basis is determinable. Each Interest Rate Basis will be determined
as of such date, and the applicable interest rate will take effect on the
applicable Interest Reset Date.
A Floating Rate Note may also have either or both of the following: (i) a
Maximum Interest Rate, or ceiling, that may accrue during any Interest Period
and (ii) a Minimum Interest Rate, or floor, that may accrue during any Interest
Period. In addition to any Maximum Interest Rate that may apply to any Floating
Rate Note, the interest rate on Floating Rate Notes will in no event be higher
than the maximum rate permitted by New York law, as the same may be modified by
United States law of general application.
Except as provided below or in the applicable Pricing Supplement, interest
will be payable, in the case of Floating Rate Notes which reset: (i) daily,
weekly or monthly, on the third Wednesday of each month or on the third
Wednesday of March, June, September and December of each year, as specified in
the applicable Pricing Supplement; (ii) quarterly, on the third Wednesday of
March, June, September and December of each year; (iii) semiannually, on the
third Wednesday of the two months of each year specified in the applicable
Pricing Supplement; and (iv) annually, on the third Wednesday of the month of
each year specified in the applicable Pricing Supplement (each, an "Interest
Payment Date") and, in each case, on the Maturity Date. If any Interest Payment
Date other than the Maturity Date for any Floating Rate Note would otherwise be
a day that is not a Business Day, such Interest Payment Date will be postponed
to the next succeeding Business Day, except that in the case of a Floating Rate
Note as to which LIBOR is an applicable Interest Rate Basis and such Business
Day falls in the next succeeding calendar month, such Interest Payment Date will
be the immediately preceding Business Day. If the Maturity Date of a Floating
Rate Note falls on a day that is not a Business Day, the required payment of
principal, premium, if any, and interest will be made on the next succeeding
Business Day as if made on the date such payment was due, and no interest will
accrue on such payment for the period from and after the Maturity Date to the
date of such payment on the next succeeding Business Day.
All percentages resulting from any calculation on Floating Rate Notes will
be rounded to the nearest one hundred-thousandth of a percentage point, with
five-one millionths of a percentage point rounded upwards (e.g., 9.876545% (or
.09876545) would be rounded to 9.87655% (or .0987655)), and all amounts used in
or resulting from such calculation on Floating Rate Notes will be rounded, in
the case of United States dollars, to the nearest cent or, in the case of a
foreign currency or composite currency, to the nearest unit (with one-half cent
or unit being rounded upwards).
With respect to each Floating Rate Note, accrued interest is calculated by
multiplying its principal amount by an accrued interest factor. Such accrued
interest factor is computed by adding the interest factor calculated for each
day in the applicable Interest Period. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for each such day will be
computed by dividing the interest rate applicable to such day by 360, in the
case of Floating
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Rate Notes for which an applicable Interest Rate Basis is the CD Rate, the
Commercial Paper Rate, the Eleventh District Cost of Funds Rate, the Federal
Funds Rate, LIBOR or the Prime Rate, or by the actual number of days in the year
in the case of Floating Rate Notes for which an applicable Interest Rate Basis
is the CMT Rate or the Treasury Rate. Unless otherwise specified in the
applicable Pricing Supplement, the interest factor for Floating Rate Notes for
which the interest rate is calculated with reference to two or more Interest
Rate Bases will be calculated in each period in the same manner as if only one
of the applicable Interest Rate Bases applied as specified in the applicable
Pricing Supplement.
Unless otherwise specified in the applicable Pricing Supplement, the
Trustee will be the "Calculation Agent." Upon request of the Holder of any
Floating Rate Note, the Calculation Agent will disclose the interest rate then
in effect and, if determined, the interest rate that will become effective as a
result of a determination made for the next succeeding Interest Reset Date with
respect to such Floating Rate Note. Unless otherwise specified in the applicable
Pricing Supplement, the "Calculation Date," if applicable, pertaining to any
Interest Determination Date will be the earlier of (i) the tenth calendar day
after such Interest Determination Date, or, if such day is not a Business Day,
the next succeeding Business Day or (ii) the Business Day immediately preceding
the applicable Interest Payment Date or the Maturity Date, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, the
Calculation Agent shall determine each Interest Rate Basis in accordance with
the following provisions.
CD Rate. Unless otherwise specified in the applicable Pricing Supplement,
"CD Rate" means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference to
the CD Rate (a "CD Rate Interest Determination Date"), the rate on such date for
negotiable United States dollar certificates of deposit having the Index
Maturity specified in the applicable Pricing Supplement as published by the
Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication ("H.15(519)")
under the heading "CDs (Secondary Market)," or, if not published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on such CD Rate
Interest Determination Date for negotiable United States dollar certificates of
deposit of the Index Maturity specified in the applicable Pricing Supplement as
published by the Federal Reserve Bank of New York in its daily statistical
release "Composite 3:30 P.M. Quotations for U.S. Government Securities" or any
successor publication ("Composite Quotations") under the heading "Certificates
of Deposit." If such rate is not yet published in either H.15(519) or Composite
Quotations by 3:00 P.M., New York City time, on the related Calculation Date,
then the CD Rate on such CD Rate Interest Determination Date will be calculated
by the Calculation Agent and will be the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on such CD Rate Interest
Determination Date, of three leading nonbank dealers in negotiable United States
dollar certificates of deposit in The City of New York (which may include the
Agent or its affiliates) selected by the Calculation Agent for negotiable United
States dollar certificates of deposit of major United States money center banks
for negotiable certificates of deposit with a remaining maturity closest to the
Index Maturity specified in the applicable Pricing Supplement in an amount that
is representative for a single transaction in that market at that time;
provided, however, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the CD Rate determined as of such CD
Rate Interest Determination Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
CMT Rate. Unless otherwise specified in the applicable Pricing Supplement,
"CMT Rate" means, with respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference to
the CMT Rate (a "CMT Rate Interest Determination Date"), the rate displayed on
the Designated CMT Telerate Page under the caption "...Treasury Constant
Maturities...Federal Reserve Board Release H.15...Mondays Approximately 3:45
P.M.," under the column for the Designated CMT Maturity Index for (i) if the
Designated CMT Telerate Page is 7055, the rate on such CMT Rate Interest
Determination Date and (ii) if the Designated CMT Telerate Page is 7052, the
weekly or monthly average, as specified in the applicable Pricing Supplement,
for the week or the month, as applicable, ended immediately preceding the week
or the month, as applicable, in which the related CMT Rate Interest
Determination Date occurs. If such rate is no longer displayed on the relevant
page or is not displayed by 3:00 P.M., New York City time, on the related
Calculation Date, then the CMT Rate for such CMT Rate Interest Determination
Date will be such treasury constant maturity rate for the Designated CMT
Maturity Index as published in H.15(519). If such rate is no longer published or
is not published by 3:00 P.M., New York City time, on the related Calculation
Date, then the CMT Rate on such CMT Rate Interest Determination Date will be
such
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<PAGE> 21
treasury constant maturity rate for the Designated CMT Maturity Index (or other
United States Treasury rate for the Designated CMT Maturity Index) for the CMT
Rate Interest Determination Date with respect to such Interest Reset Date as may
then be published by either the Board of Governors of the Federal Reserve System
or the United States Department of the Treasury that the Calculation Agent
determines to be comparable to the rate formerly displayed on the Designated CMT
Telerate Page and published in H.15(519). If such information is not provided by
3:00 P.M., New York City time, on the related Calculation Date, then the CMT
Rate on the CMT Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity, based on the arithmetic mean
of the secondary market closing offer side prices as of approximately 3:30 P.M.,
New York City time, on such CMT Rate Interest Determination Date reported,
according to their written records, by three leading primary United States
government securities dealers (each, a "Reference Dealer") in The City of New
York (which may include the Agent or its affiliates) selected by the Calculation
Agent (from five such Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of equality, one of the
lowest)), for the most recently issued direct noncallable fixed rate obligations
of the United States ("Treasury Notes") with an original maturity of
approximately the Designated CMT Maturity Index and a remaining term to maturity
of not less than such Designated CMT Maturity Index minus one year. If the
Calculation Agent is unable to obtain three such Treasury Note quotations, the
CMT Rate on such CMT Rate Interest Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity based on the arithmetic mean
of the secondary market offer side prices as of approximately 3:30 P.M., New
York City time, on such CMT Rate Interest Determination Date of three Reference
Dealers in The City of New York (from five such Reference Dealers selected by
the Calculation Agent and eliminating the highest quotation (or, in the event of
equality, one of the highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for Treasury Notes with an original maturity of
the number of years that is the next highest to the Designated CMT Maturity
Index and a remaining term to maturity closest to the Designated CMT Maturity
Index and in an amount of at least $100 million. If three or four (and not five)
of such Reference Dealers are quoting as described above, then the CMT Rate will
be based on the arithmetic mean of the offer prices obtained and neither the
highest nor the lowest of such quotes will be eliminated; provided, however,
that if fewer than three Reference Dealers so selected by the Calculation Agent
are quoting as mentioned herein, the CMT Rate determined as of such CMT Rate
Interest Determination Date will be the CMT Rate in effect on such CMT Rate
Interest Determination Date. If two Treasury Notes with an original maturity as
described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the Calculation Agent will
obtain quotations for the Treasury Note with the shorter remaining term to
maturity.
"Designated CMT Telerate Page" means the display on the Dow Jones Telerate
Service (or any successor service) on the page specified in the applicable
Pricing Supplement (or any other page as may replace such page on such service
(or any successor service)) for the purpose of displaying Treasury Constant
Maturities as reported in H.15(519). If no such page is specified in the
applicable Pricing Supplement, the Designated CMT Telerate Page shall be 7052
for the most recent week.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in the applicable Pricing Supplement with respect to which the CMT
Rate will be calculated. If no such maturity is specified in the applicable
Pricing Supplement, the Designated CMT Maturity Index shall be 2 years.
Commercial Paper Rate. Unless otherwise specified in the applicable Pricing
Supplement, "Commercial Paper Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest rate
is determined with reference to the Commercial Paper Rate (a "Commercial Paper
Rate Interest Determination Date"), the Money Market Yield (as hereinafter
defined) on such date of the rate for commercial paper having the Index Maturity
specified in the applicable Pricing Supplement as published in H.15(519) under
the heading "Commercial Paper." In the event that such rate is not published by
3:00 P.M., New York City time, on the related Calculation Date, then the
Commercial Paper Rate on such Commercial Paper Rate Interest Determination Date
will be the Money Market Yield of the rate for commercial paper having the Index
Maturity specified in the applicable Pricing Supplement as published in
Composite Quotations under the heading "Commercial Paper" (with an Index
Maturity of one month or three months being deemed to be equivalent to an Index
Maturity of 30 days or 90 days, respectively). If such rate is not yet published
in either H.15(519) or Composite Quotations by 3:00 P.M., New York
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City time, on the related Calculation Date, then the Commercial Paper Rate on
such Commercial Paper Rate Interest Determination Date will be calculated by the
Calculation Agent and will be the Money Market Yield of the arithmetic mean of
the offered rates at approximately 11:00 A.M., New York City time, on such
Commercial Paper Rate Interest Determination Date of three leading dealers of
commercial paper in The City of New York (which may include the Agent or its
affiliates) selected by the Calculation Agent for commercial paper having the
Index Maturity specified in the applicable Pricing Supplement placed for an
industrial issuer whose bond rating is "AA", or the equivalent, from a
nationally recognized statistical rating organization; provided, however, that
if the dealers so selected by the Calculation Agent are not quoting as mentioned
in this sentence, the Commercial Paper Rate determined as of such Commercial
Paper Rate Interest Determination Date will be the Commercial Paper Rate in
effect on such Commercial Paper Rate Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage) calculated
in accordance with the following formula:
<TABLE>
<S> <C> <C>
D X 360
Money Market Yield = X 100
---------------
360 - (D X M)
</TABLE>
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the Interest Period for which interest is being calculated.
Eleventh District Cost of Funds Rate. Unless otherwise specified in the
applicable Pricing Supplement, "Eleventh District Cost of Funds Rate" means,
with respect to any Interest Determination Date relating to a Floating Rate Note
for which the interest rate is determined with reference to the Eleventh
District Cost of Funds Rate (an "Eleventh District Cost of Funds Rate Interest
Determination Date"), the rate equal to the monthly weighted average cost of
funds for the calendar month immediately preceding the month in which such
Eleventh District Cost of Funds Rate Interest Determination Date falls, as set
forth under the caption "11th District" on Telerate Page 7058 as of 11:00 A.M.,
San Francisco time, on such Eleventh District Cost of Funds Rate Interest
Determination Date. If such rate does not appear on Telerate Page 7058 on such
Eleventh District Cost of Funds Rate Interest Determination Date, then the
Eleventh District Cost of Funds Rate on such Eleventh District Cost of Funds
Rate Interest Determination Date shall be the monthly weighted average cost of
funds paid by member institutions of the Eleventh Federal Home Loan Bank
District that was most recently announced (the "Index") by the FHLB of San
Francisco as such cost of funds for the calendar month immediately preceding
such Eleventh District Cost of Funds Rate Interest Determination Date. If the
FHLB of San Francisco fails to announce the Index on or prior to such Eleventh
District Cost of Funds Rate Interest Determination Date for the calendar month
immediately preceding such Eleventh District Cost of Funds Rate Interest
Determination Date, the Eleventh District Cost of Funds Rate determined as of
such Eleventh District Cost of Funds Rate Interest Determination Date will be
the Eleventh District Cost of Funds Rate in effect on such Eleventh District
Cost of Funds Rate Interest Determination Date.
Federal Funds Rate. Unless otherwise specified in the applicable Pricing
Supplement, "Federal Funds Rate" means, with respect to any Interest
Determination Date relating to a Floating Rate Note for which the interest rate
is determined with reference to the Federal Funds Rate (a "Federal Funds Rate
Interest Determination Date"), the rate on such date for United States dollar
federal funds as published in H.15(519) under the heading "Federal Funds
(Effective)" or, if not published by 3:00 P.M., New York City time, on the
related Calculation Date, the rate on such Federal Funds Rate Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate." If such rate is not published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the
related Calculation Date, then the Federal Funds Rate on such Federal Funds Rate
Interest Determination Date will be calculated by the Calculation Agent and will
be the arithmetic mean of the rates for the last transaction in overnight United
States dollar federal funds arranged by three leading brokers of federal funds
transactions in The City of New York (which may include the Agent or its
affiliates) selected by the Calculation Agent prior to 9:00 A.M., New York City
time, on such Federal Funds Rate Interest Determination Date; provided, however,
that if the brokers so selected by the Calculation Agent are not quoting as
mentioned in this sentence, the Federal Funds Rate determined as of such Federal
Funds Rate Interest Determination Date will be the Federal Funds Rate in effect
on such Federal Funds Rate Interest Determination Date.
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<PAGE> 23
LIBOR. Unless otherwise specified in the applicable Pricing Supplement,
"LIBOR" means the rate determined in accordance with the following provisions:
(i) With respect to any Interest Determination Date relating to a
Floating Rate Note for which the interest rate is determined with reference
to LIBOR (a "LIBOR Interest Determination Date"), LIBOR will be either: (a)
if "LIBOR Reuters" is specified in the applicable Pricing Supplement, the
arithmetic mean of the offered rates (unless the Designated LIBOR Page by
its terms provides only for a single rate, in which case such single rate
shall be used) for deposits in the Index Currency having the Index Maturity
specified in such Pricing Supplement, commencing on the applicable Interest
Reset Date, that appear (or, if only a single rate is required as
aforesaid, appears) on the Designated LIBOR Page as of 11:00 A.M., London
time, on such LIBOR Interest Determination Date, or (b) if "LIBOR Telerate"
is specified in the applicable Pricing Supplement or if neither "LIBOR
Reuters" nor "LIBOR Telerate" is specified in the applicable Pricing
Supplement as the method for calculating LIBOR, the rate for deposits in
the Index Currency having the Index Maturity specified in such Pricing
Supplement, commencing on such Interest Reset Date, that appears on the
Designated LIBOR Page as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date. If fewer than two such offered rates so appear, or if
no such rate so appears, as applicable, LIBOR on such LIBOR Interest
Determination Date will be determined in accordance with the provisions
described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear, or no rate appears, as the case may
be, on the Designated LIBOR Page as specified in clause (i) above, the
Calculation Agent will request the principal London offices of each of four
major reference banks in the London interbank market, as selected by the
Calculation Agent, to provide the Calculation Agent with its offered
quotation for deposits in the Index Currency for the period of the Index
Maturity specified in the applicable Pricing Supplement, commencing on the
applicable Interest Reset Date, to prime banks in the London interbank
market at approximately 11:00 A.M., London time, on such LIBOR Interest
Determination Date and in a principal amount that is representative for a
single transaction in such Index Currency in such market at such time. If
at least two such quotations are so provided, then LIBOR on such LIBOR
Interest Determination Date will be the arithmetic mean of such quotations.
If fewer than two such quotations are so provided, then LIBOR on such LIBOR
Interest Determination Date will be the arithmetic mean of the rates quoted
at approximately 11:00 A.M., in the applicable Principal Financial Center,
on such LIBOR Interest Determination Date by three major banks in such
Principal Financial Center selected by the Calculation Agent for loans in
the Index Currency to leading European banks, having the Index Maturity
specified in the applicable Pricing Supplement and in a principal amount
that is representative for a single transaction in such Index Currency in
such market at such time; provided, however, that if the banks so selected
by the Calculation Agent are not quoting as mentioned in this sentence,
LIBOR determined as of such LIBOR Interest Determination Date will be LIBOR
in effect on such LIBOR Interest Determination Date.
"Index Currency" means the currency or composite currency specified in the
applicable Pricing Supplement as to which LIBOR shall be calculated. If no such
currency or composite currency is specified in the applicable Pricing
Supplement, the Index Currency shall be United States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable Pricing Supplement, the display on the Reuter Monitor Money Rates
Service (or any successor service) on the page specified in such Pricing
Supplement (or any other page as may replace such page on such service (or any
successor service)) for the purpose of displaying the London interbank rates of
major banks for the applicable Index Currency, or (b) if "LIBOR Telerate" is
specified in the applicable Pricing Supplement or neither "LIBOR Reuters" nor
"LIBOR Telerate" is specified in the applicable Pricing Supplement as the method
for calculating LIBOR, the display on the Dow Jones Telerate Service (or any
successor service) on the page specified in such Pricing Supplement (or any
other page as may replace such page on such service (or any successor service))
for the purpose of displaying the London interbank rates of major banks for the
applicable Index Currency.
Prime Rate. Unless otherwise specified in the applicable Pricing
Supplement, "Prime Rate" means, with respect to any Interest Determination Date
relating to a Floating Rate Note for which the interest rate is determined with
reference to the Prime Rate (a "Prime Rate Interest Determination Date"), the
rate on such date as such rate is published in H.15(519) under the heading "Bank
Prime Loan." If such rate is not published prior to 3:00 P.M., New
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<PAGE> 24
York City time, on the related Calculation Date, then the Prime Rate shall be
the arithmetic mean of the rates of interest publicly announced by each bank
that appears on the Reuters Screen US PRIME 1 Page (as hereinafter defined) as
such bank's prime rate or base lending rate as in effect for such Prime Rate
Interest Determination Date. If fewer than four such rates appear on the Reuters
Screen US PRIME 1 Page for such Prime Rate Interest Determination Date, then the
Prime Rate shall be the arithmetic mean of the prime rates quoted on the basis
of the actual number of days in the year divided by a 360-day year as of the
close of business on such Prime Rate Interest Determination Date by four major
money center banks in The City of New York selected by the Calculation Agent. If
fewer than four such quotations are so provided, then the Prime Rate shall be
the arithmetic mean of four prime rates quoted on the basis of the actual number
of days in the year divided by a 360-day year as of the close of business on
such Prime Rate Interest Determination Date as furnished in The City of New York
by the major money center banks, if any, that have provided such quotations and
by a reasonable number of substitute banks or trust companies to obtain four
such prime rate quotations, provided such substitute banks or trust companies
are organized and doing business under the laws of the United States, or any
State thereof, each having total equity capital of at least $500 million and
being subject to supervision or examination by Federal or State authority,
selected by the Calculation Agent to provide such rate or rates; provided,
however, that if the banks or trust companies so selected by the Calculation
Agent are not quoting as mentioned in this sentence, the Prime Rate determined
as of such Prime Rate Interest Determination Date will be the Prime Rate in
effect on such Prime Rate Interest Determination Date.
"Reuters Screen US PRIME 1 Page" means the display designated as page "US
PRIME 1" on the Reuter Monitor Money Rates Service (or any successor service)
(or such other page as may replace the US PRIME 1 page on such service (or any
successor service) for the purpose of displaying prime rates or base lending
rates of major United States banks).
Treasury Rate. Unless otherwise specified in the applicable Pricing
Supplement, "Treasury Rate" means, with respect to any Interest Determination
Date relating to a Floating Rate Note for which the interest rate is determined
by reference to the Treasury Rate (a "Treasury Rate Interest Determination
Date"), the rate from the auction held on such Treasury Rate Interest
Determination Date (the "Auction") of direct obligations of the United States
("Treasury Bills") having the Index Maturity specified in the applicable Pricing
Supplement, as such rate is published in H.15(519) under the heading "Treasury
Bills-auction average (investment)" or, if not published by 3:00 P.M., New York
City time, on the related Calculation Date, the auction average rate of such
Treasury Bills (expressed as a bond equivalent on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) as otherwise announced by
the United States Department of the Treasury. In the event that the results of
the Auction of Treasury Bills having the Index Maturity specified in the
applicable Pricing Supplement are not reported as provided by 3:00 P.M., New
York City time, on the related Calculation Date, or if no such Auction is held,
then the Treasury Rate will be calculated by the Calculation Agent and will be a
yield to maturity (expressed as a bond equivalent on the basis of a year of 365
or 366 days, as applicable, and applied on a daily basis) of the arithmetic mean
of the secondary market bid rates, as of approximately 3:30 P.M., New York City
time, on such Treasury Rate Interest Determination Date, of three leading
primary United States government securities dealers (which may include the Agent
or its affiliates) selected by the Calculation Agent, for the issue of Treasury
Bills with a remaining maturity closest to the Index Maturity specified in the
applicable Pricing Supplement; provided, however, that if the dealers so
selected by the Calculation Agent are not quoting as mentioned in this sentence,
the Treasury Rate determined as of such Treasury Rate Interest Determination
Date will be the Treasury Rate in effect on such Treasury Rate Interest
Determination Date.
OTHER/ADDITIONAL PROVISIONS; ADDENDUM
Any provisions with respect to the Notes, including the specification and
determination of one or more Interest Rate Bases, the calculation of the
interest rate applicable to a Floating Rate Note, the Interest Payment Dates,
the Maturity Date or any other term relating thereto, may be modified and/or
supplemented as specified under "Other/Additional Provisions" on the face
thereof or in an Addendum relating thereto, if so specified on the face thereof.
Such provisions will be described in the applicable Pricing Supplement.
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<PAGE> 25
AMORTIZING NOTES
The Company may from time to time offer Amortizing Notes. Unless otherwise
specified in the applicable Pricing Supplement, interest on each Amortizing Note
will be computed on the basis of a 360-day year of twelve 30-day months.
Payments with respect to Amortizing Notes will be applied first to interest due
and payable thereon and then to the reduction of the unpaid principal amount
thereof. Further information concerning additional terms and provisions of
Amortizing Notes will be specified in the applicable Pricing Supplement,
including a table setting forth repayment information for such Amortizing Notes.
ORIGINAL ISSUE DISCOUNT NOTES
The Company may offer Notes ("Original Issue Discount Notes") from time to
time that have an Issue Price (as specified in the applicable Pricing
Supplement) that is less than 100% of the principal amount thereof (i.e. par).
Original Issue Discount Notes may not bear any interest currently or may bear
interest at a rate that is below market rates at the time of issuance. The
difference between the Issue Price of an Original Issue Discount Note and par is
referred to herein as the "Discount." In the event of redemption, repayment or
acceleration of maturity of an Original Issue Discount Note, the amount payable
to the Holder of such Original Issue Discount Note, unless otherwise specified
in the applicable Pricing Supplement, will be equal to the sum of (i) the Issue
Price (increased by any accruals of Discount) and, in the event of any
redemption of such Original Issue Discount Note (if applicable), multiplied by
the Initial Redemption Percentage specified in the applicable Pricing Supplement
(as adjusted by the Annual Redemption Percentage Reduction, if applicable) and
(ii) any unpaid interest on such Original Issue Discount Note accrued from the
date of issue to the date of such redemption, repayment or acceleration of
maturity, as the case may be.
Unless otherwise specified in the applicable Pricing Supplement, for
purposes of determining the amount of Discount that has accrued as of any date
on which a redemption, repayment or acceleration of maturity occurs for an
Original Issue Discount Note, such Discount will be accrued using a constant
yield method. The constant yield will be calculated using a 30-day month,
360-day year convention, a compounding period that, except for the Initial
Period (as hereinafter defined), corresponds to the shortest period between
Interest Payment Dates for the applicable Original Issue Discount Note (with
ratable accruals within a compounding period), a coupon rate equal to the
initial coupon rate applicable to such Original Issue Discount Note and an
assumption that the maturity of such Original Issue Discount Note will not be
accelerated. If the period from the date of issue to the initial Interest
Payment Date for an Original Issue Discount Note (the "Initial Period") is
shorter than the compounding period for such Original Issue Discount Note, a
proportionate amount of the yield for an entire compounding period will be
accrued. If the Initial Period is longer than the compounding period, then such
period will be divided into a regular compounding period and a short period with
the short period being treated as provided in the preceding sentence. The
accrual of the applicable Discount may differ from the accrual of original issue
discount for purposes of the Internal Revenue Code of 1986, as amended (the
"Code"), certain Original Issue Discount Notes may not be treated as having
original issue discount within the meaning of the Code, and Notes other than
Original Issue Discount Notes may be treated as issued with original issue
discount for federal income tax purposes. See "Certain United States Federal
Income Tax Considerations" herein.
INDEXED NOTES
Notes may be issued with the amount of principal, premium and/or interest
payable in respect thereof to be determined with reference to the price or
prices of specified commodities or stocks, to the exchange rate of one or more
designated currencies (including a composite currency such as the ECU) relative
to an indexed currency or to other price(s) or exchange rate(s) ("Indexed
Notes"), in each case as specified in the applicable Pricing Supplement. In
certain cases, Holders of Indexed Notes may receive a principal payment on the
Maturity Date that is greater than or less than the principal amount of such
Indexed Notes depending upon the relative value on the Maturity Date of the
specified indexed item. Information as to the method for determining the amount
of principal, premium, if any, and/or interest, if any, payable in respect of
Indexed Notes, certain historical information with respect to the specified
indexed item and any material tax considerations associated with an investment
in Indexed Notes will be specified in the applicable Pricing Supplement. See
also "Risk Factors."
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<PAGE> 26
BOOK-ENTRY NOTES
The Company has established a depositary arrangement with The Depository
Trust Company with respect to the Book-Entry Notes, the terms of which are
summarized below. Any additional or differing terms of the depositary
arrangement with respect to the Book-Entry Notes will be described in the
applicable Pricing Supplement.
Upon issuance, all Book-Entry Notes up to $200,000,000 aggregate principal
amount bearing interest (if any) at the same rate or pursuant to the same
formula and having the same date of issue, Specified Currency, Interest Payment
Dates (if any), Stated Maturity Date, redemption provisions (if any), repayment
provisions (if any) and other terms will be represented by a single Global
Security. Each Global Security representing Book-Entry Notes will be deposited
with, or on behalf of, the Depositary and will be registered in the name of the
Depositary or a nominee of the Depositary. No Global Security may be transferred
except as a whole by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or such nominee to a successor
of the Depositary or a nominee of such successor.
So long as the Depositary or its nominee is the registered owner of a
Global Security, the Depositary or its nominee, as the case may be, will be the
sole Holder of the Book-Entry Notes represented thereby for all purposes under
the Indenture. Except as otherwise provided in this section, the Beneficial
Owners of the Global Security or Securities representing Book-Entry Notes will
not be entitled to receive physical delivery of Certificated Notes and will not
be considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing Book-Entry Notes shall be exchangeable or
transferable. Accordingly, each Beneficial Owner must rely on the procedures of
the Depositary and, if such Beneficial Owner is not a Participant, on the
procedures of the Participant through which such Beneficial Owner owns its
interest in order to exercise any rights of a Holder under such Global Security
or the Indenture. The laws of some jurisdictions require that certain purchasers
of securities take physical delivery of such securities in certificated form.
Such limits and such laws may impair the ability to transfer beneficial
interests in a Global Security representing Book-Entry Notes.
Unless otherwise specified in the applicable Pricing Supplement, each
Global Security representing Book-Entry Notes will be exchangeable for
Certificated Notes of like tenor and terms and of differing authorized
denominations aggregating a like principal amount, only if (i) the Depositary
notifies the Company that it is unwilling or unable to continue as Depositary
for the Global Securities, (ii) the Depositary ceases to be a clearing agency
registered under the Exchange Act, (iii) the Company in its sole discretion
determines that the Global Securities shall be exchangeable for Certificated
Notes or (iv) there shall have occurred and be continuing an Event of Default
under the Indenture with respect to the Notes. Upon any such exchange, the
Certificated Notes shall be registered in the names of the Beneficial Owners of
the Global Security or Securities representing Book-Entry Notes, which names
shall be provided by the Depositary's relevant Participants (as identified by
the Depositary) to the Trustee.
The following is based on information furnished by the Depositary:
The Depositary will act as securities depository for the Book-Entry
Notes. The Book-Entry Notes will be issued as fully registered securities
registered in the name of Cede & Co. (the Depositary's partnership
nominee). One fully registered Global Security will be issued for each
issue of Book-Entry Notes, each in the aggregate principal amount of such
issue, and will be deposited with the Depositary. If, however, the
aggregate principal amount of any issue exceeds $200,000,000, one Global
Security will be issued with respect to each $200,000,000 of principal
amount and an additional Global Security will be issued with respect to any
remaining principal amount of such issue.
The Depositary is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of the
New York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. The Depositary holds securities that its
participants ("Participants") deposit with the Depositary. The Depositary
also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants'
accounts, thereby eliminating the need for physical movement of securities
certificates. Direct Participants of the Depositary ("Direct Participants")
include securities brokers and dealers (including the Agent), banks, trust
companies,
S-17
<PAGE> 27
clearing corporations and certain other organizations. The Depositary is
owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc., and the National
Association of Securities Dealers, Inc. Access to the Depositary's system
is also available to others such as securities brokers and dealers, banks
and trust companies that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to the Depositary and its Participants
are on file with the Securities and Exchange Commission.
Purchases of Book-Entry Notes under the Depositary's system must be
made by or through Direct Participants, which will receive a credit for
such Book-Entry Notes on the Depositary's records. The ownership interest
of each actual purchaser of each Book-Entry Note represented by a Global
Security ("Beneficial Owner") is in turn to be recorded on the records of
Direct Participants and Indirect Participants. Beneficial Owners will not
receive written confirmation from the Depositary of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their
holdings, from the Direct Participants or Indirect Participants through
which such Beneficial Owner entered into the transaction. Transfers of
ownership interests in a Global Security representing Book-Entry Notes are
to be accomplished by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners of a Global Security
representing Book-Entry Notes will not receive Certificated Notes
representing their ownership interests therein, except in the event that
use of the book-entry system for such Book-Entry Notes is discontinued.
To facilitate subsequent transfers, all Global Securities representing
Book-Entry Notes which are deposited with, or on behalf of, the Depositary
are registered in the name of the Depositary's nominee, Cede & Co. The
deposit of Global Securities with, or on behalf of, the Depositary and
their registration in the name of Cede & Co. effect no change in beneficial
ownership. The Depositary has no knowledge of the actual Beneficial Owners
of the Global Securities representing the Book-Entry Notes; the
Depositary's records reflect only the identity of the Direct Participants
to whose accounts such Book-Entry Notes are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by the Depositary to
Direct Participants, by Direct Participants to Indirect Participants, and
by Direct Participants and Indirect Participants to Beneficial Owners will
be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Neither the Depositary nor Cede & Co. will consent or vote with
respect to the Global Securities representing the Book-Entry Notes. Under
its usual procedures, the Depositary mails an Omnibus Proxy to the Company
as soon as possible after the applicable record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Book-Entry Notes are credited on the
applicable record date (identified in a listing attached to the Omnibus
Proxy).
Principal, premium, if any, and/or interest, if any, payments on the
Global Securities representing the Book-Entry Notes will be made in
immediately available funds to the Depositary. The Depositary's practice is
to credit Direct Participants' accounts on the applicable payment date in
accordance with their respective holdings shown on the Depositary's records
unless the Depositary has reason to believe that it will not receive
payment on such date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is the case
with securities held for the accounts of customers in bearer form or
registered in "street name", and will be the responsibility of such
Participant and not of the Depositary, the Trustee or the Company, subject
to any statutory or regulatory requirements as may be in effect from time
to time. Payment of principal, premium, if any, and/or interest, if any, to
the Depositary is the responsibility of the Company or the Trustee,
disbursement of such payments to Direct Participants shall be the
responsibility of the Depositary, and disbursement of such payments to the
Beneficial Owners shall be the responsibility of Direct Participants and
Indirect Participants.
If applicable, redemption notices shall be sent to Cede & Co. If less
than all of the Book-Entry Notes within an issue are being redeemed, the
Depositary's practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.
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A Beneficial Owner shall give notice of any option to elect to have
its Book-Entry Notes repaid by the Company, through its Participant, to the
Trustee, and shall effect delivery of such Book-Entry Notes by causing the
Direct Participant to transfer the Participant's interest in the Global
Security or Securities representing such Book-Entry Notes, on the
Depositary's records, to the Trustee. The requirement for physical delivery
of Book-Entry Notes in connection with a demand for repayment will be
deemed satisfied when the ownership rights in the Global Security or
Securities representing such Book-Entry Notes are transferred by Direct
Participants on the Depositary's records.
The Depositary may discontinue providing its services as securities
depository with respect to the Book-Entry Notes at any time by giving
reasonable notice to the Company or the Trustee. Under such circumstances,
in the event that a successor securities depository is not obtained,
Certificated Notes are required to be printed and delivered.
The Company may decide to discontinue use of the system of book-entry
transfers through the Depositary (or a successor securities depository). In
that event, Certificated Notes will be printed and delivered.
The information in this section concerning the Depositary and the
Depositary's system has been obtained from sources that the Company believes to
be reliable, but the Company takes no responsibility for the accuracy thereof.
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SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
GENERAL
Unless otherwise specified in the applicable Pricing Supplement, Foreign
Currency Notes will not be sold in, or to residents of, the country issuing the
applicable currency. The information set forth in this Prospectus Supplement is
directed to prospective purchasers who are United States residents. With respect
to Foreign Currency Notes, the information in this Prospectus Supplement is by
necessity incomplete. The Company disclaims any responsibility to advise
prospective purchasers who are residents of countries other than the United
States with respect to any matters that may affect the purchase, holding or
receipt of payments of principal of, and premium, if any, and interest, if any,
on, the Foreign Currency Notes. Such persons should consult their own financial
and legal advisors with regard to such matters. See "Risk Factors -- Exchange
Rates and Exchange Controls."
PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST, IF ANY
Unless otherwise specified in the applicable Pricing Supplement, the
Company is obligated to make payments of principal of, and premium, if any, and
interest, if any, on, Foreign Currency Notes in the applicable Specified
Currency (or, if such Specified Currency is not at the time of such payment
legal tender for the payment of public and private debts, in such other coin or
currency of the country which issued such Specified Currency as at the time of
such payment is legal tender for the payment of such debts). Any such amounts
payable by the Company in the Specified Currency will, unless otherwise
specified in the applicable Pricing Supplement, be converted by the exchange
rate agent named in the applicable Pricing Supplement (the "Exchange Rate
Agent") into United States dollars for payment to Holders. However, the Holder
of a Foreign Currency Note may elect to receive such amounts payable in the
Specified Currency as hereinafter described.
Any United States dollar amount to be received by a Holder of a Foreign
Currency Note will be based on the highest bid quotation in The City of New York
received by the Exchange Rate Agent at approximately 11:00 A.M., New York City
time, on the second Business Day preceding the applicable payment date from
three recognized foreign exchange dealers (one of whom may be the Exchange Rate
Agent) selected by the Exchange Rate Agent and approved by the Company for the
purchase by the quoting dealer of the Specified Currency for United States
dollars for settlement on such payment date in the aggregate amount of such
Specified Currency payable to all Holders of Foreign Currency Notes scheduled to
receive United States dollar payments and at which the applicable dealer commits
to execute a contract. All currency exchange costs will be borne by the Holders
of such Foreign Currency Notes by deductions from such payments. If three such
bid quotations are not available, payments will be made in the Specified
Currency.
Holders of Foreign Currency Notes may elect to receive all or a specified
portion of any payments of principal, premium, if any, and/or interest, if any,
in the Specified Currency by submitting a written request for such payment to
the Trustee at its corporate trust office in The City of New York on or prior to
the applicable Record Date or at least fifteen calendar days prior to the
Maturity Date, as the case may be. Such written request may be mailed or hand
delivered or sent by cable, telex or other form of facsimile transmission.
Holders of Foreign Currency Notes may elect to receive all or a specified
portion of all future payments in the Specified Currency and need not file a
separate election for each payment. Such election will remain in effect until
revoked by written notice to the Trustee, but written notice of any such
revocation must be received by the Trustee on or prior to the applicable Record
Date or at least fifteen calendar days prior to the Maturity Date, as the case
may be. Holders of Foreign Currency Notes to be held in the name of a broker or
nominee should contact such broker or nominee to determine whether and how an
election to receive payments in the Specified Currency may be made.
Payments of the principal of, and premium, if any, and/or interest, if any,
on, Foreign Currency Notes which are to be made in United States dollars will be
made in the manner specified herein with respect to Notes denominated in United
States dollars. See "Description of Notes -- General." Payments of interest, if
any, on Foreign Currency Notes which are to be made in the Specified Currency on
an Interest Payment Date other than the Maturity Date will be made by check
mailed to the address of the Holders of such Foreign Currency Notes as they
appear in the Security Register, subject to the right to receive such interest
payments by wire transfer of immediately available funds under the circumstances
described under "Description of Notes -- General." Payments of principal of, and
premium, if any, and/or interest, if any, on, Foreign Currency Notes which are
to be made in the Specified Currency
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on the Maturity Date will be made by wire transfer of immediately available
funds to an account with a bank designated at least fifteen calendar days prior
to the Maturity Date by each Holder thereof, provided that such bank has
appropriate facilities therefor and that the applicable Foreign Currency Note is
presented and surrendered at the principal corporate trust office of the Trustee
in time for the Trustee to make such payments in such funds in accordance with
its normal procedures.
Unless otherwise specified in the applicable Pricing Supplement, if the
Specified Currency is other than United States dollars, a Beneficial Owner of
the related Global Security or Securities which elects to receive payments of
principal, premium, if any, and/or interest, if any, in the Specified Currency
must notify the Participant through which it owns its interest on or prior to
the applicable Record Date or at least fifteen calendar days prior to the
Maturity Date, as the case may be, of such Beneficial Owner's election. Such
Participant must notify the Depositary of such election on or prior to the third
Business Day after such Record Date or at least twelve calendar days prior to
the Maturity Date, as the case may be, and the Depositary will notify the
Trustee of such election on or prior to the fifth Business Day after such Record
Date or at least ten calendar days prior to the Maturity Date, as the case may
be. If complete instructions are received by the Participant from the Beneficial
Owner and forwarded by the Participant to the Depositary, and by the Depositary
to the Trustee, on or prior to such dates, then such Beneficial Owner will
receive payments in the applicable foreign currency or composite currency.
AVAILABILITY OF SPECIFIED CURRENCY
If the Specified Currency for a Foreign Currency Note is not available for
the required payment of principal, premium, if any, and/or interest, if any, due
to the imposition of exchange controls or other circumstances beyond the control
of the Company, the Company will be entitled to satisfy its obligations to the
Holder of such Foreign Currency Note by making such payment in United States
dollars on the basis of the Market Exchange Rate on the second Business Day
prior to such payment or, if such Market Exchange Rate is not then available, on
the basis of the most recently available Market Exchange Rate or as otherwise
specified in the applicable Pricing Supplement.
If payment in respect of a Foreign Currency Note is required to be made in
any composite currency, and such composite currency is unavailable due to the
imposition of exchange controls or other circumstances beyond the control of the
Company, the Company will be entitled to satisfy its obligations to the Holder
of such Foreign Currency Note by making such payment in United States dollars.
The amount of each payment in United States dollars shall be computed by the
Exchange Rate Agent on the basis of the equivalent of the composite currency in
United States dollars. The component currencies of the composite currency for
this purpose (collectively, the "Component Currencies" and each, a "Component
Currency") shall be the currency amounts that were components of the composite
currency as of the last day on which the composite currency was used. The
equivalent of the composite currency in United States dollars shall be
calculated by aggregating the United States dollar equivalents of the Component
Currencies. The United States dollar equivalent of each of the Component
Currencies shall be determined by the Exchange Rate Agent on the basis of the
most recently available Market Exchange Rate for each such Component Currency,
or as otherwise specified in the applicable Pricing Supplement.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
The "Market Exchange Rate" for a currency or composite currency other than
United States dollars means the noon dollar buying rate in The City of New York
for cable transfers for such currency or composite currency as certified for
customs purposes by (or if not so certified, as otherwise determined by) the
Federal Reserve Bank of New York. Any payment made in United States dollars
under such circumstances where the required payment is in a currency or
composite currency other than United States dollars will not constitute an Event
of Default under the Indenture with respect to the Notes.
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All determinations referred to above made by the Exchange Rate Agent shall
be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the Holders of the Foreign Currency
Notes.
GOVERNING LAW; JUDGMENTS
The Notes will be governed by and construed in accordance with the laws of
the State of New York. Under current New York law, a state court in the State of
New York rendering a judgment on a Foreign Currency Note would be required to
render such judgment in the Specified Currency, and such judgment would be
converted into United States dollars at the exchange rate prevailing on the date
of entry of the judgment. Accordingly, Holders of Foreign Currency Notes would
be subject to of exchange rate fluctuations after such date. It is not certain,
however that a non-New York court would follow the same rules and procedures
with respect to such conversions of the Specified Currency.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the Notes is based
upon laws, regulations, rulings and decisions now in effect, all of which are
subject to change (including changes in effective dates) or possible differing
interpretations. It deals only with Notes held as capital assets and does not
purport to deal with persons in special tax situations, such as financial
institutions, insurance companies, regulated investment companies, dealers in
securities or currencies, persons holding Notes as a hedge against currency
risks or as a position in a "straddle" for tax purposes, or persons whose
functional currency is not the United States dollar. It also does not deal with
holders other than original purchasers (except where otherwise specifically
noted). Persons considering the purchase of the Notes should consult their own
tax advisors concerning the application of United States Federal income tax laws
to their particular situations as well as any consequences of the purchase,
ownership and disposition of the Notes arising under the laws of any other
taxing jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that is for United States Federal income tax purposes (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or of any political
subdivision thereof, (iii) an estate or trust the income of which is subject to
United States Federal income taxation regardless of its source or (iv) any other
person whose income or gain in respect of a Note is effectively connected with
the conduct of a United States trade or business. As used herein, the term
"non-U.S. Holder" means a beneficial owner of a Note that is not a U.S. Holder.
U.S. HOLDERS
Payments of Interest
Except as set forth below, payments of interest on a Note generally will be
taxable to a U.S. Holder as ordinary interest income at the time such payments
are accrued or are received (in accordance with the U.S. Holder's regular method
of tax accounting).
Original Issue Discount
The following summary is a general discussion of the United States Federal
income tax consequences to U.S. Holders of the purchase, ownership and
disposition of Notes issued with original issue discount ("Discount Notes"). The
following summary is based upon final Treasury regulations (the "OID
Regulations") released by the Internal Revenue Service ("IRS") on January 27,
1994 under the original issue discount provisions of the Internal Revenue Code
of 1986, as amended (the "Code").
For United States Federal income tax purposes, original issue discount is
the excess of the stated redemption price at maturity of a Note over its issue
price, if such excess equals or exceeds a de minimis amount (generally 1/4 of 1%
of the Note's stated redemption price at maturity multiplied by the number of
complete years to its maturity from its issue date or, in the case of a Note
providing for the payment of any amount other than qualified stated
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interest (as hereinafter defined) prior to maturity, multiplied by the weighted
average maturity of such Note). The issue price of each Note in an issue of
Notes equals the first price at which a substantial amount of such Notes has
been sold (ignoring sales to bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement agents, or
wholesalers). The stated redemption price at maturity of a Note is the sum of
all payments provided by the Note other than "qualified stated interest"
payments. The term "qualified stated interest" generally means stated interest
that is unconditionally payable in cash or property (other than debt instruments
of the issuer) at least annually at a single fixed rate. In addition, under the
OID Regulations, if a Note bears interest for one or more accrual periods at a
rate below the rate applicable for the remaining term of such Note (e.g., Notes
with teaser rates or interest holidays), and if the greater of either the
resulting foregone interest on such Note or any "true" discount on such Note
(i.e., the excess of the Note's stated principal amount over its issue price)
equals or exceeds a specified de minimis amount, then the stated interest on the
Note would be treated as original issue discount rather than qualified stated
interest.
Payments of qualified stated interest on a Note are taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a Discount Note must include original issue
discount in income as ordinary interest for United States Federal income tax
purposes as it accrues under a constant yield method in advance of receipt of
the cash payments attributable to such income, regardless of such U.S. Holder's
regular method of tax accounting. In general, the amount of original issue
discount included in income by the initial U.S. Holder of a Discount Note is the
sum of the daily portions of original issue discount with respect to such
Discount Note for each day during the taxable year (or portion of the taxable
year) on which such U.S. Holder held such Discount Note. The "daily portion" of
original issue discount on any Discount Note is determined by allocating to each
day in any accrual period a ratable portion of the original issue discount
allocable to that accrual period. An "accrual period" may be of any length and
the accrual periods may vary in length over the term of the Discount Note,
provided that each accrual period is no longer than one year and each scheduled
payment of principal or interest occurs either on the final day of an accrual
period or on the first day of an accrual period. The amount of original issue
discount allocable to each accrual period is generally equal to the difference
between (i) the product of the Discount Note's adjusted issue price at the
beginning of such accrual period and its yield to maturity (determined on the
basis of compounding at the close of each accrual period and appropriately
adjusted to take into account the length of the particular accrual period) and
(ii) the amount of any qualified stated interest payments allocable to such
accrual period. The "adjusted issue price" of a Discount Note at the beginning
of any accrual period is the sum of the issue price of the Discount Note plus
the amount of original issue discount allocable to all prior accrual periods
minus the amount of any prior payments on the Discount Note that were not
qualified stated interest payments. Under these rules, U.S. Holders generally
will have to include in income increasingly greater amounts of original issue
discount in successive accrual periods.
A U.S. Holder who purchases a Discount Note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal to
the sum of all amounts payable on the Discount Note after the purchase date
other than payments of qualified stated interest, will be considered to have
purchased the Discount Note at an "acquisition premium." Under the acquisition
premium rules, the amount of original issue discount which such U.S. Holder must
include in its gross income with respect to such Discount Note for any taxable
year (or portion thereof in which the U.S. Holder holds the Discount Note) will
be reduced (but not below zero) by the portion of the acquisition premium
properly allocable to the period.
Under the OID Regulations, Floating Rate Notes and Indexed Notes ("Variable
Notes") are subject to special rules whereby a Variable Note will qualify as a
"variable rate debt instrument" if (a) its issue price does not exceed the total
noncontingent principal payments due under the Variable Note by more than a
specified de minimis amount and (b) it provides for stated interest, paid or
compounded at least annually, at current values of (i) one or more qualified
floating rates, (ii) a single fixed rate and one or more qualified floating
rates, (iii) a single objective rate, or (iv) a single fixed rate and a single
objective rate that is a qualified inverse floating rate.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
Variable Note is denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a variable rate
equal to the product of a qualified floating rate and a fixed multiple that is
greater
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than zero but not more than 1.35 will constitute a qualified floating rate. A
variable rate equal to the product of a qualified floating rate and a fixed
multiple that is greater than zero but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, under the OID Regulations, two or more qualified floating rates that
can reasonably be expected to have approximately the same values throughout the
term of the Variable Note (e.g., two or more qualified floating rates with
values within 25 basis points of each other as determined on the Variable Note's
issue date) will be treated as a single qualified floating rate. Notwithstanding
the foregoing, a variable rate that would otherwise constitute a qualified
floating rate but which is subject to one or more restrictions such as a maximum
numerical limitation (i.e., a cap) or a minimum numerical limitation (i.e., a
floor) may, under certain circumstances, fail to be treated as a qualified
floating rate under the OID Regulations unless such cap or floor is fixed
throughout the term of the Note. An "objective rate" is a rate that is not
itself a qualified floating rate but which is determined using a single fixed
formula and which is based upon (i) one or more qualified floating rates, (ii)
one or more rates where each rate would be a qualified floating rate for a debt
instrument denominated in a currency other than the currency in which the
Variable Note is denominated, (iii) either the yield or changes in the price of
one or more items of actively traded personal property (other than stock or debt
of the issuer or a related party) or (iv) a combination of objective rates. The
OID Regulations also provide that other variable interest rates may be treated
as objective rates if so designated by the IRS in the future. Despite the
foregoing, a variable rate of interest on a Variable Note will not constitute an
objective rate if it is reasonably expected that the average value of such rate
during the first half of the Variable Note's term will be either significantly
less than or significantly greater than the average value of the rate during the
final half of the Variable Note's term. A "qualified inverse floating rate" is
any objective rate where such rate is equal to a fixed rate minus a qualified
floating rate, as long as variations in the rate can reasonably be expected to
inversely reflect contemporaneous variations in the cost of newly borrowed
funds. The OID Regulations also provide that if a Variable Note provides for
stated interest at a fixed rate for an initial period of less than one year
followed by a variable rate that is either a qualified floating rate or an
objective rate and if the variable rate on the Variable Note's issue date is
intended to approximate the fixed rate (e.g., the value of the variable rate on
the issue date does not differ from the value of the fixed rate by more than 25
basis points), then the fixed rate and the variable rate together will
constitute either a single qualified floating rate or objective rate, as the
case may be.
If a Variable Note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument" under the OID Regulations, then
any stated interest on such Note which is unconditionally payable in cash or
property (other than debt instruments of the issuer) at least annually will
constitute qualified stated interest and will be taxed accordingly. Thus, a
Variable Note that provides for stated interest at either a single qualified
floating rate or a single objective rate throughout the term thereof and that
qualifies as a "variable rate debt instrument" under the OID Regulations will
generally not be treated as having been issued with original issue discount
unless the Variable Note is issued at a "true" discount (i.e., at a price below
the Note's stated principal amount) in excess of a specified de minimis amount.
Original issue discount on such a Variable Note arising from "true" discount is
allocated to an accrual period using the constant yield method described above
by assuming that the variable rate is a fixed rate equal to (i) in the case of a
qualified floating rate or qualified inverse floating rate, the value as of the
issue date, of the qualified floating rate or qualified inverse floating rate,
or (ii) in the case of an objective rate (other than a qualified inverse
floating rate), a fixed rate that reflects the yield that is reasonably expected
for the Variable Note.
In general, any other Variable Note that qualifies as a "variable rate debt
instrument" will be converted into an "equivalent" fixed rate debt instrument
for purposes of determining the amount and accrual of original issue discount
and qualified stated interest on the Variable Note. The OID Regulations
generally require that such a Variable Note be converted into an "equivalent"
fixed rate debt instrument by substituting any qualified floating rate or
qualified inverse floating rate provided for under the terms of the Variable
Note with a fixed rate equal to the value of the qualified floating rate or
qualified inverse floating rate, as the case may be, as of the Variable Note's
issue date. Any objective rate (other than a qualified inverse floating rate)
provided for under the terms of the Variable Note is converted into a fixed rate
that reflects the yield that is reasonably expected for the Variable Note. In
the case of a Variable Note that qualifies as a "variable rate debt instrument"
and provides for stated interest at a fixed rate in addition to either one or
more qualified floating rates or a qualified inverse floating rate, the fixed
rate is initially converted into a qualified floating rate (or a qualified
inverse floating rate, if the Variable Note provides for a qualified inverse
floating rate). Under such circumstances, the qualified floating rate or
qualified inverse floating rate that
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replaces the fixed rate must be such that the fair market value of the Variable
Note as of the Variable Note's issue date is approximately the same as the fair
market value of an otherwise identical debt instrument that provides for either
the qualified floating rate or qualified inverse floating rate rather than the
fixed rate. Subsequent to converting the fixed rate into either a qualified
floating rate or a qualified inverse floating rate, the Variable Note is then
converted into an "equivalent" fixed rate debt instrument in the manner
described above.
Once the Variable Note is converted into an "equivalent" fixed rate debt
instrument pursuant to the foregoing rules, the amount of original issue
discount and qualified stated interest, if any, are determined for the
"equivalent" fixed rate debt instrument by applying the general original issue
discount rules to the "equivalent" fixed rate debt instrument and a U.S. Holder
of the Variable Note will account for such original issue discount and qualified
stated interest as if the U.S. Holder held the "equivalent" fixed rate debt
instrument. Each accrual period appropriate adjustments will be made to the
amount of qualified stated interest or original issue discount assumed to have
been accrued or paid with respect to the "equivalent" fixed rate debt instrument
in the event that such amounts differ from the actual amount of interest accrued
or paid on the Variable Note during the accrual period.
U.S. Holders should be aware that on June 14, 1996, the IRS released final
amendments to the OID Regulations which slightly modify the definition of a
qualified floating rate, broaden the definition of an objective rate and further
clarify certain other provisions contained in the OID Regulations. In general,
under these amendments, the definition of qualified floating rate is slightly
modified such that a variable rate equal to either (a) the product of a
qualified floating rate and a fixed multiple that is greater than .65 but not
more than 1.35 or (b) the product of a qualified floating rate and a fixed
multiple that is greater than .65 but not more than 1.35, increased or decreased
by a fixed rate will each constitute a qualified floating rate. In addition,
under these amendments, an objective rate is redefined as a rate (other than a
qualified floating rate) that is determined using a single fixed formula and
that is based on objective financial or economic information. A rate will not
qualify as an objective rate if it is based on information that is within the
control of the issuer (or a related party) or that is unique to the
circumstances of the issuer (or a related party), such as dividends, profits, or
the value of the issuer's stock (although a rate does not fail to be an
objective rate merely because it is based on the credit quality of the issuer).
These amendments to the OID Regulations generally apply to debt instruments
issued on or after August 13, 1996.
If a Variable Note does not qualify as a "variable rate debt instrument"
under the OID Regulations, then the Variable Note would be treated as a
contingent payment debt obligation. It is not entirely clear under current law
how a Variable Note would be taxed if such Note were treated as a contingent
payment debt obligation. The proper United States Federal income tax treatment
of Variable Notes that are treated as contingent payment debt obligations will
be more fully described in the applicable Pricing Supplement. Furthermore, any
other special United States Federal income tax considerations, not otherwise
discussed herein, which are applicable to any particular issue of Notes will be
discussed in the applicable Pricing Supplement.
Certain of the Notes (i) may be redeemable at the option of the Company
prior to their stated maturity (a "call option") and/or (ii) may be repayable at
the option of the holder prior to their stated maturity (a "put option"). Notes
containing such features may be subject to rules that differ from the general
rules discussed above. Investors intending to purchase Notes with such features
should consult their own tax advisors, since the original issue discount
consequences will depend, in part, on the particular terms and features of the
purchased Notes.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, original issue discount, de
minimis original issue discount, market discount, de minimis market discount,
and unstated interest, as adjusted by any amortizable bond premium or
acquisition premium) that accrues on a debt instrument by using the constant
yield method applicable to original issue discount, subject to certain
limitations and exceptions.
Short-Term Notes
Notes that have a fixed maturity of one year or less ("Short-Term Notes")
will be treated as having been issued with original issue discount. In general,
an individual or other cash method U.S. Holder is not required to accrue such
original issue discount unless the U.S. Holder elects to do so. If such an
election is not made, any gain recognized by the U.S. Holder on the sale,
exchange or maturity of the Short-Term Note will be ordinary income to the
extent of the original issue discount accrued on a straight-line basis, or upon
election under the constant yield
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method (based on daily compounding), through the date of sale or maturity, and a
portion of the deductions otherwise allowable to the U.S. Holder for interest on
borrowings allocable to the Short-Term Note will be deferred until a
corresponding amount of income is realized. U.S. Holders who report income for
United States Federal income tax purposes under the accrual method, and certain
other holders including banks and dealers in securities, are required to accrue
original issue discount on a Short-Term Note on a straight-line basis unless an
election is made to accrue the original issue discount under a constant yield
method (based on daily compounding).
Market Discount
If a U.S. Holder purchases a Note, other than a Discount Note, for an
amount that is less than its issue price (or, in the case of a subsequent
purchaser, its stated redemption price at maturity) or, in the case of a
Discount Note, for an amount that is less than its adjusted issue price as of
the purchase date, such U.S. Holder will be treated as having purchased such
Note at a "market discount," unless such market discount is less than a
specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to treat
any partial principal payment (or, in the case of a Discount Note, any payment
that does not constitute qualified stated interest) on, or any gain realized on
the sale, exchange, retirement or other disposition of, a Note as ordinary
income to the extent of the lesser of (i) the amount of such payment or realized
gain or (ii) the market discount which has not previously been included in
income and is treated as having accrued on such Note at the time of such payment
or disposition. Market discount will be considered to accrue ratably during the
period from the date of acquisition to the maturity date of the Note, unless the
U.S. Holder elects to accrue market discount on a constant interest basis.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with market discount until the maturity of the Note or
certain earlier dispositions, because a current deduction is only allowed to the
extent the interest expense exceeds an allocable portion of market discount. A
U.S. Holder may elect to include market discount in income currently as it
accrues (on either a ratable or constant interest basis), in which case the
rules described above regarding the treatment as ordinary income of gain upon
the disposition of the Note and upon the receipt of certain cash payments and
regarding the deferral of interest deductions will not apply. Generally, such
currently included market discount is treated as ordinary interest for United
States Federal income tax purposes. Such an election will apply to all debt
instruments acquired by the U.S. Holder on or after the first day of the first
taxable year to which such election applies and may be revoked only with the
consent of the IRS.
Premium
If a U.S. Holder purchases a Note for an amount that is greater than the
sum of all amounts payable on the Note after the purchase date other than
payments of qualified stated interest, such U.S. Holder will be considered to
have purchased the Note with "amortizable bond premium" equal in amount to such
excess. A U.S. Holder may elect to amortize such premium using a constant yield
method over the remaining term of the Note and may offset interest otherwise
required to be included in respect of the Note during any taxable year by the
amortized amount of such excess for the taxable year. However, if the Note may
be optionally redeemed after the U.S. Holder acquires it at a price in excess of
its stated redemption price at maturity, special rules would apply which could
result in a deferral of the amortization of some bond premium until later in the
term of the Note. Any election to amortize bond premium applies to all taxable
debt instruments acquired by the U.S. Holder on or after the first day of the
first taxable year to which such election applies and may be revoked only with
the consent of the IRS.
Disposition of a Note
Except as discussed above, upon the sale, exchange or retirement of a Note,
a U.S. Holder generally will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange or retirement
(other than amounts representing accrued and unpaid interest) and such U.S.
Holder's adjusted tax basis in the Note. A U.S. Holder's adjusted tax basis in a
Note generally will equal such U.S. Holder's initial investment in the Note
increased by any original issue discount included in income (and accrued market
discount, if any, if the U.S. Holder has included such market discount in
income) and decreased by the amount of any payments, other
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than qualified stated interest payments, received and amortizable bond premium
taken with respect to such Note. Such gain or loss generally will be long-term
capital gain or loss if the Note were held for more than one year.
NOTES DENOMINATED, OR IN RESPECT OF WHICH INTEREST IS PAYABLE, IN A FOREIGN
CURRENCY
As used herein, "Foreign Currency" means a currency or currency unit other
than U.S. dollars.
Payments of Interest in a Foreign Currency
Cash Method. A U.S. Holder who uses the cash method of accounting for
United States Federal income tax purposes and who receives a payment of interest
on a Note (other than original issue discount or market discount) will be
required to include in income the U.S. dollar value of the Foreign Currency
payment (determined on the date such payment is received) regardless of whether
the payment is in fact converted to U.S. dollars at that time, and such U.S.
dollar value will be the U.S. Holder's tax basis in such Foreign Currency.
Accrual Method. A U.S. Holder who uses the accrual method of accounting for
United States Federal income tax purposes, or who otherwise is required to
accrue interest prior to receipt, will be required to include in income the U.S.
dollar value of the amount of interest income (including original issue discount
or market discount and reduced by amortizable bond premium to the extent
applicable) that has accrued and is otherwise required to be taken into account
with respect to a Note during an accrual period. The U.S. dollar value of such
accrued income will be determined by translating such income at the average rate
of exchange for the accrual period or, with respect to an accrual period that
spans two taxable years, at the average rate for the partial period within the
taxable year. A U.S. Holder may elect, however, to translate such accrued
interest income using the rate of exchange on the last day of the accrual period
or, with respect to an accrual period that spans two taxable years, using the
rate of exchange on the last day of the taxable year. If the last day of an
accrual period is within five business days of the date of receipt of the
accrued interest, a U.S. Holder may translate such interest using the rate of
exchange on the date of receipt. The above election will apply to other debt
obligations held by the U.S. Holder and may not be changed without the consent
of the IRS. A U.S. Holder should consult a tax advisor before making the above
election. A U.S. Holder will recognize exchange gain or loss (which will be
treated as ordinary income or loss) with respect to accrued interest income on
the date such income is received. The amount of ordinary income or loss
recognized will equal the difference, if any, between the U.S. dollar value of
the Foreign Currency payment received (determined on the date such payment is
received) in respect of such accrual period and the U.S. dollar value of
interest income that has accrued during such accrual period (as determined
above).
Purchase, Sale and Retirement of Notes
A U.S. Holder who purchases a Note with previously owned Foreign Currency
will recognize ordinary income or loss in an amount equal to the difference, if
any, between such U.S. Holder's tax basis in the Foreign Currency and the U.S.
dollar fair market value of the Foreign Currency used to purchase the Note,
determined on the date of purchase.
Except as discussed above with respect to Short-Term Notes, upon the sale,
exchange or retirement of a Note, a U.S. Holder will recognize taxable gain or
loss equal to the difference between the amount realized on the sale, exchange
or retirement and such U.S. Holder's adjusted tax basis in the Note. Such gain
or loss generally will be capital gain or loss (except to the extent of any
accrued market discount not previously included in the U.S. Holder's income) and
will be long-term capital gain or loss if at the time of sale, exchange or
retirement the Note has been held by such U.S. Holder for more than one year. To
the extent the amount realized represents accrued but unpaid interest, however,
such amounts must be taken into account as interest income, with exchange gain
or loss computed as described in "Payments of Interest in a Foreign Currency"
above. If a U.S. Holder receives Foreign Currency on such a sale, exchange or
retirement the amount realized will be based on the U.S. dollar value of the
Foreign Currency on the date the payment is received or the Note is disposed of
(or deemed disposed of as a result of a material change in the terms of such
Note). In the case of a Note that is denominated in Foreign Currency and is
traded on an established securities market, a cash basis U.S. Holder (or, upon
election, an accrual basis U.S. Holder) will determine the U.S. dollar value of
the amount realized by translating the Foreign Currency payment at the spot rate
of exchange on the settlement date of the sale. A U.S. Holder's adjusted tax
basis in a Note will equal
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the cost of the Note to such holder, increased by the amounts of any market
discount or original issue discount previously included in income by the holder
with respect to such Note and reduced by any amortized acquisition or other
premium and any principal payments received by the holder. A U.S. Holder's tax
basis in a Note, and the amount of any subsequent adjustments to such holder's
tax basis, will be the U.S. dollar value of the Foreign Currency amount paid for
such Note, or of the Foreign Currency amount of the adjustment, determined on
the date of such purchase or adjustment.
Gain or loss realized upon the sale, exchange or retirement of a Note that
is attributable to fluctuations in currency exchange rates will be ordinary
income or loss which will not be treated as interest income or expense. Gain or
loss attributable to fluctuations in exchange rates will equal the difference
between the U.S. dollar value of the Foreign Currency principal amount of the
Note, determined on the date such payment is received or the Note is disposed
of, and the U.S. dollar value of the Foreign Currency principal amount of the
Note, determined on the date the U.S. Holder acquired the Note. Such Foreign
Currency gain or loss will be recognized only to the extent of the total gain or
loss realized by the U.S. Holder on the sale, exchange or retirement of the
Note.
Original Issue Discount
In the case of a Discount Note or Short-Term Note, (i) original issue
discount is determined in units of the Foreign Currency, (ii) accrued original
issue discount is translated into U.S. dollars as described in "Payments of
Interest in a Foreign Currency -- Accrual Method" above and (iii) the amount of
Foreign Currency gain or loss on the accrued original issue discount is
determined by comparing the amount of income received attributable to the
discount (either upon payment, maturity or an earlier disposition), as
translated into U.S. dollars at the rate of exchange on the date of such
receipt, with the amount of original issue discount accrued, as translated
above.
Premium and Market Discount
In the case of a Note with market discount, (i) market discount is
determined in units of the Foreign Currency, (ii) accrued market discount taken
into account upon the receipt of any partial principal payment or upon the sale,
exchange, retirement or other disposition of the Note (other than accrued market
discount required to be taken into account currently) is translated into U.S.
dollars at the exchange rate on such disposition date (and no part of such
accrued market discount is treated as exchange gain or loss) and (iii) accrued
market discount currently includible in income by a U.S. Holder for any accrual
period is translated into U.S. dollars on the basis of the average exchange rate
in effect during such accrual period, and the exchange gain or loss is
determined upon the receipt of any partial principal payment or upon the sale,
exchange, retirement or other disposition of the Note in the manner described in
"Payments of Interest in a Foreign Currency -- Accrual Method" above with
respect to computation of exchange gain or loss on accrued interest.
With respect to a Note issued with amortizable bond premium, such premium
is determined in the relevant Foreign Currency and reduces interest income in
units of the Foreign Currency. Although not entirely clear, a U.S. Holder should
recognize exchange gain or loss equal to the difference between the U.S. dollar
value of the bond premium amortized with respect to a period, determined on the
date the interest attributable to such period is received, and the U.S. dollar
value of the bond premium determined on the date of the acquisition of the Note.
Exchange of Foreign Currencies
A U.S. Holder will have a tax basis in any Foreign Currency received as
interest or on the sale, exchange or retirement of a Note equal to the U.S.
dollar value of such Foreign Currency, determined at the time the interest is
received or at the time of the sale, exchange or retirement. Any gain or loss
realized by a U.S. Holder on a sale or other disposition of Foreign Currency
(including its exchange for U.S. dollars or its use to purchase Notes) will be
ordinary income or loss.
NON-U.S. HOLDERS
A non-U.S. Holder will not be subject to United States Federal income taxes
on payments of principal, premium (if any) or interest (including original issue
discount, if any) on a Note, unless such non-U.S. Holder is a direct or indirect
10% or greater shareholder of the Company, a controlled foreign corporation
related to the Company or a
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bank receiving interest described in section 881(c)(3)(A) of the Code. To
qualify for the exemption from taxation, the last United States payor in the
chain of payment prior to payment to a non-U.S. Holder (the "Withholding Agent")
must have received in the year in which a payment of interest or principal
occurs, or in either of the two preceding calendar years, a statement that (i)
is signed by the beneficial owner of the Note under penalties of perjury, (ii)
certifies that such owner is not a U.S. Holder and (iii) provides the name and
address of the beneficial owner. The statement may be made on an IRS Form W-8 or
a substantially similar form, and the beneficial owner must inform the
Withholding Agent of any change in the information on the statement within 30
days of such change. If a Note is held through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent. However, in
such case, the signed statement must be accompanied by a copy of the IRS Form
W-8 or the substitute form provided by the beneficial owner to the organization
or institution. The Treasury Department is considering implementation of further
certification requirements aimed at determining whether the issuer of a debt
obligation is related to holders thereof.
Generally, a non-U.S. Holder will not be subject to Federal income taxes on
any amount which constitutes capital gain upon retirement or disposition of a
Note, provided the gain is not effectively connected with the conduct of a trade
or business in the United States by the non-U.S. Holder. Certain other
exceptions may be applicable, and a non-U.S. Holder should consult its tax
advisor in this regard.
The Notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of the Company
or, at the time of such individual's death, payments in respect of the Notes
would have been effectively connected with the conduct by such individual of a
trade or business in the United States.
BACKUP WITHHOLDING
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the Notes to registered owners who are not
"exempt recipients" and who fail to provide certain identifying information
(such as the registered owner's taxpayer identification number) in the required
manner. Generally, individuals are not exempt recipients, whereas corporations
and certain other entities generally are exempt recipients. Payments made in
respect of the Notes to a U.S. Holder must be reported to the IRS, unless the
U.S. Holder is an exempt recipient or establishes an exemption. Compliance with
the identification procedures described in the preceding section would establish
an exemption from backup withholding for those non-U.S. Holders who are not
exempt recipients.
In addition, upon the sale of a Note to (or through) a broker, the broker
must withhold 31% of the entire purchase price, unless either (i) the broker
determines that the seller is a corporation or other exempt recipient or (ii)
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-U.S.
Holder (and certain other conditions are met). Such a sale must also be reported
by the broker to the IRS, unless either (i) the broker determines that the
seller is an exempt recipient or (ii) the seller certifies its non-U.S. status
(and certain other conditions are met). Certification of the registered owner's
non-U.S. status would be made normally on an IRS Form W-8 under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
PLAN OF DISTRIBUTION
The Notes are being offered on a continuous basis for sale by the Company
to or through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Lehman Brothers Inc., Smith Barney Inc., UBS Securities LLC, First
of Michigan Corporation, Keefe, Bruyette & Woods, Inc., McDonald & Company
Securities, Inc. and Roney & Co. LLC (the "Agents"). The Agents may purchase
Notes, as principal, from the Company from time to time for resale to investors
and other purchasers at varying prices relating to prevailing market prices at
the time of resale as determined by the applicable Agent, or, if so specified in
the applicable Pricing Supplement, for resale at a fixed
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<PAGE> 39
offering price. If agreed to by the Company and an Agent, such Agent may also
utilize its reasonable efforts on an agency basis to solicit offers to purchase
the Notes at 100% of the principal amount thereof, unless otherwise specified in
the applicable Pricing Supplement. The Company will pay a commission to the
applicable Agent, ranging from .125% to .75% of the principal amount of each
Note, depending upon its stated maturity, sold through such Agent. Commissions
with respect to Notes with stated maturities in excess of 30 years that are sold
through an Agent will be negotiated between the Company and such Agent at the
time of such sale.
Unless otherwise specified in the applicable Pricing Supplement, any Note
sold to an Agent as principal will be purchased by such Agent at a price equal
to 100% of the principal amount thereof less a percentage of the principal
amount equal to the commission applicable to an agency sale of a Note of
identical maturity. The Agents may sell Notes which they purchase from the
Company as principal to other dealers for resale to investors and other
purchasers, and may reallow all or any portion of the discount received in
connection with such purchase from the Company to such dealers. After the
initial offering of Notes, the offering price (in the case of Notes to be resold
on a fixed offering price basis), the concession and the discount may be
changed.
The Company reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject offers in whole or in part (whether placed
directly with the Company or through an Agent). Each Agent will have the right,
in its discretion reasonably exercised, to reject in whole or in part any offer
to purchase Notes received by it on an agency basis.
Unless otherwise specified in the applicable Pricing Supplement, payment of
the purchase price of the Notes will be required to be made in immediately
available funds in the Specified Currency in The City of New York on the date of
settlement. See "Description of Notes -- General."
Upon issuance, the Notes will not have an established trading market. The
Notes will not be listed on any securities exchange. The Agents may from time to
time purchase and sell Notes in the secondary market, but the Agents are not
obligated to do so, and there can be no assurance that there will be a secondary
market for the Notes or that there will be liquidity in the secondary market if
one develops. From time to time, the Agents may make a market in the Notes, but
the Agents are not obligated to do so and may discontinue any market-making
activity at any time.
Each of the Agents may be deemed to be an "underwriter" within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"). The Company
has agreed to indemnify the Agents against certain liabilities (including
liabilities under the Securities Act), or to contribute to payments the Agents
may be required to make in respect thereof. The Company has agreed to reimburse
the Agents for certain other expenses.
In the ordinary course of its business, the Agents and their affiliates
have engaged and may in the future engage in investment and commercial banking
transactions with the Company and certain of its affiliates.
Concurrently with the offering of Notes described herein, the Company may
issue and sell other Debt Securities described in the accompanying Prospectus.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JUNE 26, 1996
PROSPECTUS
STANDARD FEDERAL BANCORPORATION, INC.
DEBT SECURITIES
[STANDARD FEDERAL LOGO]
Standard Federal Bancorporation, Inc., a Michigan corporation (the
"Company"), may offer, from time to time, in one or more series, its unsecured
debt securities (the "Debt Securities"), having such prices and terms as are
determined in light of market conditions at the time of sale. The Prospectus
Supplement and the Pricing Supplement accompanying this Prospectus set forth,
with respect to the particular series of Debt Securities for which this
Prospectus, the Prospectus Supplement and the Pricing Supplement are being
delivered, the specific aggregate principal amount, denominations (which may be
in United States dollars, in any other currency or in composite currencies),
maturity, rate (which may be fixed or variable) and time of payment of any
interest, purchase price, any terms for redemption or other special terms and
the names of the underwriters, if any. The Debt Securities may be unsecured Debt
Securities (the "Senior Debt Securities") or unsecured and subordinated Debt
Securities (the "Subordinated Debt Securities"). The Senior Debt Securities,
when issued, will rank on a parity with all other unsecured Senior Indebtedness
(as defined herein) of the Company, and the Subordinated Debt Securities, when
issued, will be subordinate in right of payment to all Senior Indebtedness. See
"Description of Debt Securities -- Subordination."
Each issue of Debt Securities may vary, where applicable, as to aggregate
principal amount, maturity date, public offering or purchase price, interest
rate or rates and timing of payments thereof, provision for redemption, sinking
fund requirements, if any, currencies of denomination or currencies otherwise
applicable thereto and any other variable terms and method of distribution. No
Debt Securities may be sold without delivery of a Prospectus Supplement
describing such issue of Debt Securities and the method and terms of offering
thereof.
THE DEBT SECURITIES ARE NOT SAVINGS ACCOUNTS, DEPOSITS OR OTHER OBLIGATIONS
OF ANY SAVINGS BANK OR NON-BANK SUBSIDIARY OF THE COMPANY AND ARE NOT INSURED BY
THE SAVINGS ASSOCIATION INSURANCE FUND OR THE BANK INSURANCE FUND OF THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The Company may sell the Debt Securities to or through one or more agents,
dealers or underwriters, and may also sell Debt Securities directly to other
purchasers. Such dealers may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933, as amended. If any agents, dealers or
underwriters are involved in the sale of any Debt Securities in respect of which
this Prospectus is being delivered, the names of such agents, dealers or
underwriters and any applicable commissions or discounts will be set forth in
the Prospectus Supplement or the Pricing Supplement. The net proceeds to the
Company from such sale will also be set forth in the Prospectus Supplement or
the Pricing Supplement. See "Plan of Distribution".
------------------------
The date of this Prospectus is July , 1996.
<PAGE> 41
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files annual and quarterly reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Reports, proxy statements and other information concerning the Company may be
inspected and copies may be made at the public reference facilities maintained
by the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, and at the Commission's Regional Offices in New York
(Seven World Trade Center, 13th Floor, New York, New York 10048), and Chicago
(500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511). Copies of
these materials may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
In addition, reports, proxy statements and other information concerning the
Company may be inspected at the offices of the New York Stock Exchange, Inc., 20
Broad Street, New York, New York 10005. The Commission maintains an Internet Web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission,
including the Company, and the address of such Internet Web site is
(http://www.sec.gov).
This Prospectus constitutes a part of a Registration Statement (the
"Registration Statement") filed by the Company with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus omits
certain of the information contained in the Registration Statement in accordance
with the rules and regulations of the Commission. Reference is hereby made to
the Registration Statement and related exhibits for further information with
respect to the Company and the Debt Securities. Statements contained herein
concerning the provisions of any document are not necessarily complete and, in
each instance, reference is made to the copy of such document filed as an
exhibit to the Registration Statement or otherwise filed with the Commission.
Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the Commission
and are incorporated herein by reference: (i) the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1995; (ii) the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996; and (iii)
the Company's Current Reports on Form 8-K, dated May 14 and June 13, 1996.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date hereof and prior to
the termination of the offering of the Debt Securities, shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any statement or document so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
THE COMPANY WILL FURNISH WITHOUT CHARGE TO EACH PERSON TO WHOM THIS
PROSPECTUS IS DELIVERED, UPON REQUEST, A COPY OF ANY AND ALL OF THE DOCUMENTS
DESCRIBED ABOVE OTHER THAN EXHIBITS TO SUCH DOCUMENTS WHICH ARE NOT SPECIFICALLY
INCORPORATED BY REFERENCE IN SUCH DOCUMENTS. WRITTEN REQUESTS SHOULD BE MAILED
TO STANDARD FEDERAL BANCORPORATION, INC., 2600 WEST BIG BEAVER ROAD, TROY,
MICHIGAN 48084, ATTENTION: INVESTOR RELATIONS. TELEPHONE REQUESTS SHOULD BE
DIRECTED TO (810) 643-9600.
THE COMPANY
The Company is the holding company for Standard Federal Bank (the "Bank"),
a federally chartered savings bank. With deposits of $9.4 billion at March 31,
1996, the Company has the largest deposit base of all thrift institutions
headquartered in the Midwest. Based on total assets at March 31, 1996, the
Company is the seventh largest publicly traded thrift institution in the United
States and the largest thrift institution headquartered in Michigan. The Bank
was founded in 1893, converted to a publicly-owned stock chartered thrift
institution in 1987,
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<PAGE> 42
and reorganized to become a subsidiary of the Company in May 1995. The Bank
currently conducts its retail banking business from 166 full-service Banking
Centers and 11 retail Home Lending Centers located in Michigan, Indiana and
Ohio. The Bank has four offices in the City of Detroit and 105 offices in the
suburban Detroit area, 10 offices in north-central Michigan, five offices in
northern Michigan, 32 offices in the southwest Michigan/northwest Indiana
region, 11 offices in northeast Indiana and 11 offices in northwest Ohio. The
Bank also has 24 wholesale Loan Production Offices that conduct business with
correspondents nationwide, and also owns and operates 347 automated teller
machines located throughout its retail market area. According to recognized
industry sources, the Bank was the tenth largest mortgage originator in the
United States in 1995, based on the dollar volume of loans originated. The
Company's executive offices are located at 2600 West Big Beaver Road, Troy,
Michigan 48084, and its telephone number is (810) 643-9600.
On June 7, 1996, the Company completed its acquisition of Bell Bancorp,
Inc. ("Bell"). The purchase price, including payments made with respect to
outstanding stock options, approximated $354.5 million. Bell, through its
principal subsidiary, Bell Federal Savings and Loan Association, operates 14
full-service branch offices in the greater Chicago, Illinois market and had
total assets of $1.9 billion and total deposits of $1.6 billion at the date of
closing. The transaction is being accounted for as a purchase and is anticipated
to result in goodwill (excess of purchase price over the underlying market value
of assets and liabilities) of approximately $70.0 million. The addition of
Bell's assets along with the related intangibles will reduce the Bank's various
capital ratios. On a pro forma basis, including the proceeds of a short-term
borrowing but without giving effect to any additional capital which may be
contributed by the Company to the Bank with proceeds from the sale of Debt
Securities, management believes the Bank will continue to be categorized as
"well-capitalized" for purposes of the Prompt Corrective Action ("PCA")
regulations of the Office of Thrift Supervision ("OTS") as of June 30, 1996. For
additional information regarding the Bell merger, see the Company's Current
Report on Form 8-K dated June 13, 1996, which is incorporated herein by
reference.
The Bank's primary business consists of attracting deposits from the
general public and originating single-family home mortgage loans. The Bank also
acquires funds on a wholesale basis from a variety of sources, manages a
high-quality securities portfolio, services a significant volume of loans for
others and makes consumer loans and commercial real estate and non-real estate
loans. The Bank also operates a nationwide wholesale mortgage banking
correspondent network.
The Bank's primary sources of revenue are interest earned on mortgage loans
and investment securities (including mortgage-backed securities, or "MBSs"),
gains on sales of loans and MBSs, fees earned in connection with loans and
deposits, and income earned on the portfolio of loans and MBSs which the Bank
services for others. Its principal expense is interest incurred on
interest-bearing liabilities, including deposits and borrowings.
CERTAIN REGULATORY CONSIDERATIONS
GENERAL
The Bank is regulated by the Director (the "OTS Director") of the OTS and
the Federal Deposit Insurance Corporation (the "FDIC") which, through the
Savings Association Insurance Fund (the "SAIF"), insures the deposit accounts of
thrift institutions such as the Bank. The Bank is a member of the Federal Home
Loan Bank (the "FHLB") of Indianapolis, which is one of the twelve regional
banks for federally insured depository institutions comprising the Federal Home
Loan Bank System. The Bank is further subject to certain regulations of the
Board of Governors of the Federal Reserve System (the "Federal Reserve Board")
governing reserves required to be maintained against certain deposits and other
matters.
The Company is a legal entity separate and distinct from the Bank and its
other subsidiaries. The ability of holders of securities of the Company,
including the holders of the Debt Securities offered hereby, to benefit from the
distribution of assets of any subsidiary of the Company (including the Bank)
upon the liquidation or reorganization of such subsidiary is subordinate to
prior claims of creditors of such subsidiary (including depositors in the case
of the Bank) except to the extent that a claim of the Company as a creditor of
the subsidiary may be recognized.
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<PAGE> 43
RESTRICTIONS ON CAPITAL DISTRIBUTIONS AND TRANSACTIONS BY THE BANK WITH
AFFILIATES
The Company's principal sources of funds are cash dividends paid to it by
the Bank and its other subsidiaries, investment income and borrowings. OTS
regulations impose limitations upon certain "capital distributions" by thrift
institutions, including dividends. The OTS Director has the authority to
preclude those institutions from declaring a dividend. Generally, the OTS
regulations permit specified amounts of capital distributions by a thrift
institution that meets or exceeds its' minimum capital requirements, so long as
the institution notifies the OTS and receives no objection to the distribution
from the OTS. The Bank may currently make capital distributions during any
calendar year equal to the greater of 100% of its year to date income plus 50%
of its "surplus capital ratio" at the beginning of the calendar year, or 75% of
its net income over the most recent four quarter period. The "surplus capital
ratio" is the lowest percentage by which the institution's three ratios of fully
phased-in capital to assets exceed the ratios of its fully phased-in capital
requirements to assets.
The OTS has proposed to amend its regulation on capital distributions such
that the Bank would no longer have to obtain approval from the OTS in order to
make a distribution in excess of the safe harbor amount, unless such
distribution would cause the Bank to fail to meet the OTS's PCA capital
standards. The OTS would, however, continue to receive prior notice of a
distribution and would retain the authority to prohibit any capital distribution
upon a determination that the making of such distribution would constitute an
unsafe or unsound practice. The Company does not anticipate that adoption of the
proposed regulation would have a material impact on the Bank's ability to make
distributions of capital.
In addition to regulation of capital distributions, there are various
statutory and regulatory limitations on the extent to which thrift institution
subsidiaries of the Company, such as the Bank, can finance or otherwise transfer
funds to the Company or its non-banking subsidiaries, whether in the form of
loans, extensions of credit, investments or asset purchases. Such transfers by
any subsidiary thrift institution to the Company or any non-banking subsidiary
are generally limited to 10% of the thrift institution's capital and surplus
and, with respect to the Company and all such non-banking subsidiaries, to an
aggregate of 20% of such thrift institution's capital and surplus. Furthermore,
loans and extensions of credit are required to be secured in specified amounts
and are required to be on terms and conditions consistent with safe and sound
banking practices. The OTS Director may further restrict these transactions in
the interest of safety and soundness.
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<PAGE> 44
CAPITAL REGULATIONS
The OTS has prescribed capital regulations (the "Capital Regulations") that
establish three capital requirements which must be met by the Bank -- a "core
capital requirement," a "tangible capital requirement" and a "risk-based capital
requirement." The Capital Regulations require thrift institutions to maintain
"core" capital of at least 3% of adjusted total assets, "tangible" capital of at
least 1.5% of adjusted total assets, and "risk-based" capital of at least 8% of
risk-weighted assets. Capital standards for thrifts must be no less stringent
than the capital standards applicable to national banks (a leverage ratio of 4%
of adjusted assets). Therefore, the Bank believes that it is required to
maintain core capital of at least 4% of adjusted total assets. The Bank meets
all of the current capital requirements at March 31, 1996.
The OTS has also adopted separate PCA regulations that call for the OTS to
enforce certain restrictions on savings institutions that are classified as
undercapitalized. The Bank was categorized for PCA purposes as a "well-
capitalized institution" by the OTS as of the completion of the Bank's 1995
Safety and Soundness Examination, and the Company's management believes the Bank
remains so categorized at June 30, 1996. An institution's capital category,
however is determined solely for regulatory purposes and may not constitute an
accurate representation of the institution's financial condition or prospects.
The OTS has also defined an interest rate risk ("IRR") component which,
although initially proposed as an additional component of risk-based capital
requirements, is now likely to be used by the OTS only as a supervisory tool.
The results derived from the OTS' IRR model indicate that at March 31, 1996, the
Bank was exposed to IRR at a level higher than the regulatory benchmark. The
Bank's March 31, 1996, IRR component was $32.9 million; such amount equalling
the Bank's IRR component as of September 30, 1995. Because the Bank had $291.8
million of excess risk-based capital as of March 31, 1996, this IRR component
will neither affect the Bank's continued compliance with applicable regulatory
capital requirements, nor will it likely result in any increased regulatory
oversight.
DEPOSIT INSURANCE
The Bank's deposits are insured by the FDIC through the SAIF to the extent
permitted by law. The Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA") directed the FDIC to establish by January 1, 1994, a risk-based
system for setting deposit insurance assessments for FDIC insured institutions
such as the Bank under which an institution's insurance assessments vary
depending on the level of capital the institution holds and the degree to which
it is the subject of supervisory concern to the FDIC from 0.23% to 0.31%. The
FDIC has reduced the assessment rate charged by the Bank Insurance Fund ("BIF")
by a substantial amount, but has not reduced the SAIF assessment rates at all.
Various committees of Congress and various federal regulatory banking agencies,
including the FDIC, are currently discussing changes to the federal deposit
insurance system to narrow or eliminate the difference in financial
characteristics between the BIF and the SAIF. One of the proposals would, among
other things, assess thrifts such as the Bank, a one-time fee to recapitalize
the SAIF. In the event that such a proposal were to become law on the terms
currently discussed, management of the Company estimates that the Bank would be
required to record a one-time charge to earnings of approximately $48.2 million,
or $1.50 per share, after-tax, based on March 31, 1996, deposit balances and an
assessment fee of 85 cents per $100 dollars of insured deposits. Under this
proposal, thereafter, the Bank's annual insurance expense would be reduced for
the foreseeable future by approximately 80% to 100% of current premiums.
Management estimates that a premium reduction of this magnitude would represent
annual after-tax cost savings to the Bank of approximately $10.1 million to
$12.6 million, based upon the actual 1995 deposit insurance premiums incurred by
the Bank. The currently proposed legislation has evolved significantly over
recent months and may continue to change until finally enacted, if ever. There
can be no assurance that a premium reduction will occur.
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<PAGE> 45
INTERSTATE BANKING
Under legislation effective June 1, 1997, commercial banks will be able to
operate branch offices outside of their home state, although the extent of their
ability to branch into a new state will depend on the law of that state. Federal
thrift associations such as the Bank are already able to branch nationwide, and
the Bank currently operates branch offices in three states (Michigan, Ohio and
Indiana), and following the Bell Merger will operate branch offices in Illinois.
The effectiveness of the recent legislation will reduce the Bank's competitive
advantage over commercial banks in this regard, and could increase competition
in the markets in which the Bank operates.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the net
proceeds from the sale of the Debt Securities will be used to make a capital
contribution to the Bank, to finance future acquisitions and for other general
corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the Company is computed by
dividing earnings by fixed charges. Earnings consist primarily of income before
income taxes and fixed charges. Fixed charges represent interest expense and the
proportion of rental expense deemed representative of the interest factor.
<TABLE>
<CAPTION>
Three Months
Ended
Year Ended December 31, March 31,
1995 1994 1993 1992 1991 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges:
Including interest on deposits 1.31x 1.42x 1.42x 1.30x 1.17x 1.33x 1.33x
Excluding interest on deposits 2.01 2.48 2.31 1.85 1.46 2.21 2.02
</TABLE>
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities will be issued under an Indenture (the "Senior
Indenture"), between the Company and a trustee, that will be filed as an exhibit
to or incorporated by reference in the Registration Statement of which this
Prospectus is a part. The Subordinated Debt Securities will be issued under an
Indenture (the "Subordinated Indenture" and collectively with the Senior
Indenture, the "Indenture"), between the Company and a trustee (collectively
with the trustee under the Senior Indenture, the "Trustee"), that will be filed
as an exhibit to or incorporated by reference in the Registration Statement of
which this Prospectus is a part. The following summary of certain provisions of
the Indenture does not purport to be complete and is subject to, and qualified
in its entirety by reference to, all provisions of the Indenture, including the
definitions therein of certain terms. Wherever particular Sections or defined
terms of the Indenture are referred to, it is intended that such Sections or
defined terms (including, unless otherwise indicated herein, definitions of
terms capitalized in this summary) shall be incorporated herein by reference.
The following sets forth certain general terms and provisions of the Debt
Securities to which any Prospectus Supplement and Pricing Supplement may relate.
The particular terms of the Debt Securities offered by any Prospectus Supplement
and Pricing Supplement and the extent, if any, to which such general provisions
may apply to the Debt Securities so offered, will be described in the Prospectus
Supplement and Pricing Supplement relating to such Debt Securities. There is no
requirement that future issues of debt securities of the Company be issued under
the Indenture, and the Company is free to employ other indentures or
documentation containing provisions different from those included in the
Indenture or applicable to one or more issues of Debt Securities, in connection
with future issues of such other debt securities.
GENERAL
The Indenture does not limit the aggregate principal amount of Debt
Securities which may be issued thereunder and provides that Debt Securities may
be issued from time to time in one or more series up to the aggregate
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<PAGE> 46
principal amount which may be authorized from time to time by the Company. The
Senior Debt Securities will be direct, unsecured obligations of the Company and
will rank on a parity with other unsecured Senior Indebtedness of the Company.
The Subordinated Debt Securities will be unsecured and will rank on a parity
with other subordinated debt of the Company and, together with such other
subordinated debt, will be subordinate and junior in right of payment to the
prior payment in full of the Senior Indebtedness of the Company, as described
below under "Subordination."
Because the Company is a holding company, rights to participate in any
distribution of assets of any subsidiary, including the Bank, upon its
bankruptcy, liquidation or other reorganization are subject to the prior claims
of the subsidiary's creditors, except to the extent that the Company is itself a
creditor with recognized claims against the subsidiary.
The Indenture provides that there may be more than one Trustee under the
Indenture with respect to one or more series of Debt Securities. Any Trustee
under the Indenture may resign or be removed with respect to one or more series
of Debt Securities issued under the Indenture, and a successor Trustee may be
appointed to act with respect to such series. Reference is made to the
Prospectus Supplement and the Pricing Supplement relating to the particular
series of Debt Securities offered thereby for the following terms: (1) the title
of such Debt Securities and series in which such Debt Securities will be
included; (2) any limit on the aggregate principal amount of such Debt
Securities; (3) the price or prices (expressed as a percentage of the aggregate
principal amount thereof) at which such Debt Securities will be issued; (4) the
date or dates, or the method or methods, if any, by which such date or dates
shall be determined, on which such Debt Securities will mature and, if other
than the principal amount thereof, the portion of the principal amount of such
Debt Securities payable at maturity; (5) the rate or rates (which may be fixed
or variable) at which such Debt Securities will bear interest, if any, or the
method or methods, if any, by which such rate or rates are to be determined and
the manner upon which interest will be calculated if other than that of a
360-day year of twelve 30-day months; (6) the date or dates from which such
interest, if any, on such Debt Securities will accrue or the method or methods,
if any, by which such date or dates are to be determined, the date or dates on
which such interest, if any, will be payable, the date on which payment of such
interest, if any, will commence and the Regular Record Dates for such Interest
Payment Dates, if any; (7) the date or dates, if any, on or after which, or the
period or periods, if any, within which, and the price or prices at which the
Debt Securities will, pursuant to any mandatory sinking fund provisions, or may,
pursuant to any optional sinking fund or to any purchase fund provisions, be
redeemed by the Company, and the other terms and provisions of such sinking
and/or purchase funds; (8) the date or dates, if any, on or after which, or the
period or periods, if any, within which, and the price or prices at which the
Debt Securities may, pursuant to any optional redemption provisions, be redeemed
at the option of the Company or of the holder thereof and the other terms and
provisions of such optional redemption; (9) the extent to which any of the Debt
Securities will be issuable in temporary or permanent global form and, if so,
the identity of the depositary for such global Debt Security, or the manner in
which any interest payable on a temporary or permanent global Debt Security will
be paid; (10) the denomination or denominations in which such Debt Securities
are authorized to be issued if other than $1,000 (in the case of Debt Securities
issued in registered form) or $5,000 (in the case of Debt Securities issued in
bearer form) and integral multiples thereof; (11) whether such Debt Securities
will be issued in registered or bearer form or both and, if in bearer form, the
terms and conditions relating thereto and any limitations on issuance of such
bearer Debt Securities (including exchange for registered Debt Securities of the
same series); (12) information with respect to book-entry procedures relating to
global Debt Securities; (13) the terms, if any, upon which such Debt Securities
may be convertible into other securities of the Company and the terms and
conditions upon which such conversion may be effected, including the initial
conversion price or rate and any other provision in addition to or in lieu of
those described herein; (14) whether any of the Debt Securities will be issued
as Original Issue Discount Securities; (15) each office or agency where, subject
to the terms of the Indenture, the principal of, and premium and interest, if
any, on, the Debt Securities will be payable and where such Debt Securities may
be presented for registration of transfer or exchange; (16) the currencies or
currency units in which such Debt Securities are issued and in which the
principal of, and premium and interest, if any, on, and additional amounts, if
any, in respect of such Debt Securities will be payable; (17) whether the amount
of payments of principal of, and interest on, and additional amounts, if any, in
respect of such Debt Securities may be determined with reference to an index,
formula or other method or methods (which index, formula or method or methods
may, but need not be, based on one or more currencies, currency units or
composite currencies, commodities, equity indices or other indices) and the
manner in which such amounts shall be determined;
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<PAGE> 47
(18) whether the Company or a holder may elect payment of the principal of, or
premium or interest, if any, on, or additional amounts in respect of, such Debt
Securities in a currency, currencies, currency unit or units or composite
currency or currencies other than that in which such Debt Securities are
denominated or stated to be payable, the period or periods within which, and the
terms and conditions upon which, such election may be made, and the time and
manner of determining the exchange rate between the currency, currencies,
currency unit or units or composite currency or currencies in which such Debt
Securities are denominated or stated to be payable and the currency, currencies,
currency unit or units or composite currency or currencies in which such Debt
Securities are to be paid; (19) if other than the Trustee, the identity of each
Security Registrar, Paying Agent and Authenticating Agent; (20) the
applicability of the defeasance provisions to such Debt Securities; (21) the
person to whom any interest on any registered Debt Securities of the series
shall be payable, if other than the person in whose name that Debt Security (or
one or more predecessor Debt Securities) is registered at the close of business
on the applicable Regular Record Date for such payment of interest, the manner
in which, or the person to whom, any interest on any bearer Debt Security of the
series shall be payable, if otherwise than upon presentation and surrender of
the coupons appertaining thereto as they severally mature, and the extent to
which, or the manner in which, any interest payable on a temporary global Debt
Security on an Interest Payment Date will be paid if other than in the manner
provided in the Indenture; (22) whether and under what circumstances the Company
will pay additional amounts as contemplated by Section 1004 of the Indenture
(the term "interest," as used in this Prospectus, shall include such additional
amounts) on such Debt Securities to any holder who is a United States Alien (as
defined in the Indenture) (including any modification to the definition of such
term as contained in the Indenture as originally executed) in respect of any
tax, assessment or governmental charge and, if so, whether the Company will have
the option to redeem such Debt Securities rather than pay such additional
amounts (and the terms of any such option); (23) any deletions from,
modifications of or additions to the Events of Default or covenants of the
Company with respect to any of such Debt Securities; (24) any special federal
income tax considerations applicable to such Debt Securities; and (25) any other
terms of such Debt Securities (which will not be inconsistent with the
provisions of the Indenture).
Debt Securities may be issued as Original Issue Discount Securities to be
sold at a substantial discount below their principal amount. In the event of an
acceleration of the maturity of any Original Issue Discount Security, the amount
payable to the holder of such Original Issue Discount Security upon such
acceleration will be determined in accordance with the applicable Prospectus
Supplement, the terms of such Debt Security and the Indenture, but will be an
amount less than the amount payable at the maturity of the principal of such
Original Issue Discount Security. Special federal income tax and other
considerations applicable thereto will be described in the Prospectus Supplement
relating thereto.
Reference is made to the Prospectus Supplement and the Pricing Supplement
relating to the particular series of Debt Securities offered thereby for
information with respect to any deletions from, modifications of or additions to
the Events of Default described below or covenants of the Company contained in
the Indenture, including any addition of a covenant or other provision providing
event risk or similar protection.
REGISTRATION, TRANSFER, PAYMENT AND PAYING AGENT
Unless otherwise indicated in the applicable Prospectus Supplement or
Pricing Supplement, each series of Debt Securities will be issued in registered
form only, without coupons. The Indenture, however, provides that the Company
may also issue Debt Securities in bearer form only, or in both registered and
bearer form. Debt Securities in bearer form shall not be offered, sold, resold
or delivered in connection with their original issuance in the United States or
to any United States person (as defined below) other than offices located
outside the United States of certain United States financial institutions. As
used herein, "United States person" means any citizen or resident of the United
States, any corporation, partnership or other entity created or organized in or
under the laws of the United States, or any estate or trust, the income of which
is subject to United States federal income taxation regardless of its source,
and "United States" means the United States of America (including the States and
the District of Columbia), its territories, its possessions and other areas
subject to its jurisdiction. Purchasers of Debt Securities in bearer form will
be subject to certification procedures and may be affected by certain
limitations under United States tax laws. Such procedures and limitations will
be described in the Prospectus Supplement or Pricing Supplement, relating to the
offering of the Debt Securities in bearer form.
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<PAGE> 48
Unless otherwise indicated in the applicable Prospectus Supplement or
Pricing Supplement, registered Debt Securities will be issued in denominations
of $1,000 or any integral multiple thereof and bearer Debt Securities will be
issued in denominations of $5,000. No service charge will be made for any
transfer or exchange of the Debt Securities, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
Unless otherwise described in the Prospectus Supplement or the Pricing
Supplement relating thereto, the principal, premium, if any, and interest, if
any, of or on the Debt Securities will be payable, and transfer of the Debt
Securities will be registrable, at the corporate trust office of The Chase
Manhattan Bank, N.A., as Paying Agent and Security Registrar under the
Indenture, in the Borough of Manhattan, The City of New York, provided that
payments of interest with respect to any Debt Security in registered form may be
made at the option of the Company by check mailed to the address appearing in
the applicable Security Register of the person in whose name such Debt Security
is registered at the close of business on the Regular Record Date or by transfer
to an account maintained with a bank located in the United States (Sections 305,
307, and 1002).
Unless otherwise indicated in the applicable Prospectus Supplement or the
Pricing Supplement, payment of principal of, premium, if any, and interest, if
any, on Debt Securities in bearer form will be made payable, subject to any
applicable laws and regulations, at such office outside the United States as
specified in the Prospectus Supplement or the Pricing Supplement and as the
Company may designate from time to time, at the option of the holder, by check
or by transfer to an account maintained by the payee with a bank located outside
the United States. Unless otherwise indicated in the applicable Prospectus
Supplement, payment of interest and certain additional amounts on Debt
Securities in bearer form will be made only against surrender of the coupon
relating to such Interest Payment Date. No payment with respect to any Debt
Security in bearer form will be made at any office or agency of the Company in
the United States or by check mailed to any address in the United States or by
transfer to an account maintained with a bank located in the United States.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities ("Global Debt Securities") that will be
deposited with, or on behalf of, a depositary (the "Depositary") identified in
the Prospectus Supplement relating to such series. Global Debt Securities may be
issued in either registered or bearer form and in either temporary or permanent
form. Unless and until it is exchanged in whole or in part for individual
certificates evidencing Debt Securities in definitive form represented thereby,
a Global Debt Security may not be transferred except as a whole by the
Depositary for such Global Debt Security to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary or another nominee of such
Depositary or by such Depositary or any such nominee to a successor of such
Depositary or a nominee of such successor.
The specific terms of the depositary arrangement with respect to a series
of Global Debt Securities and certain limitations and restrictions relating to a
series of bearer Global Debt Securities, will be described in the Prospectus
Supplement or the Pricing Supplement relating to such series.
OUTSTANDING DEBT SECURITIES
In determining whether the holders of the requisite principal amount of
Outstanding Debt Securities have given any request, demand, authorization,
direction, notice, consent or waiver under the Indenture, (i) the portion of the
principal amount of an Original Issue Discount Security that shall be deemed to
be Outstanding for such purposes shall be that portion of the principal amount
thereof that could be declared to be due and payable pursuant to the terms of
such Original Issue Discount Security as of the date of such determination, (ii)
the principal amount of any Indexed Security shall be the principal face amount
of such Indexed Security determined on the date of its original issuance, (iii)
the principal amount of a Debt Security denominated in a Foreign Currency (as
defined below) shall be the U.S. dollar equivalent, determined on the date of
original issue of such Debt Security, of the principal amount of such Debt
Security and (iv) any Debt Security owned by the Company or any obligor on such
Debt Security or any Affiliate of the Company or such other obligor, shall be
deemed not to be Outstanding (Section 101).
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<PAGE> 49
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be made by the Company
and the Trustee with the consent of the holders of 66 2/3% in aggregate
principal amount of the Outstanding Debt Securities of each series affected by
such modification or amendment; provided, however, that no such modification or
amendment may, without the consent of the holder of each Outstanding Debt
Security affected thereby: (a) change the stated maturity date of the principal
of, or any installment of principal or interest on, any Debt Security; (b)
reduce the principal amount of, or any premium or interest on, any Debt
Security; (c) reduce the amount of principal of an Original Issue Discount
Security payable upon acceleration of the maturity thereof or the amount thereof
provable in bankruptcy; (d) change the redemption provisions or adversely affect
the right of repayment at the option of any holder; (e) change the place of
payment of, currency of payment of principal of, or any premium or interest on,
any Debt Security; (f) impair the right to institute suit for the enforcement of
any payment on or with respect to any Debt Security; (g) reduce the percentage
in principal amount of Outstanding Debt Securities of any series the consent of
whose holders is required for modification or amendment of the Indenture or for
waiver of compliance with certain provisions of the Indenture or for waiver of
certain defaults; (h) modify the provisions of the Indenture described in this
paragraph or those regarding waiver of compliance with certain provisions of, or
certain defaults and their consequences under, the Indenture, except to increase
the percentage of Outstanding Debt Securities necessary to modify and amend the
Indenture or to give any such waiver, and except to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent of
the holder of each Outstanding Debt Security affected thereby; (i) make any
change that adversely affects the right to convert any Debt Security; or (j) in
the case of Subordinated Debt Securities, modify the provisions of the Indenture
with respect to subordination of such Subordinated Debt Securities in a manner
adverse to the holders (Section 902).
The holders of a majority in aggregate principal amount of the Outstanding
Debt Securities of each series may, on behalf of all holders of Debt Securities
of that series, waive, insofar as that series is concerned, compliance by the
Company with certain restrictive provisions of the Indenture (Section 1007). The
holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of each series may, on behalf of all holders of Debt Securities of
that series, waive any past default under the Indenture with respect to Debt
Securities of that series, except a default in the payment of principal or any
premium or interest on a Debt Security of such series, or a default in respect
of a provision which under the Indenture cannot be modified or amended without
the consent of the holder of each affected Outstanding Debt Security of that
series (Section 513).
Modifications and amendments of the Indenture may be made by the Company
and the Trustee without the consent of any holder for any of the following
purposes: (i) to evidence the succession of another corporation to the Company;
(ii) to add to the covenants of the Company for the benefit of the holders of
all or any series of Debt Securities or to surrender any right or power therein
conferred upon the Company; (iii) to add or change any provisions of the
Indenture to facilitate the issuance of bearer Debt Securities; (iv) to
establish the form or terms of Debt Securities of any series and any related
coupons; (v) to provide for the acceptance of appointment by a successor
Trustee; (vi) to cure any ambiguity, defect or inconsistency in the Indenture,
provided such action does not adversely affect the interests of holders of Debt
Securities of any series or any related coupons in any material respect; (vii)
to add to, delete from or revise the conditions, limitations and restrictions on
the authorized amount, terms or purposes of issue, authentication and delivery
of Debt Securities; (viii) to add any additional Events of Default; (ix) to
supplement any of the provisions of the Indenture to such extent as shall be
necessary to permit or facilitate the defeasance and discharge of any series of
Debt Securities, provided such action does not adversely affect the interests of
holders of Debt Securities of such series or any related coupons in any material
respect; (x) to secure the Debt Securities; (xi) to make provisions with respect
to conversion rights of holders of Debt Securities of any series; and (xii) to
amend or supplement any provision contained in the Indenture or in any
supplemental indenture, provided that such amendment or supplement does not
materially adversely affect the interests of the holders of any Debt Securities
then Outstanding (Section 901).
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company may consolidate or merge with or into, or transfer its assets
substantially as an entirety to, any corporation organized under the laws of any
domestic jurisdiction, provided that the successor corporation assumes the
Company's obligations on the Debt Securities and under the Indenture, that after
giving effect to the transaction
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<PAGE> 50
no Event of Default, and no event which, after notice or lapse of time or both,
would become an Event of Default, shall have occurred and be continuing, and
that certain other conditions are met (Section 801).
EVENTS OF DEFAULT
The following are Events of Default under the Indenture with respect to
Debt Securities of any series: (a) failure to pay principal of, or any premium
on, any Debt Security of that series when due; (b) failure to pay any interest
on any Debt Security of that series when due, continued for 30 days; (c) failure
to deposit any sinking fund payment, when due, in respect of any Debt Security
of that series; (d) breach of any other covenant or warranty of the Company in
the Indenture (other than a covenant or warranty included in the Indenture
solely for the benefit of a series of Debt Securities other than that series),
continued for 60 days after written notice as provided in the Indenture; (e)
certain events in bankruptcy, insolvency or reorganization involving the Company
or any Restricted Subsidiary (as hereinafter defined); (f) acceleration of
Indebtedness in a principal amount in excess of $10,000,000 of the Company or
any Restricted Subsidiary under the terms of the instrument under which such
Indebtedness was issued or secured, if such acceleration is not annulled within
30 days after written notice as provided in the Indenture; and (g) any other
Event of Default provided with respect to Debt Securities of that series
(Section 501). If an Event of Default with respect to Senior Debt Securities of
any series at the time Outstanding (other than an Event of Default described in
clause (e) above) occurs and is continuing, either the Trustee or the holders of
at least 25% in aggregate principal amount of the Outstanding Senior Debt
Securities of that series may declare the principal amount of all the Senior
Debt Securities of that series or such lesser amount as may be provided for in
the Senior Debt Securities of such series to be due and payable immediately. If
an Event of Default specified in clause (e) above with respect to any Debt
Securities of any series at the time Outstanding occurs, the principal amount of
all the Debt Securities of that series or such lesser amount as may be provided
for in the Debt Securities of such series will ipso facto become immediately due
and payable without any declaration on the part of the Trustee or any holder.
UNLESS OTHERWISE INDICATED IN THE APPLICABLE PROSPECTUS SUPPLEMENT OR PRICING
SUPPLEMENT, THERE IS NO RIGHT OF ACCELERATION IN THE CASE OF DEFAULT IN THE
PAYMENT OF PRINCIPAL OF OR INTEREST ON THE SUBORDINATED DEBT SECURITIES OR THE
PERFORMANCE OF ANY OTHER OBLIGATION OF THE COMPANY UNDER THE SUBORDINATED
INDENTURE. At any time after Debt Securities of any series have been
accelerated, but before a judgment or decree based on acceleration has been
obtained, the holders of a majority in aggregate principal amount of Outstanding
Debt Securities of that series may rescind and annul such acceleration, provided
that, among other things, all Events of Default with respect to such series,
other than payment defaults caused by such acceleration, have been cured or
waived as provided in the Indenture (Section 502).
"Restricted Subsidiary" means Standard Federal Bank so long as it remains a
Subsidiary, and any other successor to all or a principal part of the business
or properties thereof, and any other Subsidiary which the Board of Directors
designates as a Restricted Subsidiary (Section 101).
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Company may discharge certain obligations to holders of any series of
Debt Securities that have not already been delivered to the Trustee for
cancellation and that either have become due and payable or will become due and
payable within one year (or scheduled for redemption within one year) by
depositing with the Trustee, in trust, funds in U.S. dollars or in such Foreign
Currency in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities in respect of principal (and
premium, if any) and interest to the date of such deposit (if such Debt
Securities have become due and payable) or to the Maturity thereof, as the case
may be (Section 401).
The Indenture provides that, if the provisions of Section 402 thereof are
made applicable to the Debt Securities of or within any series pursuant to
Section 301 thereof, the Company may elect either (a) to defease and be
discharged from any and all obligations with respect to such Debt Securities
(except for, among other things, the obligation to pay Additional Amounts, if
any, upon the occurrence of certain events of taxation, assessment or
governmental charge with respect to payments on such Debt Securities and the
obligations to register the transfer or exchange of such Debt Securities, to
replace temporary or mutilated, destroyed, lost or stolen Debt Securities, to
maintain an office or agency in respect of such Debt Securities and to hold
moneys for payment in trust) ("defeasance") (Section 402(2)) or (b) to be
released from its obligations with respect to such Debt Securities
11
<PAGE> 51
under the covenants described in "Limitation on Sale or Pledge of Stock of the
Bank" below or, if provided pursuant to Section 301 of the Indenture, its
obligations with respect to any other covenant, and any omission to comply with
such obligations shall not constitute a default or an Event of Default with
respect to such Debt Securities ("covenant defeasance") (Section 402(3)), in
either case upon the irrevocable deposit by the Company with the Trustee, in
trust, of an amount, in U.S. dollars or in such Foreign Currency in which such
Debt Securities are payable at Stated Maturity, or Government Obligations (as
defined below), or both, applicable to such Debt Securities which through the
scheduled payment of principal and interest in accordance with their terms will
provide money in an amount sufficient to pay the principal of (and premium, if
any) and interest on such Debt Securities, and any mandatory sinking fund or
analogous payments thereon, on the scheduled due dates therefor (Section
402(4)).
Such a trust may only be established if, among other things, (i) the
applicable defeasance or covenant defeasance does not result in a breach or
violation of, or constitute a default under, the Indenture or any other material
agreement or instrument to which the Company is a party or by which it is bound,
(ii) no default or Event of Default with respect to the Debt Securities to be
defeased shall have occurred and be continuing on the date of the establishment
of such a trust and (iii) the Company has delivered to the Trustee an Opinion of
Counsel (as specified in the Indenture) to the effect that the holders of such
Debt Securities will not recognize income, gain or loss for U.S. federal income
tax purposes as a result of such defeasance or covenant defeasance and will be
subject to U.S. federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such defeasance or covenant
defeasance had not occurred, and such Opinion of Counsel, in the case of
defeasance, must refer to and be based upon a letter ruling of the Internal
Revenue Service received by the Company, a Revenue Ruling published by the
Internal Revenue Service or a change in applicable U.S. federal income tax law
occurring after the date of the Indenture (Section 402(4)(d) and (e)).
"Foreign Currency" means any currency, currency unit or composite currency,
including, without limitation, the ECU, issued by the government of one or more
countries other than the United States of America or by any recognized
confederation or association of such governments (Section 101).
"Government Obligations" means securities which are (i) direct obligations
of the United States of America or the government or the governments in the
confederation which issued the Foreign Currency in which the Debt Securities of
a particular series are payable, for the payment of which its full faith and
credit is pledged or (ii) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America or
such government or governments which issued the Foreign Currency in which the
Debt Securities of such series are payable, the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America or such other government or governments, which, in the case of
clauses (i) and (ii), are not callable or redeemable at the option of the issuer
or issuers thereof, and shall also include a depository receipt issued by a bank
or trust company as custodian with respect to any such Government Obligation or
a specific payment of interest on or principal of or any other amount with
respect to any such Government Obligation held by such custodian for the account
of the holder of a depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the Government Obligation or the specific payment of
interest on or principal of or any other amount with respect to the Government
Obligation evidenced by such depository receipt (Section 101).
Unless otherwise provided in the applicable Prospectus Supplement or
Pricing Supplement, if after the Company has deposited funds and/or Government
Obligations to effect defeasance or covenant defeasance with respect to Debt
Securities of any series, (a) the holder of a Debt Security of such series is
entitled to, and does, elect pursuant to Section 301 of the Indenture or the
terms of such Debt Security to receive payment in a currency other than that in
which such deposit has been made in respect of such Debt Security, or (b) a
Conversion Event (as defined below) occurs in respect of the Foreign Currency in
which such deposit has been made, the indebtedness represented by such Debt
Security shall be deemed to have been, and will be, fully discharged and
satisfied through the payment of the principal of (and premium, if any) and
interest, if any, on such Debt Security as such Debt Security becomes due out of
the proceeds yielded by converting the amount so deposited in respect of such
Debt Security into the currency in which such Debt Security becomes payable as a
result of such election or such Conversion Event based on (x) in the case of
payments made pursuant to clause (a) above, the applicable market exchange rate
for such currency in effect on the second business day prior to such payment
date, or (y) with
12
<PAGE> 52
respect to a Conversion Event, the applicable market exchange rate for such
Foreign Currency in effect (as nearly as feasible) at the time of the Conversion
Event (Section 402(5)).
"Conversion Event" means the cessation of use of (i) a Foreign Currency
both by the government of the country or the confederation which issued such
Foreign Currency and for the settlement of transactions by a central bank or
other public institutions of or within the international banking community, (ii)
the ECU both within the European Monetary System and for the settlement of
transactions by public institutions of or within the European Community or (iii)
any currency unit or composite currency other than the ECU for the purposes for
which it was established. Unless otherwise provided in the applicable Prospectus
Supplement, all payments of principal of (and premium, if any) and interest on
any Debt Security that is payable in a Foreign Currency that ceases to be used
by its government or confederation of issuance shall be made in U.S. dollars
(Section 101).
In the event the Company effects covenant defeasance with respect to any
Debt Securities and such Debt Securities are declared due and payable because of
the occurrence of any Event of Default other than an Event of Default with
respect to Section 1005 of the Indenture (which Section would no longer be
applicable to such Debt Securities after such covenant defeasance) or with
respect to any other covenant as to which there has been covenant defeasance,
the amount in such Foreign Currency in which such Debt Securities are payable,
and Government Obligations on deposit with the Trustee, will be sufficient to
pay amounts due on such Debt Securities at the time of their Stated Maturity but
may not be sufficient to pay amounts due on such Debt Securities at the time of
the acceleration resulting from such Event of Default. However, the Company
would remain liable to make payment of such amounts due at the time of
acceleration.
The applicable Prospectus Supplement or Pricing Supplement may further
describe the provisions, if any, permitting such defeasance or covenant
defeasance, including any modifications to the provisions described above, with
respect to the Debt Securities of or within a particular series.
Under each Indenture, the Company is required to furnish to the Trustee
annually a statement as to performance by the Company of certain of its
obligations under the Indenture and as to any default in such performance. The
Company is also required to deliver to the Trustee, within five days after the
occurrence thereof, written notice of any event which after notice or lapse of
time or both would constitute an Event of Default (Section 1008).
LIMITATION ON SALE OR PLEDGE OF STOCK OF THE BANK
The Senior Indenture provides that, unless otherwise specified therein with
respect to a series of Senior Debt Securities, the Company (a) will not (i)
sell, transfer or otherwise dispose of any shares of the Voting Stock of the
Bank or (ii) permit the Bank to issue, sell or otherwise dispose of shares of
its Voting Stock unless in either case the Bank remains a Controlled Subsidiary
and (b) will not permit the Bank to (i) merge or consolidate unless the
surviving entity is the Bank or a Controlled Subsidiary or (ii) convey or
transfer its properties and assets substantially as an entirety to any person,
except to the Company or a Controlled Subsidiary (Section 1005). However, the
Company may avoid this restriction if prior to any such transaction the Bank
unconditionally guarantees payment when due of the principal of, premium, if
any, and interest on the Senior Debt Securities, the Bank obtains all regulatory
approvals, if any, required to permit such guarantee, and the Company obtains an
Opinion of Counsel to such guarantee. For purposes of these covenants, the Bank
includes any successor but not a Subsidiary of the Bank, "Controlled Subsidiary"
means any Person at least 80% of the outstanding shares of Voting Stock (except
for directors' qualifying shares, if any) of which is at the time owned directly
or indirectly by the Company and "Voting Stock" of any Person means stock of any
class or classes, however designated, having ordinary voting power for the
election of a majority of the board of directors of such Person, other than
stock having such power only by reason of the occurrence of a contingency
(Sections 101 and 1005).
The Senior Indenture also provides that, unless otherwise specified with
respect to a series of Senior Debt Securities, the Company will not create,
assume, incur or suffer to exist, as security for indebtedness for borrowed
money any mortgage, pledge, encumbrance, lien or charge of any kind upon the
Voting Stock of the Bank (other than directors' qualifying shares) without
effectively providing that such series of Senior Debt Securities is secured
equally and ratably with (or prior to) such indebtedness; provided, however,
that the Company may create, assume, incur or suffer to exist any such mortgage,
pledge, encumbrance, lien or charge without regard to the foregoing
13
<PAGE> 53
provisions so long as after giving effect thereto the Company will own directly
or indirectly at least 80% of the Voting Stock of the Bank then issued and
outstanding, free and clear of any such mortgage, pledge, encumbrance, lien or
charge. The Company may also avoid this restriction if prior to creating,
assuming, incurring or suffering to exist any such mortgage, pledge,
encumbrance, lien or charge, the Bank unconditionally guarantees payment when
due of the principal of, premium, if any, and interest on the Debt Securities,
the Bank obtains all regulatory approvals, if any, required to permit such
guarantee, and the Company obtains an Opinion of Counsel pertaining to such
guarantee.
The Subordinated Indenture does not contain any of the foregoing covenants.
The Indentures do not restrict the Company from incurring, assuming or
becoming liable for any type of debt or from creating, assuming, incurring or
permitting to exist any mortgage, pledge, encumbrance, lien or charge on its
property (except the Voting Stock of the Bank). The Indenture does not require
the Company to maintain any financial ratios or specified levels of net worth or
liquidity.
Unless otherwise indicated in the applicable Prospectus Supplement with
respect to a series of Debt Securities, the covenants contained in the Indenture
would not necessarily provide holders of Debt Securities any protection in the
event of a highly leveraged or other transaction involving the Company that may
adversely affect holders.
Any additional restrictive covenants with respect to any series of Debt
Securities, and any variations from the foregoing restrictive covenants
applicable to any series of Debt Securities, will be described in the applicable
Prospectus Supplement or Pricing Supplement.
SUBORDINATION
The payment of the principal of and interest on the Subordinated Debt
Securities will, to the extent set forth in the Indenture relating thereto, be
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness (as defined below). Upon any payment or distribution of assets to
creditors upon any liquidation, dissolution, winding up, reorganization,
assignment for the benefit of creditors, marshalling of assets or any
bankruptcy, insolvency, receivership or similar proceedings of the Company, the
holders of all Senior Indebtedness will first be entitled to receive payment in
full of all amounts due or to become due thereon before the holders of the
Subordinated Debt Securities will be entitled to receive any payment in respect
of the principal of or interest thereto. In the event of the acceleration of the
maturity of any Subordinated Debt Securities pursuant to the terms of the
Subordinated Indenture, the holders of all Senior Indebtedness will first be
entitled to receive payment in full of all amounts due thereon before the
holders of the Subordinated Debt Securities will be entitled to receive any
payment upon the principal of or interest thereon. No payment on account of
principal or interest in respect of the Subordinated Debt Securities may be made
if there shall have occurred and be continuing beyond any applicable grace
period a default in any payment with respect to Senior Indebtedness, or if there
shall have occurred an event of default with respect to any Senior Indebtedness
permitting the holders thereof to accelerate the maturity thereof, or if any
judicial proceeding shall be pending with respect to any such default (Article
16 of the Subordinated Indenture).
By reason of such subordination, in the event of insolvency, holders of the
Subordinated Debt Securities may recover less, ratably, than other creditors of
the Company, including holders of Senior Indebtedness.
"Senior Indebtedness" is defined in the Indenture as any indebtedness for
money borrowed (including all indebtedness of the Corporation for borrowed and
purchased money of the Corporation, all obligations of the Corporation arising
from off-balance sheet guarantees by the Corporation and direct credit
substitutes, and obligations of the Corporation associated with derivative
products such as interest and foreign exchange rate contracts and commodity
contracts) that is outstanding on the date of execution of the Subordinated
Indenture, or is thereafter created, incurred or assumed, for the payment of
which the Corporation is at the time of determination responsible or liable as
obligor, guarantor or otherwise, and all deferrals, renewals, extensions and
refundings of any such indebtedness or obligations, other than the Subordinated
Debt Securities or any other indebtedness as to which, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is provided that such indebtedness is subordinate in right of payment to any
other indebtedness of the Corporation. (Section 101 of the Subordinated
Indenture). The Indenture relating to the Subordinated Debt Securities does not
prohibit or limit the incurrence of additional Senior Indebtedness.
14
<PAGE> 54
ADDITIONAL PROVISIONS
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request or direction of any of the holders, unless such holders shall have
offered to the Trustee reasonable indemnity (Section 601). Subject to such
provisions for the indemnification of the Trustee and certain other conditions,
the holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee, with respect to the Debt
Securities of that series (Section 512).
No holder of any Debt Security of any series will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless: (i) such holder shall have previously given to the Trustee
written notice of a continuing Event of Default with respect to Debt Securities
of that series; (ii) the holders of not less than 25% in aggregate principal
amount of the Outstanding Debt Securities of that series shall have made written
request, and offered reasonable indemnity, to the Trustee to institute such
proceeding as trustee; (iii) the Trustee shall have failed to institute such
proceeding within 60 days after receipt of such written request; and (iv) the
Trustee shall not have received from the holders of a majority in principal
amount of the Outstanding Debt Securities of that series a direction
inconsistent with such request (Section 507). However, the holder of any Debt
Security will have an absolute right to receive payment of the principal of (and
premium, if any) and interest on such Debt Security on the due dates expressed
in such Debt Security and to institute suit for the enforcement of any such
payment (Section 508).
CONCERNING THE TRUSTEE
The Company has, from time to time, engaged in transactions with the
Trustee in the ordinary course of its business.
PLAN OF DISTRIBUTION
The Company may sell all or part of the Debt Securities from time to time
on terms determined at the time such Debt Securities are offered for sale. The
Debt Securities may be sold (i) through underwriters or dealers; (ii) through
agents; (iii) directly to one or more purchasers; or (iv) through a combination
of any such methods of sale. The Prospectus Supplement or the Pricing Supplement
with respect to the Debt Securities of a particular series will describe the
terms of the offering of such Debt Securities, including the name of the agent
or the name or names of any underwriters, the public offering or purchase price,
any discounts and commissions to be allowed or paid to the agent or
underwriters, all other items constituting underwriting compensation, the
discounts and commissions to be allowed or paid to dealers, if any, and the
exchanges, if any, on which the Debt Securities will be listed. Only the agents
or underwriters so named in the Prospectus Supplement or the Pricing Supplement
are agents or underwriters in connection with the Debt Securities offered
thereby. Under certain circumstances, the Company may repurchase Debt Securities
and reoffer them to the public as set forth above. The Company may also arrange
for repurchases and resales of such Debt Securities by dealers.
If so indicated in the Prospectus Supplement or the Pricing Supplement, the
Company will authorize underwriters to solicit offers by certain institutions to
purchase Debt Securities from the Company pursuant to Delayed Delivery Contracts
providing for payment and delivery on the date stated in the Prospectus
Supplement or the Pricing Supplement. Each such contract will be for an amount
not less than, and, unless the Company otherwise agrees, the aggregate principal
amount of Debt Securities sold pursuant to such contracts shall not be more
than, the respective amounts stated in the Prospectus Supplement or the Pricing
Supplement. Institutions with whom contracts, when authorized, may be made
include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions, and other
institutions, but shall in all cases be subject to the approval of the Company.
Delayed Delivery Contracts will not be subject to any conditions except that the
purchase by an institution of Debt Securities covered thereby shall not at the
time of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject.
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<PAGE> 55
The Company will agree to indemnify any agents or underwriters through
which Debt Securities are sold against certain civil liabilities, including
liabilities under the Securities Act, or to contribute to payments the agents or
the underwriters may be required to make in respect thereof.
Certain of the underwriters and their associates and affiliates may be
customers of, have borrowing relationships with, engage in other transactions
with, and/or perform services, including investment banking services for, the
Company or its affiliates in the ordinary course of business.
LEGAL OPINIONS
The validity of the Debt Securities offered hereby and other legal matters
will be passed upon for the Company by Dykema Gossett P.L.L.C., Detroit,
Michigan. Certain legal matters will be passed upon for the underwriters or
agents by Brown & Wood, New York, New York. Members of the firm of Dykema
Gossett P.L.L.C. own in the aggregate a total of 17,800 shares of the Company's
common stock (less than 0.1% of the total outstanding shares).
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference from the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for the periods
ended March 31, 1996 and 1995, which is incorporated herein by reference,
Deloitte & Touche LLP have applied limited procedures in accordance with
professional standards for a review of such information. However, as stated in
their reports included in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996 and incorporated by reference herein, they did not
audit and they do not express an opinion on that interim financial information.
Accordingly, the degree of reliance on their reports on such information should
be restricted in light of the limited nature of the review procedures applied.
Deloitte & Touche LLP are not subject to the liability provisions of Section 11
of the Securities Act for their reports on the unaudited interim financial
information because those reports are not "reports" or a "part" of the
registration statement prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Securities Act.
The consolidated financial statements of Bell Bancorp, Inc. incorporated by
reference into the Company's Current Reports on Form 8-K dated May 14 and June
13, 1996, which are incorporated by reference herein, have been incorporated by
reference herein in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, and upon the authority of said firm as
experts in accounting and auditing.
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<PAGE> 56
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- ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PRICING SUPPLEMENT, THE PROSPECTUS OR THE PROSPECTUS
SUPPLEMENT IN CONNECTION WITH THE OFFER MADE BY THIS PRICING SUPPLEMENT, THE
PROSPECTUS AND THE PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PRICING SUPPLEMENT,
THE PROSPECTUS OR THE PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER AND
THEREUNDER SHALL UNDER ANY CIRCUMSTANCE CREATE AN IMPLICATION THAT THERE HAS NOT
BEEN ANY CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PRICING SUPPLEMENT, THE PROSPECTUS AND THE PROSPECTUS SUPPLEMENT DO NOT
CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER
OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER IS
NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
------------------------
TABLE OF CONTENTS
PRICING SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
The Company........................... PS-2
Use of Proceeds....................... PS-2
Capitalization........................ PS-3
Ratio of Earnings to Fixed Charges.... PS-3
Recent Developments................... PS-5
Description of Notes.................. PS-7
Supplemental Plan of Distribution..... PS-8
PROSPECTUS SUPPLEMENT
Risk Factors.......................... S-3
Description of Notes.................. S-4
Special Provisions Relating to Foreign
Currency Notes...................... S-20
Certain United States Federal Income
Tax Considerations.................. S-22
Plan of Distribution.................. S-29
PROSPECTUS
Available Information................. 2
Incorporation of Certain Documents By
Reference........................... 2
The Company........................... 2
Certain Regulatory Considerations..... 3
Use of Proceeds....................... 6
Ratio of Earnings to Fixed Charges.... 6
Description of Debt Securities........ 6
Plan of Distribution.................. 15
Legal Opinions........................ 16
Experts............................... 16
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
$100,000,000
[STANDARD FEDERAL LOGO]
STANDARD FEDERAL
BANCORPORATION, INC.
% SUBORDINATED NOTES
DUE JULY 1, 2006
---------------------------
PRICING SUPPLEMENT
---------------------------
MERRILL LYNCH & CO.
LEHMAN BROTHERS
SMITH BARNEY INC.
UBS SECURITIES LLC
FIRST OF MICHIGAN CORPORATION
KEEFE, BRUYETTE & WOODS, INC.
MCDONALD & COMPANY
SECURITIES, INC.
RONEY & CO.
JULY , 1996
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 57
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following statement sets forth the estimated amounts of expenses to be
borne by the Company in connection with the distribution of the securities
offered hereby:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee $ 68,966
Blue Sky fees and expenses 15,000
Accounting fees and expenses 25,000
Legal fees and expenses 150,000
Trustee's fees and expenses 15,000
Printing and engraving expenses 120,000
Rating Agency fees 200,000
Miscellaneous expenses 16,034
--------
Total $610,000
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 561 through 571 of the Michigan Business Corporation Act (the
"MBCA") govern the indemnification of officers, directors and other persons. In
this regard, the MBCA provides for indemnification of directors and officers
acting in good faith and in a manner they reasonably believe to be in, or not
opposed to, the best interest of the Company or its shareholders (and, with
respect to a criminal proceeding, if they have no reasonable cause to believe
their conduct to be unlawful). Such indemnification may be made against (a)
expenses (including attorney's fees), judgments, penalties, fines and amounts
paid in settlement actually and reasonably incurred in connection with any
threatened, pending or completed action, suit or proceeding (other than an
action by, or in the right of, the Company) arising out of a position with the
Company (or with some other entity at the Company's request), and (b) expenses
(including attorney's fees) and amounts paid in settlement actually and
reasonably incurred in connection with a threatened, pending or completed action
or suit by, or in the right of, the Company, unless the director or officer is
found liable to the Company and an appropriate court does not determine that he
or she is nevertheless fairly and reasonably entitled to indemnification. The
MBCA requires indemnification for expenses to the extent that a director or
officer is successful in defending against any such action, suit or proceeding,
and otherwise requires, in general, that the indemnification provided for in (a)
and (b) above be made only on a determination by a majority vote of a quorum of
the Board of Directors comprised of members who were not parties to or
threatened to be made parties to such action. In certain circumstances, the MBCA
further permits advances to cover such expenses before a final determination
that indemnification is permissible, upon receipt of (i) a written affirmation
by the director or officer of his good faith belief that he has met the
applicable standard of conduct set forth in the MBCA, and (ii) a written
undertaking by or on behalf of the director or officer to repay such amounts
unless it shall ultimately be determined that he is entitled to indemnification
and a determination that the facts then known to those making the advance would
not preclude indemnification.
The MBCA permits the Company to purchase insurance on behalf of its
directors and officers against liabilities arising out of their positions with
the Company, whether or not such liabilities would be within the indemnification
provisions of the MBCA.
Indemnification under the MBCA is not exclusive of other rights to
indemnification to which a person may be entitled under a Company's articles of
incorporation or bylaws, or under contract executed by such corporation. Subject
to the exceptions recited in the following sentence, the Company's Articles of
Incorporation provide that no director shall be personally liable to the Company
or its shareholders for damages for breach of his or her duty as a director.
Such exculpatory language does not, however, eliminate or limit the liability of
a director for (a) breach of the duty of loyalty, (b) acts or omissions that are
not in good faith or involve intentional misconduct or knowing violation of law,
(c) certain other violations of the Michigan Business Corporation Act, or (d)
responsibility in respect of any transaction from which the director has derived
an improper personal benefit.
II-1
<PAGE> 58
The bylaws of the Company provide that the Company shall indemnify its
directors, officers, employees and other agents ("indemnitees") in respect of
expenses, judgments, penalties, fines, and settlement of claims paid or
incurred, if the indemnitee acted in good faith and in what he or she reasonably
believed to be in, or not opposed to, the best interest of the corporation, and,
in the case of criminal action, if the indemnitee had no reasonable cause to
believe his or her conduct was unlawful. In respect of actions brought by or on
behalf of the Company in which the indemnitee is found liable, indemnification
shall not be made without a judicial determination by the court in which the
matter was heard that the indemnitee is, in all of the circumstances, fairly and
reasonably entitled to indemnification for reasonable expenses incurred. To the
extent that an indemnitee is successful in the defense of any proceeding, he or
she is entitled to be indemnified against actual and reasonable expenses
incurred in connection with such defense. Unless a court orders indemnification,
it shall not be made unless the directors of the Company determine that
indemnification is proper. The bylaws establish procedures pursuant to which
such a determination may be made. The bylaws authorize the Company to purchase
and maintain directors' and officers' liability insurance.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1. Form of Distribution Agreement*
4.1 Form of Senior Indenture*
4.2 Form of Fixed Rate Senior Note*
4.3 Form of Floating Rate Senior Note*
4.4 Form of Subordinated Indenture (filed herewith)
4.5 Form of Fixed Rate Subordinated Note (filed herewith)
4.6 Form of Floating Rate Subordinated Note (filed herewith)
5. Opinion of Dykema Gossett P.L.L.C.*
12. Computation of Ratio of Earnings to Fixed Charges*
15. Letter re: Unaudited Interim Financial Information (filed herewith)
23.1 Consent of Deloitte & Touche LLP (filed herewith)
23.2 Consent of KPMG Peat Marwick LLP (filed herewith)
23.3 Consent of Dykema Gossett P.L.L.C. (contained in Exhibit 5)*
24. Power of Attorney (contained on signature page)*
25. Form T-1 Statement of Eligibility of Trustee*
</TABLE>
- -------------------------
* Previously filed
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
1. That for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
2. (a) To file, during any period in which offers or sales are being
made, a post effective amendment to this registration statement 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, (b) that, for the
purpose of determining any liability under the Securities Act, each such
post-effective amendment 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, and (c) to remove from registration by means of a
post-effective amendment any of the securities which remain unsold at the
termination of the offering.
II-2
<PAGE> 59
ITEM 17. UNDERTAKINGS -- CONTINUED
3. That insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
II-3
<PAGE> 60
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment to its
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Troy, State of Michigan on the 26th day of June,
1996.
STANDARD FEDERAL BANCORPORATION, INC.
By: /s/ THOMAS R. RICKETTS
------------------------------------
Thomas R. Ricketts,
Chairman and President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities indicated on the 26th day of June, 1996.
<TABLE>
<CAPTION>
NAME AND SIGNATURE CAPACITY
- ------------------------------------- ------------------------------------------------------
<C> <S>
/s/ THOMAS R. RICKETTS Chairman, President and Director (Principal Executive
- ------------------------------------- Officer)
Thomas R. Ricketts
* Executive Vice President, Secretary and Director
- -------------------------------------
Garry G. Carley
* Senior Vice President and Chief Financial Officer
- ------------------------------------- (Principal Financial and Accounting Officer)
Joseph Krul
* Director
- -------------------------------------
Beverly Beltaire
* Director
- -------------------------------------
Ernest L. Grove, Jr.
* Director
- -------------------------------------
Norman P. Hahn
* Director
- -------------------------------------
William E. Hoglund
* Director
- -------------------------------------
John M. O'Hara
</TABLE>
II-4
<PAGE> 61
<TABLE>
<CAPTION>
NAME AND SIGNATURE CAPACITY
- -------------------------------------------- -------------------------------------------------
<S> <C>
Director
- --------------------------------------------
Jack L. Otto
* Director
- --------------------------------------------
E.G. Wilkinson, Jr.
* Director
- --------------------------------------------
David P. Williams
*By: /s/ THOMAS R. RICKETTS
-------------------------------------
Thomas R. Ricketts, Attorney-in-fact
</TABLE>
II-5
<PAGE> 62
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -------------------------------------------------------------------------------------
<C> <S>
1. Form of Distribution Agreement*
4.1 Form of Senior Indenture*
4.2 Form of Fixed Rate Senior Note*
4.3 Form of Floating Rate Senior Note*
4.4 Form of Subordinated Indenture (filed herewith)
4.5 Form of Fixed Rate Subordinated Note (filed herewith)
4.6 Form of Floating Rate Subordinated Note (filed herewith)
5. Opinion of Dykema Gossett P.L.L.C.*
12. Computation of Ratio of Earnings to Fixed Charges*
15. Letter re: Unaudited Interim Financial Information (filed herewith)
23.1 Consent of Deloitte & Touche LLP (filed herewith)
23.2 Consent of KPMG Peat Marwick LLP (filed herewith)
23.3 Consent of Dykema Gossett P.L.L.C. (contained in Exhibit 5)*
24. Power of Attorney (contained on signature page)*
25. Form T-1 Statement of Eligibility of Trustee*
</TABLE>
- -------------------------
* Previously filed
<PAGE> 1
EXHIBIT 4.4
STANDARD FEDERAL BANCORPORATION, INC.,
Issuer
to
THE CHASE MANHATTAN BANK, N.A.,
Trustee
_______________
INDENTURE
__________
Dated as of June __, 1996
Subordinated Debt Securities
<PAGE> 2
Reconciliation and tie between
Trust Indenture Act of 1939 (the "Trust Indenture Act")
and Indenture
Trust Indenture
Act Section Indenture Section
Section 310(a)(1) 607
(a)(2) 607
(b) 608
Section 312(a) 701
(b) 702
(c) 702
Section 313(a) 703
(b)(2) 703
(c) 703
(d) 703
Section 314(a) 704
(c)(1) 102
(c)(2) 102
(e) 102
(f) 102
Section 316(a) (last sentence) 101
(a)(1)(A) 502, 512
(a)(1)(B) 513
(b) 508
Section 317(a)(1) 503
(a)(2) 504
(b) 1003
Section 318(a) 108
- ---------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be part of the Indenture.
Attention should also be directed to Section 318(c) of the Trust
Indenture Act, which provides that the provisions of Sections 310 to
and including 317 are a part of and govern every qualified indenture,
whether or not physically contained herein.
<PAGE> 3
TABLE OF CONTENTS
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions. . . . . . . . . . . . . . . . . . . . . . 2
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Additional Amounts . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . 3
Authorized Newspaper . . . . . . . . . . . . . . . . . . . . . . 3
Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Bearer Security . . . . . . . . . . . . . . . . . . . . . . . . 3
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . 3
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . 3
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Cedel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Company Request and Company Order . . . . . . . . . . . . . . . 4
Conversion Event . . . . . . . . . . . . . . . . . . . . . . . . 4
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . 4
Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Coupon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
CUSIP number . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . 5
Dollars or $ . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ECU . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Euroclear . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
European Monetary System . . . . . . . . . . . . . . . . . . . . 5
European Union . . . . . . . . . . . . . . . . . . . . . . . . . 5
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . 5
Foreign Currency . . . . . . . . . . . . . . . . . . . . . . . . 5
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Government Obligations . . . . . . . . . . . . . . . . . . . . . 5
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ii
<PAGE> 4
Independent Public Accountants . . . . . . . . . . . . . . . . . 6
Indexed Security . . . . . . . . . . . . . . . . . . . . . . . . 6
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . 6
Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . 6
Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . 6
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
New York Banking Day . . . . . . . . . . . . . . . . . . . . . . 7
Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . 7
Officers' Certificate . . . . . . . . . . . . . . . . . . . . . 7
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . 7
Original Issue Discount Security . . . . . . . . . . . . . . . . 7
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . 9
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . 9
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . 9
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . 9
Registered Security . . . . . . . . . . . . . . . . . . . . . . 9
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . 9
Required Currency . . . . . . . . . . . . . . . . . . . . . . . 9
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . 9
Restricted Subsidiary . . . . . . . . . . . . . . . . . . . . . 9
Security or Securities . . . . . . . . . . . . . . . . . . . . . 9
Security Register and Security Registrar . . . . . . . . . . . . 10
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . 10
Special Record Date . . . . . . . . . . . . . . . . . . . . . . 10
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . 10
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . 10
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
United States . . . . . . . . . . . . . . . . . . . . . . . . . 11
United States Alien . . . . . . . . . . . . . . . . . . . . . . 11
U.S. Depository or Depository . . . . . . . . . . . . . . . . . 11
Vice President . . . . . . . . . . . . . . . . . . . . . . . . . 11
Voting Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 102. Compliance Certificates and Opinions. . . . . . . . . . 11
Section 103. Form of Documents Delivered to Trustee. . . . . . . . . 12
Section 104. Acts of Holders. . . . . . . . . . . . . . . . . . . . 12
Section 105. Notices, etc. to Trustee and Company. . . . . . . . . . 14
Section 106. Notice to Holders of Securities; Waiver. . . . . . . . 15
Section 107. Language of Notices. . . . . . . . . . . . . . . . . . 16
Section 108. Conflict with Trust Indenture Act. . . . . . . . . . . 16
iii
<PAGE> 5
Section 109. Effect of Headings and Table of Contents. . . . . . . . . 16
Section 110. Successors and Assigns. . . . . . . . . . . . . . . . . . 16
Section 111. Separability Clause. . . . . . . . . . . . . . . . . . . 16
Section 112. Benefits of Indenture. . . . . . . . . . . . . . . . . . 16
Section 113. Governing Law. . . . . . . . . . . . . . . . . . . . . . 17
Section 114. Legal Holidays. . . . . . . . . . . . . . . . . . . . . . 17
Section 115. Counterparts. . . . . . . . . . . . . . . . . . . . . . . 17
Section 116. Judgment Currency. . . . . . . . . . . . . . . . . . . . 17
ARTICLE TWO
SECURITIES FORMS
Section 201. Forms Generally. . . . . . . . . . . . . . . . . . . . . 18
Section 202. Form of Trustee's Certificate of Authentication. . . . . 18
Section 203. Securities in Global Form. . . . . . . . . . . . . . . . 19
ARTICLE THREE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series. . . . . . . . . . . 20
Section 302. Currency; Denominations. . . . . . . . . . . . . . . . . 24
Section 303. Execution, Authentication, Delivery and Dating. . . . . . 24
Section 304. Temporary Securities. . . . . . . . . . . . . . . . . . . 26
Section 305. Registration, Transfer and Exchange. . . . . . . . . . . 27
Section 306. Mutilated, Destroyed, Lost and Stolen Securities. . . . . 30
Section 307. Payment of Interest and Certain Additional Amounts;
Rights to Interest and Certain Additional Amounts
Preserved . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 308. Persons Deemed Owners. . . . . . . . . . . . . . . . . . 34
Section 309. Cancellation. . . . . . . . . . . . . . . . . . . . . . . 34
Section 310. Computation of Interest. . . . . . . . . . . . . . . . . 35
ARTICLE FOUR
SATISFACTION AND DISCHARGE OF INDENTURE
Section 401. Satisfaction and Discharge. . . . . . . . . . . . . . . . 35
Section 402. Defeasance and Covenant Defeasance. . . . . . . . . . . . 37
Section 403. Application of Trust Money. . . . . . . . . . . . . . . . 41
iv
<PAGE> 6
ARTICLE FIVE
REMEDIES
Section 501. Events of Default. . . . . . . . . . . . . . . . . . . . . .41
Section 502. Acceleration of Maturity; Rescission and Annulment. . . . . 43
Section 503. Collection of Indebtedness and Suits for Enforcement
by Trustee. . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 504. Trustee May File Proofs of Claim. . . . . . . . . . . . . . 45
Section 505. Trustee May Enforce Claims without Possession of
Securities or Coupons . . . . . . . . . . . . . . . . . . . 46
Section 506. Application of Money Collected. . . . . . . . . . . . . . . 46
Section 507. Limitations on Suits. . . . . . . . . . . . . . . . . . . . 47
Section 508. Unconditional Right of Holders to Receive Principal
and any Premium, Interest and Additional Amounts. . . . . . 47
Section 509. Restoration of Rights and Remedies. . . . . . . . . . . . . 48
Section 510. Rights and Remedies Cumulative. . . . . . . . . . . . . . . 48
Section 511. Delay or Omission Not Waiver. . . . . . . . . . . . . . . . 48
Section 512. Control by Holders of Securities. . . . . . . . . . . . . . 48
Section 513. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . 49
Section 514. Waiver of Stay or Extension Laws. . . . . . . . . . . . . . 49
Section 515. Undertaking for Costs . . . . . . . . . . . . . . . . . . . 49
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Rights of Trustee. . . . . . . . . . . . . . . . . 50
Section 602. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . 51
Section 603. Not Responsible for Recitals or Issuance of Securities. . . 52
Section 604. May Hold Securities. . . . . . . . . . . . . . . . . . . . 52
Section 605. Money Held in Trust. . . . . . . . . . . . . . . . . . . . 52
Section 606. Compensation and Reimbursement. . . . . . . . . . . . . . . 52
Section 607. Corporate Trustee Required; Eligibility. . . . . . . . . . 53
Section 608. Resignation and Removal; Appointment of Successor. . . . . 53
Section 609. Acceptance of Appointment by Successor. . . . . . . . . . . 55
Section 610. Merger, Conversion, Consolidation or Succession to Business 56
Section 611. Appointment of Authenticating Agent. . . . . . . . . . . . 57
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and Addresses of Holders . 59
v
<PAGE> 7
Section 702. Preservation of Information; Communications to Holders. . . 59
Section 703. Reports by Trustee. . . . . . . . . . . . . . . . . . . . . 59
Section 704. Reports by Company. . . . . . . . . . . . . . . . . . . . . 60
ARTICLE EIGHT
CONSOLIDATION, MERGER AND SALES
Section 801. Company May Consolidate, Etc., Only on Certain Terms. . . . 61
Section 802. Successor Person Substituted for Company. . . . . . . . . . 62
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures without Consent of Holders. . . . . 62
Section 902. Supplemental Indentures with Consent of Holders. . . . . . 64
Section 903. Execution of Supplemental Indentures. . . . . . . . . . . . 65
Section 904. Effect of Supplemental Indentures. . . . . . . . . . . . . 65
Section 905. Reference in Securities to Supplemental Indentures. . . . . 65
Section 906. Conformity with Trust Indenture Act. . . . . . . . . . . . 66
Section 907. Effect on Senior Indebtedness. . . . . . . . . . . . . . . 66
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, any Premium, Interest and Additional
Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 1002. Maintenance of Office or Agency . . . . . . . . . . . . . . 66
Section 1003. Money for Securities Payments to Be Held in Trust. . . . . 68
Section 1004. Additional Amounts. . . . . . . . . . . . . . . . . . . . . 69
Section 1005. [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 1006. Corporate Existence . . . . . . . . . . . . . . . . . . . . 71
Section 1007. Waiver of Certain Covenants. . . . . . . . . . . . . . . . 71
Section 1008. Company Statement as to Compliance; Notice of Certain
Defaults . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article. . . . . . . . . . . . . . . . . . 72
Section 1102. Election to Redeem; Notice to Trustee. . . . . . . . . . . 72
vi
<PAGE> 8
Section 1103. Selection by Trustee of Securities to be Redeemed . . . . . 73
Section 1104. Notice of Redemption. . . . . . . . . . . . . . . . . . . . 73
Section 1105. Deposit of Redemption Price. . . . . . . . . . . . . . . . 75
Section 1106. Securities Payable on Redemption Date. . . . . . . . . . . 75
Section 1107. Securities Redeemed in Part. . . . . . . . . . . . . . . . 76
ARTICLE TWELVE
SINKING FUNDS
Section 1201. Applicability of Article. . . . . . . . . . . . . . . . . . 77
Section 1202. Satisfaction of Sinking Fund Payments with Securities. . . 77
Section 1203. Redemption of Securities for Sinking Fund. . . . . . . . . 78
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
Section 1301. Applicability of Article. . . . . . . . . . . . . . . . . . 78
ARTICLE FOURTEEN
SECURITIES IN FOREIGN CURRENCIES
Section 1401. Applicability of Article. . . . . . . . . . . . . . . . . . 79
ARTICLE FIFTEEN
SUBORDINATION OF SECURITIES
Section 1501. Securities Subordinate to Senior Indebtedness. . . . . . . 80
Section 1502. Payment Over of Proceeds Upon Dissolution, Etc. . . . . . . 80
Section 1503. Prior Payment to Senior Indebtedness Upon Acceleration of
Securities . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 1504. No Payment When Senior Indebtedness in Default. . . . . . . 81
Section 1505. Payment Permitted if No Default . . . . . . . . . . . . . . 82
Section 1506. Subrogation to Rights of Holders of Senior Indebtedness . . 82
Section 1507. Provisions Solely to Define Relative Rights . . . . . . . . 83
Section 1508. Trustee to Effectuate Subordination. . . . . . . . . . . . 83
Section 1509. No Waiver of Subordination Provisions. . . . . . . . . . . 83
Section 1510. Notice to Trustee. . . . . . . . . . . . . . . . . . . . . 84
Section 1511. Reliance on Judicial Order or Certificate of Liquidating
Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 1512. Trustee Not Fiduciary for Holders of Senior Indebtedness. . 85
vii
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Section 1513. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights. . . . . . . . . . . . . . 85
Section 1514. Article Applicable to Payment Agents . . . . . . . . . . . 85
ARTICLE SIXTEEN
MEETINGS OF HOLDERS OF SECURITIES
Section 1601. Purposes for Which Meetings May Be Called. . . . . . . . . 86
Section 1602. Call, Notice and Place of Meetings. . . . . . . . . . . . . 86
Section 1603. Persons Entitled to Vote at Meetings. . . . . . . . . . . . 87
Section 1604. Quorum; Action. . . . . . . . . . . . . . . . . . . . . . . 87
Section 1605. Determination of Voting Rights; Conduct and
Adjournment of Meetings . . . . . . . . . . . . . . . . . . 88
Section 1606. Counting Votes and Recording Action of Meetings. . . . . . 89
viii
<PAGE> 10
INDENTURE, dated as of June __, 1996 (the "Indenture"), among
STANDARD FEDERAL BANCORPORATION, INC., a corporation duly organized and
existing under the laws of the Michigan (hereinafter called the "Company"),
having its principal executive office located at 2600 West Big Beaver Road,
Troy, Michigan 48084, and THE CHASE MANHATTAN BANK, N.A., a national banking
association duly organized and existing under the laws of the United States
(hereinafter called the "Trustee"), having its Corporate Trust Office located
at 4 Chase MetroTech Center, Brooklyn, N.Y. 11245.
RECITALS
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of its unsecured
and subordinated debentures, notes or other evidences of Indebtedness
(hereinafter called the "Securities"), unlimited as to principal amount, to
bear such rates of interest, to mature at such time or times, to be issued in
one or more series and to have such other provisions as shall be fixed as
hereinafter provided.
The Company has duly authorized the execution and delivery of
this Indenture. All things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust
Indenture Act of 1939, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder that are required to
be part of this Indenture and, to the extent applicable, shall be governed by
such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of
the Securities by the Holders (as herein defined) thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of all Holders
of the Securities or of any series thereof and any Coupons (as herein defined)
as follows:
<PAGE> 11
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
Except as otherwise expressly provided in or pursuant to this
Indenture or unless the context otherwise requires, for all purposes of this
Indenture:
(1) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as
the singular;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles and, except as otherwise herein expressly
provided, the terms "generally accepted accounting principles" or
"GAAP" with respect to any computation required or permitted hereunder
shall mean such accounting principles as are generally accepted at the
date of such computation;
(4) the words "herein", "hereof", "hereto" and "hereunder"
and other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision; and
(5) the word "or" is always used inclusively (for example,
the phrase "A or B" means "A or B or both", not "either A or B but not
both").
Certain terms used principally in certain Articles hereof are
defined in those Articles.
"Act", when used with respect to any Holders, has the meaning
specified in Section 104.
"Additional Amounts" means any additional amounts which are
required hereby or by any Security, under circumstances specified herein or
therein, to be paid by the Company in respect of certain taxes, assessments or
other governmental charges imposed on Holders specified therein and which are
owing to such Holders.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control", when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
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<PAGE> 12
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have the meanings
correlative to the foregoing.
"Authenticating Agent" means any Person authorized by the
Trustee pursuant to Section 611 to act on behalf of the Trustee to authenticate
Securities of one or more series.
"Authorized Newspaper" means a newspaper, in an official
language of the place of publication or in the English language, customarily
published on each day that is a Business Day in the place of publication,
whether or not published on days that are Legal Holidays in the place of
publication, and of general circulation in each place in connection with which
the term is used or in the financial community of each such place. Where
successive publications are required to be made in Authorized Newspapers, the
successive publications may be made in the same or in different newspapers in
the same city meeting the foregoing requirements and in each case on any day
that is a Business Day in the place of publication.
"Bank" means Standard Federal Bank and its successors (whether
by consolidation, merger, conversion, transfer of substantially all their
assets and business or otherwise).
"Bearer Security" means any Security in the form established
pursuant to Section 201 which is payable to bearer.
"Board of Directors" means the board of directors of the
Company or any committee of that board duly authorized to act generally or in
any particular respect for the Company hereunder.
"Board Resolution" means a copy of one or more resolutions,
certified by the Secretary or an Assistant Secretary of the Company to have
been duly adopted by the Board of Directors and to be in full force and effect
on the date of such certification, delivered to the Trustee.
"Business Day", with respect to any Place of Payment or other
location, means, unless otherwise specified with respect to any Securities
pursuant to Section 301, any day other than a Saturday, Sunday or other day on
which banking institutions in such Place of Payment or other location are
authorized or obligated by law, regulation or executive order to close.
"Cedel" means Cedel Bank, societe anonyme, or its successors.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, as amended, or, if at any time after the execution of this Indenture such
Commission is not existing and performing the duties now assigned to it under
the Trust Indenture Act, then the body performing such duties at such time.
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"Common Stock" includes any stock of any class of the Company
which has no preference in respect of dividends or of amounts payable in the
event of any voluntary or involuntary liquidation, dissolution or winding up of
the Company and which is not subject to redemption by the Company.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person, and any other obligor upon the
Securities.
"Company Request" and "Company Order" mean, respectively, a
written request or order, as the case may be, signed in the name of the Company
by the Chairman of the Board of Directors, a Vice Chairman, the President or a
Vice President, and by the Treasurer, an Assistant Treasurer, the Secretary or
an Assistant Secretary, of the Company, and delivered to the Trustee.
"Conversion Event" means the cessation of use of (i) a Foreign
Currency both by the government of the country or the confederation which
issued such Foreign Currency and for the settlement of transactions by a
central bank or other public institutions of or within the international
banking community, (ii) the ECU both within the European Monetary System and
for the settlement of transactions by public institutions of or within the
European Union or (iii) any currency unit or composite currency other than the
ECU for the purposes for which it was established.
"Corporate Trust Office" means the principal corporate trust
office of the Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of original execution
of this Indenture is located at 4 Chase MetroTech Center, Brooklyn, N.Y.
11245, Attention: Institutional Trust.
"Corporation" includes corporations and limited liability
companies and, except for purposes of Article Eight, associations, companies
and business trusts.
"Coupon" means any interest coupon appertaining to a Bearer
Security.
"Currency", with respect to any payment, deposit or other
transfer in respect of the principal of or any premium or interest on or any
Additional Amounts with respect to any Security, means Dollars or the Foreign
Currency, as the case may be, in which such payment, deposit or other transfer
is required to be made by or pursuant to the terms hereof or such Security and,
with respect to any other payment, deposit or transfer pursuant to or
contemplated by the terms hereof or such Security, means Dollars.
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<PAGE> 14
"CUSIP number" means the alphanumeric designation assigned to
a Security by Standard & Poor's Corporation, CUSIP Service Bureau.
"Defaulted Interest" has the meaning specified in Section 307.
"Dollars" or "$" means a dollar or other equivalent unit of
legal tender for payment of public or private debts in the United States of
America.
"ECU" means the European Currency Units as defined and revised
from time to time by the Council of the European Community.
"Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, or its successor, as operator of the Euroclear System.
"European Monetary System" means the European Monetary System
established by the Resolution of December 5, 1978 of the Council of the
European Community.
"European Union" means the European Community, the European
Coal and Steel Community and the European Atomic Energy Community.
"Event of Default" has the meaning specified in Section 501.
"Foreign Currency" means any currency, currency unit or
composite currency, including, without limitation, the ECU, issued by the
government of one or more countries other than the United States of America or
by any recognized confederation or association of such governments.
"GAAP" means such accounting principles as are generally
accepted in the United States of America as of the date or time of any
computation required hereunder.
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the other government or
governments in the confederation which issued the Foreign Currency in which the
principal of or any premium or interest on such Security or any Additional
Amounts in respect thereof shall be payable, in each case where the payment or
payments thereunder are supported by the full faith and credit of such
government or governments or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America or such other government or governments, in each case where the
timely payment or payments thereunder are unconditionally guaranteed as a full
faith and credit obligation by the United States of America or such other
government or governments, and which, in the case of (i) or (ii), are not
callable or redeemable at the option of the issuer or issuers thereof, and
shall also include a depository receipt issued by a bank or trust company as
custodian with respect to any such Government Obligation or a specific payment
of interest on or principal of or other amount with respect to any such
Government Obligation held by such custodian for the account of the holder of a
depository receipt, provided that (except as
5
<PAGE> 15
required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depository receipt from any amount
received by the custodian in respect of the Government Obligation or the
specific payment of interest on or principal of or other amount with respect to
the Government Obligation evidenced by such depository receipt.
"Holder", in the case of any Registered Security, means the
Person in whose name such Security is registered in the Security Register and,
in the case of any Bearer Security, means the bearer thereof and, in the case
of any Coupon, means the bearer thereof.
"Indebtedness", with respect to any Person, means indebtedness
for borrowed money or for the unpaid purchase price of real or personal
property of, or guaranteed by, such Person and computed in accordance with
GAAP.
"Indenture" means this instrument as it may from time to time
be supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof and, with respect to
any Security, by the terms and provisions of such Security and any Coupon
appertaining thereto established pursuant to Section 301 (as such terms and
provisions may be amended pursuant to the applicable provisions hereof).
"Independent Public Accountants" means accountants or a firm
of accountants that, with respect to the Company and any other obligor under
the Securities or the Coupons, are independent public accountants within the
meaning of the Securities Act of 1933, as amended, and the rules and
regulations promulgated by the Commission thereunder, who may be the
independent public accountants regularly retained by the Company or who may be
other independent public accountants. Such accountants or firm shall be
entitled to rely upon any Opinion of Counsel as to the interpretation of any
legal matters relating to this Indenture or certificates required to be
provided hereunder.
"Indexed Security" means a Security the terms of which provide
that the principal amount thereof payable at Stated Maturity may be more or
less than the principal face amount thereof at original issuance.
"Interest", with respect to any Original Issue Discount
Security which by its terms bears interest only after Maturity, means interest
payable after Maturity and, when used with respect to a Security which provides
for the payment of Additional Amounts pursuant to Section 1004, includes such
Additional Amounts.
"Interest Payment Date", with respect to any Security, means
the Stated Maturity of an installment of interest on such Security.
"Judgment Currency" has the meaning specified in Section 116.
"Legal Holidays" has the meaning specified in Section 114.
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<PAGE> 16
"Maturity", with respect to any Security, means the date on
which the principal of such Security or an installment of principal becomes due
and payable as provided in or pursuant to this Indenture, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption or repurchase,
notice of option to elect repayment or otherwise, and includes the Redemption
Date.
"New York Banking Day" has the meaning specified in Section
116.
"Office" or "Agency", with respect to any Securities, means an
office or agency of the Company maintained or designated in a Place of Payment
for such Securities pursuant to Section 1002 or any other office or agency of
the Company maintained or designated for such Securities pursuant to Section
1002 or, to the extent designated or required by Section 1002 in lieu of such
office or agency, the Corporate Trust Office of the Trustee.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, a Vice Chairman, the President or a Vice President, and
by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant
Secretary of the Company, that complies with the requirements of Section 314(e)
of the Trust Indenture Act and is delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who
may be an employee of or counsel for the Company or other counsel who shall be
reasonably acceptable to the Trustee, that, if required by the Trust Indenture
Act, complies with the requirements of Section 314(e) of the Trust Indenture
Act.
"Original Issue Discount Security" means a Security issued
pursuant to this Indenture which provides for declaration of an amount less
than the principal face amount thereof to be due and payable upon acceleration
pursuant to Section 502.
"Outstanding", when used with respect to any Securities,
means, as of the date of determination, all such Securities theretofore
authenticated and delivered under this Indenture, except:
(a) any such Security theretofore cancelled by the
Trustee or the Security Registrar or delivered to the
Trustee or the Security Registrar for cancellation;
(b) any such Security for whose payment at the Maturity
thereof money in the necessary amount has been
theretofore deposited pursuant hereto with the
Trustee or any Paying Agent (other than the Company)
in trust or set aside and segregated in trust by the
Company (if the Company shall act as its own Paying
Agent) for the Holders of such Securities and any
Coupons appertaining thereto, provided that, if such
Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the
Trustee has been made;
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<PAGE> 17
(c) any such Security with respect to which the Company
has effected defeasance pursuant to the terms hereof,
except to the extent provided in Section 402;
(d) any such Security which has been paid pursuant to
Section 306 or in exchange for or in lieu of which
other Securities have been authenticated and
delivered pursuant to this Indenture, unless there
shall have been presented to the Trustee proof
satisfactory to it that such Security is held by a
bona fide purchaser in whose hands such Security is a
valid obligation of the Company; and
(e) any such Security converted or exchanged as
contemplated by this Indenture into other securities,
if the terms of such Security provide for such
conversion or exchange pursuant to Section 301;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or are present at
a meeting of Holders of Securities for quorum purposes, (i) the principal
amount of an Original Issue Discount Security that may be counted in making
such determination and that shall be deemed to be Outstanding for such purposes
shall be equal to the amount of the principal thereof that pursuant to the
terms of such Original Issue Discount Security would be declared (or shall have
been declared to be) due and payable upon a declaration of acceleration thereof
pursuant to Section 502 at the time of such determination, and (ii) the
principal amount of any Indexed Security that may be counted in making such
determination and that shall be deemed outstanding for such purpose shall be
equal to the principal face amount of such Indexed Security at original
issuance, unless otherwise provided in or pursuant to this Indenture, and (iii)
the principal amount of a Security denominated in a Foreign Currency shall be
the Dollar equivalent, determined on the date of original issuance of such
Security, of the principal amount (or, in the case of an Original Issue
Discount Security, the Dollar equivalent on the date of original issuance of
such Security of the amount determined as provided in (i) above) of such
Security, and (iv) Securities owned by the Company or any other obligor upon
the Securities or any Affiliate of the Company or such other obligor, shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in making any such determination or
relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which a Responsible Officer of the Trustee
knows to be so owned shall be so disregarded. Securities so owned which shall
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee (A) the pledgee's right so to
act with respect to such Securities and (B) that the pledgee is not the Company
or any other obligor upon the Securities or any Coupons appertaining thereto or
an Affiliate of the Company or such other obligor.
"Paying Agent" means any Person authorized by the Company to
pay the principal of, or any premium or interest on, or any Additional Amounts
with respect to, any Security or any Coupon on behalf of the Company.
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<PAGE> 18
"Person" means any individual, Corporation, partnership, joint
venture, joint-stock company, trust, unincorporated organization or government
or any agency or political subdivision thereof.
"Place of Payment", with respect to any Security, means the
place or places where the principal of, or any premium or interest on, or any
Additional Amounts with respect to such Security are payable as provided in or
pursuant to this Indenture or such Security.
"Predecessor Security" of any particular Security means every
previous Security evidencing all or a portion of the same Indebtedness as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a lost, destroyed, mutilated or stolen Security or
any Security to which a mutilated, destroyed, lost or stolen Coupon appertains
shall be deemed to evidence the same Indebtedness as the lost, destroyed,
mutilated or stolen Security or the Security to which a mutilated, destroyed,
lost or stolen Coupon appertains.
"Redemption Date", with respect to any Security or portion
thereof to be redeemed, means the date fixed for such redemption by or pursuant
to this Indenture or such Security.
"Redemption Price", with respect to any Security or portion
thereof to be redeemed, means the price at which it is to be redeemed as
determined by or pursuant to this Indenture or such Security.
"Registered Security" means any Security established pursuant
to Section 201 which is registered in the Security Register.
"Regular Record Date" for the interest payable on any
Registered Security on any Interest Payment Date therefor means the date, if
any, specified in or pursuant to this Indenture or such Security as the
"Regular Record Date".
"Required Currency" has the meaning specified in Section 116.
"Responsible Officer" means any officer of the Trustee in its
Corporate Trust Office and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Subsidiary" means Standard Federal Bank so long as
it remains a Subsidiary, any other successor to all or a principal part of the
business or properties thereof, and any other Subsidiary which the Board of
Directors designates as a Restricted Subsidiary.
"Security" or "Securities" means any note or notes, bond or
bonds, debenture or debentures, or any other evidences of Indebtedness, as the
case may be, authenticated and
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<PAGE> 19
delivered under this Indenture; provided, however, that, if at any time there
is more than one Person acting as Trustee under this Indenture, "Securities",
with respect to any such Person, shall mean Securities authenticated and
delivered under this Indenture, exclusive, however, of Securities of any series
as to which such Person is not Trustee.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Senior Indebtedness" means any indebtedness for money
borrowed (including all indebtedness of the Corporation for borrowed and
purchased money of the Corporation, all obligations of the Corporation arising
from off-balance sheet guarantees by the Corporation and direct credit
substitutes, and obligations of the Corporation associated with derivative
products such as interest and foreign exchange rate contracts and commodity
contracts) that is outstanding on the date of execution of the Subordinated
Indenture, or is thereafter created, incurred or assumed, for the payment of
which the Corporation is at the time of determination responsible or liable as
obligor, guarantor or otherwise, and all deferrals, renewals, extensions and
refundings of any such indebtedness or obligations, other than the Subordinated
Debt Securities or any other indebtedness as to which, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding,
it is provided that such indebtedness is subordinate in right of payment to any
other indebtedness of the Corporation.
"Special Record Date" for the payment of any Defaulted
Interest on any Registered Security means a date fixed by the Trustee pursuant
to Section 307.
"Stated Maturity", with respect to any Security or any
installment of principal thereof or interest thereon or any Additional Amounts
with respect thereto, means the date established by or pursuant to this
Indenture or such Security as the fixed date on which the principal of such
Security or such installment of principal or interest is, or such Additional
Amounts are, due and payable.
"Subsidiary" means any Corporation of which at the time of
determination the Company or one or more Subsidiaries owns or controls directly
or indirectly more than 50% of the shares of Voting Stock.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended, and any reference herein to the Trust Indenture Act or a particular
provision thereof shall mean such Act or provision, as the case may be, as
amended or replaced from time to time or as supplemented from time to time by
rules or regulations adopted by the Commission under or in furtherance of the
purposes of such Act or provision, as the case may be.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
with respect to one or more series of Securities pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall
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<PAGE> 20
mean each Person who is then a Trustee hereunder; provided, however, that if at
any time there is more than one such Person, "Trustee" shall mean each such
Person and as used with respect to the Securities of any series shall mean the
Trustee with respect to the Securities of such series.
"United States", except as otherwise provided in or pursuant
to this Indenture or any Security, means the United States of America
(including the states thereof and the District of Columbia), its territories
and possessions and other areas subject to its jurisdiction.
"United States Alien", except as otherwise provided in or
pursuant to this Indenture or any Security, means any Person who, for United
States Federal income tax purposes, is a foreign corporation, a non-resident
alien individual, a non-resident alien fiduciary of a foreign estate or trust,
or a foreign partnership one or more of the members of which is, for United
States Federal income tax purposes, a foreign corporation, a non-resident alien
individual or a non-resident alien fiduciary of a foreign estate or trust.
"U.S. Depository" or "Depository" means, with respect to any
Security issuable or issued in the form of one or more global Securities, the
Person designated as U.S. Depository or Depository by the Company in or
pursuant to this Indenture, which Person must be, to the extent required by
applicable law or regulation, a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and, if so provided with respect to any
Security, any successor to such Person. If at any time there is more than one
such Person, "U.S. Depository" or "Depository" shall mean, with respect to any
Securities, the qualifying entity which has been appointed with respect to such
Securities.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "Vice President".
"Voting Stock" of any Person means stock of any class or
classes, however designated, having ordinary voting power for the election of a
majority of the board of directors of such Person, other than stock having such
power only by reason of the happening of a contingency.
Section 102. Compliance Certificates and Opinions.
Except as otherwise expressly provided in this Indenture, upon
any application or request by the Company to the Trustee to take any action
under any provision of this Indenture, the Company shall furnish to the Trustee
an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with and an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents or any of them is specifically required by any provision of
this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
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Section 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon an Opinion of Counsel,
unless such officer knows, or in the exercise of reasonable care should know,
that the opinion with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such Opinion of Counsel may be based,
insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture or any Security, they may, but need not,
be consolidated and form one instrument.
Section 104. Acts of Holders.
(1) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by or pursuant to this Indenture to be
given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing. If, but only if, Securities of a series
are issuable as Bearer Securities, any request, demand, authorization,
direction, notice, consent, waiver or other action provided in or pursuant to
this Indenture to be given or taken by Holders of Securities of such series
may, alternatively, be embodied in and evidenced by the record of Holders of
Securities of such series voting in favor thereof, either in person or by
proxies duly appointed in writing, at any meeting of Holders of Securities of
such series duly called and held in accordance with the provisions of Article
Fifteen, or a combination of such instruments and any such record. Except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments or record or both are delivered to the Trustee
and, where it is hereby expressly required, to the Company. Such instrument or
instruments and any such record (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments or so voting at any such meeting. Proof of
execution of any such instrument or of a writing appointing any such agent, or
of the holding by any Person of a Security, shall be sufficient for any purpose
of this Indenture and (subject to Section 315 of the Trust Indenture Act)
conclusive
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in favor of the Trustee and the Company and any agent of the Trustee or the
Company, if made in the manner provided in this Section. The record of any
meeting of Holders of Securities shall be proved in the manner provided in
Section 1606.
Without limiting the generality of this Section 104, unless
otherwise provided in or pursuant to this Indenture, a Holder, including a U.S.
Depository that is a Holder of a global Security, may make, give or take, by a
proxy, or proxies, duly appointed in writing, any request, demand,
authorization, direction, notice, consent, waiver or other Act provided in or
pursuant to this Indenture to be made, given or taken by Holders, and a U.S.
Depository that is a Holder of a global Security may provide its proxy or
proxies to the beneficial owners of interests in any such global Security
through such U.S. Depository's standing instructions and customary practices.
The Trustee shall fix a record date for the purpose of
determining the Persons who are beneficial owners of interest in any permanent
global Security held by a U.S. Depository entitled under the procedures of such
U.S. Depository to make, give or take, by a proxy or proxies duly appointed in
writing, any request, demand, authorization, direction, notice, consent, waiver
or other Act provided in or pursuant to this Indenture to be made, given or
taken by Holders. If such a record date is fixed, the Holders on such record
date or their duly appointed proxy or proxies, and only such Persons, shall be
entitled to make, give or take such request, demand, authorization, direction,
notice, consent, waiver or other Act, whether or not such Holders remain
Holders after such record date. No such request, demand, authorization,
direction, notice, consent, waiver or other Act shall be valid or effective if
made, given or taken more than 90 days after such record date.
(2) The fact and date of the execution by any Person of any
such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient and in accordance with such reasonable rules as the
Trustee may determine; and the Trustee may in any instance require further
proof with respect to any of the matters referred to in this Section.
(3) The ownership, principal amount and serial numbers of
Registered Securities held by any Person, and the date of the commencement and
the date of the termination of holding the same, shall be proved by the
Security Register.
(4) The ownership, principal amount and serial numbers of
Bearer Securities held by any Person, and the date of the commencement and the
date of the termination of holding the same, may be proved by the production of
such Bearer Securities or by a certificate executed, as depositary, by any
trust company, bank, banker or other depositary reasonably acceptable to the
Company, wherever situated, if such certificate shall be deemed by the Company
and the Trustee to be satisfactory, showing that at the date therein mentioned
such Person had on deposit with such depositary, or exhibited to it, the Bearer
Securities therein described; or such facts may be proved by the certificate or
affidavit of the Person holding such Bearer Securities, if such certificate or
affidavit is deemed by the Trustee to be satisfactory. The Trustee and the
Company may assume that such ownership of any Bearer Security continues until
(1) another certificate or
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affidavit bearing a later date issued in respect of the same Bearer Security is
produced, or (2) such Bearer Security is produced to the Trustee by some other
Person, or (3) such Bearer Security is surrendered in exchange for a Registered
Security, or (4) such Bearer Security is no longer Outstanding. The ownership,
principal amount and serial numbers of Bearer Securities held by the Person so
executing such instrument or writing and the date of the commencement and the
date of the termination of holding the same may also be proved in any other
manner which the Company and the Trustee deem sufficient.
(5) If the Company shall solicit from the Holders of any
Registered Securities any request, demand, authorization, direction, notice,
consent, waiver or other Act, the Company may at its option (but is not
obligated to), by Board Resolution, fix in advance a record date for the
determination of Holders of Registered Securities entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
Act. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other Act may be given before or after
such record date, but only the Holders of Registered Securities of record at
the close of business on such record date shall be deemed to be Holders for the
purpose of determining whether Holders of the requisite proportion of
Outstanding Securities have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the Outstanding Securities shall be computed as of such record
date; provided that no such authorization, agreement or consent by the Holders
of Registered Securities shall be deemed effective unless it shall become
effective pursuant to the provisions of this Indenture not later than six
months after the record date.
(6) Any request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holder of any Security shall bind every
future Holder of the same Security and the Holder of every Security issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof
in respect of anything done or suffered to be done by the Trustee, any Security
Registrar, any Paying Agent or the Company in reliance thereon, whether or not
notation of such Act is made upon such Security.
Section 105. Notices, etc. to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or other Act of Holders or other document provided or permitted
by this Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or the Company shall be
sufficient for every purpose hereunder if made, given, furnished or
filed in writing to or with the Trustee at its Corporate Trust Office,
or
(2) the Company by the Trustee or any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to the attention of its Chief
Financial Officer at the address of its principal office specified in
the first paragraph of
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this instrument or at any other address previously furnished in
writing to the Trustee by the Company.
Section 106. Notice to Holders of Securities; Waiver.
Except as otherwise expressly provided in or pursuant to this
Indenture, where this Indenture provides for notice to Holders of Securities of
any event,
(1) such notice shall be sufficiently given to Holders of
Registered Securities if in writing and mailed, first-class postage
prepaid, to each Holder of a Registered Security affected by such
event, at his address as it appears in the Security Register, not
later than the latest date, and not earlier than the earliest date,
prescribed for the giving of such notice; and
(2) such notice shall be sufficiently given to Holders of
Bearer Securities, if any, if published in an Authorized Newspaper in
The City of New York and, if such Securities are then listed on any
stock exchange outside the United States, in an Authorized Newspaper
in such city as the Company shall advise the Trustee that such stock
exchange so requires, on a Business Day at least twice, the first such
publication to be not earlier than the earliest date and the second
such publication not later than the latest date prescribed for the
giving of such notice.
In any case where notice to Holders of Registered Securities
is given by mail, neither the failure to mail such notice, nor any defect in
any notice so mailed, to any particular Holder of a Registered Security shall
affect the sufficiency of such notice with respect to other Holders of
Registered Securities or the sufficiency of any notice to Holders of Bearer
Securities given as provided herein. Any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given or
provided. In the case by reason of the suspension of regular mail service or
by reason of any other cause it shall be impracticable to give such notice by
mail, then such notification as shall be made with the approval of the Trustee
shall constitute a sufficient notification for every purpose hereunder.
In case by reason of the suspension of publication of any
Authorized Newspaper or Authorized Newspapers or by reason of any other cause
it shall be impracticable to publish any notice to Holders of Bearer Securities
as provided above, then such notification to Holders of Bearer Securities as
shall be given with the approval of the Trustee shall constitute sufficient
notice to such Holders for every purpose hereunder. Neither failure to give
notice by publication to Holders of Bearer Securities as provided above, nor
any defect in any notice so published, shall affect the sufficiency of any
notice mailed to Holders of Registered Securities as provided above.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by the Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders of Securities
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shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
Section 107. Language of Notices.
Any request, demand, authorization, direction, notice,
consent, election or waiver required or permitted under this Indenture shall be
in the English language, except that, if the Company so elects, any published
notice may be in an official language of the country of publication.
Section 108. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with
any duties under any required provision of the Trust Indenture Act imposed
hereon by Section 318(c) thereof, such required provision shall control.
Section 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the construction hereof.
Section 110. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
Section 111. Separability Clause.
In case any provision in this Indenture, any Security or any
Coupon shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 112. Benefits of Indenture.
Nothing in this Indenture, any Security or any Coupon, express
or implied, shall give to any Person, other than the parties hereto and holders
of Senior Indebtedness, any Security Registrar, any Paying Agent and their
successors hereunder and the Holders of Securities or Coupons, any benefit or
any legal or equitable right, remedy or claim under this Indenture.
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Section 113. Governing Law.
This Indenture, the Securities and any Coupons shall be
governed by and construed in accordance with the laws of the State of New York
applicable to agreements made or instruments entered into and, in each case,
performed in said state.
Section 114. Legal Holidays.
Unless otherwise specified in or pursuant to this Indenture or
any Securities, in any case where any Interest Payment Date, Stated Maturity or
Maturity of any Security, or the last date on which a Holder has the right to
convert or exchange Securities of a series that are convertible or
exchangeable, shall be a Legal Holiday at any Place of Payment, then
(notwithstanding any other provision of this Indenture, any Security or any
Coupon other than a provision in any Security or Coupon that specifically
states that such provision shall apply in lieu hereof) payment need not be made
at such Place of Payment on such date, and such Securities need not be
converted or exchanged on such date but such payment may be made, and such
Securities may be converted or exchanged, on the next succeeding day that is a
Business Day at such Place of Payment with the same force and effect as if made
on the Interest Payment Date or at the Stated Maturity or Maturity or on such
last day for conversion or exchange, and no interest shall accrue on the amount
payable on such date or at such time for the period from and after such
Interest Payment Date, Stated Maturity, Maturity or last day for conversion or
exchange, as the case may be, to the next succeeding Business Day.
Section 115. Counterparts.
This Indenture may be executed in several counterparts, each
of which shall be an original and all of which shall constitute but one and the
same instrument.
Section 116. Judgment Currency.
The Company agrees, to the fullest extent that it may
effectively do so under applicable law, that (a) if for the purpose of
obtaining judgment in any court it is necessary to convert the sum due in
respect of the principal of, or premium or interest, if any, or Additional
Amounts on the Securities of any series (the "Required Currency") into a
currency in which a judgment will be rendered (the "Judgment Currency"), the
rate of exchange used shall be the rate at which in accordance with normal
banking procedures the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the New York Banking Day
preceding that on which a final unappealable judgment is given and (b) its
obligations under this Indenture to make payments in the Required Currency (i)
shall not be discharged or satisfied by any tender, or any recovery pursuant to
any judgment (whether or not entered in accordance with
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clause (a)), in any currency other than the Required Currency, except to the
extent that such tender or recovery shall result in the actual receipt, by the
payee, of the full amount of the Required Currency expressed to be payable in
respect of such payments, (ii) shall be enforceable as an alternative or
additional cause of action for the purpose of recovering in the Required
Currency the amount, if any, by which such actual receipt shall fall short of
the full amount of the Required Currency so expressed to be payable and (iii)
shall not be affected by judgment being obtained for any other sum due under
this Indenture. For purposes of the foregoing, "New York Banking Day" means
any day except a Saturday, Sunday or a legal holiday in The City of New York or
a day on which banking institutions in The City of New York are authorized or
obligated by law, regulation or executive order to be closed.
ARTICLE TWO
SECURITIES FORMS
Section 201. Forms Generally.
Each Registered Security, Bearer Security, Coupon and
temporary or permanent global Security issued pursuant to this Indenture shall
be in the form established by or pursuant to a Board Resolution or in one or
more indentures supplemental hereto, shall have such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
or pursuant to this Indenture or any indenture supplemental hereto and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Security or Coupon as evidenced by their execution of
such Security or Coupon.
Unless otherwise provided in or pursuant to this Indenture or
any Securities, the Securities shall be issuable in registered form without
Coupons and shall not be issuable upon the exercise of warrants.
Definitive Securities and definitive Coupons shall be printed,
lithographed or engraved or produced by any combination of these methods on a
steel engraved border or steel engraved borders or may be produced in any other
manner, all as determined by the officers of the Company executing such
Securities or Coupons, as evidenced by their execution of such Securities or
Coupons.
Section 202. Form of Trustee's Certificate of
Authentication.
Subject to Section 611, the Trustee's certificate of
authentication shall be in substantially the following form:
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This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, N.A.,
as Trustee
By____________________________________
Authorized Officer
Section 203. Securities in Global Form.
Unless otherwise provided in or pursuant to this Indenture or
any Securities, the Securities shall not be issuable in temporary or permanent
global form. If Securities of a series shall be issuable in global form, any
such Security may provide that it or any number of such Securities shall
represent the aggregate amount of all Outstanding Securities of such series (or
such lesser amount as is permitted by the terms thereof) from time to time
endorsed thereon and may also provide that the aggregate amount of Outstanding
Securities represented thereby may from time to time be increased or reduced to
reflect exchanges. Any endorsement of any Security in global form to reflect
the amount, or any increase or decrease in the amount, or changes in the rights
of Holders, of Outstanding Securities represented thereby shall be made in such
manner and by such Person or Persons as shall be specified therein or in the
Company Order to be delivered pursuant to Section 303 or 304 with respect
thereto. Subject to the provisions of Section 303 and, if applicable, Section
304, the Trustee shall deliver and redeliver any Security in permanent global
form in the manner and upon instructions given by the Person or Persons
specified therein or in the applicable Company Order. If a Company Order
pursuant to Section 303 or 304 has been, or simultaneously is, delivered, any
instructions by the Company with respect to a Security in global form shall be
in writing but need not be accompanied by or contained in an Officers'
Certificate and need not be accompanied by an Opinion of Counsel.
Notwithstanding the provisions of Section 307, unless
otherwise specified in or pursuant to this Indenture or any Securities, payment
of principal of, any premium and interest on, and any Additional Amounts in
respect of, any Security in temporary or permanent global form shall be made to
the Person or Persons specified therein.
Notwithstanding the provisions of Section 308 and except as
provided in the preceding paragraph, the Company, the Trustee and any agent of
the Company and the Trustee shall treat as the Holder of such principal amount
of Outstanding Securities represented by a global Security (i) in the case of a
global Security in registered form, the Holder of such global Security in
registered form, or (ii) in the case of a global Security in bearer form, the
Person or Persons specified pursuant to Section 301.
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ARTICLE THREE
THE SECURITIES
Section 301. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited. The Securities
may be issued in one or more series. The Securities shall be subordinated in
right of payment to Senior Indebtedness as provided in Article Fifteen.
With respect to any Securities to be authenticated and
delivered hereunder, there shall be established in or pursuant to a Board
Resolution and set forth in an Officers' Certificate, or established in one or
more indentures supplemental hereto,
(1) the title of such Securities and the series in which such
Securities shall be included;
(2) any limit upon the aggregate principal amount of the
Securities of such title or the Securities of such series which may be
authenticated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration or transfer
of, or in exchange for, or in lieu of, other Securities of such series
pursuant to Section 304, 305, 306, 905 or 1107, upon repayment on part
of any Registered Security of such series pursuant to Article
Thirteen, upon surrender in part of any Registered Security for
conversion or exchange into other securities pursuant to its terms, or
pursuant to the terms of such Securities);
(3) if such Securities are to be issuable as Registered
Securities, as Bearer Securities or alternatively as Bearer Securities
and Registered Securities, and whether the Bearer Securities are to be
issuable with Coupons, without Coupons or both, and any restrictions
applicable to the offer, sale or delivery of the Bearer Securities and
the terms, if any, upon which Bearer Securities may be exchanged for
Registered Securities and vice versa;
(4) if any of such Securities are to be issuable in global
form, when any of such Securities are to be issuable in global form
and (i) whether such Securities are to be issued in temporary or
permanent global form or both, (ii) whether beneficial owners of
interests in any such global Security may exchange such interests for
Securities of the same series and of like tenor and of any authorized
form and denomination, and the circumstances under which any such
exchanges may occur, if other than in the manner specified in Section
305, and (iii) the name of the Depository or the U.S. Depository, as
the case may be, with respect to any global Security;
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(5) if any of such Securities are to be issuable as Bearer
Securities or in global form, the date as of which any such Bearer
Security or global Security shall be dated (if other than the date of
original issuance of the first of such Securities to be issued);
(6) if any of such Securities are to be issuable as Bearer
Securities, whether interest in respect of any portion of a temporary
Bearer Security in global form payable in respect of an Interest
Payment Date therefor prior to the exchange, if any, of such temporary
Bearer Security for definitive Securities shall be paid to any
clearing organization with respect to the portion of such temporary
Bearer Security held for its account and, in such event, the terms and
conditions (including any certification requirements) upon which any
such interest payment received by a clearing organization will be
credited to the Persons entitled to interest payable on such Interest
Payment Date;
(7) the date or dates, or the method or methods, if any, by
which such date or dates shall be determined, on which the principal
of such Securities is payable;
(8) the rate or rates at which such Securities shall bear
interest, if any, or the method or methods, if any, by which such rate
or rates are to be determined, the date or dates, if any, from which
such interest shall accrue or the method or methods, if any, by which
such date or dates are to be determined, the Interest Payment Dates,
if any, on which such interest shall be payable and the Regular Record
Date, if any, for the interest payable on Registered Securities on any
Interest Payment Date, whether and under what circumstances Additional
Amounts on such Securities or any of them shall be payable, the
notice, if any, to Holders regarding the determination of interest on
a floating rate Security and the manner of giving such notice, and the
basis upon which interest shall be calculated if other than that of a
360-day year of twelve 30-day months;
(9) if in addition to or other than the Borough of Manhattan,
The City of New York, the place or places where the principal of, any
premium and interest on or any Additional Amounts with respect to such
Securities shall be payable, any of such Securities that are
Registered Securities may be surrendered for registration of transfer
or exchange, any of such Securities may be surrendered for conversion
or exchange and notices or demands to or upon the Company in respect
of such Securities and this Indenture may be served, the extent to
which, or the manner in which, any interest payment or Additional
Amounts on a global Security on an Interest Payment Date, will be paid
and the manner in which any principal of or premium, if any, on any
global Security will be paid;
(10) whether any of such Securities are to be redeemable at
the option of the Company and, if so, the date or dates on which, the
period or periods within which, the price or prices at which and the
other terms and conditions upon which such Securities may be redeemed,
in whole or in part, at the option of the Company;
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(11) if the Company is obligated to redeem or purchase any of
such Securities pursuant to any sinking fund or analogous provision or
at the option of any Holder thereof and, if so, the date or dates on
which, the period or periods within which, the price or prices at
which and the other terms and conditions upon which such Securities
shall be redeemed or purchased, in whole or in part, pursuant to such
obligation, and any provisions for the remarketing of such Securities
so redeemed or purchased;
(12) the denominations in which any of such Securities that
are Registered Securities shall be issuable if other than
denominations of $1,000 and any integral multiple thereof, and the
denominations in which any of such Securities that are Bearer
Securities shall be issuable if other than the denomination of $5,000;
(13) whether the Securities of the series will be convertible
into or exchangeable for other securities, and if so, the terms and
conditions upon which such Securities will be so convertible or
exchangeable, and any deletions from or modifications or additions to
this Indenture to permit or to facilitate the issuance of such
convertible or exchangeable Securities or the administration thereof;
(14) if other than the principal amount thereof, the portion
of the principal amount of any of such Securities that shall be
payable upon declaration of acceleration of the Maturity thereof
pursuant to Section 502 or the method by which such portion is to be
determined;
(15) if other than Dollars, the Foreign Currency in which
payment of the principal of, any premium or interest on or any
Additional Amounts with respect to any of such Securities shall be
payable;
(16) if the principal of, any premium or interest on or any
Additional Amounts with respect to any of such Securities are to be
payable, at the election of the Company or a Holder thereof or
otherwise, in Dollars or in a Foreign Currency other than that in
which such Securities are stated to be payable, the date or dates on
which, the period or periods within which, and the other terms and
conditions upon which, such election may be made, and the time and
manner of determining the exchange rate between the Currency in which
such Securities are stated to be payable and the Currency in which
such Securities or any of them are to be paid pursuant to such
election, and any deletions from or modifications of or additions to
the terms of this Indenture to provide for or to facilitate the
issuance of Securities denominated or payable, at the election of the
Company or a Holder thereof or otherwise, in a Foreign Currency;
(17) whether the amount of payments of principal of, any
premium or interest on or any Additional Amounts with respect to such
Securities may be determined with reference to an index, formula or
other method or methods (which index, formula or method or methods may
be based, without limitation, on one or more Currencies,
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commodities, equity indices or other indices), and, if so, the terms
and conditions upon which and the manner in which such amounts shall
be determined and paid or payable;
(18) any deletions from, modifications of or additions to the
Events of Default or covenants of the Company with respect to any of
such Securities, whether or not such Events of Default or covenants
are consistent with the Events of Default or covenants set forth
herein;
(19) if either or both of Section 402(2) relating to
defeasance or Section 402(3) relating to covenant defeasance shall not
be applicable to the Securities of such series, or any covenants in
addition to those specified in Section 402(3) relating to the
Securities of such series which shall be subject to covenant of
defeasance, and any deletions from, or modifications or additions to,
the provisions of Article Four in respect of the Securities of such
series;
(20) if any of such Securities are to be issuable upon the
exercise of warrants, and the time, manner and place for such
Securities to be authenticated and delivered;
(21) if any of such Securities are to be issuable in global
form and are to be issuable in definitive form (whether upon original
issue or upon exchange of a temporary Security) only upon receipt of
certain certificates or other documents or satisfaction of other
conditions, then the form and terms of such certificates, documents or
conditions;
(22) if there is more than one Trustee, the identity of the
Trustee and, if not the Trustee, the identity of each Security
Registrar, Paying Agent or Authenticating Agent with respect to such
Securities; and
(23) any other terms of such Securities and any deletions from
or modifications or additions to this Indenture in respect of such
Securities.
All Securities of any one series and all Coupons, if any,
appertaining to Bearer Securities of such series shall be substantially
identical except as to Currency of payments due thereunder, denomination and
the rate of interest, or method of determining the rate of interest, if any,
Maturity, and the date from which interest, if any, shall accrue and except as
may otherwise be provided by the Company in or pursuant to the Board Resolution
and set forth in the Officers' Certificate or in any indenture or indentures
supplemental hereto pertaining to such series of Securities. The terms of the
Securities of any series may provide, without limitation, that the Securities
shall be authenticated and delivered by the Trustee on original issue from time
to time upon telephonic or written order of persons designated in the Officers'
Certificate or supplemental indenture (telephonic instructions to be promptly
confirmed in writing by such person) and that such persons are authorized to
determine, consistent with such Officers' Certificate or any applicable
supplemental indenture, such terms and conditions of the Securities of such
series as are specified in such Officers' Certificate or supplemental
indenture. All Securities of any one series need not be issued at the same
time and, unless otherwise so provided
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by the Company, a series may be reopened for issuances of additional Securities
of such series or to establish additional terms of such series of Securities.
If any of the terms of the Securities of any series shall be
established by action taken by or pursuant to a Board Resolution, the Board
Resolution shall be delivered to the Trustee at or prior to the delivery of the
Officers' Certificate setting forth the terms of such series.
Section 302. Currency; Denominations.
Unless otherwise provided in or pursuant to this Indenture,
the principal of, any premium and interest on and any Additional Amounts with
respect to the Securities shall be payable in Dollars. Unless otherwise
provided in or pursuant to this Indenture, Registered Securities denominated in
Dollars shall be issuable in registered form without Coupons in denominations
of $1,000 and any integral multiple thereof, and the Bearer Securities
denominated in Dollars shall be issuable in the denomination of $5,000.
Securities not denominated in Dollars shall be issuable in such denominations
as are established with respect to such Securities in or pursuant to this
Indenture.
Section 303. Execution, Authentication, Delivery and
Dating.
Securities shall be executed on behalf of the Company by its
Chairman of the Board, one of its Vice Chairmen, its President, its Treasurer
or one of its Vice Presidents under its corporate seal reproduced thereon and
attested by its Secretary or one of its Assistant Secretaries. Coupons shall
be executed on behalf of the Company by the Treasurer or any Assistant
Treasurer of the Company. The signature of any of these officers on the
Securities or any Coupons appertaining thereto may be manual or facsimile.
Securities and any Coupons appertaining thereto bearing the
manual or facsimile signatures of individuals who were at any time the proper
officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Securities or did not hold such offices at
the date of such Securities or Coupons.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities, together with
any Coupons appertaining thereto, executed by the Company, to the Trustee for
authentication and, provided that the Board Resolution and Officers'
Certificate or supplemental indenture or indentures with respect to such
Securities referred to in Section 301 and a Company Order for the
authentication and delivery of such Securities have been delivered to the
Trustee, the Trustee in accordance with the Company Order and subject to the
provisions hereof and of such Securities shall authenticate and deliver such
Securities. In authenticating such Securities, and accepting the additional
responsibilities under this Indenture in relation to such Securities and any
Coupons appertaining thereto, the
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Trustee shall be entitled to receive, and (subject to Sections 315(a) through
315(d) of the Trust Indenture Act) shall be fully protected in relying upon,
(1) an Opinion of Counsel to the effect that:
(a) the form or forms and terms of such Securities and
Coupons, if any, have been established in conformity with the
provisions of this Indenture;
(b) all conditions precedent to the authentication and
delivery of such Securities and Coupons, if any, appertaining thereto,
have been complied with and that such Securities, and Coupons, when
completed by appropriate insertions, executed under the Company's
corporate seal and attested by duly authorized officers of the
Company, delivered by duly authorized officers of the Company to the
Trustee for authentication pursuant to this Indenture, and
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 legally valid and binding obligations of
the Company, enforceable against the Company in accordance with their
terms, except as enforcement thereof may be subject to or limited by
bankruptcy, insolvency, reorganization, moratorium, arrangement,
fraudulent conveyance, fraudulent transfer or other similar laws
relating to or affecting creditors' rights generally, and subject to
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law) and will entitle the
Holders thereof to the benefits of this Indenture; such Opinion of
Counsel need express no opinion as to the availability of equitable
remedies;
(c) all laws and requirements in respect of the execution
and delivery by the Company of such Securities and Coupons, if any,
have been complied with; and
(d) this Indenture has been qualified under the Trust
Indenture Act; and
(2) an Officers' Certificate stating that, to the best
knowledge of the Persons executing such certificate, no event which is, or
after notice or lapse of time would become, an Event of Default with respect to
any of the Securities shall have occurred and be continuing.
If all the Securities of any series are not to be issued at
one time, it shall not be necessary to deliver an Opinion of Counsel and an
Officers' Certificate at the time of issuance of each Security, but such
opinion and certificate, with appropriate modifications, shall be delivered at
or before the time of issuance of the first Security of such series. After any
such first delivery, any separate request by the Company that the Trustee
authenticate Securities of such series for original issue will be deemed to be
a certification by the Company that all conditions precedent provided for in
this Indenture relating to authentication and delivery of such Securities
continue to have been complied with.
The Trustee shall not be required to authenticate or to cause
an Authenticating Agent to authenticate any Securities if the issue of such
Securities pursuant to this Indenture will
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affect the Trustee's own rights, duties or immunities under the Securities and
this Indenture or otherwise in a manner which is not reasonably acceptable to
the Trustee or if the Trustee, being advised by counsel, determines that such
action may not lawfully be taken.
Each Registered Security shall be dated the date of its
authentication. Each Bearer Security and any Bearer Security in global form
shall be dated as of the date specified in or pursuant to this Indenture.
No Security or Coupon appertaining thereto shall be entitled
to any benefit under this Indenture or be valid or obligatory for any purpose,
unless there appears on such Security a certificate of authentication
substantially in the form provided for in Section 202 or 611 executed by or on
behalf of the Trustee or by the Authenticating Agent by the manual signature of
one of its authorized officers. Such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder. Except as permitted by Section 306 or
307, the Trustee shall not authenticate and deliver any Bearer Security unless
all Coupons appertaining thereto then matured have been detached and cancelled.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company
may execute and deliver to the Trustee and, upon Company Order, the Trustee
shall authenticate and deliver, in the manner provided in Section 303,
temporary Securities in lieu thereof which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized
denomination, substantially of the tenor of the definitive Securities in lieu
of which they are issued, in registered form or, if authorized in or pursuant
to this Indenture, in bearer form with one or more Coupons or without Coupons
and with such appropriate insertions, omissions, substitutions and other
variations as the officers of the Company executing such Securities may
determine, as conclusively evidenced by their execution of such Securities.
Such temporary Securities may be in global form.
Except in the case of temporary Securities in global form,
which shall be exchanged in accordance with the provisions thereof, if
temporary Securities are issued, the Company shall cause definitive Securities
to be prepared without unreasonable delay. After the preparation of definitive
Securities of the same series and containing terms and provisions that are
identical to those of any temporary Securities, such temporary Securities shall
be exchangeable for such definitive Securities upon surrender of such temporary
Securities at an Office or Agency for such Securities, without charge to any
Holder thereof. Upon surrender for cancellation of any one or more temporary
Securities (accompanied by any unmatured Coupons appertaining thereto), the
Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Securities of
authorized denominations of the same series and containing identical terms and
provisions; provided, however, that no definitive Bearer Security, except as
provided in or pursuant to this Indenture, shall be delivered in exchange for a
temporary Registered Security; and provided, further, that a definitive Bearer
Security shall be delivered in
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<PAGE> 36
exchange for a temporary Bearer Security only in compliance with the conditions
set forth in or pursuant to this Indenture. Unless otherwise provided in or
pursuant to this Indenture with respect to a temporary global Security, until
so exchanged the temporary Securities of any series shall in all respects be
entitled to the same benefits under this Indenture as definitive Securities of
such series.
Section 305. Registration, Transfer and Exchange.
With respect to the Registered Securities of each series, if
any, the Company shall cause to be kept a register (each such register being
herein sometimes referred to as the "Security Register") at an Office or Agency
for such series in which, subject to such reasonable regulations as it may
prescribe, the Company shall provide for the registration of the Registered
Securities of such series and of transfers of the Registered Securities of such
series. Such Office or Agency shall be the "Security Registrar" for that
series of Securities. Unless otherwise specified in or pursuant to this
Indenture or the Securities, the Trustee shall be the initial Security
Registrar for each series of Securities. The Company shall have the right to
remove and replace from time to time the Security Registrar for any series of
Securities; provided that no such removal or replacement shall be effective
until a successor Security Registrar with respect to such series of Securities
shall have been appointed by the Company and shall have accepted such
appointment by the Company. In the event that the Trustee shall not be or
shall cease to be Security Registrar with respect to a series of Securities, it
shall have the right to examine the Security Register for such series at all
reasonable times. There shall be only one Security Register for each series of
Securities.
Upon surrender for registration of transfer of any Registered
Security of any series at any Office or Agency for such series, the Company
shall execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Registered Securities
of the same series denominated as authorized in or pursuant to this Indenture,
of a like aggregate principal amount bearing a number not contemporaneously
outstanding and containing identical terms and provisions.
At the option of the Holder, Registered Securities of any
series may be exchanged for other Registered Securities of the same series
containing identical terms and provisions, in any authorized denominations, and
of a like aggregate principal amount, upon surrender of the Securities to be
exchanged at any Office or Agency for such series. Whenever any Registered
Securities are so surrendered for exchange, the Company shall execute, and the
Trustee shall authenticate and deliver, the Registered Securities which the
Holder making the exchange is entitled to receive.
If provided in or pursuant to this Indenture, with respect to
Securities of any series, at the option of the Holder, Bearer Securities of
such series may be exchanged for Registered Securities of such series
containing identical terms, denominated as authorized in or pursuant to this
Indenture and in the same aggregate principal amount, upon surrender of the
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Bearer Securities to be exchanged at any Office or Agency for such series, with
all unmatured Coupons and all matured Coupons in default thereto appertaining.
If the Holder of a Bearer Security is unable to produce any such unmatured
Coupon or Coupons or matured Coupon or Coupons in default, such exchange may be
effected if the Bearer Securities are accompanied by payment in funds
acceptable to the Company and the Trustee in an amount equal to the face amount
of such missing Coupon or Coupons, or the surrender of such missing Coupon or
Coupons may be waived by the Company and the Trustee if there is furnished to
them such security or indemnity as they may require to save each of them and
any Paying Agent harmless. If thereafter the Holder of such Bearer Security
shall surrender to any Paying Agent any such missing Coupon in respect of which
such a payment shall have been made, such Holder shall be entitled to receive
the amount of such payment; provided, however, that, except as otherwise
provided in Section 1002, interest represented by Coupons shall be payable only
upon presentation and surrender of those Coupons at an Office or Agency for
such series located outside the United States. Notwithstanding the foregoing,
in case a Bearer Security of any series is surrendered at any such Office or
Agency for such series in exchange for a Registered Security of such series and
like tenor after the close of business at such Office or Agency on (i) any
Regular Record Date and before the opening of business at such Office or Agency
on the relevant Interest Payment Date, or (ii) any Special Record Date and
before the opening of business at such Office or Agency on the related date for
payment of Defaulted Interest, such Bearer Security shall be surrendered
without the Coupon relating to such Interest Payment Date or proposed date of
payment, as the case may be (or, if such Coupon is so surrendered with such
Bearer Security, such Coupon shall be returned to the Person so surrendering
the Bearer Security), and interest or Defaulted Interest, as the case may be,
shall not be payable on such Interest Payment Date or proposed date for
payment, as the case may be, in respect of the Registered Security issued in
exchange for such Bearer Security, but shall be payable only to the Holder of
such Coupon when due in accordance with the provisions of this Indenture.
If provided in or pursuant to this Indenture with respect to
Securities of any series, at the option of the Holder, Registered Securities of
such series may be exchanged for Bearer Securities upon such terms and
conditions as may be provided in or pursuant to this Indenture with respect to
such series.
Whenever any Securities are surrendered for exchange as
contemplated by the immediately preceding two paragraphs, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
Notwithstanding the foregoing, except as otherwise provided in
or pursuant to this Indenture, any global Security shall be exchangeable for
definitive Securities only if (i) the Depository is at any time unwilling,
unable or ineligible to continue as Depository and a successor depository is
not appointed by the Company within 90 days of the date the Company is so
informed in writing, (ii) the Company executes and delivers to the Trustee a
Company Order to the effect that such global Security shall be so exchangeable,
or (iii) an Event of Default has occurred and is continuing with respect to the
Securities. If the beneficial owners of interests in
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<PAGE> 38
a global Security are entitled to exchange such interests for definitive
Securities as the result of an event described in clause (i), (ii) or (iii) of
the preceding sentence, then without unnecessary delay but in any event not
later than the earliest date on which such interests may be so exchanged, the
Company shall deliver to the Trustee definitive Securities in such form and
denominations as are required by or pursuant to this Indenture, and of the same
series, containing identical terms and in aggregate principal amount equal to
the principal amount of such global Security, executed by the Company. On or
after the earliest date on which such interests may be so exchanged, such
global Security shall be surrendered from time to time by the U.S. Depository
or such other Depository as shall be specified in the Company Order with
respect thereto, and in accordance with instructions given to the Trustee and
the U.S. Depository or such other Depository, as the case may be (which
instructions shall be in writing but need not be contained in or accompanied by
an Officers' Certificate or be accompanied by an Opinion of Counsel), as shall
be specified in the Company Order with respect thereto to the Trustee, as the
Company's agent for such purpose, to be exchanged, in whole or in part, for
definitive Securities as described above without charge. The Trustee shall
authenticate and make available for delivery, in exchange for each portion of
such surrendered global Security, a like aggregate principal amount of
definitive Securities of the same series of authorized denominations and of
like tenor as the portion of such global Security to be exchanged, which
(unless such Securities are not issuable both as Bearer Securities and as
Registered Securities, in which case the definitive Securities exchanged for
the global Security shall be issuable only in the form in which the Securities
are issuable, as provided in or pursuant to this Indenture) shall be in the
form of Bearer Securities or Registered Securities, or any combination thereof,
as shall be specified by the beneficial owner thereof, but subject to the
satisfaction of any certification or other requirements to the issuance of
Bearer Securities; provided, however, that no such exchanges may occur during a
period beginning at the opening of business 15 days before any selection of
Securities of the same series to be redeemed and ending on the relevant
Redemption Date; and provided, further, that (unless otherwise provided in or
pursuant to this Indenture) no Bearer Security delivered in exchange for a
portion of a global Security shall be mailed or otherwise delivered to any
location in the United States. Promptly following any such exchange in part,
such global Security shall be returned by the Trustee to such Depository or the
U.S. Depository, as the case may be, or such other Depository or U.S.
Depository referred to above in accordance with the instructions of the Company
referred to above. If a Registered Security is issued in exchange for any
portion of a global Security after the close of business at the Office or
Agency for such Security where such exchange occurs on or after (i) any Regular
Record Date for such Security and before the opening of business at such Office
or Agency on the next Interest Payment Date, or (ii) any Special Record Date
for such Security and before the opening of business at such Office or Agency
on the related proposed date for payment of interest or Defaulted Interest, as
the case may be, interest shall not be payable on such Interest Payment Date or
proposed date for payment, as the case may be, in respect of such Registered
Security, but shall be payable on such Interest Payment Date or proposed date
for payment, as the case may be, only to the Person to whom interest in respect
of such portion of such global Security shall be payable in accordance with the
provisions of this Indenture.
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All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company evidencing
the same debt and entitling the Holders thereof to the same benefits under this
Indenture as the Securities surrendered upon such registration of transfer or
exchange.
Every Registered Security presented or surrendered for
registration of transfer or for exchange or redemption shall (if so required by
the Company or the Security Registrar for such Security) be duly endorsed, or
be accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar for such Security duly executed by the
Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange, or redemption of Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge and
any other expenses (including fees and expenses of the Trustee) that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 905 or 1107 not
involving any transfer.
Except as otherwise provided in or pursuant to this Indenture,
the Company shall not be required (i) to issue, register the transfer of or
exchange any Securities during a period beginning at the opening of business 15
days before the day of the selection for redemption of Securities of like tenor
and the same series under Section 1103 and ending at the close of business on
the day of such selection, or (ii) to register the transfer of or exchange any
Registered Security so selected for redemption in whole or in part, except in
the case of any Security to be redeemed in part, the portion thereof not to be
redeemed, or (iii) to exchange any Bearer Security so selected for redemption
except, to the extent provided with respect to such Bearer Security, that such
Bearer Security may be exchanged for a Registered Security of like tenor and
the same series, provided that such Registered Security shall be immediately
surrendered for redemption with written instruction for payment consistent with
the provisions of this Indenture or (iv) to issue, register the transfer of or
exchange any Security which, in accordance with its terms, has been surrendered
for repayment at the option of the Holder, except the portion, if any, of such
Security not to be so repaid.
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities.
If any mutilated Security or a Security with a mutilated
Coupon appertaining to it is surrendered to the Trustee, subject to the
provisions of this Section 306, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security of the same series
containing identical terms and of like principal amount and bearing a number
not contemporaneously outstanding, with Coupons appertaining thereto
corresponding to the Coupons, if any, appertaining to the surrendered Security.
If there be delivered to the Company and to the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any
Security or Coupon, and (ii) such security or
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indemnity as may be required by them to save each of them and any agent of
either of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security or Coupon has been acquired by a bona fide
purchaser, the Company shall execute and, upon the Company's request the
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Security or in exchange for the Security
to which a destroyed, lost or stolen Coupon appertains with all appurtenant
Coupons not destroyed, lost or stolen, a new Security of the same series
containing identical terms and of like principal amount and bearing a number
not contemporaneously outstanding, with Coupons corresponding to the Coupons,
if any, appertaining to such destroyed, lost or stolen Security or to the
Security to which such destroyed, lost or stolen Coupon appertains.
Notwithstanding the foregoing provisions of this Section 306,
in case any mutilated, destroyed, lost or stolen Security or Coupon has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security or Coupon; provided,
however, that payment of principal of, any premium or interest on or any
Additional Amounts with respect to any Bearer Securities shall, except as
otherwise provided in Section 1002, be payable only at an Office or Agency for
such Securities located outside the United States and, unless otherwise
provided in or pursuant to this Indenture, any interest on Bearer Securities
and any Additional Amounts with respect to such interest shall be payable only
upon presentation and surrender of the Coupons appertaining thereto.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security, with any Coupons appertaining thereto
issued pursuant to this Section in lieu of any destroyed, lost or stolen
Security, or in exchange for a Security to which a destroyed, lost or stolen
Coupon appertains shall constitute a separate obligation of the Company,
whether or not the destroyed, lost or stolen Security and Coupons appertaining
thereto or the destroyed, lost or stolen Coupon shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of such
series and any Coupons, if any, duly issued hereunder.
The provisions of this Section, as amended or supplemented
pursuant to this Indenture with respect to particular Securities or generally,
shall be exclusive and shall preclude (to the extent lawful) all other rights
and remedies with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities or Coupons.
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Section 307. Payment of Interest and Certain Additional
Amounts; Rights to Interest and Certain
Additional Amounts Preserved.
Unless otherwise provided in or pursuant to this Indenture,
any interest on and any Additional Amounts with respect to any Registered
Security which shall be payable, and are punctually paid or duly provided for,
on any Interest Payment Date shall be paid to the Person in whose name such
Security (or one or more Predecessor Securities) is registered as of the close
of business on the Regular Record Date for such interest. Unless otherwise
provided in or pursuant to this Indenture, in case a Bearer Security is
surrendered in exchange for a Registered Security after the close of business
at an Office or Agency for such Security on any Regular Record Date therefor
and before the opening of business at such Office or Agency on the next
succeeding Interest Payment Date therefor, such Bearer Security shall be
surrendered without the Coupon relating to such Interest Payment Date and
interest shall not be payable on such Interest Payment Date in respect of the
Registered Security issued in exchange for such Bearer Security, but shall be
payable only to the Holder of such Coupon when due in accordance with the
provisions of this Indenture.
Unless otherwise provided in or pursuant to this Indenture,
any interest on and any Additional Amounts with respect to any Registered
Security which shall be payable, but shall not be punctually paid or duly
provided for, on any Interest Payment Date for such Registered Security (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
thereof on the relevant Regular Record Date by virtue of having been such
Holder; and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in Clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the Person in whose name such Registered
Security (or a Predecessor Security thereof) shall be registered at
the close of business on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of Defaulted
Interest proposed to be paid on such Registered Security and the date
of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit
on or prior to the date of the proposed payment, such money when so
deposited to be held in trust for the benefit of the Person entitled
to such Defaulted Interest as in this Clause provided. Thereupon, the
Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less
than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of
such Special Record Date and, in the name and at the expense of the
Company shall cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to the Holder of such Registered Security
(or a Predecessor Security thereof) at his address as it appears in
the Security Register not
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less than 10 days prior to such Special Record Date. The Trustee may,
in its discretion, in the name and at the expense of the Company cause
a similar notice to be published at least once in an Authorized
Newspaper of general circulation in the Borough of Manhattan, The City
of New York, but such publication shall not be a condition precedent
to the establishment of such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record
Date therefor having been mailed as aforesaid, such Defaulted Interest
shall be paid to the Person in whose name such Registered Security (or
a Predecessor Security thereof) shall be registered at the close of
business on such Special Record Date and shall no longer be payable
pursuant to the following clause (2). In case a Bearer Security is
surrendered at the Office or Agency for such Security in exchange for
a Registered Security after the close of business at such Office or
Agency on any Special Record Date and before the opening of business
at such Office or Agency on the related proposed date for payment of
Defaulted Interest, such Bearer Security shall be surrendered without
the Coupon relating to such Defaulted Interest and Defaulted Interest
shall not be payable on such proposed date of payment in respect of
the Registered Security issued in exchange for such Bearer Security,
but shall be payable only to the Holder of such Coupon when due in
accordance with the provisions of this Indenture.
(2) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Security may be
listed, and upon such notice as may be required by such exchange, if,
after notice given by the Company to the Trustee of the proposed
payment pursuant to this Clause, such payment shall be deemed
practicable by the Trustee.
Unless otherwise provided in or pursuant to this Indenture or
the Securities of any particular series pursuant to the provisions of this
Indenture, at the option of the Company, interest on Registered Securities that
bear interest may be paid by mailing a check to the address of the Person
entitled thereto as such address shall appear in the Security Register or by
transfer to an account maintained by the payee with a bank located in the
United States.
Subject to the foregoing provisions of this Section and
Section 305, each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by
such other Security.
In the case of any Registered Security of any series that is
convertible, which Registered Security is converted after any Regular Record
Date and on or prior to the next succeeding Interest Payment Date (other than
any Registered Security with respect to which the Stated Maturity is prior to
such Interest Payment Date), interest with respect to which the Stated Maturity
is on such Interest Payment Date shall be payable on such Interest Payment Date
notwithstanding such conversion, and such interest (whether or not punctually
paid or duly provided for) shall be paid to the Person in whose name that
Registered Security (or one or more predecessor Registered Securities) is
registered at the close of business on such Regular Record
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Date. Except as otherwise expressly provided in the immediately preceding
sentence, in the case of any Registered Security which is converted, interest
with respect to which the Stated Maturity is after the date of conversion of
such Registered Security shall not be payable.
Section 308. Persons Deemed Owners.
Prior to due presentment of a Registered Security for
registration of transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name such Registered Security is
registered in the Security Register as the owner of such Registered Security
for the purpose of receiving payment of principal of, any premium and (subject
to Sections 305 and 307) interest on and any Additional Amounts with respect to
such Registered Security and for all other purposes whatsoever, whether or not
any payment with respect to such Registered Security shall be overdue, and
neither the Company, nor the Trustee or any agent of the Company or the Trustee
shall be affected by notice to the contrary.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the bearer of any Bearer Security or the bearer of any Coupon
as the absolute owner of such Security or Coupon for the purpose of receiving
payment thereof or on account thereof and for all other purposes whatsoever,
whether or not any payment with respect to such Security or Coupon shall be
overdue, and neither the Company, nor the Trustee or any agent of the Company
or the Trustee shall be affected by notice to the contrary.
No Holder of any beneficial interest in any global Security
held on its behalf by a Depository shall have any rights under this Indenture
with respect to such global Security, and such Depository may be treated by the
Company, the Trustee, and any agent of the Company or the Trustee as the owner
of such global Security for all purposes whatsoever. None of the Company, the
Trustee, any Paying Agent or the Security Registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests of a global Security
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Section 309. Cancellation.
All Securities and Coupons surrendered for payment,
redemption, registration of transfer, exchange or conversion or for credit
against any sinking fund payment shall, if surrendered to any Person other than
the Trustee, be delivered to the Trustee, and any such Securities and Coupons,
as well as Securities and Coupons surrendered directly to the Trustee for any
such purpose, shall be cancelled promptly by the Trustee. The Company may at
any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in
any manner whatsoever, and all Securities so delivered shall be cancelled
promptly by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this Section, except as
expressly
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permitted by or pursuant to this Indenture. All cancelled Securities and
Coupons held by the Trustee shall be destroyed by the Trustee, unless by a
Company Order the Company directs their return to it.
Section 310. Computation of Interest.
Except as otherwise provided in or pursuant to this Indenture
or in any Security, interest on the Securities shall be computed on the basis
of a 360-day year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE OF INDENTURE
Section 401. Satisfaction and Discharge.
Upon the direction of the Company by a Company Order, this
Indenture shall cease to be of further effect with respect to any series of
Securities specified in such Company Order and any Coupons appertaining
thereto, and the Trustee, on receipt of a Company Order, at the expense of the
Company, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture as to such series, when
(1) either
(a) all Securities of such series theretofore
authenticated and delivered and all Coupons appertaining thereto
(other than (i) Coupons appertaining to Bearer Securities of such
series surrendered in exchange for Registered Securities of such
series and maturing after such exchange whose surrender is not
required or has been waived as provided in Section 305, (ii)
Securities and Coupons of such series which have been destroyed, lost
or stolen and which have been replaced or paid as provided in Section
306, (iii) Coupons appertaining to Securities of such series called
for redemption and maturing after the relevant Redemption Date whose
surrender has been waived as provided in Section 1107, and (iv)
Securities and Coupons of such series for whose payment money has
theretofore been deposited in trust or segregated and held in trust by
the Company and thereafter repaid to the Company or discharged from
such trust, as provided in Section 1003) have been delivered to the
Trustee for cancellation; or
(b) all Securities of such series and, in the
case of (i) or (ii) below, any Coupons appertaining thereto not
theretofore delivered to the Trustee for cancellation
(i) have become due and payable, or
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(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) if redeemable at the option of the Company,
are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of
notice of redemption by the Trustee in the name, and at the
expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
deposited or caused to be deposited with the Trustee as trust funds in
trust for such purpose, money in the Currency in which such Securities
are payable in an amount sufficient to pay and discharge the entire
indebtedness on such Securities and any Coupons appertaining thereto
not theretofore delivered to the Trustee for cancellation, including
the principal of, any premium and interest on, and any Additional
Amounts with respect to such Securities and any Coupons appertaining
thereto, to the date of such deposit (in the case of Securities which
have become due and payable) or to the Maturity thereof, as the case
may be;
(2) the Company has paid or caused to be paid all other
sums payable hereunder by the Company with respect to the Outstanding
Securities of such series and any Coupons appertaining thereto; and
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture as to such series have been complied
with.
In the event there are Securities of two or more series
hereunder, the Trustee shall be required to execute an instrument acknowledging
satisfaction and discharge of this Indenture only if requested to do so with
respect to Securities of such series as to which it is Trustee and if the other
conditions thereto are met.
Notwithstanding the satisfaction and discharge of this
Indenture with respect to any series of Securities, the obligations of the
Company to the Trustee under Section 605 and, if money shall have been
deposited with the Trustee pursuant to subclause (b) of clause (1) of this
Section, the obligations of the Company and the Trustee with respect to the
Securities of such series under Sections 305, 306, 403, 1002 and 1003, with
respect to the payment of Additional Amounts, if any, with respect to such
Securities as contemplated by Section 1004 (but only to the extent that the
Additional Amounts payable with respect to such Securities exceed the amount
deposited in respect of such Additional Amounts pursuant to Section 401(1)(b)),
shall survive.
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Section 402. Defeasance and Covenant Defeasance.
(1) Unless pursuant to Section 301, either or both of (i)
defeasance of the Securities of or within a series under clause (2) of this
Section 402 shall not be applicable with respect to the Securities of such
series or (ii) covenant defeasance of the Securities of or within a series
under clause (3) of this Section 402 shall not be applicable with respect to
the Securities of such series, then such provisions, together with the other
provisions of this Section 402 (with such modifications thereto as may be
specified pursuant to Section 301 with respect to any Securities), shall be
applicable to such Securities and any Coupons appertaining thereto, and the
Company may at its option by Board Resolution, at any time, with respect to
such Securities and any Coupons appertaining thereto, elect to have Section
402(2) or Section 402(3) be applied to such Outstanding Securities and any
Coupons appertaining thereto upon compliance with the conditions set forth
below in this Section 402.
(2) Upon the Company's exercise of the above option
applicable to this Section 402(2) with respect to any Securities of or within a
series, the Company shall be deemed to have been discharged from its
obligations with respect to such Outstanding Securities and any Coupons
appertaining thereto on the date the conditions set forth in clause (4) of this
Section 402 are satisfied (hereinafter, "defeasance"). For this purpose, such
defeasance means that the Company shall be deemed to have paid and discharged
the entire Indebtedness represented by such Outstanding Securities and any
Coupons appertaining thereto, which shall thereafter be deemed to be
"Outstanding" only for the purposes of clause (5) of this Section 402 and the
other Sections of this Indenture referred to in clauses (i) and (ii) below, and
to have satisfied all of its other obligations under such Securities and any
Coupons appertaining thereto and this Indenture insofar as such Securities and
any Coupons appertaining thereto are concerned (and the Trustee, at the expense
of the Company, shall execute proper instruments acknowledging the same),
except for the following which shall survive until otherwise terminated or
discharged hereunder: (i) the rights of Holders of such Outstanding Securities
and any Coupons appertaining thereto to receive, solely from the trust fund
described in clause (4) of this Section 402 and as more fully set forth in such
Section, payments in respect of the principal of (and premium, if any) and
interest, if any, on, and Additional Amounts, if any, with respect to, such
Securities and any Coupons appertaining thereto when such payments are due,
(ii) the obligations of the Company and the Trustee with respect to such
Securities under Sections 305, 306, 1002 and 1003 and with respect to the
payment of Additional Amounts, if any, on such Securities as contemplated by
Section 1004 (but only to the extent that the Additional Amounts payable with
respect to such Securities exceed the amount deposited in respect of such
Additional Amounts pursuant to Section 401(4)(a) below), (iii) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and (iv) this
Section 402. The Company may exercise its option under this Section 402(2)
notwithstanding the prior exercise of its option under clause (3) of this
Section 402 with respect to such Securities and any Coupons appertaining
thereto.
(3) Upon the Company's exercise of the above option
applicable to this Section 402(3) with respect to any Securities of or within a
series, the Company shall be released from its obligations under Section 1005
and, to the extent specified pursuant to Section 301, any other
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covenant applicable to such Securities, with respect to such Outstanding
Securities and any Coupons appertaining thereto on and after the date the
conditions set forth in clause (4) of this Section 402 are satisfied
(hereinafter, "covenant defeasance"), and such Securities and any Coupons
appertaining thereto shall thereafter be deemed to be not "Outstanding" for the
purposes of any direction, waiver, consent or declaration or Act of Holders
(and the consequences of any thereof) in connection with any such covenant, but
shall continue to be deemed "Outstanding" for all other purposes hereunder.
For this purpose, such covenant defeasance means that, with respect to such
Outstanding Securities and any Coupons appertaining thereto, the Company may
omit to comply with, and shall have no liability in respect of, any term,
condition or limitation set forth in any such Section or such other covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
any such Section or such other covenant or by reason of reference in any such
Section or such other covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a default or an Event
of Default under Section 501(4) or 501(8) or otherwise, as the case may be,
but, except as specified above, the remainder of this Indenture and such
Securities and Coupons appertaining thereto shall be unaffected thereby.
(4) The following shall be the conditions to application
of clause (2) or (3) of this Section 402 to any Outstanding Securities of or
within a series and any Coupons appertaining thereto:
(a) The Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another trustee satisfying
the requirements of Section 607 who shall agree to comply with the
provisions of this Section 402 applicable to it) as trust funds in
trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of such Securities and any Coupons appertaining thereto, (1)
an amount in Dollars or in such Foreign Currency in which such
Securities and any Coupons appertaining thereto are then specified as
payable at Stated Maturity, or (2) Government Obligations applicable
to such Securities and Coupons appertaining thereto (determined on the
basis of the Currency in which such Securities and Coupons
appertaining thereto are then specified as payable at Stated Maturity)
which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not later
than one day before the due date of any payment of principal of (and
premium, if any) and interest, if any, on such Securities and any
Coupons appertaining thereto, money in an amount, or (3) a combination
thereof, in any case, in an amount, sufficient, without consideration
of any reinvestment of such principal and interest, in the opinion of
a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee,
to pay and discharge, and which shall be applied by the Trustee (or
other qualifying trustee) to pay and discharge, (y) the principal of
(and premium, if any) and interest, if any, on such Outstanding
Securities and any Coupons appertaining thereto on the Stated Maturity
of such principal or installment of principal or interest and (z) any
mandatory sinking fund payments or analogous payments applicable to
such Outstanding Securities and any Coupons appertaining thereto on
the day on which such payments are
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due and payable in accordance with the terms of this Indenture and of
such Securities and any Coupons appertaining thereto.
(b) Such defeasance or covenant defeasance shall not
result in a breach or violation of, or constitute a default under,
this Indenture or any other material agreement or instrument to which
the Company is a party or by which it is bound.
(c) No Event of Default or event which with notice or
lapse of time or both would become an Event of Default with respect to
such Securities and any Coupons appertaining thereto shall have
occurred and be continuing on the date of such deposit and, with
respect to defeasance only, at any time during the period ending on
the 91st day after the date of such deposit (it being understood that
this condition shall not be deemed satisfied until the expiration of
such period).
(d) In the case of an election under clause (2) of this
Section 402, the Company shall have delivered to the Trustee an
Opinion of Counsel stating that (i) the Company has received from the
Internal Revenue Service a letter ruling, or there has been published
by the Internal Revenue Service a Revenue Ruling, or (ii) since the
date of execution of this Indenture, there has been a change in the
applicable Federal income tax law, in either case to the effect that,
and based thereon such opinion shall confirm that, the Holders of such
Outstanding Securities and any Coupons appertaining thereto will not
recognize income, gain or loss for Federal income tax purposes as a
result of such defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would
have been the case if such defeasance had not occurred.
(e) In the case of an election under clause (3) of this
Section 402, the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that the Holders of such Outstanding
Securities and any Coupons appertaining thereto will not recognize
income, gain or loss for Federal income tax purposes as a result of
such covenant defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would
have been the case if such covenant defeasance had not occurred.
(f) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance or covenant defeasance under
clause (2) or (3) of this Section 402 (as the case may be) have been
complied with.
(g) Notwithstanding any other provisions of this Section
402(4), such defeasance or covenant defeasance shall be effected in
compliance with any additional or substitute terms, conditions or
limitations which may be imposed on the Company in connection
therewith pursuant to Section 301.
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(5) Subject to the provisions of the last paragraph of
Section 1003, all money and Government Obligations (or other property as may be
provided pursuant to Section 301) (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee, collectively for purposes of
this Section 402(5) and Section 403, the "Trustee") pursuant to clause (4) of
Section 402 in respect of any Outstanding Securities of any series and any
Coupons appertaining thereto shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Securities and any Coupons
appertaining thereto and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own Paying Agent)
as the Trustee may determine, to the Holders of such Securities and any Coupons
appertaining thereto of all sums due and to become due thereon in respect of
principal (and premium, if any) and interest and Additional Amounts, if any,
but such money need not be segregated from other funds except to the extent
required by law.
Unless otherwise specified in or pursuant to this Indenture or
any Security, if, after a deposit referred to in Section 402(4)(a) has been
made, (a) the Holder of a Security in respect of which such deposit was made is
entitled to, and does, elect pursuant to Section 301 or the terms of such
Security to receive payment in a Currency other than that in which the deposit
pursuant to Section 402(4)(a) has been made in respect of such Security, or (b)
a Conversion Event occurs in respect of the Foreign Currency in which the
deposit pursuant to Section 402(4)(a) has been made, the indebtedness
represented by such Security and any Coupons appertaining thereto shall be
deemed to have been, and will be, fully discharged and satisfied through the
payment of the principal of (and premium, if any), and interest, if any, on,
and Additional Amounts, if any, with respect to, such Security as the same
becomes due out of the proceeds yielded by converting (from time to time as
specified below in the case of any such election) the amount or other property
deposited in respect of such Security into the Currency in which such Security
becomes payable as a result of such election or Conversion Event based on (x)
in the case of payments made pursuant to clause (a) above, the applicable
market exchange rate for such Currency in effect on the second Business Day
prior to each payment date, or (y) with respect to a Conversion Event, the
applicable market exchange rate for such Foreign Currency in effect (as nearly
as feasible) at the time of the Conversion Event.
The Company shall pay and indemnify the Trustee against any
tax, fee or other charge, imposed on or assessed against the Government
Obligations deposited pursuant to this Section 402 or the principal or 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 such Outstanding Securities and any
Coupons appertaining thereto.
Anything in this Section 402 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or Government Obligations (or other property and any proceeds
therefrom) held by it as provided in clause (4) of this Section 402 which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect a defeasance or covenant defeasance, as applicable, in accordance with
this Section 402.
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The provisions for subordination of the Securities set forth
in Article Fifteen are hereby expressly made subject to the provisions for
defeasance or covenant defeasance in this Article Four and, anything herein to
the contrary notwithstanding, upon the effectiveness of such defeasance or
covenant defeasance with respect to Outstanding Securities, such Securities
shall thereupon cease to be so subordinated.
Section 403. Application of Trust Money.
Subject to the provisions of the last paragraph of Section
1003, all money and Government Obligations deposited with the Trustee pursuant
to Section 401 or 402 shall be held in trust and applied by it, in accordance
with the provisions of the Securities, the Coupons and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal, premium, interest and Additional Amounts
for whose payment such money has or Government Obligations have been deposited
with or received by the Trustee; but such money and Government Obligations need
not be segregated from other funds except to the extent required by law.
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default", wherever used herein with respect to
Securities of any series, means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body), unless such event is specifically deleted
or modified in or pursuant to the supplemental indenture, Board Resolution or
Officers' Certificate establishing the terms of such Series pursuant to this
Indenture:
(1) default in the payment of any interest on or any
Additional Amounts payable in respect of any Security of such series when such
interest becomes or such Additional Amounts become due and payable, and
continuance of such default for a period of 30 days; or
(2) default in the payment of the principal of or any
premium on any Security of such series when it becomes due and payable at its
Maturity; or
(3) default in the deposit of any sinking fund payment
when and as due by the terms of a Security of such series; or
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(4) default in the performance, or breach, of any
covenant or warranty of the Company in this Indenture or the Securities (other
than a covenant or warranty a default in the performance or the breach of which
is elsewhere in this Section specifically dealt with or which has been
expressly included in this Indenture solely for the benefit of a series of
Securities other than such series), and continuance of such default or breach
for a period of 60 days after there has been given, by registered or certified
mail, to the Company by the Trustee or to the Company and the Trustee by the
Holders of at least 25% in principal amount of the Outstanding Securities of
such series, a written notice specifying such default or breach and requiring
it to be remedied and stating that such notice is a "Notice of Default"
hereunder; or
(5) if any event of default as defined in any mortgage,
indenture or instrument under which there may be issued, or by which there may
be secured or evidenced, any Indebtedness of the Company or any Restricted
Subsidiary, whether such Indebtedness now exists or shall hereafter be created,
shall happen and shall result in such Indebtedness in principal amount in
excess of $10,000,000 becoming or being declared due and payable prior to the
date on which it would otherwise become due and payable, and such acceleration
shall not be rescinded or annulled, or such Indebtedness shall not have been
discharged, within a period of 30 days after there shall have been given, by
registered or certified mail, to the Company by the Trustee or to the Company
and the Trustee by the Holders of at least 25% in principal amount of the
Outstanding Securities of such series, a written notice specifying such event
of default and requiring the Company to cause such acceleration to be rescinded
or annulled or to cause such Indebtedness to be discharged and stating that
such notice is a "Notice of Default" hereunder; or
(6) the Company shall fail within 60 days to pay, bond or
otherwise discharge any uninsured judgment or court order for the payment of
money in excess of $10,000,000, which is not stayed on appeal or is not
otherwise being appropriately contested in good faith; or
(7) the entry by a court having competent jurisdiction
of:
(a) a decree or order for relief in respect of the
Company or any Restricted Subsidiary in an involuntary proceeding
under any applicable bankruptcy, insolvency, reorganization or other
similar law and such decree or order shall remain unstayed and in
effect for a period of 60 consecutive days; or
(b) a decree or order adjudging the Company or any
Restricted Subsidiary to be insolvent, or approving a petition seeking
reorganization, arrangement, adjustment or composition of the Company
or any Restricted Subsidiary and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or
(c) a final and non-appealable order appointing a
custodian, receiver, liquidator, assignee, trustee or other similar
official of the Company or any Restricted Subsidiary or of any
substantial part of the property of the Company or any Restricted
Subsidiary, as the case may be, or ordering the winding up or
liquidation of the affairs of the Company or any Restricted
Subsidiary; or
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(8) the commencement by the Company or any Restricted
Subsidiary of a voluntary proceeding under any applicable bankruptcy,
insolvency, reorganization or other similar law or of a voluntary proceeding
seeking to be adjudicated insolvent or the consent by the Company or any
Restricted Subsidiary to the entry of a decree or order for relief in an
involuntary proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any insolvency
proceedings against it, or the filing by the Company or any Restricted
Subsidiary of a petition or answer or consent seeking reorganization or relief
under any applicable law, or the consent by the Company or any Restricted
Subsidiary to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee or similar
official of the Company or any Restricted Subsidiary or any substantial part of
the property of the Company or any Restricted Subsidiary or the making by the
Company or any Restricted Subsidiary of an assignment for the benefit of
creditors, or the taking of corporate action by the Company or any Restricted
Subsidiary in furtherance of any such action; or
(9) any other Event of Default provided in or pursuant to
this Indenture with respect to Securities of such series.
Section 502. Acceleration of Maturity; Rescission and
Annulment.
If an Event of Default specified in clause (7) or (8) of
Section 501 occurs with respect to the Company, all unpaid principal of and
accrued interest on the Outstanding Securities of that series (or such lesser
amount as may be provided for in the Securities of such series) shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder of any Security of that series. An
Event of Default specified in clauses (1) through (6) of Section 501 shall not
give rise to the acceleration of payment of unpaid principal of or accrued
interest on the Outstanding Securities of that series.
At any time after Securities of any series have been
accelerated and before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter in this Article provided, the
Holders of not less than a majority in principal amount of the Outstanding
Securities of such series, by written notice to the Company and the Trustee,
may rescind and annul such declaration and its consequences if
(1) the Company has paid or deposited with the Trustee a
sum of money sufficient to pay
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(a) all overdue installments of any interest on and
Additional Amounts with respect to all Securities of such series and
any Coupon appertaining thereto,
(b) the principal of and any premium on any Securities of
such series which have become due otherwise than by such declaration
of acceleration and interest thereon and any Additional Amounts with
respect thereto at the rate or rates borne by or provided for in such
Securities,
(c) to the extent that payment of such interest or
Additional Amounts is lawful, interest upon overdue installments of
any interest and Additional Amounts at the rate or rates borne by or
provided for in such Securities, and
(d) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel and all other amounts due the
Trustee under Section 606; and
(2) all Events of Default with respect to Securities of
such series, other than the non-payment of the principal of, any premium and
interest on, and any Additional Amounts with respect to Securities of such
series which shall have become due solely by such declaration of acceleration,
shall have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any installment of
interest on or any Additional Amounts with respect to any Security or any
Coupon appertaining thereto when such interest or Additional Amounts shall have
become due and payable and such default continues for a period of 30 days, or
(2) default is made in the payment of the principal of or
any premium on any Security at its Maturity,
the Company shall, upon demand of the Trustee, pay to the Trustee, for the
benefit of the Holders of such Securities and any Coupons appertaining thereto,
the whole amount of money then due and payable with respect to such Securities
and any Coupons appertaining thereto, with interest upon the overdue principal,
any premium and, to the extent that payment of such interest shall be legally
enforceable, upon any overdue installments of interest and Additional Amounts
at the rate or rates borne by or provided for in such Securities, and, in
addition thereto, such further amount of money as shall be sufficient to cover
the costs and expenses of collection, including
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the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel and all other amounts due to the Trustee under
Section 606.
If the Company fails to pay the money it is required to pay
the Trustee pursuant to the preceding paragraph forthwith upon the demand of
the Trustee, the Trustee, in its own name and as trustee of an express trust,
may institute a judicial proceeding for the collection of the money so due and
unpaid, and may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Company or any other obligor upon such Securities
and any Coupons appertaining thereto and collect the monies adjudged or decreed
to be payable in the manner provided by law out of the property of the Company
or any other obligor upon such Securities and any Coupons appertaining thereto,
wherever situated.
If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may in its discretion proceed to
protect and enforce its rights and the rights of the Holders of Securities of
such series and any Coupons appertaining thereto by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or such Securities or in aid of the exercise of any power
granted herein or therein, or to enforce any other proper remedy.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Company or any other obligor upon
the Securities or the property of the Company or such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of any overdue principal, premium, interest or
Additional Amounts) shall be entitled and empowered, by intervention in such
proceeding or otherwise,
(1) to file and prove a claim for the whole amount, or
such lesser amount as may be provided for in the Securities of such
series, of the principal and any premium, interest and Additional
Amounts owing and unpaid in respect of the Securities and any Coupons
appertaining thereto and to file such other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents or counsel) and
of the Holders of Securities or any Coupons allowed in such judicial
proceeding, and
(2) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same;
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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder of Securities or any Coupons to make such payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders of Securities or any Coupons, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel and any other amounts due the
Trustee under Section 606.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
of a Security or any Coupon any plan of reorganization, arrangement, adjustment
or composition affecting the Securities or Coupons or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claim of any
Holder of a Security or any Coupon in any such proceeding.
Section 505. Trustee May Enforce Claims without Possession of Securities or
Coupons.
All rights of action and claims under this Indenture or any of
the Securities or Coupons may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or Coupons or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and
any recovery or judgment, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, shall be for the ratable benefit of each and every Holder of a
Security or Coupon in respect of which such judgment has been recovered.
Section 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal,
or any premium, interest or Additional Amounts, upon presentation of the
Securities or Coupons, or both, as the case may be, and the notation thereon of
the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee and any
predecessor Trustee under Section 606;
SECOND: To the payment of the amounts then due and unpaid
upon the Securities and any Coupons for principal and any premium,
interest and Additional Amounts in respect of which or for the benefit
of which such money has been collected, ratably, without preference or
priority of any kind, according to the aggregate amounts
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due and payable on such Securities and Coupons for principal and any
premium, interest and Additional Amounts, respectively;
THIRD: The balance, if any, to the Person or Persons entitled
thereto.
Section 507. Limitations on Suits.
No Holder of any Security of any series or any Coupons
appertaining thereto shall have any right to institute any proceeding, judicial
or otherwise, with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to
the Trustee of a continuing Event of Default with respect to the
Securities of such series;
(2) the Holders of not less than 25% in principal amount
of the Outstanding Securities of such series shall have made written
request to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute any
such proceeding; and
(5) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the Holders
of a majority in principal amount of the Outstanding Securities of
such series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture or any Security to affect, disturb or prejudice the rights of
any other such Holders or Holders of Securities of any other series, or to
obtain or to seek to obtain priority or preference over any other Holders or to
enforce any right under this Indenture, except in the manner herein provided
and for the equal and ratable benefit of all such Holders.
Section 508. Unconditional Right of Holders to Receive
Principal and any Premium, Interest and Additional Amounts.
Notwithstanding any other provision in this Indenture, the
Holder of any Security or Coupon shall have the right, which is absolute and
unconditional, to receive payment of the principal of, any premium and (subject
to Sections 305 and 307) interest on, and any Additional Amounts with respect
to such Security or payment of such Coupon, as the case may be, on the
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respective Stated Maturity or Maturities therefor specified in such Security or
Coupon (or, in the case of redemption, on the Redemption Date or, in the case
of repayment at the option of such Holder if provided in or pursuant to this
Indenture, on the date such repayment is due) and to institute suit for the
enforcement of any such payment, and such right shall not be impaired without
the consent of such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder of a Security or a Coupon has
instituted any proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any reason, or has
been determined adversely to the Trustee or to such Holder, then and in every
such case the Company, the Trustee and each such Holder shall, subject to any
determination in such proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Trustee and each such Holder shall continue as though no such proceeding had
been instituted.
Section 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Securities or Coupons in the
last paragraph of Section 306, no right or remedy herein conferred upon or
reserved to the Trustee or to each and every Holder of a Security or a Coupon
is intended to be exclusive of any other right or remedy, and every right and
remedy, to the extent permitted by law, shall be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not, to the extent permitted by law,
prevent the concurrent assertion or employment of any other appropriate right
or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security or Coupon to exercise any right or remedy accruing upon any Event of
Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Article or by law to the Trustee or to any Holder of a Security or a
Coupon may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by such Holder, as the case may be.
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Section 512. Control by Holders of Securities.
The Holders of a majority in principal amount of the
Outstanding Securities of any series shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee with respect
to the Securities of such series and any Coupons appertaining thereto, provided
that
(1) such direction shall not be in conflict with any rule
of law or with this Indenture or with the Securities of any series,
(2) the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction, and
(3) such direction is not unduly prejudicial to the
rights of the other Holders of Securities of such series not joining
in such action.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of
the Outstanding Securities of any series on behalf of the Holders of all the
Securities of such series and any Coupons appertaining thereto may waive any
past default hereunder with respect to such series and its consequences, except
a default
(1) in the payment of the principal of, any premium or
interest on, or any Additional Amounts with respect to, any Security
of such series or any Coupons appertaining thereto, or
(2) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the consent
of the Holder of each Outstanding Security of such series affected.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
Section 514. Waiver of Stay or Extension Laws.
The Company covenants that (to the extent that it may lawfully
do so) it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company expressly
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waives (to the extent that it may lawfully do so) all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
Section 515. Undertaking for Costs
All parties to this Indenture agree, and each Holder of any
Security by his acceptance thereof shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the Trustee for
any action taken or omitted by it as Trustee, the filing by any party litigant
in such suit of any undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit having due regard to
the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section 515 shall not apply to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal amount of
Outstanding Securities of any series, or to any suit instituted by any Holder
for the enforcement of the payment of the principal of (or premium, if any) or
interest, if any, on or Additional Amounts, if any, with respect to any
Security on or after the respective Stated Maturities expressed in such
Security (or, in the case of redemption, on or after the Redemption Date, and,
in the case of repayment, on or after the date for repayment) or for the
enforcement of the right, if any, to convert or exchange any Security into
Common Stock or other securities in accordance with its terms.
ARTICLE SIX
THE TRUSTEE
Section 601. Certain Rights of Trustee.
Subject to Sections 315(a) through 315(d) of the Trust
Indenture Act:
(1) the Trustee may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, coupon or other paper or document
reasonably believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(2) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or a
Company Order (in each case, other than delivery of any Security,
together with any Coupons appertaining thereto, to the
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Trustee for authentication and delivery pursuant to Section 303 which
shall be sufficiently evidenced as provided therein) and any
resolution of the Board of Directors may be sufficiently evidenced by
a Board Resolution;
(3) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the
Trustee (unless other evidence shall be herein specifically
prescribed) may, in the absence of bad faith on its part, rely upon an
Officers' Certificate;
(4) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
(5) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by or pursuant to this
Indenture at the request or direction of any of the Holders of
Securities of any series or any Coupons appertaining thereto pursuant
to this Indenture, unless such Holders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses
and liabilities which might be incurred by it in compliance with such
request or direction;
(6) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, coupon or other paper or
document, but the 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, during business hours
and upon reasonable notice, the books, records and premises of the
Company, personally or by agent or attorney; and
(7) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder.
Section 602. Notice of Defaults.
Within 90 days after the occurrence of any default hereunder
with respect to the Securities of any series, the Trustee shall transmit by
mail to all Holders of Securities of such series entitled to receive reports
pursuant to Section 703(3), notice of such default hereunder known to the
Trustee, unless such default shall have been cured or waived; provided,
however, that, except in the case of a default in the payment of the principal
of (or premium, if any), or
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interest, if any, on, or Additional Amounts or any sinking fund or purchase
fund installment with respect to, any Security of such series, the Trustee
shall be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determine that the
withholding of such notice is in the best interest of the Holders of Securities
and Coupons of such series; and provided, further, that in the case of any
default of the character specified in Section 501(5) with respect to Securities
of such series, no such notice to Holders shall be given until at least 30 days
after the occurrence thereof. For the purpose of this Section, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an Event of Default with respect to Securities of such series.
Section 603. Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities, except
the Trustee's certificate of authentication, and in any Coupons shall be taken
as the statements of the Company and neither the Trustee nor any Authenticating
Agent assumes any responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities or the Coupons, except that the Trustee represents that it is duly
authorized to execute and deliver this Indenture, authenticate the Securities
and perform its obligations hereunder and that the statements made by it in a
Statement of Eligibility and Qualification on Form T-1 supplied to the Company
are true and accurate, subject to the qualifications set forth therein. Neither
the Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of the Securities or the proceeds thereof.
Section 604. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any
Security Registrar or any other Person that may be an agent of the Trustee or
the Company, in its individual or any other capacity, may become the owner or
pledgee of Securities or Coupons and, subject to Sections 310(b) and 311 of the
Trust Indenture Act, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Authenticating Agent, Paying Agent,
Security Registrar or such other Person.
Section 605. Money Held in Trust.
Except as provided in Section 403 and Section 1003, money held
by the Trustee in trust hereunder need not be segregated from other funds
except to the extent required by law and shall be held uninvested. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
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Section 606. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by the Trustee hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in
accordance with any provision of this Indenture (including the
reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to the Trustee's negligence or bad faith; and
(3) to indemnify the Trustee and its agents for, and to
hold them harmless against, any loss, liability or expense incurred
without negligence or bad faith on their part, arising out of or in
connection with the acceptance or administration of the trust or
trusts hereunder, including the costs and expenses of defending
themselves against any claim or liability in connection with the
exercise or performance of any of their powers or duties hereunder,
except to the extent that any such loss, liability or expense was due
to the Trustee's negligence or bad faith.
As security for the performance of the obligations of the
Company under this Section, the Trustee shall have a lien prior to the
Securities of any series upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the payment of principal of,
and premium or interest on or any Additional Amounts with respect to Securities
or any Coupons appertaining thereto.
Any compensation or expense incurred by the Trustee after a
default specified by Section 501 is intended to constitute an expense of
administration under any then applicable bankruptcy or insolvency law.
"Trustee" for purposes of this Section 606 shall include any predecessor
Trustee but the negligence or bad faith of any Trustee shall not affect the
rights of any other Trustee under this Section 606.
Section 607. Corporate Trustee Required.
There shall at all times be a Trustee hereunder that is a
Corporation, organized and doing business under the laws of the United States
of America, any state thereof or the District of Columbia, eligible under
Section 310(a)(1) of the Trust Indenture Act to act as trustee under an
indenture qualified under the Trust Indenture Act and that has a combined
capital and surplus (computed in accordance with Section 310(a)(2) of the Trust
Indenture Act) of at least $50,000,000 subject to supervision or examination by
Federal or state authority. If at any time
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the Trustee shall cease to be eligible in accordance with the provisions of
this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
Section 608. Resignation and Removal; Appointment of
Successor.
(1) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee pursuant
to Section 609.
(2) The Trustee may resign at any time with respect to
the Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 609 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to such series.
(3) The Trustee may be removed at any time with respect
to the Securities of any series by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series, delivered to the
Trustee and the Company.
(4) If at any time:
(a) the Trustee shall fail to comply with the obligations
imposed upon it under Section 310(b) of the Trust Indenture Act with
respect to Securities of any series after written request therefor by
the Company or any Holder of a Security of such series who has been a
bona fide Holder of a Security of such series for at least six months,
or
(b) the Trustee shall cease to be eligible under Section
607 and shall fail to resign after written request therefor by the
Company or any such Holder, or
(c) the Trustee shall become incapable of acting or shall
be adjudged a bankrupt or insolvent or a receiver of the Trustee or of
its property shall be appointed or any public officer shall take
charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by or pursuant to a Board Resolution,
may remove the Trustee with respect to all Securities or the Securities of such
series, or (ii) subject to Section 315(e) of the Trust Indenture Act, any
Holder of a Security who has been a bona fide Holder of a Security of such
series for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee with respect to all Securities of such series and the
appointment of a successor Trustee or Trustees.
(5) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Trustee for
any cause, with respect to the Securities of
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one or more series, the Company, by or pursuant to a Board Resolution, shall
promptly appoint a successor Trustee or Trustees with respect to the Securities
of that or those series (it being understood that any such successor Trustee
may be appointed with respect to the Securities of one or more or all of such
series and that at any time there shall be only one Trustee with respect to the
Securities of any particular series) and shall comply with the applicable
requirements of Section 609. If, within one year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the successor Trustee
so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 609, become the
successor Trustee with respect to the Securities of such series and to that
extent supersede the successor Trustee appointed by the Company. If no
successor Trustee with respect to the Securities of any series shall have been
so appointed by the Company or the Holders of Securities and accepted
appointment in the manner required by Section 609, any Holder of a Security who
has been a bona fide Holder of a Security of such series for at least six
months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee
with respect to the Securities of such series.
(6) The Company shall give notice of each resignation and
each removal of the Trustee with respect to the Securities of any series and
each appointment of a successor Trustee with respect to the Securities of any
series by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Registered Securities, if any, of such series as
their names and addresses appear in the Security Register and, if Securities of
such series are issued as Bearer Securities, by publishing notice of such event
once in an Authorized Newspaper in each Place of Payment located outside the
United States. Each notice shall include the name of the successor Trustee
with respect to the Securities of such series and the address of its Corporate
Trust Office.
Section 609. Acceptance of Appointment by Successor.
(1) Upon the appointment hereunder of any successor
Trustee with respect to all Securities, such successor Trustee so appointed
shall execute, acknowledge and deliver to the Company and the retiring Trustee
an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties hereunder of the retiring Trustee;
but, on the request of the Company or such successor Trustee, such retiring
Trustee, upon payment of its charges, shall execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and trusts of the
retiring Trustee and, subject to Section 1003, shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder, subject nevertheless to its claim, if any, provided for in
Section 606.
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(2) Upon the appointment hereunder of any successor
Trustee with respect to the Securities of one or more (but not all) series, the
Company, the retiring Trustee and such successor Trustee shall execute and
deliver an indenture supplemental hereto wherein each successor Trustee shall
accept such appointment and which (1) shall contain such provisions as shall be
necessary or desirable to transfer and confirm to, and to vest in, such
successor Trustee all the rights, powers, trusts and duties of the retiring
Trustee with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring Trustee is
not retiring with respect to all Securities, shall contain such provisions as
shall be deemed necessary or desirable to confirm that all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of
that or those series as to which the retiring Trustee is not retiring shall
continue to be vested in the retiring Trustee, and (3) shall add to or change
any of the provisions of this Indenture as shall be necessary to provide for or
facilitate the administration of the trusts hereunder by more than one Trustee,
it being understood that nothing herein or in such supplemental indenture shall
constitute such Trustees co-trustees of the same trust, that each such Trustee
shall be trustee of a trust or trusts hereunder separate and apart from any
trust or trusts hereunder administered by any other such Trustee and that no
Trustee shall be responsible for any notice given to, or received by, or any
act or failure to act on the part of any other Trustee hereunder, and, upon the
execution and delivery of such supplemental indenture, the resignation or
removal of the retiring Trustee shall become effective to the extent provided
therein, such retiring Trustee shall have no further responsibility for the
exercise of rights and powers or for the performance of the duties and
obligations vested in the Trustee under this Indenture with respect to the
Securities of that or those series to which the appointment of such successor
Trustee relates other than as hereinafter expressly set forth, and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series to which the appointment
of such successor Trustee relates; but, on request of the Company or such
successor Trustee, such retiring Trustee, upon payment of its charges with
respect to the Securities of that or those series to which the appointment of
such successor relates and subject to Section 1003 shall duly assign, transfer
and deliver to such successor Trustee, to the extent contemplated by such
supplemental indenture, the property and money held by such retiring Trustee
hereunder with respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, subject to its claim, if any,
provided for in Section 606.
(3) Upon request of any Person appointed hereunder as a
successor Trustee, the Company shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all
such rights, powers and trusts referred to in paragraph (1) or (2) of this
Section, as the case may be.
(4) No Person shall accept its appointment hereunder as a
successor Trustee unless at the time of such acceptance such successor Person
shall be qualified and eligible under this Article.
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Section 610. Merger, Conversion, Consolidation or
Succession to Business.
Any Corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any Corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any Corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor of the Trustee
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Securities shall have been
authenticated but not delivered by the Trustee then in office, any successor by
merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
Section 611. Appointment of Authenticating Agent.
The Trustee may appoint one or more Authenticating Agents
acceptable to the Company with respect to one or more series of Securities
which shall be authorized to act on behalf of the Trustee to authenticate
Securities of that or those series issued upon original issue, exchange,
registration of transfer, partial redemption or partial repayment or pursuant
to Section 306, and Securities so authenticated shall be entitled to the
benefits of this Indenture and shall be valid and obligatory for all purposes
as if authenticated by the Trustee hereunder. Wherever reference is made in
this Indenture to the authentication and delivery of Securities by the Trustee
or the Trustee's certificate of authentication, such reference shall be deemed
to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company
and, except as provided in or pursuant to this Indenture, shall at all times be
a corporation that would be permitted by the Trust Indenture Act to act as
trustee under an indenture qualified under the Trust Indenture Act, is
authorized under applicable law and by its charter to act as an Authenticating
Agent and has a combined capital and surplus (computed in accordance with
Section 310(a)(2) of the Trust Indenture Act) of at least $50,000,000. If at
any time an Authenticating Agent shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in the manner and
with the effect specified in this Section.
Any Corporation into which an Authenticating Agent 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
Authenticating Agent shall be a party, or any Corporation succeeding to all or
substantially all of the corporate agency or corporate trust business of an
Authenticating Agent, shall be the successor of such Authenticating Agent
hereunder, provided such Corporation shall be otherwise eligible under this
Section, without the execution or filing of any paper or any further act on the
part of the Trustee or the Authenticating Agent.
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An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and the Company. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving written notice
thereof to such Authenticating Agent and the Company. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall (i) mail written
notice of such appointment by first-class mail, postage prepaid, to all Holders
of Registered Securities, if any, of the series with respect to which such
Authenticating Agent shall serve, as their names and addresses appear in the
Security Register, and (ii) if Securities of the series are issued as Bearer
Securities, publish notice of such appointment at least once in an Authorized
Newspaper in the place where such successor Authenticating Agent has its
principal office if such office is located outside the United States. Any
successor Authenticating Agent, upon acceptance of its appointment hereunder,
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Company agrees to pay each Authenticating Agent from time
to time reasonable compensation for its services under this Section. If the
Trustee makes such payments, it shall be entitled to be reimbursed for such
payments, subject to the provisions of Section 606.
The provisions of Sections 308, 603 and 604 shall be
applicable to each Authenticating Agent.
If an Authenticating Agent is appointed with respect to one or
more series of Securities pursuant to this Section, the Securities of such
series may have endorsed thereon, in addition to or in lieu of the Trustee's
certificate of authentication, an alternate certificate of authentication in
substantially the following form:
This is one of the Securities of the series designated herein
referred to in the within-mentioned Indenture.
THE CHASE MANHATTAN BANK, N.A.,
As Trustee
By_____________________________
As Authenticating Agent
By_____________________________
Authorized Officer
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If all of the Securities of any series may not be originally
issued at one time, and if the Trustee does not have an office capable of
authenticating Securities upon original issuance located in a Place of Payment
where the Company wishes to have Securities of such series authenticated upon
original issuance, the Trustee, if so requested in writing (which writing need
not be accompanied by or contained in an Officers' Certificate by the Company),
shall appoint in accordance with this Section an Authenticating Agent having an
office in a Place of Payment designated by the Company with respect to such
series of Securities.
ARTICLE SEVEN
HOLDERS LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 701. Company to Furnish Trustee Names and
Addresses of Holders.
In accordance with Section 312(a) of the Trust Indenture Act,
the Company shall furnish or cause to be furnished to the Trustee
(1) semi-annually with respect to Securities of each
series not later than ____ and ____ of the year or upon such other
dates as are set forth in or pursuant to the Board Resolution or
indenture supplemental hereto authorizing such series, a list, in each
case in such form as the Trustee may reasonably require, of the names
and addresses of Holders as of the applicable date, and
(2) at such other times as the Trustee may request in
writing, within 30 days after the receipt by the Company of any such
request, a list of similar form and content as of a date not more than
15 days prior to the time such list is furnished,
provided, however, that so long as the Trustee is the Security Registrar no
such list shall be required to be furnished.
Section 702. Preservation of Information; Communications
to Holders.
The Trustee shall comply with the obligations imposed upon it
pursuant to Section 312 of the Trust Indenture Act.
Every Holder of Securities or Coupons, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company, the Trustee, any Paying Agent or any Security Registrar shall be held
accountable by reason of the disclosure of any such information as to the names
and addresses of the Holders of Securities in accordance with Section 312(c) of
the Trust Indenture Act, regardless of the source from which such information
was derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under Section 312(b) of the
Trust Indenture Act.
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Section 703. Reports by Trustee.
(1) Within 60 days after September 15 of each year
commencing with the first September 15 following the first issuance of
Securities pursuant to Section 301, if required by Section 313(a) of the Trust
Indenture Act, the Trustee shall transmit, pursuant to Section 313(c) of the
Trust Indenture Act, a brief report dated as of such September 15 with respect
to any of the events specified in said Section 313(a) which may have occurred
since the later of the immediately preceding September 15 and the date of this
Indenture.
(2) The Trustee shall transmit the reports required by
Section 313(a) of the Trust Indenture Act at the times specified therein.
(3) Reports pursuant to this Section shall be transmitted
in the manner and to the Persons required by Sections 313(c) and 313(d) of the
Trust Indenture Act.
Section 704. Reports by Company.
The Company, pursuant to Section 314(a) of the Trust Indenture
Act, shall:
(1) file with the Trustee, within 15 days after the
Company is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Company may be required to file with
the Commission pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934; or, if the Company is not required to file information,
documents or reports pursuant to either of said Sections, then it shall file
with the Trustee and the Commission, in accordance with rules and regulations
prescribed from time to time by the Commission, such of the supplementary and
periodic information, documents and reports which may be required pursuant to
Section 13 of the Securities Exchange Act of 1934 in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by the
Commission, such additional information, documents and reports with respect to
compliance by the Company, with the conditions and covenants of this Indenture
as may be required from time to time by such rules and regulations; and
(3) transmit within 30 days after the filing thereof with
the Trustee, in the manner and to the extent provided in Section 313(c) of the
Trust Indenture Act, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of this
Section as may be required by rules and regulations prescribed from time to
time by the Commission.
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ARTICLE EIGHT
CONSOLIDATION, MERGER AND SALES
Section 801. Company May Consolidate, Etc., Only on
Certain Terms.
Nothing contained in this Indenture or in any of the
Securities shall prevent any consolidation or merger of the Company with or
into any other Person or Persons (whether or not affiliated with the Company),
or successive consolidations or mergers in which the Company or its successor
or successors shall be a party or parties, or shall prevent any conveyance,
transfer or lease of the property of the Company as an entirety or
substantially as an entirety, to any other Person (whether or not affiliated
with the Company); provided, however, that:
(1) in case the Company shall consolidate with or merge into
another Person or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any Person, the entity formed by
such consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer, or which leases, the properties and assets
of the Company as an entirety or substantially as an entirety shall be a
Corporation organized and existing under the laws of the United States of
America, any state thereof or the District of Columbia and shall expressly
assume, by an indenture (or indentures, if at such time there is more than one
Trustee) supplemental hereto, executed by the successor Person and delivered to
the Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of, any premium and interest on and any Additional Amounts
with respect to all the Securities and the performance of every obligation in
this Indenture and the Outstanding Securities on the part of the Company to be
performed or observed and shall provide for conversion or exchange rights in
accordance with the provisions of the Securities of any series that are
convertible or exchangeable into other securities;
(2) immediately after giving effect to such transaction, no
Event of Default or event which, after notice or lapse of time, or both, would
become an Event of Default, shall have occurred and be continuing; and
(3) either the Company or the successor Person shall have
delivered to the Trustee an Officers' Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, conveyance, transfer or lease
and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture comply with this Article and that all
conditions precedent herein provided for relating to such transaction have been
complied with.
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Section 802. Successor Person Substituted for Company.
Upon any consolidation by the Company with or merger of the
Company into any other Person or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety to any Person
in accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person had been named as the Company herein;
and thereafter, except in the case of a lease, the predecessor Person shall be
released from all obligations and covenants under this Indenture, the
Securities and the Coupons.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures without Consent of
Holders.
Without the consent of any Holders of Securities or Coupons,
the Company (when authorized by or pursuant to a Board Resolution) and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(1) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the covenants of the
Company contained herein and in the Securities; or
(2) to add to the covenants of the Company for the
benefit of the Holders of all or any series of Securities (as shall be
specified in such supplemental indenture or indentures) or to surrender any
right or power herein conferred upon the Company; or
(3) to add to or change any of the provisions of this
Indenture to provide that Bearer Securities may be registrable as to principal,
to change or eliminate any restrictions on the payment of principal of, any
premium or interest on or any Additional Amounts with respect to Securities, to
permit Bearer Securities to be issued in exchange for Registered Securities, to
permit Bearer Securities to be exchanged for Bearer Securities of other
authorized denominations or to permit or facilitate the issuance of Securities
in uncertificated form, provided any such action shall not adversely affect the
interests of the Holders of Securities of any series or any Coupons
appertaining thereto in any material respect; or
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(4) to establish the form or terms of Securities of any
series and any Coupons appertaining thereto as permitted by Sections 201 and
301; or
(5) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the Securities of
one or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the administration
of the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 609; or
(6) to cure any ambiguity or to correct or supplement any
provision herein which may be defective or inconsistent with any other
provision herein, or to make any other provisions with respect to matters or
questions arising under this Indenture which shall not adversely affect the
interests of the Holders of Securities of any series then Outstanding or any
Coupons appertaining thereto in any material respect; or
(7) to add to, delete from or revise the conditions,
limitations and restrictions on the authorized amount, terms or purposes of
issue, authentication and delivery of Securities, as herein set forth; or
(8) to add any additional Events of Default with respect
to all or any series of Securities (as shall be specified in such supplemental
indenture); or
(9) to supplement any of the provisions of this Indenture
to such extent as shall be necessary to permit or facilitate the defeasance and
discharge of any series of Securities pursuant to Article Four, provided that
any such action shall not adversely affect the interests of any Holder of a
Security of such series and any Coupons appertaining thereto or any other
Security or Coupon in any material respect; or
(10) to secure the Securities pursuant to Section 1005 or
otherwise; or
(11) to make provisions with respect to conversion or
exchange rights of Holders of Securities of any series; or
(12) to amend or supplement any provision contained herein
or in any supplemental indenture, provided that no such amendment or supplement
shall materially adversely affect the interests of the Holders of any
Securities then Outstanding.
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Section 902. Supplemental Indentures with Consent of
Holders.
With the consent of the Holders of not less than 66-2/3% in
principal amount of the Outstanding Securities of each series affected by such
supplemental indenture, by Act of said Holders delivered to the Company and the
Trustee, the Company (when authorized by or pursuant to a Company's Board
Resolution) and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture or of the Securities of such series; provided, however,
that no such supplemental indenture, without the consent of the Holder of each
Outstanding Security affected thereby, shall
(1) change the Stated Maturity of the principal of, or
any premium or installment of interest on or any Additional Amounts with
respect to, any Security, or reduce the principal amount thereof or the rate
(or modify the calculation of such rate) of interest thereon or any Additional
Amounts with respect thereto, or any premium payable upon the redemption
thereof or otherwise, or change the obligation of the Company to pay Additional
Amounts pursuant to Section 1004 (except as contemplated by Section 801(1) and
permitted by Section 901(1)), or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 502 or
the amount thereof provable in bankruptcy pursuant to Section 504, change the
redemption provisions or adversely affect the right of repayment at the option
of any Holder as contemplated by Article Thirteen, or change the Place of
Payment, Currency in which the principal of, any premium or interest on, or any
Additional Amounts with respect to any Security is payable, or impair the right
to institute suit for the enforcement of any such payment on or after the
Stated Maturity thereof (or, in the case of redemption, on or after the
Redemption Date or, in the case of repayment at the option of the Holder, on or
after the date for repayment or in the case of change in control, or
(2) reduce the percentage in principal amount of the
Outstanding Securities of any series, the consent of whose Holders is required
for any such supplemental indenture, or the consent of whose Holders is
required for any waiver (of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences) provided for in
this Indenture, or reduce the requirements of Section 1604 for quorum or
voting, or
(3) modify any of the provisions of this Indenture
relating to the subordination of the Securities in a manner adverse to Holders
of Securities, or
(4) modify any of the provisions of this Section, Section
513 or Section 1007, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived without
the consent of the Holder of each Outstanding Security affected thereby, or
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(5) make any change that adversely affects the right to
convert or exchange any Security for other securities in accordance with its
terms.
A supplemental indenture which changes or eliminates any
covenant or other provision of this Indenture which shall have been included
expressly and solely for the benefit of one or more particular series of
Securities, or which modifies the rights of the Holders of Securities of such
series with respect to such covenant or other provision, shall be deemed not to
affect the rights under this Indenture of the Holders of Securities of any
other series.
It shall not be necessary for any Act of Holders of Securities
under this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Section 903. Execution of Supplemental Indentures.
As a condition to executing, or accepting the additional
trusts created by, any supplemental indenture permitted by this Article or the
modifications thereby of the trust created by this Indenture, the Trustee shall
be entitled to receive, and (subject to Section 315 of the Trust Indenture Act)
shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes;
and every Holder of a Security theretofore or thereafter authenticated and
delivered hereunder and of any Coupon appertaining thereto shall be bound
thereby.
Section 905. Reference in Securities to Supplemental
Indentures.
Securities of any series authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article may, and shall
if required by the Trustee, bear a notation in form approved by the Trustee as
to any matter provided for in such supplemental indenture. If the Company
shall so determine, new Securities of any series so modified as to conform, in
the opinion of the Trustee and the Company, to any such supplemental indenture
may be prepared and executed by the Company and authenticated and delivered by
the Trustee in exchange for Outstanding Securities of such series.
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Section 906. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act as then in effect.
Section 907. Effect on Senior Indebtedness.
No supplemental indenture shall directly or indirectly modify
or eliminate the provisions of Article Fifteen in any manner which might
terminate or impair the subordination of the Securities to Senior Indebtedness
without the prior written consent of the holders of the Senior Indebtedness.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, any Premium, Interest
and Additional Amounts.
The Company covenants and agrees for the benefit of the
Holders of the Securities of each series that it will duly and punctually pay
the principal of, any premium and interest on and any Additional Amounts with
respect to the Securities of such series in accordance with the terms thereof,
any Coupons appertaining thereto and this Indenture. Any interest due on any
Bearer Security on or before the Maturity thereof, and any Additional Amounts
payable with respect to such interest, shall be payable only upon presentation
and surrender of the Coupons appertaining thereto for such interest as they
severally mature.
Section 1002. Maintenance of Office or Agency.
The Company shall maintain in each Place of Payment for any
series of Securities an Office or Agency where Securities of such series (but
not Bearer Securities, except as otherwise provided below, unless such Place of
Payment is located outside the United States) may be presented or surrendered
for payment, where Securities of such series may be surrendered for
registration of transfer or exchange, where Securities of such series that are
convertible or exchangeable may be surrendered for conversion or exchange, and
where notices and demands to or upon the Company in respect of the Securities
of such series relating thereto and this Indenture may be served. If
Securities of a series are issuable as Bearer Securities, the Company shall
maintain, subject to any laws or regulations applicable thereto, an Office or
Agency in a Place of Payment for such series which is located outside the
United States where Securities of such series and any Coupons appertaining
thereto may be presented and surrendered for payment;
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provided, however, that if the Securities of such series are listed on The
Stock Exchange of the United Kingdom and the Republic of Ireland or the
Luxembourg Stock Exchange or any other stock exchange located outside the
United States and such stock exchange shall so require, the Company shall
maintain a Paying Agent in London, Luxembourg or any other required city
located outside the United States, as the case may be, so long as the
Securities of such series are listed on such exchange. The Company will give
prompt written notice to the Trustee of the location, and any change in the
location, of such Office or Agency. If at any time the Company shall fail to
maintain any such required Office or Agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee,
except that Bearer Securities of such series and any Coupons appertaining
thereto may be presented and surrendered for payment at the place specified for
the purpose with respect to such Securities as provided in or pursuant to this
Indenture, and the Company hereby appoints the Trustee as its agent to receive
all such presentations, surrenders, notices and demands.
Except as otherwise provided in or pursuant to this Indenture,
no payment of principal, premium, interest or Additional Amounts with respect
to Bearer Securities shall be made at any Office or Agency in the United States
or by check mailed to any address in the United States or by transfer to an
account maintained with a bank located in the United States; provided, however,
if amounts owing with respect to any Bearer Securities shall be payable in
Dollars, payment of principal of, any premium or interest on and any Additional
Amounts with respect to any such Security may be made at the Corporate Trust
Office of the Trustee or any Office or Agency designated by the Company in the
Borough of Manhattan, The City of New York, if (but only if) payment of the
full amount of such principal, premium, interest or Additional Amounts at all
offices outside the United States maintained for such purpose by the Company in
accordance with this Indenture is illegal or effectively precluded by exchange
controls or other similar restrictions.
The Company may also from time to time designate one or more
other Offices or Agencies where the Securities of one or more series may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an Office or Agency in each Place of Payment for Securities of any
series for such purposes. The Company shall give prompt written notice to the
Trustee of any such designation or rescission and of any change in the location
of any such other Office or Agency. Unless otherwise provided in or pursuant
to this Indenture, the Company hereby designates as the Place of Payment for
each series of Securities the Borough of Manhattan, The City of New York, and
initially appoints the Corporate Trust Office of the Trustee as the Office or
Agency of the Company in the Borough of Manhattan, The City of New York for
such purpose. The Company may subsequently appoint a different Office or
Agency in the Borough of Manhattan, The City of New York for the Securities of
any series.
Unless otherwise specified with respect to any Securities
pursuant to Section 301, if and so long as the Securities of any series (i) are
denominated in a Foreign Currency or (ii)
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may be payable in a Foreign Currency, or so long as it is required under any
other provision of this Indenture, then the Company will maintain with respect
to each such series of Securities, or as so required, at least one exchange
rate agent.
Section 1003. Money for Securities Payments to Be Held in
Trust.
If the Company shall at any time act as its own Paying Agent
with respect to any series of Securities, it shall, on or before each due date
of the principal of, any premium or interest on or Additional Amounts with
respect to any of the Securities of such series, segregate and hold in trust
for the benefit of the Persons entitled thereto a sum in the currency or
currencies, currency unit or units or composite currency or currencies in which
the Securities of such series are payable (except as otherwise specified
pursuant to Section 301 for the Securities of such series) sufficient to pay
the principal or any premium, interest or Additional Amounts so becoming due
until such sums shall be paid to such Persons or otherwise disposed of as
herein provided, and shall promptly notify the Trustee of its action or failure
so to act.
Whenever the Company shall have one or more Paying Agents for
any series of Securities, it shall, on or prior to each due date of the
principal of, any premium or interest on or any Additional Amounts with respect
to any Securities of such series, deposit with any Paying Agent a sum (in the
currency or currencies, currency unit or units or composite currency or
currencies described in the preceding paragraph) sufficient to pay the
principal or any premium, interest or Additional Amounts so becoming due, such
sum to be held in trust for the benefit of the Persons entitled thereto, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of its action or failure so to act.
The Company shall cause each Paying Agent for any series of
Securities other than the Trustee to execute and deliver to the Trustee an
instrument in which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent shall:
(1) hold all sums held by it for the payment of the
principal of, any premium or interest on or any Additional Amounts with respect
to Securities of such series in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as provided in or pursuant to this Indenture;
(2) give the Trustee notice of any default by the Company
(or any other obligor upon the Securities of such series) in the making of any
payment of principal, any premium or interest on or any Additional Amounts with
respect to the Securities of such series; and
(3) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay to the Trustee
all sums so held in trust by such Paying Agent.
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The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held
in trust by the Company or such Paying Agent, such sums to be held by the
Trustee upon the same terms as those upon which such sums were held by the
Company or such Paying Agent; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such sums.
Except as otherwise provided herein or pursuant hereto, any
money deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of, any premium or interest
on or any Additional Amounts with respect to any Security of any series or any
Coupon appertaining thereto and remaining unclaimed for two years after such
principal or any such premium or interest or any such Additional Amounts shall
have become due and payable shall be paid to the Company on Company Request, or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such Security or any Coupon appertaining thereto shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such repayment, may at the expense of the
Company cause to be published once, in an Authorized Newspaper in each Place of
Payment for such series or to be mailed to Holders of Registered Securities of
such series, or both, notice that such money remains unclaimed and that, after
a date specified therein, which shall not be less than 30 days from the date of
such publication or mailing nor shall it be later than two years after such
principal and any premium or interest or Additional Amounts shall have become
due and payable, any unclaimed balance of such money then remaining will be
repaid to the Company.
Section 1004. Additional Amounts.
If any Securities of a series provide for the payment of
Additional Amounts, the Company agrees to pay to the Holder of any such
Security or any Coupon appertaining thereto Additional Amounts as provided in
or pursuant to this Indenture or such Securities. Whenever in this Indenture
there is mentioned, in any context, the payment of the principal of or any
premium or interest on, or in respect of, any Security of any series or any
Coupon or the net proceeds received on the sale or exchange of any Security of
any series, such mention shall be deemed to include mention of the payment of
Additional Amounts provided by the terms of such series established hereby or
pursuant hereto to the extent that, in such context, Additional Amounts are,
were or would be payable in respect thereof pursuant to such terms, and express
mention of the payment of Additional Amounts (if applicable) in any provision
hereof shall not be construed as excluding Additional Amounts in those
provisions hereof where such express mention is not made.
Except as otherwise provided in or pursuant to this Indenture
or the Securities of the applicable series, if the Securities of a series
provide for the payment of Additional Amounts,
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at least 10 days prior to the first Interest Payment Date with respect to such
series of Securities (or if the Securities of such series shall not bear
interest prior to Maturity, the first day on which a payment of principal is
made), and at least 10 days prior to each date of payment of principal or
interest if there has been any change with respect to the matters set forth in
the below-mentioned Officers' Certificate, the Company shall furnish to the
Trustee and the principal Paying Agent or Paying Agents, if other than the
Trustee, an Officers' Certificate instructing the Trustee and such Paying Agent
or Paying Agents whether such payment of principal of and premium, if any, or
interest on the Securities of such series shall be made to Holders of
Securities of such series or the Coupons appertaining thereto who are United
States Aliens without withholding for or on account of any tax, assessment or
other governmental charge described in the Securities of such series. If any
such withholding shall be required, then such Officers' Certificate shall
specify by country the amount, if any, required to be withheld on such payments
to such Holders of Securities or Coupons, and the Company agrees to pay to the
Trustee or such Paying Agent the Additional Amounts required by the terms of
such Securities. The Company covenants to indemnify the Trustee and any Paying
Agent for, and to hold them harmless against, any loss, liability or expense
reasonably incurred without negligence or bad faith on their part arising out
of or in connection with actions taken or omitted by any of them in reliance on
any Officers' Certificate furnished pursuant to this Section.
Section 1005. [Reserved]
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Section 1006. Corporate Existence.
Subject to Article Eight, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and that of each Restricted Subsidiary and their respective
rights (charter and statutory) and franchises; provided, however, that the
foregoing shall not obligate the Company or any Restricted Subsidiary to
preserve any such right or franchise if the Company or any Restricted
Subsidiary shall determine that the preservation thereof is no longer desirable
in the conduct of its business or the business of such Restricted Subsidiary
and that the loss thereof is not disadvantageous in any material respect to any
Holder.
Section 1007. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any term, provision or condition set forth in Sections 1005 or 1006 with
respect to the Securities of any series if before the time for such compliance
the Holders of at least a majority in principal amount of the Outstanding
Securities of such series, by Act of such Holders, either shall waive such
compliance in such instance or generally shall have waived compliance with such
term, provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and
the duties of the Trustee in respect of any such term, provision or condition
shall remain in full force and effect.
Section 1008. Company Statement as to Compliance; Notice of
Certain Defaults.
(1) The Company shall deliver to the Trustee, within 120
days after the end of each fiscal year, a written statement (which need not be
contained in or accompanied by an Officers' Certificate) signed by the
principal executive officer, the principal financial officer or the principal
accounting officer of the Company, stating that
(a) a review of the activities of the Company during such
year and of its performance under this Indenture has been made under
his or her supervision, and
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(b) to the best of his or her knowledge, based on such
review, (a) the Company has complied with all the conditions and
covenants imposed on it under this Indenture throughout such year, or,
if there has been a default in the fulfillment of any such condition
or covenant, specifying each such default known to him or her and the
nature and status thereof, and (b) no event has occurred and is
continuing which is, or after notice or lapse of time or both would
become, an Event of Default, or, if such an event has occurred and is
continuing, specifying each such event known to him and the nature and
status thereof.
(2) The Company shall deliver to the Trustee, within five
days after the occurrence thereof, written notice of any Event of Default or
any event which after notice or lapse of time or both would become an Event of
Default pursuant to clause (4) of Section 501.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Applicability of Article.
Redemption of Securities of any series at the option of the
Company as permitted or required by the terms of such Securities shall be made
in accordance with the terms of such Securities and (except as otherwise
provided herein or pursuant hereto) this Article.
Section 1102. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be
evidenced by or pursuant to a Board Resolution. In case of any redemption at
the election of the Company of (a) less than all of the Securities of any
series or (b) all of the Securities of any series, with the same issue date,
interest rate or formula, Stated Maturity and other terms, the Company shall,
at least 60 days prior to the Redemption Date fixed by the Company (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of
such Redemption Date and of the principal amount of Securities of such series
to be redeemed.
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Section 1103. Selection by Trustee of Securities to be
Redeemed.
If less than all of the Securities of any series with the same
issue date, interest rate or formula, Stated Maturity and other terms are to be
redeemed, the particular Securities to be redeemed shall be selected not more
than 60 days prior to the Redemption Date by the Trustee from the Outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions of the principal amount of Registered
Securities of such series; provided, however, that no such partial redemption
shall reduce the portion of the principal amount of a Registered Security of
such series not redeemed to less than the minimum denomination for a Security
of such series established herein or pursuant hereto.
The Trustee shall promptly notify the Company and the Security
Registrar (if other than itself) in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities redeemed or to be redeemed only in
part, to the portion of the principal of such Securities which has been or is
to be redeemed.
Unless otherwise specified in or pursuant to this Indenture or
the Securities of any series, if any Security selected for partial redemption
is converted or exchanged for or other securities in part before termination of
the conversion or exchange right with respect to the portion of the Security so
selected, the converted portion of such Security shall be deemed (so far as may
be) to be the portion selected for redemption. Securities which have been
converted or exchanged during a selection of Securities to be redeemed shall be
treated by the Trustee as Outstanding for the purpose of such selection.
Section 1104. Notice of Redemption.
Notice of redemption shall be given in the manner provided in
Section 106, not less than 30 nor more than 60 days prior to the Redemption
Date, unless a shorter period is specified in the Securities to be redeemed, to
the Holders of Securities to be redeemed. Failure to give notice by mailing in
the manner herein provided to the Holder of any Registered Securities
designated for redemption as a whole or in part, or any defect in the notice to
any such Holder, shall not affect the validity of the proceedings for the
redemption of any other Securities or portion thereof.
Any notice that is mailed to the Holder of any Registered
Securities in the manner herein provided shall be conclusively presumed to have
been duly given, whether or not such Holder receives the notice.
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All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Securities of any series
are to be redeemed, the identification (and, in the case of partial redemption,
the principal amount) of the particular Security or Securities to be redeemed,
(4) in case any Security is to be redeemed in part only,
the notice which relates to such Security shall state that on and after the
Redemption Date, upon surrender of such Security, the Holder of such Security
will receive, without charge, a new Security or Securities of authorized
denominations for the principal amount thereof remaining unredeemed,
(5) that, on the Redemption Date, the Redemption Price
shall become due and payable upon each such Security or portion thereof to be
redeemed, and, if applicable, that interest thereon shall cease to accrue on
and after said date,
(6) the place or places where such Securities, together
(in the case of Bearer Securities) with all Coupons appertaining thereto, if
any, maturing after the Redemption Date, are to be surrendered for payment of
the Redemption Price and any accrued interest and Additional Amounts pertaining
thereto,
(7) that the redemption is for a sinking fund, if such is
the case,
(8) that, unless otherwise specified in such notice,
Bearer Securities of any series, if any, surrendered for redemption must be
accompanied by all Coupons maturing subsequent to the date fixed for redemption
or the amount of any such missing Coupon or Coupons will be deducted from the
Redemption Price, unless security or indemnity satisfactory to the Company, the
Trustee and any Paying Agent is furnished,
(9) if Bearer Securities of any series are to be redeemed
and any Registered Securities of such series are not to be redeemed, and if
such Bearer Securities may be exchanged for Registered Securities not subject
to redemption on the Redemption Date pursuant to Section 305 or otherwise, the
last date, as determined by the Company, on which such exchanges may be made,
(10) in the case of Securities of any series that are
convertible or exchangeable into other securities, the conversion or exchange
price or rate, the date or dates on which the right to convert or exchange the
principal of the Securities of such series to be redeemed will commence or
terminate and the place or places where such Securities may be surrendered for
conversion or exchange, and
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(11) the CUSIP number or the Euroclear or the Cedel
reference numbers of such Securities, if any (or any other numbers used by a
Depository to identify such Securities).
A notice of redemption published as contemplated by Section
106 need not identify particular Registered Securities to be redeemed.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
Section 1105. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall deposit,
with respect to the Securities of any series called for redemption pursuant to
Section 1104, with the Trustee or with a Paying Agent (or, if the Company is
acting as its own Paying Agent, segregate and hold in trust as provided in
Section 1003) an amount of money in the applicable Currency sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall be an
Interest Payment Date, unless otherwise specified pursuant to Section 301 or in
the Securities of such series) any accrued interest on and Additional Amounts
with respect thereto, all such Securities or portions thereof which are to be
redeemed on that date.
Section 1106. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to bear interest and the Coupons
for such interest appertaining to any Bearer Securities so to be redeemed,
except to the extent provided below, shall be void. Upon surrender of any such
Security for redemption in accordance with said notice, together with all
Coupons, if any, appertaining thereto maturing after the Redemption Date, such
Security shall be paid by the Company at the Redemption Price, together with
any accrued interest and Additional Amounts to the Redemption Date; provided,
however, that, except as otherwise provided in or pursuant to this Indenture or
the Bearer Securities of such series, installments of interest on Bearer
Securities whose Stated Maturity is on or prior to the Redemption Date shall be
payable only upon presentation and surrender of Coupons for such interest (at
an Office or Agency located outside the United States except as otherwise
provided in Section 1002), and provided, further, that, except as otherwise
specified in or pursuant to this Indenture or the Registered Securities of such
series, installments of interest on Registered Securities whose Stated Maturity
is on or prior to the Redemption Date shall be payable to the Holders of such
Securities, or one or more Predecessor Securities, registered as such at the
close of business on the Regular Record Dates therefor according to their terms
and the provisions of Section 307.
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If any Bearer Security surrendered for redemption shall not be
accompanied by all appurtenant Coupons maturing after the Redemption Date, such
Security may be paid after deducting from the Redemption Price an amount equal
to the face amount of all such missing Coupons, or the surrender of such
missing Coupon or Coupons may be waived by the Company and the Trustee if there
be furnished to them such security or indemnity as they may require to save
each of them and any Paying Agent harmless. If thereafter the Holder of such
Security shall surrender to the Trustee or any Paying Agent any such missing
Coupon in respect of which a deduction shall have been made from the Redemption
Price, such Holder shall be entitled to receive the amount so deducted;
provided, however, that any interest or Additional Amounts represented by
Coupons shall be payable only upon presentation and surrender of those Coupons
at an Office or Agency for such Security located outside of the United States
except as otherwise provided in Section 1002.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal and any premium, until
paid, shall bear interest from the Redemption Date at the rate prescribed
therefor in the Security.
Section 1107. Securities Redeemed in Part.
Any Registered Security which is to be redeemed only in part
shall be surrendered at any Office or Agency for such Security (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in writing) and the
Company shall execute and the Trustee shall authenticate and deliver to the
Holder of such Security without service charge, a new Registered Security or
Securities of the same series, containing identical terms and provisions, of
any authorized denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered. If a Security in global form is so surrendered,
the Company shall execute, and the Trustee shall authenticate and deliver to
the U.S. Depository or other Depository for such Security in global form as
shall be specified in the Company Order with respect thereto to the Trustee,
without service charge, a new Security in global form in a denomination equal
to and in exchange for the unredeemed portion of the principal of the Security
in global form so surrendered.
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ARTICLE TWELVE
SINKING FUNDS
Section 1201. Applicability of Article.
The provisions of this Article shall be applicable to any
sinking fund for the retirement of Securities of a series, except as otherwise
permitted or required in or pursuant to this Indenture or any Security of such
series issued pursuant to this Indenture.
The minimum amount of any sinking fund payment provided for by
the terms of Securities of any series is herein referred to as a "mandatory
sinking fund payment", and any payment in excess of such minimum amount
provided for by the terms of Securities of such series is herein referred to as
an "optional sinking fund payment". If provided for by the terms of Securities
of any series, the cash amount of any sinking fund payment may be subject to
reduction as provided in Section 1202. Each sinking fund payment shall be
applied to the redemption of Securities of any series as provided for by the
terms of Securities of such series and this Indenture.
Section 1202. Satisfaction of Sinking Fund Payments with
Securities.
The Company may, in satisfaction of all or any part of any
sinking fund payment with respect to the Securities of any series to be made
pursuant to the terms of such Securities (1) deliver Outstanding Securities of
such series (other than any of such Securities previously called for redemption
or any of such Securities in respect of which cash shall have been released to
the Company), together in the case of any Bearer Securities of such series with
all unmatured Coupons appertaining thereto, and (2) apply as a credit
Securities of such series which have been redeemed either at the election of
the Company pursuant to the terms of such series of Securities or through the
application of permitted optional sinking fund payments pursuant to the terms
of such Securities, provided that such series of Securities have not been
previously so credited. Such Securities shall be received and credited for
such purpose by the Trustee at the Redemption Price specified in such
Securities for redemption through operation of the sinking fund and the amount
of such sinking fund payment shall be reduced accordingly. If as a result of
the delivery or credit of Securities of any series in lieu of cash payments
pursuant to this Section 1202, the principal amount of Securities of such
series to be redeemed in order to exhaust the aforesaid cash payment shall be
less than $100,000, the Trustee need not call Securities of such series for
redemption, except upon Company Request, and such cash payment shall be held by
the Trustee or a Paying Agent and applied to the next succeeding sinking fund
payment, provided, however, that the Trustee or such Paying Agent shall at the
request of the Company from time to time pay over and deliver to the Company
any cash payment so being held by the Trustee or such Paying Agent upon
delivery by the Company to the Trustee of Securities of that series purchased
by the
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Company having an unpaid principal amount equal to the cash payment requested
to be released to the Company.
Section 1203. Redemption of Securities for Sinking Fund.
Not less than 75 days prior to each sinking fund payment date
for any series of Securities, the Company shall deliver to the Trustee an
Officers' Certificate specifying the amount of the next ensuing mandatory
sinking fund payment for that series pursuant to the terms of that series, the
portion thereof, if any, which is to be satisfied by payment of cash and the
portion thereof, if any, which is to be satisfied by delivering and crediting
of Securities of that series pursuant to Section 1202, and the optional amount,
if any, to be added in cash to the next ensuing mandatory sinking fund payment,
and will also deliver to the Trustee any Securities to be so credited and not
theretofore delivered. If such Officers' Certificate shall specify an optional
amount to be added in cash to the next ensuing mandatory sinking fund payment,
the Company shall thereupon be obligated to pay the amount therein specified.
Not less than 60 days before each such sinking fund payment date the Trustee
shall select the Securities to be redeemed upon such sinking fund payment date
in the manner specified in Section 1103 and cause notice of the redemption
thereof to be given in the name of and at the expense of the Company in the
manner provided in Section 1104. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in the manner
stated in Sections 1106 and 1107.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
Section 1301. Applicability of Article.
Securities of any series which are repayable at the option of
the Holders thereof before their Stated Maturity shall be repaid in accordance
with the terms of the Securities of such series. The repayment of any principal
amount of Securities pursuant to such option of the Holder to require repayment
of Securities before their Stated Maturity, for purposes of Section 309, shall
not operate as a payment, redemption or satisfaction of the Indebtedness
represented by such Securities unless and until the Company, at its option,
shall deliver or surrender the same to the Trustee with a directive that such
Securities be cancelled. Notwithstanding anything to the contrary contained in
this Section 1301, in connection with any repayment of Securities, the Company
may arrange for the purchase of any Securities by an agreement with one or more
investment bankers or other purchasers to purchase such Securities by paying to
the Holders of such Securities on or before the close of business on the
repayment date an amount not less than the repayment price payable by the
Company on repayment of such Securities, and the obligation
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of the Company to pay the repayment price of such Securities shall be satisfied
and discharged to the extent such payment is so paid by such purchasers.
ARTICLE FOURTEEN
SECURITIES IN FOREIGN CURRENCIES
Section 1401. Applicability of Article.
Whenever this Indenture provides for (i) any action by, or the
determination of any of the rights of, Holders of Securities of any series in
which not all of such Securities are denominated in the same Currency, or (ii)
any distribution to Holders of Securities, in the absence of any provision to
the contrary in the form of Security of any particular series or pursuant to
this Indenture or the Securities, any amount in respect of any Security
denominated in a Currency other than Dollars shall be treated for any such
action or distribution as that amount of Dollars that could be obtained for
such amount on such reasonable basis of exchange and as of the record date with
respect to Registered Securities of such series (if any) for such action,
determination of rights or distribution (or, if there shall be no applicable
record date, such other date reasonably proximate to the date of such action,
determination of rights or distribution) as the Company may specify in a
written notice to the Trustee or, in the absence of such written notice, as the
Trustee may determine.
ARTICLE FIFTEEN
SUBORDINATION OF SECURITIES
Section 1501. Securities Subordinate to Senior Indebtedness.
The Company covenants and agrees, and each Holder of a Security, by
his or her acceptance thereof, likewise, covenants and agrees, that, to the
extent and in the manner hereinafter set forth in this Article, the
indebtedness represented by the Securities and the payment of the principal of
and interest on each and all of the Securities are hereby expressly made
subordinate and subject in right of payment to the prior payment in full of all
Senior Indebtedness. The provisions of this Article Fifteen are subject to the
final paragraph of Section 402.
Section 1502. Payment Over of Proceeds Upon Dissolution, Etc.
In the event of (a) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its
creditors, as such, or to its assets, or (b) any liquidation, dissolution or
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other winding up of the Company, whether voluntary or involuntary and whether
or not involving insolvency or bankruptcy, or (c) any assignment for the
benefit of creditors or any other marshalling of assets and liabilities of the
Company, then and in any such event the holders of Senior Indebtedness shall be
entitled to receive payment in full of all amounts due or to become due on or
in respect of all Senior Indebtedness before the Holders of the Securities and
any coupons appurtenant thereto are entitled to receive any payment on account
of principal of or interest on the Securities, and to that end the holders of
Senior Indebtedness shall be entitled to receive, for application to the
payment thereof, any payment or distribution of any kind or character, whether
in cash, property or securities, including any such payment or distribution
that may be payable or deliverable by reason of the payment of any other
indebtedness of the Company being subordinated to the payment of the
Securities, which may be payable or deliverable in respect of the Securities in
any such case, proceeding, dissolution, liquidation or other winding up or
event.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Security shall have received any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, including any such payment or
distribution that may be payable or deliverable by reason of the payment of any
other indebtedness of the Company being subordinated to the payment of the
Securities, before all Senior Indebtedness is paid in full, and if such fact
shall, at or prior to the time of such payment or distribution, have been made
known to the Trustee or, as the case may be, such Holder, then and in such
event such payment or distribution shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee,
agent or other Person making payment or distribution of assets of the Company
for application to the payment of all Senior Indebtedness remaining unpaid, to
the extent necessary to pay all Senior Indebtedness in full, after giving
effect to any concurrent payment or distribution to or for the Holders of
Senior Indebtedness.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan or reorganization or readjustment that are
subordinated in right of payment to all Senior Indebtedness that may at the
time be outstanding to substantially the same extent as, or to a greater extent
than, the Securities are also subordinated as provided in this Article. The
consolidation of the Company with, or the merger of the Company into, another
Person or the liquidation or dissolution of the Company following the
conveyance or transfer of its properties and assets substantially as an
entirety to another Person upon the terms and conditions set forth in Article
Eight shall not be deemed a dissolution, winding up, liquidation,
reorganization, assignment for the benefit of creditors or marshalling of
assets and liabilities of the Company for the purposes of this Section if the
Person formed by such consolidation or into which the Company is merged or the
Person that acquires by conveyance or transfer such properties and assets
substantially as an entirety, as the case may be, shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions set
forth in Article Eight.
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Section 1503. Prior Payment to Senior Indebtedness Upon
Acceleration of Securities.
In the event that any Securities are declared due and payable before
their Stated Maturity, then and in such event the holders of the Senior
Indebtedness shall be entitled to receive payment in full of all amounts due on
or in respect of all Senior Indebtedness before the Holders of the Securities
are entitled to receive any payment (including any payment that may be payable
by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Securities) by the Company on account of the
principal of or interest on the Securities or on account of the purchase or
other acquisition of Securities.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security prohibited by the
foregoing provisions of this Section, and if such fact shall, at or prior to
the time of such payment, have been made known to the Trustee or, as the case
may be, such Holder, then and in such event such payment shall be paid over and
delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 1502 would be applicable.
Section 1504. No Payment When Senior Indebtedness in Default.
(a) In the event and during the continuation of any default in the
payment of principal of (or premium, if any) or interest on any Senior
Indebtedness beyond any applicable grace period with respect thereto, or in the
event that any event of default with respect to any Senior Indebtedness shall
have occurred and be continuing permitting the holders of such Senior
Indebtedness (or a trustee on behalf of the holders thereof) to declare such
Senior Indebtedness due and payable prior to the date on which it would
otherwise have become due and payable, and unless and until such event of
default shall have been cured or waived or shall have ceased to exist, or (b)
in the event any judicial proceeding shall be pending with respect to any such
default in payment or event of default, then no payment (including any payment
that may be payable by reason of the payment of any other indebtedness of the
Company being subordinated to the payment of the Securities) shall be made by
the Company on account of principal of or interest on the Securities and any
coupon appurtenant thereto or on account of the purchase or other acquisition
of Securities.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to the Trustee or the Holder of any Security or coupon
prohibited by the foregoing provisions of this Section, and if such fact shall,
at or prior to the time of such payment, have been made known to the Trustee
or, as the case may be, such Holder, then and in such event such payment shall
be paid over and delivered forthwith to the Company.
The provisions of this Section shall not apply to any payment with
respect to which Section 1502 would be applicable.
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Section 1505. Payment Permitted if No Default.
Nothing contained in this Article or elsewhere in this Indenture or in
any of the Securities shall prevent (a) the Company, at any time except during
the pendency of any case, proceeding, dissolution, liquidation or other winding
up, assignment for the benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 1502 or under the conditions
described in Section 1503 or 1504, from making payment at any time of principal
of or interest on the Securities, or (b) the application by the Trustee of any
money deposited with it hereunder to the payment of or on account of the
principal of or interest on the Securities or the retention of such payment by
the Holders, if, at the time of such application by the Trustee, it did not
have knowledge as provided in Section 1510 that such payment would have been
prohibited by the provisions of this Article.
Section 1506. Subrogation to Rights of Holders of Senior
Indebtedness.
Subject to the payment in full of all Senior Indebtedness, the Holders
of the Securities and any coupons appurtenant thereto shall be subrogated
(equally and ratably with the holders of all indebtedness of the Company that
by its express terms is subordinated to indebtedness of the Company to
substantially the same extent as the Securities are subordinated and is
entitled to like rights of subrogation) to the rights of the holders of such
Senior Indebtedness to receive payments and distributions of cash, property and
securities applicable to the Senior Indebtedness until the principal of and
interest on the Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which the Holders of the
Securities or the Trustee would be entitled except for the provisions of this
Article, and no payments over pursuant to the provisions of this Article to the
holders of Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of Senior
Indebtedness and the Holders of the Securities, be deemed to be a payment or
distribution by the Company to or on account of the Senior Indebtedness.
Section 1507. Provisions Solely to Define Relative Rights.
The provisions of this Article are and are intended solely for the
purpose of defining the relative rights of the Holders of the Securities on the
one hand and the holders of Senior Indebtedness on the other hand. Nothing
contained in this Article or elsewhere in this Indenture or in the Securities
is intended to or shall (a) impair, as among the Company, its creditors other
than holders of Senior Indebtedness and the Holders of the Securities, the
obligation of the Company, which is absolute and unconditional (and which,
subject to the rights under this Article of the Holders of Senior Indebtedness,
is intended to the fullest extent permitted by law to rank equally with all
other general obligations of the Company), to pay to the Holders of the
Securities the principal of and interest on the Securities as and when the same
shall become due and payable
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in accordance with their terms; or (b) affect the relative rights against the
Company of the Holders of the Securities and creditors of the Company other
than the holders of Senior Indebtedness; or (c) prevent the Trustee or the
Holder of any Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if
any, under this Article of the holders of Senior Indebtedness to receive cash,
property and securities otherwise payable or deliverable to the Trustee or such
Holder.
Section 1508. Trustee to Effectuate Subordination.
Each holder of a Security by his or her acceptance thereof authorizes
and directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to effectuate the subordination provided in this
Article and appoints the Trustee his or her attorney-in-fact for any and all
such purposes.
Section 1509. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the Company
or by any act or failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof any such holder may have or be
otherwise charged with.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Securities, without incurring responsibility to the Holders of the Securities
and without impairing or releasing the subordination provided in this Article
or the obligations hereunder of the Holders of the Securities to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness, or otherwise amend or supplement in any manner
Senior Indebtedness or any instrument evidencing the same or any agreement
under which Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing
Senior Indebtedness; (iii) release any Person liable in any manner for the
collection of Senior Indebtedness; and (iv) exercise or refrain from exercising
any rights against the Company and any other Person.
Section 1510. Notice to Trustee.
The Company shall give prompt written notice to the Trustee of any
fact known to the Company that would prohibit the making of any payment to or
by the Trustee in respect of the Securities. Notwithstanding the provisions of
this Article or any other provision of this Indenture,
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the Trustee shall not be charged with knowledge of the existence of any facts
that would prohibit the making of any payment to or by the Trustee in respect
of the Securities, unless and until the Trustee shall have received written
notice thereof from the Company or a holder of Senior Indebtedness or from any
trustee therefor, and, prior to the receipt of any such written notice, the
Trustee, subject to the provisions of Section 601, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 1510 at
least three Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of or interest on any Security), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power
and authority to receive such money and to apply the same to the purpose for
which such money was received and shall be affected by any notice to the
contrary that may be received by it during or after such three Business Day
period.
Subject to the provisions of Section 601, the Trustee shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself or herself to be a holder of Senior Indebtedness (or a
trustee therefor) to establish that such notice has been given by a holder of
Senior Indebtedness (or a trustee therefor). In the event that the Trustee
determines in good faith that further evidence is required with respect to the
right of any Person as a holder of Senior Indebtedness to participate in any
payment or distribution pursuant to this Article, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article, and if such
evidence is not furnished, the Trustee may defer any payment to such person
pending judicial determination as to the right of such Person to receive such
payment.
Section 1511. Reliance on Judicial Order or Certificate of
Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to
in this Article, the Trustee, subject to the provisions of Section 601, and the
Holders of the Securities shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Securities, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this
Article.
Section 1512. Trustee Not Fiduciary for Holders of Senior
Indebtedness.
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The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders of Securities
or coupons or to the Company or to any other Person cash, property or
securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article or otherwise.
Section 1513. Rights of Trustee as Holder of Senior Indebtedness;
Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article with respect to any Senior Indebtedness that
may at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of
its rights as such holder.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 606.
Section 1514. Article Applicable to Payment Agents.
In case at any time any Paying Agent other than the Trustee shall have
been appointed by the Company and be then acting hereunder, the term "Trustee"
as used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent were
named in this Article in addition to or in place of the Trustee; provided,
however, that Section 1513 shall not apply to the Company or any Affiliate of
the Company if it or such Affiliate acts as Paying Agent.
ARTICLE SIXTEEN
MEETINGS OF HOLDERS OF SECURITIES
Section 1601. Purposes for Which Meetings May Be Called.
A meeting of Holders of Securities of any series may be called
at any time and from time to time pursuant to this Article to make, give or
take any request, demand, authorization, direction, notice, consent, waiver or
other Act provided by this Indenture to be made, given or taken by Holders of
Securities of such series.
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<PAGE> 95
Section 1602. Call, Notice and Place of Meetings.
(1) The Trustee may at any time call a meeting of Holders
of Securities of any series for any purpose specified in Section 1601, to be
held at such time and at such place in the Borough of Manhattan, The City of
New York, or, if Securities of such series have been issued in whole or in part
as Bearer Securities, in London or in such place outside the United States as
the Trustee shall determine. Notice of every meeting of Holders of Securities
of any series, setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting, shall be given,
in the manner provided in Section 106, not less than 21 nor more than 180 days
prior to the date fixed for the meeting.
(2) In case at any time the Company (by or pursuant to a
Board Resolution) or the Holders of at least 10% in principal amount of the
Outstanding Securities of any series shall have requested the Trustee to call a
meeting of the Holders of Securities of such series for any purpose specified
in Section 1601, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have
mailed notice of or made the first publication of the notice of such meeting
within 21 days after receipt of such request (whichever shall be required
pursuant to Section 106) or shall not thereafter proceed to cause the meeting
to be held as provided herein, then the Company or the Holders of Securities of
such series in the amount above specified, as the case may be, may determine
the time and the place in the Borough of Manhattan, The City of New York, or,
if Securities of such series are to be issued as Bearer Securities, in London
for such meeting and may call such meeting for such purposes by giving notice
thereof as provided in clause (1) of this Section.
Section 1603. Persons Entitled to Vote at Meetings.
To be entitled to vote at any meeting of Holders of Securities
of any series, a Person shall be (1) a Holder of one or more Outstanding
Securities of such series, or (2) a Person appointed by an instrument in
writing as proxy for a Holder or Holders of one or more Outstanding Securities
of such series by such Holder or Holders. The only Persons who shall be
entitled to be present or to speak at any meeting of Holders of Securities of
any series shall be the Persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
Section 1604. Quorum; Action.
The Persons entitled to vote a majority in principal amount of
the Outstanding Securities of a series shall constitute a quorum for a meeting
of Holders of Securities of such series; provided, however, that if any action
is to be taken at such meeting with respect to a consent or waiver which this
Indenture expressly provides may be given by the Holders of at least 66-2/3% in
principal amount of the Outstanding Securities of a series, the Persons
entitled to vote 66-2/3% in principal amount of the Outstanding Securities of
such series shall constitute a
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<PAGE> 96
quorum. In the absence of a quorum within 30 minutes after the time appointed
for any such meeting, the meeting shall, if convened at the request of Holders
of Securities of such series, be dissolved. In any other case the meeting may
be adjourned for a period of not less than 10 days as determined by the
chairman of the meeting prior to the adjournment of such meeting. In the
absence of a quorum at any such adjourned meeting, such adjourned meeting may
be further adjourned for a period of not less than 10 days as determined by the
chairman of the meeting prior to the adjournment of such adjourned meeting.
Notice of the reconvening of any adjourned meeting shall be given as provided
in Section 1602(1), except that such notice need be given only once not less
than five days prior to the date on which the meeting is scheduled to be
reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly the percentage, as provided above, of the principal amount of the
Outstanding Securities of such series which shall constitute a quorum.
Except as limited by the proviso to Section 902, any
resolution presented to a meeting or adjourned meeting duly reconvened at which
a quorum is present as aforesaid may be adopted only by the affirmative vote of
the Holders of a majority in principal amount of the Outstanding Securities of
that series; provided, however, that, except as limited by the proviso to
Section 902, any resolution with respect to any consent or waiver which this
Indenture expressly provides may be given by the Holders of at least 66-2/3% in
principal amount of the Outstanding Securities of a series may be adopted at a
meeting or an adjourned meeting duly convened and at which a quorum is present
as aforesaid only by the affirmative vote of the Holders of 66-2/3% in
principal amount of the Outstanding Securities of that series; and provided,
further, that, except as limited by the proviso to Section 902, any resolution
with respect to any request, demand, authorization, direction, notice, consent,
waiver or other Act which this Indenture expressly provides may be made, given
or taken by the Holders of a specified percentage, which is less than a
majority, in principal amount of the Outstanding Securities of a series may be
adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid by the affirmative vote of the Holders of such
specified percentage in principal amount of the Outstanding Securities of such
series.
Any resolution passed or decision taken at any meeting of
Holders of Securities of any series duly held in accordance with this Section
shall be binding on all the Holders of Securities of such series and the
Coupons appertaining thereto, whether or not such Holders were present or
represented at the meeting.
Section 1605. Determination of Voting Rights; Conduct and
Adjournment of Meetings.
(1) Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Holders of Securities of such series in regard to
proof of the holding of Securities of such series and of the appointment of
proxies and in regard to the appointment and duties of inspectors of votes, the
submission and examination of proxies, certificates and other evidence of the
right to vote, and
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such other matters concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by any such
regulations, the holding of Securities shall be proved in the manner specified
in Section 104 and the appointment of any proxy shall be proved in the manner
specified in Section 104 or by having the signature of the person executing the
proxy witnessed or guaranteed by any trust company, bank or banker authorized
by Section 104 to certify to the holding of Bearer Securities. Such
regulations may provide that written instruments appointing proxies, regular on
their face, may be presumed valid and genuine without the proof specified in
Section 104 or other proof.
(2) The Trustee shall, by an instrument in writing,
appoint a temporary chairman of the meeting, unless the meeting shall have been
called by the Company or by Holders of Securities as provided in Section
1602(2), in which case the Company or the Holders of Securities of the series
calling the meeting, as the case may be, shall in like manner appoint a
temporary chairman. A permanent chairman and a permanent secretary of the
meeting shall be elected by vote of the Persons entitled to vote a majority in
principal amount of the Outstanding Securities of such series represented at
the meeting.
(3) At any meeting, each Holder of a Security of such
series or proxy shall be entitled to one vote for each $1,000 principal amount
of Securities of such series held or represented by him; provided, however,
that no vote shall be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the meeting to be
not Outstanding. The chairman of the meeting shall have no right to vote,
except as a Holder of a Security of such series or proxy.
(4) Any meeting of Holders of Securities of any series
duly called pursuant to Section 1602 at which a quorum is present may be
adjourned from time to time by Persons entitled to vote a majority in principal
amount of the Outstanding Securities of such series represented at the meeting;
and the meeting may be held as so adjourned without further notice.
Section 1606. Counting Votes and Recording Action of
Meetings.
The vote upon any resolution submitted to any meeting of
Holders of Securities of any series shall be by written ballots on which shall
be subscribed the signatures of the Holders of Securities of such series or of
their representatives by proxy and the principal amounts and serial numbers of
the Outstanding Securities of such series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in triplicate of all votes cast at the meeting. A record, at least in
triplicate, of the proceedings of each meeting of Holders of Securities of any
series shall be prepared by the secretary of the meeting and there shall be
attached to said record the original reports of the inspectors of votes on any
vote by ballot taken thereat and affidavits by one or more persons having
knowledge of the facts setting forth a copy of the notice of the meeting and
showing that said notice was given as provided in Section 1602 and, if
applicable,
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Section 1604. Each copy shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one such copy shall be
delivered to the Company, and another to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the matters
therein stated.
* * * * *
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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<PAGE> 99
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed, all as of the day and year first above written.
[SEAL] STANDARD FEDERAL BANCORPORATION, INC.
Attest:
By ____________________________________
Name:
Title:
[SEAL] THE CHASE MANHATTAN BANK, N.A.,
as Trustee
Attest:
By ____________________________________
Name:
Title:
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<PAGE> 100
STATE OF _________)
: SS.:
COUNTY OF _________)
On the _____ day of ________________, 1996, before me
personally came _______________, to me known, who, being by me duly sworn, did
depose and say that he is a _____________ of Standard Federal Bancorporation,
Inc., a Michigan corporation, one of the persons described in and who executed
the foregoing instrument; that he knows the seal of said Corporation; that the
seal affixed to said instrument is such Corporation's seal; that it was so
affixed by authority of the Board of Directors of said Corporation; and that he
signed his name thereto by like authority.
____________________________
Notary Public
[NOTARIAL SEAL]
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<PAGE> 101
STATE OF _________)
: SS.:
COUNTY OF _________)
On the _____ day of ________________, 1996, before me
personally came _______________, to me known, who, being by me duly sworn, did
depose and say that he is a _____________ of TRUSTEE'S NAME, a banking
association organized and existing under the laws of TRUSTEE'S JURISDICTION,
one of the persons described in and who executed the foregoing instrument; that
he knows the seal of said Corporation; that the seal affixed to said instrument
is such Corporation's seal; that it was so affixed by authority of the Board of
Directors of said Corporation; and that he signed his name thereto by like
authority.
____________________________
Notary Public
[NOTARIAL SEAL]
92
<PAGE> 1
EXHIBIT 4.5
[FORM OF FIXED RATE SUBORDINATED NOTE]
THIS NOTE IS A DIRECT, UNCONDITIONAL AND UNSECURED OBLIGATION OF STANDARD
FEDERAL BANCORPORATION, INC. (THE "COMPANY"), IS NOT A SAVINGS ACCOUNT, DEPOSIT
OR OTHER OBLIGATION OF ANY SAVINGS BANK OR NON-BANK SUBSIDIARY OF THE COMPANY
AND IS NOT INSURED BY THE SAVINGS ASSOCIATION INSURANCE FUND OR THE BANK
INSURANCE FUND OF THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THE OBLIGATIONS OF THE COMPANY EVIDENCED BY THIS NOTE ARE
TO THE EXTENT AND IN THE MANNER SET FORTH HEREIN, SUBORDINATE TO THE COMPANY'S
OBLIGATIONS TO HOLDERS OF SENIOR INDEBTEDNESS. PAYMENT OF PRINCIPAL OF THE
NOTES MAY BE ACCELERATED ONLY IN THE CASE OF CERTAIN EVENTS INVOLVING THE
BANKRUPTCY, INSOLVENCY OR REORGANIZATION OF THE COMPANY. THERE IS NO RIGHT OF
ACCELERATION IN THE CASE OF DEFAULT IN THE PAYMENT OF PRINCIPAL OF OR INTEREST
ON THE NOTES OR THE PERFORMANCE OF ANY OTHER OBLIGATION OF THE COMPANY UNDER
THE NOTES.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.(1)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE
TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.(2)
REGISTERED CUSIP No.: PRINCIPAL AMOUNT:
No. FXR-___ ______________ ________________
STANDARD FEDERAL BANCORPORATION, INC.
SUBORDINATED MEDIUM-TERM NOTE
(Fixed Rate)
ORIGINAL ISSUE DATE: INTEREST RATE: % STATED MATURITY DATE:
INTEREST PAYMENT DATE(S) DEFAULT RATE: %
[ ] _______ and ______
[ ] Other:
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION
DATE: PERCENTAGE: % PERCENTAGE
REDUCTION: %
OPTIONAL REPAYMENT [ ] CHECK IF AN ORIGINAL
DATE(S): ISSUE DISCOUNT NOTE
Issue Price: %
____________________
(1) This paragraph applies to global Notes only.
(2) This paragraph applies to global Notes only.
<PAGE> 2
SPECIFIED CURRENCY: AUTHORIZED DENOMINATION: EXCHANGE RATE
[ ] United States dollars [ ] $1,000 and integral AGENT:
[ ] Other: multiples thereof
[ ] Other:
ADDENDUM ATTACHED OTHER/ADDITIONAL PROVISIONS:
[ ] Yes
[ ] No
STANDARD FEDERAL BANCORPORATION, INC., a Michigan Corporation (the
"Company", which terms include any successor corporation under the Subordinated
Indenture hereinafter referred to), for value received, hereby promises to pay
to CEDE & CO., or registered assigns, the principal sum of
_____________________, on the Stated Maturity Date specified above (or any
Redemption Date or Repayment Date, each as defined on the reverse hereof) (each
such Stated Maturity Date, Redemption Date or Repayment Date being hereinafter
referred to as the "Maturity Date" with respect to the principal repayable on
such date) and to pay interest thereon, at the Interest Rate per annum
specified above, until the principal hereof is paid or duly made available for
payment, and (to the extent that the payment of such interest shall be legally
enforceable) at the Default Rate per annum specified above on any overdue
principal, premium and/or interest. The Company will pay interest in arrears
on each Interest Payment Date, if any, specified above (each, an "Interest
Payment Date"), commencing with the first Interest Payment Date next succeeding
the Original Issue Date specified above, and on the Maturity Date; provided,
however, that if the Original Issue Date occurs between a Record Date (as
defined below) and the next succeeding Interest Payment Date, interest payments
will commence on the second Interest Payment Date next succeeding the Original
Issue Date to the holder of this Note on the Record Date with respect to such
second Interest Payment Date. Interest on this Note will be computed on the
basis of a 360-day year of twelve 30-day months.
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly
provided for (or from, and including, the Original Issue Date if no interest
has been paid or duly provided for) to, but excluding, the applicable Interest
Payment Date or the Maturity Date, as the case may be (each, an "Interest
Period"). The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, subject to certain exceptions described
herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the fifteenth
calendar day (whether or not a Business Day, as defined below) immediately
preceding such Interest Payment Date (the "Record Date"); provided, however,
that interest payable on the Maturity Date will be payable to the person to
whom the principal hereof and premium, if any, hereon shall be payable. Any
such interest not so punctually paid or duly provided for ("Defaulted
Interest") will forthwith cease to be payable to the holder on any Record Date,
and shall be paid to the person in whose
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<PAGE> 3
name this Note is registered at the close of business on a special record date
(the "Special Record Date") for the payment of such Defaulted Interest to be
fixed by the Trustee hereinafter referred to, notice whereof shall be given to
the holder of this Note by the Trustee not less than 10 calendar days prior to
such Special Record Date or may be paid at any time in any other lawful manner
not inconsistent with the requirements of any securities exchange on which this
Note may be listed, and upon such notice as may be required by such exchange,
all as more fully provided for in the Subordinated Indenture.
Payment of principal, premium, if any, and interest in respect of this
Note due on the Maturity Date will be made in immediately available funds upon
presentation and surrender of this Note (and, with respect to any applicable
repayment of this Note, a duly completed election form as contemplated on the
reverse hereof) at the corporate trust office of the Trustee maintained for
that purpose in the Borough of Manhattan, The City of New York, currently
located at [ADDRESS], New York, New York [ZIP CODE], or at such other paying
agency in the Borough of Manhattan, The City of New York, as the Company may
determine; provided, however, that if the Specified Currency specified above is
other than United States dollars and such payment is to be made in the
Specified Currency in accordance with the provisions set forth below, such
payment will be made by wire transfer of immediately available funds to an
account with a bank designated by the holder hereof at least 15 calendar days
prior to the Maturity Date, provided that such bank has appropriate facilities
therefor and that this Note (and, if applicable, a duly completed repayment
election form) is presented and surrendered at the aforementioned office of the
Trustee in time for the Trustee to make such payment in such funds in
accordance with its normal procedures. Payment of interest due on any Interest
Payment Date other than the Maturity Date will be made by check mailed to the
address of the person entitled thereto as such address shall appear in the
Security Register maintained at the aforementioned office of the Trustee;
provided, however, that a holder of U.S.$10,000,000 (or, if the Specified
Currency is other than United States dollars, the equivalent thereof in the
Specified Currency) or more in aggregate principal amount of Notes (whether
having identical or different terms and provisions) will be entitled to receive
interest payments on such Interest Payment Date by wire transfer of immediately
available funds if appropriate wire transfer instructions have been received in
writing by the Trustee not less than 15 calendar days prior to such Interest
Payment Date. Any such wire transfer instructions received by the Trustee
shall remain in effect until revoked by such holder.
If any Interest Payment Date or the Maturity Date falls on a day that
is not a Business Day, the required payment of principal, premium, if any,
and/or interest shall be made on the next succeeding Business Day with the same
force and effect as if made on the date such payment was due, and no interest
shall accrue with respect to such payment for the period from and after such
Interest
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<PAGE> 4
Payment Date or the Maturity Date, as the case may be, to the date of such
payment on the next succeeding Business Day.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law, regulation or executive order to close in
The City of New York; provided, however, that if the Specified Currency is
other than United States dollars and any payment is to be made in the Specified
Currency in accordance with the provisions hereof, such day is also not a day
on which banking institutions are authorized or required by law, regulation or
executive order to close in the Principal Financial Center (as defined below)
of the country issuing the Specified Currency (or, in the case of European
Currency Units ("ECU"), is not a day that appears as an ECU non-settlement day
on the display designated as "ISDE" on the Reuter Monitor Money Rates Service
(or a day so designated by the ECU Banking Association) or, if ECU
non-settlement days do not appear on that page (and are not so designated), is
not a day on which payments in ECU cannot be settled in the international
interbank market). "Principal Financial Center" means the capital city of the
country issuing the Specified Currency, except that with respect to United
States dollars, Australian dollars, Deutsche marks, Dutch guilders, Italian
lire, Swiss francs and ECU, the "Principal Financial Center" shall be The City
of New York, Sydney, Frankfurt, Amsterdam, Milan, Zurich and Luxembourg,
respectively.
The Company is obligated to make payment of principal, premium, if
any, and interest in respect of this Note in the Specified Currency (or, if the
Specified Currency is not at the time of such payment legal tender for the
payment of public and private debts, in such other coin or currency of the
country which issued the Specified Currency as at the time of such payment is
legal tender for the payment of such debts). If the Specified Currency is
other than United States dollars, except as otherwise provided below, any such
amounts so payable by the Company will be converted by the Exchange Rate Agent
specified above into United States dollars for payment to the holder of this
Note.
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive such amounts in such Specified
Currency. If the holder of this Note shall not have duly made an election to
receive all or a specified portion of any payment of principal, premium, if
any, and/or interest in respect of this Note in the Specified Currency, any
United States dollar amount to be received by the holder of this Note will be
based on the highest bid quotation in The City of New York received by the
Exchange Rate Agent at approximately 11:00 A.M., New York City time, on the
second Business Day preceding the applicable payment date from three recognized
foreign exchange dealers (one of whom may be the Exchange Rate Agent) selected
by the Exchange Rate Agent and approved by the Company for the purchase by the
quoting dealer of the Specified Currency for United States dollars for
settlement on such payment date in the aggregate amount of the Specified
4
<PAGE> 5
Currency payable to all holders of Notes scheduled to receive United States
dollar payments and at which the applicable dealer commits to execute a
contract. All currency exchange costs will be borne by the holder of this Note
by deductions from such payments. If three such bid quotations are not
available, payments on this Note will be made in the Specified Currency.
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive all or a specified portion of any
payment of principal, premium, if any, and/or interest in respect of this Note
in the Specified Currency by submitting a written request for such payment to
the Trustee at its corporate trust office in The City of New York on or prior
to the applicable Record Date or at least 15 calendar days prior to the
Maturity Date, as the case may be. Such written request may be mailed or hand
delivered or sent by cable, telex or other form of facsimile transmission. The
holder of this Note may elect to receive all or a specified portion of all
future payments in the Specified Currency in respect of such principal,
premium, if any, and/or interest and need not file a separate election for each
payment. Such election will remain in effect until revoked by written notice
to the Trustee, but written notice of any such revocation must be received by
the Trustee on or prior to the applicable Record Date or at least 15 calendar
days prior to the Maturity Date, as the case may be.
If the Specified Currency is other than United States dollars or a
composite currency and the holder of this Note shall have duly made an election
to receive all or a specified portion of any payment of principal, premium, if
any, and/or interest in respect of this Note in the Specified Currency and if
the Specified Currency is not available due to the imposition of exchange
controls or other circumstances beyond the control of the Company, the Company
will be entitled to satisfy its obligations to the holder of this Note by
making such payment in United States dollars on the basis of the Market
Exchange Rate (as defined below) on the second Business Day prior to such
payment date or, if such Market Exchange Rate is not then available, on the
basis of the most recently available Market Exchange Rate or as otherwise
specified on the face hereof. The "Market Exchange Rate" for the Specified
Currency means the noon dollar buying rate in The City of New York for cable
transfers for the Specified Currency as certified for customs purposes by (or
if not so certified, as otherwise determined by) the Federal Reserve Bank of
New York. Any payment made under such circumstances in United States dollars
will not constitute an Event of Default (as defined in the Subordinated
Indenture).
If the Specified Currency is a composite currency and the holder of
this Note shall have duly made an election to receive all or a specified
portion of any payment of principal, premium, if any, and/or interest in
respect of this Note in the Specified Currency and if such composite currency
is unavailable due to the imposition of exchange controls or other
circumstances beyond the
5
<PAGE> 6
control of the Company, then the Company will be entitled to satisfy its
obligations to the holder of this Note by making such payment in United States
dollars. The amount of each payment in United States dollars shall be computed
by the Exchange Rate Agent on the basis of the equivalent of the composite
currency in United States dollars. The component currencies of the composite
currency for this purpose (collectively, the "Component Currencies" and each, a
"Component Currency") shall be the currency amounts that were components of the
composite currency as of the last day on which the composite currency was used.
The equivalent of the composite currency in United States dollars shall be
calculated by aggregating the United States dollar equivalents of the Component
Currencies. The United States dollar equivalent of each of the Component
Currencies shall be determined by the Exchange Rate Agent on the basis of the
most recently available Market Exchange Rate for each such Component Currency,
or as otherwise specified on the face hereof.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
All determinations referred to above made by the Exchange Rate Agent
shall be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holder of this Note.
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof and, if so specified on the face hereof, in an
Addendum hereto, which further provisions shall have the same force and effect
as if set forth on the face hereof.
Notwithstanding the foregoing, if an Addendum is attached hereto or
"Other/Additional Provisions" apply to this Note as specified above, this Note
shall be subject to the terms set forth in such Addendum or such
"Other/Additional Provisions".
Unless the Certificate of Authentication hereon has been executed by
the Trustee by manual signature, this Note shall not be entitled to any benefit
under the Subordinated Indenture or be valid or obligatory for any purpose.
6
<PAGE> 7
IN WITNESS WHEREOF, Standard Federal Bancorporation, Inc. has caused
this Note to be duly executed by one of its duly authorized officers.
STANDARD FEDERAL BANCORPORATION, INC.
By________________________________
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Debt Securities of
the series designated therein referred
to in the within-mentioned Subordinated
Indenture.
THE CHASE MANHATTAN BANK, N.A.,
as Trustee
By____________________________
Authorized Signatory
7
<PAGE> 8
[REVERSE OF NOTE]
STANDARD FEDERAL BANCORPORATION, INC.
SUBORDINATED MEDIUM-TERM NOTE
(Fixed Rate)
This Note is one of a duly authorized series of Debt Securities (the
"Debt Securities") of the Company issued and to be issued under a Subordinated
Indenture, dated as of June __, 1996, as amended, modified or supplemented from
time to time (the "Subordinated Indenture"), between the Company and The Chase
Manhattan Bank, N.A., as Trustee (the "Trustee", which term includes any
successor trustee under the Subordinated Indenture), to which Subordinated
Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the holders of the Debt
Securities, and of the terms upon which the Debt Securities are, and are to be,
authenticated and delivered. This Note is one of the series of Debt Securities
designated as "Medium-Term Notes Due Nine Months or More From Date of Issue"
(the "Notes"). All terms used but not defined in this Note or in an Addendum
hereto shall have the meanings assigned to such terms in the Subordinated
Indenture or on the face hereof, as the case maybe.
The indebtedness evidenced by this Note is, to the extent provided in
the Subordinated Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Note is issued
subject to such provisions. Each Holder of this Note, by accepting the same,
agrees to and shall be bound by such provisions, and authorizes the Trustee on
his or her behalf to take such action as may be necessary or appropriate to
effectuate such subordination as provided in the Subordinated Indenture and
appoints the Trustee his or her attorney-in-fact for such purpose.
This Note is issuable only in registered form without coupons in
minimum denominations of U.S.$1,000 and integral multiples thereof or the
minimum Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless
otherwise specified on the face hereof in accordance with the provisions of the
following two paragraphs, will not be redeemable or repayable prior to the
Stated Maturity Date.
This Note will be subject to redemption at the option of the Company
on any date on or after the Initial Redemption Date, if any, specified on the
face hereof, in whole or from time to time in part in increments of U.S.$1,000
or the minimum Authorized Denomination (provided that any remaining principal
amount hereof shall be at least U.S.$1,000 or such minimum Authorized
Denomination), at the Redemption Price (as defined below), together
8
<PAGE> 9
with unpaid interest accrued thereon to the date fixed for redemption (each, a
"Redemption Date"), on notice given no more than 60 nor less than 30 calendar
days prior to the Redemption Date and in accordance with the provisions of the
Subordinated Indenture. The "Redemption Price" shall initially be the Initial
Redemption Percentage specified on the face hereof multiplied by the unpaid
principal amount of this Note to be redeemed. The Initial Redemption
Percentage shall decline at each anniversary of the Initial Redemption Date by
the Annual Redemption Percentage Reduction, if any, specified on the face
hereof until the Redemption Price is 100% of unpaid principal amount to be
redeemed. In the event of redemption of this Note in part only, a new Note of
like tenor for the unredeemed portion hereof and otherwise having the same
terms as this Note shall be issued in the name of the holder hereof upon the
presentation and surrender hereof.
This Note will be subject to repayment by the Company at the option of
the holder hereof on the Optional Repayment Date(s), if any, specified on the
face hereof, in whole or in part in increments of U.S.$1,000 or the minimum
Authorized Denomination (provided that any remaining principal amount hereof
shall be at least U.S.$1,000 or such minimum Authorized Denomination), at a
repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued thereon to the date fixed for repayment
(each, a "Repayment Date"). For this Note to be repaid, this Note must be
received, together with the form hereon entitled "Option to Elect Repayment"
duly completed, by the Trustee at its corporate trust office not more than 60
nor less than 30 calendar days prior to the Repayment Date. Exercise of such
repayment option by the holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the unrepaid
portion hereof and otherwise having the same terms as this Note shall be issued
in the name of the holder hereof upon the presentation and surrender hereof.
If this Note is an Original Issue Discount Note as specified on the
face hereof, the amount payable to the holder of this Note in the event of
redemption, repayment or acceleration of maturity will be equal to the sum of
(1) the Issue Price specified on the face hereof (increased by any accruals of
the Discount, as defined below) and, in the event of any redemption of this
Note (if applicable), multiplied by the Initial Redemption Percentage (as
adjusted by the Annual Redemption Percentage Reduction, if applicable) and (2)
any unpaid interest on this Note accrued from the Original Issue Date to the
Redemption Date, Repayment Date or date of acceleration of maturity, as the
case may be. The difference between the Issue Price and 100% of the principal
amount of this Note is referred to herein as the "Discount".
For purposes of determining the amount of Discount that has accrued
as of any Redemption Date, Repayment Date or date of acceleration of maturity
of this Note, such Discount will be accrued so as to cause the yield on the
Note to be constant. The constant yield will be calculated using a 30-day
month, 360-day
9
<PAGE> 10
year convention, a compounding period that, except for the Initial Period (as
defined below), corresponds to the shortest period between Interest Payment
Dates (with ratable accruals within a compounding period) and an assumption
that the maturity of this Note will not be accelerated. If the period from the
Original Issue Date to the initial Interest Payment Date (the "Initial Period")
is shorter than the compounding period for this Note, a proportionate amount of
the yield for an entire compounding period will be accrued. If the Initial
Period is longer than the compounding period, then such period will be divided
into a regular compounding period and a short period, with the short period
being treated as provided in the preceding sentence.
If certain Events of Default, as set forth in the Subordinated
Indenture, shall occur and be continuing, the principal of the Notes may be
accelerated in the manner and with the effect provided in the Subordinated
Indenture.
The Subordinated Indenture contains provisions for defeasance of (i)
the entire indebtedness of the Notes or (ii) certain covenants and Events of
Default with respect to the Notes, in each case upon compliance with certain
conditions set forth therein, which provisions apply to the Notes.
The Subordinated Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the holders of the Debt Securities
at any time by the Company and the Trustee with the consent of the holders of
not less than a majority of the aggregate principal amount of all Debt
Securities at the time outstanding and affected thereby. The Subordinated
Indenture also contains provisions permitting the holders of not less than a
majority of the aggregate principal amount of the outstanding Debt Securities
of any series, on behalf of the holders of all such Debt Securities, to waive
compliance by the Company with certain provisions of the Subordinated
Indenture. Furthermore, provisions in the Subordinated Indenture permit the
holders of not less than a majority of the aggregate principal amount of the
outstanding Debt Securities of any series, in certain instances, to waive, on
behalf of all of the holders of Debt Securities of such series, certain past
defaults under the Subordinated Indenture and their consequences. Any such
consent or waiver by the holder of this Note shall be conclusive and binding
upon such holder and upon all future holders of this Note and other Notes
issued upon the registration of transfer hereof or in exchange heretofore or in
lieu hereof, whether or not notation of such consent or waiver is made upon
this Note.
No reference herein to the Subordinated Indenture and no provision of
this Note or of the Subordinated Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay principal, premium,
if any, and interest in respect of this Note at the times, places and rate or
formula, and in the coin or currency, herein prescribed.
10
<PAGE> 11
As provided in the Subordinated Indenture and subject to certain
limitations therein and herein set forth, the transfer of this Note is
registrable in the Security Register of the Company upon surrender of this Note
for registration of transfer at the office or agency of the Company in any
place where the principal hereof and any premium or interest hereon are
payable, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Security Registrar duly executed
by, the holder hereof or by his attorney duly authorized in writing, and
thereupon one or more new Notes, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
As provided in the Subordinated Indenture and subject to certain
limitations therein and herein set forth, this Note is exchangeable for a like
aggregate principal amount of Notes of different authorized denominations but
otherwise having the same terms and conditions, as requested by the holder
hereof surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the holder in whose name this Note is registered as the owner thereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Subordinated Indenture and this Note shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in such State.
11
<PAGE> 12
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ______ Custodian _____
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act_____________________
in common (State)
Additional abbreviations may also be used though not in the above list.
__________________________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________
| |
|_____________________________ |_______________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
_______________________________________________________________________________
this Note and all rights thereunder hereby irrevocably constituting and
appointing
____________________________________________________________________ Attorney
to transfer this Note on the books of the Trustee, with full power of
substitution in the premises.
Dated:_____________________ _______________________________________
_______________________________________
Notice: The signature(s) on this
Assignment must correspond with
the name(s) as written upon the face of
this Note in every particular, without
alteration or enlargement or any change
whatsoever.
12
<PAGE> 13
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion hereof specified below) pursuant to its
terms at a price equal to 100% of the principal amount to be repaid, together
with unpaid interest accrued hereon to the Repayment Date, to the undersigned,
at ____________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at its corporate
trust office in the Borough of Manhattan, The City of New York, currently
located at ______________________________________, not more than 60 nor less
than 30 calendar days prior to the Repayment Date, this Note with this "Option
to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of U.S.$1,000 (or, if the
Specified Currency is other than United States dollars, the minimum Authorized
Denomination specified on the face hereof)) which the holder elects to have
repaid and specify the denomination or denominations (which shall be an
Authorized Denomination) of the Notes to be issued to the holder for the
portion of this Note not being repaid (in the absence of any such
specification, one such Note will be issued for the portion not being repaid).
Principal Amount
to be Repaid: $_____________ ______________________________
Notice: The signature(s) on this
Date: ______________________ Option to Elect Repayment must
correspond with the name(s) as written
upon the face of this Note in every
particular, without alteration or
enlargement or any change whatsoever.
13
<PAGE> 1
EXHIBIT 4.6
[FORM OF FLOATING RATE SUBORDINATED NOTE]
THIS NOTE IS A DIRECT, UNCONDITIONAL AND UNSECURED OBLIGATION OF STANDARD
FEDERAL BANCORPORATION, INC. (THE "COMPANY"), IS NOT A SAVINGS ACCOUNT, DEPOSIT
OR OTHER OBLIGATION OF ANY SAVINGS BANK OR NON-BANK SUBSIDIARY OF THE COMPANY
AND IS NOT INSURED BY THE SAVINGS ASSOCIATION INSURANCE FUND OR THE BANK
INSURANCE FUND OF THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THE OBLIGATIONS OF THE COMPANY EVIDENCED BY THIS NOTE ARE
TO THE EXTENT AND IN THE MANNER SET FORTH HEREIN, SUBORDINATE TO THE COMPANY'S
OBLIGATIONS TO THE HOLDERS OF SENIOR INDEBTEDNESS. PAYMENT OF PRINCIPAL OF THE
NOTES MAY BE ACCELERATED ONLY IN THE CASE OF CERTAIN EVENTS INVOLVING THE
BANKRUPTCY, INSOLVENCY OR REORGANIZATION OF THE COMPANY. THERE IS NO RIGHT OF
ACCELERATION IN THE CASE OF DEFAULT IN THE PAYMENT OF PRINCIPAL OF OR INTEREST
ON THE NOTES OR THE PERFORMANCE OF ANY OTHER OBLIGATION OF THE COMPANY UNDER
THE NOTES.
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") (55 WATER STREET, NEW YORK, NEW YORK) TO THE
ISSUER HEREOF OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY AND ANY PAYMENT
IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.(1)
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE
TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.(2)
REGISTERED CUSIP No.: PRINCIPAL AMOUNT:
No. FLR-___ ______________ ________________
STANDARD FEDERAL BANCORPORATION, INC.
SUBORDINATED MEDIUM-TERM NOTE
(Floating Rate)
INTEREST RATE BASIS ORIGINAL ISSUE DATE: STATED MATURITY DATE:
OR BASES:
IF LIBOR: IF CMT RATE:
[ ] LIBOR Reuters Designated CMT Telerate
Page: Page:
[ ] LIBOR Telerate IF Telerate Page 7052:
Page: [ ] Weekly Average
INDEX CURRENCY: [ ] Monthly Average
Designated CMT Maturity
Index:
INDEX MATURITY: INITIAL INTEREST RATE: % INTEREST PAYMENT DATE(S):
____________________
(1) This paragraph applies to global Notes only.
(2) This paragraph applies to global Notes only.
<PAGE> 2
SPREAD (PLUS OR SPREAD MULTIPLIER: INITIAL INTEREST RESET
MINUS): DATE:
MINIMUM INTEREST RATE: % MAXIMUM INTEREST RATE: % INTEREST RESET DATE(S):
INITIAL REDEMPTION INITIAL REDEMPTION ANNUAL REDEMPTION
DATE: PERCENTAGE: % PERCENTAGE REDUCTION: %
OPTIONAL REPAYMENT CALCULATION AGENT:
DATE(S):
INTEREST CATEGORY: DAY COUNT CONVENTION:
[ ] Regular Floating Rate Note [ ] 30/360 for the period
[ ] Floating Rate/Fixed Rate Note from to .
Fixed Rate Commencement Date: [ ] Actual/360 for the period
Fixed Interest Rate: % from to .
[ ] Inverse Floating Rate Note [ ] Actual/Actual for the period
Fixed Interest Rate: % from to .
[ ] Original Issue Discount Note Applicable Interest Rate Basis:
Issue Price: %
SPECIFIED CURRENCY: AUTHORIZED DENOMINATION:
[ ] United States dollars [ ] $1,000 and integral multiples
[ ] Other: thereof
[ ] Other:
EXCHANGE RATE AGENT:
DEFAULT RATE: %
ADDENDUM ATTACHED
[ ] Yes
[ ] No
OTHER/ADDITIONAL PROVISIONS:
2
<PAGE> 3
STANDARD FEDERAL BANCORPORATION, INC., a Michigan corporation (the
"Company", which terms include any successor corporation under the Subordinated
Indenture hereinafter referred to), for value received, hereby promises to pay
to CEDE & CO., or registered assigns, the principal sum of ___________________,
on the Stated Maturity Date specified above (or any Redemption Date or
Repayment Date, each as defined on the reverse hereof) (each such Stated
Maturity Date, Redemption Date or Repayment Date being hereinafter referred to
as the "Maturity Date" with respect to the principal repayable on such date)
and to pay interest thereon, at a rate per annum equal to the Initial Interest
Rate specified above until the Initial Interest Reset Date specified above and
thereafter at a rate determined in accordance with the provisions specified
above and on the reverse hereof or in an Addendum hereto with respect to one or
more Interest Rate Bases specified above until the principal hereof is paid or
duly made available for payment, and (to the extent that the payment of such
interest shall be legally enforceable) at the Default Rate per annum specified
above on any overdue principal, premium and/or interest. The Company will pay
interest in arrears on each Interest Payment Date, if any, specified above
(each, an "Interest Payment Date"), commencing with the first Interest Payment
Date next succeeding the Original Issue Date specified above, and on the
Maturity Date; provided, however, that if the Original Issue Date occurs
between a Record Date (as defined below) and the next succeeding Interest
Payment Date, interest payments will commence on the second Interest Payment
Date next succeeding the Original Issue Date to the holder of this Note on the
Record Date with respect to such second Interest Payment Date.
Interest on this Note will accrue from, and including, the immediately
preceding Interest Payment Date to which interest has been paid or duly
provided for (or from, and including, the Original Issue Date if no interest
has been paid or duly provided for) to, but excluding, the applicable Interest
Payment Date or the Maturity Date, as the case may be (each, an "Interest
Period"). The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, subject to certain exceptions described
herein, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the fifteenth
calendar day (whether or not a Business Day, as defined on the reverse hereof)
immediately preceding such Interest Payment Date (the "Record Date"); provided,
however, that interest payable on the Maturity Date will be payable to the
person to whom the principal hereof and premium, if any, hereon shall be
payable. Any such interest not so punctually paid or duly provided for
("Defaulted Interest") will forthwith cease to be payable to the holder on any
Record Date, and shall be paid to the person in whose name this Note is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee hereinafter referred to, notice whereof shall be given to the holder of
this Note by the Trustee not less than 10 calendar days prior to such Special
Record Date or may be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which this
Note may be listed, and upon such notice as
3
<PAGE> 4
may be required by such exchange, all as more fully provided for in the
Subordinated Indenture.
Payment of principal, premium, if any, and interest in respect of this
Note due on the Maturity Date will be made in immediately available funds upon
presentation and surrender of this Note (and, with respect to any applicable
repayment of this Note, a duly completed election form as contemplated on the
reverse hereof) at the corporate trust office of the Trustee maintained for
that purpose in the Borough of Manhattan, The City of New York, currently
located at [ADDRESS], New York, New York [ZIP CODE], or at such other paying
agency in the Borough of Manhattan, The City of New York, as the Company may
determine; provided, however, that if the Specified Currency specified above is
other than United States dollars and such payment is to be made in the
Specified Currency in accordance with the provisions set forth below, such
payment will be made by wire transfer of immediately available funds to an
account with a bank designated by the holder hereof at least 15 calendar days
prior to the Maturity Date, provided that such bank has appropriate facilities
therefor and that this Note (and, if applicable, a duly completed repayment
election form) is presented and surrendered at the aforementioned office of the
Trustee in time for the Trustee to make such payment in such funds in
accordance with its normal procedures. Payment of interest due on any Interest
Payment Date other than the Maturity Date will be made by check mailed to the
address of the person entitled thereto as such address shall appear in the
Security Register maintained at the aforementioned office of the Trustee;
provided, however, that a holder of U.S.$10,000,000 (or, if the Specified
Currency is other than United States dollars, the equivalent thereof in the
Specified Currency) or more in aggregate principal amount of Notes (whether
having identical or different terms and provisions) will be entitled to receive
interest payments on such Interest Payment Date by wire transfer of immediately
available funds if appropriate wire transfer instructions have been received in
writing by the Trustee not less than 15 calendar days prior to such Interest
Payment Date. Any such wire transfer instructions received by the Trustee
shall remain in effect until revoked by such holder.
If any Interest Payment Date other than the Maturity Date would
otherwise be a day that is not a Business Day, such Interest Payment Date shall
be postponed to the next succeeding Business Day, except that if LIBOR is an
applicable Interest Rate Basis and such Business Day falls in the next
succeeding calendar month, such Interest Payment Date shall be the immediately
preceding Business Day. If the Maturity Date falls on a day that is not a
Business Day, the required payment of principal, premium, if any, and interest
shall be made on the next succeeding Business Day with the same force and
effect as if made on the date such payment was due, and no interest shall
accrue with respect to such payment for the period from and after the Maturity
Date to the date of such payment on the next succeeding Business Day.
The Company is obligated to make payment of principal, premium, if
any, and interest in respect of this Note in the Specified Currency (or, if the
Specified Currency is not at the time of such payment legal tender for the
payment of public and
4
<PAGE> 5
private debts, in such other coin or currency of the country which issued the
Specified Currency as at the time of such payment is legal tender for the
payment of such debts). If the Specified Currency is other than United States
dollars, except as otherwise provided below, any such amounts so payable by the
Company will be converted by the Exchange Rate Agent specified above into
United States dollars for payment to the holder of this Note.
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive such amounts in such Specified
Currency. If the holder of this Note shall not have duly made an election to
receive all or a specified portion of any payment of principal, premium, if
any, and/or interest in respect of this Note in the Specified Currency, any
United States dollar amount to be received by the holder of this Note will be
based on the highest bid quotation in The City of New York received by the
Exchange Rate Agent at approximately 11:00 A.M., New York City time, on the
second Business Day preceding the applicable payment date from three recognized
foreign exchange dealers (one of whom may be the Exchange Rate Agent) selected
by the Exchange Rate Agent and approved by the Company for the purchase by the
quoting dealer of the Specified Currency for United States dollars for
settlement on such payment date in the aggregate amount of the Specified
Currency payable to all holders of Notes scheduled to receive United States
dollar payments and at which the applicable dealer commits to execute a
contract. All currency exchange costs will be borne by the holder of this Note
by deductions from such payments. If three such bid quotations are not
available, payments on this Note will be made in the Specified Currency.
If the Specified Currency is other than United States dollars, the
holder of this Note may elect to receive all or a specified portion of any
payment of principal, premium, if any, and/or interest in respect of this Note
in the Specified Currency by submitting a written request for such payment to
the Trustee at its corporate trust office in The City of New York on or prior
to the applicable Record Date or at least 15 calendar days prior to the
Maturity Date, as the case may be. Such written request may be mailed or hand
delivered or sent by cable, telex or other form of facsimile transmission. The
holder of this Note may elect to receive all or a specified portion of all
future payments in the Specified Currency in respect of such principal,
premium, if any, and/or interest and need not file a separate election for each
payment. Such election will remain in effect until revoked by written notice
to the Trustee, but written notice of any such revocation must be received by
the Trustee on or prior to the applicable Record Date or at least 15 calendar
days prior to the Maturity Date, as the case may be.
If the Specified Currency is other than United States dollars or a
composite currency and the holder of this Note shall have duly made an election
to receive all or a specified portion of any payment of principal, premium, if
any, and/or interest in respect of this Note in the Specified Currency and if
the Specified Currency is not available due to the imposition of exchange
controls or other circumstances beyond the control of the Company, the Company
will be entitled to satisfy its obligations to the
5
<PAGE> 6
holder of this Note by making such payment in United States dollars on the
basis of the Market Exchange Rate (as defined below) on the second Business Day
prior to such payment date or, if such Market Exchange Rate is not then
available, on the basis of the most recently available Market Exchange Rate or
as otherwise specified on the face hereof. The "Market Exchange Rate" for the
Specified Currency means the noon dollar buying rate in The City of New York
for cable transfers for the Specified Currency as certified for customs
purposes by (or if not so certified, as otherwise determined by) the Federal
Reserve Bank of New York. Any payment made under such circumstances in United
States dollars will not constitute an Event of Default (as defined in the
Subordinated Indenture).
If the Specified Currency is a composite currency and the holder of
this Note shall have duly made an election to receive all or a specified
portion of any payment of principal, premium, if any, and/or interest in
respect of this Note in the Specified Currency and if such composite currency
is unavailable due to the imposition of exchange controls or other
circumstances beyond the control of the Company, then the Company will be
entitled to satisfy its obligations to the holder of this Note by making such
payment in United States dollars. The amount of each payment in United States
dollars shall be computed by the Exchange Rate Agent on the basis of the
equivalent of the composite currency in United States dollars. The component
currencies of the composite currency for this purpose (collectively, the
"Component Currencies" and each, a "Component Currency") shall be the currency
amounts that were components of the composite currency as of the last day on
which the composite currency was used. The equivalent of the composite
currency in United States dollars shall be calculated by aggregating the United
States dollar equivalents of the Component Currencies. The United States
dollar equivalent of each of the Component Currencies shall be determined by
the Exchange Rate Agent on the basis of the most recently available Market
Exchange Rate for each such Component Currency, or as otherwise specified on
the face hereof.
If the official unit of any Component Currency is altered by way of
combination or subdivision, the number of units of the currency as a Component
Currency shall be divided or multiplied in the same proportion. If two or more
Component Currencies are consolidated into a single currency, the amounts of
those currencies as Component Currencies shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated Component
Currencies expressed in such single currency. If any Component Currency is
divided into two or more currencies, the amount of the original Component
Currency shall be replaced by the amounts of such two or more currencies, the
sum of which shall be equal to the amount of the original Component Currency.
All determinations referred to above made by the Exchange Rate Agent
shall be at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holder of this Note.
6
<PAGE> 7
Reference is hereby made to the further provisions of this Note set
forth on the reverse hereof and, if so specified on the face hereof, in an
Addendum hereto, which further provisions shall have the same force and effect
as if set forth on the face hereof.
Notwithstanding any provisions to the contrary contained herein, if
the face of this Note specifies that an Addendum is attached hereto or that
"Other/Additional Provisions" apply, this Note shall be subject to the terms
set forth in such Addendum or such "Other/Additional Provisions".
Unless the Certificate of Authentication hereon has been executed by
the Trustee by manual signature, this Note shall not be entitled to any benefit
under the Subordinated Indenture or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, Standard Federal Bancorporation, Inc. has caused
this Note to be duly executed by one of its duly authorized officers.
STANDARD FEDERAL BANCORPORATION, INC.
By________________________________
Title:
Dated:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION:
This is one of the Debt Securities of
the series designated therein referred
to in the within-mentioned Subordinated Indenture.
THE CHASE MANHATTAN BANK, N.A.,
as Trustee
By____________________________
Authorized Signatory
7
<PAGE> 8
[REVERSE OF NOTE]
STANDARD FEDERAL BANCORPORATION, INC.
SUBORDINATED MEDIUM-TERM NOTE
(Floating Rate)
This Note is one of a duly authorized series of Debt Securities (the
"Debt Securities") of the Company issued and to be issued under a Subordinated
Indenture, dated as of June __, 1996, as amended, modified or supplemented from
time to time (the "Subordinated Indenture"), between the Company and The Chase
Manhattan Bank, N.A., as Trustee (the "Trustee", which term includes any
successor trustee under the Subordinated Indenture), to which Subordinated
Indenture and all indentures supplemental thereto reference is hereby made for
a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the holders of the Debt
Securities, and of the terms upon which the Debt Securities are, and are to be,
authenticated and delivered. This Note is one of the series of Debt Securities
designated as "Medium-Term Notes Due Nine Months or More From Date of Issue"
(the "Notes"). All terms used but not defined in this Note or in an Addendum
hereto shall have the meanings assigned to such terms in the Subordinated
Indenture or on the face hereof, as the case may be.
The indebtedness evidenced by this Note is, to the extent provided in
the Subordinated Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Note is issued
subject to such provisions. Each Holder of this Note, by accepting the same,
agrees to and shall be bound by such provisions, and authorizes the Trustee on
his or her behalf to take such action as may be necessary or appropriate to
effectuate such subordination as provided in the Subordinated Indenture and
appoints the Trustee his or her attorney-in-fact for such purpose.
This Note is issuable only in registered form without coupons in
minimum denominations of U.S.$1,000 and integral multiples thereof or the
minimum Authorized Denomination specified on the face hereof.
This Note will not be subject to any sinking fund and, unless
otherwise specified on the face hereof in accordance with the provisions of the
following two paragraphs, will not be redeemable or repayable prior to the
Stated Maturity Date.
This Note will be subject to redemption at the option of the Company
on any date on or after the Initial Redemption Date, if any, specified on the
face hereof, in whole or from time to time in part in increments of U.S.$1,000
or the minimum Authorized Denomination (provided that any remaining principal
amount hereof shall be at least U.S.$1,000 or such minimum Authorized
Denomination), at the Redemption Price (as defined below), together with unpaid
interest accrued thereon to the date fixed for redemption (each, a "Redemption
Date"), on notice given no more than 60 nor less than 30 calendar days prior to
the Redemption Date
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<PAGE> 9
and in accordance with the provisions of the Subordinated Indenture. The
"Redemption Price" shall initially be the Initial Redemption Percentage
specified on the face hereof multiplied by the unpaid principal amount of this
Note to be redeemed. The Initial Redemption Percentage shall decline at each
anniversary of the Initial Redemption Date by the Annual Redemption Percentage
Reduction, if any, specified on the face hereof until the Redemption Price is
100% of unpaid principal amount to be redeemed. In the event of redemption of
this Note in part only, a new Note of like tenor for the unredeemed portion
hereof and otherwise having the same terms as this Note shall be issued in the
name of the holder hereof upon the presentation and surrender hereof.
This Note will be subject to repayment by the Company at the option of
the holder hereof on the Optional Repayment Date(s), if any, specified on the
face hereof, in whole or in part in increments of U.S.$1,000 or the minimum
Authorized Denomination (provided that any remaining principal amount hereof
shall be at least U.S.$1,000 or such minimum Authorized Denomination), at a
repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued thereon to the date fixed for repayment
(each, a "Repayment Date"). For this Note to be repaid, this Note must be
received, together with the form hereon entitled "Option to Elect Repayment"
duly completed, by the Trustee at its corporate trust office not more than 60
nor less than 30 calendar days prior to the Repayment Date. Exercise of such
repayment option by the holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the unrepaid
portion hereof and otherwise having the same terms as this Note shall be issued
in the name of the holder hereof upon the presentation and surrender hereof.
If the Interest Category of this Note is specified on the face hereof
as an Original Issue Discount Note, the amount payable to the holder of this
Note in the event of redemption, repayment or acceleration of maturity of this
Note will be equal to the sum of (1) the Issue Price specified on the face
hereof (increased by any accruals of the Discount, as defined below) and, in
the event of any redemption of this Note (if applicable), multiplied by the
Initial Redemption Percentage (as adjusted by the Annual Redemption Percentage
Reduction, if applicable) and (2) any unpaid interest on this Note accrued from
the Original Issue Date to the Redemption Date, Repayment Date or date of
acceleration of maturity, as the case may be. The difference between the Issue
Price and 100% of the principal amount of this Note is referred to herein as
the "Discount."
For purposes of determining the amount of Discount that has accrued as
of any Redemption Date, Repayment Date or date of acceleration of maturity of
this Note, such Discount will be accrued so as to cause an assumed yield on the
Note to be constant. The assumed constant yield will be calculated using a
30-day month, 360-day year convention, a compounding period that, except for
the Initial Period (as defined below), corresponds to the shortest period
between Interest Payment Dates (with ratable accruals within a compounding
period), a constant coupon rate equal to the initial interest rate applicable
to this Note and an assumption that the
9
<PAGE> 10
maturity of this Note will not be accelerated. If the period from the Original
Issue Date to the initial Interest Payment Date (the "Initial Period") is
shorter than the compounding period for this Note, a proportionate amount of
the yield for an entire compounding period will be accrued. If the Initial
Period is longer than the compounding period, then such period will be divided
into a regular compounding period and a short period, with the short period
being treated as provided in the preceding sentence.
The interest rate borne by this Note will be determined as follows:
(i) Unless the Interest Category of this Note is
specified on the face hereof as a "Floating Rate/Fixed Rate Note" or
an "Inverse Floating Rate Note" or as otherwise specified as
Other/Additional Provisions on the face hereof or in an Addendum
hereto, this Note shall be designated as a "Regular Floating Rate
Note" and, except as set forth below or specified on the face hereof
or in an Addendum hereto, shall bear interest at the rate determined
by reference to the applicable Interest Rate Basis or Bases (a) plus
or minus the Spread, if any, and/or (b) multiplied by the Spread
Multiplier, if any, in each case as specified on the face hereof.
Commencing on the Initial Interest Reset Date, the rate at which
interest on this Note shall be payable shall be reset as of each
Interest Reset Date specified on the face hereof; provided, however,
that the interest rate in effect for the period, if any, from the
Original Issue Date to the Initial Interest Reset Date shall be the
Initial Interest Rate.
(ii) If the Interest Category of this Note is specified on
the face hereof as a "Floating Rate/Fixed Rate Note", then, except as
set forth below or specified on the face hereof or in an Addendum
hereto, this Note shall bear interest at the rate determined by
reference to the applicable Interest Rate Basis or Bases (a) plus or
minus the Spread, if any, and/or (b) multiplied by the Spread
Multiplier, if any. Commencing on the Initial Interest Reset Date,
the rate at which interest on this Note shall be payable shall be
reset as of each Interest Reset Date;provided, however, that (y) the
interest rate in effect for the period, if any, from the Original
Issue Date to the Initial Interest Reset Date shall be the Initial
Interest Rate and (z) the interest rate in effect for the period
commencing on the Fixed Rate Commencement Date specified on the face
hereof to the Maturity Date shall be the Fixed Interest Rate specified
on the face hereof or, if no such Fixed Interest Rate is specified,
the interest rate in effect hereon on the day immediately preceding
the Fixed Rate Commencement Date.
(iii) If the Interest Category of this Note is specified on
the face hereof as an "Inverse Floating Rate Note", then, except as
set forth below or specified on the face hereof or in an Addendum
hereto, this Note shall bear interest at the Fixed Interest Rate minus
the rate determined by reference to the applicable Interest Rate Basis
or Bases (a) plus or minus
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<PAGE> 11
the Spread, if any, and/or (b) multiplied by the Spread Multiplier, if
any; provided, however, that, unless otherwise specified on the face
hereof or in an Addendum hereto, the interest rate hereon shall not be
less than zero. Commencing on the Initial Interest Reset Date, the
rate at which interest on this Note shall be payable shall be reset as
of each Interest Reset Date; provided, however, that the interest rate
in effect for the period, if any, from the Original Issue Date to the
Initial Interest Reset Date shall be the Initial Interest Rate.
Except as set forth above or specified on the face hereof or in an
Addendum hereto, the interest rate in effect on each day shall be (i) if such
day is an Interest Reset Date, the interest rate determined as of the Interest
Determination Date (as defined below) immediately preceding such Interest Reset
Date or (ii) if such day is not an Interest Reset Date, the interest rate
determined as of the Interest Determination Date immediately preceding the most
recent Interest Reset Date. If any Interest Reset Date would otherwise be a
day that is not a Business Day, such Interest Reset Date shall be postponed to
the next succeeding Business Day, except that if LIBOR is an applicable
Interest Rate Basis and such Business Day falls in the next succeeding calendar
month, such Interest Reset Date shall be the immediately preceding Business
Day. In addition, if the Treasury Rate is an applicable Interest Rate Basis
and the Interest Determination Date would otherwise fall on an Interest Reset
Date, then such Interest Reset Date will be postponed to the next succeeding
Business Day.
As used herein, "Business Day" means any day, other than a Saturday or
Sunday, that is neither a legal holiday nor a day on which banking institutions
are authorized or required by law, regulation or executive order to close in
The City of New York; provided, however, that if the Specified Currency is
other than United States dollars, such day is also not a day on which banking
institutions are authorized or required by law, regulation or executive order
to close in the Principal Financial Center (as defined below) of the country
issuing the Specified Currency (or, in the case of European Currency Units
("ECU"), is not a day that appears as an ECU non-settlement day on the display
designated as "ISDE" on the Reuter Monitor Money Rates Service (or a day so
designated by the ECU Banking Association) or, if ECU non-settlement days do
not appear on that page (and are not so designated), is not a day on which
payments in ECU cannot be settled in the international interbank market);
provided, further, that if LIBOR is an applicable Interest Rate Basis, such day
is also a London Business Day (as defined below). "London Business Day" means
(i) if the Index Currency (as defined below) is other than ECU, any day on
which dealings in such Index Currency are transacted in the London interbank
market or (ii) if the Index Currency is ECU, any day that does not appear as an
ECU non-settlement day on the display designated as "ISDE" on the Reuter
Monitor Money Rates Service (or a day so designated by the ECU Banking
Association) or, if ECU non-settlement days do not appear on that page (and are
not so designated), is not a day on which payments in ECU cannot be settled in
the international interbank market. "Principal Financial Center" means the
capital city of the
11
<PAGE> 12
country issuing the Specified Currency, or solely with respect to the
calculation of LIBOR, the Index Currency, except that with respect to United
States dollars, Australian dollars, Deutsche marks, Dutch guilders, Italian
lire, Swiss francs and ECU, the "Principal Financial Center" shall be The City
of New York, Sydney, Frankfurt, Amsterdam, Milan, Zurich and Luxembourg,
respectively.
The interest rate applicable to each Interest Reset Period commencing
on the related Interest Reset Date will be determined by the Calculation Agent
as of the applicable Interest Determination Date and will be calculated by the
Calculation Agent on or prior to the Calculation Date (as defined below),
except with respect to the LIBOR and the Eleventh District Cost of Funds Rate,
which will be calculated as of such Interest Determination Date. The "Interest
Determination Date" with respect to the CD Rate, the CMT Rate, the Commercial
Paper Rate, the Federal Funds Rate and the Prime Rate will be the second
Business Day immediately preceding the applicable Interest Reset Date; the
"Interest Determination Date" with respect to the Eleventh District Cost of
Funds Rate shall be the last working day of the month immediately preceding the
applicable Interest Reset Date on which the Federal Home Loan Bank of San
Francisco (the "FHLB of San Francisco") publishes the Index (as defined below);
and the "Interest Determination Date" with respect to LIBOR shall be the second
London Business Day immediately preceding the applicable Interest Reset Date,
unless the Index Currency is British pounds sterling, in which case the
"Interest Determination Date" will be the applicable Interest Reset Date. The
"Interest Determination Date" with respect to the Treasury Rate shall be the
day in the week in which the applicable Interest Reset Date falls on which day
Treasury Bills (as defined below) are normally auctioned (Treasury Bills are
normally sold at an auction held on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally held on the following
Tuesday, except that such auction may be held on the preceding Friday);
provided, however, that if an auction is held on the Friday of the week
preceding the applicable Interest Reset Date, the "Interest Determination Date"
shall be such preceding Friday. If the interest rate of this Note is
determined with reference to two or more Interest Rate Bases specified on the
face hereof, the "Interest Determination Date" pertaining to this Note shall be
the most recent Business Day which is at least two Business Days prior to the
applicable Interest Reset Date on which each Interest Rate Basis is
determinable. Each Interest Rate Basis shall be determined as of such date,
and the applicable interest rate shall take effect on the related Interest
Reset Date.
Unless otherwise specified on the face hereof or in an Addendum
hereto, the rate with respect to each Interest Rate Basis will be determined in
accordance with the applicable provisions below.
CD Rate. If an Interest Rate Basis for this Note is specified on the
face hereof as the CD Rate, the CD Rate shall be determined as of the
applicable Interest Determination Date (a "CD Rate Interest Determination
Date") as the rate on such date for negotiable United States dollar
certificates of deposit having the Index Maturity specified on the face hereof
as published by the
12
<PAGE> 13
Board of Governors of the Federal Reserve System in "Statistical Release
H.15(519), Selected Interest Rates" or any successor publication ("H.15(519)")
under the heading "CDs (Secondary Market)", or, if not published by 3:00 P.M.,
New York City time, on the related Calculation Date, the rate on such CD Rate
Interest Determination Date for negotiable United States dollar certificates of
deposit of the Index Maturity as published by the Federal Reserve Bank of New
York in its daily statistical release "Composite 3:30 P.M. Quotations for
United States Government Securities" or any successor publication ("Composite
Quotations") under the heading "Certificates of Deposit". If such rate is not
yet published in either H.15(519) or Composite Quotations by 3:00 P.M., New
York City time, on the related Calculation Date, then the CD Rate on such CD
Rate Interest Determination Date will be calculated by the Calculation Agent
specified on the face hereof and will be the arithmetic mean of the secondary
market offered rates as of 10:00 A.M., New York City time, on such CD Rate
Interest Determination Date, of three leading nonbank dealers in negotiable
United States dollar certificates of deposit in The City of New York selected
by the Calculation Agent for negotiable certificates of deposit of major United
States money market banks for negotiable United States dollar certificates of
deposit with a remaining maturity closest to the Index Maturity in an amount
that is representative for a single transaction in that market at that time;
provided, however, that if the dealers so selected by the Calculation Agent are
not quoting as mentioned in this sentence, the CD Rate determined as of such CD
Rate Interest Determination Date will be the CD Rate in effect on such CD Rate
Interest Determination Date.
CMT Rate. If an Interest Rate Basis for this Note is specified on the
face hereof as the CMT rate, the CMT Rate shall be determined as of the
applicable Interest Determination Date (a "CMT Rate Interest Determination
Date") as the rate displayed on the Designated CMT Telerate Page (as defined
below) under the caption "...Treasury Constant Maturities...Federal Reserve
Board Release H.15...Mondays Approximately 3:45 P.M.", under the column for the
Designated CMT Maturity Index (as defined below) for (i) if the Designated CMT
Telerate Page is 7055, the rate on such CMT Rate Interest Determination Date
and (ii) if the Designated CMT Telerate Page is 7052, the weekly or monthly
average, as specified on the face hereof, for the week or month, as applicable,
ended immediately preceding the week or month, as applicable, in which the
related CMT Rate Interest Determination Date occurs. If such rate is no longer
displayed on the relevant page or is not displayed by 3:00 P.M., New York City
time, on the related Calculation Date, then the CMT Rate for such CMT Rate
Interest Determination Date will be such treasury constant maturity rate for
the Designated CMT Maturity Index as published in H.15(519). If such rate is
no longer published or is not published by 3:00 P.M., New York City time, on
the related Calculation Date, then the CMT Rate on such CMT Rate Interest
Determination Date will be such treasury constant maturity rate for the
Designated CMT Maturity Index (or other United States Treasury rate for the
Designated CMT Maturity Index) for the CMT Rate Interest Determination Date
with respect to such Interest Reset Date as may then be published by either the
Board of Governors of the Federal Reserve System or the
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<PAGE> 14
United States Department of the Treasury that the Calculation Agent determines
to be comparable to the rate formerly displayed on the Designated CMT Telerate
Page and published in H.15(519). If such information is not provided by 3:00
P.M., New York City time, on the related Calculation Date, then the CMT Rate on
the CMT Rate Interest Determination Date will be calculated by the Calculation
Agent and will be a yield to maturity, based on the arithmetic mean of the
secondary market closing offer side prices as of approximately 3:30 P.M., New
York City time, on such CMT Rate Interest Determination Date reported,
according to their written records, by three leading primary United States
government securities dealers (each, a "Reference Dealer") in The City of New
York selected by the Calculation Agent (from five such Reference Dealers
selected by the Calculation Agent and eliminating the highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United States ("Treasury Notes") with
an original maturity of approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated CMT Maturity Index
minus one year. If the Calculation Agent is unable to obtain three such
Treasury Note quotations, the CMT Rate on such CMT Rate Interest Determination
Date will be calculated by the Calculation Agent and will be a yield to
maturity based on the arithmetic mean of the secondary market offer side prices
as of approximately 3:30 P.M., New York City time, on such CMT Rate Interest
Determination Date of three Reference Dealers in The City of New York (from
five such Reference Dealers selected by the Calculation Agent and eliminating
the highest quotation (or, in the event of equality, one of the highest) and
the lowest quotation (or, in the event of equality, one of the lowest)), for
Treasury Notes with an original maturity of the number of years that is the
next highest to the Designated CMT Maturity Index and a remaining term to
maturity closest to the Designated CMT Maturity Index and in an amount of at
least U.S.$100 million. If three or four (and not five) of such Reference
Dealers are quoting as described above, then the CMT Rate will be based on the
arithmetic mean of the offer prices obtained and neither the highest nor the
lowest of such quotes will be eliminated; provided, however, that if fewer than
three Reference Dealers selected by the Calculation Agent are quoting as
mentioned herein, the CMT Rate determined as of such CMT Rate Interest
Determination Date will be the CMT Rate in effect on such CMT Rate Interest
Determination Date. If two Treasury Notes with an original maturity as
described in the second preceding sentence have remaining terms to maturity
equally close to the Designated CMT Maturity Index, the Calculation Agent will
obtain quotations for the Treasury Note with the shorter remaining term to
maturity.
"Designated CMT Telerate Page" means the display on the Dow Jones
Telerate Service (or any successor service) on the page specified on the face
hereof (or any other page as may replace such page on such service (or any
successor service) for the purpose of displaying Treasury Constant Maturities
as reported in H.15(519). If no such page is specified on the face hereof, the
Designated CMT Telerate Page shall be 7052, for the most recent week.
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<PAGE> 15
"Designated CMT Maturity Index" means the original period to maturity
of the United States Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30
years) specified on the face hereof with respect to which the CMT Rate will be
calculated. If no such maturity is specified on the face hereof, the
Designated CMT Maturity Index shall be 2 years.
Commercial Paper Rate. If an Interest Rate Basis for this Note is
specified on the face hereof as the Commercial Paper Rate, the Commercial
Paper Rate shall be determined as of the applicable Interest Determination Date
(a "Commercial Paper Rate Interest Determination Date") as the Money Market
Yield (as defined below) on such date of the rate for commercial paper having
the Index Maturity as published in H.15(519) under the heading "Commercial
Paper". In the event that such rate is not published by 3:00 P.M., New York
City time, on such Calculation Date, then the Commercial Paper Rate on such
Commercial Paper Rate Interest Determination Date will be the Money Market
Yield of the rate for commercial paper having the Index Maturity as published
in Composite Quotations under the heading "Commercial Paper" (with an Index
Maturity of one month or three months being deemed to be equivalent to an Index
Maturity of 30 days or 90 days, respectively). If such rate is not yet
published in either H.15(519) or Composite Quotations by 3:00 P.M., New York
City time, on such Calculation Date, then the Commercial Paper Rate on such
Commercial Paper Rate Interest Determination Date will be calculated by the
Calculation Agent and shall be the Money Market Yield of the arithmetic mean of
the offered rates at approximately 11:00 A.M., New York City time, on such
Commercial Paper Rate Interest Determination Date of three leading dealers of
commercial paper in The City of New York selected by the Calculation Agent for
commercial paper having the Index Maturity placed for an industrial issuer
whose bond rating is "AA", or the equivalent, from a nationally recognized
statistical rating organization; provided, however, that if the dealers so
selected by the Calculation Agent are not quoting as mentioned in this
sentence, the Commercial Paper Rate determined as of such Commercial Paper Rate
Interest Determination Date will be the Commercial Paper Rate in effect on such
Commercial Paper Rate Interest Determination Date.
"Money Market Yield" means a yield (expressed as a percentage)
calculated in accordance with the following formula:
Money Market Yield = D x 360
---------------------- x 100
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the Interest Period for which interest is being
calculated.
Eleventh District Cost of Funds Rate. If an Interest Rate Basis for
this Note is specified on the face hereof as the Eleventh District Cost of
Funds Rate, the Eleventh District Cost of Funds Rate shall be determined as of
the applicable Interest Determination Date (an "Eleventh District Cost of Funds
Rate Interest Determination Date") as the rate equal to the monthly
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<PAGE> 16
weighted average cost of funds for the calendar month immediately preceding the
month in which such Eleventh District Cost of Funds Rate Interest Determination
Date falls, as set forth under the caption "11th District" on Telerate Page
7058 as of 11:00 A.M., San Francisco time, on such Eleventh District Cost of
Funds Rate Interest Determination Date. If such rate does not appear on
Telerate Page 7058 on such Eleventh District Cost of Funds Rate Interest
Determination Date, then the Eleventh District Cost of Funds Rate on such
Eleventh District Cost of Funds Rate Interest Determination Date shall be the
monthly weighted average cost of funds paid by member institutions of the
Eleventh Federal Home Loan Bank District that was most recently announced (the
"Index") by the FHLB of San Francisco as such cost of funds for the calendar
month immediately preceding such Eleventh District Cost of Funds Rate Interest
Determination Date. If the FHLB of San Francisco fails to announce the Index
on or prior to such Eleventh District Cost of Funds Rate Interest Determination
Date for the calendar month immediately preceding such Eleventh District Cost
of Funds Rate Interest Determination Date, the Eleventh District Cost of Funds
Rate determined as of such Eleventh District Cost of Funds Rate Interest
Determination Date will be the Eleventh District Cost of Funds Rate in effect
on such Eleventh District Cost of Funds Rate Interest Determination Date.
Federal Funds Rate. If an Interest Rate Basis for this Note is
specified on the face hereof as the Federal Funds Rate, the Federal Funds
Rate shall be determined as of the applicable Interest Determination Date (a
"Federal Funds Rate Interest Determination Date") as the rate on such date for
United States dollar federal funds as published in H.15(519) under the heading
"Federal Funds (Effective)" or, if not published by 3:00 P.M., New York City
time, on the Calculation Date, the rate on such Federal Funds Rate Interest
Determination Date as published in Composite Quotations under the heading
"Federal Funds/Effective Rate". If such rate is not published in either
H.15(519) or Composite Quotations by 3:00 P.M., New York City time, on the
related Calculation Date, then the Federal Funds Rate on such Federal Funds
Interest Determination Date shall be calculated by the Calculation Agent and
will be the arithmetic mean of the rates for the last transaction in overnight
United States dollar federal funds arranged by three leading brokers of federal
funds transactions in The City of New York selected by the Calculation Agent,
prior to 9:00 A.M., New York City time, on such Federal Funds Rate Interest
Determination Date; provided, however, that if the brokers so selected by the
Calculation Agent are not quoting as mentioned in this sentence, the Federal
Funds Rate determined as of such Federal Funds Rate Interest Determination Date
will be the Federal Funds Rate in effect on such Federal Funds Rate Interest
Determination Date.
LIBOR. If an Interest Rate Basis for this Note is specified on the
face hereof as LIBOR, LIBOR shall be determined by the Calculation Agent as of
the applicable Interest Determination Date (a "LIBOR Interest Determination
Date") in accordance with the following provisions:
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<PAGE> 17
(i) if (a) "LIBOR Reuters" is specified on the face hereof, the
arithmetic mean of the offered rates (unless the Designated LIBOR Page (as
defined below) by its terms provides only for a single rate, in which case such
single rate will be used) for deposits in the Index Currency having the Index
Maturity, commencing on the applicable Interest Reset Date, that appear (or, if
only a single rate is required as aforesaid, appears) on the Designated LIBOR
Page (as defined below) as of 11:00 A.M., London time, on such LIBOR Interest
Determination Date, or (b) "LIBOR Telerate" is specified on the face hereof, or
if neither "LIBOR Reuters" nor "LIBOR Telerate" is specified on the face hereof
as the method for calculating LIBOR, the rate for deposits in the Index
Currency having the Index Maturity, commencing on such Interest Reset Date,
that appears on the Designated LIBOR Page as of 11:00 A.M., London time, on
such LIBOR Interest Determination Date. If fewer than two such offered rates
appear, or if no such rate appears, as applicable, LIBOR on such LIBOR Interest
Determination Date shall be determined in accordance with the provisions
described in clause (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which
fewer than two offered rates appear, or no rate appears, as the case may be, on
the Designated LIBOR Page as specified in clause (i) above, the Calculation
Agent shall request the principal London offices of each of four major
reference banks in the London interbank market, as selected by the Calculation
Agent, to provide the Calculation Agent with its offered quotation for deposits
in the Index Currency for the period of the Index Maturity, commencing on the
applicable Interest Reset Date, to prime banks in the London interbank market
at approximately 11:00 A.M., London time, on such LIBOR Interest Determination
Date and in a principal amount that is representative for a single transaction
in such Index Currency in such market at such time. If at least two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination
Date will be the arithmetic mean of such quotations. If fewer than two such
quotations are so provided, then LIBOR on such LIBOR Interest Determination
Date will be the arithmetic mean of the rates quoted at approximately 11:00
A.M., in the applicable Principal Financial Center, on such LIBOR Interest
Determination Date by three major banks in such Principal Financial Center
selected by the Calculation Agent for loans in the Index Currency to leading
European banks, having the Index Maturity and in a principal amount that is
representative for a single transaction in such Index Currency in such market
at such time; provided, however, that if the banks so selected by the
Calculation Agent are not quoting as mentioned in this sentence, LIBOR
determined as of such LIBOR Interest Determination Date shall be LIBOR in
effect on such LIBOR Interest Determination Date.
"Index Currency" means the currency or composite currency specified on
the face hereof as to which LIBOR shall be calculated. If no such currency or
composite currency is specified on the face hereof, the Index Currency shall be
United States dollars.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified on
the face hereof, the display on the Reuter Monitor Money Rates Service (or any
successor service) on the page
17
<PAGE> 18
specified on the face hereof (or any other page as may replace such page on
such service (or any successor service)), for the purpose of displaying the
London interbank rates of major banks for the Index Currency, or (b) if "LIBOR
Telerate" is specified on the face hereof or neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified on the face hereof as the method for calculating LIBOR,
the display on the Dow Jones Telerate Service (or any successor service) on the
page specified on the face hereof (or any other page as may replace such page
on such service (or any successor service)) for the purpose of displaying the
London interbank rates of major banks for the Index Currency.
Prime Rate. If an Interest Rate Basis for this Note is specified on
the face hereto as the Prime Rate, the Prime Rate shall be determined as of the
applicable Interest Determination Date (a "Prime Rate Interest Determination
Date") as the rate on such date as such rate is published in H.15(519) under
the heading "Bank Prime Loan". If such rate is not published prior to 3:00
P.M., New York City time, on the related Calculation Date, then the Prime Rate
shall be the arithmetic mean of the rates of interest publicly announced by
each bank that appears on the Reuters Screen USPRIME1 Page (as defined below)
as such bank's prime rate or base lending rate as in effect for such Prime Rate
Interest Determination Date. If fewer than four such rates appear on the
Reuters Screen USPRIME1 Page for such Prime Rate Interest Determination Date,
the Prime Rate shall be the arithmetic mean of the prime rates quoted on the
basis of the actual number of days in the year divided by a 360-day year as of
the close of business on such Prime Rate Interest Determination Date by four
major money center banks in The City of New York selected by the Calculation
Agent. If fewer than four such quotations are so provided, the Prime Rate
shall be the arithmetic mean of four prime rates quoted on the basis of the
actual number of days in the year divided by a 360-day year as of the close of
business on such Prime Rate Interest Determination Date as furnished in The
City of New York by the major money center banks, if any, that have provided
such quotations and by a reasonable number of substitute banks or trust
companies to obtain four such prime rate quotations, provided such substitute
banks or trust companies are organized and doing business under the laws of the
United States, or any State thereof, each having total equity capital of at
least U.S.$500 million and being subject to supervision or examination by
Federal or State authority, selected by the Calculation Agent to provide such
rate or rates; provided, however, that if the banks or trust companies so
selected by the Calculation Agent are not quoting as mentioned in this
sentence, the Prime Rate determined as of such Prime Rate Interest
Determination Date will be the Prime Rate in effect on such Prime Rate Interest
Determination Date.
"Reuters Screen USPRIME1 Page" means the display designated as page
"USPRIME1" on the Reuter Monitor Money Rates Service (or any successor service)
(or such other page as may replace the USPRIME1 page on such service (or any
successor service) for the purpose of displaying prime rates or base lending
rates of major United States banks).
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<PAGE> 19
Treasury Rate. If an Interest Rate Basis for this Note is specified
on the face hereof as the Treasury Rate, the Treasury Rate shall be determined
as of the applicable Interest Determination Date (a "Treasury Rate Interest
Determination Date") as the rate from the auction held on such Treasury Rate
Interest Determination Date (the "Auction") of direct obligations of the United
States ("Treasury Bills") having the Index Maturity, as such rate is published
in H.15(519) under the heading "Treasury bills-auction average (investment)"
or, if not published by 3:00 P.M., New York City time, on the related
Calculation Date, the auction average rate of such Treasury Bills (expressed as
a bond equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) as otherwise announced by the United States
Department of the Treasury. In the event that the results of the Auction of
Treasury Bills having the Index Maturity are not reported as provided above by
3:00 P.M., New York City time, on such Calculation Date, or if no such Auction
is held, then the Treasury Rate shall be calculated by the Calculation Agent
and shall be a yield to maturity (expressed as a bond equivalent on the basis
of a year of 365 or 366 days, as applicable, and applied on a daily basis) of
the arithmetic mean of the secondary market bid rates, as of approximately 3:30
P.M., New York City time, on such Treasury Rate Interest Determination Date, of
three leading primary United States government securities dealers selected by
the Calculation Agent, for the issue of Treasury Bills with a remaining
maturity closest to the Index Maturity; provided, however, that if the dealers
so selected by the Calculation Agent are not quoting as mentioned in this
sentence, the Treasury Rate determined as of such Treasury Rate Interest
Determination Date will be the Treasury Rate in effect on such Treasury Rate
Interest Determination Date.
Notwithstanding the foregoing, the interest rate hereon shall not be
greater than the Maximum Interest Rate, if any, or less than the Minimum
Interest Rate, if any, in each case as specified on the face hereof. The
interest rate on this Note will in no event be higher than the maximum rate
permitted by New York law, as the same may be modified by United States law of
general application.
The "Calculation Date", if applicable, pertaining to any Interest
Determination Date shall be the earlier of (i) the tenth calendar day after
such Interest Determination Date or, if such day is not a Business Day, the
next succeeding Business Day or (ii) the Business Day immediately preceding the
applicable Interest Payment Date or the Maturity Date, as the case may be. At
the request of the Holder hereof, the Calculation Agent will provide to the
Holder hereof the interest rate hereon then in effect and, if determined, the
interest rate that will become effective as a result of a determination made
for the next succeeding Interest Reset Date.
Accrued interest hereon shall be an amount calculated by multiplying
the principal amount hereof by an accrued interest factor. Such accrued
interest factor shall be computed by adding the interest factor calculated for
each day in the applicable Interest Period. Unless otherwise specified as the
Day Count Convention on the face hereof, the interest factor for each such date
shall be computed by dividing the interest rate applicable to such day by 360
if the CD Rate, the Commercial Paper Rate, the
19
<PAGE> 20
Eleventh District Cost of Funds Rate, the Federal Funds Rate, LIBOR or the
Prime Rate is an applicable Interest Rate Basis or by the actual number of days
in the year if the CMT Rate or the Treasury Rate is an applicable Interest Rate
Basis. Unless otherwise specified as the Day Count Convention on the face
hereof, the interest factor for this Note, if the interest rate is calculated
with reference to two or more Interest Rate Bases, shall be calculated in each
period in the same manner as if only the Applicable Interest Rate Basis
specified on the face hereof applied.
All percentages resulting from any calculation on this Note shall be
rounded to the nearest one hundred-thousandth of a percentage point, with five
one-millionths of a percentage point rounded upwards, and all amounts used in
or resulting from such calculation on this Note shall be rounded, in the case
of United States dollars, to the nearest cent or, in the case of a Specified
Currency other than United States dollars, to the nearest unit (with one-half
cent or unit being rounded upwards).
If certain Events of Default, as set forth in the Subordinated
Indenture, shall occur and be continuing, the principal of the Notes may be
accelerated in the manner and with the effect provided in the Subordinated
Indenture.
The Subordinated Indenture contains provisions for defeasance of (i)
the entire indebtedness of the Notes or (ii) certain covenants and Events of
Default with respect to the Notes, in each case upon compliance with certain
conditions set forth therein, which provisions apply to the Notes.
The Subordinated Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the holders of the Debt Securities
at any time by the Company and the Trustee with the consent of the holders of
not less than a majority of the aggregate principal amount of all Debt
Securities at the time outstanding and affected thereby. The Subordinated
Indenture also contains provisions permitting the holders of not less than a
majority of the aggregate principal amount of the outstanding Debt Securities
of any series, on behalf of the holders of all such Debt Securities, to waive
compliance by the Company with certain provisions of the Subordinated
Indenture. Furthermore, provisions in the Subordinated Indenture permit the
holders of not less than a majority of the aggregate principal amount of the
outstanding Debt Securities of any series, in certain instances, to waive, on
behalf of all of the holders of Debt Securities of such series, certain past
defaults under the Subordinated Indenture and their consequences. Any such
consent or waiver by the holder of this Note shall be conclusive and binding
upon such holder and upon all future holders of this Note and other Notes
issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon
this Note.
No reference herein to the Subordinated Indenture and no provision of
this Note or of the Subordinated Indenture shall alter
20
<PAGE> 21
or impair the obligation of the Company, which is absolute and unconditional,
to pay principal, premium, if any, and interest in respect of this Note at the
times, places and rate or formula, and in the coin or currency, herein
prescribed.
As provided in the Subordinated Indenture and subject to certain
limitations therein and herein set forth, the transfer of this Note is
registrable in the Security Register of the Company upon surrender of this Note
for registration of transfer at the office or agency of the Company in any
place where the principal hereof and any premium or interest hereon are
payable, duly endorsed by, or accompanied by a written instrument of transfer
in form satisfactory to the Company and the Security Registrar duly executed
by, the holder hereof or by his attorney duly authorized in writing, and
thereupon one or more new Notes, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.
As provided in the Subordinated Indenture and subject to certain
limitations therein and herein set forth, this Note is exchangeable for a like
aggregate principal amount of Notes of different authorized denominations but
otherwise having the same terms and conditions, as requested by the holder
hereof surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the holder in whose name this Note is registered as the owner thereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Subordinated Indenture and this Note shall be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely in such State.
21
<PAGE> 22
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ______ Custodian _____
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act_____________________
in common (State)
Additional abbreviations may also be used though not in the above list.
__________________________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
| |
|______________________________|_______________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
______________________________________________________________________________
this Note and all rights thereunder hereby irrevocably constituting and
appointing
____________________________________________________________________ Attorney
to transfer this Note on the books of the Trustee, with full power of
substitution in the premises.
Dated:_____________________ _______________________________________
_______________________________________
Notice: The signature(s) on this
Assignment must correspond with
the name(s) as written upon the face of
this Note in every particular, without
alteration or enlargement or any change
whatsoever.
22
<PAGE> 23
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion hereof specified below) pursuant to its
terms at a price equal to 100% of the principal amount to be repaid, together
with unpaid interest accrued hereon to the Repayment Date, to the undersigned,
at ___________________________________________________________________________
______________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at its corporate
trust office in the Borough of Manhattan, The City of New York, currently
located at __________________________________________, not more than 60 nor
less than 30 calendar days prior to the Repayment Date, this Note with this
"Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be increments of U.S.$1,000 (or, if the
Specified Currency is other than United States dollars, the minimum Authorized
Denomination specified on the face hereof)) which the holder elects to have
repaid and specify the denomination or denominations (which shall be an
Authorized Denomination) of the Notes to be issued to the holder for the
portion of this Note not being repaid (in the absence of any such
specification, one such Note will be issued for the portion not being repaid).
Principal Amount
to be Repaid: $_____________ ______________________________
Notice: The signature(s) on
Date: ______________________ this Option to Elect Repayment
must correspond with the name(s) as
written upon the face of this Note in
every particular, without alteration or
enlargement or any change whatsoever.
23
<PAGE> 1
EXHIBIT 15
June 24, 1996
Standard Federal Bancorporation, Inc.
2600 West Big Beaver Road
Troy, Michigan
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Standard Federal Bancorporation, Inc. and Subsidiary (formerly
Standard Federal Bank) for the periods ended March 31, 1996 and 1995 as
indicated in our report dated April 18, 1996; because we did not perform an
audit, we expressed no opinion on that information.
We are aware that our report referred to above, which was included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996 is being
used in this Registration Statement.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
/s/ DELOITTE & TOUCHE LLP
Detroit, Michigan
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Standard Federal Bancorporation, Inc. on Form S-3 of our report dated January
18, 1996, incorporated by reference in the Annual Report on Form 10-K of
Standard Federal Bancorporation, Inc. for the year ended December 31, 1995 and
to the Reference to us under the heading "Experts" in the Prospectus, which is
part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Detroit, Michigan
June 24, 1996
<PAGE> 1
[KPMG PEAT MARWICK LLP LETTERHEAD]
EXHIBIT 23.2
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Bell Bancorp, Inc.:
We consent to incorporation by reference in the registration statement (No.
333-03943) on Form S-3 of Standard Federal Bancorporation Inc.,
which incorporates by reference the Form 8-K of Standard Federal Bancorporation,
Inc., dated June 13, 1996, which included our report dated May 24, 1996,
relating to the consolidated statements of financial condition of Bell Bancorp,
Inc. and subsidiary as of March 31, 1996 and 1995, and the related consolidated
statements of earnings, changes in stockholders' equity, and cash flows for
each of the years in the three year period ended March 31, 1996, and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
------------------------------
KPMG Peat Marwick LLP
Chicago, Illinois
June 26, 1996
