UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______ to ________
Commission File No. 0-20632
FIRST BANKS, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 43-1175538
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
135 North Meramec, Clayton, Missouri 63105
(Address of principal executive offices) (Zip code)
(314) 854-4600
(Registrant's telephone number, including area code)
--------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
-------- --------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Shares Outstanding
Class at July 31, 2002
----- ----------------
Common Stock, $250.00 par value 23,661
FIRST BANKS, INC.
TABLE OF CONTENTS
Page
----
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS - (UNAUDITED):
CONSOLIDATED BALANCE SHEETS......................................................... 1
CONSOLIDATED STATEMENTS OF INCOME................................................... 3
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME........................................................ 4
CONSOLIDATED STATEMENTS OF CASH FLOWS............................................... 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.......................................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS....................................................... 15
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.......................... 28
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................................................... 29
SIGNATURES.......................................................................................... 30
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
FIRST BANKS, INC.
CONSOLIDATED BALANCE SHEETS - (UNAUDITED)
(dollars expressed in thousands, except share and per share data)
June 30, December 31,
2002 2001
---- ----
ASSETS
------
Cash and cash equivalents:
Cash and due from banks....................................................... $ 163,371 181,522
Interest-bearing deposits with other financial institutions
with maturities of three months or less..................................... 880 4,664
Federal funds sold............................................................ 112,900 55,688
------------ -----------
Total cash and cash equivalents.......................................... 277,151 241,874
------------ -----------
Investment securities:
Available for sale, at fair value............................................. 819,580 610,466
Held to maturity, at amortized cost (fair value of $21,003 and $20,812
at June 30, 2002 and December 31, 2001, respectively)....................... 20,444 20,602
------------ -----------
Total investment securities.............................................. 840,024 631,068
------------ -----------
Loans:
Commercial, financial and agricultural........................................ 1,556,017 1,681,846
Real estate construction and development...................................... 997,190 954,913
Real estate mortgage.......................................................... 2,552,257 2,445,847
Consumer and installment...................................................... 112,241 124,542
Loans held for sale........................................................... 150,871 204,206
------------ -----------
Total loans.............................................................. 5,368,576 5,411,354
Unearned discount............................................................. (5,944) (2,485)
Allowance for loan losses..................................................... (103,794) (97,164)
------------ -----------
Net loans................................................................ 5,258,838 5,311,705
------------ -----------
Derivative instruments............................................................. 70,128 54,889
Bank premises and equipment, net of accumulated depreciation and amortization...... 154,026 149,604
Intangibles associated with the purchase of subsidiaries, net of amortization...... 140,774 125,440
Bank-owned life insurance.......................................................... 89,796 87,200
Accrued interest receivable........................................................ 38,062 37,349
Deferred income taxes.............................................................. 94,496 94,546
Other assets....................................................................... 42,767 44,776
------------ -----------
Total assets............................................................. $ 7,006,062 6,778,451
============ ===========
The accompanying notes are an integral part of the consolidated financial statements.
FIRST BANKS, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED) - (UNAUDITED)
(dollars expressed in thousands, except share and per share data)
June 30, December 31,
2002 2001
---- ----
LIABILITIES
-----------
Deposits:
Demand:
Non-interest-bearing........................................................ $ 915,618 921,455
Interest-bearing............................................................ 736,301 629,015
Savings....................................................................... 1,939,002 1,832,939
Time:
Time deposits of $100 or more............................................... 500,442 484,201
Other time deposits......................................................... 1,817,032 1,816,294
------------ -----------
Total deposits........................................................... 5,908,395 5,683,904
Short-term borrowings.............................................................. 198,922 243,134
Note payable....................................................................... 10,000 27,500
Guaranteed preferred beneficial interests in:
First Banks, Inc. subordinated debentures..................................... 218,944 191,539
First Banks America, Inc. subordinated debentures............................. 44,988 44,342
Accrued interest payable........................................................... 19,798 16,006
Deferred income taxes.............................................................. 53,916 43,856
Accrued expenses and other liabilities............................................. 52,654 61,515
Minority interest in subsidiary.................................................... 18,847 17,998
------------ -----------
Total liabilities........................................................ 6,526,464 6,329,794
------------ -----------
STOCKHOLDERS' EQUITY
--------------------
Preferred stock:
$1.00 par value, 5,000,000 shares authorized, no shares issued
and outstanding at June 30, 2002 and December 31, 2001...................... -- --
Class A convertible, adjustable rate, $20.00 par value, 750,000
shares authorized, 641,082 shares issued and outstanding.................... 12,822 12,822
Class B adjustable rate, $1.50 par value, 200,000 shares authorized,
160,505 shares issued and outstanding....................................... 241 241
Common stock, $250.00 par value, 25,000 shares authorized,
23,661 shares issued and outstanding.......................................... 5,915 5,915
Capital surplus.................................................................... 5,958 6,074
Retained earnings.................................................................. 406,348 389,308
Accumulated other comprehensive income............................................. 48,314 34,297
------------ -----------
Total stockholders' equity............................................... 479,598 448,657
------------ -----------
Total liabilities and stockholders' equity............................... $ 7,006,062 6,778,451
============ ===========
FIRST BANKS, INC.
CONSOLIDATED STATEMENTS OF INCOME - (UNAUDITED)
(dollars expressed in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
2002 2001 2002 2001
---- ---- ---- ----
Interest income:
Interest and fees on loans............................................ $ 98,782 105,855 197,824 212,917
Investment securities................................................. 7,868 6,341 15,149 14,821
Federal funds sold and other.......................................... 653 1,160 942 1,655
-------- ------- ------- -------
Total interest income............................................ 107,303 113,356 213,915 229,393
-------- ------- ------- -------
Interest expense:
Deposits:
Interest-bearing demand............................................. 2,281 1,807 3,953 3,480
Savings............................................................. 9,265 13,342 18,434 27,525
Time deposits of $100 or more....................................... 4,889 7,453 10,179 15,329
Other time deposits................................................. 16,970 25,954 35,851 53,143
Short-term borrowings................................................. 912 1,673 1,829 3,662
Note payable.......................................................... 181 543 530 1,773
Guaranteed preferred debentures....................................... 7,117 4,489 13,329 8,978
-------- ------- ------- -------
Total interest expense........................................... 41,615 55,261 84,105 113,890
-------- ------- ------- -------
Net interest income.............................................. 65,688 58,095 129,810 115,503
Provision for loan losses.................................................. 12,000 3,720 25,000 7,110
-------- ------- ------- -------
Net interest income after provision for loan losses.............. 53,688 54,375 104,810 108,393
-------- ------- ------- -------
Noninterest income:
Service charges on deposit accounts and customer service fees......... 7,014 5,312 13,494 10,537
Gain on mortgage loans sold and held for sale......................... 7,292 3,864 12,459 7,332
Gain on sale of credit card portfolio, net of expenses................ -- -- -- 2,275
Net gain (loss) on sales of available-for-sale investment securities.. -- 61 92 (113)
Bank-owned life insurance investment income........................... 1,526 1,044 2,813 2,099
Net gain (loss) on derivative instruments............................. 90 4,989 (249) 5,486
Other................................................................. 4,607 4,154 10,755 8,282
-------- ------- ------- -------
Total noninterest income......................................... 20,529 19,424 39,364 35,898
-------- ------- ------- -------
Noninterest expense:
Salaries and employee benefits........................................ 28,895 23,345 56,156 45,797
Occupancy, net of rental income....................................... 4,964 4,100 9,636 8,216
Furniture and equipment............................................... 4,396 2,406 8,539 5,617
Postage, printing and supplies........................................ 1,317 1,103 2,859 2,258
Information technology fees........................................... 8,497 6,452 16,597 12,951
Legal, examination and professional fees.............................. 2,106 1,734 3,597 3,424
Amortization of intangibles associated with the
purchase of subsidiaries........................................... 482 1,862 964 3,712
Communications........................................................ 908 732 1,704 1,513
Advertising and business development.................................. 1,507 1,595 2,951 3,182
Other................................................................. 6,148 16,580 13,075 20,368
-------- ------- ------- -------
Total noninterest expense........................................ 59,220 59,909 116,078 107,038
-------- ------- ------- -------
Income before provision for income taxes, minority interest
in income of subsidiary and cumulative effect of change
in accounting principle...................................... 14,997 13,890 28,096 37,253
Provision for income taxes................................................. 5,328 5,457 10,099 14,581
-------- ------- ------- -------
Income before minority interest in income of subsidiary and
cumulativeeffect of change in accounting principle........... 9,669 8,433 17,997 22,672
Minority interest in income of subsidiary.................................. 301 534 629 1,045
-------- ------- ------- -------
Income before cumulative effect of change in
accounting principle......................................... 9,368 7,899 17,368 21,627
Cumulative effect of change in accounting principle, net of tax............ -- -- -- (1,376)
-------- ------- ------- -------
Net income....................................................... 9,368 7,899 17,368 20,251
Preferred stock dividends.................................................. 132 132 328 328
-------- ------- ------- -------
Net income available to common stockholders...................... $ 9,236 7,767 17,040 19,923
======== ======= ======= =======
Basic earnings per common share:
Income before cumulative effect of change in accounting principle..... $ 390.35 328.27 720.18 900.21
Cumulative effect of change in accounting principle, net of tax....... -- -- -- (58.16)
--------- ------- ------- -------
Basic................................................................. $ 390.35 328.27 720.18 842.05
======== ======= ======= =======
Diluted earnings per common share:
Income before cumulative effect of change in accounting principle..... $ 384.48 322.78 712.75 882.65
Cumulative effect of change in accounting principle, net of tax....... -- -- -- (58.16)
-------- ------- ------- -------
Diluted............................................................... $ 384.48 322.78 712.75 824.49
========= ======= ======= =======
Weighted average common stock outstanding.................................. 23,661 23,661 23,661 23,661
======== ======= ======= =======
The accompanying notes are an integral part of the consolidated financial statements.
FIRST BANKS, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME - (UNAUDITED)
Six Months Ended June 30, 2002 and 2001 and Six Months Ended December 31, 2001
(dollars expressed in thousands, except per share data)
Adjustable Rate Accu-
Preferred Stock mulated
------------------ Other Total
Class A Compre- Compre- Stock-
Conver- Common Capital hensive Retained hensive holders'
tible Class B Stock Surplus Income Earnings Income Equity
----- ------- ----- ------- ------- -------- ------ ------
Consolidated balances, December 31, 2000......... $12,822 241 5,915 2,267 325,580 6,021 352,846
Six months ended June 30, 2001:
Comprehensive income:
Net income................................. -- -- -- -- 20,251 20,251 -- 20,251
Other comprehensive income, net of tax:
Unrealized gains on securities, net of
reclassification adjustment (1)........ -- -- -- -- 9,529 -- 9,529 9,529
Derivative instruments:
Cumulative effect of change in
accounting principle, net........... -- -- -- -- 9,069 -- 9,069 9,069
Current period transactions............ -- -- -- -- 7,621 -- 7,621 7,621
Reclassification to earnings........... -- -- -- -- (2,927) -- (2,927) (2,927)
------
Comprehensive income....................... 43,543
======
Class A preferred stock dividends,
$0.50 per share.......................... -- -- -- -- (321) -- (321)
Class B preferred stock dividends,
$0.04 per share.......................... -- -- -- -- (7) -- (7)
Effect of capital stock transactions of
majority-owned subsidiary.................. -- -- -- 343 -- -- 343
------- --- ----- ----- ------- ------- -------
Consolidated balances, June 30, 2001............. 12,822 241 5,915 2,610 345,503 29,313 396,404
Six months ended December 31, 2001:
Comprehensive income:
Net income................................. -- -- -- -- 44,263 44,263 -- 44,263
Other comprehensive income, net of tax:
Unrealized losses on securities, net of
reclassification adjustment (1)........ -- -- -- -- (11,400) -- (11,400) (11,400)
Derivative instruments:
Current period transactions............ -- -- -- -- 19,400 -- 19,400 19,400
Reclassification to earnings........... -- -- -- -- (3,016) -- (3,016) (3,016)
------
Comprehensive income....................... -- -- -- -- 49,247
======
Class A preferred stock dividends,
$0.70 per share.......................... -- -- -- -- (448) -- (448)
Class B preferred stock dividends,
$0.07 per share.......................... -- -- -- -- (10) -- (10)
Effect of capital stock transactions of
majority-owned subsidiary.................. -- -- -- 3,464 -- -- 3,464
------- --- ----- ----- ------- ------ -------
Consolidated balances, December 31, 2001......... 12,822 241 5,915 6,074 389,308 34,297 448,657
Six months ended June 30, 2002:
Comprehensive income:
Net income................................. -- -- -- -- 17,368 17,368 -- 17,368
Other comprehensive income, net of tax:
Unrealized gains on securities, net of
reclassification adjustment (1)........ -- -- -- -- 7,620 -- 7,620 7,620
Derivative instruments:
Current period transactions............ -- -- -- -- 6,397 -- 6,397 6,397
------
Comprehensive income....................... 31,385
======
Class A preferred stock dividends,
$0.50 per share.......................... -- -- -- -- (321) -- (321)
Class B preferred stock dividends,
$0.04 per share.......................... -- -- -- -- (7) -- (7)
Effect of capital stock transactions of
majority-owned subsidiary.................. -- -- -- (116) -- -- (116)
------- --- ----- ----- ------- ------ -------
Consolidated balances, June 30, 2002............. $12,822 241 5,915 5,958 406,348 48,314 479,598
======= === ===== ===== ======= ====== =======
- -------------------------
(1) Disclosure of reclassification adjustment:
Three Months Ended Six Months Ended Six Months Ended
June 30, June 30, December 31,
------------------ ----------------
2002 2001 2002 2001 2001
---- ---- ---- ---- ----
Unrealized gains on investment securities arising
during the period.............................................. $7,086 4,098 7,680 9,456 842
Less reclassification adjustment for gains (losses)
included in net income......................................... -- 40 60 (73) 12,242
----- ----- ----- ----- -------
Unrealized gains (losses) on investment securities................ $7,086 4,058 7,620 9,529 (11,400)
====== ===== ===== ===== =======
The accompanying notes are an integral part of the consolidated financial statements.
FIRST BANKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
(dollars expressed in thousands)
Six Months Ended
June 30,
---------------------
2002 2001
---- ----
Cash flows from operating activities:
Net income........................................................................... $ 17,368 20,251
Adjustments to reconcile net income to net cash used in operating activities:
Cumulative effect of change in accounting principle, net of tax.................... -- 1,376
Depreciation and amortization of bank premises and equipment....................... 9,261 5,734
Amortization, net of accretion..................................................... 7,020 4,090
Originations and purchases of loans held for sale.................................. (806,713) (757,526)
Proceeds from the sale of loans held for sale...................................... 757,023 587,612
Provision for loan losses.......................................................... 25,000 7,110
Provision for income taxes......................................................... 10,099 14,581
Payments of income taxes........................................................... (15,792) (21,288)
(Increase) decrease in accrued interest receivable................................. (218) 2,949
Interest accrued on liabilities.................................................... 84,105 113,890
Payments of interest on liabilities................................................ (81,341) (109,947)
Gain on mortgage loans sold and held for sale...................................... (12,459) (7,332)
Gain on sale of credit card portfolio, net of expenses............................. -- (2,275)
Net (gain) loss on sales of available-for-sale investment securities............... (92) 113
Net loss (gain) on derivative instruments.......................................... 249 (5,486)
Other operating activities, net.................................................... 3,147 (8,574)
Minority interest in income of subsidiary.......................................... 629 1,045
-------- ---------
Net cash used in operating activities........................................... (2,714) (153,677)
-------- ---------
Cash flows from investing activities:
Cash received from acquired entities, net of cash and cash equivalents paid.......... 44,097 --
Proceeds from sales of investment securities available for sale...................... 192 71,023
Maturities of investment securities available for sale............................... 398,629 194,642
Maturities of investment securities held to maturity................................. 2,405 1,887
Purchases of investment securities available for sale................................ (416,673) (57,421)
Purchases of investment securities held to maturity.................................. (2,260) (240)
Proceeds from terminations of derivative instruments................................. -- 5,396
Net decrease in loans................................................................ 118,128 27,258
Recoveries of loans previously charged-off........................................... 8,297 3,775
Purchases of bank premises and equipment............................................. (7,621) (20,403)
Other investing activities, net...................................................... 4,721 1,098
-------- ---------
Net cash provided by investing activities....................................... 149,915 227,015
-------- ---------
Cash flows from financing activities:
Increase in demand and savings deposits.............................................. 58,743 11,883
Decrease in time deposits............................................................ (114,739) (27,926)
Decrease in federal funds purchased.................................................. (81,000) --
(Decrease) increase in Federal Home Loan Bank advances............................... (4,600) 50,000
Increase in securities sold under agreements to repurchase........................... 23,267 10,608
Advances drawn on note payable....................................................... 36,500 5,000
Repayments of note payable........................................................... (54,000) (53,500)
Proceeds from issuance of guaranteed preferred subordinated debentures............... 24,233 --
Payment of preferred stock dividends................................................. (328) (328)
Other financing activities, net...................................................... -- (94)
-------- ---------
Net cash used in financing activities........................................... (111,924) (4,357)
-------- ---------
Net increase in cash and cash equivalents....................................... 35,277 68,981
Cash and cash equivalents, beginning of period............................................ 241,874 198,279
-------- ---------
Cash and cash equivalents, end of period.................................................. $277,151 267,260
======== =========
Noncash investing and financing activities:
Reduction of deferred tax asset valuation reserve.................................... $ -- 565
Loans transferred to other real estate............................................... 1,622 1,312
Loans held for sale transferred to mortgage-backed securities........................ 100,317 15,139
Loans held for sale transferred to loans............................................. 2,741 28,351
======== =========
The accompanying notes are an integral part of the consolidated financial statements.
FIRST BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The consolidated financial statements of First Banks, Inc. and
subsidiaries (First Banks or the Company) are unaudited and should be read in
conjunction with the consolidated financial statements contained in the 2001
Annual Report on Form 10-K. The consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America and conform to predominant practices within the banking
industry. Management of First Banks has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare the consolidated
financial statements. In the opinion of management, all adjustments, consisting
of normal recurring accruals considered necessary for a fair presentation of the
results of operations for the interim periods presented herein, have been
included. Operating results for the three and six months ended June 30, 2002 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2002.
The consolidated financial statements include the accounts of First
Banks, Inc. and its subsidiaries, net of minority interest, as more fully
described below. All significant intercompany accounts and transactions have
been eliminated. Certain reclassifications of 2001 amounts have been made to
conform to the 2002 presentation. In particular, the guaranteed preferred
beneficial interests in First Banks, Inc. and First Banks America, Inc.
subordinated debentures has been reclassified into the liabilities section on
the consolidated balance sheets rather than presented as a separate line item
excluded from the calculation of total liabilities. Consequently, the guaranteed
preferred debentures expense has been reclassified to interest expense from
noninterest expense in the consolidated statements of income.
First Banks operates through its subsidiary bank holding companies and
subsidiary financial institutions (collectively referred to as the Subsidiary
Banks) as follows:
Union Financial Group, Ltd., headquartered in Swansea, Illinois (UFG),
and its wholly owned subsidiary:
First Bank, headquartered in St. Louis County, Missouri;
First Banks America, Inc., headquartered in San Francisco, California
(FBA), and its wholly owned subsidiary:
The San Francisco Company, headquartered in San Francisco,
California (SFC), and its wholly-owned subsidiary:
First Bank & Trust, headquartered in San Francisco, California
(FB&T).
The Subsidiary Banks are wholly owned by their respective parent
companies except FBA, which was 93.76% and 93.69% owned by First Banks at June
30, 2002 and December 31, 2001, respectively.
(2) ACQUISITIONS
On January 15, 2002, First Banks completed its acquisition of Plains
Financial Corporation (PFC), and its wholly owned banking subsidiary, PlainsBank
of Illinois, National Association (PlainsBank), Des Plaines, Illinois, in
exchange for $36.5 million in cash. PFC operated a total of three banking
facilities in Des Plaines, Illinois, and one banking office in Elk Grove
Village, Illinois. The acquisition was funded from borrowings under First Banks'
credit agreement with a group of unaffiliated financial institutions. At the
time of the transaction, PFC had $256.3 million in total assets, $150.4 million
in loans, net of unearned discount, $81.0 million in investment securities and
$213.4 million in deposits. This transaction was accounted for using the
purchase method of accounting. The excess of the cost over the fair value of the
net assets acquired was approximately $12.6 million and will not be amortized,
but instead will be periodically tested for impairment in accordance with the
requirements of SFAS No. 142 (as defined below). The core deposit intangibles
were approximately $2.9 million and are being amortized over seven years
utilizing the straight-line method. PFC was merged with and into UFG, and
PlainsBank was merged with and into First Bank.
On June 22, 2002, FB&T completed its assumption of the deposits and
certain liabilities and the purchase of certain assets of the Garland and
Denton, Texas branch offices of Union Planters Bank, National Association. The
transaction resulted in the acquisition of $15.3 million in deposits and one
branch office in Garland and $49.6 million in deposits and one branch office,
including a detached drive-thru facility, in Denton. The core deposit
intangibles associated with the branch purchases were $1.4 million and are being
amortized over seven years.
(3) IMPLEMENTATION OF ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 142 -- Goodwill and Other
Intangible Assets. SFAS No. 142 requires that goodwill and intangible assets
with indefinite useful lives no longer be amortized, but instead tested for
impairment at least annually in accordance with the provisions of SFAS No. 142.
SFAS No. 142 also requires that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment in accordance with SFAS No. 144 --
Accounting for the Impairment or Disposal of Long-Lived Assets, as discussed
below. The amortization of goodwill ceased upon adoption of SFAS No. 142, which
for calendar year-end companies was January 1, 2002.
On January 1, 2002, First Banks adopted SFAS No. 142. At the date of
adoption, First Banks had unamortized goodwill of $115.9 million and core
deposit intangibles of $9.6 million, which were subject to the transition
provisions of SFAS No. 142. Under SFAS No. 142, First Banks will continue to
amortize, on a straight-line basis, its core deposit intangibles and goodwill
associated with purchases of branch offices. Goodwill associated with the
purchase of subsidiaries will no longer be amortized, but instead, will be
tested annually for impairment following First Banks' existing methods of
measuring and recording impairment losses.
First Banks completed the transitional goodwill impairment test
required under SFAS No. 142, to determine the potential impact, if any, on the
consolidated financial statements. The results of the transitional goodwill
impairment testing did not identify any goodwill impairment losses.
Intangible assets associated with the purchase of subsidiaries, net of
amortization, were comprised of the following at June 30, 2002 and December 31,
2001:
June 30, 2002 December 31, 2001
---------------------------- --------------------------
Gross Gross
Carrying Accumulated Carrying Accumulated
Amount Amortization Amount Amortization
------ ------------ ------ ------------
(dollars expressed in thousands)
Amortized intangible assets:
Core deposit intangibles........... $ 13,871 (893) 9,580 --
Goodwill associated with
purchases of branch offices...... 2,210 (648) 2,210 (576)
---------- ------- -------- -------
Total......................... $ 16,081 (1,541) 11,790 (576)
========== ======= ======== =======
Unamortized intangible assets:
Goodwill associated with the
purchase of subsidiaries......... $ 126,234 114,226
========== ========
Amortization of intangibles associated with the purchase of
subsidiaries and branch offices was $482,000 and $964,000 for the three and six
months ended June 30, 2002, respectively, and $1.9 million and $3.7 million for
the comparable periods in 2001. Amortization of intangibles associated with the
purchase of subsidiaries, including amortization of core deposit intangibles and
branch purchases, has been estimated through 2007 in the following table, and
does not take into consideration any potential future acquisitions or branch
purchases.
(dollars expressed
in thousands)
Year ending December 31:
2002................................... $ 2,026
2003................................... 2,124
2004................................... 2,124
2005................................... 2,124
2006................................... 2,124
2007................................... 2,124
---------
Total............................... $ 12,646
=========
Changes in the carrying amount of goodwill for the three and six months
ended June 30, 2002 were as follows:
Three Months Ended June 30, 2002 Six Months Ended June 30, 2002
-------------------------------- ----------------------------------
First Bank FB&T Total First Bank FB&T Total
---------- ---- ----- ---------- ---- -----
(dollars expressed in thousands)
Balance, beginning of period............ $ 31,912 96,758 128,670 19,165 96,695 115,860
Goodwill acquired during period......... -- -- -- 12,577 -- 12,577
Acquisition-related adjustments......... (739) (99) (838) (569) -- (569)
Amortization - purchases of
branch offices........................ -- (36) (36) -- (72) (72)
-------- ------- -------- ------- ------ -------
Balance, end of period................ $ 31,173 96,623 127,796 31,173 96,623 127,796
======== ======= ======= ======= ====== =======
The following is a reconciliation of reported net income to net income
adjusted to reflect the adoption of SFAS No. 142, as if it had been implemented
on January 1, 2001:
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2002 2001 2002 2001
---- ---- ---- ----
(dollars expressed in thousands)
Net income:
Reported net income........................... $ 9,368 7,899 17,368 20,251
Add back - goodwill amortization.............. -- 1,817 -- 3,623
------- ------- ------- ------
Adjusted net income......................... $ 9,368 9,716 17,368 23,874
======= ======= ======= ======
Basic earnings per share:
Reported net income........................... $390.35 328.27 720.18 842.05
Add back - goodwill amortization.............. -- 76.82 -- 153.11
------- ------- ------- ------
Adjusted net income......................... $390.35 405.09 720.18 995.16
======= ======= ======= ======
Diluted earnings per share:
Reported net income........................... $384.48 322.78 712.75 824.49
Add back - goodwill amortization.............. -- 74.31 -- 147.54
------- ------- ------- ------
Adjusted net income......................... $384.48 397.09 712.75 972.03
======= ======= ======= ======
In August 2001, the FASB issued SFAS No. 144 -- Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No. 144 supersedes SFAS No.
121 -- Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of. SFAS No. 144 addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and requires that
one accounting model be used for long-lived assets to be disposed of by sale,
whether previously held and used or newly acquired. SFAS No. 144 broadens the
presentation of discontinued operations to include more disposal transactions.
Therefore, the accounting for similar events and circumstances will be the same.
The provisions of SFAS No. 144 are effective for financial statements issued for
fiscal years beginning after December 15, 2001, and interim periods within those
fiscal years, with early application encouraged. The provisions of SFAS No. 144
generally are to be applied prospectively. On January 1, 2002, First Banks
implemented SFAS No. 144, which did not have a material effect on the
consolidated financial statements.
(4) MORTGAGE SERVICING RIGHTS
Mortgage servicing rights are amortized in proportion to the related
estimated net servicing income on a disaggregated, discounted basis over the
estimated lives of the related mortgages considering the level of current and
anticipated repayments, which range from five to 10 years. The weighted average
amortization period of the mortgage servicing rights is seven years.
Changes in mortgage servicing rights, net of amortization, for the
periods indicated were as follows:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2002 2001 2002 2001
---- ---- ---- ----
(dollars expressed in thousands)
Balance, beginning of period........................... $11,746 7,258 10,125 7,048
Originated mortgage servicing rights................... 1,522 2,257 3,960 3,291
Amortization........................................... (914) (886) (1,731) (1,710)
------- ----- ------ ------
Balance, end of period................................. $12,354 8,629 12,354 8,629
======= ===== ====== ======
Amortization of mortgage servicing rights, as it relates to the balance
at June 30, 2002 of $12.4 million, has been estimated through 2007 in the
following table:
(dollars expressed in thousands)
Year ending December 31:
2002 (1)........................................... $ 3,460
2003............................................... 3,341
2004............................................... 3,138
2005............................................... 3,051
2006............................................... 1,095
2007............................................... --
---------
Total........................................... $ 14,085
=========
- -----------------------
(1) Includes $1.7 million of amortization for the six months ended June 30,
2002.
(5) EARNINGS PER COMMON SHARE
The following is a reconciliation of the numerators and denominators of
the basic and diluted earnings per share (EPS) computations for the periods
indicated:
Income Shares Per Share
(numerator) (denominator) Amount
----------- ------------- ------
(dollars in thousands, except per share data)
Three months ended June 30, 2002:
Basic EPS - income before cumulative effect..................... $ 9,236 23,661 $ 390.35
Cumulative effect of change in accounting principle,
net of tax.................................................... -- -- --
--------- ------- ---------
Basic EPS - income available to common stockholders............. 9,236 23,661 390.35
Effect of dilutive securities:
Class A convertible preferred stock........................... 128 695 (5.87)
--------- ------- ---------
Diluted EPS - income available to common stockholders........... $ 9,364 24,356 $ 384.48
========= ======= =========
Three months ended June 30, 2001:
Basic EPS - income before cumulative effect..................... $ 7,767 23,661 $ 328.27
Cumulative effect of change in accounting principle,
net of tax.................................................... -- -- --
--------- ------- ---------
Basic EPS - income available to common stockholders............. 7,767 23,661 328.27
Effect of dilutive securities:
Class A convertible preferred stock........................... 128 800 (5.49)
--------- ------- ---------
Diluted EPS - income available to common stockholders........... $ 7,895 24,461 $ 322.78
========= ======= =========
Six months ended June 30, 2002:
Basic EPS - income before cumulative effect..................... $ 17,040 23,661 $ 720.18
Cumulative effect of change in accounting principle, net of tax. -- -- --
--------- ------- ---------
Basic EPS - income available to common stockholders............. 17,040 23,661 720.18
Effect of dilutive securities:
Class A convertible preferred stock........................... 321 696 (7.43)
--------- ------- ---------
Diluted EPS - income available to common stockholders........... $ 17,361 24,357 $ 712.75
========= ======= =========
Six months ended June 30, 2001:
Basic EPS - income before cumulative effect..................... $ 21,299 23,661 $ 900.21
Cumulative effect of change in accounting principle,
net of tax.................................................... (1,376) -- (58.16)
--------- ------- ---------
Basic EPS - income available to common stockholders............. 19,923 23,661 842.05
Effect of dilutive securities:
Class A convertible preferred stock........................... 321 893 (17.56)
--------- ------- ---------
Diluted EPS - income available to common stockholders........... $ 20,244 24,554 $ 824.49
========= ======= =========
(6) TRANSACTIONS WITH RELATED PARTIES
First Brokerage America, L.L.C., a limited liability corporation which
is indirectly owned by First Banks' Chairman and members of his immediate
family, received approximately $978,000 and $1.7 million for the three and six
months ended June 30, 2002, and $676,000 and $1.4 million for the comparable
periods in 2001, respectively, in commissions paid by unaffiliated third-party
companies. The commissions received were primarily in connection with the sales
of annuities, securities and other insurance products to customers of the
Subsidiary Banks.
First Services, L.P., a limited partnership indirectly owned by First
Banks' Chairman and his adult children, provides information technology and
various related services to First Banks, Inc. and its Subsidiary Banks. Fees
paid under agreements with First Services, L.P. were $7.0 million and $13.7
million for the three and six months ended June 30, 2002, and $5.6 million and
$10.9 million for the comparable periods in 2001, respectively. During the three
months ended June 30, 2002 and 2001, First Services, L.P. paid First Banks
$975,000 and $498,000, respectively, and during the six months ended June 30,
2002 and 2001, First Services, L.P. paid First Banks $1.9 million and $984,000,
respectively, in rental fees for the use of data processing and other equipment
owned by First Banks.
(7) REGULATORY CAPITAL
First Banks and the Subsidiary Banks are subject to various regulatory
capital requirements administered by the federal and state banking agencies.
Failure to meet minimum capital requirements can initiate certain mandatory and
possibly additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on First Banks' financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, First Banks and the Subsidiary Banks must meet specific capital
guidelines that involve quantitative measures of assets, liabilities and certain
off-balance-sheet items as calculated under regulatory accounting practices.
Capital amounts and classifications are also subject to qualitative judgments by
the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require First Banks and the Subsidiary Banks to maintain minimum
amounts and ratios of total and Tier I capital (as defined in the regulations)
to risk-weighted assets, and of Tier I capital to average assets. Management
believes, as of June 30, 2002, First Banks and the Subsidiary Banks were each
well capitalized under the applicable regulations.
As of June 30, 2002, the most recent notification from First Banks'
primary regulator categorized First Banks and the Subsidiary Banks as well
capitalized and FBA as adequately capitalized under the regulatory framework for
prompt corrective action. To be categorized as well capitalized, First Banks and
the Subsidiary Banks must maintain minimum total risk-based, Tier I risk-based
and Tier I leverage ratios as set forth in the table below.
At June 30, 2002 and December 31, 2001, First Banks' and the Subsidiary
Banks' required and actual capital ratios were as follows:
Actual To Be Well
------------------------ Capitalized Under
June 30, December 31, For Capital Prompt Corrective
2002 2001 Adequacy Purposes Action Provisions
---- ---- ----------------- -----------------
Total capital (to risk-weighted assets):
First Banks............................. 10.91% 10.53% 8.0% 10.0%
First Bank.............................. 10.59 10.14 8.0 10.0
FB&T.................................... 10.88 11.27 8.0 10.0
Tier 1 capital (to risk-weighted assets):
First Banks............................. 7.61 7.57 4.0 6.0
First Bank.............................. 9.33 8.89 4.0 6.0
FB&T.................................... 9.63 10.02 4.0 6.0
Tier 1 capital (to average assets):
First Banks............................. 6.78 7.24 3.0 5.0
First Bank.............................. 7.95 8.67 3.0 5.0
FB&T.................................... 9.17 9.47 3.0 5.0
(8) BUSINESS SEGMENT RESULTS
First Banks' business segments are its Subsidiary Banks. The reportable
business segments are consistent with the management structure of First Banks,
the Subsidiary Banks and the internal reporting system that monitors
performance.
Through the respective branch networks, the Subsidiary Banks provide
similar products and services in their defined geographic areas. The products
and services offered include a broad range of commercial and personal deposit
products, including demand, savings, money market and time deposit accounts. In
addition, the Subsidiary Banks market combined basic services for various
customer groups, including packaged accounts for more affluent customers, and
sweep accounts, lock-box deposits and cash management products for commercial
customers. The Subsidiary Banks also offer both consumer and commercial loans.
Consumer lending includes residential real estate, home equity and installment
lending. Commercial lending includes commercial, financial and agricultural
loans, real estate construction and development loans, commercial real estate
loans, asset-based loans, commercial leasing and trade financing.
Other financial services include mortgage banking, debit cards,
brokerage services, credit-related insurance, internet banking, automated teller
machines, telephone banking, safe deposit boxes, escrow and bankruptcy deposit
services, stock option services and trust, private banking and institutional
money management services. The revenues generated by each business segment
consist primarily of interest income, generated from the loan and investment
security portfolios, and service charges and fees, generated from the deposit
products and services. The geographic areas include eastern Missouri, Illinois,
southern and northern California and Houston, Dallas, Irving, McKinney and
Denton, Texas. The products and services are offered to customers primarily
within their respective geographic areas, with the exception of loan
participations executed between the Subsidiary Banks.
The business segment results are consistent with First Banks' internal
reporting system and, in all material respects, with accounting principles
generally accepted in the United States of America and practices predominant in
the banking industry.
The business segment results are summarized as follows:
First Bank FB&T
-------------------------- -------------------------
June 30, December 31, June 30, December 31,
2002 2001 2002 2001
---- ---- ---- ----
(dollars expressed in thousands)
Balance sheet information:
Investment securities........................................... $ 456,955 245,365 360,218 368,207
Loans, net of unearned discount................................. 3,084,650 3,086,023 2,278,398 2,323,263
Intangibles associated with the purchase
of subsidiaries, net of amortization......................... 36,788 22,287 103,986 103,153
Total assets.................................................... 3,927,412 3,707,081 3,058,123 3,057,920
Deposits........................................................ 3,400,478 3,142,676 2,527,248 2,555,396
Note payable.................................................... -- -- -- --
Stockholders' equity............................................ 362,293 321,336 394,158 398,713
========== ========= ========= =========
First Bank FB&T
Three Months Ended Three Months Ended
June 30, June 30,
-------------------------- ----------------------
2002 2001 2002 2001
---- ---- ---- ----
Income statement information:
Interest income................................................. $ 59,894 61,391 47,268 52,339
Interest expense................................................ 21,595 30,121 12,757 20,712
---------- --------- --------- ---------
Net interest income........................................ 38,299 31,270 34,511 31,627
Provision for loan losses....................................... 4,200 2,900 7,800 820
---------- --------- --------- ---------
Net interest income after provision for loan losses........ 34,099 28,370 26,711 30,807
---------- --------- --------- ---------
Noninterest income.............................................. 15,815 13,373 5,264 6,343
Noninterest expense............................................. 36,428 24,561 22,157 22,171
---------- --------- --------- ---------
Income before provision for income taxes
and minority interest in income of subsidiary............ 13,486 17,182 9,818 14,979
Provision for income taxes...................................... 4,367 6,000 3,720 5,772
---------- --------- --------- ---------
Income before minority interest in income of subsidiary.... 9,119 11,182 6,098 9,207
Minority interest in income of subsidiary....................... -- -- -- --
---------- --------- --------- ---------
Net income................................................. $ 9,119 11,182 6,098 9,207
========== ========= ========= =========
First Bank FB&T
Six Months Ended Six Months Ended
June 30, June 30,
-------------------------- ----------------------
2002 2001 2002 2001
---- ---- ---- ----
Income statement information:
Interest income................................................. $ 119,636 122,986 94,134 107,078
Interest expense................................................ 44,015 61,297 26,428 43,052
---------- --------- --------- ---------
Net interest income........................................ 75,621 61,689 67,706 64,026
Provision for loan losses....................................... 9,500 6,200 15,500 910
---------- --------- --------- ---------
Net interest income after provision for loan losses........ 66,121 55,489 52,206 63,116
---------- --------- --------- ---------
Noninterest income.............................................. 29,687 25,805 10,799 10,853
Noninterest expense............................................. 71,433 48,867 42,833 42,963
---------- --------- --------- ---------
Income before provision for income taxes,
minority interest in income of
subsidiary and cumulative effect of change
in accounting principle.................................. 24,375 32,427 20,172 31,006
Provision for income taxes...................................... 7,933 11,327 7,622 12,056
---------- --------- --------- ---------
Income before minority interest in income of
subsidiary and cumulative effect of change in
accounting principle..................................... 16,442 21,100 12,550 18,950
Minority interest in income of subsidiary....................... -- -- -- --
---------- --------- --------- ---------
Income before cumulative effect of change in
accounting principle..................................... 16,442 21,100 12,550 18,950
Cumulative effect of change in accounting principle,
net of tax............................................... -- (917) -- (459)
---------- --------- --------- ---------
Net income................................................. $ 16,422 20,183 12,550 18,491
========== ========= ========= =========
- ---------------------------
(1) Corporate and other includes $7.1 million and $4.5 million of guaranteed preferred debenture expense for the three months
ended June 30, 2002 and 2001, respectively. The applicable income tax benefit associated with the guaranteed preferred
debentures expense was $2.5 million and $1.6 million for the three months ended June 30, 2002 and 2001, respectively. For
the six months ended June 30, 2002 and 2001, respectively, corporate and other includes $13.3 million and $9.0 million of
guaranteed preferred debenture expense. The applicable income tax benefit associated with the guaranteed preferred
debentures expense was $4.7 million and $3.1 million for the six months ended June 30, 2002 and 2001, respectively. In
addition, corporate and other includes holding company expenses.
Corporate, Other and
Intercompany Reclassifications (1) Consolidated Totals
---------------------------------- ------------------------------------
June 30, December 31, June 30, December 31,
2002 2001 2002 2001
---- ---- ---- ----
(dollars expressed in thousands)
22,851 17,496 840,024 631,068
(416) (417) 5,362,632 5,408,869
-- -- 140,774 125,440
20,527 13,450 7,006,062 6,778,451
(19,331) (14,168) 5,908,395 5,683,904
10,000 27,500 10,000 27,500
(276,853) (271,392) 479,598 448,657
========= ======== ========= =========
Corporate, Other and
Intercompany Reclassifications (1) Consolidated Totals
---------------------------------- ------------------------------------
Three Months Ended Three Months Ended
June 30, June 30,
---------------------------------- ------------------------------------
2002 2001 2002 2001
---- ---- ---- ----
141 (374) 107,303 113,356
7,263 4,428 41,615 55,261
--------- -------- --------- ---------
(7,122) (4,802) 65,688 58,095
-- -- 12,000 3,720
--------- -------- --------- ---------
(7,122) (4,802) 53,688 54,375
--------- -------- --------- ---------
(550) (292) 20,529 19,424
635 13,177 59,220 59,909
--------- -------- --------- ---------
(8,307) (18,271) 14,997 13,890
(2,759) (6,315) 5,328 5,457
--------- -------- --------- ---------
(5,548) (11,956) 9,669 8,433
301 534 301 534
--------- -------- --------- ---------
(5,849) (12,490) 9,368 7,899
========= ======== ========= =========
Corporate, Other and
Intercompany Reclassifications (1) Consolidated Totals
---------------------------------- ------------------------------------
Six Months Ended Six Months Ended
June 30, June 30,
---------------------------------- ------------------------------------
2002 2001 2002 2001
---- ---- ---- ----
145 (671) 213,915 229,393
13,662 9,541 84,105 113,890
--------- -------- --------- ---------
(13,517) (10,212) 129,810 115,503
-- -- 25,000 7,110
--------- -------- --------- ---------
(13,517) (10,212) 104,810 108,393
--------- -------- --------- ---------
(1,122) (760) 39,364 35,898
1,812 15,208 116,078 107,038
--------- -------- --------- ---------
(16,451) (26,180) 28,096 37,253
(5,456) (8,802) 10,099 14,581
--------- -------- --------- ---------
(10,995) (17,378) 17,997 22,672
629 1,045 629 1,045
--------- -------- --------- ---------
(11,624) (18,423) 17,368 21,627
-- -- -- (1,376)
--------- -------- --------- ---------
(11,624) (18,423) 17,368 20,251
========= ======== ========= =========
(9) GUARANTEED PREFERRED BENEFICIAL INTERESTS IN SUBORDINATED DEBENTURES
On April 10, 2002, First Bank Capital Trust (FBCT), a newly-formed
Delaware business trust subsidiary of First Banks, issued 25,000 shares of
variable rate cumulative trust preferred securities at $1,000 per share in a
private placement offering, and issued 774 shares of common securities to First
Banks at $1,000 per share. First Banks owns all of the common securities of
FBCT. The gross proceeds of the offering were used by FBCT to purchase $25.8
million of variable rate junior subordinated debentures from First Banks,
maturing on April 22, 2032. The maturity date of the subordinated debentures may
be shortened to a date not earlier than April 22, 2007, if certain conditions
are met. The subordinated debentures are the sole asset of FBCT. In connection
with the issuance of the FBCT preferred securities, First Banks made certain
guarantees and commitments that, in the aggregate, constitute a full and
unconditional guarantee by First Banks of the obligations of FBCT under the FBCT
preferred securities. First Banks' proceeds from the issuance of the
subordinated debentures to FBCT, net of offering expenses, were $24.2 million,
and were used to reduce indebtedness currently outstanding under First Banks'
revolving credit line with a group of unaffiliated banks. The distribution rate
on the FBCT securities is equivalent to the six-month London Interbank Offering
Rate plus 387.5 basis points, and is payable semi-annually in arrears on April
22 and October 22, beginning on October 22, 2002. Distributions on FBCT's
preferred securities were $391,000 for the three and six months ended June 30,
2002.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The discussion set forth in Management's Discussion and Analysis of
Financial Condition and Results of Operations contains certain forward-looking
statements with respect to our financial condition, results of operations and
business. These forward-looking statements are subject to certain risks and
uncertainties, not all of which can be predicted or anticipated. Factors that
may cause actual results to differ materially from those contemplated by the
forward-looking statements herein include market conditions as well as
conditions affecting the banking industry generally and factors having a
specific impact on us, including but not limited to fluctuations in interest
rates and in the economy, including the negative impact on the economy resulting
from the events of September 11, 2001 in New York City and Washington D.C. and
the national response to those events; the impact of laws and regulations
applicable to us and changes therein; the impact of accounting pronouncements
applicable to us and changes therein; competitive conditions in the markets in
which we conduct our operations, including competition from banking and
non-banking companies with substantially greater resources than us, some of
which may offer and develop products and services not offered by us; our ability
to control the composition of our loan portfolio without adversely affecting
interest income; and our ability to respond to changes in technology. With
regard to our efforts to grow through acquisitions, factors that could affect
the accuracy or completeness of forward-looking statements contained herein
include the potential for higher than anticipated operating costs arising from
the geographic dispersion of our offices, as compared with competitors operating
solely in contiguous markets; the competition of larger acquirers with greater
resources than us, fluctuations in the prices at which acquisition targets may
be available for sale and in the market for our securities; and the potential
for difficulty or unanticipated costs in realizing the benefits of particular
acquisition transactions. Readers of our Form 10-Q should therefore not place
undue reliance on forward-looking statements.
General
We are a registered bank holding company incorporated in Missouri and
headquartered in St. Louis County, Missouri. Through the operation of our
subsidiaries, we offer a broad array of financial services to consumer and
commercial customers. We currently operate banking subsidiaries with 154 branch
offices throughout California, Illinois, Missouri and Texas. At June 30, 2002,
we had total assets of $7.01 billion, loans, net of unearned discount, of $5.36
billion, total deposits of $5.91 billion and total stockholders' equity of
$479.6 million.
Through our subsidiary banks, we offer a broad range of commercial and
personal deposit products, including demand, savings, money market and time
deposit accounts. In addition, we market combined basic services for various
customer groups, including packaged accounts for more affluent customers, and
sweep accounts, lock-box deposits and cash management products for commercial
customers. We also offer both consumer and commercial loans. Consumer lending
includes residential real estate, home equity and installment lending.
Commercial lending includes commercial, financial and agricultural loans, real
estate construction and development loans, commercial real estate loans,
asset-based loans, commercial leasing and trade financing. Other financial
services include mortgage banking, debit cards, brokerage services,
credit-related insurance, internet banking, automated teller machines, telephone
banking, safe deposit boxes, escrow and bankruptcy deposit services, stock
option services and trust, private banking and institutional money management
services.
We operate through two subsidiary banks and three subsidiary bank
holding companies as follows:
Union Financial Group, Ltd., or UFG, headquartered in Swansea,
Illinois, and its wholly owned subsidiary:
First Bank, headquartered in St. Louis County, Missouri;
First Banks America, Inc., or FBA, headquartered in San Francisco,
California and its wholly owned subsidiary:
The San Francisco Company, or SFC, headquartered in San Francisco,
California, and its wholly owned subsidiary:
First Bank & Trust, or FB&T, headquartered in San Francisco,
California.
Our subsidiary banks are wholly owned by their respective parent
companies. We owned 93.76% and 93.69% of FBA at June 30, 2002 and December 31,
2001, respectively.
Primary responsibility for managing our subsidiary banking units rests
with the officers and directors of each unit. However, in keeping with our
policy, we centralize overall corporate policies, procedures and administrative
functions and provide operational support functions for our subsidiaries. This
practice allows us to achieve various operating efficiencies while allowing our
subsidiary banking units to focus on customer service.
Financial Condition
Our total assets were $7.01 billion and $6.78 billion at June 30, 2002
and December 31, 2001, respectively. The increase in total assets is primarily
attributable to our acquisition of Plains Financial Corporation, or PFC, in
January 2002, which provided total assets of $256.3 million as well as our
acquisition of the Denton and Garland, Texas branch offices of Union Planters
Bank, National Association, or UPB, completed on June 22, 2002, which provided
assets of approximately $63.7 million. The increase in total assets was
partially offset by lower loan demand and an anticipated level of attrition
associated with our acquisitions of Charter Pacific Bank, BYL Bancorp and UFG,
completed during the fourth quarter of 2001, and of PFC. Federal funds sold
increased by $57.2 million due to the investment of excess funds resulting from
reduced loan demand primarily due to economic conditions. Investment securities
increased $208.9 million to $840.0 million at June 30, 2002 from $631.1 million
at December 31, 2001. We attribute the increase in investment securities
primarily to the purchase of available-for-sale investment securities of $517.0
million as well as the $81.0 million of investments acquired in conjunction with
our acquisition of PFC, offset by maturities of available-for-sale investment
securities of $398.6 million. Derivative instruments increased $15.2 million due
to the purchase of two interest rate swap agreements in June 2002 and
mark-to-market adjustments required under Statement of Financial Accounting
Standards, or SFAS, No. 133, Accounting for Derivative Instruments and Hedging
Activities, which was implemented in January 2001. See further discussion under
"--Interest Rate Risk Management." In addition, intangibles associated with the
purchase of subsidiaries increased $15.3 million, which reflects core deposit
intangibles and goodwill associated with our acquisition of PFC as well as core
deposit intangibles associated with our branch purchases of UPB as further
discussed in Note 2 to the consolidated financial statements. The overall
increase in assets was partially offset by a decrease in loans, net of unearned
discount, of $46.2 million, which is further discussed under "--Loans and
Allowance for Loan Losses." Total deposits increased by $224.5 million to $5.91
billion at June 30, 2002 from $5.68 billion at December 31, 2001. The increase
reflects deposits of $213.4 million acquired in our PFC acquisition and $64.9
million acquired in our branch purchases offset by an anticipated level of
attrition associated with our acquisitions and continued aggressive competition
within our market areas. In addition, certain large commercial accounts,
particularly related to real estate title and escrow business, sharply reduced
their deposit levels, reflecting reduced business activity as a result of
general economic conditions. Short-term borrowings decreased $44.2 million to
$198.9 million at June 30, 2002 from $243.1 million at December 31, 2001,
primarily due to a reduction in federal funds purchased. Our note payable
decreased by $17.5 million to $10.0 million at June 30, 2002 from $27.5 million
at December 31, 2001 due to $54.0 million in repayments offset by a $36.5
million advance utilized to fund our acquisition of PFC. Guaranteed preferred
beneficial interests in subordinated debentures increased $28.1 million due
primarily to the issuance of $25.0 million of additional trust preferred
securities as more fully described in Note 9 to the consolidated financial
statements. Furthermore, accrued expenses and other liabilities decreased $8.8
million to $52.7 million at June 30, 2002 from $61.5 million at December 31,
2001. We attribute this decrease primarily to the timing of certain payments.
Results of Operations
Net Income
Net income was $9.4 million and $17.4 million for the three and six
months ended June 30, 2002, respectively, compared to $7.9 million and $20.3
million for the comparable periods in 2001. Results for 2002 reflect increased
net interest income and noninterest income, offset by increased provisions for
loan losses, reflecting the effects of the current economic environment,
increased charge-off, delinquency and higher-than-normal nonperforming trends,
and higher operating expenses. The implementation of SFAS No. 142, Goodwill and
Other Intangible Assets, on January 1, 2002, resulted in the discontinuation of
the amortization of certain intangibles associated with the purchase of
subsidiaries. As more fully described in Note 3 to the consolidated financial
statements, if we had implemented SFAS No. 142 at the beginning of 2001, net
income for the three and six months ended June 30, 2001 would have increased
$1.8 million and $3.6 million, respectively. In addition, the implementation of
SFAS No. 133, on January 1, 2001, resulted in the recognition of a cumulative
effect of change in accounting principle of $1.4 million, net of tax, which
reduced net income in 2001. Excluding this item, net income would have been
$21.6 million for the six months ended June 30, 2001. The accounting for
derivatives under the requirements of SFAS No. 133 will continue to have an
impact on future financial results as further discussed above and under
"--Noninterest Income."
The decline in earnings primarily reflects higher operating expenses
and increased provisions for loan losses associated with the increased
charge-off, delinquency and nonperforming trends we are experiencing as a result
of current economic conditions. The overall increase in operating expenses for
2002, as further discussed under "--Noninterest Expense," was partially offset
by the discontinuation of the amortization of certain intangibles associated
with the purchase of subsidiaries in accordance with the implementation of SFAS
No. 142. Amortization of intangibles for the three and six months ended June 30,
2002 was $482,000 and $964,000, respectively, compared to $1.9 million and $3.7
million for the comparable periods in 2001. The higher operating expenses and
increased provisions for loan losses were partially offset by increased net
interest income and noninterest income as further discussed under "--Net
Interest Income" and "--Noninterest Income."
Net Interest Income
Net interest income (expressed on a tax equivalent basis) increased to
$66.1 million, or 4.24% of interest-earning assets, for the three months ended
June 30, 2002, from $58.3 million, or 4.37% of interest-earning assets, for the
comparable period in 2001. For the six months ended June 30, 2002 and 2001, net
interest income (expressed on a tax equivalent basis) was $130.5 million, or
4.22% of interest-earning assets, and $115.9 million, or 4.39% of
interest-earning assets, respectively. We credit the increased net interest
income primarily to the net interest-earning assets provided by our acquisitions
completed during the fourth quarter of 2001 and in January 2002, internal loan
growth and earnings on our interest rate swap agreements that we entered into in
conjunction with our interest rate risk management program. As further discussed
under "--Interest Rate Risk Management," for the three and six months ended June
30, 2002, these agreements provided net interest income of $12.6 million and
$23.8 million, respectively, in comparison to $4.7 million and $5.7 million for
the comparable periods in 2001. The increase in net interest income, however,
was partially offset by reductions in prevailing interest rates during 2001,
generally weaker loan demand and overall economic conditions, resulting in the
decline in our net interest margin. Guaranteed preferred debentures expense was
$7.1 million and $13.3 million for the three and six months ended June 30, 2002,
respectively, compared to $4.5 million and $9.0 million for the comparable
periods in 2001. The increase for 2002 is primarily attributable to the issuance
of trust preferred securities by our financing subsidiaries. In November 2001,
First Preferred Capital Trust III issued $55.2 million of trust preferred
securities and in April 2002, First Bank Capital Trust issued $25.8 million of
trust preferred securities. The increase also reflects a change in estimate
regarding the amortization period over which the deferred issuance costs are
being amortized.
Average loans, net of unearned discount, were $5.39 billion and $5.44
billion for the three and six months ended June 30, 2002, respectively, in
comparison to $4.88 billion and $4.84 billion for the comparable periods in
2001. The yield on our loan portfolio, however, decreased to 7.36% and 7.34% for
the three and six months ended June 30, 2002, respectively, in comparison to
8.70% and 8.88% for the comparable periods in 2001. This was a major contributor
to the decline in our net interest margin of 13 basis points and 17 basis points
for the three and six months ended June 30, 2002, respectively, from the
comparable periods in 2001. We attribute the decline in yields and our net
interest margin primarily to the decreases in prevailing interest rates
throughout 2001. During the period from January 1, 2001 through December 31,
2001, the Board of Governors of the Federal Reserve System decreased the
targeted Federal funds rate 11 times, resulting in 11 decreases in the prime
rate of interest from 9.50% to 4.75%. This is reflected not only in the rate of
interest earned on loans that are indexed to the prime rate, but also in other
assets and liabilities which either have variable or adjustable rates, or which
matured or repriced during this period. As discussed above, the reduced level of
interest income earned on our loan portfolio as a result of declining interest
rates and increased competition within our market areas was partially mitigated
by the earnings associated with our interest rate swap agreements.
For the three and six months ended June 30, 2002, the aggregate
weighted average rate paid on our deposit portfolio decreased to 2.71% and
2.80%, respectively, compared to 4.56% and 4.73% for the comparable periods in
2001. We attribute the decline primarily to rates paid on savings and time
deposits, which have continued to decline in conjunction with the interest rate
reductions previously discussed. The decrease in rates paid for the three and
six months ended June 30, 2002 is a result of generally decreasing interest
rates during 2001. However, the competitive pressures on deposits within our
market areas precluded us from fully reflecting the general interest rate
decreases in our deposit pricing and still providing an adequate funding source
for loans.
The aggregate weighted average rate paid on our note payable decreased
to 3.65% and 3.24% for the three and six months ended June 30, 2002,
respectively, compared to 5.93% and 6.78% for the comparable periods in 2001,
which is reflective of the current rate environment. Amounts outstanding under
our $120.0 million line of credit with a group of unaffiliated financial
institutions bear interest at the lead bank's corporate base rate or, at our
option, at the Eurodollar rate plus a margin determined by the outstanding
balance and our profitability. Thus, our revolving credit line represents a
relatively high-cost funding source as increased advances have the effect of
increasing the weighted average rate of non-deposit liabilities. The overall
cost of this funding source, however, has been significantly mitigated by the
reductions in the prime lending rate during 2001 and in the outstanding balance
of the note payable in 2002. During 2001, our note payable was fully repaid from
the proceeds of the trust preferred securities issued by First Preferred Capital
Trust III. However, on December 31, 2001, we obtained a $27.5 million advance to
fund our acquisition of UFG and in January 2002, we utilized the note payable to
fund our acquisition of PFC. The aggregate weighted average rate paid on our
short-term borrowings also declined for the three and six months ended June 30,
2002, as compared to the comparable periods in 2001, reflecting reductions in
the current interest rate environment.
The aggregate weighted average rate paid on our guaranteed preferred
debentures increased to 11.01% and 10.85% for the three and six months ended
June 30, 2002, respectively, from 9.85% and 9.90% for the comparable periods in
2001. The increase is due to the change in estimate regarding the amortization
period over which the deferred issuance costs associated with these obligations
are being amortized.
The following table sets forth, on a tax-equivalent basis, certain
information relating to our average balance sheets, and reflects the average
yield earned on interest-earning assets, the average cost of interest-bearing
liabilities and the resulting net interest income for the periods indicated.
Three Months Ended June 30, Six Months Ended June 30,
------------------------------------------------- ----------------------------------------------
2002 2001 2002 2001
------------------------- ---------------------- ---------------------- -----------------------
Interest Interest Interest Interest
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate Balance Expense Rate
------- ------- ---- ------- ------- ---- ------- ------- ---- ------- ------- ------
(dollars expressed in thousands)
Assets
------
Interest-earning assets:
<c> <c> <c> <c>
Loans (1)(2)(3)(4)......... $5,391,165 98,916 7.36% $4,883,268 105,923 8.70% $5,443,106 198,038 7.34% $4,840,188 213,061 8.88%
Investment securities (4).. 701,470 8,127 4.65 388,456 6,466 6.68 679,733 15,644 4.64 428,817 15,072 7.09
Federal funds sold
and other................ 156,675 653 1.67 82,631 1,160 5.63 115,364 942 1.65 57,511 1,655 5.80
---------- ------- ---------- ------- ---------- ------- ---------- -------
Total interest-
earning assets...... 6,249,310 107,696 6.91 5,354,355 113,549 8.51 6,238,203 214,624 6.94 5,326,516 229,788 8.70
------- ------- ------- -------
Nonearning assets............. 663,241 534,143 667,649 517,548
---------- ---------- ---------- ----------
Total assets.......... $6,912,551 $5,888,498 $6,905,852 $5,844,064
========== ========== ========== ==========
Liabilities and
Stockholders' Equity
--------------------
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand
deposits............... $ 731,513 2,281 1.25% $ 478,771 1,807 1.51% $ 695,901 3,953 1.15% $ 466,634 3,480 1.50%
Savings deposits......... 1,928,691 9,265 1.93 1,479,117 13,342 3.62 1,921,210 18,434 1.93 1,452,496 27,525 3.82
Time deposits of $100
or more (3)............ 497,267 4,889 3.94 534,970 7,453 5.59 501,252 10,179 4.10 527,164 15,329 5.86
Other time deposits (3).. 1,794,830 16,970 3.79 1,778,304 25,954 5.85 1,812,161 35,851 3.99 1,795,382 53,143 5.97
---------- ------- ---------- ------- ---------- ------- --------- -------
Total interest-
bearing deposits.... 4,952,301 33,405 2.71 4,271,162 48,556 4.56 4,930,524 68,417 2.80 4,241,676 99,477 4.73
Short-term borrowings...... 191,568 912 1.91 174,667 1,673 3.84 183,718 1,829 2.01 166,720 3,662 4.43
Notes payable.............. 19,911 181 3.65 36,700 543 5.93 32,987 530 3.24 52,753 1,773 6.78
Guaranteed preferred
debentures(3).......... 259,233 7,117 11.01 182,860 4,489 9.85 247,657 13,329 10.85 182,829 8,978 9.90
---------- ------- ---------- ------- ---------- ------- --------- -------
Total interest-
bearing
liabilities....... 5,423,013 41,615 3.08 4,665,389 55,261 4.75 5,394,886 84,105 3.14 4,643,978 113,890 4.95
------- ------- ------- -------
Noninterest-bearing
liabilities:
Demand deposits............ 898,862 718,259 918,829 714,891
Other liabilities.......... 130,394 107,660 136,610 106,335
---------- --------- --------- ---------
Total liabilities..... 6,452,269 5,491,308 6,450,325 5,465,204
Stockholders' equity.......... 460,282 397,190 455,527 378,860
----------- ---------- --------- ---------
Total liabilities
and stockholders'
equity............. $6,912,551 $5,888,498 $6,905,852 $5,844,064
========== ========== ========== ==========
Net interest income........... 66,081 58,288 130,519 115,898
======= ======= ======= =======
Interest rate spread.......... 3.83 3.76 3.80 3.75
Net interest margin (5)....... 4.24% 4.37% 4.22% 4.39%
===== ==== ===== ====
- --------------------
(1) For purposes of these computations, nonaccrual loans are included in the average loan amounts.
(2) Interest income on loans includes loan fees.
(3) Interest income and interest expense include the effects of interest rate swap agreements.
(4) Information is presented on a tax-equivalent basis assuming a tax rate of 35%. The tax-equivalent adjustments were
approximately $393,000 and $709,000 for the three and six months ended June 30, 2002, and $193,000 and $395,000 for
the comparable periods in 2001, respectively.
(5) Net interest margin is the ratio of net interest income (expressed on a tax-equivalent basis) to average interest-
earning assets.
Provision for Loan Losses
The provision for loan losses was $12.0 million and $25.0 for the three
and six months ended June 30, 2002, compared to $3.7 million and $7.1 million
for the comparable periods in 2001, respectively. The provision for loan losses
reflects the level of loan charge-offs and recoveries, the adequacy of the
allowance for loan losses and the effect of economic conditions within our
markets. We attribute the increase in the provision for loan losses primarily to
the overall growth in our loan portfolio, principally through acquisitions, a
general increase in risk associated with the continued changing composition of
our loan portfolio and a significant increase in net loan charge-offs and past
due loans, largely resulting from the slowdown in economic conditions prevalent
within our markets. Net loan charge-offs were $7.9 million and $19.7 million for
the three and six months ended June 30, 2002, respectively, in comparison to
$4.6 million and $11.6 million for the comparable periods in 2001. The increase
in net charge-offs reflects the general slowdown in economic conditions
prevalent within our markets as well as an aggregate of $12.9 million of loan
charge-offs on four large credit relationships during 2002. Loan recoveries were
$3.7 million and $8.3 for the three and six months ended June 30, 2002,
respectively, in comparison to $1.9 million and $3.8 million for the comparable
periods in 2001. Although nonperforming assets and past due loans have declined
to $85.2 million at June 30, 2002 from $86.8 million at December 31, 2001, our
overall nonperforming and past due trends remain at higher than historical
levels and are expected to remain at these levels in the near future. However,
we believe these trends represent normal cyclical trends experienced within the
banking industry during times of economic slowdown. Management considered these
trends in its overall assessment of the adequacy of the allowance for loan
losses.
Tables summarizing nonperforming assets, past due loans and charge-off
and recovery experience are presented under "--Loans and Allowance for Loan
Losses."
Noninterest Income
Noninterest income was $20.5 million and $39.4 million for the three
and six months ended June 30, 2002, respectively, in comparison to $19.4 million
and $35.9 million for the comparable periods in 2001. Noninterest income
consists primarily of service charges on deposit accounts and customer service
fees, mortgage-banking revenues, a gain on the sale of our credit card portfolio
in 2001, bank-owned life insurance investment income, net gains or losses on
derivative instruments and other income.
Service charges on deposit accounts and customer service fees were $7.0
million and $13.5 million for the three and six months ended June 30, 2002,
respectively, in comparison to $5.3 million and $10.5 million for the comparable
periods in 2001. We attribute the increase in service charges and customer
service fees to:
>> increased deposit balances provided by internal growth;
>> our acquisitions completed during 2001 and, to a lesser degree,
2002;
>> additional products and services available and utilized by our
expanding base of consumer and commercial customers;
>> increased fee income resulting from revisions of customer service
charge rates, effective July 1, 2001, and enhanced control
of fee waivers; and
>> increased income associated with automated teller machine
services and debit cards.
The gain on mortgage loans sold and held for sale was $7.3 million and
$12.5 million for the three and six months ended June 30, 2002, respectively, in
comparison to $3.9 million and $7.3 million for the comparable periods in 2001.
The overall increase is primarily attributable to a significant increase in the
volume of loans originated and sold commensurate with the reductions in mortgage
loan rates experienced in 2001 as well as the continued expansion of our
mortgage banking activities into new and existing markets.
During the six months ended June 30, 2001, we recorded a $2.3 million
pre-tax gain on the sale of our credit card portfolio. The sale of this
portfolio was consistent with our strategic decision to exit this product line
and enter into an agent relationship with a larger credit card service provider.
Bank-owned life insurance investment income was $1.5 million and $2.8
million for the three and six months ended June 30, 2002, respectively, in
comparison to $1.0 million and $2.1 million for the comparable periods in 2001.
The increase for 2002 reflects changes in the portfolio mix of the underlying
investments made by management to improve our return on this product as well as
the reinvestment of earnings.
The net gain on derivative instruments was $90,000 for the three months
ended June 30, 2002 and the net loss on derivative instruments was $249,000 for
the six months ended June 30, 2002, in comparison to net gains of $5.0 million
and $5.5 million for the comparable periods in 2001, respectively. The decrease
in income from derivative instruments reflects $3.8 million of gains resulting
from the termination of certain interest rate swap agreements during the second
quarter of 2001, the sale of the interest rate floor agreements in November 2001
and changes in the fair value of our interest rate cap agreements and fair value
hedges.
Other income was $4.6 million and $10.8 million for the three and six
months ended June 30, 2002, respectively, in comparison to $4.2 million and $8.3
million for the comparable periods in 2001. We attribute the primary components
of the increase to:
>> our acquisitions completed during 2001 and, to a lesser extent,
2002;
>> increased portfolio management fee income associated our
Institutional Money Management division;
>> increased rental income associated with our commercial leasing
activities; and
>> a gain of approximately $448,000 in March 2002 on the sale of
certain operating lease equipment associated with equipment
leasing activities that we acquired in conjunction with our
acquisition of Bank of San Francisco in December 2000; offset by
>> the write-down of approximately $943,000 on certain equipment
associated with our commercial leasing operation in June 2002.
Noninterest Expense
Noninterest expense was $59.2 million and $116.1 million for the three
and six months ended June 30, 2002, respectively, in comparison to $59.9 million
and $107.0 million for the comparable periods in 2001. The increase for the six
months ended June 30, 2002 reflects the noninterest expense of our acquisitions
completed during 2001 and, to a lesser extent, 2002, including certain
nonrecurring expenses associated with those acquisitions as well as increased
salaries and employee benefit expenses, furniture and equipment expenses and
information technology fees, offset by a decline in amortization of intangibles
associated with the purchase of subsidiaries and other expense.
Salaries and employee benefits were $28.9 million and $56.2 million for
the three and six months ended June 30, 2002, respectively, in comparison to
$23.3 million and $45.8 million for the comparable periods in 2001. We primarily
associate the increase with our 2001 and 2002 acquisitions and higher
commissions paid to mortgage loan originators due to increased volume. However,
the increase also reflects higher salary and employee benefit costs associated
with employing and retaining qualified personnel. In addition, the increase
includes various additions to staff throughout 2001 to enhance senior management
expertise and expand our product lines.
Occupancy, net of rental income, and furniture and equipment expense
totaled $9.4 million and $18.2 million for the three and six months ended June
30, 2002, respectively, in comparison to $6.5 million and $13.8 million for the
comparable periods in 2001. We primarily attribute the increase to our
aforementioned acquisitions, the relocation of certain branches and operational
areas, increased depreciation expense associated with numerous capital
expenditures and the continued expansion and renovation of various corporate and
branch offices, including our facility that houses our centralized operations
and certain corporate administrative functions.
Information technology fees were $8.5 million and $16.6 million for the
three and six months ended June 30, 2002, respectively, in comparison to $6.5
million and $13.0 million for the comparable periods in 2001. As more fully
described in Note 6 to our consolidated financial statements, First Services,
L.P. provides information technology and operational support services to our
subsidiaries and us. We attribute the increased fees to growth and technological
advancements consistent with our product and service offerings, continued
expansion and upgrades to technological equipment, networks and communication
channels and certain nonrecurring expenses associated with the data processing
conversions of UFG and PFC, completed in the first quarter of 2002.
Legal, examination and professional fees were $2.1 million and $3.6
million for the three and six months ended June 30, 2002, respectively, in
comparison to $1.7 million and $3.4 million for the comparable periods in 2001.
We primarily attribute the increase in these fees to the continued expansion of
overall corporate activities, the ongoing professional services utilized by
certain of our acquired entities and increased legal fees associated with
commercial loan documentation, collection efforts, expanded corporate activities
and certain defense litigation particularly related to acquisitions.
Amortization of intangibles associated with the purchase of
subsidiaries was $482,000 and $964,000 for the three and six months ended June
30, 2002, respectively, in comparison to $1.9 million and $3.7 million for the
comparable periods in 2001. As more fully discussed in Note 3 to our
consolidated financial statements, the significant decrease for 2002 is
attributable to the implementation of SFAS No. 142 in January 2002.
Other expense was $6.1 million and $13.1 million for the three and six
months ended June 30, 2002, respectively, in comparison to $16.6 million and
$20.4 million for the comparable periods in 2001. Other expense encompasses
numerous general and administrative expenses including travel, meals and
entertainment, insurance, freight and courier services, correspondent bank
charges, advertising and business development, miscellaneous losses and
recoveries, memberships and subscriptions, transfer agent fees and sales taxes.
We attribute the majority of the decrease in other expense to a $11.5 million
nonrecurring litigation settlement charge in June 2001 associated with a lawsuit
brought by an unaffiliated bank against one of our subsidiaries and certain
individuals related to allegations arising from the employment by our subsidiary
of individuals previously employed by the plaintiff bank, as well as the conduct
of those individuals while employed by the plaintiff bank. The decrease was
offset by expenses associated with our acquisitions completed during 2001 and,
to a lesser extent, 2002, and the overall continued growth and expansion of our
banking franchise.
Provision for Income Taxes
The provision for income taxes was $5.3 million and $10.1 million for
the three and six months ended June 30, 2002, representing an effective income
tax rate of 35.5% and 35.9%, respectively, in comparison to $5.5 million and
$14.6 million, representing an effective income tax rate of 39.3% and 39.1% for
the comparable periods in 2001, respectively. The decrease in the effective
income tax rate for 2002 reflects the significant decline in amortization of
intangibles associated with the purchase of subsidiaries, in accordance with the
requirements of SFAS No. 142, which is not deductible for tax purposes.
Interest Rate Risk Management
We utilize derivative financial instruments to assist in our management
of interest rate sensitivity by modifying the repricing, maturity and option
characteristics of certain assets and liabilities. The derivative instruments we
hold are summarized as follows:
June 30, 2002 December 31, 2001
----------------------- ----------------------
Notional Credit Notional Credit
Amount Exposure Amount Exposure
------ -------- ------ --------
(dollars expressed in thousands)
Cash flow hedges..................................... $1,050,000 1,942 900,000 1,764
Fair value hedges.................................... 387,450 8,751 200,000 6,962
Interest rate cap agreements......................... 450,000 559 450,000 2,063
Interest rate lock commitments....................... 38,000 -- 88,000 --
Forward commitments to sell
mortgage-backed securities......................... 109,000 -- 209,000 --
========== ===== ======= =====
The notional amounts of derivative financial instruments do not
represent amounts exchanged by the parties and, therefore, are not a measure of
our credit exposure through our use of these instruments. The credit exposure
represents the accounting loss we would incur in the event the counterparties
failed completely to perform according to the terms of the derivative financial
instruments and the collateral held to support the credit exposure was of no
value.
During the three and six months ended June 30, 2002, the net interest
income realized on our derivative financial instruments was $12.6 million and
$23.8 million, respectively, in comparison to $4.7 million and $5.7 million for
the comparable periods in 2001. In addition, we realized a net gain on
derivative instruments, which is included in noninterest income, of $90,000 and
$5.0 million for the three months ended June 30, 2002 and 2001, respectively, in
comparison to a net loss of $249,000 and a net gain of $5.5 million for the six
months ended June 30, 2002 and 2001, respectively. The net decrease in income
from 2001 reflects $3.8 million of gains resulting from the termination of
certain interest rate swap agreements during the second quarter of 2001, the
sale of the interest rate floor agreements in November 2001 and changes in the
fair value of our interest rate cap agreements and fair value hedges.
Cash Flow Hedges
During September 2000, March 2001, April 2001 and March 2002, we
entered into $600.0 million, $200.0 million, $175.0 million and $150.0 million
notional amount, respectively, of interest rate swap agreements to effectively
lengthen the repricing characteristics of certain interest-earning assets to
correspond more closely with their funding source with the objective of
stabilizing cash flow, and accordingly, net interest income over time. The swap
agreements, which have been designated as cash flow hedges, provide for us to
receive a fixed rate of interest and pay an adjustable rate of interest
equivalent to the weighted average prime lending rate minus 2.70%, 2.82%, 2.82%
and 2.80%, respectively. The terms of the swap agreements provide for us to pay
and receive interest on a quarterly basis. In November 2001, we terminated $75.0
million notional amount of the swap agreements originally entered into in April
2001, which would have expired in April 2006, in order to appropriately modify
our overall hedge position in accordance with our interest rate risk management
program. We recorded a pre-tax gain of $2.6 million in conjunction with the
termination of these swap agreements. The amount receivable by us under the swap
agreements was $3.0 million and $2.9 million at June 30, 2002 and December 31,
2001, respectively, and the amount payable by us was $1.1 million at June 30,
2002 and December 31, 2001.
The maturity dates, notional amounts, interest rates paid and received
and fair value of our interest rate swap agreements designated as cash flow
hedges as of June 30, 2002 and December 31, 2001 were as follows:
Notional Interest Rate Interest Rate Fair
Maturity Date Amount Paid Received Value
------------- ----- ---- -------- -----
(dollars expressed in thousands)
June 30, 2002:
March 14, 2004.................................. $ 150,000 1.95% 3.93% $ 2,410
September 20, 2004.............................. 600,000 2.05 6.78 43,500
March 21, 2005.................................. 200,000 1.93 5.24 8,085
April 2, 2006................................... 100,000 1.93 5.45 4,482
---------- ---------
$1,050,000 2.00 5.95 $ 58,477
========== ===== ===== =========
December 31, 2001:
September 20, 2004.............................. $ 600,000 2.05% 6.78% $ 40,980
March 21, 2005.................................. 200,000 1.93 5.24 4,951
April 2, 2006................................... 100,000 1.93 5.45 2,305
---------- ---------
$ 900,000 2.01 6.29 $ 48,236
========== ===== ===== =========
Fair Value Hedges
We entered into the following interest rate swap agreements, designated
as fair value hedges, to effectively shorten the repricing characteristics of
certain interest-bearing liabilities to correspond more closely with their
funding source with the objective of stabilizing net interest income over time:
>> During January 2001, we entered into $50.0 million notional
amount of three-year interest rate swap agreements and $150.0
million notional amount of five-year interest rate swap
agreements that provide for us to receive a fixed rate of
interest and pay an adjustable rate of interest equivalent to the
three-month London Interbank Offering Rate. The terms of the swap
agreements provide for us to pay interest on a quarterly basis
and receive interest on a semiannual basis. The amount receivable
by us under the swap agreements was $4.4 million and $5.2 million
at June 30, 2002 and December 31, 2001, respectively, and the
amount payable by us under the swap agreements was $927,000 and
$1.2 million at June 30, 2002 and December 31, 2001,
respectively.
>> During May 2002 and June 2002, we entered into $55.2 million and
$86.3 million notional amount, respectively, of interest rate
swap agreements that provide for us to receive a fixed rate of
interest and pay an adjustable rate of interest equivalent to the
three-month London Interbank Offering Rate plus 2.30% and 2.75%,
respectively. In addition, during June 2002, FBA entered into
$46.0 million notional amount of interest rate swap agreements
that provide for us to receive a fixed rate of interest and pay
an adjustable rate of interest equivalent to the three-month
London Interbank Offering Rate plus 1.97%. The underlying hedged
liabilities are our guaranteed preferred beneficial interests in
First Banks, Inc. subordinated debentures and First Banks
America, Inc. subordinated debentures. The terms of the swap
agreements provide for us to pay and receive interest on a
quarterly basis. The amount receivable and payable by us under
the swap agreements was $593,400 and $291,000, respectively, at
June 30, 2002.
The maturity dates, notional amounts, interest rates paid and received
and fair value of our interest rate swap agreements designated as fair value
hedges as of June 30, 2002 and December 31, 2001 were as follows:
Notional Interest Rate Interest Rate Fair
Maturity Date Amount Paid Received Value
------------- ------ ---- -------- -----
(dollars expressed in thousands)
June 30, 2002:
January 9, 2004................................. $ 50,000 2.01% 5.37% $ 1,939
January 9, 2006................................. 150,000 2.01 5.50 7,089
March 31, 2027.................................. 86,250 4.61 9.25 285
June 30, 2028................................... 46,000 3.83 8.50 239
December 31, 2031............................... 55,200 4.22 9.00 1,351
---------- --------
$ 387,450 3.12 7.17 $ 10,903
========== ===== ===== ========
December 31, 2001:
January 9, 2004................................. $ 50,000 2.48% 5.37% $ 1,761
January 9, 2006................................. 150,000 2.48 5.50 3,876
---------- --------
$ 200,000 2.48 5.47 $ 5,637
========== ===== ===== ========
Interest Rate Cap Agreements
In conjunction with the interest rate swap agreements that we entered
into in September 2000, we also entered into $450.0 million notional amount of
four-year interest rate cap agreements to limit the net interest expense
associated with our interest rate swap agreements in the event of a rising rate
scenario. The interest rate cap agreements provide for us to receive a quarterly
adjustable rate of interest equivalent to the differential between the
three-month London Interbank Offering Rate and the strike price of 7.50% should
the three-month London Interbank Offering Rate exceed the strike price. At June
30, 2002 and December 31, 2001, the carrying value of these interest rate cap
agreements, which is included in derivative instruments in the consolidated
balance sheets, was $559,000 and $2.1 million, respectively.
Pledged Collateral
At June 30, 2002 and December 31, 2001, we had pledged investment
securities available for sale with a carrying value of $6.0 million and $1.1
million, respectively, in connection with our interest rate swap agreements. In
addition, at June 30, 2002, and December 31, 2001, we had accepted, as
collateral in connection with our interest rate swap agreements, cash of $71.7
million and $4.9 million, respectively. At December 31, 2001, we had also
accepted investment securities with a fair value of $53.9 million as collateral
in connection with our interest rate swap agreements. We are permitted by
contract to sell or repledge the collateral accepted from our counterparties,
however, at June 30, 2002 and December 31, 2001, we had not done so.
Interest Rate Lock Commitments/Forward Commitments to Sell Mortgage-Backed
Securities
Derivative financial instruments issued by us consist of interest rate
lock commitments to originate fixed-rate loans. Commitments to originate
fixed-rate loans consist primarily of residential real estate loans. These net
loan commitments and loans held for sale are hedged with forward contracts to
sell mortgage-backed securities.
Loans and Allowance for Loan Losses
Interest earned on our loan portfolio represents the principal source
of income for our subsidiary banks. Interest and fees on loans were 92.1% and
92.5% of total interest income for the three and six months ended June 30, 2002,
respectively, in comparison to 93.4% and 92.8% for the comparable periods in
2001. Total loans, net of unearned discount, decreased $46.2 million to $5.36
billion, or 76.5% of total assets, at June 30, 2002, compared to $5.41 billion,
or 79.8% of total assets, at December 31, 2001. The decrease in loans, as
reflected on our consolidated balance sheets, exclusive of our acquisition of
PFC, which provided loans, net of unearned discount, of $150.4 million, is
primarily attributable to declines in our commercial, financial and agricultural
and loans held for sale portfolios due to an anticipated amount of attrition
associated with our acquisitions completed during the fourth quarter of 2001 and
the first quarter of 2002, as well as current economic conditions prevalent
within our markets, resulting in lower loan demand. In addition, our consumer
and installment portfolio, net of unearned discount, decreased to $106.3 million
at June 30, 2002 from $122.1 million at December 31, 2001. This decrease
reflects continued reductions in new loan volumes and the repayment of principal
on our existing portfolio, and is also consistent with our objectives of
de-emphasizing consumer lending and expanding commercial lending.
Nonperforming assets include nonaccrual loans, restructured loans and
other real estate. The following table presents the categories of nonperforming
assets and certain ratios as of the dates indicated:
June 30, December 31,
2002 2001
---- ----
(dollars expressed in thousands)
Commercial, financial and agricultural:
Nonaccrual..................................................... $ 22,828 19,326
Real estate construction and development:
Nonaccrual..................................................... 19,569 3,270
Real estate mortgage:
Nonaccrual..................................................... 27,906 41,898
Restructured terms............................................. 1,972 2,013
Consumer and installment:
Nonaccrual..................................................... 901 794
Restructured terms............................................. -- 7
----------- ----------
Total nonperforming loans.................................. 73,176 67,308
Other real estate................................................... 3,949 4,316
----------- ----------
Total nonperforming assets................................. $ 77,125 71,624
=========== ==========
Loans, net of unearned discount..................................... $ 5,362,632 5,408,869
=========== ==========
Loans past due 90 days or more and still accruing................... $ 8,061 15,156
=========== ==========
Ratio of:
Allowance for loan losses to loans............................. 1.94% 1.80%
Nonperforming loans to loans................................... 1.36 1.24
Allowance for loan losses to nonperforming loans............... 141.84 144.36
Nonperforming assets to loans and other real estate............ 1.44 1.32
=========== ==========
Nonperforming loans, consisting of loans on nonaccrual status and
certain restructured loans, were $73.2 million at June 30, 2002, in comparison
to $67.3 million at December 31, 2001. The increase in nonperforming loans is
primarily attributable to the addition of a $16.1 million borrowing relationship
to nonaccrual real estate construction and development loans during the second
quarter of 2002. The relationship relates to a residential and recreational
development project that had significant financial difficulties and experienced
inadequate project financing at inception, project delays and weak project
management. This relationship had previously been on nonaccrual status and was
removed from nonaccrual status during the third quarter of 2001 due to financing
being recast with a new borrower, who appeared able to meet ongoing
developmental expectations. Subsequent to that time, the new borrower has
encountered internal management problems, which have negatively impacted and
further delayed development of the project. Excluding this borrowing
relationship, nonperforming loans decreased $10.2 million from December 31,
2001, primarily as a result of increased loan charge-offs. Loan charge-offs
increased significantly to $11.6 million and $28.0 million for the three and six
months ended June 30, 2002, respectively, from $6.4 million and $15.3 million
for the comparable periods in 2001, primarily due to the general slowdown in
economic conditions as well as charge-offs aggregating $12.9 million on four
large credit relationships. We attribute the higher trends in nonperforming and
delinquent loans and charge-offs to cyclical trends experienced within the
banking industry, as a result of economic slowdown. Consistent with the general
economic slow down experienced within our primary markets, we anticipate this
trend will continue in the near future.
The following table is a summary of our loan loss experience for the
periods indicated:
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2002 2001 2002 2001
---- ---- ---- ----
(dollars expressed in thousands)
Allowance for loan losses, beginning of period.............. $ 99,683 77,996 97,164 81,592
Acquired allowances for loan losses......................... -- -- 1,366 --
--------- ------- ------- -------
99,683 77,996 98,530 81,592
--------- ------- ------- -------
Loans charged-off........................................... (11,625) (6,433) (28,033) (15,336)
Recoveries of loans previously charged-off.................. 3,736 1,858 8,297 3,775
--------- ------- ------- -------
Net loan charge-offs........................................ (7,889) (4,575) (19,736) (11,561)
--------- ------- ------- -------
Provision for loan losses................................... 12,000 3,720 25,000 7,110
--------- ------- ------- -------
Allowance for loan losses, end of period.................... $ 103,794 77,141 103,794 77,141
========= ======= ======= =======
The allowance for loan losses is monitored on a monthly basis. Each
month, the credit administration department provides management with detailed
lists of loans on the watch list and summaries of the entire loan portfolio of
each subsidiary bank by risk rating. These are coupled with analyses of changes
in the risk profiles of the portfolios, changes in past-due and nonperforming
loans and changes in watch list and classified loans over time. In this manner,
we continually monitor the overall increases or decreases in the levels of risk
in the portfolios. Factors are applied to the loan portfolios for each category
of loan risk to determine acceptable levels of allowance for loan losses. We
derive these factors from the actual loss experience of our subsidiary banks and
from published national surveys of norms in the industry. The calculated
allowances required for the portfolios are then compared to the actual allowance
balances to determine the provisions necessary to maintain the allowances at
appropriate levels. In addition, management exercises a certain degree of
judgment in its analysis of the overall adequacy of the allowance for loan
losses. In its analysis, management considers the change in the portfolio,
including growth, composition, the ratio of net loans to total assets, and the
economic conditions of the regions in which we operate. Based on this
quantitative and qualitative analysis, provisions are made to the allowance for
loan losses. Such provisions are reflected in our consolidated statements of
income.
Liquidity
Our liquidity and the liquidity of our subsidiary banks is the ability
to maintain a cash flow which is adequate to fund operations, service debt
obligations and meet other commitments on a timely basis. Our subsidiary banks
receive funds for liquidity from customer deposits, loan payments, maturities of
loans and investments, sales of investments and earnings. In addition, we may
avail ourselves of other sources of funds by issuing certificates of deposit in
denominations of $100,000 or more, borrowing federal funds, selling securities
under agreements to repurchase and utilizing borrowings from the Federal Home
Loan Banks and other borrowings, including our revolving credit line. The
aggregate funds acquired from these sources were $709.4 million and $754.8
million at June 30, 2002 and December 31, 2001, respectively.
The following table presents the maturity structure of these other
sources of funds, which consists of certificates of deposit of $100,000 or more,
short-term borrowings and our revolving note payable, at June 30, 2002:
(dollars expressed
in thousands)
Three months or less................................. $367,601
Over three months through six months................. 115,572
Over six months through twelve months................ 105,943
Over twelve months................................... 120,248
--------
Total......................................... $709,364
========
In addition to these sources of funds, our subsidiary banks have
established borrowing relationships with the Federal Reserve Banks in their
respective districts. These borrowing relationships, which are secured by
commercial loans, provide an additional liquidity facility that may be utilized
for contingency purposes. At June 30, 2002 and December 31, 2001, the borrowing
capacity of our subsidiary banks under these agreements was approximately $1.19
billion and $1.21 billion, respectively. In addition, our subsidiary banks'
borrowing capacity through their relationships with the Federal Home Loan Banks
was approximately $363.5 million and $234.6 million at June 30, 2002 and
December 31, 2001, respectively. At June 30, 2002 and December 31, 2001, there
were no amounts outstanding under either of these agreements.
Management believes the available liquidity and operating results of
our subsidiary banks will be sufficient to provide funds for growth and to
permit the distribution of dividends to us sufficient to meet our operating and
debt service requirements, both on a short-term and long-term basis, and to pay
the dividends on the trust preferred securities issued by our financing
subsidiaries, First Preferred Capital Trust I, First Preferred Capital Trust II,
First Preferred Capital Trust III and First Bank Capital Trust, and FBA's
financing subsidiary, First America Capital Trust.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At December 31, 2001, our risk management program's simulation model
indicated a loss of projected net interest income in the event of a decline in
interest rates. While a decline in interest rates of less than 100 basis points
was projected to have a relatively minimal impact on our net interest income, an
instantaneous, parallel decline in the interest yield curve of 100 basis points
indicated a pre-tax projected loss of approximately 6.1% of net interest income,
based on assets and liabilities at December 31, 2001. At June 30, 2002, we
remain in an "asset-sensitive" position and thus, remain subject to a higher
level of risk in a declining interest rate environment. Although we do not
anticipate that instantaneous shifts in the yield curve as projected in our
simulation model are likely, these are indications of the effects that changes
in interest rates would have over time. Our asset-sensitive position, coupled
with reductions in prevailing interest rates throughout 2001, is reflected in
our reduced net interest margin for the three and six months ended June 30, 2002
as compared to the comparable periods in 2001 and further discussed under
"--Results of Operations." During the three and six months ended June 30, 2002,
our asset-sensitive position and overall susceptibility to market risks have not
changed materially.
Part II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits are numbered in accordance with the Exhibit Table of Item 601
of Regulation S-K.
Exhibit Number Description
-------------- -----------
4.15 Indenture between First Banks, Inc., as
Issuer, and Wilmington Trust Company, as
Trustee, dated as of April 10, 2002.
4.16 Guarantee Agreement for First Bank Capital
Trust, dated as of April 10, 2002.
4.17 Amended and Restated Declaration of Trust
of First Bank Capital Trust, dated as of
April 10, 2002.
4.18 Floating Rate Junior Subordinated Debt
Security Certificate of First Banks, Inc.,
dated April 10, 2002.
4.19 Capital Security Certificate of First Bank
Capital Trust, dated as of April 10, 2002.
99.1 Certification of Periodic Report - Chief
Executive Officer.
99.2 Certification of Periodic Report - Chief
Financial Officer.
(b) We filed no reports on Form 8-K for the three months ended June 30, 2002.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
FIRST BANKS, INC.
August 12, 2002 By: /s/ James F. Dierberg
-------------------------------------------
James F. Dierberg
Chairman of the Board of Directors
and Chief Executive Officer
(Principal Executive Officer)
August 12, 2002 By: /s/ Allen H. Blake
-------------------------------------------
Allen H. Blake
President, and Chief Financial Officer
(Principal Financial and
Accounting Officer)
Exhibit 4.15
FIRST BANKS, INC.
as Issuer
INDENTURE
Dated as of April 10, 2002
WILMINGTON TRUST COMPANY
as Trustee
FLOATING RATE JUNIOR SUBORDINATED DEBT SECURITIES DUE 2032
TABLE OF CONTENTS
Page
----
Parties............................................................................................. 1
Recitals............................................................................................ 1
Authorization of Indenture.......................................................................... 1
Compliance with Legal Requirements.................................................................. 1
Purpose of and Consideration for Indenture.......................................................... 1
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions...................................................................... 1
Additional Interest................................................................................. 1
Additional Provisions............................................................................... 1
Authenticating Agent................................................................................ 1
Bankruptcy Law...................................................................................... 1
Board of Directors.................................................................................. 2
Board Resolution.................................................................................... 2
Business Day........................................................................................ 2
Calculation Agent................................................................................... 2
Capital Securities.................................................................................. 2
Capital Securities Guarantee........................................................................ 2
Capital Treatment Event............................................................................. 2
Certificate......................................................................................... 3
Common Securities................................................................................... 3
Company............................................................................................. 3
Comparable Treasury Issue........................................................................... 3
Comparable Treasury Price........................................................................... 3
Debt Security or Debt Securities.................................................................... 3
Debt Security Register.............................................................................. 3
Declaration......................................................................................... 3
Default............................................................................................. 3
Defaulted Interest.................................................................................. 3
Deferred Interest................................................................................... 4
Event of Default.................................................................................... 4
Extension Period.................................................................................... 4
Federal Reserve..................................................................................... 4
Indenture........................................................................................... 4
Institutional Trustee............................................................................... 4
Interest Payment Date............................................................................... 4
Interest Rate....................................................................................... 4
Investment Company Event............................................................................ 4
LIBOR............................................................................................... 4
LIBOR Banking Day................................................................................... 4
LIBOR Business Day.................................................................................. 4
LIBOR Determination Date............................................................................ 5
Liquidation Amount.................................................................................. 5
Maturity Date....................................................................................... 5
Officers' Certificate............................................................................... 5
Opinion of Counsel.................................................................................. 5
outstanding......................................................................................... 5
Person.............................................................................................. 5
Predecessor......................................................................................... 6
Primary Treasury Dealer............................................................................. 6
Principal Office of the Trustee..................................................................... 6
Quotation Agent..................................................................................... 6
Redemption Date..................................................................................... 6
Redemption Price.................................................................................... 6
Reference Treasury Dealer........................................................................... 6
Reference Treasury Dealer Quotations................................................................ 6
Remaining Life...................................................................................... 6
Responsible Officer................................................................................. 6
Securities Act...................................................................................... 7
Securityholder, holder of Debt Securities........................................................... 7
Senior.............................................................................................. 7
Special Event....................................................................................... 7
Special Redemption Date............................................................................. 7
Special Redemption Price............................................................................ 7
Subsidiary.......................................................................................... 8
Tax Event........................................................................................... 8
Treasury Rate....................................................................................... 8
Trust............................................................................................... 9
Trust Indenture Act................................................................................. 9
Trust Securities.................................................................................... 9
Trustee............................................................................................. 9
United States....................................................................................... 9
U.S. Person......................................................................................... 9
ARTICLE II
DEBT SECURITIES
SECTION 2.01. Authentication and Dating............................................................. 9
SECTION 2.02. Form of Trustee's Certificate of Authentication....................................... 10
SECTION 2.03. Form and Denomination of Debt Securities.............................................. 10
SECTION 2.04. Execution of Debt Securities.......................................................... 10
SECTION 2.05. Exchange and Registration of Transfer of Debt Securities.............................. 11
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Debt Securities.................................. 14
SECTION 2.07. Temporary Debt Securities............................................................. 14
SECTION 2.08. Payment of Interest................................................................... 15
SECTION 2.09. Cancellation of Debt Securities Paid, etc............................................. 16
SECTION 2.10. Computation of Interest............................................................... 16
SECTION 2.11. Extension of Interest Payment Period.................................................. 18
SECTION 2.12. CUSIP Numbers......................................................................... 19
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest; Agreed Treatment of the Debt
Securities......................................................................... 19
SECTION 3.02. Offices for Notices and Payments, etc................................................. 20
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office.................................... 20
SECTION 3.04. Provision as to Paying Agent.......................................................... 21
SECTION 3.05. Certificate to Trustee................................................................ 22
SECTION 3.06. Additional Interest................................................................... 22
SECTION 3.07. Compliance with Consolidation Provisions.............................................. 22
SECTION 3.08. Limitation on Dividends............................................................... 22
SECTION 3.09. Covenants as to the Trust............................................................. 23
ARTICLE IV
LISTS AND REPORTS BY THE COMPANY AND THE
TRUSTEE
SECTION 4.01. Securityholders' Lists................................................................ 24
SECTION 4.02. Preservation and Disclosure of Lists.................................................. 24
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
UPON AN EVENT OF DEFAULT
SECTION 5.01. Events of Default..................................................................... 25
SECTION 5.02. Payment of Debt Securities on Default; Suit Therefor.................................. 27
SECTION 5.03. Application of Moneys Collected by Trustee............................................ 29
SECTION 5.04. Proceedings by Securityholders........................................................ 29
SECTION 5.05. Proceedings by Trustee................................................................ 30
SECTION 5.06. Remedies Cumulative and Continuing.................................................... 30
SECTION 5.07. Direction of Proceedings and Waiver of Defaults by Majority of
Securityholders.................................................................... 30
SECTION 5.08. Notice of Defaults.................................................................... 31
SECTION 5.09. Undertaking to Pay Costs.............................................................. 31
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee................................................ 32
SECTION 6.02. Reliance on Documents, Opinions, etc.................................................. 33
SECTION 6.03. No Responsibility for Recitals, etc................................................... 34
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer Agents
or Registrar May Own Debt Securities............................................... 34
SECTION 6.05. Moneys to be Held in Trust............................................................ 34
SECTION 6.06. Compensation and Expenses of Trustee.................................................. 35
SECTION 6.07. Officers' Certificate as Evidence..................................................... 35
SECTION 6.08. Eligibility of Trustee................................................................ 36
SECTION 6.09. Resignation or Removal of Trustee..................................................... 36
SECTION 6.10. Acceptance by Successor Trustee....................................................... 37
SECTION 6.11. Succession by Merger, etc............................................................. 38
SECTION 6.12. Authenticating Agents................................................................. 39
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders............................................................. 40
SECTION 7.02. Proof of Execution by Securityholders................................................. 41
SECTION 7.03. Who Are Deemed Absolute Owners........................................................ 41
SECTION 7.04. Debt Securities Owned by Company Deemed Not Outstanding............................... 41
SECTION 7.05. Revocation of Consents; Future Holders Bound.......................................... 42
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.................................................................. 42
SECTION 8.02. Call of Meetings by Trustee........................................................... 43
SECTION 8.03. Call of Meetings by Company or Securityholders........................................ 43
SECTION 8.04. Qualifications for Voting............................................................. 43
SECTION 8.05. Regulations........................................................................... 43
SECTION 8.06. Voting................................................................................ 44
SECTION 8.07. Quorum; Actions....................................................................... 45
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures without Consent of Securityholders............................ 46
SECTION 9.02. Supplemental Indentures with Consent of Securityholders............................... 47
SECTION 9.03. Effect of Supplemental Indentures..................................................... 48
SECTION 9.04. Notation on Debt Securities........................................................... 48
SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be
Furnished to Trustee............................................................... 49
ARTICLE X
REDEMPTION OF SECURITIES
SECTION 10.01. Optional Redemption.................................................................. 49
SECTION 10.02. Special Event Redemption............................................................. 49
SECTION 10.03. Notice of Redemption; Selection of Debt Securities................................... 49
SECTION 10.04. Payment of Debt Securities Called for Redemption..................................... 50
ARTICLE XI
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 11.01. Company May Consolidate, etc., on Certain Terms...................................... 51
SECTION 11.02. Successor Entity to be Substituted................................................... 51
SECTION 11.03. Opinion of Counsel to be Given to Trustee............................................ 52
ARTICLE XII
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 12.01. Discharge of Indenture............................................................... 52
SECTION 12.02. Deposited Moneys to be Held in Trust by Trustee...................................... 53
SECTION 12.03. Paying Agent to Repay Moneys Held.................................................... 53
SECTION 12.04. Return of Unclaimed Moneys........................................................... 53
ARTICLE XIII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 13.01. Indenture and Debt Securities Solely Corporate Obligations........................... 53
ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 14.01. Successors........................................................................... 54
SECTION 14.02. Official Acts by Successor Entity.................................................... 54
SECTION 14.03. Surrender of Company Powers.......................................................... 54
SECTION 14.04. Addresses for Notices, etc........................................................... 54
SECTION 14.05. Governing Law........................................................................ 55
SECTION 14.06. Evidence of Compliance with Conditions Precedent..................................... 55
SECTION 14.07. Non-Business Days.................................................................... 55
SECTION 14.08. Table of Contents, Headings, etc..................................................... 56
SECTION 14.09. Execution in Counterparts............................................................ 56
SECTION 14.10. Separability......................................................................... 56
SECTION 14.11. Assignment........................................................................... 56
SECTION 14.12. Acknowledgment of Rights............................................................. 56
ARTICLE XV
SUBORDINATION OF DEBT SECURITIES
SECTION 15.01. Agreement to Subordinate............................................................. 57
SECTION 15.02. Default on Senior Indebtedness....................................................... 57
SECTION 15.03. Liquidation; Dissolution; Bankruptcy................................................. 58
SECTION 15.04. Subrogation.......................................................................... 59
SECTION 15.05. Trustee to Effectuate Subordination.................................................. 60
SECTION 15.06. Notice by the Company................................................................ 60
SECTION 15.07. Rights of the Trustee; Holders of Senior Indebtedness................................ 61
SECTION 15.08. Subordination May Not Be Impaired.................................................... 61
EXHIBITS
EXHIBIT A FORM OF DEBT SECURITY
THIS INDENTURE, dated as of April 10, 2002, between First Banks,
Inc., a bank holding company incorporated in Missouri (hereinafter sometimes
called the "Company"), and Wilmington Trust Company, a Delaware banking
corporation, as trustee (hereinafter sometimes called the "Trustee").
W I T N E S S E T H :
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issuance of its Floating Rate Junior Subordinated Debt Securities
due 2032 (the "Debt Securities") under this Indenture and to provide, among
other things, for the execution and authentication, delivery and administration
thereof, the Company has duly authorized the execution of this Indenture.
NOW, THEREFORE, in consideration of the premises, and the
purchase of the Debt Securities by the holders thereof, the Company covenants
and agrees with the Trustee for the equal and proportionate benefit of the
respective holders from time to time of the Debt Securities as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
-----------
The terms defined in this Section 1.01 (except as herein
otherwise expressly provided or unless the context otherwise requires) for all
purposes of this Indenture and of any indenture supplemental hereto shall have
the respective meanings specified in this Section 1.01. All accounting terms
used herein and not expressly defined shall have the meanings assigned to such
terms in accordance with generally accepted accounting principles and the term
"generally accepted accounting principles" means such accounting principles as
are generally accepted in the United States at the time of any computation. The
words "herein," "hereof" and "hereunder" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section or other
subdivision.
"Additional Interest" shall have the meaning set forth in Section
3.06.
"Additional Provisions" shall have the meaning set forth in
Section 15.01.
"Authenticating Agent" means any agent or agents of the Trustee
which at the time shall be appointed and acting pursuant to Section 6.12.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors.
"Board of Directors" means the board of directors or the
executive committee or any other duly authorized designated officers of the
Company.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee. "Business Day" means any day other
than a Saturday, Sunday or any other day on which banking institutions in
Wilmington, Delaware, New York City or St. Louis, Missouri are permitted or
required by any applicable law or executive order to close.
"Calculation Agent" means the Person identified as "Trustee" in
the first paragraph hereof with respect to the Debt Securities and the
Institutional Trustee with respect to the Trust Securities.
"Capital Securities" means undivided beneficial interests in the
assets of the Trust which are designated as "TRUPS(R)" and rank pari passu with
Common Securities issued by the Trust; provided, however, that if an Event of
-------- -------
Default (as defined in the Declaration) has occurred and is continuing, the
rights of holders of such Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of holders of such Capital Securities.
"Capital Securities Guarantee" means the guarantee agreement that
the Company will enter into with Wilmington Trust Company or other Persons that
operates directly or indirectly for the benefit of holders of Capital Securities
of the Trust.
"Capital Treatment Event " means the receipt by the Company and
the Trust of an opinion of counsel experienced in such matters to the effect
that, as a result of any amendment to, or change in, the laws, rules or
regulations of the United States or any political subdivision thereof or
therein, or as the result of any official or administrative pronouncement or
action or decision interpreting or applying such laws, rules or regulations,
which amendment or change is effective or which pronouncement, action or
decision is announced on or after the date of original issuance of the Debt
Securities, there is more than an insubstantial risk that the Company will not,
within 90 days of the date of such opinion, be entitled to treat an amount equal
to the aggregate Liquidation Amount of the Capital Securities as "Tier 1
Capital" (or the then equivalent thereof) for purposes of the capital adequacy
guidelines of the Federal Reserve (or any successor regulatory authority with
jurisdiction over bank holding companies), as then in effect and applicable to
the Company, provided, however, that the distribution of the Debt Securities in
-------- -------
connection with the liquidation of the Trust by the Company shall not in and of
itself constitute a Capital Treatment Event unless such liquidation shall have
occurred in connection with a Tax Event or an Investment Company Event.
"Certificate" means a certificate signed by any one of the
principal executive officer, the principal financial officer or the principal
accounting officer of the Company.
"Common Securities" means undivided beneficial interests in the
assets of the Trust which are designated as "Common Securities" and rank pari
passu with Capital Securities issued by the Trust; provided, however, that if an
-------- -------
Event of Default (as defined in the Declaration) has occurred and is continuing,
the rights of holders of such Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise are
subordinated to the rights of holders of such Capital Securities.
"Company" means First Banks, Inc., a bank holding company
incorporated in Missouri, and, subject to the provisions of Article XI, shall
include its successors and assigns.
"Comparable Treasury Issue " means with respect to any Special
Redemption Date, the United States Treasury security selected by the Quotation
Agent as having a maturity comparable to the Remaining Life that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the Remaining Life. If no United States Treasury security has a
maturity which is within a period from three months before to three months after
April 22, 2007, the two most closely corresponding United States Treasury
securities shall be used as the Comparable Treasury Issue, and the Treasury Rate
shall be interpolated or extrapolated on a straight-line basis, rounding to the
nearest month using such securities.
"Comparable Treasury Price" means (a) the average of five
Reference Treasury Dealer Quotations for such Special Redemption Date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(b) if the Quotation Agent receives fewer than five such Reference Treasury
Dealer Quotations, the average of all such Quotations.
"Debt Security" or "Debt Securities" has the meaning stated in
the first recital of this Indenture.
"Debt Security Register" has the meaning specified in Section
2.05.
"Declaration" means the Amended and Restated Declaration of Trust
of the Trust dated as of April 10, 2002, as amended or supplemented from time to
time.
"Default" means any event, act or condition that with notice or
lapse of time, or both, would constitute an Event of Default.
"Defaulted Interest" has the meaning set forth in Section 2.08.
"Deferred Interest" has the meaning set forth in Section 2.11.
"Event of Default" means any event specified in Section 5.01,
which has continued for the period of time, if any, and after the giving of the
notice, if any, therein designated.
"Extension Period" has the meaning set forth in Section 2.11.
"Federal Reserve " means the Board of Governors of the Federal
Reserve System.
"Indenture" means this instrument as originally executed or, if
amended or supplemented as herein provided, as so amended or supplemented, or
both.
"Institutional Trustee" has the meaning set forth in the
Declaration.
"Interest Payment Date" means April 22 and October 22 of each
year, commencing on October 22, 2002, during the term of this Indenture.
"Interest Rate" means a per annum rate of interest, reset
semi-annually, equal to LIBOR, as determined on the LIBOR Determination Date
immediately preceding each Interest Payment Date, plus 3.875%; provided, that
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the applicable Interest Rate may not exceed 11.00% through the Interest Payment
Date in April 2007.
"Investment Company Event" means the receipt by the Company and
the Trust of an opinion of counsel experienced in such matters to the effect
that, as a result of a change in law or regulation or written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or, within 90 days of the date of such
opinion will be, considered an "investment company" that is required to be
registered under the Investment Company Act of 1940, as amended, which change or
prospective change becomes effective or would become effective, as the case may
be, on or after the date of the original issuance of the Debt Securities.
"LIBOR" means the London Interbank Offered Rate for six-month
U.S. Dollar deposits in Europe as determined by the Calculation Agent according
to Section 2.10(b).
"LIBOR Banking Day" has the meaning set forth in Section
2.10(b)(1).
"LIBOR Business Day" has the meaning set forth in Section
2.10(b)(1).
"LIBOR Determination Date" has the meaning set forth in Section
2.10(b).
"Liquidation Amount " means the stated amount of $1,000 per Trust
Security.
"Maturity Date" means April 22, 2032.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, the Vice Chairman, the President or any Vice President,
and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the
Comptroller, an Assistant Comptroller, the Secretary or an Assistant Secretary
of the Company, and delivered to the Trustee. Each such certificate shall
include the statements provided for in Section 14.06 if and to the extent
required by the provisions of such Section.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company, or may be other
counsel reasonably satisfactory to the Trustee. Each such opinion shall include
the statements provided for in Section 14.06 if and to the extent required by
the provisions of such Section. The term "outstanding," when used with reference
to Debt Securities, subject to the provisions of Section 7.04, means, as of any
particular time, all Debt Securities authenticated and delivered by the Trustee
or the Authenticating Agent under this Indenture, except
(a) Debt Securities theretofore canceled by the Trustee or the
Authenticating Agent or delivered to the Trustee for cancellation;
(b) Debt Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount shall have been
deposited in trust with the Trustee or with any paying agent (other
than the Company) or shall have been set aside and segregated in trust
by the Company (if the Company shall act as its own paying agent);
provided, that, if such Debt Securities, or portions thereof, are to
be redeemed prior to maturity thereof, notice of such redemption shall
have been given as provided in Articles X and XIV or provision
satisfactory to the Trustee shall have been made for giving such
notice; and
(c) Debt Securities paid pursuant to Section 2.06 or in lieu of
or in substitution for which other Debt Securities shall have been
authenticated and delivered pursuant to the terms of Section 2.06
unless proof satisfactory to the Company and the Trustee is presented
that any such Debt Securities are held by bona fide holders in due
course.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Security" of any particular Debt Security means
every previous Debt Security evidencing all or a portion of the same debt as
that evidenced by such particular Debt Security; and, for the purposes of this
definition, any Debt Security authenticated and delivered under Section 2.06 in
lieu of a lost, destroyed or stolen Debt Security shall be deemed to evidence
the same debt as the lost, destroyed or stolen Debt Security.
"Primary Treasury Dealer" means a primary United States
Government securities dealer in New York City.
"Principal Office of the Trustee," or other similar term, means
the office of the Trustee, at which at any particular time its corporate trust
business shall be principally administered, which at all times shall be located
within the United States and at the time of the execution of this Indenture
shall be Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001.
"Quotation Agent " means Salomon Smith Barney Inc. and its
successors; provided, however, that if the foregoing shall cease to be a Primary
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Treasury Dealer, the Company shall substitute therefor another Primary Treasury
Dealer.
"Redemption Date" has the meaning set forth in Section 10.01.
"Redemption Price" means 100% of the principal amount of the Debt
Securities being redeemed plus accrued and unpaid interest on such Debt
Securities to the Redemption Date or, in the case of a redemption due to the
occurrence of a Special Event, to the Special Redemption Date if such Special
Redemption Date is on or after April 22, 2007.
"Reference Treasury Dealer" means (i) the Quotation Agent and
(ii) any other Primary Treasury Dealer selected by the Trustee after
consultation with the Company.
"Reference Treasury Dealer Quotations " means, with respect to
each Reference Treasury Dealer and any Special Redemption Date, the average, as
determined by the Quotation Agent, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m., New York City time, on the third Business Day preceding
such Special Redemption Date.
"Remaining Life" means, with respect to any Debt Security, the
period from the Special Redemption Date for such Debt Security to April 22,
2007.
"Responsible Officer" means, with respect to the Trustee, any
officer within the Principal Office of the Trustee with direct responsibility
for the administration of the Indenture, including any vice-president, any
assistant vice-president, any secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or other officer of the Principal
Trust Office of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Securities Act" means the Securities Act of 1933, as amended
from time-to time, or any successor legislation.
"Securityholder," "holder of Debt Securities" or other similar
terms, means any Person in whose name at the time a particular Debt Security is
registered on the Debt Security Register.
"Senior Indebtedness" means, with respect to the Company, (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of the
Company for money borrowed and (B) indebtedness evidenced by securities,
debentures, notes, bonds or other similar instruments issued by the Company;
(ii) all capital lease obligations of the Company; (iii) all obligations of the
Company issued or assumed as the deferred purchase price of property, all
conditional sale obligations of the Company and all obligations of the Company
under any title retention agreement (but excluding trade accounts payable
arising in the ordinary course of business); (iv) all obligations of the Company
for the reimbursement of any letter of credit, any banker's acceptance, any
security purchase facility, any repurchase agreement or similar arrangement, any
interest rate swap, any other hedging arrangement, any obligation under options
or any similar credit or other transaction; (v) all obligations of the type
referred to in clauses (i) through (iv) above of other Persons for the payment
of which the Company is responsible or liable as obligor, guarantor or
otherwise; (vi) all obligations of the type referred to in clauses (i) through
(v) above of other Persons secured by any lien on any property or asset of the
Company (whether or not such obligation is assumed by the Company), whether
incurred on or prior to the date of this Indenture or thereafter incurred,
unless, with the prior approval of the Federal Reserve if not otherwise
generally approved, in the instrument creating or evidencing the same or
pursuant to which the same is outstanding, it is provided that such obligations
are not superior or are pari passu in right of payment to (including without
limitation the Company's 9.25% Subordinated Debentures due 2027 issued to First
Preferred Capital Trust I and the Company's 10.24% Subordinated Debentures due
2030 issued to First Preferred Capital Trust II) the Debt Securities; and (vii)
all obligations of the Company in respect of the Company's 9.00% Subordinated
Debentures due 2031 issued to First Preferred Capital Trust III under that
certain Indenture by and between First Banks, Inc. and State Street Bank and
Trust Company of Connecticut, National Association, as Trustee dated as of
November 15, 2001.
"Special Event" means any of a Tax Event, an Investment Company
Event or a Capital Treatment Event.
"Special Redemption Date" has the meaning set forth in 10.02.
"Special Redemption Price" means (1) if the Special Redemption
Date is before April 22, 2007, the greater of (a) 100% of the principal amount
of the Debt Securities being redeemed pursuant to Section 10.02 or (b) as
determined by a Quotation Agent, the sum of the present values of the principal
amount payable as part of the Redemption Price with respect to a redemption as
of April 22, 2007, together with the present value of interest payments
calculated at a fixed per annum rate of interest equal to 9.95% over the
Remaining Life of such Debt Securities, discounted to the Special Redemption
Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 0.50%, plus, in the case of either (a) or (b),
accrued and unpaid interest on such Debt Securities to the Special Redemption
Date and (2) if the Special Redemption Date is on or after April 22, 2007, the
Redemption Price for such Special Redemption Date.
"Subsidiary" means, with respect to any Person, (i) any
corporation, at least a majority of the outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries, (ii) any
general partnership, joint venture or similar entity, at least a majority of the
outstanding partnership or similar interests of which shall at the time be owned
by such Person, or by one or more of its Subsidiaries, or by such Person and one
or more of its Subsidiaries, and (iii) any limited partnership of which such
Person or any of its Subsidiaries is a general partner. For the purposes of this
definition, "voting stock" means shares, interests, participations or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person, other than shares, interests, participations or
other equivalents having such power only by reason of the occurrence of a
contingency.
"Tax Event" means the receipt by the Company and the Trust of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to or change (including any announced prospective change) in
the laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement (including any private letter ruling,
technical advice memorandum, regulatory procedure, notice or announcement (an
"Administrative Action")) or judicial decision interpreting or applying such
laws or regulations, regardless of whether such Administrative Action or
judicial decision is issued to or in connection with a proceeding involving the
Company or the Trust and whether or not subject to review or appeal, which
amendment, clarification, change, Administrative Action or decision is enacted,
promulgated or announced, in each case on or after the date of original issuance
of the Debt Securities, there is more than an insubstantial risk that: (i) the
Trust is, or will be within 90 days of the date of such opinion, subject to
United States federal income tax with respect to income received or accrued on
the Debt Securities; (ii) interest payable by the Company on the Debt Securities
is not, or within 90 days of the date of such opinion, will not be, deductible
by the Company, in whole or in part, for United States federal income tax
purposes; or (iii) the Trust is, or will be within 90 days of the date of such
opinion, subject to more than a de minimis amount of other taxes (including
withholding taxes), duties, assessments or other governmental charges.
"Treasury Rate" means (i) the yield, under the heading which
represents the average for the week immediately prior to the date of
calculation, appearing in the most recently published statistical release
designated H.15 (519) or any successor publication which is published weekly by
the Federal Reserve and which establishes yields on actively traded United
States Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities," for the maturity corresponding to the Remaining
Life (if no maturity is within three months before or after the Remaining Life,
yields for the two published maturities most closely corresponding to the
Remaining Life shall be determined and the Treasury Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding to the
nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such Special Redemption Date. The
Treasury Rate shall be calculated on the third Business Day preceding the
Special Redemption Date.
"Trust" means First Bank Capital Trust, the Delaware business
trust, or any other similar trust created for the purpose of issuing Capital
Securities in connection with the issuance of Debt Securities under this
Indenture, of which the Company is the sponsor.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time-to-time, or any successor legislation.
"Trust Securities" means Common Securities and Capital Securities
of First Bank Capital Trust.
"Trustee" means the Person identified as "Trustee" in the first
paragraph hereof, and, subject to the provisions of Article VI hereof, shall
also include its successors and assigns as Trustee hereunder. "United States"
means the United States of America and the District of Columbia.
"U.S. Person" has the meaning given to United States Person as
set forth in Section 7701(a)(30) of the Internal Revenue Code of 1986, as
amended.
ARTICLE II
DEBT SECURITIES
SECTION 2.01. Authentication and Dating.
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Upon the execution and delivery of this Indenture, or from time
to time thereafter, Debt Securities in an aggregate principal amount not in
excess of $25,774,000 may be executed and delivered by the Company to the
Trustee for authentication, and the Trustee shall thereupon authenticate and
make available for delivery said Debt Securities to or upon the written order of
the Company, signed by its Chairman of the Board of Directors, Vice Chairman,
President or Chief Financial Officer or one of its Vice Presidents, without any
further action by the Company hereunder. In authenticating such Debt Securities,
and accepting the additional responsibilities under this Indenture in relation
to such Debt Securities, the Trustee shall be entitled to receive, and (subject
to Section 6.01) shall be fully protected in relying upon a copy of any Board
Resolution or Board Resolutions relating thereto and, if applicable, an
appropriate record of any action taken pursuant to such resolution, in each case
certified by the Secretary or an Assistant Secretary of the Company as the case
may be.
The Trustee shall have the right to decline to authenticate and
deliver any Debt Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken or if a
Responsible Officer of the Trustee in good faith shall determine that such
action would expose the Trustee to personal liability to existing holders.
The definitive Debt Securities shall be typed, printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers executing such Debt Securities,
as evidenced by their execution of such Debt Securities.
SECTION 2.02. Form of Trustee's Certificate of Authentication.
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The Trustee's certificate of authentication on all Debt
Securities shall be in substantially the following form:
This is one of the Debt Securities referred to in the
within-mentioned Indenture.
WILMINGTON TRUST COMPANY, not in its individual capacity but
solely as trustee
By_________________________
Authorized Officer
SECTION 2.03. Form and Denomination of Debt Securities.
----------------------------------------
The Debt Securities shall be substantially in the form of Exhibit
A hereto. The Debt Securities shall be in registered, certificated form without
coupons and in minimum denominations of $100,000 and any multiple of $1,000 in
excess thereof. The Debt Securities shall be numbered, lettered, or otherwise
distinguished in such manner or in accordance with such plans as the officers
executing the same may determine with the approval of the Trustee as evidenced
by the execution and authentication thereof.
SECTION 2.04. Execution of Debt Securities.
----------------------------
The Debt Securities shall be signed in the name and on behalf of
the Company by the manual or facsimile signature of its Chairman of the Board of
Directors, Vice Chairman, President or Chief Financial Officer or one of its
Executive Vice Presidents, Senior Vice Presidents or Vice Presidents, under its
corporate seal which may be affixed thereto or printed, engraved or otherwise
reproduced thereon, by facsimile or otherwise, and which need not be attested.
Only such Debt Securities as shall bear thereon a certificate of authentication
substantially in the form herein before recited, executed by the Trustee or the
Authenticating Agent by the manual signature of an authorized officer, shall be
entitled to the benefits of this Indenture or be valid or obligatory for any
purpose. Such certificate by the Trustee or the Authenticating Agent upon any
Debt Security executed by the Company shall be conclusive evidence that the Debt
Security so authenticated has been duly authenticated and delivered hereunder
and that the holder is entitled to the benefits of this Indenture.
In case any officer of the Company who shall have signed any of
the Debt Securities shall cease to be such officer before the Debt Securities so
signed shall have been authenticated and delivered by the Trustee or the
Authenticating Agent, or disposed of by the Company, such Debt Securities
nevertheless may be authenticated and delivered or disposed of as though the
Person who signed such Debt Securities had not ceased to be such officer of the
Company; and any Debt Security may be signed on behalf of the Company by such
Persons as, at the actual date of the execution of such Debt Security, shall be
the proper officers of the Company, although at the date of the execution of
this Indenture any such person was not such an officer.
Every Debt Security shall be dated the date of its
authentication.
SECTION 2.05. Exchange and Registration of Transfer of Debt Securities.
--------------------------------------------------------
The Company shall cause to be kept, at the office or agency
maintained for the purpose of registration of transfer and for exchange as
provided in Section 3.02, a register (the "Debt Security Register") for the Debt
Securities issued hereunder in which, subject to such reasonable regulations as
it may prescribe, the Company shall provide for the registration and transfer of
all Debt Securities as provided in this Article II. Such register shall be in
written form or in any other form capable of being converted into written form
within a reasonable time.
Debt Securities to be exchanged may be surrendered at the
Principal Office of the Trustee or at any office or agency to be maintained by
the Company for such purpose as provided in Section 3.02, and the Company shall
execute, the Company or the Trustee shall register and the Trustee or the
Authenticating Agent shall authenticate and make available for delivery in
exchange therefor the Debt Security or Debt Securities which the Securityholder
making the exchange shall be entitled to receive. Upon due presentment for
registration of transfer of any Debt Security at the Principal Office of the
Trustee or at any office or agency of the Company maintained for such purpose as
provided in Section 3.02, the Company shall execute, the Company or the Trustee
shall register and the Trustee or the Authenticating Agent shall authenticate
and make available for delivery in the name of the transferee or transferees a
new Debt Security for a like aggregate principal amount. Registration or
registration of transfer of any Debt Security by the Trustee or by any agent of
the Company appointed pursuant to Section 3.02, and delivery of such Debt
Security, shall be deemed to complete the registration or registration of
transfer of such Debt Security.
All Debt Securities presented for registration of transfer or for
exchange or payment shall (if so required by the Company or the Trustee or the
Authenticating Agent) be duly endorsed by, or be accompanied by, a written
instrument or instruments of transfer in form satisfactory to the Company and
either the Trustee or the Authenticating Agent duly executed by, the holder or
such holder's attorney duly authorized in writing.
No service charge shall be made for any exchange or registration
of transfer of Debt Securities, but the Company or the Trustee may require
payment of a sum sufficient to cover any tax, fee or other governmental charge
that may be imposed in connection therewith.
The Company or the Trustee shall not be required to exchange or
register a transfer of any Debt Security for a period of 15 days immediately
preceding the date of selection of Debt Securities for redemption.
Notwithstanding the foregoing, Debt Securities may not be
transferred except in compliance with the restricted securities legend set forth
below, unless otherwise determined by the Company in accordance with applicable
law, which legend shall be placed on each Debt Security:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY
(A) TO THE COMPANY, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO AN EXEMPTION
FROM REGISTRATION TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (D)
12 PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSES (C) OR (D) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN
ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY
WITH THE FOREGOING RESTRICTIONS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES,
REPRESENTS AND WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS
INVOLVING THIS SECURITY UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE
SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
(EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY
REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,
95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR
HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO
WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING
ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY
USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE,
OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE
STATUTORY OR ADMINISTRATIVE EXEMPTION.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE
REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING A PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF
$1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK
HAVING A PRINCIPAL AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND
OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT
TO BE THE HOLDER OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED
TO, THE RECEIPT OF DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE
SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Debt Securities.
----------------------------------------------------
In case any Debt Security shall become mutilated or be destroyed,
lost or stolen, the Company shall execute, and upon its written request the
Trustee shall authenticate and deliver, a new Debt Security bearing a number not
contemporaneously outstanding, in exchange and substitution for the mutilated
Debt Security, or in lieu of and in substitution for the Debt Security so
destroyed, lost or stolen. In every case the applicant for a substituted Debt
Security shall furnish to the Company and the Trustee such security or indemnity
as may be required by them to save each of them harmless, and, in every case of
destruction, loss or theft, the applicant shall also furnish to the Company and
the Trustee evidence to their satisfaction of the destruction, loss or theft of
such Debt Security and of the ownership thereof.
The Trustee may authenticate any such substituted Debt Security
and deliver the same upon the written request or authorization of any officer of
the Company. Upon the issuance of any substituted Debt Security, 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 connected
therewith. In case any Debt Security which has matured or is about to mature or
has been called for redemption in full shall become mutilated or be destroyed,
lost or stolen, the Company may, instead of issuing a substitute Debt Security,
pay or authorize the payment of the same (without surrender thereof except in
the case of a mutilated Debt Security) if the applicant for such payment shall
furnish to the Company and the Trustee such security or indemnity as may be
required by them to save each of them harmless and, in case of destruction, loss
or theft, evidence satisfactory to the Company and to the Trustee of the
destruction, loss or theft of such Security and of the ownership thereof.
Every substituted Debt Security issued pursuant to the provisions
of this Section 2.06 by virtue of the fact that any such Debt Security is
destroyed, lost or stolen shall constitute an additional contractual obligation
of the Company, whether or not the destroyed, lost or stolen Debt Security shall
be found at any time, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Debt Securities
duly issued hereunder. All Debt Securities shall be held and owned upon the
express condition that, to the extent permitted by applicable law, the foregoing
provisions are exclusive with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Debt Securities and shall preclude any and
all other rights or remedies notwithstanding any law or statute existing or
hereafter enacted to the contrary with respect to the replacement or payment of
negotiable instruments or other securities without their surrender.
SECTION 2.07. Temporary Debt Securities.
-------------------------
Pending the preparation of definitive Debt Securities, the
Company may execute and the Trustee shall authenticate and make available for
delivery temporary Debt Securities that are typed, printed or lithographed.
Temporary Debt Securities shall be issuable in any authorized denomination, and
substantially in the form of the definitive Debt Securities but with such
omissions, insertions and variations as may be appropriate for temporary Debt
Securities, all as may be determined by the Company. Every such temporary Debt
Security shall be executed by the Company and be authenticated by the Trustee
upon the same conditions and in substantially the same manner, and with the same
effect, as the definitive Debt Securities. Without unreasonable delay, the
Company will execute and deliver to the Trustee or the Authenticating Agent
definitive Debt Securities and thereupon any or all temporary Debt Securities
may be surrendered in exchange therefor, at the Principal Office of the Trustee
or at any office or agency maintained by the Company for such purpose as
provided in Section 3.02, and the Trustee or the Authenticating Agent shall
authenticate and make available for delivery in exchange for such temporary Debt
Securities a like aggregate principal amount of such definitive Debt Securities.
Such exchange shall be made by the Company at its own expense and without any
charge therefor except that in case of any such exchange involving a
registration of transfer the Company may require payment of a sum sufficient to
cover any tax, fee or other governmental charge that may be imposed in relation
thereto. Until so exchanged, the temporary Debt Securities shall in all respects
be entitled to the same benefits under this Indenture as definitive Debt
Securities authenticated and delivered hereunder.
SECTION 2.08. Payment of Interest.
-------------------
Each Debt Security will bear interest at the then applicable
Interest Rate from and including each Interest Payment Date or, in the case of
the first interest period, the original date of issuance of such Debt Security
to, but excluding, the next succeeding Interest Payment Date or, in the case of
the last interest period, the Redemption Date, Special Redemption Date or
Maturity Date, as applicable, on the principal thereof, on any overdue principal
and (to the extent that payment of such interest is enforceable under applicable
law) on Deferred Interest and on any overdue installment of interest (including
Defaulted Interest), payable (subject to the provisions of Article XII) on each
Interest Payment Date commencing on October 22, 2002. Interest and any Deferred
Interest on any Debt Security that is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name said Debt Security (or one or more Predecessor Securities) is registered at
the close of business on the regular record date for such interest installment,
except that interest and any Deferred Interest payable on the Maturity Date
shall be paid to the Person to whom principal is paid. In the event that any
Debt Security or portion thereof is called for redemption and the redemption
date is subsequent to a regular record date with respect to any Interest Payment
Date and prior to such Interest Payment Date, interest on such Debt Security
will be paid upon presentation and surrender of such Debt Security.
Any interest on any Debt Security, other than Deferred Interest,
that is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease
to be payable to the registered holder on the relevant regular record date by
virtue of having been such holder, and such Defaulted Interest shall be paid by
the Company to the Persons in whose names such Debt Securities (or their
respective Predecessor Securities) are registered at the close of business on a
special record date for the payment of such Defaulted Interest, which shall be
fixed in the following manner: the Company shall notify the Trustee in writing
of the amount of Defaulted Interest proposed to be paid on each such Debt
Security and the date of the proposed payment, and at the same time the Company
shall deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to the date of
the proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a special record date for the payment
of such Defaulted Interest which shall not be more than fifteen nor less than
ten days prior to the date of the proposed payment and not less than ten days
after the receipt by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such special record date and, in
the name and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the special record date therefor to be
mailed, first class postage prepaid, to each Securityholder at his or her
address as it appears in the Debt Security Register, not less than ten days
prior to such special record date. Notice of the proposed payment of such
Defaulted Interest and the special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in whose names
such Debt Securities (or their respective Predecessor Securities) are registered
on such special record date and thereafter the Company shall have no further
payment obligation in respect of the Defaulted Interest.
Any interest scheduled to become payable on an Interest Payment
Date occurring during an Extension Period shall not be Defaulted Interest and
shall be payable on such other date as may be specified in the terms of such
Debt Securities.
The term "regular record date" as used in this Section shall
mean the fifteenth day prior to an Interest Payment Date whether or not such
date is a Business Day.
Subject to the foregoing provisions of this Section, each Debt
Security delivered under this Indenture upon registration of transfer of or in
exchange for or in lieu of any other Debt Security shall carry the rights to
interest accrued and unpaid, and to accrue, that were carried by such other Debt
Security.
SECTION 2.09. Cancellation of Debt Securities Paid, etc.
-----------------------------------------
All Debt Securities surrendered for the purpose of payment,
redemption, exchange or registration of transfer, shall, if surrendered to the
Company or any paying agent, be surrendered to the Trustee and promptly canceled
by it, or, if surrendered to the Trustee or any Authenticating Agent, shall be
promptly canceled by it, and no Debt Securities shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Indenture. All
Debt Securities canceled by any Authenticating Agent shall be delivered to the
Trustee. The Trustee shall destroy all canceled Debt Securities unless the
Company otherwise directs the Trustee in writing. If the Company shall acquire
any of the Debt Securities, however, such acquisition shall not operate as a
redemption or satisfaction of the indebtedness represented by such Debt
Securities unless and until the same are surrendered to the Trustee for
cancellation.
SECTION 2.10. Computation of Interest.
-----------------------
(a) The amount of interest payable for any interest period will
be computed on the basis of a 360-day year and the actual number of days elapsed
in the relevant interest period; provided, however, that upon the occurrence of
-------- -------
a Special Event Redemption pursuant to Section 10.02 the amounts payable
pursuant to this Indenture shall be calculated as set forth in the definition of
Special Redemption Price.
(b) LIBOR shall be determined by the Calculation Agent in
accordance with the following provisions:
(1) On the second LIBOR Business Day (provided, that on such
--------
day commercial banks are open for business (including dealings in
foreign currency deposits) in London (a "LIBOR Banking Day"), and
otherwise the next preceding LIBOR Business Day that is also a
LIBOR Banking Day) prior to May 1 and November 1 (except, with
respect to the first interest payment period, on April 8, 2002),
(each such day, a "LIBOR Determination Date"), LIBOR shall equal
the rate, as obtained by the Calculation Agent for six-month U.S.
Dollar deposits in Europe, which appears on Telerate Page 3750
(as defined in the International Swaps and Derivatives
Association, Inc. 1991 Interest Rate and Currency Exchange
Definitions) or such other page as may replace such Telerate Page
3750, as of 11:00 a.m. (London time) on such LIBOR Determination
Date, as reported by Bloomberg Financial Markets Commodities
News; provided, however, that in the case of the first interest
-------- -------
payment period, LIBOR will be interpolated from LIBOR for
six-month U.S. Dollar deposits in Europe and LIBOR for seven
month U.S. Dollar deposits in Europe on a straight-line basis.
"LIBOR Business Day" means any day that is not a Saturday, Sunday
or other day on which commercial banking institutions in New
York, New York or Wilmington, Delaware are authorized or
obligated by law or executive order to be closed. If such rate is
superseded on Telerate Page 3750 by a corrected rate before 12:00
noon (London time) on the same LIBOR Determination Date, the
corrected rate as so substituted will be the applicable LIBOR for
that LIBOR Determination Date.
(2) If, on any LIBOR Determination Date, such rate does not
appear on Telerate Page 3750 as reported by Bloomberg Financial
Markets Commodities News or such other page as may replace such
Telerate Page 3750, the Calculation Agent shall determine the
arithmetic mean of the offered quotations of the Reference Banks
(as defined below) to leading banks in the London Interbank
market for six-month U.S. Dollar deposits in Europe (in an amount
determined by the Calculation Agent) by reference to requests for
quotations as of approximately 11:00 a.m. (London time) on the
LIBOR Determination Date made by the Calculation Agent to the
Reference Banks. If, on any LIBOR Determination Date, at least
two of the Reference Banks provide such quotations, LIBOR shall
equal the arithmetic mean of such quotations. If, on any LIBOR
Determination Date, only one or none of the Reference Banks
provide such a quotation, LIBOR shall be deemed to be the
arithmetic mean of the offered quotations that at least two
leading banks in the City of New York (as selected by the
Calculation Agent) are quoting on the relevant LIBOR
Determination Date for six-month U.S. Dollar deposits in Europe
at approximately 11:00 a.m. (London time) (in an amount
determined by the Calculation Agent). As used herein, "Reference
Banks" means four major banks in the London interbank market
selected by the Calculation Agent.
(3) If the Calculation Agent is required but is unable to
determine a rate in accordance with at least one of the
procedures provided above, LIBOR shall be LIBOR in effect on the
previous LIBOR Determination Date (whether or not LIBOR for such
period was in fact determined on such LIBOR Determination Date).
(c) All percentages resulting from any calculations on the Debt
Securities will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)),
and all dollar amounts used in or resulting from such calculation will be
rounded to the nearest cent (with one-half cent being rounded upward).
(d) On each LIBOR Determination Date, the Calculation Agent shall
notify, in writing, the Company and the Paying Agent of the applicable Interest
Rate in effect for the related Interest Payment Date. The Calculation Agent
shall, upon the request of the holder of any Debt Securities, provide the
Interest Rate then in effect. All calculations made by the Calculation Agent in
the absence of manifest error shall be conclusive for all purposes and binding
on the Company and the Holders of the Debt Securities. The Paying Agent shall be
entitled to rely on information received from the Calculation Agent or the
Company as to the Interest Rate. The Company shall, from time to time, provide
any necessary information to the Paying Agent relating to any original issue
discount and interest on the Debt Securities that is included in any payment and
reportable for taxable income calculation purposes.
SECTION 2.11. Extension of Interest Payment Period.
------------------------------------
So long as no Event of Default has occurred and is continuing,
the Company shall have the right, from time to time and without causing an Event
of Default, to defer payments of interest on the Debt Securities by extending
the interest payment period on the Debt Securities at any time and from time to
time during the term of the Debt Securities, for up to ten consecutive
semi-annual periods (each such extended interest payment period, an "Extension
Period"), during which Extension Period no interest shall be due and payable
(except any Additional Interest that may be due and payable). No Extension
Period may end on a date other than an Interest Payment Date. During any
Extension Period, interest will continue to accrue on the Debt Securities, and
interest on such accrued interest (such accrued interest and interest thereon
referred to herein as "Deferred Interest") will accrue, at the Interest Rate,
compounded semiannually from the date such Deferred Interest would have been
payable were it not for the Extension Period, both to the extent permitted by
law. No interest or Deferred Interest shall be due and payable during an
Extension Period, except at the end thereof. At the end of any such Extension
Period the Company shall pay all Deferred Interest then accrued and unpaid on
the Debt Securities; provided, however, that no Extension Period may extend
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beyond the Maturity Date; and provided further, however, that during any such
-------- ------- -------
Extension Period, the Company shall be subject to the restrictions set forth in
Section 3.08 of this Indenture. Prior to the termination of any Extension
Period, the Company may further extend such period, provided, that such period
--------
together with all such previous and further consecutive extensions thereof shall
not exceed ten consecutive semi-annual periods, or extend beyond the Maturity
Date. Upon the termination of any Extension Period and upon the payment of all
Deferred Interest, the Company may commence a new Extension Period, subject to
the foregoing requirements. The Company must give the Trustee notice of its
election to begin such Extension Period at least one Business Day prior to the
earlier of (i) the next succeeding date on which interest on the Debt Securities
would have been payable except for the election to begin such Extension Period
or (ii) the date such interest is payable, but in any event not later than the
related regular record date. The Trustee shall give notice of the Company's
election to begin a new Extension Period to the Securityholders.
SECTION 2.12. CUSIP Numbers.
-------------
The Company in issuing the Debt Securities may use "CUSIP"
numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Securityholders; provided,
--------
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Debt Securities or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Debt Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Company will promptly notify the Trustee in writing of any change in the
CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal, Premium and Interest; Agreed
---------------------------------------------------------
Treatment of the Debt Securities.
- --------------------------------
(a) The Company covenants and agrees that it will duly and
punctually pay or cause to be paid the principal of and premium, if any, and
interest on the Debt Securities at the place, at the respective times and in the
manner provided in this Indenture and the Debt Securities. At the option of the
Company, each installment of interest on the Debt Securities may be paid (i) by
mailing checks for such interest payable to the order of the holders of Debt
Securities entitled thereto as they appear on the Debt Security Register or (ii)
by wire transfer to any account with a banking institution located in the United
States designated by such Person to the paying agent no later than the related
record date.
(b) The Company will treat the Debt Securities as indebtedness,
and the interest payable in respect of such Debt Securities as interest, for all
U.S. federal income tax purposes. All payments in respect of such Debt
Securities will be made free and clear of U.S. withholding tax to any beneficial
owner thereof that has provided an Internal Revenue Service Form W-8 BEN (or any
substitute or successor form) establishing its non-U.S. status for U.S. federal
income tax purposes.
(c) As of the date of this Indenture, the Company has no
intention to exercise its right under Section 2.11 to defer payments of interest
on the Debt Securities by commencing an Extension Period.
(d) As of the date of this Indenture, the Company believes that
the likelihood that it would exercise its right under Section 2.11 to defer
payments of interest on the Debt Securities by commencing an Extension Period at
any time during which the Debt Securities are outstanding is remote because of
the restrictions that would be imposed on the Company's ability to declare or
pay dividends or distributions on, or to redeem, purchase or make a liquidation
payment with respect to, any of its outstanding equity and on the Company's
ability to make any payments of principal of or interest on, or repurchase or
redeem, any of its debt securities that rank pari passu in all respects with (or
junior in interest to) the Debt Securities.
SECTION 3.02. Offices for Notices and Payments, etc.
-------------------------------------
So long as any of the Debt Securities remain outstanding, the
Company will maintain in Wilmington, Delaware or in St. Louis, Missouri an
office or agency where the Debt Securities may be presented for payment, an
office or agency where the Debt Securities may be presented for registration of
transfer and for exchange as provided in this Indenture and an office or agency
where notices and demands to or upon the Company in respect of the Debt
Securities or of this Indenture may be served. The Company will give to the
Trustee written notice of the location of any such office or agency and of any
change of location thereof. Until otherwise designated from time to time by the
Company in a notice to the Trustee, or specified as contemplated by Section
2.05, such office or agency for all of the above purposes shall be the Principal
Office of the Trustee. In case the Company shall fail to maintain any such
office or agency in Wilmington, Delaware or in St. Louis, Missouri or shall fail
to give such notice of the location or of any change in the location thereof,
presentations and demands may be made and notices may be served at the Principal
Office of the Trustee.
In addition to any such office or agency, the Company may from
time to time designate one or more offices or agencies outside Wilmington,
Delaware or St. Louis, Missouri where the Debt Securities may be presented for
registration of transfer and for exchange in the manner provided in this
Indenture, and the Company may from time to time rescind such designation, as
the Company may deem desirable or expedient; provided, however, that no such
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designation or rescission shall in any manner relieve the Company of its
obligation to maintain any such office or agency in Wilmington, Delaware or in
St. Louis, Missouri for the purposes above mentioned. The Company will give to
the Trustee prompt written notice of any such designation or rescission thereof.
SECTION 3.03. Appointments to Fill Vacancies in Trustee's Office.
--------------------------------------------------
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 6.09, a
Trustee, so that there shall at all times be a Trustee hereunder.
SECTION 3.04. Provision as to Paying Agent.
----------------------------
(a) If the Company shall appoint a paying agent other than the
Trustee, it will cause such paying agent to execute and deliver to the Trustee
an instrument in which such agent shall agree with the Trustee, subject to the
provision of this Section 3.04,
(1) that it will hold all sums held by it as such agent for
the payment of the principal of and premium, if any, or interest,
if any, on the Debt Securities (whether such sums have been paid
to it by the Company or by any other obligor on the Debt
Securities) in trust for the benefit of the holders of the Debt
Securities;
(2) that it will give the Trustee prompt written notice of
any failure by the Company (or by any other obligor on the Debt
Securities) to make any payment of the principal of and premium,
if any, or interest, if any, on the Debt Securities when the same
shall be due and payable; and
(3) that it will, at any time during the continuance of any
Event of Default, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust by such
paying agent.
(b) If the Company shall act as its own paying agent, it will, on
or before each due date of the principal of and premium, if any, or interest, if
any, on the Debt Securities, set aside, segregate and hold in trust for the
benefit of the holders of the Debt Securities a sum sufficient to pay such
principal, premium or interest so becoming due and will notify the Trustee in
writing of any failure to take such action and of any failure by the Company (or
by any other obligor under the Debt Securities) to make any payment of the
principal of and premium, if any, or interest, if any, on the Debt Securities
when the same shall become due and payable.
Whenever the Company shall have one or more paying agents for the
Debt Securities, it will, on or prior to each due date of the principal of and
premium, if any, or interest, if any, on the Debt Securities, deposit with a
paying agent a sum sufficient to pay the principal, premium or interest 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 shall
promptly notify the Trustee in writing of its action or failure to act.
(c) Anything in this Section 3.04 to the contrary
notwithstanding, the Company may, at any time, for the purpose of obtaining a
satisfaction and discharge with respect to the Debt Securities, or for any other
reason, pay, or direct any paying agent to pay to the Trustee all sums held in
trust by the Company or any such paying agent, such sums to be held by the
Trustee upon the same terms and conditions herein contained.
(d) Anything in this Section 3.04 to the contrary
notwithstanding, the agreement to hold sums in trust as provided in this Section
3.04 is subject to Sections 12.03 and 12.04.
(e) The Company hereby initially appoints the Trustee to act as
paying agent.
SECTION 3.05. Certificate to Trustee.
----------------------
The Company will deliver to the Trustee on or before 120 days
after the end of each fiscal year, so long as Debt Securities are outstanding
hereunder, a Certificate stating that in the course of the performance by the
signers of their duties as officers of the Company they would normally have
knowledge of any default by the Company in the performance of any covenants
contained herein, stating whether or not they have knowledge of any such default
and, if so, specifying each such default of which the signers have knowledge and
the nature thereof.
SECTION 3.06. Additional Interest.
-------------------
If and for so long as the Trust is the holder of all Debt
Securities and is subject to any additional taxes (including withholding taxes),
duties, assessments or other governmental charges as a result of a Tax Event,
the Company will pay such additional amounts (the "Additional Interest") on the
Debt Securities as shall be required so that the net amounts received and
retained by the Trust after paying taxes, duties, assessments or other
governmental charges will be equal to the amounts the Trust would have received
if no such taxes, duties, assessments or other governmental charges had been
imposed. Whenever in this Indenture or the Debt Securities there is a reference
in any context to the payment of principal of or interest on the Debt
Securities, such mention shall be deemed to include mention of payments of the
Additional Interest provided for in this paragraph to the extent that, in such
context, Additional Interest is, was or would be payable in respect thereof
pursuant to the provisions of this paragraph and express mention of the payment
of Additional Interest (if applicable) in any provisions hereof shall not be
construed as excluding Additional Interest in those provisions hereof where such
express mention is not made, provided, however, that the deferral of the payment
-------- -------
of interest during an Extension Period pursuant to Section 2.11 shall not defer
the payment of any Additional Interest that may be due and payable.
SECTION 3.07. Compliance with Consolidation Provisions.
----------------------------------------
The Company will not, while any of the Debt Securities remain
outstanding, consolidate with, or merge into any other Person, or merge into
itself, or sell or convey all or substantially all of its property to any other
Person unless the provisions of Article XI hereof are complied with.
SECTION 3.08. Limitation on Dividends.
-----------------------
If Debt Securities are initially issued to the Trust or a trustee
of such Trust in connection with the issuance of Trust Securities by the Trust
(regardless of whether Debt Securities continue to be held by such Trust) and
(i) there shall have occurred and be continuing an Event of Default, (ii) the
Company shall be in default with respect to its payment of any obligations under
the Capital Securities Guarantee or (iii) the Company shall have given notice of
its election to defer payments of interest on the Debt Securities by extending
the interest payment period as provided herein and such period, or any extension
thereof, shall have commenced and be continuing, then the Company may not (A)
declare or pay any dividends or distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to, any of the Company's capital
stock or (B) make any payment of principal of or interest or premium, if any, on
or repay, repurchase or redeem any debt securities of the Company that rank pari
passu in all respects with or junior in interest to the Debt Securities (other
than (a) repurchases, redemptions or other acquisitions of shares of capital
stock of the Company (I) in connection with any employment contract, benefit
plan or other similar arrangement with or for the benefit of one or more
employees, officers, directors or consultants, (II) in connection with a
dividend reinvestment or stockholder stock purchase plan or (III) in connection
with the issuance of capital stock of the Company (or securities convertible
into or exercisable for such capital stock), as consideration in an acquisition
transaction entered into prior to the occurrence of (i), (ii) or (iii) above,
(b) as a result of any exchange or conversion of any class or series of the
Company's capital stock (or any capital stock of a subsidiary of the Company)
for any class or series of the Company's capital stock or of any class or series
of the Company's indebtedness for any class or series of the Company's capital
stock, (c) the purchase of fractional interests in shares of the Company's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (d) any declaration of a
dividend in connection with any stockholder's rights plan, or the issuance of
rights, stock or other property under any stockholder's rights plan, or the
redemption or repurchase of rights pursuant thereto, or (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks pari passu with
or junior to such stock).
SECTION 3.09. Covenants as to the Trust.
-------------------------
For so long as such Trust Securities remain outstanding, the
Company shall maintain 100% ownership of the Common Securities; provided,
--------
however, that any permitted successor of the Company under this Indenture that
- -------
is a U.S. Person may succeed to the Company's ownership of such Common
Securities. The Company, as owner of the Common Securities, shall use
commercially reasonable efforts to cause the Trust (a) to remain a statutory
business trust, except in connection with a distribution of Debt Securities to
the holders of Trust Securities in liquidation of the Trust, the redemption of
all of the Trust Securities or certain mergers, consolidations or amalgamations,
each as permitted by the Declaration, (b) to otherwise continue to be classified
as a grantor trust for United States federal income tax purposes and (c) to
cause each holder of Trust Securities to be treated as owning an undivided
beneficial interest in the Debt Securities.
ARTICLE IV
LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
SECTION 4.01. Securityholders' Lists.
----------------------
The Company covenants and agrees that it will furnish or cause to
be furnished to the Trustee:
(a) on each regular record date for an Interest Payment Date, a list, in such
form as the Trustee may reasonably require, of the names and addresses of the
Securityholders of the Debt Securities as of such record date; and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a list of
similar form and content as of a date not more than 15 days prior to the time
such list is furnished; except that no such lists need be furnished under this
Section 4.01 so long as the Trustee is in possession thereof by reason of its
acting as Debt Security registrar.
SECTION 4.02. Preservation and Disclosure of Lists.
------------------------------------
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Debt Securities (1) contained in the most recent list furnished to it
as provided in Section 4.01 or (2) received by it in the capacity of Debt
Securities registrar (if so acting) hereunder. The Trustee may destroy any list
furnished to it as provided in Section 4.01 upon receipt of a new list so
furnished.
(b) In case three or more holders of Debt Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee and furnish to the
Trustee reasonable proof that each such applicant has owned a Debt Security for
a period of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other holders
of Debt Securities with respect to their rights under this Indenture or under
such Debt Securities and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall
within five Business Days after the receipt of such application, at its
election, either:
(1) afford such applicants access to the information
preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.02, or
(2) inform such applicants as to the approximate number of
holders of Debt Securities whose names and addresses appear in
the information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of this Section
4.02, and as to the approximate cost of mailing to such
Securityholders the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford such applicants access
to such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder of Debt Securities whose name and
address appear in the information preserved at the time by the Trustee in
accordance with the provisions of subsection (a) of this Section 4.02 a copy of
the form of proxy or other communication which is specified in such request with
reasonable promptness after a tender to the Trustee of the material to be mailed
and of payment, or provision for the payment, of the reasonable expenses of
mailing, unless within five days after such tender, the Trustee shall mail to
such applicants and file with the Securities and Exchange Commission, if
permitted or required by applicable law, together with a copy of the material to
be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the holders of
all Debt Securities, as the case may be, or would be in violation of applicable
law. Such written statement shall specify the basis of such opinion. If said
Commission, as permitted or required by applicable law, after opportunity for a
hearing upon the objections specified in the written statement so filed, shall
enter an order refusing to sustain any of such objections or if, after the entry
of an order sustaining one or more of such objections, said Commission shall
find, after notice and opportunity for hearing, that all the objections so
sustained have been met and shall enter an order so declaring, the Trustee shall
mail copies of such material to all such Securityholders with reasonable
promptness after the entry of such order and the renewal of such tender;
otherwise the Trustee shall be relieved of any obligation or duty to such
applicants respecting their application.
(c) Each and every holder of Debt Securities, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any paying agent shall be held accountable by reason
of the disclosure of any such information as to the names and addresses of the
holders of Debt Securities in accordance with the provisions of subsection (b)
of this Section 4.02, 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 said subsection (b).
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
UPON AN EVENT OF DEFAULT
SECTION 5.01. Events of Default.
-----------------
The following events shall be "Events of Default" with respect to
Debt Securities:
(a) the Company defaults in the payment of any interest upon any
Debt Security when it becomes due and payable, and continuance of such default
for a period of 30 days; for the avoidance of doubt, an extension of any
interest payment period by the Company in accordance with Section 2.11 of this
Indenture shall not constitute a default under this clause 5.01(a); or
(b) the Company defaults in the payment of all or any part of the
principal of (or premium, if any, on) any Debt Securities as and when the same
shall become due and payable either at maturity, upon redemption, by declaration
of acceleration or otherwise; or
(c) the Company defaults in the performance of, or breaches, any
of its covenants or agreements in Sections 3.06, 3.07, 3.08 and 3.09 of this
Indenture (other than a covenant or agreement a default in whose performance or
whose breach is elsewhere in this Section specifically dealt with), and
continuance of such default or breach for a period of 90 days after there has
been given, by registered or certified mail, to the Company by the Trustee or to
the Company and the Trustee by the holders of not less than 25% in aggregate
principal amount of the outstanding Debt Securities, a written notice specifying
such default or breach and requiring it to be remedied and stating that such
notice is a "Notice of Default" hereunder; or
(d) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appoints a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of the Company or for any
substantial part of its property, or orders the winding-up or liquidation of its
affairs and such decree or order shall remain unstayed and in effect for a
period of 90 consecutive days; or
(e) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Company or of any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due; or
(f) the Trust shall have voluntarily or involuntarily liquidated,
dissolved, wound-up its business or otherwise terminated its existence except in
connection with (1) the distribution of the Debt Securities to holders of the
Trust Securities in liquidation of their interests in the Trust, (2) the
redemption of all of the outstanding Trust Securities or (3) certain mergers,
consolidations or amalgamations, each as permitted by the Declaration.
If an Event of Default occurs and is continuing with respect to
the Debt Securities, then, and in each and every such case, unless the principal
of the Debt Securities shall have already become due and payable, either the
Trustee or the holders of not less than 25% in aggregate principal amount of the
Debt Securities then outstanding hereunder, by notice in writing to the Company
(and to the Trustee if given by Securityholders), may declare the entire
principal of the Debt Securities and the interest accrued, but unpaid, thereon,
if any, to be due and payable immediately, and upon any such declaration the
same shall become immediately due and payable.
The foregoing provisions, however, are subject to the condition
that if, at any time after the principal of the Debt Securities shall have been
so declared due and payable, and before any judgment or decree for the payment
of the moneys due shall have been obtained or entered as hereinafter provided,
(i) the Company shall pay or shall deposit with the Trustee a sum sufficient to
pay all matured installments of interest upon all the Debt Securities and the
principal of and premium, if any, on the Debt Securities which shall have become
due otherwise than by acceleration (with interest upon such principal and
premium, if any, and Deferred Interest, to the extent permitted by law) and such
amount as shall be sufficient to cover reasonable compensation to the Trustee
and each predecessor Trustee, their respective agents, attorneys and counsel,
and all other amounts due to the Trustee pursuant to Section 6.06, if any, and
(ii) all Events of Default under this Indenture, other than the non-payment of
the principal of or premium, if any, on Debt Securities which shall have become
due by acceleration, shall have been cured, waived or otherwise remedied as
provided herein, then and in every such case the holders of a majority in
aggregate principal amount of the Debt Securities then outstanding, by written
notice to the Company and to the Trustee, may waive all defaults and rescind and
annul such declaration and its consequences, but no such waiver or rescission
and annulment shall extend to or shall affect any subsequent default or shall
impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such case
the Company, the Trustee and the holders of the Debt Securities shall be
restored respectively to their several positions and rights hereunder, and all
rights, remedies and powers of the Company, the Trustee and the holders of the
Debt Securities shall continue as though no such proceeding had been taken.
SECTION 5.02. Payment of Debt Securities on Default; Suit Therefor.
----------------------------------------------------
The Company covenants that upon the occurrence of an Event of
Default pursuant to clause 5.01(a) or 5.01(b) and upon demand of the Trustee,
the Company will pay to the Trustee, for the benefit of the holders of the Debt
Securities, the whole amount that then shall have become due and payable on all
Debt Securities for principal and premium, if any, or interest, or both, as the
case may be, including Deferred Interest accrued on the Debt Securities; and, in
addition thereto, such further amount as shall be sufficient to cover the costs
and expenses of collection, including a reasonable compensation to the Trustee,
its agents, attorneys and counsel, and any other amounts due to the Trustee
under Section 6.06. In case the Company shall fail forthwith to pay such amounts
upon such demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any actions or proceedings
at law or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company or any other
obligor on such Debt Securities and collect in the manner provided by law out of
the property of the Company or any other obligor on such Debt Securities
wherever situated the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the Debt
Securities under Bankruptcy Law, or in case a receiver or trustee shall have
been appointed for the property of the Company or such other obligor, or in the
case of any other similar judicial proceedings relative to the Company or other
obligor upon the Debt Securities, or to the creditors or property of the Company
or such other obligor, the Trustee, irrespective of whether the principal of the
Debt Securities shall then be due and payable as therein expressed or by
declaration of acceleration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section 5.02,
shall be entitled and empowered, by intervention in such proceedings or
otherwise, to file and prove a claim or claims for the whole amount of principal
and interest owing and unpaid in respect of the Debt Securities and, in case of
any judicial proceedings, to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for reasonable compensation to the Trustee and each
predecessor Trustee, and their respective agents, attorneys and counsel, and for
reimbursement of all other amounts due to the Trustee under Section 6.06) and of
the Securityholders allowed in such judicial proceedings relative to the Company
or any other obligor on the Debt Securities, or to the creditors or property of
the Company or such other obligor, unless prohibited by applicable law and
regulations, to vote on behalf of the holders of the Debt Securities in any
election of a trustee or a standby trustee in arrangement, reorganization,
liquidation or other bankruptcy or insolvency proceedings or Person performing
similar functions in comparable proceedings, and to collect and receive any
moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses; and any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the Securityholders to make such payments to the Trustee,
and, in the event that the Trustee shall consent to the making of such payments
directly to the Securityholders, to pay to the Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Trustee, each predecessor
Trustee and their respective agents, attorneys and counsel, and all other
amounts due to the Trustee under Section 6.06.
Nothing herein contained shall be construed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Debt Securities or the rights of any holder thereof or
to authorize the Trustee to vote in respect of the claim of any Securityholder
in any such proceeding.
All rights of action and of asserting claims under this
Indenture, or under any of the Debt Securities, may be enforced by the Trustee
without the possession of any of the Debt Securities, or the production thereof
at any trial or other proceeding relative thereto, and any such suit or
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall be for the ratable
benefit of the holders of the Debt Securities.
In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party) the Trustee shall be held to represent all
the holders of the Debt Securities, and it shall not be necessary to make any
holders of the Debt Securities parties to any such proceedings.
SECTION 5.03. Application of Moneys Collected by Trustee.
------------------------------------------
Any moneys collected by the Trustee shall be applied in the
following order, at the date or dates fixed by the Trustee for the distribution
of such moneys, upon presentation of the several Debt Securities in respect of
which moneys have been collected, and stamping thereon the payment, if only
partially paid, and upon surrender thereof if fully paid:
First: To the payment of costs and expenses incurred by, and
reasonable fees of, the Trustee, its agents, attorneys and counsel, and of all
other amounts due to the Trustee under Section 6.06;
Second: To the payment of all Senior Indebtedness of the Company
if and to the extent required by Article XV;
Third: To the payment of the amounts then due and unpaid upon
Debt Securities for principal (and premium, if any), and interest on the Debt
Securities, in respect of which or for the benefit of which money has been
collected, ratably, without preference or priority of any kind, according to the
amounts due on such Debt Securities for principal (and premium, if any) and
interest, respectively; and
Fourth: The balance, if any, to the Company.
SECTION 5.04. Proceedings by Securityholders.
------------------------------
No holder of any Debt Security shall have any right to institute
any suit, action or proceeding for any remedy hereunder, unless such holder
previously shall have given to the Trustee written notice of an Event of Default
with respect to the Debt Securities and unless the holders of not less than 25%
in aggregate principal amount of the Debt Securities then outstanding shall have
given the Trustee a written request to institute such action, suit or proceeding
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred thereby, and
the Trustee for 60 days after its receipt of such notice, request and offer of
indemnity shall have failed to institute any such action, suit or proceeding;
provided, that no holder of Debt Securities shall have any right to prejudice
- --------
the rights of any other holder of Debt Securities, obtain priority or preference
over any other such holder or enforce any right under this Indenture except in
the manner herein provided and for the equal, ratable and common benefit of all
holders of Debt Securities.
Notwithstanding any other provisions in this Indenture, however,
the right of any holder of any Debt Security to receive payment of the principal
of, premium, if any, and interest on such Debt Security when due, or to
institute suit for the enforcement of any such payment, shall not be impaired or
affected without the consent of such holder. For the protection and enforcement
of the provisions of this Section, each and every Securityholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
SECTION 5.05. Proceedings by Trustee.
----------------------
In case of an Event of Default hereunder the Trustee may in its
discretion proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as the Trustee shall deem
most effectual to protect and enforce any of such rights, either by suit in
equity or by action at law or by proceeding in bankruptcy or otherwise, whether
for the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture, or
to enforce any other legal or equitable right vested in the Trustee by this
Indenture or by law.
SECTION 5.06. Remedies Cumulative and Continuing.
----------------------------------
Except as otherwise provided in Section 2.06, all powers and
remedies given by this Article V to the Trustee or to the Securityholders shall,
to the extent permitted by law, be deemed cumulative and not exclusive of any
other powers and remedies available to the Trustee or the holders of the Debt
Securities, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture or
otherwise established with respect to the Debt Securities, and no delay or
omission of the Trustee or of any holder of any of the Debt Securities to
exercise any right or power accruing upon any Event of Default occurring and
continuing as aforesaid shall impair any such right or power, or shall be
construed to be a waiver of any such default or an acquiescence therein; and,
subject to the provisions of Section 5.04, every power and remedy given by this
Article V or by law to the Trustee or to the Securityholders may be exercised
from time to time, and as often as shall be deemed expedient, by the Trustee or
by the Securityholders.
SECTION 5.07. Direction of Proceedings and Waiver of Defaults by
---------------------------------------------------------
Majority of Securityholders.
- ---------------------------
The holders of a majority in aggregate principal amount of the
Debt Securities affected (voting as one class) at the time outstanding shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or power
conferred on the Trustee with respect to such Debt Securities; provided,
--------
however, that (subject to the provisions of Section 6.01) the Trustee shall have
- -------
the right to decline to follow any such direction if the Trustee shall determine
that the action so directed would be unjustly prejudicial to the holders not
taking part in such direction or if the Trustee being advised by counsel
determines that the action or proceeding so directed may not lawfully be taken
or if a Responsible Officer of the Trustee shall determine that the action or
proceedings so directed would involve the Trustee in personal liability. Prior
to any declaration accelerating the maturity of the Debt Securities, the holders
of a majority in aggregate principal amount of the Debt Securities at the time
outstanding may on behalf of the holders of all of the Debt Securities waive (or
modify any previously granted waiver of) any past default or Event of Default
and its consequences, except a default (a) in the payment of principal of,
premium, if any, or interest on any of the Debt Securities, (b) in respect of
covenants or provisions hereof which cannot be modified or amended without the
consent of the holder of each Debt Security affected, or (c) in respect of the
covenants contained in Section 3.09; provided, however, that if the Debt
-------- -------
Securities are held by the Trust or a trustee of such trust, such waiver or
modification to such waiver shall not be effective until the holders of a
majority in liquidation preference of the Trust Securities of the Trust shall
have consented to such waiver or modification to such waiver; provided, further,
-------- -------
that if the consent of the holder of each outstanding Debt Security is required,
such waiver shall not be effective until each holder of the Trust Securities of
the Trust shall have consented to such waiver. Upon any such waiver, the default
covered thereby shall be deemed to be cured for all purposes of this Indenture
and the Company, the Trustee and the holders of the Debt Securities shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent thereon. Whenever any default or Event of Default
hereunder shall have been waived as permitted by this Section 5.07, said default
or Event of Default shall for all purposes of the Debt Securities and this
Indenture be deemed to have been cured and to be not continuing.
SECTION 5.08. Notice of Defaults.
------------------
The Trustee shall, within 90 days after a Responsible Officer of
the Trustee shall have actual knowledge or received written notice of the
occurrence of a default with respect to the Debt Securities, mail to all
Securityholders, as the names and addresses of such holders appear upon the Debt
Security Register, notice of all defaults with respect to the Debt Securities
known to the Trustee, unless such defaults shall have been cured before the
giving of such notice (the term "defaults" for the purpose of this Section 5.08
being hereby defined to be the events specified in subsections (a), (b), (c),
(d) and (e) of Section 5.01, not including periods of grace, if any, provided
for therein); provided, that, except in the case of default in the payment of
--------
the principal of, premium, if any, or interest on any of the Debt Securities,
the Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the Trustee in good faith determines that the withholding
of such notice is in the interests of the Securityholders.
SECTION 5.09. Undertaking to Pay Costs.
------------------------
All parties to this Indenture agree, and each holder of any Debt
Security by such holder's acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the enforcement of
any right or remedy under this Indenture, or in any suit against the Trustee for
any action taken or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section 5.09 shall not apply to any
suit instituted by the Trustee, to any suit instituted by any Securityholder, or
group of Securityholders, holding in the aggregate more than 10% in principal
amount of the Debt Securities outstanding, or to any suit instituted by any
Securityholder for the enforcement of the payment of the principal of (or
premium, if any) or interest on any Debt Security against the Company on or
after the same shall have become due and payable.
ARTICLE VI
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee.
--------------------------------------
With respect to the holders of Debt Securities issued hereunder,
the Trustee, prior to the occurrence of an Event of Default with respect to the
Debt Securities and after the curing or waiving of all Events of Default which
may have occurred, with respect to the Debt Securities, undertakes to perform
such duties and only such duties as are specifically set forth in this
Indenture. In case an Event of Default with respect to the Debt Securities has
occurred (which has not been cured or waived) the Trustee shall exercise such of
the rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of such person's own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default with respect
to the Debt Securities and after the curing or waiving of all Events of Default
which may have occurred
(1) the duties and obligations of the Trustee with respect
to the Debt Securities shall be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable
except for the performance of such duties and obligations with
respect to the Debt Securities as are specifically set forth in
this Indenture, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(2) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but, in the
case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee,
the Trustee shall be under a duty to examine the same to
determine whether or not they conform on their face to the
requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Officers of the Trustee, unless
it shall be proved that the Trustee was negligent in ascertaining the pertinent
facts;
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith, in accordance with the
direction of the Securityholders pursuant to Section 5.07, relating to the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee, under this
Indenture; and
(d) the Trustee shall not be charged with knowledge of any
Default or Event of Default with respect to the Debt Securities unless either
(1) a Responsible Officer shall have actual knowledge of such Default or Event
of Default or (2) written notice of such Default or Event of Default shall have
been given to the Trustee by the Company or any other obligor on the Debt
Securities or by any holder of the Debt Securities, except with respect to an
Event of Default pursuant to Sections 5.01(a) or 5.01(b) hereof (other than an
Event of Default resulting from the default in the payment of Additional
Interest or premium, if any, if the Trustee does not have actual knowledge or
written notice that such payment is due and payable), of which the Trustee shall
be deemed to have knowledge.
None of the provisions contained in this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers.
SECTION 6.02. Reliance on Documents, Opinions, etc.
------------------------------------
Except as otherwise provided in Section 6.01:
(a) the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, bond,
note, debenture or other paper or document believed by it in good faith to be
genuine and to have been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof be herein specifically prescribed);
and any Board Resolution may be evidenced to the Trustee by a copy thereof
certified by the Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel of its selection and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture; nothing
contained herein shall, however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default with respect to the Debt Securities (that has
not been cured or waived) to exercise with respect to the Debt Securities such
of the rights and powers vested in it by this Indenture, and to use the same
degree of care and skill in their exercise, as a prudent person would exercise
or use under the circumstances in the conduct of such person's own affairs;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
debenture, coupon or other paper or document, unless requested in writing to do
so by the holders of not less than a majority in principal amount of the
outstanding Debt Securities affected thereby; provided, however, that if the
-------- -------
payment within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such expense or liability as a condition to so
proceeding; and
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
(including any Authenticating Agent) or attorneys, and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent or
attorney appointed by it with due care.
SECTION 6.03. No Responsibility for Recitals, etc.
-----------------------------------
The recitals contained herein and in the Debt Securities (except
in the certificate of authentication of the Trustee or the Authenticating Agent)
shall be taken as the statements of the Company and the Trustee and the
Authenticating Agent assume no responsibility for the correctness of the same.
The Trustee and the Authenticating Agent make no representations as to the
validity or sufficiency of this Indenture or of the Debt Securities. The Trustee
and the Authenticating Agent shall not be accountable for the use or application
by the Company of any Debt Securities or the proceeds of any Debt Securities
authenticated and delivered by the Trustee or the Authenticating Agent in
conformity with the provisions of this Indenture.
SECTION 6.04. Trustee, Authenticating Agent, Paying Agents, Transfer
---------------------------------------------------------
Agents or Registrar May Own Debt Securities.
- --------------------------------------------
The Trustee or any Authenticating Agent or any paying agent or
any transfer agent or any Debt Security registrar, in its individual or any
other capacity, may become the owner or pledgee of Debt Securities with the same
rights it would have if it were not Trustee, Authenticating Agent, paying agent,
transfer agent or Debt Security registrar.
SECTION 6.05. Moneys to be Held in Trust.
--------------------------
Subject to the provisions of Section 12.04, all moneys received
by the Trustee or any paying agent shall, until used or applied as herein
provided, be held in trust for the purpose for which they were received, but
need not be segregated from other funds except to the extent required by law.
The Trustee and any paying agent shall be under no liability for interest on any
money received by it hereunder except as otherwise agreed in writing with the
Company. So long as no Event of Default shall have occurred and be continuing,
all interest allowed on any such moneys, if any, shall be paid from time to time
to the Company upon the written order of the Company, signed by the Chairman of
the Board of Directors, the President, the Chief Operating Officer, a Vice
President, the Treasurer or an Assistant Treasurer of the Company.
SECTION 6.06. Compensation and Expenses of Trustee.
------------------------------------
The Company covenants and agrees to pay to the Trustee from time
to time, and the Trustee shall be entitled to, such compensation as shall be
agreed to in writing between the Company and the Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust), and the Company will pay or reimburse the Trustee upon its
written request for all documented reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
reasonable expenses and disbursements of its counsel and of all Persons not
regularly in its employ) except any such expense, disbursement or advance that
arises from its negligence or bad faith. The Company also covenants to indemnify
each of the Trustee (including in its individual capacity) and any predecessor
Trustee (and its officers, agents, directors and employees) for, and to hold it
harmless against, any and all loss, damage, claim, liability or expense
including taxes (other than taxes based on the income of the Trustee), except to
the extent such loss, damage, claim, liability or expense results from the
negligence or bad faith of such indemnitee, arising out of or in connection with
the acceptance or administration of this trust, including the costs and expenses
of defending itself against any claim or liability in the premises. The
obligations of the Company under this Section 6.06 to compensate and indemnify
the Trustee and to pay or reimburse the Trustee for documented expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Debt Securities upon all property and funds held or collected by the Trustee as
such, except funds held in trust for the benefit of the holders of particular
Debt Securities.
Without prejudice to any other rights available to the Trustee
under applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in subsections (d), (e) or (f) of
Section 5.01, the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the resignation or
removal of the Trustee and the defeasance or other termination of this
Indenture.
SECTION 6.07. Officers' Certificate as Evidence.
---------------------------------
Except as otherwise provided in Sections 6.01 and 6.02, whenever
in the administration of the provisions of this Indenture the Trustee shall deem
it necessary or desirable that a matter be proved or established prior to taking
or omitting any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may, in the absence of negligence or
bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee, and such
certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken or omitted by
it under the provisions of this Indenture upon the faith thereof.
SECTION 6.08. Eligibility of Trustee.
----------------------
The Trustee hereunder shall at all times be a U.S. Person that is
a banking corporation organized and doing business under the laws of the United
States of America or any state thereof or of the District of Columbia and
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least fifty million U.S. dollars ($50,000,000) and
subject to supervision or examination by federal, state, or District of Columbia
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 6.08 the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent records of condition so published.
The Company may not, nor may any Person directly or indirectly
controlling, controlled by, or under common control with the Company, serve as
Trustee, notwithstanding that such corporation shall be otherwise eligible and
qualified under this Article.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.08, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.09.
If the Trustee has or shall acquire any "conflicting interest"
within the meaning of ss. 310(b) of the Trust Indenture Act, the Trustee shall
either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to this Indenture.
SECTION 6.09. Resignation or Removal of Trustee.
---------------------------------
(a) The Trustee, or any trustee or trustees hereafter appointed,
may at any time resign by giving written notice of such resignation to the
Company and by mailing notice thereof, at the Company's expense, to the holders
of the Debt Securities at their addresses as they shall appear on the Debt
Security Register. Upon receiving such notice of resignation, the Company shall
promptly appoint a successor trustee or trustees by written instrument, in
duplicate, executed by order of its Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor Trustee. If no successor Trustee shall have been so appointed and have
accepted appointment within 30 days after the mailing of such notice of
resignation to the affected Securityholders, the resigning Trustee may petition
any court of competent jurisdiction for the appointment of a successor Trustee,
or any Securityholder who has been a bona fide holder of a Debt Security or Debt
Securities for at least six months may, subject to the provisions of Section
5.09, on behalf of himself or herself and all others similarly situated,
petition any such court for the appointment of a successor Trustee. Such court
may thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee.
(b) In case at any time any of the following shall occur --
(1) the Trustee shall fail to comply with the provisions of
the last paragraph of Section 6.08 after written request therefor
by the Company or by any Securityholder who has been a bona fide
holder of a Debt Security or Debt Securities for at least six
months,
(2) the Trustee shall cease to be eligible in accordance
with the provisions of Section 6.08 and shall fail to resign
after written request therefor by the Company or by any such
Securityholder, or
(3) the Trustee shall become incapable of acting, or shall
be adjudged bankrupt or insolvent, or a receiver of the Trustee
or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, the Company may remove the Trustee and appoint a
successor Trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor Trustee, or, subject to the
provisions of Section 5.09, if no successor Trustee shall have been so appointed
and have accepted appointment within 30 days of the occurrence of any of (1),(2)
or (3) above, any Securityholder who has been a bona fide holder of a Debt
Security or Debt Securities for at least six months may, on behalf of himself or
herself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint a successor Trustee.
(c) Upon prior written notice to the Company and the Trustee, the
holders of a majority in aggregate principal amount of the Debt Securities at
the time outstanding may at any time remove the Trustee and nominate a successor
Trustee, which shall be deemed appointed as successor Trustee unless within ten
Business Days after such nomination the Company objects thereto, in which case
or in the case of a failure by such holders to nominate a successor Trustee, the
Trustee so removed or any Securityholder, upon the terms and conditions and
otherwise as in subsection (a) of this Section 6.09 provided, may petition any
court of competent jurisdiction for an appointment of a successor.
(d) Any resignation or removal of the Trustee and appointment of
a successor Trustee pursuant to any of the provisions of this Section 6.09 shall
become effective upon acceptance of appointment by the successor Trustee as
provided in Section 6.10.
SECTION 6.10. Acceptance by Successor Trustee.
-------------------------------
Any successor Trustee appointed as provided in Section 6.09 shall
execute, acknowledge and deliver to the Company and to its predecessor Trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, duties and obligations with respect to the
Debt Securities of its predecessor hereunder, with like effect as if originally
named as Trustee herein; but, nevertheless, on the written request of the
Company or of the successor Trustee, the Trustee ceasing to act shall, upon
payment of the amounts then due it pursuant to the provisions of Section 6.06,
execute and deliver an instrument transferring to such successor Trustee all the
rights and powers of the Trustee so ceasing to act and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor Trustee all such rights
and powers. Any Trustee ceasing to act shall, nevertheless, retain a lien upon
all property or funds held or collected by such Trustee to secure any amounts
then due it pursuant to the provisions of Section 6.06.
If a successor Trustee is appointed, the Company, the retiring
Trustee and the successor Trustee shall execute and deliver an indenture
supplemental hereto which 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 Debt Securities as to which the
predecessor Trustee is not retiring shall continue to be vested in the
predecessor Trustee, and 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 Trust 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 and that each such Trustee shall be Trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee.
No successor Trustee shall accept appointment as provided in this
Section 6.10 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 6.08.
In no event shall a retiring Trustee be liable for the acts or
omissions of any successor Trustee hereunder.
Upon acceptance of appointment by a successor Trustee as provided
in this Section 6.10, the Company shall mail notice of the succession of such
Trustee hereunder to the holders of Debt Securities at their addresses as they
shall appear on the Debt Security Register. If the Company fails to mail such
notice within ten Business Days after the acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at
the expense of the Company.
SECTION 6.11. Succession by Merger, etc.
-------------------------
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to 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; provided, that such corporation shall be otherwise eligible
--------
and qualified under this Article.
In case at the time such successor to the Trustee shall succeed
to the trusts created by this Indenture any of the Debt Securities shall have
been authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor Trustee, and deliver
such Debt Securities so authenticated; and in case at that time any of the Debt
Securities shall not have been authenticated, any successor to the Trustee may
authenticate such Debt Securities either in the name of any predecessor
hereunder or in the name of the successor Trustee; and in all such cases such
certificates shall have the full force which it is anywhere in the Debt
Securities or in this Indenture provided that the certificate of the Trustee
shall have; provided, however, that the right to adopt the certificate of
-------- -------
authentication of any predecessor Trustee or authenticate Debt Securities in the
name of any predecessor Trustee shall apply only to its successor or successors
by merger, conversion or consolidation.
SECTION 6.12. Authenticating Agents.
---------------------
There may be one or more Authenticating Agents appointed by the
Trustee upon the request of the Company with power to act on its behalf and
subject to its direction in the authentication and delivery of Debt Securities
issued upon exchange or registration of transfer thereof as fully to all intents
and purposes as though any such Authenticating Agent had been expressly
authorized to authenticate and deliver Debt Securities; provided, that the
--------
Trustee shall have no liability to the Company for any acts or omissions of the
Authenticating Agent with respect to the authentication and delivery of Debt
Securities. Any such Authenticating Agent shall at all times be a corporation
organized and doing business under the laws of the United States or of any state
or territory thereof or of the District of Columbia authorized under such laws
to act as Authenticating Agent, having a combined capital and surplus of at
least $50,000,000 and being subject to supervision or examination by federal,
state, territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually pursuant to law or the
requirements of such authority, then for the purposes of this Section 6.12 the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of any Authenticating Agent, shall be the successor
of such Authenticating Agent hereunder, if such successor corporation is
otherwise eligible under this Section 6.12 without the execution or filing of
any paper or any further act on the part of the parties hereto or such
Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any Authenticating Agent with respect to the Debt
Securities by giving written notice of termination to such Authenticating Agent
and to the Company. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section 6.12, the Trustee may, and upon the request of the
Company shall, promptly appoint a successor Authenticating Agent eligible under
this Section 6.12, shall give written notice of such appointment to the Company
and shall mail notice of such appointment to all holders of Debt Securities as
the names and addresses of such holders appear on the Debt Security Register.
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all rights, powers, duties and responsibilities with
respect to the Debt Securities of its predecessor hereunder, with like effect as
if originally named as Authenticating Agent herein.
The Company agrees to pay to any Authenticating Agent from time
to time reasonable compensation for its services. Any Authenticating Agent shall
have no responsibility or liability for any action taken by it as such in
accordance with the directions of the Trustee.
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.
-------------------------
Whenever in this Indenture it is provided that the holders of a
specified percentage in aggregate principal amount of the Debt Securities may
take any action (including the making of any demand or request, the giving of
any notice, consent or waiver or the taking of any other action), the fact that
at the time of taking any such action the holders of such specified percentage
have joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by such Securityholders in person or by
agent or proxy appointed in writing, or (b) by the record of such holders of
Debt Securities voting in favor thereof at any meeting of such Securityholders
duly called and held in accordance with the provisions of Article VIII, or (c)
by a combination of such instrument or instruments and any such record of such a
meeting of such Securityholders or (d) by any other method the Trustee deems
satisfactory.
If the Company shall solicit from the Securityholders any
request, demand, authorization, direction, notice, consent, waiver or other
action or revocation of the same, the Company may, at its option, as evidenced
by an Officers' Certificate, fix in advance a record date for such Debt
Securities for the determination of Securityholders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other
action or revocation of the same, but the Company shall have no obligation to do
so. If such a record date is fixed, such request, demand, authorization,
direction, notice, consent, waiver or other action or revocation of the same may
be given before or after the record date, but only the Securityholders of record
at the close of business on the record date shall be deemed to be
Securityholders for the purposes of determining whether Securityholders of the
requisite proportion of outstanding Debt Securities have authorized or agreed or
consented to such request, demand, authorization, direction, notice, consent,
waiver or other action or revocation of the same, and for that purpose the
outstanding Debt Securities shall be computed as of the record date; provided,
--------
however, that no such authorization, agreement or consent by such
- -------
Securityholders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than six
months after the record date.
SECTION 7.02. Proof of Execution by Securityholders.
-------------------------------------
Subject to the provisions of Sections 6.01, 6.02 and 8.05, proof
of the execution of any instrument by a Securityholder or such Securityholder's
agent or proxy shall be sufficient if made in accordance with such reasonable
rules and regulations as may be prescribed by the Trustee or in such manner as
shall be satisfactory to the Trustee. The ownership of Debt Securities shall be
proved by the Debt Security Register or by a certificate of the Debt Security
registrar. The Trustee may require such additional proof of any matter referred
to in this Section as it shall deem necessary.
The record of any Securityholders' meeting shall be proved in the
manner provided in Section 8.06.
SECTION 7.03. Who Are Deemed Absolute Owners.
------------------------------
Prior to due presentment for registration of transfer of any Debt
Security, the Company, the Trustee, any Authenticating Agent, any paying agent,
any transfer agent and any Debt Security registrar may deem the Person in whose
name such Debt Security shall be registered upon the Debt Security Register to
be, and may treat such Person as, the absolute owner of such Debt Security
(whether or not such Debt Security shall be overdue) for the purpose of
receiving payment of or on account of the principal of, premium, if any, and
interest on such Debt Security and for all other purposes; and neither the
Company nor the Trustee nor any Authenticating Agent nor any paying agent nor
any transfer agent nor any Debt Security registrar shall be affected by any
notice to the contrary. All such payments so made to any holder for the time
being or upon such holder's order shall be valid, and, to the extent of the sum
or sums so paid, effectual to satisfy and discharge the liability for moneys
payable upon any such Debt Security.
SECTION 7.04. Debt Securities Owned by Company Deemed Not Outstanding.
-------------------------------------------------------
In determining whether the holders of the requisite aggregate
principal amount of Debt Securities have concurred in any direction, consent or
waiver under this Indenture, Debt Securities which are owned by the Company or
any other obligor on the Debt Securities or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any other obligor on the Debt Securities shall be disregarded and
deemed not to be outstanding for the purpose of any such determination;
provided, that for the purposes of determining whether the Trustee shall be
- --------
protected in relying on any such direction, consent or waiver, only Debt
Securities which a Responsible Officer of the Trustee actually knows are so
owned shall be so disregarded. Debt Securities so owned which have been pledged
in good faith may be regarded as outstanding for the purposes of this Section
7.04 if the pledgee shall establish to the satisfaction of the Trustee the
pledgee's right to vote such Debt Securities and that the pledgee is not the
Company or any such other obligor or Person directly or indirectly controlling
or controlled by or under direct or indirect common control with the Company or
any such other obligor. In the case of a dispute as to such right, any decision
by the Trustee taken upon the advice of counsel shall be full protection to the
Trustee.
SECTION 7.05. Revocation of Consents; Future Holders Bound.
--------------------------------------------
At any time prior to (but not after) the evidencing to the
Trustee, as provided in Section 7.01, of the taking of any action by the holders
of the percentage in aggregate principal amount of the Debt Securities specified
in this Indenture in connection with such action, any holder (in cases where no
record date has been set pursuant to Section 7.01) or any holder as of an
applicable record date (in cases where a record date has been set pursuant to
Section 7.01) of a Debt Security (or any Debt Security issued in whole or in
part in exchange or substitution therefor) the serial number of which is shown
by the evidence to be included in the Debt Securities the holders of which have
consented to such action may, by filing written notice with the Trustee at the
Principal Office of the Trustee and upon proof of holding as provided in Section
7.02, revoke such action so far as concerns such Debt Security (or so far as
concerns the principal amount represented by any exchanged or substituted Debt
Security). Except as aforesaid any such action taken by the holder of any Debt
Security shall be conclusive and binding upon such holder and upon all future
holders and owners of such Debt Security, and of any Debt Security issued in
exchange or substitution therefor or on registration of transfer thereof,
irrespective of whether or not any notation in regard thereto is made upon such
Debt Security or any Debt Security issued in exchange or substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings.
--------------------
A meeting of Securityholders may be called at any time and from
time to time pursuant to the provisions of this Article VIII for any of the
following purposes:
(a) to give any notice to the Company or to the Trustee, or to
give any directions to the Trustee, or to consent to the waiving of any default
hereunder and its consequences, or to take any other action authorized to be
taken by Securityholders pursuant to any of the provisions of Article V;
(b) to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article VI;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or on
behalf of the holders of any specified aggregate principal amount of such Debt
Securities under any other provision of this Indenture or under applicable law.
SECTION 8.02. Call of Meetings by Trustee.
---------------------------
The Trustee may at any time call a meeting of Securityholders to
take any action specified in Section 8.01, to be held at such time and at such
place in New York or Wilmington, Delaware, as the Trustee shall determine.
Notice of every meeting of the Securityholders, setting forth the time and the
place of such meeting and in general terms the action proposed to be taken at
such meeting, shall be mailed to holders of Debt Securities affected at their
addresses as they shall appear on the Debt Securities Register. Such notice
shall be mailed not less than 20 nor more than 180 days prior to the date fixed
for the meeting.
SECTION 8.03. Call of Meetings by Company or Securityholders.
----------------------------------------------
In case at any time the Company pursuant to a Board Resolution,
or the holders of at least 10% in aggregate principal amount of the Debt
Securities, as the case may be, then outstanding, shall have requested the
Trustee to call a meeting of Securityholders, by written request setting forth
in reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within 20 days after
receipt of such request, then the Company or such Securityholders may determine
the time and the place in St. Louis, Missouri for such meeting and may call such
meeting to take any action authorized in Section 8.01, by mailing notice thereof
as provided in Section 8.02.
SECTION 8.04. Qualifications for Voting.
-------------------------
To be entitled to vote at any meeting of Securityholders a Person
shall be (a) a holder of one or more Debt Securities with respect to which the
meeting is being held or (b) a Person appointed by an instrument in writing as
proxy by a holder of one or more such Debt Securities. The only Persons who
shall be entitled to be present or to speak at any meeting of Securityholders
shall be the Persons entitled to vote at such meeting and their counsel and any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 8.05. Regulations.
-----------
Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Securityholders, in regard to proof of the holding of Debt Securities
and of the appointment of proxies, and in regard to the appointment and duties
of inspectors of votes, the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters concerning the
conduct of the meeting as it shall deem appropriate.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Securityholders as provided in Section 8.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote at the meeting.
Subject to the provisions of Section 7.04, at any meeting each
holder of Debt Securities with respect to which such meeting is being held or
proxy therefor shall be entitled to one vote for each $1,000 principal amount of
Debt Securities held or represented by such holder; provided, however, that no
-------- -------
vote shall be cast or counted at any meeting in respect of any Debt Security
challenged as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Debt Securities held by such chairman or instruments in writing as
aforesaid duly designating such chairman as the Person to vote on behalf of
other Securityholders. Any meeting of Securityholders duly called pursuant to
the provisions of Section 8.02 or 8.03 may be adjourned from time to time by a
majority of those present, whether or not constituting a quorum, and the meeting
may be held as so adjourned without further notice.
SECTION 8.06. Voting.
------
The vote upon any resolution submitted to any meeting of holders
of Debt Securities with respect to which such meeting is being held shall be by
written ballots on which shall be subscribed the signatures of such holders or
of their representatives by proxy and the serial number or numbers of the Debt
Securities held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in triplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
meeting of Securityholders shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more Persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that said notice was mailed as provided in Section 8.02. The record
shall show the serial numbers of the Debt Securities voting in favor of or
against any resolution. The record shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting.
Any record so signed and verified shall be conclusive evidence of
the matters therein stated.
SECTION 8.07. Quorum; Actions.
---------------
The Persons entitled to vote a majority in outstanding principal
amount of the Debt Securities shall constitute a quorum for a meeting of
Securityholders; provided, however, that if any action is to be taken at such
-------- -------
meeting with respect to a consent, waiver, request, demand, notice,
authorization, direction or other action which may be given by the holders of
not less than a specified percentage in outstanding principal amount of the Debt
Securities, the Persons holding or representing such specified percentage in
outstanding principal amount of the Debt Securities will constitute a quorum. In
the absence of a quorum within 30 minutes of the time appointed for any such
meeting, the meeting shall, if convened at the request of Securityholders, be
dissolved. In any other case the meeting may be adjourned for a period of not
less than 10 days as determined by the permanent 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 permanent 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 8.02, 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 outstanding principal amount of the Debt Securities which shall constitute a
quorum.
Except as limited by the proviso in the first paragraph of
Section 9.02, any resolution presented to a meeting or adjourned meeting duly
reconvened at which a quorum is present as aforesaid may be adopted by the
affirmative vote of the holders of not less than a majority in outstanding
principal amount of the Debt Securities; provided, however, that, except as
-------- -------
limited by the proviso in the first paragraph of Section 9.02, any resolution
with respect to any consent, waiver, request, demand, notice, authorization,
direction or other action that this Indenture expressly provides may be given by
the holders of not less than a specified percentage in outstanding principal
amount of the Debt Securities may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid only by
the affirmative vote of the holders of not less than such specified percentage
in outstanding principal amount of the Debt Securities.
Any resolution passed or decision taken at any meeting of holders
of Debt Securities duly held in accordance with this Section shall be binding on
all the Securityholders, whether or not present or represented at the meeting.
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures without Consent of Security-
---------------------------------------------------------
holders.
- -------
The Company, when authorized by a Board Resolution, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto, without the consent of the Securityholders, for
one or more of the following purposes:
(a) to evidence the succession of another corporation to the
Company, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Company,
pursuant to Article XI hereof;
(b) to add to the covenants of the Company such further
covenants, restrictions or conditions for the protection of the holders of Debt
Securities as the Board of Directors shall consider to be for the protection of
the holders of such Debt Securities, and to make the occurrence, or the
occurrence and continuance, of a default in any of such additional covenants,
restrictions or conditions a default or an Event of Default permitting the
enforcement of all or any of the several remedies provided in this Indenture as
herein set forth; provided, however, that in respect of any such additional
-------- -------
covenant, restriction or condition such supplemental indenture may provide for a
particular period of grace after default (which period may be shorter or longer
than that allowed in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available to the Trustee
upon such default;
(c) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture which may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to matters or
questions arising under this Indenture; provided, that any such action shall not
--------
adversely affect the interests of the holders of the Debt Securities;
(d) to add to, delete from, or revise the terms of Debt
Securities, including, without limitation, any terms relating to the issuance,
exchange, registration or transfer of Debt Securities, including to provide for
transfer procedures and restrictions substantially similar to those applicable
to the Capital Securities, as required by Section 2.05 (for purposes of assuring
that no registration of Debt Securities is required under the Securities Act of
1933, as amended); provided, that any such action shall not adversely affect the
--------
interests of the holders of the Debt Securities then outstanding (it being
understood, for purposes of this proviso, that transfer restrictions on Debt
Securities substantially similar to those applicable to Capital Securities shall
not be deemed to adversely affect the holders of the Debt Securities);
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Debt Securities and to add
to or change any of the provisions of this Indenture as shall be necessary to
provide for or facilitate the administration of the trusts hereunder by more
than one Trustee, pursuant to the requirements of Section 6.10;
(f) to make any change (other than as elsewhere provided in this
paragraph) that does not adversely affect the rights of any Securityholder in
any material respect; or
(g) to provide for the issuance of and establish the form and
terms and conditions of the Debt Securities, to establish the form of any
certifications required to be furnished pursuant to the terms of this Indenture
or the Debt Securities, or to add to the rights of the holders of Debt
Securities.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to, but may in its discretion, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section 9.01 may be executed by the Company and the Trustee without the consent
of the holders of any of the Debt Securities at the time outstanding,
notwithstanding any of the provisions of Section 9.02.
SECTION 9.02. Supplemental Indentures with Consent of Securityholders.
-------------------------------------------------------
With the consent (evidenced as provided in Section 7.01) of the
holders of not less than a majority in aggregate principal amount of the Debt
Securities at the time outstanding affected by such supplemental indenture
(voting as a class), the Company, when authorized by a Board Resolution, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act, then in effect, applicable to indentures qualified
thereunder) for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the holders
of the Debt Securities; provided, however, that no such supplemental indenture
-------- -------
shall without such consent of the holders of each Debt Security then outstanding
and affected thereby (i) extend the fixed maturity of any Debt Security, or
reduce the principal amount thereof or any premium thereon, or reduce the rate
or extend the time of payment of interest thereon, or reduce any amount payable
on redemption thereof or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than that provided in the Debt
Securities, or impair or affect the right of any Securityholder to institute
suit for payment thereof or impair the right of repayment, if any, at the option
of the holder, or (ii) reduce the aforesaid percentage of Debt Securities the
holders of which are required to consent to any such supplemental indenture; and
provided, further, that if the Debt Securities are held by the Trust or a
- -------- -------
trustee of such trust, such supplemental indenture shall not be effective until
the holders of a majority in liquidation preference of the Trust Securities
shall have consented to such supplemental indenture; provided, further, that if
-------- -------
the consent of the Securityholder of each outstanding Debt Security is required,
such supplemental indenture shall not be effective until each holder of the
Trust Securities shall have consented to such supplemental indenture.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Securityholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Trustee shall transmit by mail, first class postage prepaid, a notice, prepared
by the Company, setting forth in general terms the substance of such
supplemental indenture, to the Securityholders as their names and addresses
appear upon the Debt Security Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
It shall not be necessary for the consent of the Securityholders
under this Section 9.02 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall approve
the substance thereof.
SECTION 9.03. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture pursuant to the
provisions of this Article IX, this Indenture shall be and be deemed to be
modified and amended in accordance therewith and the respective rights,
limitations of rights, obligations, duties and immunities under this Indenture
of the Trustee, the Company and the holders of Debt Securities shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.04. Notation on Debt Securities.
---------------------------
Debt Securities authenticated and delivered after the execution
of any supplemental indenture pursuant to the provisions of this Article IX may
bear a notation as to any matter provided for in such supplemental indenture. If
the Company or the Trustee shall so determine, new Debt Securities so modified
as to conform, in the opinion of the Board of Directors of the Company, to any
modification of this Indenture contained in any such supplemental indenture may
be prepared and executed by the Company, authenticated by the Trustee or the
Authenticating Agent and delivered in exchange for the Debt Securities then
outstanding.
SECTION 9.05. Evidence of Compliance of Supplemental Indenture to be
---------------------------------------------------------
Furnished to Trustee.
- --------------------
The Trustee, subject to the provisions of Sections 6.01 and 6.02,
shall, in addition to the documents required by Section 14.06, receive an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant hereto complies with the requirements
of this Article IX. The Trustee shall receive an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant to this
Article IX is authorized or permitted by, and conforms to, the terms of this
Article IX and that it is proper for the Trustee under the provisions of this
Article IX to join in the execution thereof.
ARTICLE X
REDEMPTION OF SECURITIES
SECTION 10.01. Optional Redemption.
-------------------
At any time the Company shall have the right, subject to the
receipt by the Company of prior approval from the Federal Reserve, if then
required under applicable capital guidelines or policies of the Federal Reserve,
to redeem the Debt Securities, in whole or in part, on any April 22 or October
22 on or after April 22, 2007 (the "Redemption Date"), at the Redemption Price.
SECTION 10.02. Special Event Redemption.
------------------------
If a Special Event shall occur and be continuing, the Company
shall have the right, subject to the receipt by the Company of prior approval
from the Federal Reserve if then required under applicable capital guidelines or
policies of the Federal Reserve, to redeem the Debt Securities, in whole but not
in part, at any time within 90 days following the occurrence of such Special
Event (the "Special Redemption Date"), at the Special Redemption Price.
SECTION 10.03. Notice of Redemption; Selection of Debt Securities.
--------------------------------------------------
In case the Company shall desire to exercise the right to redeem
all, or, as the case may be, any part of the Debt Securities, it shall fix a
date for redemption and shall mail a notice of such redemption at least 30 and
not more than 60 days prior to the date fixed for redemption to the holders of
Debt Securities so to be redeemed as a whole or in part at their last addresses
as the same appear on the Debt Security Register. Such mailing shall be by first
class mail. The notice if mailed in the manner herein provided shall be
conclusively presumed to have been duly given, whether or not the holder
receives such notice. In any case, failure to give such notice by mail or any
defect in the notice to the holder of any Debt Security designated for
redemption as a whole or in part shall not affect the validity of the
proceedings for the redemption of any other Debt Security.
Each such notice of redemption shall specify the CUSIP number, if
any, of the Debt Securities to be redeemed, the date fixed for redemption, the
redemption price at which Debt Securities are to be redeemed, the place or
places of payment, that payment will be made upon presentation and surrender of
such Debt Securities, that interest accrued to the date fixed for redemption
will be paid as specified in said notice, and that on and after said date
interest thereon or on the portions thereof to be redeemed will cease to accrue.
If less than all the Debt Securities are to be redeemed the notice of redemption
shall specify the numbers of the Debt Securities to be redeemed. In case the
Debt Securities are to be redeemed in part only, the notice of redemption shall
state the portion of the principal amount thereof to be redeemed and shall state
that on and after the date fixed for redemption, upon surrender of such Debt
Security, a new Debt Security or Debt Securities in principal amount equal to
the unredeemed portion thereof will be issued.
Prior to 10:00 a.m. New York City time on the Redemption Date or
the Special Redemption Date specified in the notice of redemption given as
provided in this Section, the Company will deposit with the Trustee or with one
or more paying agents an amount of money sufficient to redeem on the redemption
date all the Debt Securities so called for redemption at the appropriate
redemption price, together with accrued interest to the date fixed for
redemption.
The Company will give the Trustee notice not less than 45 nor
more than 60 days prior to the redemption date as to the redemption price at
which the Debt Securities are to be redeemed and the aggregate principal amount
of Debt Securities to be redeemed and the Trustee shall select, in such manner
as in its sole discretion it shall deem appropriate and fair, the Debt
Securities or portions thereof (in integral multiples of $1,000) to be redeemed.
SECTION 10.04. Payment of Debt Securities Called for Redemption.
------------------------------------------------
If notice of redemption has been given as provided in Section
10.03, the Debt Securities or portions of Debt Securities with respect to which
such notice has been given shall become due and payable on the Redemption Date
or the Special Redemption Date (as the case may be) and at the place or places
stated in such notice at the applicable redemption price, together with interest
accrued to the date fixed for redemption, and on and after said Redemption Date
or the Special Redemption Date (unless the Company shall default in the payment
of such Debt Securities at the redemption price, together with interest accrued
to said date) interest on the Debt Securities or portions of Debt Securities so
called for redemption shall cease to accrue. On presentation and surrender of
such Debt Securities at a place of payment specified in said notice, such Debt
Securities or the specified portions thereof shall be paid and redeemed by the
Company at the applicable redemption price, together with interest accrued
thereon to the Redemption Date or the Special Redemption Date (as the case may
be).
Upon presentation of any Debt Security redeemed in part only, the
Company shall execute and the Trustee shall authenticate and make available for
delivery to the holder thereof, at the expense of the Company, a new Debt
Security or Debt Securities of authorized denominations in principal amount
equal to the unredeemed portion of the Debt Security so presented.
ARTICLE XI
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 11.01. Company May Consolidate, etc., on Certain Terms.
-----------------------------------------------
Nothing contained in this Indenture or in the Debt Securities
shall prevent any consolidation or merger of the Company with or into any other
corporation or corporations (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 sale, conveyance,
transfer or other disposition of the property or capital stock of the Company or
its successor or successors as an entirety, or substantially as an entirety, to
any other corporation (whether or not affiliated with the Company, or its
successor or successors) authorized to acquire and operate the same; provided,
--------
however, that the Company hereby covenants and agrees that, upon any such
- -------
consolidation, merger (where the Company is not the surviving corporation),
sale, conveyance, transfer or other disposition, the due and punctual payment of
the principal of (and premium, if any) and interest on all of the Debt
Securities in accordance with their terms, according to their tenor, and the due
and punctual performance and observance of all the covenants and conditions of
this Indenture to be kept or performed by the Company, shall be expressly
assumed by supplemental indenture reasonably satisfactory in form to the Trustee
executed and delivered to the Trustee by the entity formed by such
consolidation, or into which the Company shall have been merged, or by the
entity which shall have acquired such property or capital stock.
SECTION 11.02. Successor Entity to be Substituted.
----------------------------------
In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition and upon the assumption by the successor entity,
by supplemental indenture, executed and delivered to the Trustee and reasonably
satisfactory in form to the Trustee, of the due and punctual payment of the
principal of and premium, if any, and interest on all of the Debt Securities and
the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed or observed by the Company, such
successor entity shall succeed to and be substituted for the Company, with the
same effect as if it had been named herein as the Company, and thereupon the
predecessor entity shall be relieved of any further liability or obligation
hereunder or upon the Debt Securities. Such successor entity thereupon may cause
to be signed, and may issue either in its own name or in the name of the
Company, any or all of the Debt Securities issuable hereunder which theretofore
shall not have been signed by the Company and delivered to the Trustee or the
Authenticating Agent; and, upon the order of such successor entity instead of
the Company and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee or the Authenticating Agent shall authenticate
and deliver any Debt Securities which previously shall have been signed and
delivered by the officers of the Company, to the Trustee or the Authenticating
Agent for authentication, and any Debt Securities which such successor entity
thereafter shall cause to be signed and delivered to the Trustee or the
Authenticating Agent for that purpose. All the Debt Securities so issued shall
in all respects have the same legal rank and benefit under this Indenture as the
Debt Securities theretofore or thereafter issued in accordance with the terms of
this Indenture as though all of such Debt Securities had been issued at the date
of the execution hereof.
SECTION 11.03. Opinion of Counsel to be Given to Trustee.
-----------------------------------------
The Trustee, subject to the provisions of Sections 6.01 and 6.02,
shall receive, in addition to the Opinion of Counsel required by Section 9.05,
an Opinion of Counsel as conclusive evidence that any consolidation, merger,
sale, conveyance, transfer or other disposition, and any assumption, permitted
or required by the terms of this Article XI complies with the provisions of this
Article XI.
ARTICLE XII
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 12.01. Discharge of Indenture.
----------------------
When (a) the Company shall deliver to the Trustee for
cancellation all Debt Securities theretofore authenticated (other than any Debt
Securities which shall have been destroyed, lost or stolen and which shall have
been replaced or paid as provided in Section 2.06) and not theretofore canceled,
or (b) all the Debt Securities not theretofore canceled or delivered to the
Trustee for cancellation shall have become due and payable, or are by their
terms to become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption, and the Company shall deposit with the
Trustee, in trust, funds, which shall be immediately due and payable, sufficient
to pay at maturity or upon redemption all of the Debt Securities (other than any
Debt Securities which shall have been destroyed, lost or stolen and which shall
have been replaced or paid as provided in Section 2.06) not theretofore canceled
or delivered to the Trustee for cancellation, including principal and premium,
if any, and interest due or to become due to such date of maturity or redemption
date, as the case may be, but excluding, however, the amount of any moneys for
the payment of principal of, and premium, if any, or interest on the Debt
Securities (1) theretofore repaid to the Company in accordance with the
provisions of Section 12.04, or (2) paid to any state or to the District of
Columbia pursuant to its unclaimed property or similar laws, and if in the case
of either clause (a) or clause (b) the Company shall also pay or cause to be
paid all other sums payable hereunder by the Company, then this Indenture shall
cease to be of further effect except for the provisions of Sections 2.05, 2.06,
3.01, 3.02, 3.04, 6.06, 6.09 and 12.04 hereof, which shall survive until such
Debt Securities shall mature or are redeemed, as the case may be, and are paid.
Thereafter, Sections 6.06, 6.09 and 12.04 shall survive, and the Trustee, on
demand of the Company accompanied by an Officers' Certificate and an Opinion of
Counsel, each stating that all conditions precedent herein provided for relating
to the satisfaction and discharge of this Indenture have been complied with, and
at the cost and expense of the Company, shall execute proper instruments
acknowledging satisfaction of and discharging this Indenture, the Company,
however, hereby agreeing to reimburse the Trustee for any costs or expenses
thereafter reasonably and properly incurred by the Trustee in connection with
this Indenture or the Debt Securities.
SECTION 12.02. Deposited Moneys to be Held in Trust by Trustee.
-----------------------------------------------
Subject to the provisions of Section 12.04, all moneys deposited
with the Trustee pursuant to Section 12.01 shall be held in trust and applied by
it to the payment, either directly or through any paying agent (including the
Company if acting as its own paying agent), to the holders of the particular
Debt Securities for the payment of which such moneys have been deposited with
the Trustee, of all sums due and to become due thereon for principal, and
premium, if any, and interest.
SECTION 12.03. Paying Agent to Repay Moneys Held.
---------------------------------
Upon the satisfaction and discharge of this Indenture, all moneys
then held by any paying agent of the Debt Securities (other than the Trustee)
shall, upon demand of the Company, be repaid to the Company or paid to the
Trustee, and thereupon such paying agent shall be released from all further
liability with respect to such moneys.
SECTION 12.04. Return of Unclaimed Moneys.
--------------------------
Any moneys deposited with or paid to the Trustee or any paying
agent for payment of the principal of, and premium, if any, or interest on Debt
Securities and not applied but remaining unclaimed by the holders of Debt
Securities for two years after the date upon which the principal of, and
premium, if any, or interest on such Debt Securities, as the case may be, shall
have become due and payable, shall be repaid to the Company by the Trustee or
such paying agent on written demand; and the holder of any of the Debt
Securities shall thereafter look only to the Company for any payment which such
holder may be entitled to collect and all liability of the Trustee or such
paying agent with respect to such moneys shall thereupon cease.
ARTICLE XIII
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 13.01. Indenture and Debt Securities Solely Corporate
--------------------------------------------------------
Obligations.
- -----------
No recourse for the payment of the principal of or premium, if
any, or interest on any Debt Security, or for any claim based thereon or
otherwise in respect thereof, and no recourse under or upon any obligation,
covenant or agreement of the Company in this Indenture or in any supplemental
indenture, or in any such Debt Security, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer, director, employee or agent, as such, past, present or
future, of the Company or of any predecessor or successor corporation of the
Company, either directly or through the Company or any successor corporation of
the Company, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Indenture and
the issue of the Debt Securities.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
SECTION 14.01. Successors.
----------
All the covenants, stipulations, promises and agreements of the
Company contained in this Indenture shall bind its successors and assigns
whether so expressed or not.
SECTION 14.02. Official Acts by Successor Entity.
---------------------------------
Any act or proceeding by any provision of this Indenture
authorized or required to be done or performed by any board, committee or
officer of the Company shall and may be done and performed with like force and
effect by the like board, committee, officer or other authorized Person of any
entity that shall at the time be the lawful successor of the Company.
SECTION 14.03. Surrender of Company Powers.
---------------------------
The Company by instrument in writing executed by authority of 2/3
(two-thirds) of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company and thereupon such power so
surrendered shall terminate both as to the Company and as to any permitted
successor.
SECTION 14.04. Addresses for Notices, etc.
--------------------------
Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the
Securityholders on the Company may be given or served in writing by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee for such purpose) to the Company at:
600 James S. McDonnell Blvd., Mail Code #014
Hazelwood, MO 63042
Attention: Allen H. Blake
Any notice, direction, request or demand by any Securityholder or
the Company to or upon the Trustee shall be deemed to have been sufficiently
given or made, for all purposes, if given or made in writing at the office of
Wilmington Trust Company at:
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
SECTION 14.05. Governing Law.
-------------
This Indenture and each Debt Security shall be deemed to be a
contract made under the law of the State of New York, and for all purposes shall
be governed by and construed in accordance with the law of said State, without
regard to conflict of laws principles thereof.
SECTION 14.06. Evidence of Compliance with Conditions Precedent.
------------------------------------------------
Upon any application or demand by the Company to the Trustee to
take any action under any of the provisions of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that in the opinion of
the signers all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with and an Opinion of
Counsel stating that, in the opinion of such counsel, all such conditions
precedent have been complied with (except that no such Opinion of Counsel is
required to be furnished to the Trustee in connection with the authentication
and issuance of Debt Securities issued on the date of this Indenture).
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture (except certificates delivered pursuant to
Section 3.05) shall include (a) a statement that the person making such
certificate or opinion has read such covenant or condition; (b) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based; (c) a statement that, in the opinion of such person, he or she has made
such examination or investigation as is necessary to enable him or her to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and (d) a statement as to whether or not, in the opinion of
such person, such condition or covenant has been complied with.
SECTION 14.07. Non-Business Days.
-----------------
In any case where the date of payment of interest on or principal
of the Debt Securities is not a Business Day, the payment of such interest on or
principal of the Debt Securities need not be made on such date but may be made
on the next succeeding Business Day, with the same force and effect as if made
on the date of payment and no interest shall accrue for the period from and
after such date, except if such Business Day is in the next succeeding calendar
year, such payment will be made on the immediately preceding Business Day.
SECTION 14.08. Table of Contents, Headings, etc.
--------------------------------
The table of contents and the titles and headings of the articles
and sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
SECTION 14.09. Execution in Counterparts.
-------------------------
This Indenture may be executed in any number of counterparts,
each of which shall be an original, but such counterparts shall together
constitute but one and the same instrument.
SECTION 14.10. Separability.
------------
In case any one or more of the provisions contained in this
Indenture or in the Debt Securities shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Indenture or of
such Debt Securities, but this Indenture and such Debt Securities shall be
construed as if such invalid or illegal or unenforceable provision had never
been contained herein or therein.
SECTION 14.11. Assignment.
----------
Subject to Article 11, the Company will have the right at all
times to assign any of its rights or obligations under this Indenture to a
direct or indirect wholly owned Subsidiary of the Company, provided, that, in
--------
the event of any such assignment, the Company will remain liable for all such
obligations. Subject to the foregoing, this Indenture is binding upon and inures
to the benefit of the parties hereto and their respective successors and
assigns. This Indenture may not otherwise be assigned by the parties thereto.
SECTION 14.12. Acknowledgment of Rights.
------------------------
The Company acknowledges that, with respect to any Debt
Securities held by the Trust or the Institutional Trustee of the Trust, if the
Institutional Trustee of the Trust fails to enforce its rights under this
Indenture as the holder of Debt Securities held as the assets of the Trust after
the holders of a majority in Liquidation Amount of the Capital Securities of the
Trust have so directed in writing such Institutional Trustee, a holder of record
of such Capital Securities may to the fullest extent permitted by law institute
legal proceedings directly against the Company to enforce such Institutional
Trustee's rights under this Indenture without first instituting any legal
proceedings against such Institutional Trustee or any other Person.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest (or premium, if any) or principal on the Debt Securities on the date
such interest (or premium, if any) or principal is otherwise due and payable (or
in the case of redemption, on the redemption date), the Company acknowledges
that a holder of record of Capital Securities of the Trust may directly
institute a proceeding against the Company for enforcement of payment to such
holder directly of the principal of (or premium, if any) or interest on the Debt
Securities having an aggregate principal amount equal to the aggregate
Liquidation Amount of the Capital Securities of such holder on or after the
respective due date specified in the Debt Securities.
ARTICLE XV
SUBORDINATION OF DEBT SECURITIES
SECTION 15.01. Agreement to Subordinate.
------------------------
The Company covenants and agrees, and each holder of Debt
Securities issued hereunder and under any supplemental indenture (the
"Additional Provisions") by such Securityholder's acceptance thereof likewise
covenants and agrees, that all Debt Securities shall be issued subject to the
provisions of this Article XV; and each holder of a Debt Security, whether upon
original issue or upon transfer or assignment thereof, accepts and agrees to be
bound by such provisions.
The payment by the Company of the principal of, and premium, if
any, and interest on all Debt Securities issued hereunder and under any
Additional Provisions shall, to the extent and in the manner hereinafter set
forth, be junior and subordinated in all respects to the prior payment in full
of all Senior Indebtedness of the Company, whether outstanding at the date of
this Indenture or thereafter incurred.
No provision of this Article XV shall prevent the occurrence
of any default or Event of Default hereunder.
SECTION 15.02. Default on Senior Indebtedness.
------------------------------
In the event and during the continuation of any default by the
Company in the payment of principal, premium, interest or any other payment due
on any Senior Indebtedness of the Company following any applicable grace period,
or in the event that the maturity of any Senior Indebtedness of the Company has
been accelerated because of a default, and such acceleration has not been
rescinded or canceled and such Senior Indebtedness has not been paid in full
then, in either case, no payment shall be made by the Company with respect to
the principal of, or premium, if any, or interest on the Debt Securities.
In the event that, notwithstanding the foregoing, any payment
shall be received by the Trustee when such payment is prohibited by the
preceding paragraph of this Section 15.02, such payment shall, subject to
Section 15.06, be held in trust for the benefit of, and shall be paid over or
delivered to, the holders of Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their respective
interests may appear, but only to the extent that the holders of the Senior
Indebtedness (or their representative or representatives or a trustee) notify
the Trustee in writing within 90 days of such payment of the amounts then due
and owing on the Senior Indebtedness and only the amounts specified in such
notice to the Trustee shall be paid to the holders of Senior Indebtedness.
SECTION 15.03. Liquidation; Dissolution; Bankruptcy.
------------------------------------
Upon any payment by the Company or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding-up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
of the Company shall first be paid in full, or payment thereof provided for in
money in accordance with its terms, before any payment is made by the Company on
account of the principal (and premium, if any) or interest on the Debt
Securities; and upon any such dissolution or winding-up or liquidation or
reorganization, any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
which the Securityholders or the Trustee would be entitled to receive from the
Company, except for the provisions of this Article XV, shall be paid by the
Company, or by any receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making such payment or distribution, or by the Securityholders
or by the Trustee under this Indenture if received by them or it, directly to
the holders of Senior Indebtedness of the Company (pro rata to such holders on
the basis of the respective amounts of Senior Indebtedness held by such holders,
as calculated by the Company) or their representative or representatives, or to
the trustee or trustees under any indenture pursuant to which any instruments
evidencing such Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay such Senior Indebtedness in
full, in money or money's worth, after giving effect to any concurrent payment
or distribution to or for the holders of such Senior Indebtedness, before any
payment or distribution is made to the Securityholders.
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, prohibited by the foregoing, shall be received by the
Trustee before all Senior Indebtedness of the Company is paid in full, or
provision is made for such payment in money in accordance with its terms, such
payment or distribution shall be held in trust for the benefit of and shall be
paid over or delivered to the holders of such Senior Indebtedness or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, as calculated by
the Company, for application to the payment of all Senior Indebtedness of the
Company remaining unpaid to the extent necessary to pay such Senior Indebtedness
in full in money in accordance with its terms, after giving effect to any
concurrent payment or distribution to or for the benefit of the holders of such
Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article XV with respect
to the Debt Securities to the payment of all Senior Indebtedness of the Company,
that may at the time be outstanding, provided, that (a) such Senior Indebtedness
is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment, and (b) the rights of the holders of such Senior
Indebtedness are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company with, or the
merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided for in Article IX of this Indenture shall not be
deemed a dissolution, winding-up, liquidation or reorganization for the purposes
of this Section 15.03 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions stated
in Article IX of this Indenture. Nothing in Section 15.02 or in this Section
15.03 shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 6.06 of this Indenture.
SECTION 15.04. Subrogation.
-----------
Subject to the payment in full of all Senior Indebtedness of the
Company, the Securityholders shall be subrogated to the rights of the holders of
such Senior Indebtedness to receive payments or distributions of cash, property
or securities of the Company applicable to such Senior Indebtedness until the
principal of (and premium, if any) and interest on the Debt Securities shall be
paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of such Senior Indebtedness of any cash, property
or securities to which the Securityholders or the Trustee would be entitled
except for the provisions of this Article XV, and no payment over pursuant to
the provisions of this Article XV to or for the benefit of the holders of such
Senior Indebtedness by Securityholders or the Trustee, shall, as between the
Company, its creditors other than holders of Senior Indebtedness of the Company,
and the holders of the Debt Securities be deemed to be a payment or distribution
by the Company to or on account of such Senior Indebtedness. It is understood
that the provisions of this Article XV are and are intended solely for the
purposes of defining the relative rights of the holders of the Debt Securities,
on the one hand, and the holders of such Senior Indebtedness, on the other hand.
Nothing contained in this Article XV or elsewhere in this
Indenture, any Additional Provisions or in the Debt Securities is intended to or
shall impair, as between the Company, its creditors other than the holders of
Senior Indebtedness of the Company, and the holders of the Debt Securities, the
obligation of the Company, which is absolute and unconditional, to pay to the
holders of the Debt Securities the principal of (and premium, if any) and
interest on the Debt Securities as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the holders of the Debt Securities and creditors of the
Company, other than the holders of Senior Indebtedness of the Company, nor shall
anything herein or therein prevent the Trustee or the holder of any Debt
Security from exercising all remedies otherwise permitted by applicable law upon
default under this Indenture, subject to the rights, if any, under this Article
XV of the holders of such Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article XV, the Trustee, subject to the provisions of
Article VI of this Indenture, and the Securityholders shall be entitled to
conclusively rely upon any order or decree made by any court of competent
jurisdiction in which such dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidation trustee, agent or other Person making such
payment or distribution, delivered to the Trustee or to the Securityholders, for
the purposes of ascertaining the Persons entitled to participate in such
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article XV.
SECTION 15.05. Trustee to Effectuate Subordination.
-----------------------------------
Each Securityholder by such Securityholder's acceptance thereof
authorizes and directs the Trustee on such Securityholder's behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in this Article XV and appoints the Trustee such Securityholder's
attorney-in-fact for any and all such purposes.
SECTION 15.06. Notice by the Company.
---------------------
The Company shall give prompt written notice to a Responsible
Officer of the Trustee at the Principal Office of the Trustee of any fact known
to the Company that would prohibit the making of any payment of moneys to or by
the Trustee in respect of the Debt Securities pursuant to the provisions of this
Article XV. Notwithstanding the provisions of this Article XV or any other
provision of this Indenture or any Additional Provisions, the Trustee shall not
be charged with knowledge of the existence of any facts that would prohibit the
making of any payment of moneys to or by the Trustee in respect of the Debt
Securities pursuant to the provisions of this Article XV, unless and until a
Responsible Officer of the Trustee at the Principal Office of the Trustee shall
have received written notice thereof from the Company or a holder or holders of
Senior Indebtedness or from any trustee therefor; and before the receipt of any
such written notice, the Trustee, subject to the provisions of Article VI of
this Indenture, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the notice
-------- -------
provided for in this Section 15.06 at least two Business Days prior to the date
upon which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any) or interest on any Debt Security), then, anything herein contained to the
contrary notwithstanding, the Trustee shall have full power and authority to
receive such money and to apply the same to the purposes for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it within two Business Days prior to such date.
The Trustee, subject to the provisions of Article VI of this
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a Person representing himself or herself to be a holder of
Senior Indebtedness of the Company (or a trustee or representative on behalf of
such holder) to establish that such notice has been given by a holder of such
Senior Indebtedness or a trustee or representative on behalf of any such holder
or holders. In the event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of such
Senior Indebtedness to participate in any payment or distribution pursuant to
this Article XV, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of such Senior
Indebtedness held by such Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article XV, and, if such evidence is not
furnished, the Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
SECTION 15.07. Rights of the Trustee; Holders of Senior Indebtedness.
-----------------------------------------------------
The Trustee in its individual capacity shall be entitled to all
the rights set forth in this Article XV in respect of any Senior Indebtedness at
any time held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Indenture or any Additional Provisions shall
deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness of the
Company, the Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this Article XV, and
no implied covenants or obligations with respect to the holders of such Senior
Indebtedness shall be read into this Indenture or any Additional Provisions
against the Trustee. The Trustee shall not owe or be deemed to owe any fiduciary
duty to the holders of such Senior Indebtedness and, subject to the provisions
of Article VI of this Indenture, the Trustee shall not be liable to any holder
of such Senior Indebtedness if it shall pay over or deliver to Securityholders,
the Company or any other Person money or assets to which any holder of such
Senior Indebtedness shall be entitled by virtue of this Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 6.06.
SECTION 15.08. Subordination May Not Be Impaired.
---------------------------------
No right of any present or future holder of any Senior
Indebtedness of the Company to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or failure to act on
the part of the Company, or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by the Company, with the terms, provisions
and covenants of this Indenture, regardless of any knowledge thereof that any
such holder may have or otherwise be charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness of the Company may, at any time
and from time to time, without the consent of or notice to the Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this Article XV or
the obligations hereunder of the holders of the Debt Securities to the holders
of such Senior Indebtedness, do any one or more of the following: (a) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Senior Indebtedness, or otherwise amend or supplement in any manner
such Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (b) sell, exchange, release
or otherwise deal with any property pledged, mortgaged or otherwise securing
such Senior Indebtedness; (c) release any Person liable in any manner for the
collection of such Senior Indebtedness; and (d) exercise or refrain from
exercising any rights against the Company, and any other Person.
Wilmington Trust Company, in its capacity as Trustee, hereby
accepts the trusts in this Indenture declared and provided, upon the terms and
conditions herein above set forth.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed by their respective officers thereunto duly
authorized, as of the day and year first above written.
FIRST BANKS, INC.
By /s/ Allen H. Blake
----------------------------------------
Name: Allen H. Blake
Title: President and Chief Operating
Officer
WILMINGTON TRUST COMPANY, as Trustee
By /s/ Anita E. Dallago
----------------------------------------
Name: Anita E. Dallago
Title: Senior Financial Services
Officer
EXHIBIT A
FORM OF FLOATING RATE JUNIOR SUBORDINATED DEBT SECURITY DUE 2032
[FORM OF FACE OF SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY
(A) TO THE COMPANY, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO AN EXEMPTION
FROM REGISTRATION TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (D)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSES (C) OR (D) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN
ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY
WITH THE FOREGOING RESTRICTIONS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS
AND WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS
SECURITY UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
(EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY
REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,
95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR
HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO
WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING
ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY
USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE,
OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE
STATUTORY OR ADMINISTRATIVE EXEMPTION.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY
THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING
A PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS
THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A PRINCIPAL
AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER
OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO
HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.
THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES
OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT
INSURANCE CORPORATION (THE "FDIC"). THIS OBLIGATION IS SUBORDINATED TO THE
CLAIMS OF DEPOSITORS AND THE CLAIMS OF GENERAL AND SECURED CREDITORS OF THE
COMPANY, IS INELIGIBLE AS COLLATERAL FOR A LOAN BY THE COMPANY OR ANY OF ITS
SUBSIDIARIES AND IS NOT SECURED.
Floating Rate Junior Subordinated Debt Security due 2032
of
FIRST BANKS, INC.
First Banks, Inc., a bank holding company incorporated in Missouri (the
"Company"), for value received promises to pay to Wilmington Trust Company, not
in its individual capacity but solely as Institutional Trustee for First Bank
Capital Trust, a Delaware statutory business trust (the "Holder") or registered
assigns, the principal sum of Twenty Five Million Seven Hundred Seventy Four
Thousand Dollars ($25,774,000) on April 22, 2032, and to pay interest on said
principal sum from April 10, 2002, or from the most recent interest payment date
(each such date, an "Interest Payment Date") to which interest has been paid or
duly provided for, semi-annually (subject to deferral as set forth herein) in
arrears on April 22 and October 22 of each year commencing October 22, 2002, at
a variable per annum rate equal to LIBOR (as defined in the Indenture) plus
3.875% (the "Interest Rate") (provided, that the applicable Interest Rate may
--------
not exceed 11.00% through the Interest Payment Date in April 2007) until the
principal hereof shall have become due and payable, and on any overdue principal
and (without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at an
annual rate equal to the Interest Rate in effect for each such Extension Period
compounded semi-annually. The amount of interest payable on any Interest Payment
Date shall be computed on the basis of a 360-day year and the actual number of
days elapsed in the relevant interest period. In the event that any date on
which the principal or interest is payable on this Debt Security is not a
Business Day, then payment payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Debt Security (or one or more
Predecessor Securities, as defined in said Indenture) is registered at the close
of business on the regular record date for such interest installment, except
that interest and any Deferred Interest payable on the Maturity Date shall be
paid to the Person to whom principal is paid. Any such interest installment not
punctually paid or duly provided for shall forthwith cease to be payable to the
registered holders on such regular record date and may be paid to the Person in
whose name this Debt Security (or one or more Predecessor Debt Securities) is
registered at the close of business on a special record date to be fixed by the
Trustee for the payment of such defaulted interest, notice whereof shall be
given to the registered holders of the Debt Securities not less than 10 days
prior to such special record date, all as more fully provided in the Indenture.
The principal of and interest on this Debt Security shall be payable at the
office or agency of the Trustee (or other paying agent appointed by the Company)
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
-------- -------
option of the Company by check mailed to the registered holder at such address
as shall appear in the Debt Security Register or by wire transfer to an account
appropriately designated by the holder hereof. Notwithstanding the foregoing, so
long as the holder of this Debt Security is the Institutional Trustee, the
payment of the principal of and interest on this Debt Security will be made in
immediately available funds at such place and to such account as may be
designated by the Trustee.
So long as no Event of Default has occurred and is continuing, the
Company shall have the right, from time to time and without causing an Event of
Default, to defer payments of interest on the Debt Securities by extending the
interest payment period on the Debt Securities at any time and from time to time
during the term of the Debt Securities, for up to 10 consecutive semi-annual
periods (each such extended interest payment period, an "Extension Period"),
during which Extension Period no interest shall be due and payable (except any
Additional Interest that may be due and payable). During any Extension Period,
interest will continue to accrue on the Debt Securities, and interest on such
accrued interest (such accrued interest and interest thereon referred to herein
as "Deferred Interest") will accrue, at the Interest Rate, compounded
semi-annually from the date such Deferred Interest would have been payable were
it not for the Extension Period, both to the extent permitted by law. No
Extension Period may end on a date other than an Interest Payment Date. At the
end of any such Extension Period the Company shall pay all Deferred Interest
then accrued and unpaid on the Debt Securities; provided, however, that no
-------- -------
Extension Period may extend beyond the Maturity Date and provided, further,
however, during any such Extension Period, the Company may not (i) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the Debt Securities (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company (A) in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of one or more employees, officers,
directors or consultants, (B) in connection with a dividend reinvestment or
stockholder stock purchase plan or (C) in connection with the issuance of
capital stock of the Company (or securities convertible into or exercisable for
such capital stock), as consideration in an acquisition transaction entered into
prior to the applicable Extension Period, (b) as a result of any exchange or
conversion of any class or series of the Company's capital stock (or any capital
stock of a subsidiary of the Company) for any class or series of the Company's
capital stock or of any class or series of the Company's indebtedness for any
class or series of the Company's capital stock, (c) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (d) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock). Prior
to the termination of any Extension Period, the Company may further extend such
period, provided, that such period together with all such previous and further
--------
consecutive extensions thereof shall not exceed 10 consecutive semi-annual
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all Deferred Interest, the Company may
commence a new Extension Period, subject to the foregoing requirements. No
interest or Deferred Interest shall be due and payable during an Extension
Period, except at the end thereof, but each installment of interest that would
otherwise have been due and payable during such Extension Period shall bear
Deferred Interest. The Company must give the Trustee notice of its election to
begin such Extension Period at least one Business Day prior to the earlier of
(i) the next succeeding date on which interest on the Debt Securities would have
been payable except for the election to begin such Extension Period or (ii) the
date such interest is payable, but in any event not later than the related
regular record date.
The indebtedness evidenced by this Debt Security is, to the extent
provided in the Indenture, subordinate and junior in right of payment to the
prior payment in full of all Senior Indebtedness, and this Debt Security is
issued subject to the provisions of the Indenture with respect thereto. Each
holder of this Debt Security, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on such
holder's behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination so provided and (c) appoints the
Trustee such holder's attorney-in-fact for any and all such purposes. Each
holder hereof, by such holder's acceptance hereof, hereby waives all notice of
the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Indebtedness, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.
The Company waives demand, presentment for payment, notice of nonpayment,
notice of protest, and all other notices.
This Debt Security shall not be entitled to any benefit under the
Indenture hereinafter referred to and shall not be valid or become obligatory
for any purpose until the certificate of authentication hereon shall have been
signed by or on behalf of the Trustee.
The provisions of this Debt Security are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has duly executed this certificate.
FIRST BANKS, INC.
By:
------------------------------------
Name:
Title:
Dated: __________________, 2002
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Debt Securities referred to in the within-mentioned
Indenture.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as the
Trustee
By:
-----------------------------------
Authorized Officer
Dated: __________________, 2002
[FORM OF REVERSE OF SECURITY]
-----------------------------
This Debt Security is one of a duly authorized series of Debt Securities
of the Company, all issued or to be issued pursuant to an Indenture (the
"Indenture"), dated as of April 10, 2002, duly executed and delivered between
the Company and Wilmington Trust Company, as Trustee (the "Trustee"), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the Debt
Securities (referred to herein as the "Debt Securities") of which this Debt
Security is a part. The summary of the terms of this Debt Security contained
herein does not purport to be complete and is qualified by reference to the
Indenture.
Upon the occurrence and continuation of a Tax Event, an Investment
Company Event or a Capital Treatment Event, this Debt Security may become due
and payable, in whole but not in part, at any time, within 90 days following the
occurrence of such Tax Event, Investment Company Event or Capital Treatment
Event (the "Special Redemption Date"), as the case may be, at the Special
Redemption Price. The Company shall also have the right to redeem this Debt
Security at the option of the Company, in whole or in part, on any April 22 or
October 22 on or after April 22, 2007 (a "Redemption Date"), at the Redemption
Price.
Any redemption pursuant to the preceding paragraph will be made, subject
to the receipt by the Company of prior approval from the Board of Governors of
the Federal Reserve System (the "Federal Reserve") if then required under
applicable capital guidelines or policies of the Federal Reserve, upon not less
than 30 days' nor more than 60 days' notice. If the Debt Securities are only
partially redeemed by the Company, the Debt Securities will be redeemed pro rata
or by lot or by any other method utilized by the Trustee.
"Redemption Price" means 100% of the principal amount of the Debt
Securities being redeemed plus accrued and unpaid interest on such Debt
Securities to the Redemption Date or, in the case of a redemption due to the
occurrence of a Special Event, to the Special Redemption Date if such Special
Redemption Date is on or after April 22, 2007.
"Special Redemption Price" means (1) if the Special Redemption Date is
before April 22, 2007, the greater of (a) 100% of the principal amount of the
Debt Securities being redeemed pursuant to Section 10.02 of the Indenture or (b)
as determined by a Quotation Agent, the sum of the present values of the
principal amount payable as part of the Redemption Price with respect to a
redemption as of April 22, 2007, together with the present value of interest
payments calculated at a fixed per annum rate of interest equal to 9.95% over
the Remaining Life of such Debt Securities, discounted to the Special Redemption
Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 0.50%, plus, in the case of either (a) or (b),
accrued and unpaid interest on such Debt Securities to the Special Redemption
Date and (2) if the Special Redemption Date is on or after April 22, 2007, the
Redemption Price for such Special Redemption Date.
"Comparable Treasury Issue" means with respect to any Special Redemption
Date, the United States Treasury security selected by the Quotation Agent as
having a maturity comparable to the Remaining Life that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
Remaining Life. If no United States Treasury security has a maturity which is
within a period from three months before to three months after April 22, 2007,
the two most closely corresponding United States Treasury securities shall be
used as the Comparable Treasury Issue, and the Treasury Rate shall be
interpolated or extrapolated on a straight-line basis, rounding to the nearest
month using such securities.
"Comparable Treasury Price" means (a) the average of five Reference
Treasury Dealer Quotations for such Special Redemption Date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or (b) if the
Quotation Agent receives fewer than five such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Primary Treasury Dealer" means a primary United States Government
securities dealer in New York City.
"Quotation Agent" means Salomon Smith Barney Inc. and its successors;
provided, however, that if the foregoing shall cease to be a Primary Treasury
- -------- -------
Dealer, the Company shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Trustee after consultation with
the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Special Redemption Date, the average, as
determined by the Quotation Agent, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m., New York City time, on the third Business Day preceding
such Special Redemption Date.
"Treasury Rate" means (i) the yield, under the heading which represents
the average for the week immediately prior to the date of calculation, appearing
in the most recently published statistical release designated H.15 (519) or any
successor publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities", for the
maturity corresponding to the Remaining Life (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Special Redemption Date. The Treasury Rate shall be calculated on the third
Business Day preceding the Special Redemption Date.
In the event of redemption of this Debt Security in part only, a new Debt
Security or Debt Securities for the unredeemed portion hereof will be issued in
the name of the holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debt Securities may be
declared due and payable, and upon such declaration of acceleration shall become
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Debt Securities at the time outstanding affected
thereby, as specified in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the holders of the Debt Securities;
provided, however, that no such supplemental indenture shall, among other
- -------- -------
things, without the consent of the holders of each Debt Security then
outstanding and affected thereby (i) extend the fixed maturity of the Debt
Securities, or reduce the principal amount thereof or any redemption premium
thereon, or reduce the rate or extend the time of payment of interest thereon,
or make the principal of, or any interest or premium on, the Debt Securities
payable in any coin or currency other than that provided in the Debt Securities,
or impair or affect the right of any holder of Debt Securities to institute suit
for the payment thereof, or (ii) reduce the aforesaid percentage of Debt
Securities, the holders of which are required to consent to any such
supplemental indenture. The Indenture also contains provisions permitting the
holders of a majority in aggregate principal amount of the Debt Securities at
the time outstanding, on behalf of all of the holders of the Debt Securities, to
waive any past default in the performance of any of the covenants contained in
the Indenture, or established pursuant to the Indenture, and its consequences,
except a default in the payment of the principal of or premium, if any, or
interest on any of the Debt Securities. Any such consent or waiver by the
registered holder of this Debt Security (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all future
holders and owners of this Debt Security and of any Debt Security issued in
exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Debt Security.
No reference herein to the Indenture and no provision of this Debt
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Debt Security at the time and place and at
the rate and in the money herein prescribed.
As provided in the Indenture and subject to certain limitations herein
and therein set forth, this Debt Security is transferable by the registered
holder hereof on the Debt Security Register of the Company, upon surrender of
this Debt Security for registration of transfer at the office or agency of the
Trustee in Wilmington, Delaware accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company or the Trustee duly
executed by the registered holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Debt Securities of
authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees. No service charge will be
made for any such registration of transfer, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
relation thereto.
Prior to due presentment for registration of transfer of this Debt
Security, the Company, the Trustee, any Authenticating Agent, any paying agent,
any transfer agent and the Debt Security registrar may deem and treat the
registered holder hereof as the absolute owner hereof (whether or not this Debt
Security shall be overdue and notwithstanding any notice of ownership or writing
hereon) for the purpose of receiving payment of or on account of the principal
hereof and interest due hereon and for all other purposes, and neither the
Company nor the Trustee nor any Authenticating Agent nor any paying agent nor
any transfer agent nor any Debt Security registrar shall be affected by any
notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debt Security, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
The Debt Securities are Issuable only in registered certificated form
without coupons. As provided in the Indenture and subject to certain limitations
herein and therein set forth, Debt Securities are exchangeable for a like
aggregate principal amount of Debt Securities of a different authorized
denomination, as requested by the holder surrendering the same.
All terms used in this Debt Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THE DEBT
SECURITIES, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.
Edxhibit 4.16
GUARANTEE AGREEMENT
FIRST BANKS, INC.
Dated as of April 10, 2002
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation......................................................... 1
ARTICLE II
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 2.1 Powers and Duties of the Guarantee Trustee............................................. 4
SECTION 2.2 Certain Rights of the Guarantee Trustee................................................ 5
SECTION 2.3 Not Responsible for Recitals or Issuance of Guarantee.................................. 7
SECTION 2.4 Events of Default; Waiver.............................................................. 8
SECTION 2.5 Events of Default; Notice.............................................................. 8
ARTICLE III
THE GUARANTEE TRUSTEE
SECTION 3.1 The Guarantee Trustee; Eligibility..................................................... 8
SECTION 3.2 Appointment, Removal and Resignation of the Guarantee Trustee.......................... 9
ARTICLE IV
GUARANTEE
SECTION 4.1 Guarantee.............................................................................. 10
SECTION 4.2 Waiver of Notice and Demand............................................................ 10
SECTION 4.3 Obligations Not Affected............................................................... 10
SECTION 4.4 Rights of Holders...................................................................... 11
SECTION 4.5 Guarantee of Payment................................................................... 12
SECTION 4.6 Subrogation............................................................................ 12
SECTION 4.7 Independent Obligations................................................................ 12
SECTION 4.8 Enforcement............................................................................ 12
ARTICLE V
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 5.1 Limitation of Transactions............................................................. 13
SECTION 5.2 Ranking................................................................................ 13
ARTICLE VI
TERMINATION
SECTION 6.1 Termination............................................................................ 14
ARTICLE VII
INDEMNIFICATION
SECTION 7.1 Exculpation............................................................................ 14
SECTION 7.2 Indemnification........................................................................ 14
SECTION 7.3 Compensation; Reimbursement of Expenses................................................ 16
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Successors and Assigns................................................................. 16
SECTION 8.2 Amendments............................................................................. 16
SECTION 8.3 Notices................................................................................ 16
SECTION 8.4 Benefit................................................................................ 17
SECTION 8.5 Governing Law.......................................................................... 17
SECTION 8.6 Counterparts........................................................................... 17
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Guarantee"), dated as of April 10, 2002, is
executed and delivered by First Banks, Inc., a bank holding company incorporated
in Missouri (the "Guarantor"), and Wilmington Trust Company, a Delaware banking
corporation, as trustee (the "Guarantee Trustee"), for the benefit of the
Holders (as defined herein) from time to time of the Capital Securities (as
defined herein) of First Bank Capital Trust, a Delaware statutory business trust
(the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of April 10, 2002, among the trustees named therein of
the Issuer, First Banks, Inc., as sponsor, and the Holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof securities, having an aggregate liquidation amount of
up to $25,000,000, designated the Floating Rate TRUPS(R) (the "Capital
Securities"); and
WHEREAS, as incentive for the Holders to purchase the Capital Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Guarantee, to pay to the Holders of Capital Securities the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of the
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1. Definitions and Interpretation.
------------------------------
In this Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee but not defined in
the preamble above have the respective meanings assigned to them in
this Section 1.1;
(b) a term defined anywhere in this Guarantee has the same
meaning throughout;
(c) all references to "the Guarantee" or "this Guarantee" are to
this Guarantee as modified, supplemented or amended from time to time;
(d) all references in this Guarantee to Articles and Sections are
to Articles and Sections of this Guarantee, unless otherwise
specified;
(e) terms defined in the Declaration as at the date of execution
of this Guarantee have the same meanings when used in this Guarantee,
unless otherwise defined in this Guarantee or unless the context
otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Beneficiaries" means any Person to whom the Issuer is or hereafter
becomes indebted or liable.
"Corporate Trust Office" means the office of the Guarantee Trustee at
which the corporate trust business of the Guarantee Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Guarantee is located at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001.
"Covered Person" means any Holder of Capital Securities.
"Debentures" means the junior subordinated debentures of First Banks,
Inc., designated the Floating Rate Junior Subordinated Debt Securities due 2032,
held by the Institutional Trustee (as defined in the Declaration) of the Issuer.
"Event of Default" has the meaning set forth in Section 2.4.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined
in the Declaration) which are required to be paid on such Capital Securities to
the extent the Issuer has funds available in the Property Account (as defined in
the Declaration) therefor at such time, (ii) the Redemption Price (as defined in
the Indenture) to the extent the Issuer has funds available in the Property
Account therefor at such time, with respect to any Capital Securities called for
redemption by the Issuer, (iii) the Special Redemption Price (as defined in the
Indenture) to the extent the Issuer has funds available in the Property Account
therefor at such time, with respect to Capital Securities called for redemption
upon the occurrence of a Special Event (as defined in the Indenture), and (iv)
upon a voluntary or involuntary liquidation, dissolution, winding-up or
termination of the Issuer (other than in connection with the distribution of
Debentures to the Holders of the Capital Securities in exchange therefor as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid Distributions on the Capital Securities to the
date of payment, to the extent the Issuer has funds available in the Property
Account therefor at such time, and (b) the amount of assets of the Issuer
remaining available for distribution to Holders in liquidation of the Issuer
after satisfaction of liabilities to creditors of the Issuer as required by
applicable law (in either case, the "Liquidation Distribution").
"Guarantee Trustee" means Wilmington Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.
"Holder" means any holder, as registered on the books and records of
the Issuer, of any Capital Securities; provided, however, that, in determining
-------- -------
whether the holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Guarantee Trustee (including in its
individual capacity), any Affiliate of the Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Guarantee Trustee.
"Indenture" means the Indenture, dated as of April 10, 2002, between
the Guarantor and Wilmington Trust Company, not in its individual capacity but
solely as trustee, and any indenture supplemental thereto pursuant to which the
Debentures are to be issued to the Institutional Trustee of the Issuer.
"Liquidation Distribution" has the meaning set forth in the definition of
"Guarantee Payments" herein.
"Majority in liquidation amount of the Capital Securities" means
Holder(s) of outstanding Capital Securities, voting together as a class, but
separately from the holders of Common Securities, of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to,
but excluding, the date upon which the voting percentages are determined) of all
Capital Securities then outstanding.
"Obligations" means any costs, expenses or liabilities (but not
including liabilities related to taxes) of the Issuer, other than obligations of
the Issuer to pay to holders of any Trust Securities the amounts due such
holders pursuant to the terms of the Trust Securities.
"Officer's Certificate" means, with respect to any Person, a
certificate signed by one Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee shall include:
(a) a statement that each officer signing the Officer's
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officer's
Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Responsible Officer" means, with respect to the Guarantee Trustee,
any officer within the Corporate Trust Office of the Guarantee Trustee with
direct responsibility for the administration of any matters relating to this
Guarantee, including any vice president, any assistant vice president, any
secretary, any assistant secretary, the treasurer, any assistant treasurer, any
trust officer or other officer of the Corporate Trust Office of the Guarantee
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of that officer's knowledge of and familiarity with the particular
subject.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1.
"Trust Securities" means the Common Securities and the Capital
Securities.
ARTICLE II
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
SECTION 2.1. Powers and Duties of the Guarantee Trustee.
------------------------------------------
(a) This Guarantee shall be held by the Guarantee Trustee for the
benefit of the Holders of the Capital Securities, and the Guarantee
Trustee shall not transfer this Guarantee to any Person except a
Holder of Capital Securities exercising his or her rights pursuant to
Section 4.4(b) or to a Successor Guarantee Trustee on acceptance by
such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee. The right, title and interest of the
Guarantee Trustee shall automatically vest in any Successor Guarantee
Trustee, and such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered
pursuant to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer of the Guarantee Trustee has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee for the benefit of the
Holders of the Capital Securities.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing or waiving of all Events of Default that
may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Guarantee, and no implied covenants
shall be read into this Guarantee against the Guarantee
Trustee. In case an Event of Default has occurred (that has not been
cured or waived pursuant to Section 2.4(b)) and is actually known to a
Responsible Officer of the Guarantee Trustee, the Guarantee Trustee
shall exercise such of the rights and powers vested in it by this
Guarantee, and use the same degree of care and skill in its exercise
thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee shall be construed to relieve
the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default and
after the curing or waiving of all Events of Default that may
have occurred:
(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee, and the Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as
are specifically set forth in this Guarantee, and no implied
covenants or obligations shall be read into this Guarantee
against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively
rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon any certificates or
opinions furnished to the Guarantee Trustee and conforming
to the requirements of this Guarantee; but in the case of
any such certificates or opinions furnished to the Guarantee
Trustee, the Guarantee Trustee shall be under a duty to
examine the same to determine whether or not on their face
they conform to the requirements of this Guarantee;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that such Responsible Officer of
the Guarantee Trustee or the Guarantee Trustee was negligent in
ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the written direction of the Holders of not less than
a Majority in liquidation amount of the Capital Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Guarantee; and
(iv) no provision of this Guarantee shall require the Guarantee
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Guarantee Trustee
shall have reasonable grounds for believing that the repayment of such
funds is not reasonably assured to it under the terms of this
Guarantee, or security and indemnity, reasonably satisfactory to the
Guarantee Trustee, against such risk or liability is not reasonably
assured to it.
SECTION 2.2. Certain Rights of the Guarantee Trustee.
---------------------------------------
(a) Subject to the provisions of Section 2.1:
(i) The Guarantee Trustee may conclusively rely, and shall be
fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by this
Guarantee shall be sufficiently evidenced by an Officer's Certificate.
(iii) Whenever, in the administration of this Guarantee, the
Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officer's Certificate of the Guarantor
which, upon receipt of such request, shall be promptly delivered by
the Guarantor.
(iv) The Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument or other writing
(or any rerecording, refiling or reregistration thereof).
(v) The Guarantee Trustee may consult with counsel of its
selection, and the advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion. Such counsel
may be counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Guarantee Trustee shall have the
right at any time to seek instructions concerning the administration
of this Guarantee from any court of competent jurisdiction.
(vi) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee at
the request or direction of any Holder, unless such Holder shall have
provided to the Guarantee Trustee such security and indemnity,
reasonably satisfactory to the Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of
the Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Guarantee Trustee; provided, however, that nothing
contained in this Section 2.2(a)(vi) shall be taken to relieve the
Guarantee Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by this
Guarantee.
(vii) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.
(viii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, nominees, custodians or attorneys, and the
Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due
care by it hereunder.
(ix) Any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders of the Capital Securities, and the
signature of the Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action. No third party
shall be required to inquire as to the authority of the Guarantee
Trustee to so act or as to its compliance with any of the terms and
provisions of this Guarantee, both of which shall be conclusively
evidenced by the Guarantee Trustee's or its agent's taking such
action.
(x) Whenever in the administration of this Guarantee the
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (A) may request instructions from the
Holders of a Majority in liquidation amount of the Capital Securities,
(B) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received and (C) shall be
protected in conclusively relying on or acting in accordance with such
instructions.
(xi) The Guarantee Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Guarantee.
(b) No provision of this Guarantee shall be deemed to impose any duty
or obligation on the Guarantee Trustee to perform any act or acts or exercise
any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law to perform
any such act or acts or to exercise any such right, power, duty or obligation.
No permissive power or authority available to the Guarantee Trustee shall be
construed to be a duty.
SECTION 2.3. Not Responsible for Recitals or Issuance of Guarantee.
-----------------------------------------------------
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee.
SECTION 2.4. Events of Default; Waiver.
-------------------------
(a) An Event of Default under this Guarantee will occur upon the
failure of the Guarantor to perform any of its payment or other obligations
hereunder.
(b) The Holders of a Majority in liquidation amount of the Capital
Securities may, voting or consenting as a class, on behalf of the Holders of all
of the Capital Securities, waive any past Event of Default and its consequences.
Upon such waiver, any such Event of Default shall cease to exist, and shall be
deemed to have been cured, for every purpose of this Guarantee, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.
SECTION 2.5. Events of Default; Notice.
-------------------------
(a) The Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of the Capital Securities, notices of all Events of Default actually
known to a Responsible Officer of the Guarantee Trustee, unless such defaults
have been cured before the giving of such notice, provided, however, that the
Guarantee Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer of the Guarantee Trustee in good faith determines that
the withholding of such notice is in the interests of the Holders of the Capital
Securities.
(b) The Guarantee Trustee shall not be charged with knowledge of any
Event of Default unless the Guarantee Trustee shall have received written notice
thereof from the Guarantor or a Holder of the Capital Securities, or a
Responsible Officer of the Guarantee Trustee charged with the administration of
this Guarantee shall have actual knowledge thereof.
ARTICLE III
THE GUARANTEE TRUSTEE
SECTION 3.1. The Guarantee Trustee; Eligibility.
----------------------------------
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory
thereof or of the District of Columbia, or Person authorized
under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If
such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then, for
the purposes of this Section 3.1(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of
condition so published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 3.1(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set forth in
Section 3.2(c).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Guarantee Trustee shall either eliminate such
interest or resign to the extent and in the manner provided by, and
subject to, this Guarantee.
SECTION 3.2. Appointment, Removal and Resignation of the Guarantee Trustee.
-------------------------------------------------------------
(a) Subject to Section 3.2(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor except
during an Event of Default.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 3.2(a) until a Successor Guarantee Trustee has been appointed
and has accepted such appointment by written instrument executed by
such Successor Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold office
until a Successor Guarantee Trustee shall have been appointed or until
its removal or resignation. The Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an
instrument in writing executed by the Guarantee Trustee and delivered
to the Guarantor, which resignation shall not take effect until a
Successor Guarantee Trustee has been appointed and has accepted such
appointment by an instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning
Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 3.2 within 60
days after delivery of an instrument of removal or resignation, the
Guarantee Trustee resigning or being removed may petition any court of
competent jurisdiction for appointment of a Successor Guarantee
Trustee. Such court may thereupon, after prescribing such notice, if
any, as it may deem proper, appoint a Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or
omissions to act of any Successor Guarantee Trustee.
(f) Upon termination of this Guarantee or removal or resignation
of the Guarantee Trustee pursuant to this Section 3.2, the Guarantor
shall pay to the Guarantee Trustee all amounts owing to the Guarantee
Trustee under Sections 7.2 and 7.3 accrued to the date of such
termination, removal or resignation.
ARTICLE IV
GUARANTEE
SECTION 4.1. Guarantee.
---------
(a) The Guarantor irrevocably and unconditionally agrees to pay
in full to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by the Issuer), as and when due, regardless
of any defense (except as defense of payment by the Issuer), right of
set-off or counterclaim that the Issuer may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to the Holders
or by causing the Issuer to pay such amounts to the Holders.
(b) The Guarantor hereby also agrees to assume any and all
Obligations of the Issuer and in the event any such Obligation is not
so assumed, subject to the terms and conditions hereof, the Guarantor
hereby irrevocably and unconditionally guarantees to each Beneficiary
the full payment, when and as due, of any and all Obligations to such
Beneficiaries. This Guarantee is intended to be for the Beneficiaries
who have received notice hereof.
SECTION 4.2. Waiver of Notice and Demand.
---------------------------
The Guarantor hereby waives notice of acceptance of this Guarantee and
of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Issuer or any other
Person before proceeding against the Guarantor, protest, notice of nonpayment,
notice of dishonor, notice of redemption and all other notices and demands.
SECTION 4.3. Obligations Not Affected.
------------------------
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Capital
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Special Redemption
Price, Liquidation Distribution or any other sums payable under the
terms of the Capital Securities or the extension of time for the
performance of any other obligation under, arising out of, or in
connection with, the Capital Securities (other than an extension of
time for the payment of the Distributions, Redemption Price, Special
Redemption Price, Liquidation Distribution or other sums payable that
results from the extension of any interest payment period on the
Debentures or any extension of the maturity date of the Debentures
permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Holders pursuant to the terms of the
Capital Securities, or any action on the part of the Issuer granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale
of any collateral, receivership, insolvency, bankruptcy, assignment
for the benefit of creditors, reorganization, arrangement, composition
or readjustment of debt of, or other similar proceedings affecting,
the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Capital
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 4.3 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances. There shall be no obligation of the Holders to give
notice to, or obtain consent of, the Guarantor with respect to the
happening of any of the foregoing.
SECTION 4.4. Rights of Holders.
-----------------
(a) The Holders of a Majority in liquidation amount of the
Capital Securities have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Guarantee
Trustee in respect of this Guarantee or to direct the exercise of any
trust or power conferred upon the Guarantee Trustee under this
Guarantee; provided, however, that (subject to Sections 2.1 and 2.2)
the Guarantee Trustee shall have the right to decline to follow any
such direction if the Guarantee Trustee shall determine that the
actions so directed would be unjustly prejudicial to the Holders not
taking part in such direction or if the Guarantee Trustee being
advised by counsel determines that the action or proceeding so
directed may not lawfully be taken or if the Guarantee Trustee in good
faith by its board of directors or trustees, executive committee or a
trust committee of directors or trustees and/or Responsible Officers
shall determine that the action or proceeding so directed would
involve the Guarantee Trustee in personal liability.
(b) Any Holder of Capital Securities may institute a legal
proceeding directly against the Guarantor to enforce the Guarantee
Trustee's rights under this Guarantee, without first instituting a
legal proceeding against the Issuer, the Guarantee Trustee or any
other Person. The Guarantor waives any right or remedy to require that
any such action be brought first against the Issuer, the Guarantee
Trustee or any other Person before so proceeding directly against the
Guarantor.
SECTION 4.5. Guarantee of Payment.
--------------------
This Guarantee creates a guarantee of payment and not of collection.
SECTION 4.6. Subrogation.
-----------
The Guarantor shall be subrogated to all (if any) rights of the
Holders of Capital Securities against the Issuer in respect of any amounts paid
to such Holders by the Guarantor under this Guarantee; provided, however, that
the Guarantor shall not (except to the extent required by applicable provisions
of law) be entitled to enforce or exercise any right that it may acquire by way
of subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee, if, after giving effect to any such
payment, any amounts are due and unpaid under this Guarantee. If any amount
shall be paid to the Guarantor in violation of the preceding sentence, the
Guarantor agrees to hold such amount in trust for the Holders and to pay over
such amount to the Holders.
SECTION 4.7. Independent Obligations
-----------------------
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Capital
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 4.3 hereof.
SECTION 4.8. Enforcement.
-----------
A Beneficiary may enforce the Obligations of the Guarantor contained
in Section 4.1(b) directly against the Guarantor, and the Guarantor waives any
right or remedy to require that any action be brought against the Issuer or any
other person or entity before proceeding against the Guarantor.
The Guarantor shall be subrogated to all rights (if any) of any
Beneficiary against the Issuer in respect of any amounts paid to the
Beneficiaries by the Guarantor under this Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by applicable provisions of
law) be entitled to enforce or exercise any rights that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee, if, after giving effect to such
payment, any amounts are due and unpaid under this Guarantee.
ARTICLE V
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 5.1. Limitation of Transactions.
--------------------------
So long as any Capital Securities remain outstanding, if (a) there
shall have occurred and be continuing an Event of Default or (b) the Guarantor
shall have selected an Extension Period as provided in the Declaration and such
period, or any extension thereof, shall have commenced and be continuing, then
the Guarantor may not (x) declare or pay any dividends or distributions on, or
redeem, purchase, acquire, or make a liquidation payment with respect to, any of
the Guarantor's capital stock or (y) make any payment of principal of or
interest or premium, if any, on or repay, repurchase or redeem any debt
securities of the Guarantor that rank pari passu in all respects with or junior
in interest to the Debentures (other than (i) payments under this Guarantee,
(ii) repurchases, redemptions or other acquisitions of shares of capital stock
of the Guarantor (A) in connection with any employment contract, benefit plan or
other similar arrangement with or for the benefit of one or more employees,
officers, directors, or consultants, (B) in connection with a dividend
reinvestment or stockholder stock purchase plan or (C) in connection with the
issuance of capital stock of the Guarantor (or securities convertible into or
exercisable for such capital stock), as consideration in an acquisition
transaction entered into prior to the occurrence of the Event of Default or the
applicable Extension Period, (iii) as a result of any exchange or conversion of
any class or series of the Guarantor's capital stock (or any capital stock of a
subsidiary of the Guarantor) for any class or series of the Guarantor's capital
stock or of any class or series of the Guarantor's indebtedness for any class or
series of the Guarantor's capital stock, (iv) the purchase of fractional
interests in shares of the Guarantor's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted or
exchanged, (v) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, or (vi) any dividend in the form of stock, warrants, options
or other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock).
SECTION 5.2. Ranking.
-------
This Guarantee will constitute an unsecured obligation of the
Guarantor and will rank subordinate and junior in right of payment to all
present and future Senior Indebtedness (as defined in the Indenture) of the
Guarantor. By their acceptance thereof, each Holder of Capital Securities agrees
to the foregoing provisions of this Guarantee and the other terms set forth
herein.
The right of the Guarantor to participate in any distribution of
assets of any of its subsidiaries upon any such subsidiary's liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
subsidiary, except to the extent the Guarantor may itself be recognized as a
creditor of that subsidiary. Accordingly, the Guarantor's obligations under this
Guarantee will be effectively subordinated to all existing and future
liabilities of the Guarantor's subsidiaries, and claimants should look only to
the assets of the Guarantor for payments thereunder. This Guarantee does not
limit the incurrence or issuance of other secured or unsecured debt of the
Guarantor, including Senior Indebtedness of the Guarantor, under any indenture
or agreement that the Guarantor may enter into in the future or otherwise.
ARTICLE VI
TERMINATION
SECTION 6.1. Termination.
-----------
This Guarantee shall terminate as to the Capital Securities (i) upon
full payment of the Redemption Price or the Special Redemption Price, as the
case may be, of all Capital Securities then outstanding, (ii) upon the
distribution of all of the Debentures to the Holders of all of the Capital
Securities or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon dissolution of the Issuer. This Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
Holder of Capital Securities must restore payment of any sums paid under the
Capital Securities or under this Guarantee.
ARTICLE VII
INDEMNIFICATION
SECTION 7.1. Exculpation.
-----------
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered
Person for any loss, damage or claim incurred by reason of any act or
omission of such Indemnified Person in good faith in accordance with
this Guarantee and in a manner that such Indemnified Person reasonably
believed to be within the scope of the authority conferred on such
Indemnified Person by this Guarantee or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Issuer or the Guarantor and upon
such information, opinions, reports or statements presented to the
Issuer or the Guarantor by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional
or expert competence and who, if selected by such Indemnified Person,
has been selected with reasonable care by such Indemnified Person,
including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other
facts pertinent to the existence and amount of assets from which
Distributions to Holders of Capital Securities might properly be paid.
SECTION 7.2. Indemnification.
---------------
(a) The Guarantor agrees to indemnify each Indemnified Person
for, and to hold each Indemnified Person harmless against, any and all
loss, liability, damage, claim or expense incurred without negligence
or willful misconduct on the part of the Indemnified Person, arising
out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including but not limited to the costs and
expenses (including reasonable legal fees and expenses) of the
Indemnified Person defending itself against, or investigating, any
claim or liability in connection with the exercise or performance of
any of the Indemnified Person's powers or duties hereunder. The
obligation to indemnify as set forth in this Section 7.2 shall survive
the resignation or removal of the Guarantee Trustee and the
termination of this Guarantee.
(b) Promptly after receipt by an Indemnified Person under this
Section 7.2 of notice of the commencement of any action, such
Indemnified Person will, if a claim in respect thereof is to be made
against the Guarantor under this Section 7.2, notify the Guarantor in
writing of the commencement thereof; but the failure so to notify the
Guarantor (i) will not relieve the Guarantor from liability under
paragraph (a) above unless and to the extent that the Guarantor did
not otherwise learn of such action and such failure results in the
forfeiture by the Guarantor of substantial rights and defenses and
(ii) will not, in any event, relieve the Guarantor from any
obligations to any Indemnified Person other than the indemnification
obligation provided in paragraph (a) above. The Guarantor shall be
entitled to appoint counsel of the Guarantor's choice at the
Guarantor's expense to represent the Indemnified Person in any action
for which indemnification is sought (in which case the Guarantor shall
not thereafter be responsible for the fees and expenses of any
separate counsel retained by the Indemnified Person or Persons except
as set forth below); provided, however, that such counsel shall be
-------- -------
satisfactory to the Indemnified Person. Notwithstanding the
Guarantor's election to appoint counsel to represent the Indemnified
Person in any action, the Indemnified Person shall have the right to
employ separate counsel (including local counsel), and the Guarantor
shall bear the reasonable fees, costs and expenses of such separate
counsel, if (i) the use of counsel chosen by the Guarantor to
represent the Indemnified Person would present such counsel with a
conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the Indemnified Person and
the Guarantor and the Indemnified Person shall have reasonably
concluded that there may be legal defenses available to it and/or
other Indemnified Persons which are different from or additional to
those available to the Guarantor, (iii) the Guarantor shall not have
employed counsel satisfactory to the Indemnified Person to represent
the Indemnified Person within a reasonable time after notice of the
institution of such action or (iv) the Guarantor shall authorize the
Indemnified Person to employ separate counsel at the expense of the
Guarantor. The Guarantor will not, without the prior written consent
of the Indemnified Persons, settle or compromise or consent to the
entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the Indemnified
Persons are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an
unconditional release of each Indemnified Person from all liability
arising out of such claim, action, suit or proceeding.
SECTION 7.3. Compensation; Reimbursement of Expenses.
---------------------------------------
The Guarantor agrees:
(a) to pay to the Guarantee Trustee from time to time such
compensation for all services rendered by it hereunder as the parties
shall agree to from time to time (which compensation shall not be
limited by any provision of law in regard to the compensation of a
trustee of an express trust); and (b) except as otherwise expressly
provided herein, to reimburse the Guarantee Trustee upon request for
all reasonable expenses, disbursements and advances incurred or made
by it in accordance with any provision of this Guarantee (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 its negligence or willful misconduct. The
provisions of this Section 7.3 shall survive the resignation or
removal of the Guarantee Trustee and the termination of this
Guarantee.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Successors and Assigns.
----------------------
All guarantees and agreements contained in this Guarantee shall bind
the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Capital
Securities then outstanding. Except in connection with any merger or
consolidation of the Guarantor with or into another entity or any sale, transfer
or lease of the Guarantor's assets to another entity, in each case to the extent
permitted under the Indenture, the Guarantor may not assign its rights or
delegate its obligations under this Guarantee without the prior approval of the
Holders of not less than a Majority in liquidation amount of the Capital
Securities.
SECTION 8.2. Amendments.
----------
Except with respect to any changes that do not adversely affect the
rights of Holders of the Capital Securities in any material respect (in which
case no consent of Holders will be required), this Guarantee may be amended only
with the prior approval of the Holders of not less than a Majority in
liquidation amount of the Capital Securities. The provisions of the Declaration
with respect to amendments thereof shall apply equally with respect to
amendments of the Guarantee.
SECTION 8.3. Notices.
-------
All notices provided for in this Guarantee shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first class mail, as follows:
(a) If given to the Guarantee Trustee, at the Guarantee Trustee's
mailing address set forth below (or such other address as the
Guarantee Trustee may give notice of to the Holders of the Capital
Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telecopy: 302-651-8882
Telephone: 302-651-1000
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give
notice of to the Holders of the Capital Securities and to the
Guarantee Trustee):
First Banks, Inc.
600 James S. McDonnell Blvd., Mail Code #014
Hazelwood, MO 63042
Attention: Allen H. Blake
Telecopy: (314) 592-6621
Telephone: (314) 592-6601
(c) If given to any Holder of the Capital Securities, at the
address set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 8.4. Benefit.
-------
This Guarantee is solely for the benefit of the Holders of the Capital
Securities and, subject to Section 2.1(a), is not separately transferable from
the Capital Securities.
SECTION 8.5. Governing Law.
-------------
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES
THEREOF.
SECTION 8.6. Counterparts.
------------
This Guarantee may contain more than one counterpart of the signature
page and this Guarantee may be executed by the affixing of the signature of the
Guarantor and the Guarantee Trustee to any of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
THIS GUARANTEE is executed as of the day and year first above
written.
FIRST BANKS, INC.,
as Guarantor
By: /S/ Allen H. Blake
-------------------------------------
Name: Allen H. Blake
Title: President and Chief Operating
Officer
WILMINGTON TRUST COMPANY, as
Guarantee Trustee
By: /s/ Anita E. Dallago
--------------------------------------
Name: Anita E. Dallago
Title: Senior Financial Services
Officer
Exhibit 4.17
AMENDED AND RESTATED DECLARATION
OF TRUST
FIRST BANK CAPITAL TRUST
Dated as of April 10, 2002
TABLE OF CONTENTS
Page
ARTICLE I INTERPRETATION AND DEFINITIONS
SECTION 1.1.Definitions............................................................................ 2
ARTICLE II - ORGANIZATION
SECTION 2.1. Name ................................................................................. 9
SECTION 2.2. Office................................................................................ 9
SECTION 2.3. Purpose............................................................................... 9
SECTION 2.4. Authority............................................................................. 9
SECTION 2.5. Title to Property of the Trust........................................................ 10
SECTION 2.6. Powers and Duties of the Trustees and the Administrators.............................. 10
SECTION 2.7. Prohibition of Actions by the Trust and the Trustees.................................. 15
SECTION 2.8. Powers and Duties of the Institutional Trustee ....................................... 15
SECTION 2.9. Certain Duties and Responsibilities of the Trustees and the Administrators............ 17
SECTION 2.10.Certain Rights of Institutional Trustee............................................... 19
SECTION 2.11.Delaware Trustee...................................................................... 21
SECTION 2.12.Execution of Documents................................................................ 21
SECTION 2.13.Not Responsible for Recitals or Issuance of Securities................................ 21
SECTION 2.14.Duration of Trust..................................................................... 22
SECTION 2.15.Mergers............................................................................... 22
ARTICLE III - SPONSOR
SECTION 3.1.Sponsor's Purchase of Common Securities................................................ 24
SECTION 3.2 Responsibilities of the Sponsor........................................................ 24
ARTICLE IV - TRUSTEES AND ADMINISTRATORS
SECTION 4.1 Number of Trustees.................................................................... 24
SECTION 4.2 Delaware Trustee...................................................................... 25
SECTION 4.3 Institutional Trustee; Eligibility.................................................... 25
SECTION 4.4 Certain Qualifications of the Delaware Trustee Generally.............................. 25
SECTION 4.5 Administrators........................................................................ 26
SECTION 4.6 Delaware Trustee ..................................................................... 26
SECTION 4.7 Appointment, Removal and Resignation of the Trustees and the Administrators........... 26
SECTION 4.8 Vacancies Among Trustees.............................................................. 28
SECTION 4.9 Effect of Vacancies................................................................... 28
SECTION 4.10 Meetings of the Trustees and the Administrators....................................... 28
SECTION 4.11 Delegation of Power................................................................... 29
SECTION 4.12 Merger, Conversion, Consolidation or Succession to Business........................... 29
ARTICLE V - DISTRIBUTIONS
SECTION 5.1 Distributions......................................................................... 29
ARTICLE VI - ISSUANCE OF SECURITIES
SECTION 6.1 General Provisions Regarding Securities............................................... 30
SECTION 6.2 Paying Agent, Transfer Agent, Calculation Agent and Registrar......................... 31
SECTION 6.3 Form and Dating....................................................................... 31
SECTION 6.4 Mutilated, Destroyed, Lost or Stolen Certificates..................................... 32
SECTION 6.5 Temporary Securities.................................................................. 32
SECTION 6.6 Cancellation.......................................................................... 32
SECTION 6.7 Rights of Holders; Waivers of Past Defaults........................................... 33
ARTICLE VII - DISSOLUTION AND TERMINATION OF TRUST
SECTION 7.1 Dissolution and Termination of Trust.................................................. 35
ARTICLE VIII - TRANSFER OF INTERESTS
SECTION 8.1 General............................................................................... 36
SECTION 8.2 Transfer Procedures and Restrictions.................................................. 37
SECTION 8.3 Deemed Security Holders............................................................... 39
ARTICLE IX - LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 9.1 Liability............................................................................. 40
SECTION 9.2 Exculpation........................................................................... 40
SECTION 9.3 Fiduciary Duty........................................................................ 40
SECTION 9.4 Indemnification....................................................................... 41
SECTION 9.5 Outside Businesses.................................................................... 44
SECTION 9.6 Compensation; Fee..................................................................... 45
ARTICLE X - ACCOUNTING
SECTION 10.1 Fiscal Year .......................................................................... 45
SECTION 10.2 Certain Accounting Matters............................................................ 45
SECTION 10.3 Banking............................................................................... 46
SECTION 10.4 Withholding........................................................................... 46
ARTICLE XI - AMENDMENTS AND MEETINGS
SECTION 11.1 Amendments ........................................................................... 47
SECTION 11.2 Meetings of the Holders of the Securities; Action by Written Consent.................. 49
ARTICLE XII - REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND DELAWARE TRUSTEE
SECTION 12.1 Representations and Warranties of Institutional Trustee............................... 50
SECTION 12.2 Representations and Warranties of Delaware Trustee.................................... 51
ARTICLE XIII - MISCELLANEOUS
SECTION 13.1 Notices............................................................................... 52
SECTION 13.2 Governing Law......................................................................... 53
SECTION 13.3 Submission to Jurisdiction............................................................ 53
SECTION 13.4 Intention of the Parties.............................................................. 54
SECTION 13.5 Headings.............................................................................. 54
SECTION 13.6 Successors and Assigns................................................................ 54
SECTION 13.7 Partial Enforceability................................................................ 54
SECTION 13.8 Counterparts.......................................................................... 54
ANNEXES AND EXHIBITS
ANNEX I Terms of Floating Rate TRUPS(R)and Floating Rate Common Securities
EXHIBIT A-1 Form of Capital Securities Certificate
EXHIBIT A-2 Form of Common Security Certificate
EXHIBIT B Form of Transferee Certificate to be Executed by Transferees Other than QIBs
EXHIBIT C Form of Transferor Certificate to be Executed for QIBs
AMENDED AND RESTATED DECLARATION OF TRUST
OF
FIRST BANK CAPITAL TRUST
April 10, 2002
AMENDED AND RESTATED DECLARATION OF TRUST (this "Declaration"), dated
and effective as of April 10, 2002, by the Trustees (as defined herein), the
Administrators (as defined herein), the Sponsor (as defined herein) and the
holders from time to time of undivided beneficial interests in the assets of the
Trust (as defined herein) to be issued pursuant to this Declaration.
WHEREAS, certain of the Trustees, the Administrators and the Sponsor
established First Bank Capital Trust (the "Trust"), a statutory business trust
under the Business Trust Act (as defined herein), pursuant to a Declaration of
Trust, dated as of March 25, 2002 (the "Original Declaration"), and a
Certificate of Trust filed with the Secretary of State of the State of Delaware
on March 25, 2002, for the sole purpose of issuing and selling certain
securities representing undivided beneficial interests in the assets of the
Trust and investing the proceeds thereof in certain debentures of the Debenture
Issuer (as defined herein) in connection with the MM Community Funding III, Ltd
transaction;
WHEREAS, as of the date hereof, no interests in the assets of the Trust
have been issued; and
WHEREAS, all of the Trustees, the Administrators and the Sponsor, by
this Declaration, amend and restate each and every term and provision of the
Original Declaration.
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory business trust under the Business Trust Act
and that this Declaration constitutes the governing instrument of such statutory
business trust, the Trustees declare that all assets contributed to the Trust
will be held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration, and, in
consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties, intending to be legally bound hereby, amend and restate in its entirety
the Original Declaration and agree as follows:
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1.Definitions. Unless the context otherwise requires:
-----------
(a) capitalized terms used in this Declaration but not defined in the
preamble above or elsewhere herein have the respective meanings assigned to them
in this Section 1.1 or, if not defined in this Section 1.1 or elsewhere herein,
in the Indenture;
(b) a term defined anywhere in this Declaration has the same meaning
throughout;
(c) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections and
Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to
this Declaration unless otherwise specified;
(e) a term defined in the Trust Indenture Act (as defined herein) has
the same meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"Additional Interest" has the meaning set forth in Section 3.06 of the
Indenture.
"Administrative Action" has the meaning set forth in paragraph 4(a) of
Annex I.
"Administrators" means each of Allen H. Blake and Lisa K. Vansickle,
solely in such Person's capacity as Administrator of the Trust created and
continued hereunder and not in such Person's individual capacity, or such
Administrator's successor in interest in such capacity, or any successor
appointed as herein provided.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Authorized Officer" of a Person means any Person that is authorized to
bind such Person.
"Bankruptcy Event" means, with respect to any Person:
(a) a court having jurisdiction in the premises enters a decree or
order for relief in respect of such Person in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or appoints a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of such Person or for any substantial part of
its property, or orders the winding-up or liquidation of its affairs, and such
decree, appointment or order remains unstayed and in effect for a period of 90
consecutive days; or
(b) such Person commences a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, consents
to the entry of an order for relief in an involuntary case under any such law,
or consents to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of such Person of any substantial part of its property, or makes any general
assignment for the benefit of creditors, or fails generally to pay its debts as
they become due.
"Business Day" means any day other than Saturday, Sunday or any other
day on which banking institutions in Wilmington, Delaware, New York City or St.
Louis, Missouri are permitted or required by any applicable law or executive
order to close. "Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss. 3801 et seq., as it may be amended from time to
time, or any successor legislation.
"Calculation Agent" has the meaning set forth in Section 1.01 of the
Indenture.
"Capital Securities" has the meaning set forth in Section 6.1(a).
"Capital Security Certificate" means a definitive Certificate
registered in the name of the Holder representing a Capital Security
substantially in the form of Exhibit A-1.
"Capital Treatment Event" has the meaning set forth in paragraph 4(a)
of Annex I.
"Certificate" means any certificate evidencing Securities.
"Certificate of Trust" means the certificate of trust filed with the
Secretary of State of the State of Delaware with respect to the Trust, as
amended and restated from time to time.
"Closing Date" has the meaning set forth in the Placement Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Securities" has the meaning set forth in Section 6.1(a)."Common
Security Certificate" means a definitive Certificate registered in the name of
the Holder representing a Common Security substantially in the form of Exhibit
A-2.
"Company Indemnified Person" means (a) any Administrator; (b) any
Affiliate of any Administrator; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Administrator; or
(d) any officer, employee or agent of the Trust or its Affiliates.
"Comparable Treasury Issue" has the meaning set forth in paragraph 4(a)
of Annex I.
"Comparable Treasury Price" has the meaning set forth in paragraph 4(a)
of Annex I.
"Corporate Trust Office" means the office of the Institutional Trustee
at which the corporate trust business of the Institutional Trustee shall, at any
particular time, be principally administered, which office shall at all times be
located in the United States and at the date of execution of this Declaration is
located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware
19890-0001, Attention: Corporate Trust Administration.
"Coupon Rate" has the meaning set forth in paragraph 2(a) of Annex I.
"Covered Person" means: (a) any Administrator, officer, director,
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) the Trust's Affiliates; and (b) any Holder of Securities. "Debenture
Issuer" means First Banks, Inc., a bank holding company incorporated in
Missouri, in its capacity as issuer of the Debentures under the Indenture.
"Debenture Trustee" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Debentures" means the Floating Rate Junior Subordinated Debt
Securities due 2032 to be issued by the Debenture Issuer under the Indenture.
"Deferred Interest" means any interest on the Debentures that would
have been overdue and unpaid for more than one Distribution Payment Date but for
the imposition of an Extension Period, and the interest that shall accrue (to
the extent that the payment of such interest is legally enforceable) on such
interest at the Coupon Rate in effect for each such Extension Period, compounded
semi-annually from the date on which such Deferred Interest would otherwise have
been due and payable until paid or made available for payment.
"Definitive Capital Securities" means any Capital Securities in
definitive form issued by the Trust.
"Delaware Trustee" has the meaning set forth in Section 4.2.
"Direct Action" has the meaning set forth in Section 2.8(e).
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 5.1.
"Distribution Payment Date" has the meaning set forth in paragraph 2(e)
of Annex I.
"Event of Default" means the occurrence of an Indenture Event of
Default.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Extension Period" has the meaning set forth in paragraph 2(e) of Annex
I.
"Federal Reserve" has the meaning set forth in paragraph 3 of Annex I.
"Fiduciary Indemnified Person" shall mean each of the Institutional
Trustee (including in its individual capacity), the Delaware Trustee (including
in its individual capacity), any Affiliate of the Institutional Trustee or the
Delaware Trustee, and any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the Institutional
Trustee or the Delaware Trustee.
"Fiscal Year" has the meaning set forth in Section 10.1
"Guarantee" means the Guarantee Agreement, dated as of April 10, 2002,
of the Sponsor in respect of the Capital Securities.
"Holder" means a Person in whose name a Certificate representing a
Security is registered on the register maintained by or on behalf of the
Registrar, such Person being a beneficial owner within the meaning of the
Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Indenture, dated as of April 10, 2002, among the
Debenture Issuer and the Debenture Trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued.
"Indenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 4.3.
"Interest" means any interest due on the Debentures, including any
Deferred Interest and Defaulted Interest (as each such term is defined in the
Indenture).
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in paragraph 4(a)
of Annex I.
"Legal Action" has the meaning set forth in Section 2.8(e).
"LIBOR" means the London Interbank Offered Rate for six-month U.S.
Dollar deposits in Europe as determined by the Calculation Agent according to
paragraph 2(b) of Annex I.
"LIBOR Banking Day" has the meaning set forth in paragraph 2(b)(1) of
Annex I.
"LIBOR Business Day" has the meaning set forth in paragraph 2(b)(1) of
Annex I.
"LIBOR Determination Date" has the meaning set forth in paragraph
2(b)(1) of Annex I.
"Liquidation" has the meaning set forth in paragraph 3 of Annex I.
"Liquidation Distribution" has the meaning set forth in paragraph 3 of
Annex I.
"Majority in liquidation amount of the Securities" means Holders of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of
more than 50% of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Officers' Certificate has
read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Paying Agent" has the meaning set forth in Section 6.2.
"Payment Amount" has the meaning set forth in Section 5.1.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Placement Agreement" means the Placement Agreement relating to the
offering and sale of Capital Securities.
"PORTAL" has the meaning set forth in Section 2.6(a)(i).
"Primary Treasury Dealer" has the meaning set forth in paragraph 4(a)
of Annex I.
"Property Account" has the meaning set forth in Section 2.8(c).
"Pro Rata" has the meaning set forth in paragraph 8 of Annex I.
"QIB" means a "qualified institutional buyer" as defined under Rule
144A.
"Quorum" means a majority of the Administrators or, if there are only
two Administrators, both of them.
"Quotation Agent" has the meaning set forth in paragraph 4(a) of Annex
I.
"Redemption/Distribution Notice" has the meaning set forth in paragraph
4(e) of Annex I.
"Redemption Price" has the meaning set forth in paragraph 4(a) of Annex
I.
"Registrar" has the meaning set forth in Section 6.2.
"Reference Treasury Dealer" has the meaning set forth in paragraph 4(a)
of Annex I. "Reference Treasury Dealer Quotations" has the meaning set forth in
paragraph 4(a) of Annex I.
"Relevant Trustee" has the meaning set forth in Section 4.7(a).
"Remaining Life" has the meaning set forth in paragraph 4(a) of Annex
I.
"Responsible Officer" means, with respect to the Institutional Trustee,
any officer within the Corporate Trust Office of the Institutional Trustee with
direct responsibility for the administration of this Declaration, including any
vice-president, any assistant vice-president, any secretary, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or other
officer of the Corporate Trust Office of the Institutional Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Restricted Securities Legend" has the meaning set forth in Section
8.2(c).
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
"Securities" means the Common Securities and the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from
time-to-time, or any successor legislation.
"Sponsor" means First Banks, Inc., a bank holding company that is a
U.S. Person incorporated in Missouri, or any successor entity in a merger,
consolidation or amalgamation that is a U.S. Person, in its capacity as sponsor
of the Trust.
"Successor Delaware Trustee" has the meaning set forth in Section
4.7(e).
"Successor Entity" has the meaning set forth in Section 2.15(b).
"Successor Institutional Trustee" has the meaning set forth in Section
4.7(b).
"Successor Securities" has the meaning set forth in Section 2.15(b).
"Super Majority" has the meaning set forth in paragraph 5(b) of Annex
I.
"Tax Event" has the meaning set forth in paragraph 4(a) of Annex I.
"10% in liquidation amount of the Securities" means Holders of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of 10%
or more of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"Transfer Agent" has the meaning set forth in Section 6.2.
"Treasury Rate" has the meaning set forth in paragraph 4(a) of Annex I.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended
from time-to-time, or any successor legislation.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Property" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Property Account and (c) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Institutional Trustee pursuant to the trusts of this
Declaration.
"U.S. Person" means a United States Person as defined in Section
7701(a)(30) of the Code.
ARTICLE II
ORGANIZATION
SECTION 2.1. Name. The Trust is named "First Bank Capital Trust," as
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such name may be modified from time to time by the Administrators following
written notice to the Institutional Trustee and the Holders of the Securities.
The Trust's activities may be conducted under the name of the Trust or any other
name deemed advisable by the Administrators.
SECTION 2.2. Office. The address of the principal office of the Trust,
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which shall be in a State of the United States or the District of Columbia, is
600 James S. McDonnell Blvd., Mail Code #014, Hazelwood, MO 63042. On ten
Business Days' written notice to the Institutional Trustee and the Holders of
the Securities, the Administrators may designate another principal office, which
shall be in a State of the United States or the District of Columbia.
SECTION 2.3. Purpose. The exclusive purposes and functions of the Trust
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are (a) to issue and sell the Securities representing undivided beneficial
interests in the assets of the Trust, (b) to invest the gross proceeds from such
sale in the Debentures and (c) except as otherwise limited herein, to engage in
only those other activities incidental thereto that are deemed necessary or
advisable by the Institutional Trustee, including, without limitation, those
activities specified in this Declaration. The Trust shall not borrow money,
issue debt or reinvest proceeds derived from investments, pledge any of its
assets, or otherwise undertake (or permit to be undertaken) any activity that
would cause the Trust not to be classified for United States federal income tax
purposes as a grantor trust.
SECTION 2.4. Authority. Except as specifically provided in this
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Declaration, the Institutional Trustee shall have exclusive and complete
authority to carry out the purposes of the Trust. An action taken by a Trustee
on behalf of the Trust and in accordance with such Trustee's powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no Person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration. The Administrators shall have only those ministerial
duties set forth herein with respect to accomplishing the purposes of the Trust
and are not intended to be trustees or fiduciaries with respect to the Trust or
the Holders. The Institutional Trustee shall have the right, but shall not be
obligated except as provided in Section 2.6, to perform those duties assigned to
the Administrators.
SECTION 2.5. Title to Property of the Trust. Except as provided in
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Section 2.8 with respect to the Debentures and the Property Account or as
otherwise provided in this Declaration, legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any part
of the assets of the Trust, but shall have an undivided beneficial interest in
the assets of the Trust.
SECTION 2.6. Powers and Duties of the Trustees and the Administrators.
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(a) The Trustees and the Administrators shall conduct the affairs of
the Trust in accordance with the terms of this Declaration. Subject to the
limitations set forth in paragraph (b) of this Section, and in accordance with
the following provisions (i) and (ii), the Administrators and, at the direction
of the Administrators, the Trustees, shall have the authority to enter into all
transactions and agreements determined by the Administrators to be appropriate
in exercising the authority, express or implied, otherwise granted to the
Trustees or the Administrators, as the case may be, under this Declaration, and
to perform all acts in furtherance thereof, including without limitation, the
following:
(i) Each Administrator shall have the power, duty and authority,
and is hereby authorized, to act on behalf of the Trust with respect
to the following matters:
(A) the issuance and sale of the Securities;
(B) to cause the Trust to enter into, and to execute,
deliver and perform on behalf of the Trust, such agreements as
may be necessary or desirable in connection with the purposes and
function of the Trust, including agreements with the Paying
Agent, a Debenture subscription agreement between the Trust and
the Sponsor and a Common Securities subscription agreement
between the Trust and the Sponsor;
(C) ensuring compliance with the Securities Act and
applicable state securities or blue sky laws;
(D) if and at such time determined by the Sponsor at the
request of the Holders, assisting in the designation of the
Capital Securities for trading in the Private Offering, Resales
and Trading through the Automatic Linkages ("PORTAL") system if
available;
(E) the sending of notices (other than notices of default)
and other information regarding the Securities and the Debentures
to the Holders in accordance with this Declaration, including
notice of any notice received from the Debenture Issuer of its
election to defer payments of interest on the Debentures by
extending the interest payment period under the Indenture;
(F) the appointment of a Paying Agent, Transfer Agent and
Registrar in accordance with this Declaration;
(G) execution and delivery of the Securities in accordance
with this Declaration;
(H) execution and delivery of closing certificates pursuant
to the Placement Agreement and the application for a taxpayer
identification number;
(I) unless otherwise determined by the Holders of a Majority
in liquidation amount of the Securities or as otherwise required
by the Business Trust Act, to execute on behalf of the Trust
(either acting alone or together with any or all of the
Administrators) any documents that the Administrators have the
power to execute pursuant to this Declaration;
(J) the taking of any action incidental to the foregoing as
the Sponsor or an Administrator may from time to time determine
is necessary or advisable to give effect to the terms of this
Declaration for the benefit of the Holders (without consideration
of the effect of any such action on any particular Holder);
(K) to establish a record date with respect to all actions
to be taken hereunder that require a record date be established,
including Distributions, voting rights, redemptions and
exchanges, and to issue relevant notices to the Holders of
Capital Securities and Holders of Common Securities as to such
actions and applicable record dates;
(L) to duly prepare and file on behalf of the Trust all
applicable tax returns and tax information reports that are
required to be filed with respect to the Trust;
(M) to negotiate the terms of, and the execution and
delivery of, the Placement Agreement providing for the sale of
the Capital Securities;
(N) to employ or otherwise engage employees, agents (who may
be designated as officers with titles), managers, contractors,
advisors, attorneys and consultants and pay reasonable
compensation for such services;
(O) to incur expenses that are necessary or incidental to
carry out any of the purposes of the Trust;
(P) to give the certificate required by ss. 314(a)(4) of the
Trust Indenture Act to the Institutional Trustee, which
certificate may be executed by an Administrator; and
(Q) to take all action that may be necessary or appropriate
for the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory
business trust under the laws of each jurisdiction (other than
the State of Delaware) in which such existence is necessary to
protect the limited liability of the Holders of the Capital
Securities or to enable the Trust to effect the purposes for
which the Trust was created.
(ii) As among the Trustees and the Administrators, the
Institutional Trustee shall have the power, duty and authority, and is
hereby authorized, to act on behalf of the Trust with respect to the
following matters:
(A) the establishment of the Property Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other
payments made in respect of the Debentures in the Property
Account;
(D) the distribution through the Paying Agent of amounts
owed to the Holders in respect of the Securities;
(E) the exercise of all of the rights, powers and privileges
of a holder of the Debentures;
(F) the sending of notices of default and other information
regarding the Securities and the Debentures to the Holders in
accordance with this Declaration;
(G) the distribution of the Trust Property in accordance
with the terms of this Declaration;
(H) to the extent provided in this Declaration, the winding
up of the affairs of and liquidation of the Trust and the
preparation, execution and filing of the certificate of
cancellation with the Secretary of State of the State of
Delaware;
(I) after any Event of Default (of which the Institutional
Trustee has knowledge (as provided in Section 2.10(m) hereof))
(provided, that such Event of Default is not by or with respect
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to the Institutional Trustee), the taking of any action
incidental to the foregoing as the Institutional Trustee may from
time to time determine is necessary or advisable to give effect
to the terms of this Declaration and protect and conserve the
Trust Property for the benefit of the Holders (without
consideration of the effect of any such action on any particular
Holder);
(J) to take all action that may be necessary or appropriate
for the preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory
business trust under the laws of the State of Delaware to protect
the limited liability of the Holders of the Capital Securities or
to enable the Trust to effect the purposes for which the Trust
was created; and
(K) to undertake any actions set forth in ss. 317(a) of the
Trust Indenture Act.
(iii) The Institutional Trustee shall have the power and
authority, and is hereby authorized, to act on behalf of the Trust
with respect to any of the duties, liabilities, powers or the
authority of the Administrators set forth in Section 2.6(a)(i)(E) and
(F) herein but shall not have a duty to do any such act unless
specifically requested to do so in writing by the Sponsor, and shall
then be fully protected in acting pursuant to such written request;
and in the event of a conflict between the action of the
Administrators and the action of the Institutional Trustee, the action
of the Institutional Trustee shall prevail.
(b) So long as this Declaration remains in effect, the Trust (or the
Trustees or Administrators acting on behalf of the Trust) shall not undertake
any business, activities or transaction except as expressly provided herein or
contemplated hereby. In particular, neither the Trustees nor the Administrators
may cause the Trust to (i) acquire any investments or engage in any activities
not authorized by this Declaration, (ii) sell, assign, transfer, exchange,
mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or
interests therein, including to Holders, except as expressly provided herein,
(iii) take any action that would cause (or in the case of the Institutional
Trustee, to the actual knowledge of a Responsible Officer would cause) the Trust
to fail or cease to qualify as a "grantor trust" for United States federal
income tax purposes, (iv) incur any indebtedness for borrowed money or issue any
other debt or (v) take or consent to any action that would result in the
placement of a lien on any of the Trust Property. The Institutional Trustee
shall, at the sole cost and expense of the Trust subject to reimbursement under
Section 9.6(a), defend all claims and demands of all Persons at any time
claiming any lien on any of the Trust Property adverse to the interest of the
Trust or the Holders in their capacity as Holders.
(c) In connection with the issuance and sale of the Capital Securities,
the Sponsor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Sponsor in furtherance of the following prior to the date of this
Declaration are hereby ratified and confirmed in all respects):
(i) the taking of any action necessary to obtain an exemption
from the Securities Act;
(ii) the determination of the States in which to take appropriate
action to qualify or register for sale all or part of the Capital
Securities and the determination of any and all such acts, other than
actions which must be taken by or on behalf of the Trust, and the
advisement of and direction to the Trustees of actions they must take
on behalf of the Trust, and the preparation for execution and filing
of any documents to be executed and filed by the Trust or on behalf of
the Trust, as the Sponsor deems necessary or advisable in order to
comply with the applicable laws of any such States in connection with
the sale of the Capital Securities; and
(iii) the taking of any other actions necessary or desirable to
carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrators, the Institutional Trustee and the Holders of a Majority in
liquidation amount of the Common Securities are authorized and directed to
conduct the affairs of the Trust and to operate the Trust so that (i) the Trust
will not be deemed to be an "investment company" required to be registered under
the Investment Company Act (in the case of the Institutional Trustee, to the
actual knowledge of a Responsible Officer), and (ii) the Trust will not fail to
be classified as a grantor trust for United States federal income tax
purposes(in the case of the Institutional Trustee, to the actual knowledge of a
Responsible Officer) and (iii) the Trust will not take any action inconsistent
with the treatment of the Debentures as indebtedness of the Debenture Issuer for
United States federal income tax purposes (in the case of the Institutional
Trustee, to the actual knowledge of a Responsible Officer). In this connection,
the Institutional Trustee, the Administrators and the Holders of a Majority in
liquidation amount of the Common Securities are authorized to take any action,
not inconsistent with applicable laws or this Declaration, as amended from time
to time, that each of the Institutional Trustee, the Administrators and such
Holders determine in their discretion to be necessary or desirable for such
purposes, even if such action adversely affects the interests of the Holders of
the Capital Securities.
(e) All expenses incurred by the Administrators or the Trustees
pursuant to this Section 2.6 shall be reimbursed by the Sponsor, and the
Trustees shall have no obligations with respect to such expenses.
(f) The assets of the Trust shall consist of the Trust Property.
(g) Legal title to all Trust Property shall be vested at all times in
the Institutional Trustee (in its capacity as such) and shall be held and
administered by the Institutional Trustee for the benefit of the Trust in
accordance with this Declaration.
(h) If the Institutional Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Declaration and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Institutional Trustee or to such Holder, then and in
every such case the Sponsor, the Institutional Trustee and the Holders 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 Institutional Trustee and the Holders shall continue as though
no such proceeding had been instituted.
SECTION 2.7. Prohibition of Actions by the Trust and the Trustees.
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The Trust shall not, and the Institutional Trustee and the
Administrators shall not, and the Administrators shall cause the Trust not to,
engage in any activity other than as required or authorized by this Declaration.
In particular, the Trust shall not, and the Institutional Trustee and the
Administrators shall not cause the Trust to:
(a) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders of the Securities
pursuant to the terms of this Declaration and of the Securities;
(b) acquire any assets other than as expressly provided herein;
(c) possess Trust Property for other than a Trust purpose;
(d) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(e) possess any power or otherwise act in such a way as to vary the
Trust Property or the terms of the Securities;
(f) issue any securities or other evidences of beneficial ownership of,
or beneficial interest in, the Trust other than the Securities; or
(g) other than as provided in this Declaration (including Annex I), (i)
direct the time, method and place of exercising any trust or power conferred
upon the Debenture Trustee with respect to the Debentures, (ii) waive any past
default that is waivable under the Indenture, (iii) exercise any right to
rescind or annul any declaration that the principal of all the Debentures shall
be due and payable, or (iv) consent to any amendment, modification or
termination of the Indenture or the Debentures where such consent shall be
required unless the Trust shall have received a written opinion of counsel
experienced in such matters to the effect that such amendment, modification or
termination will not cause the Trust to cease to be classified as a grantor
trust for United States federal income tax purposes.
SECTION 2.8. Powers and Duties of the Institutional Trustee.
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(a) The legal title to the Debentures shall be owned by and held of
record in the name of the Institutional Trustee in trust for the benefit of the
Trust. The right, title and interest of the Institutional Trustee to the
Debentures shall vest automatically in each Person who may hereafter be
appointed as Institutional Trustee in accordance with Section 4.7. Such vesting
and cessation of title shall be effective whether or not conveyancing documents
with regard to the Debentures have been executed and delivered.
(b) The Institutional Trustee shall not transfer its right, title and
interest in the Debentures to the Administrators or to the Delaware Trustee.
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Property Account") in the United States (as
defined in Treasury Regulations section 301.7701-7), in the name of
and under the exclusive control of the Institutional Trustee, and
maintained in the Institutional Trustee's trust department, on behalf
of the Holders of the Securities and, upon the receipt of payments of
funds made in respect of the Debentures held by the Institutional
Trustee, deposit such funds into the Property Account and make
payments to the Holders of the Capital Securities and Holders of the
Common Securities from the Property Account in accordance with Section
5.1. Funds in the Property Account shall be held uninvested until
disbursed in accordance with this Declaration;
(ii) engage in such ministerial activities as shall be necessary
or appropriate to effect the redemption of the Capital Securities and
the Common Securities to the extent the Debentures are redeemed or
mature; and
(iii) upon written notice of distribution issued by the
Administrators in accordance with the terms of the Securities, engage
in such ministerial activities as shall be necessary or appropriate to
effect the distribution of the Debentures to Holders of Securities
upon the occurrence of certain circumstances pursuant to the terms of
the Securities.
(d) The Institutional Trustee shall take all actions and perform such
duties as may be specifically required of the Institutional Trustee pursuant to
the terms of the Securities.
(e) The Institutional Trustee may bring or defend, pay, collect,
compromise, arbitrate, resort to legal action with respect to, or otherwise
adjust claims or demands of or against, the Trust (a "Legal Action") which arise
out of or in connection with an Event of Default of which a Responsible Officer
of the Institutional Trustee has actual knowledge or the Institutional Trustee's
duties and obligations under this Declaration or the Trust Indenture Act;
provided, however, that if an Event of Default has occurred and is continuing
- -------- -------
and such event is attributable to the failure of the Debenture Issuer to pay
interest or principal on the Debentures on the date such interest or principal
is otherwise payable (or in the case of redemption, on the redemption date),
then a Holder of the Capital Securities may directly institute a proceeding for
enforcement of payment to such Holder of the principal of or interest on the
Debentures having a principal amount equal to the aggregate liquidation amount
of the Capital Securities of such Holder (a "Direct Action") on or after the
respective due date specified in the Debentures. In connection with such Direct
Action, the rights of the Holders of the Common Securities will be subrogated to
the rights of such Holder of the Capital Securities to the extent of any payment
made by the Debenture Issuer to such Holder of the Capital Securities in such
Direct Action; provided, however, that a Holder of the Common Securities may
-------- -------
exercise such right of subrogation only if no Event of Default with respect to
the Capital Securities has occurred and is continuing.
(f) The Institutional Trustee shall continue to serve as a Trustee
until either:
(i) the Trust has been completely liquidated and the proceeds of
the liquidation distributed to the Holders of the Securities pursuant
to the terms of the Securities and this Declaration (including Annex
I); or
(ii) a Successor Institutional Trustee has been appointed and has
accepted that appointment in accordance with Section 4.7.
(g) The Institutional Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of the Debentures under the
Indenture and, if an Event of Default occurs and is continuing, the
Institutional Trustee may, for the benefit of Holders of the Securities, enforce
its rights as holder of the Debentures subject to the rights of the Holders
pursuant to this Declaration (including Annex I) and the terms of the
Securities.
(h) The Institutional Trustee must exercise the powers set forth in
this Section 2.8 in a manner that is consistent with the purposes and functions
of the Trust set out in Section 2.3, and the Institutional Trustee shall not
take any action that is inconsistent with the purposes and functions of the
Trust set out in Section 2.3.
SECTION 2.9. Certain Duties and Responsibilities of the Trustees and
---------------------------------------------------------
the Administrators.
- ------------------
(a) The Institutional Trustee, before the occurrence of any Event of
Default (of which the Institutional Trustee has knowledge (as provided in
Section 2.10(m) hereof)) and after the curing of all Events of Default that may
have occurred, shall undertake to perform only such duties as are specifically
set forth in this Declaration and no implied covenants shall be read into this
Declaration against the Institutional Trustee. In case an Event of Default (of
which the Institutional Trustee has knowledge (as provided in Section 2.10(m)
hereof)), has occurred (that has not been cured or waived pursuant to Section
6.7), the Institutional Trustee shall exercise such of the rights and powers
vested in it by this Declaration, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) The duties and responsibilities of the Trustees and the
Administrators shall be as provided by this Declaration and, in the case of the
Institutional Trustee, by the Trust Indenture Act. Notwithstanding the
foregoing, no provision of this Declaration shall require any Trustee or
Administrator to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity satisfactory to it
against such risk or liability is not reasonably assured to it. Whether or not
therein expressly so provided, every provision of this Declaration relating to
the conduct or affecting the liability of or affording protection to the
Trustees or the Administrators shall be subject to the provisions of this
Article. Nothing in this Declaration shall be construed to release a Trustee
from liability for its own negligent action, its own negligent failure to act,
or its own willful misconduct. Nothing in this Declaration shall be construed to
release an Administrator from liability for its own gross negligent action, its
own gross negligent failure to act, or its own willful misconduct. To the extent
that, at law or in equity, a Trustee or an Administrator has duties and
liabilities relating to the Trust or to the Holders, such Trustee or
Administrator shall not be liable to the Trust or to any Holder for such
Trustee's or Administrator's good faith reliance on the provisions of this
Declaration. The provisions of this Declaration, to the extent that they
restrict the duties and liabilities of the Administrators or the Trustees
otherwise existing at law or in equity, are agreed by the Sponsor and the
Holders to replace such other duties and liabilities of the Administrators or
the Trustees.
(c) All payments made by the Institutional Trustee or a Paying Agent in
respect of the Securities shall be made only from the revenue and proceeds from
the Trust Property and only to the extent that there shall be sufficient revenue
or proceeds from the Trust Property to enable the Institutional Trustee or a
Paying Agent to make payments in accordance with the terms hereof. Each Holder,
by its acceptance of a Security, agrees that it will look solely to the revenue
and proceeds from the Trust Property to the extent legally available for
distribution to it as herein provided and that the Trustees and the
Administrators are not personally liable to it for any amount distributable in
respect of any Security or for any other liability in respect of any Security.
This Section 2.9(c) does not limit the liability of the Trustees expressly set
forth elsewhere in this Declaration or, in the case of the Institutional
Trustee, in the Trust Indenture Act.
(d) No provision of this Declaration shall be construed to relieve the
Institutional Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct with respect to matters
that are within the authority of the Institutional Trustee under this
Declaration, except that:
(i) the Institutional Trustee shall not be liable for any error
or judgment made in good faith by an Authorized Officer of the
Institutional Trustee, unless it shall be proved that the
Institutional Trustee was negligent in ascertaining the pertinent
facts;
(ii) the Institutional Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Capital Securities or the Common
Securities, as applicable, relating to the time, method and place of
conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon
the Institutional Trustee under this Declaration;
(iii) the Institutional Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Property Account shall be to deal with such property in a similar
manner as the Institutional Trustee deals with similar property for
its own account, subject to the protections and limitations on
liability afforded to the Institutional Trustee under this Declaration
and the Trust Indenture Act;
(iv) the Institutional Trustee shall not be liable for any
interest on any money received by it except as it may otherwise agree
in writing with the Sponsor; and money held by the Institutional
Trustee need not be segregated from other funds held by it except in
relation to the Property Account maintained by the Institutional
Trustee pursuant to Section 2.8(c)(i) and except to the extent
otherwise required by law; and
(v) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Administrators or the Sponsor with
their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Administrators or the Sponsor.
SECTION 2.10. Certain Rights of Institutional Trustee. Subject to the
----------------------------------------
provisions of Section 2.9:
(a) the Institutional Trustee may conclusively rely and shall fully be
protected in acting or refraining from acting in good faith upon any resolution,
written opinion of counsel, certificate, written representation of a Holder or
transferee, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
appraisal, bond, debenture, note, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;
(b) if (i) in performing its duties under this Declaration, the
Institutional Trustee is required to decide between alternative courses of
action, (ii) in construing any of the provisions of this Declaration, the
Institutional Trustee finds the same ambiguous or inconsistent with any other
provisions contained herein, or (iii) the Institutional Trustee is unsure of the
application of any provision of this Declaration, then, except as to any matter
as to which the Holders of Capital Securities are entitled to vote under the
terms of this Declaration, the Institutional Trustee may deliver a notice to the
Sponsor requesting the Sponsor's opinion as to the course of action to be taken
and the Institutional Trustee shall take such action, or refrain from taking
such action, as the Institutional Trustee in its sole discretion shall deem
advisable and in the best interests of the Holders, in which event the
Institutional Trustee shall have no liability except for its own negligence or
willful misconduct;
(c) any direction or act of the Sponsor or the Administrators
contemplated by this Declaration shall be sufficiently evidenced by an Officers'
Certificate;
(d) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established before undertaking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and conclusively rely upon
an Officers' Certificate which, upon receipt of such request, shall be promptly
delivered by the Sponsor or the Administrators;
(e) the Institutional Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;
(f) the Institutional Trustee may consult with counsel of its selection
(which counsel may be counsel to the Sponsor or any of its Affiliates) and the
advice of such counsel shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon and in accordance with such advice; the
Institutional Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of competent
jurisdiction;
(g) the Institutional Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the request or
direction of any of the Holders pursuant to this Declaration, unless such
Holders shall have offered to the Institutional Trustee security or indemnity
reasonably satisfactory to it against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction; provided,
that nothing contained in this Section 2.10(g) shall be taken to relieve the
Institutional Trustee, upon the occurrence of an Event of Default (of which the
Institutional Trustee has knowledge (as provided in Section 2.10(m) hereof))
that has not been cured or waived, of its obligation to exercise the rights and
powers vested in it by this Declaration;
(h) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, unless requested in writing to do so by one or more Holders, but
the Institutional Trustee may make such further inquiry or investigation into
such facts or matters as it may see fit;
(i) the Institutional Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through its
agents or attorneys and the Institutional Trustee shall not be responsible for
any misconduct or negligence on the part of, or for the supervision of, any such
agent or attorney appointed with due care by it hereunder;
(j) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action hereunder,
the Institutional Trustee (i) may request instructions from the Holders of the
Common Securities and the Capital Securities, which instructions may be given
only by the Holders of the same proportion in liquidation amount of the Common
Securities and the Capital Securities as would be entitled to direct the
Institutional Trustee under the terms of the Common Securities and the Capital
Securities in respect of such remedy, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be fully protected in acting in
accordance with such instructions;
(k) except as otherwise expressly provided in this Declaration, the
Institutional Trustee shall not be under any obligation to take any action that
is discretionary under the provisions of this Declaration;
(l) when the Institutional Trustee incurs expenses or renders services
in connection with a Bankruptcy Event, such expenses (including the fees and
expenses of its counsel) and the compensation for such services are intended to
constitute expenses of administration under any bankruptcy law or law relating
to creditors rights generally;
(m) the Institutional Trustee shall not be charged with knowledge of an
Event of Default unless a Responsible Officer of the Institutional Trustee has
actual knowledge of such event or the Institutional Trustee receives written
notice of such event from any Holder, except with respect to an Event of Default
pursuant to Sections 5.01(a) or 5.01(b) of the Indenture (other than an Event of
Default resulting from the default in the payment of Additional Interest or
premium, if any, if the Institutional Trustee does not have actual knowledge or
written notice that such payment is due and payable), of which the Institutional
Trustee shall be deemed to have knowledge;
(n) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall be required to
inquire as to the authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Institutional Trustee's or its
agent's taking such action; and
(o) no provision of this Declaration shall be deemed to impose any duty
or obligation on the Institutional Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Institutional
Trustee shall be construed to be a duty.
SECTION 2.11. Delaware Trustee. Notwithstanding any other provision of
----------------
this Declaration other than Section 4.2, the Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of
the duties and responsibilities of any of the Trustees or the Administrators
described in this Declaration (except as may be required under the Business
Trust Act). Except as set forth in Section 4.2, the Delaware Trustee shall
be a Trustee for the sole and limited purpose of fulfilling the requirements of
ss. 3807 of the Business Trust Act.
SECTION 2.12. Execution of Documents. Unless otherwise determined in
----------------------
writing by the Institutional Trustee, and except as otherwise required by the
Business Trust Act, the Institutional Trustee, or any one or more of the
Administrators, as the case may be, is authorized to execute and deliver on
behalf of the Trust any documents, agreements, instruments or certificates that
the Trustees or the Administrators, as the case may be, have the power and
authority to execute pursuant to Section 2.6.
SECTION 2.13. Not Responsible for Recitals or Issuance of
----------------------------------------------------------------
Securities.
- ----------
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration, the Debentures or the Securities.
SECTION 2.14. Duration of Trust. The Trust, unless dissolved pursuant
-----------------
to the provisions of Article VII hereof, shall have existence for thirty-five
(35) years from the Closing Date.
SECTION 2.15. Mergers.
-------
(a) The Trust may not consolidate, amalgamate, merge with or into, or
be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except as
described in this Section 2.15 and except with respect to the distribution of
Debentures to Holders of Securities pursuant to Section 7.1(a)(iv) of the
Declaration or Section 4 of Annex I.
(b) The Trust may, with the consent of the Administrators (which
consent will not be unreasonably withheld) and without the consent of the
Institutional Trustee, the Delaware Trustee or the Holders of the Capital
Securities, consolidate, amalgamate, merge with or into, or be replaced by, or
convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to a trust organized as such under the laws of any
State; provided, that:
(i) if the Trust is not the survivor, such successor entity (the
"Successor Entity") either:
(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor
Securities") so that the Successor Securities rank the same as
the Securities rank with respect to Distributions and payments
upon Liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints, as the holder of the
Debentures, a trustee of the Successor Entity that possesses the same
powers and duties as the Institutional Trustee;
(iii) the Capital Securities or any Successor Securities
(excluding any securities substituted for the Common Securities) are
listed or quoted, or any Successor Securities will be listed or quoted
upon notification of issuance, on any national securities exchange or
with another organization on which the Capital Securities are then
listed or quoted, if any;
(iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Capital Securities
(including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, if the Capital
Securities are then rated;
(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders of the Securities (including
any Successor Securities) in any material respect (other than with
respect to any dilution of such Holders' interests in the Successor
Entity as a result of such merger, consolidation, amalgamation or
replacement);
(vi) such Successor Entity has a purpose substantially identical
to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Trust has received a
written opinion of a nationally recognized independent counsel to the
Trust experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders of the
Securities (including any Successor Securities) in any material
respect (other than with respect to any dilution of the Holders'
interests in the Successor Entity);
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor
the Successor Entity will be required to register as an
Investment Company; and
(C) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Trust (or the
Successor Entity) will continue to be classified as a grantor
trust for United States federal income tax purposes;
(viii) the Sponsor guarantees the obligations of such Successor
Entity under the Successor Securities to the same extent provided by
the Guarantee, the Debentures and this Declaration; and
(ix) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Institutional Trustee
shall have received an Officers' Certificate of the Administrators and
an opinion of counsel, each to the effect that all conditions
precedent of this paragraph (b) to such transaction have been
satisfied.
(c) Notwithstanding Section 2.15(b), the Trust shall not, except with
the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets as an entirety or substantially as
an entirety to, any other Person or permit any other Person to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, replacement, conveyance, transfer or lease would cause the
Trust or Successor Entity to be classified as other than a grantor trust for
United States federal income tax purposes.
ARTICLE III
SPONSOR
SECTION 3.1. Sponsor's Purchase of Common Securities. On the Closing
-----------------------------------------
Date, the Sponsor will purchase all of the Common Securities issued by the
Trust, in an amount at least equal to 3% of the capital of the Trust, at the
same time as the Capital Securities are sold.
SECTION 3.2. Responsibilities of the Sponsor. In connection with the
--------------------------------
issue and sale of the Capital Securities, the Sponsor shall have the exclusive
right and responsibility to engage in, or direct the Administrators to engage
in, the following activities:
(a) to determine the States in which to take appropriate action to
qualify or register for sale of all or part of the Capital Securities and to do
any and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;
(b) to prepare for filing and request the Administrators to cause the
filing by the Trust, as may be appropriate, of an application to the PORTAL
system, for listing or quotation upon notice of issuance of any Capital
Securities, as requested by the Holders of not less than a Majority in
liquidation amount of the Capital Securities; and
(c) to negotiate the terms of and/or execute and deliver on behalf of
the Trust, the Placement Agreement and other related agreements providing for
the sale of the Capital Securities.
ARTICLE IV
TRUSTEES AND ADMINISTRATORS
SECTION 4.1. Number of Trustees. The number of Trustees initially shall
------------------
be two, and:
(a) at any time before the issuance of any Securities, the Sponsor may,
by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holder of a Majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holder of
the Common Securities; provided, however, that there shall be a Delaware Trustee
-------- -------
if required by Section 4.2; and there shall always be one Trustee who shall be
the Institutional Trustee, and such Trustee may also serve as Delaware Trustee
if it meets the applicable requirements, in which case Section 2.11 shall have
no application to such entity in its capacity as Institutional Trustee.
SECTION 4.2. Delaware Trustee. If required by the Business Trust Act,
----------------
one Trustee (the "Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which is organized under the
laws of the United States or any State thereof or the District of Columbia, has
its principal place of business in the State of Delaware, and otherwise meets
the requirements of applicable law, including ss.3807 of the Business Trust Act.
SECTION 4.3. Institutional Trustee; Eligibility.
----------------------------------
(a) There shall at all times be one Trustee which shall act as
Institutional Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) not offer or provide credit or credit enhancement to the
Trust; and
(iii) be a banking corporation organized and doing business under
the laws of the United States of America or any State thereof or of
the District of Columbia and authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least fifty million U.S. dollars ($50,000,000), and subject to
supervision or examination by federal, State or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then for the purposes of this
Section 4.3(a)(iii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published.
(b) If at any time the Institutional Trustee shall cease to be eligible
to so act under Section 4.3(a), the Institutional Trustee shall immediately
resign in the manner and with the effect set forth in Section 4.7.
(c) If the Institutional Trustee has or shall acquire any "conflicting
interest" within the meaning of ss. 310(b) of the Trust Indenture Act, the
Institutional Trustee shall either eliminate such interest or resign, to the
extent and in the manner provided by, and subject to this Declaration.
(d) The initial Institutional Trustee shall be Wilmington Trust
Company.
SECTION 4.4. Certain Qualifications of the Delaware Trustee Generally.
--------------------------------------------------------
The Delaware Trustee shall be a U.S. Person and either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.
SECTION 4.5. Administrators. Each Administrator shall be a U.S. Person.
--------------
There shall at all times be at least one Administrator. Except where a
requirement for action by a specific number of Administrators is expressly
set forth in this Declaration and except with respect to any action the taking
of which is the subject of a meeting of the Administrators, any action
required or permitted to be taken by the Administrators may be taken by,
and any power of the Administrators may be exercised by, or with the consent of,
any one such Administrator acting alone.
SECTION 4.6. Initial Delaware Trustee. The initial Delaware Trustee
------------------------
shall be Wilmington Trust Company.
SECTION 4.7. Appointment, Removal and Resignation of the Trustees and
-----------------------------------------------------------
the Administrators.
- --- --------------
(a) No resignation or removal of any Trustee (the "Relevant Trustee")
and no appointment of a successor Trustee pursuant to this Article shall become
effective until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of this Section 4.7.
(b) Subject to Section 4.7(a), a Relevant Trustee may resign at any
time by giving written notice thereof to the Holders of the Securities and by
appointing a successor Relevant Trustee. Upon the resignation of the
Institutional Trustee, the Institutional Trustee shall appoint a successor by
requesting from at least three Persons meeting the eligibility requirements
their expenses and charges to serve as the successor Institutional Trustee on a
form provided by the Administrators, and selecting the Person who agrees to the
lowest expense and charges (the "Successor Institutional Trustee"). If the
instrument of acceptance by the successor Relevant Trustee required by this
Section 4.7 shall not have been delivered to the Relevant Trustee within 60 days
after the giving of such notice of resignation or delivery of the instrument of
removal, the Relevant Trustee may petition, at the expense of the Trust, any
federal, State or District of Columbia court of competent jurisdiction for the
appointment of a successor Relevant Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Relevant
Trustee. The Institutional Trustee shall have no liability for the selection of
such successor pursuant to this Section 4.7.
(c) Unless an Event of Default shall have occurred and be continuing,
any Trustee may be removed at any time by an act of the Holders of a Majority in
liquidation amount of the Common Securities. If any Trustee shall be so removed,
the Holders of the Common Securities, by act of the Holders of a Majority in
liquidation amount of the Common Securities delivered to the Relevant Trustee,
shall promptly appoint a successor Relevant Trustee, and such successor Trustee
shall comply with the applicable requirements of this Section 4.7. If an Event
of Default shall have occurred and be continuing, the Institutional Trustee or
the Delaware Trustee, or both of them, may be removed by the act of the Holders
of a Majority in liquidation amount of the Capital Securities, delivered to the
Relevant Trustee (in its individual capacity and on behalf of the Trust). If any
Trustee shall be so removed, the Holders of Capital Securities, by act of the
Holders of a Majority in liquidation amount of the Capital Securities then
outstanding delivered to the Relevant Trustee, shall promptly appoint a
successor Relevant Trustee or Trustees, and such successor Trustee shall comply
with the applicable requirements of this Section 4.7. If no successor Relevant
Trustee shall have been so appointed by the Holders of a Majority in liquidation
amount of the Capital Securities and accepted appointment in the manner required
by this Section 4.7 within 30 days after delivery of an instrument of removal,
the Relevant Trustee or any Holder who has been a Holder of the Securities for
at least six months may, on behalf of himself and all others similarly situated,
petition any federal, State or District of Columbia court of competent
jurisdiction for the appointment of a successor Relevant Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a successor Relevant Trustee or Trustees.
(d) The Institutional Trustee shall give notice of each resignation and
each removal of a Trustee and each appointment of a successor Trustee to all
Holders and to the Sponsor. Each notice shall include the name of the successor
Relevant Trustee and the address of its Corporate Trust Office if it is the
Institutional Trustee.
(e) Notwithstanding the foregoing or any other provision of this
Declaration, in the event a Delaware Trustee who is a natural person dies or is
adjudged by a court to have become incompetent or incapacitated, the vacancy
created by such death, incompetence or incapacity may be filled by the
Institutional Trustee following the procedures in this Section 4.7 (with the
successor being a Person who satisfies the eligibility requirement for a
Delaware Trustee set forth in this Declaration) (the "Successor Delaware
Trustee").
(f) In case of the appointment hereunder of a successor Relevant
Trustee, the retiring Relevant Trustee and each successor Relevant Trustee with
respect to the Securities shall execute and deliver an amendment hereto wherein
each successor Relevant Trustee shall accept such appointment and which (a)
shall contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Securities and the Trust and (b) shall add to or change any of the provisions of
this Declaration as shall be necessary to provide for or facilitate the
administration of the Trust by more than one Relevant Trustee, it being
understood that nothing herein or in such amendment shall constitute such
Relevant Trustees co-trustees and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor Relevant
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee; but,
on request of the Trust or any successor Relevant Trustee, such retiring
Relevant Trustee shall duly assign, transfer and deliver to such successor
Relevant Trustee all Trust Property, all proceeds thereof and money held by such
retiring Relevant Trustee hereunder with respect to the Securities and the Trust
subject to the payment of all unpaid fees, expenses and indemnities of such
retiring Relevant Trustee.
(g) No Institutional Trustee or Delaware Trustee shall be liable for
the acts or omissions to act of any Successor Institutional Trustee or Successor
Delaware Trustee, as the case may be.
(h) The Holders of the Capital Securities will have no right to vote to
appoint, remove or replace the Administrators, which voting rights are vested
exclusively in the Holders of the Common Securities.
(i) Any successor Delaware Trustee shall file an amendment to the
Certificate of Trust with the Secretary of State of the State of Delaware
identifying the name and principal place of business of such Delaware Trustee in
the State of Delaware.
SECTION 4.8. Vacancies Among Trustees. If a Trustee ceases to hold
------------------------
office for any reason and the number of Trustees is not reduced pursuant to
Section 4.1, or if the number of Trustees is increased pursuant to Section 4.1,
a vacancy shall occur. A resolution certifying the existence of such vacancy by
the Trustees or, if there are more than two, a majority of the Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 4.7.
SECTION 4.9. Effect of Vacancies. The death, resignation, retirement,
-------------------
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of a Trustee shall not operate to dissolve, terminate or
annul the Trust or terminate this Declaration. Whenever a vacancy in the number
of Trustees shall occur, until such vacancy is filled by the appointment of a
Trustee in accordance with Section 4.7, the Institutional Trustee shall have all
the powers granted to the Trustees and shall discharge all the duties imposed
upon the Trustees by this Declaration.
SECTION 4.10. Meetings of the Trustees and the Administrators. Meetings
-----------------------------------------------
of the Trustees or the Administrators shall be held from time to time upon the
call of any Trustee or Administrator, as applicable. Regular meetings of the
Trustees and the Administrators, respectively, may be in person in the United
States or by telephone, at a place (if applicable) and time fixed by resolution
of the Trustees or the Administrators, as applicable. Notice of any in-person
meetings of the Trustees or the Administrators shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 48 hours before such meeting. Notice of any
telephonic meetings of the Trustees or the Administrators or any committee
thereof shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of a Trustee or an Administrator, as the case may be, at a meeting
shall constitute a waiver of notice of such meeting except where a Trustee or an
Administrator, as the case may be, attends a meeting for the express purpose of
objecting to the transaction of any activity on the ground that the meeting has
not been lawfully called or convened. Unless provided otherwise in this
Declaration, any action of the Trustees or the Administrators, as the case may
be, may be taken at a meeting by vote of a majority of the Trustees or the
Administrators present (whether in person or by telephone) and eligible to vote
with respect to such matter; provided, that, in the case of the Administrators,
--------
a Quorum is present, or without a meeting by the unanimous written consent of
the Trustees or the Administrators, as the case may be. Meetings of the Trustees
and the Administrators together shall be held from time to time upon the call of
any Trustee or Administrator.
SECTION 4.11. Delegation of Power.
-------------------
(a) Any Trustee or any Administrator, as the case may be, may, by power
of attorney consistent with applicable law, delegate to any other natural person
over the age of 21 that is a U.S. Person his or her power for the purpose of
executing any documents, instruments or other writings contemplated in Section
2.6.
(b) The Trustees shall have power to delegate from time to time to such
of their number or to any officer of the Trust that is a U.S. Person, the doing
of such things and the execution of such instruments or other writings either in
the name of the Trust or the names of the Trustees or otherwise as the Trustees
may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
SECTION 4.12. Merger, Conversion, Consolidation or Succession to
---------------------------------------------------------
Business. Any Person into which the Institutional Trustee or the Delaware
- --------
Trustee, as the case may be, may be merged or converted or with which either may
be consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Institutional Trustee or the Delaware Trustee, as the
case may be, shall be a party, or any Person succeeding to all or substantially
all the corporate trust business of the Institutional Trustee or the Delaware
Trustee, as the case may be, shall be the successor of the Institutional Trustee
or the Delaware Trustee, as the case may be, hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
provided such Person shall be otherwise qualified and eligible under this
Article and, provided, further, that such Person shall file an amendment to the
-------- -------
Certificate of Trust with the Secretary of State of the State of Delaware as
contemplated in Section 4.7(i).
ARTICLE V
DISTRIBUTIONS
SECTION 5.1. Distributions. Holders shall receive Distributions in
-------------
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Capital Securities and the Common Securities
in accordance with the preferences set forth in their respective terms. If and
to the extent that the Debenture Issuer makes a payment of interest (including
any Additional Interest or Deferred Interest) and/or principal on the Debentures
held by the Institutional Trustee (the amount of any such payment being a
"Payment Amount"), the Institutional Trustee shall and is directed, to the
extent funds are available in the Property Account for that purpose, to make a
distribution (a "Distribution") of the Payment Amount to Holders.
ARTICLE VI
ISSUANCE OF SECURITIES
SECTION 6.1. General Provisions Regarding Securities.
---------------------------------------
(a) The Administrators shall on behalf of the Trust issue one series of
capital securities, evidenced by a certificate substantially in the form of
Exhibit A-1, representing undivided beneficial interests in the assets of the
Trust and having such terms as are set forth in Annex I (the "Capital
Securities"), and one series of common securities, evidenced by a certificate
substantially in the form of Exhibit A-2, representing undivided beneficial
interests in the assets of the Trust and having such terms as are set forth in
Annex I (the "Common Securities"). The Trust shall issue no securities or other
interests in the assets of the Trust other than the Capital Securities and the
Common Securities. The Capital Securities rank pari passu and payment thereon
shall be made Pro Rata with the Common Securities except that, where an Event of
Default has occurred and is continuing, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights to payment of the
Holders of the Capital Securities.
(b) The Certificates shall be signed on behalf of the Trust by one or
more Administrators. Such signature shall be the facsimile or manual signature
of any Administrator. In case any Administrator of the Trust who shall have
signed any of the Securities shall cease to be such Administrator before the
Certificates so signed shall be delivered by the Trust, such Certificates
nevertheless may be delivered as though the person who signed such Certificates
had not ceased to be such Administrator. Any Certificate may be signed on behalf
of the Trust by such person who, at the actual date of execution of such
Security, shall be an Administrator of the Trust, although at the date of the
execution and delivery of the Declaration any such person was not such an
Administrator. A Capital Security shall not be valid until authenticated by the
manual signature of an Authorized Officer of the Institutional Trustee. Such
signature shall be conclusive evidence that the Capital Security has been
authenticated under this Declaration. Upon written order of the Trust signed by
one Administrator, the Institutional Trustee shall authenticate the Capital
Securities for original issue. The Institutional Trustee may appoint an
authenticating agent that is a U.S. Person acceptable to the Trust to
authenticate the Capital Securities. A Common Security need not be so
authenticated and shall be valid upon execution by one or more Administrators.
(c) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(d) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable, and each Holder thereof shall be entitled to the benefits
provided by this Declaration.
(e) Every Person, by virtue of having become a Holder in accordance
with the terms of this Declaration, shall be deemed to have expressly assented
and agreed to the terms of, and shall be bound by, this Declaration and the
Guarantee.
SECTION 6.2. Paying Agent, Transfer Agent, Calculation Agent and
----------------------------------------------------------
Registrar.
- ----------
(a) The Trust shall maintain in Wilmington, Delaware, an office or
agency where the Securities may be presented for payment (the "Paying Agent"),
and an office or agency where Securities may be presented for registration of
transfer or exchange (the "Transfer Agent"). The Trust shall keep or cause to be
kept at such office or agency a register for the purpose of registering
Securities and transfers and exchanges of Securities, such register to be held
by a registrar (the "Registrar"). The Administrators may appoint the Paying
Agent, the Registrar and the Transfer Agent, and may appoint one or more
additional Paying Agents, one or more co-Registrars, or one or more co-Transfer
Agents in such other locations as it shall determine. The term "Paying Agent"
includes any additional Paying Agent, the term "Registrar" includes any
additional Registrar or co-Registrar and the term "Transfer Agent" includes any
additional Transfer Agent or co-Transfer Agent. The Administrators may change
any Paying Agent, Transfer Agent or Registrar at any time without prior notice
to any Holder. The Administrators shall notify the Institutional Trustee of the
name and address of any Paying Agent, Transfer Agent and Registrar not a party
to this Declaration. The Administrators hereby initially appoint the
Institutional Trustee to act as Paying Agent, Transfer Agent and Registrar for
the Capital Securities and the Common Securities at its Corporate Trust Office.
The Institutional Trustee or any of its Affiliates in the United States may act
as Paying Agent, Transfer Agent or Registrar.
(b) The Trust shall also appoint a Calculation Agent, which shall
determine the Coupon Rate in accordance with the terms of the Securities. The
Trust initially appoints the Institutional Trustee as Calculation Agent.
SECTION 6.3. Form and Dating.
---------------
(a) The Capital Securities and the Institutional Trustee's certificate
of authentication thereon shall be substantially in the form of Exhibit A-1, and
the Common Securities shall be substantially in the form of Exhibit A-2, each of
which is hereby incorporated in and expressly made a part of this Declaration.
Certificates may be typed, printed, lithographed or engraved or may be produced
in any other manner as is reasonably acceptable to the Administrators, as
conclusively evidenced by their execution thereof. The Securities may have
letters, numbers, notations or other marks of identification or designation and
such legends or endorsements required by law, stock exchange rule, agreements to
which the Trust is subject, if any, or usage (provided, that any such notation,
--------
legend or endorsement is in a form acceptable to the Sponsor). The Trust at the
direction of the Sponsor shall furnish any such legend not contained in Exhibit
A-1 to the Institutional Trustee in writing. Each Capital Security shall be
dated the date of its authentication. The terms and provisions of the Securities
set forth in Annex I and the forms of Securities set forth in Exhibits A-1 and
A-2 are part of the terms of this Declaration and to the extent applicable, the
Institutional Trustee, the Delaware Trustee, the Administrators and the Sponsor,
by their execution and delivery of this Declaration, expressly agree to such
terms and provisions and to be bound thereby. Capital Securities will be issued
only in blocks having a stated liquidation amount of not less than $100,000.
(b) The Capital Securities are being offered and sold by the Trust
pursuant to the Placement Agreement in definitive form, registered in the name
of the Holder thereof, without coupons and with the Restricted Securities
Legend.
SECTION 6.4. Mutilated, Destroyed, Lost or Stolen Certificates. If:
-------------------------------------------------
(a) any mutilated Certificates should be surrendered to the Registrar,
or if the Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Registrar, the Administrators and
the Institutional Trustee such security or indemnity as may be required by them
to keep each of them harmless; then, in the absence of notice that such
Certificate shall have been acquired by a bona fide purchaser, an Administrator
on behalf of the Trust shall execute (and in the case of a Capital Security
Certificate, the Institutional Trustee shall authenticate) and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like denomination. In connection with the
issuance of any new Certificate under this Section 6.4, the Registrar or the
Administrators may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith. Any
duplicate Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership interest in the relevant Securities, as if
originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 6.5. Temporary Securities. Until definitive Securities are
--------------------
ready for delivery, the Administrators may prepare and, in the case of the
Capital Securities, the Institutional Trustee shall authenticate, temporary
Securities. Temporary Securities shall be substantially in form of definitive
Securities but may have variations that the Administrators consider appropriate
for temporary Securities. Without unreasonable delay, the Administrators shall
prepare and, in the case of the Capital Securities, the Institutional Trustee
shall authenticate definitive Securities in exchange for temporary Securities.
SECTION 6.6. Cancellation. The Administrators at any time may deliver
------------
Securities to the Institutional Trustee for cancellation. The Registrar shall
forward to the Institutional Trustee any Securities surrendered to it for
registration of transfer, redemption or payment. The Institutional Trustee shall
promptly cancel all Securities surrendered for registration of transfer,
payment, replacement or cancellation and shall dispose of such canceled
Securities as the Administrators direct. The Administrators may not issue new
Securities to replace Securities that have been paid or that have been delivered
to the Institutional Trustee for cancellation.
SECTION 6.7. Rights of Holders; Waivers of Past Defaults.
-------------------------------------------
(a) The legal title to the Trust Property is vested exclusively in the
Institutional Trustee (in its capacity as such) in accordance with Section 2.5,
and the Holders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the Trust conferred by their
Securities and they shall have no right to call for any partition or division of
property, profits or rights of the Trust except as described below. The
Securities shall be personal property giving only the rights specifically set
forth therein and in this Declaration. The Securities shall have no, and the
issuance of the Securities shall not be subject to, preemptive or other similar
rights and when issued and delivered to Holders against payment of the purchase
price therefor, the Securities will be fully paid and nonassessable by the
Trust.
(b) For so long as any Capital Securities remain outstanding, if, upon
an Indenture Event of Default, the Debenture Trustee fails or the holders of not
less than 25% in principal amount of the outstanding Debentures fail to declare
the principal of all of the Debentures to be immediately due and payable, the
Holders of not less than a Majority in liquidation amount of the Capital
Securities then outstanding shall have the right to make such declaration by a
notice in writing to the Institutional Trustee, the Sponsor and the Debenture
Trustee.
(c) At any time after a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as provided in the
Indenture, if the Institutional Trustee, subject to the provisions hereof, fails
to annul any such declaration and waive such default, the Holders of not less
than a Majority in liquidation amount of the Capital Securities, by written
notice to the Institutional Trustee, the Sponsor and the Debenture Trustee, may
rescind and annul such declaration and its consequences if:
(i) the Sponsor has paid or deposited with the Debenture Trustee a sum
sufficient to pay
(A) all overdue installments of interest on all of the
Debentures;
(B) any accrued Deferred Interest on all of the Debentures;
(C) the principal of (and premium, if any, on) any Debentures
that have become due otherwise than by such declaration of
acceleration and interest and Deferred Interest thereon at the rate
borne by the Debentures; and
(D) all sums paid or advanced by the Debenture Trustee under the
Indenture and the reasonable compensation, documented expenses,
disbursements and advances of the Debenture Trustee and the
Institutional Trustee, their agents and counsel; and
(ii) all Events of Default with respect to the Debentures, other than
the non-payment of the principal of the Debentures that has become due
solely by such acceleration, have been cured or waived as provided in
Section 5.07 of the Indenture.
(d) The Holders of not less than a Majority in liquidation amount of
the Capital Securities may, on behalf of the Holders of all the Capital
Securities, waive any past default or Event of Default, except a default or
Event of Default in the payment of principal or interest (unless such default or
Event of Default has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee) or a default or Event of Default in
respect of a covenant or provision that under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Debenture. No
such rescission shall affect any subsequent default or impair any right
consequent thereon.
(e) Upon receipt by the Institutional Trustee of written notice
declaring such an acceleration, or rescission and annulment thereof, by Holders
of any part of the Capital Securities, a record date shall be established for
determining Holders of outstanding Capital Securities entitled to join in such
notice, which record date shall be at the close of business on the day the
Institutional Trustee receives such notice. The Holders on such record date, or
their duly designated proxies, and only such Persons, shall be entitled to join
in such notice, whether or not such Holders remain Holders after such record
date; provided, that, unless such declaration of acceleration, or rescission and
--------
annulment, as the case may be, shall have become effective by virtue of the
requisite percentage having joined in such notice prior to the day that is 90
days after such record date, such notice of declaration of acceleration, or
rescission and annulment, as the case may be, shall automatically and without
further action by any Holder be canceled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new written notice of declaration of
acceleration, or rescission and annulment thereof, as the case may be, that is
identical to a written notice that has been canceled pursuant to the proviso to
the preceding sentence, in which event a new record date shall be established
pursuant to the provisions of this Section 6.7.
(f) Except as otherwise provided in this Section 6.7, the Holders of
not less than a Majority in liquidation amount of the Capital Securities may, on
behalf of the Holders of all the Capital Securities, waive any past default or
Event of Default and its consequences. Upon such waiver, any such default or
Event of Default shall cease to exist, and any default or Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other default
or Event of Default or impair any right consequent thereon.
ARTICLE VII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 7.1. Dissolution and Termination of Trust.
------------------------------------
(a) The Trust shall dissolve on the first to occur of :
(i) unless earlier dissolved, on April 22, 2037, the expiration
of the term of the Trust;
(ii) a Bankruptcy Event with respect to the Sponsor, the Trust or
the Debenture Issuer;
(iii) (other than in connection with a merger, consolidation or
similar transaction not prohibited by the Indenture, this Declaration
or the Guarantee, as the case may be) the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor or upon the
revocation of the charter of the Sponsor and the expiration of 90 days
after the date of revocation without a reinstatement thereof;
(iv) the distribution of the Debentures to the Holders of the
Securities, upon exercise of the right of the Holders of all of the
outstanding Common Securities to dissolve the Trust as provided in
Annex I hereto;
(v) the entry of a decree of judicial dissolution of any Holder
of the Common Securities, the Sponsor, the Trust or the Debenture
Issuer;
(vi) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the
Securities; or
(vii) before the issuance of any Securities, with the consent of
all of the Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event referred
to in Section 7.1(a), and after satisfaction of liabilities to creditors of the
Trust as required by applicable law, including Section 3808 of the Business
Trust Act, and subject to the terms set forth in Annex I, the Institutional
Trustee shall terminate the Trust by filing a certificate of cancellation with
the Secretary of State of the State of Delaware.
(c) The provisions of Section 2.9 and Article IX shall survive the
termination of the Trust.
ARTICLE VIII
TRANSFER OF INTERESTS
SECTION 8.1. General.
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(a) Where Capital Securities are presented to the Registrar with a
request to register a transfer or to exchange them for an equal number of
Capital Securities represented by different certificates, the Registrar shall
register the transfer or make the exchange if its requirements for such
transactions are met. To permit registrations of transfers and exchanges, the
Trust shall issue and the Institutional Trustee shall authenticate Capital
Securities at the Registrar's request.
(b) Upon issuance of the Common Securities, the Sponsor shall acquire
and retain beneficial and record ownership of the Common Securities and, for so
long as the Securities remain outstanding, the Sponsor shall maintain 100%
ownership of the Common Securities; provided, however, that any permitted
-------- -------
successor of the Sponsor under the Indenture that is a U.S. Person may succeed
to the Sponsor's ownership of the Common Securities.
(c) Capital Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Capital Securities. To the fullest extent permitted by
applicable law, any transfer or purported transfer of any Security not made in
accordance with this Declaration shall be null and void and will be deemed to be
of no legal effect whatsoever and any such transferee shall be deemed not to be
the holder of such Capital Securities for any purpose, including but not limited
to the receipt of Distributions on such Capital Securities, and such transferee
shall be deemed to have no interest whatsoever in such Capital Securities.
(d) The Registrar shall provide for the registration of Securities and
of transfers of Securities, which will be effected without charge but only upon
payment (with such indemnity as the Registrar may require) in respect of any tax
or other governmental charges that may be imposed in relation to it. Upon
surrender for registration of transfer of any Securities, the Registrar shall
cause one or more new Securities to be issued in the name of the designated
transferee or transferees. Any Security issued upon any registration of transfer
or exchange pursuant to the terms of this Declaration shall evidence the same
Security and shall be entitled to the same benefits under this Declaration as
the Security surrendered upon such registration of transfer or exchange. Every
Security surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form similar to Exhibits B and C satisfactory
to the Registrar duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Security surrendered for registration of transfer
shall be canceled by the Institutional Trustee pursuant to Section 6.6. A
transferee of a Security shall be entitled to the rights and subject to the
obligations of a Holder hereunder upon the receipt by such transferee of a
Security. By acceptance of a Security, each transferee shall be deemed to have
agreed to be bound by this Declaration.
(e) Neither the Trust nor the Registrar shall 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 any selection of Securities
for redemption and ending at the close of business on the earliest date on which
the relevant notice of redemption is deemed to have been given to all Holders of
the Securities to be redeemed, or (ii) to register the transfer or exchange of
any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
SECTION 8.2. Transfer Procedures and Restrictions.
------------------------------------
(a) The Capital Securities shall bear the Restricted Securities Legend
(as defined below), which shall not be removed unless there is delivered to the
Trust such satisfactory evidence, which may include an opinion of counsel
licensed to practice law in the State of New York, as may be reasonably required
by the Trust, that neither the legend nor the restrictions on transfer set forth
therein are required to ensure that transfers thereof comply with the provisions
of the Securities Act or that such Securities are not "restricted" within the
meaning of Rule 144 under the Securities Act. Upon provision of such
satisfactory evidence, the Institutional Trustee, at the written direction of
the Trust, shall authenticate and deliver Capital Securities that do not bear
the Restricted Securities Legend.
(b) When Capital Securities are presented to the Registrar (x) to
register the transfer of such Capital Securities, or (y) to exchange such
Capital Securities for an equal number of Capital Securities represented by
different Certificates, the Registrar shall register the transfer or make the
exchange as requested if its reasonable requirements for such transaction are
met; provided, however, that the Capital Securities surrendered for registration
-------- -------
of transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Trust and the
Registrar, duly executed by the Holder thereof or his attorney duly authorized
in writing and (i) if such Capital Securities are being transferred to a QIB,
accompanied by a certificate of the transferor substantially in the form set
forth as Exhibit C hereto or (ii) if such Capital Securities are being
transferred otherwise than to a QIB, accompanied by a certificate of the
transferee substantially in the form set forth as Exhibit B hereto.
(c) Except as permitted by Section 8.2(a), each Capital Security shall
bear a legend (the "Restricted Securities Legend") in substantially the
following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY
(A) TO THE DEBENTURE ISSUER OR THE TRUST, (B) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT
TO AN EXEMPTION FROM REGISTRATION TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE DEBENTURE
ISSUER'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (C) OR (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN
ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY OF WHICH
MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS
AND WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS
SECURITY UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
(EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY
REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,
95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR
HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO
WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING
ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY
USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE,
OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE
STATUTORY OR ADMINISTRATIVE EXEMPTION.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVERTO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE
REQUIRED BY THE AMENDED AND RESTATED DECLARATION OF TRUST TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN
EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE
THE HOLDER OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE
RECEIPT OF DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL
BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.
(d) Capital Securities may only be transferred in minimum blocks of
$100,000 aggregate liquidation amount (100 Capital Securities) and multiples of
$1,000 in excess thereof. Any attempted transfer of Capital Securities in a
block having an aggregate liquidation amount of less than $100,000 shall be
deemed to be void and of no legal effect whatsoever. Any such purported
transferee shall be deemed not to be a Holder of such Capital Securities for any
purpose, including, but not limited to, the receipt of Distributions on such
Capital Securities, and such purported transferee shall be deemed to have no
interest whatsoever in such Capital Securities.
SECTION 8.3. Deemed Security Holders. The Trust, the Administrators,
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the Trustees, the Paying Agent, the Transfer Agent or the Registrar may treat
the Person in whose name any Certificate shall be registered on the books and
records of the Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust, the Administrators, the Trustees, the
Paying Agent, the Transfer Agent or the Registrar shall have actual or other
notice thereof.
ARTICLE IX
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 9.1. Liability.
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(a) Except as expressly set forth in this Declaration, the Guarantee
and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; and
(ii) required to pay to the Trust or to any Holder of the
Securities anydeficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the Holders of
the Securities shall be entitled to the same limitation of personal liability
extended to stockholders of private corporations for profit organized under the
General Corporation Law of the State of Delaware, except as otherwise
specifically set forth herein.
SECTION 9.2. Exculpation.
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(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or by law, except that
an Indemnified Person (other than an Administrator) shall be liable for any such
loss, damage or claim incurred by reason of such Indemnified Person's negligence
or willful misconduct with respect to such acts or omissions and except that an
Administrator shall be liable for any such loss, damage or claim incurred by
reason of such Administrator's gross negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and, if selected by such Indemnified Person, has been selected by
such Indemnified Person with reasonable care by or on behalf of the Trust,
including information, opinions, reports or statements as to the value and
amount of the assets, liabilities, profits, losses or any other facts pertinent
to the existence and amount of assets from which Distributions to Holders of
Securities might properly be paid.
SECTION 9.3. Fiduciary Duty.
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(a) To the extent that, at law or in equity, an Indemnified Person has
duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity (other than the
duties imposed on the Institutional Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of the
Indemnified Person.
(b) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests
and factors as it desires, including its own interests, and shall have
no duty or obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not
be subject to any other or different standard imposed by this
Declaration or by applicable law.
SECTION 9.4. Indemnification.
---------------
(a) (i) The Sponsor shall indemnify, to the fullest extent permitted
by law, any Indemnified Person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of the Trust) by reason of the fact that
such Person is or was an Indemnified Person against expenses (including
attorneys' fees and expenses), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such Person in connection
with such action, suit or proceeding if such Person acted in good faith and
in a manner such Person reasonably believed to be in or not opposed to the
best interests of the Trust, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the Indemnified
Person did not act in good faith and in a manner which such Person
reasonably believed to be in or not opposed to the best interests of the
Trust, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that such conduct was unlawful.
(ii) The Sponsor shall indemnify, to the fullest extent permitted by
law, any Indemnified Person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or
in the right of the Trust to procure a judgment in its favor by reason of
the fact that such Person is or was an Indemnified Person against expenses
(including attorneys' fees and expenses) actually and reasonably incurred
by such Person in connection with the defense or settlement of such action
or suit if such Person acted in good faith and in a manner such Person
reasonably believed to be in or not opposed to the best interests of the
Trust and except that no such indemnification shall be made in respect of
any claim, issue or matter as to which such Indemnified Person shall have
been adjudged to be liable to the Trust unless and only to the extent that
the Court of Chancery of Delaware or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication
of liability but in view of all the circumstances of the case, such Person
is fairly and reasonably entitled to indemnity for such expenses which such
Court of Chancery or such other court shall deem proper.
(iii) To the extent that an Indemnified Person shall be successful on
the merits or otherwise (including dismissal of an action without prejudice
or the settlement of an action without admission of liability) in defense
of any action, suit or proceeding referred to in paragraphs (i) and (ii) of
this Section 9.4(a), or in defense of any claim, issue or matter therein,
such Person shall be indemnified, to the fullest extent permitted by law,
against expenses (including attorneys' fees and expenses) actually and
reasonably incurred by such Person in connection therewith.
(iv) Any indemnification of an Administrator under paragraphs (i) and
(ii) of this Section 9.4(a) (unless ordered by a court) shall be made by
the Sponsor only as authorized in the specific case upon a determination
that indemnification of the Indemnified Person is proper in the
circumstances because such Person has met the applicable standard of
conduct set forth in paragraphs (i) and (ii). Such determination shall be
made (A) by the Administrators by a majority vote of a Quorum consisting of
such Administrators who were not parties to such action, suit or
proceeding, (B) if such a Quorum is not obtainable, or, even if obtainable,
if a Quorum of disinterested Administrators so directs, by independent
legal counsel in a written opinion, or (C) by the Common Security Holder of
the Trust.
(v) To the fullest extent permitted by law, expenses (including
attorneys' fees and expenses) incurred by an Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit
or proceeding referred to in paragraphs (i) and (ii) of this Section 9.4(a)
shall be paid by the Sponsor in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf
of such Indemnified Person to repay such amount if it shall ultimately be
determined that such Person is not entitled to be indemnified by the
Sponsor as authorized in this Section 9.4(a). Notwithstanding the
foregoing, no advance shall be made by the Sponsor if a determination is
reasonably and promptly made (1) in the case of a Company Indemnified
Person (A) by the Administrators by a majority vote of a Quorum of
disinterested Administrators, (B) if such a Quorum is not obtainable, or,
even if obtainable, if a Quorum of disinterested Administrators so directs,
by independent legal counsel in a written opinion or (C) by the Common
Security Holder of the Trust, that, based upon the facts known to the
Administrators, counsel or the Common Security Holder at the time such
determination is made, such Indemnified Person acted in bad faith or in a
manner that such Person either believed to be opposed to or did not believe
to be in the best interests of the Trust, or, with respect to any criminal
proceeding, that such Indemnified Person believed or had reasonable cause
to believe such conduct was unlawful, or (2) in the case of a Fiduciary
Indemnified Person, by independent legal counsel in a written opinion that,
based upon the facts known to the counsel at the time such determination is
made, such Indemnified Person acted in bad faith or in a manner that such
Indemnified Person either believed to be opposed to or did not believe to
be in the best interests of the Trust, or, with respect to any criminal
proceeding, that such Indemnified Person believed or had reasonable cause
to believe such conduct was unlawful. In no event shall any advance be made
(i) to a Company Indemnified Person in instances where the Administrators,
independent legal counsel or the Common Security Holder reasonably
determine that such Person deliberately breached such Person's duty to the
Trust or its Common or Capital Security Holders or (ii) to a Fiduciary
Indemnified Person in instances where independent legal counsel promptly
and reasonably determines in a written opinion that such Person
deliberately breached such Person's duty to the Trust or its Common or
Capital Security Holders.
(b) The Sponsor shall indemnify, to the fullest extent permitted by
applicable law, each Indemnified Person from and against any and all loss,
damage, liability, tax (other than taxes based on the income of such Indemnified
Person), penalty, expense or claim of any kind or nature whatsoever incurred by
such Indemnified Person arising out of or in connection with or by reason of the
creation, administration or termination of the Trust, or any act or omission of
such Indemnified Person in good faith on behalf of the Trust and in a manner
such Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Declaration, except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage, liability, tax, penalty, expense or claim incurred by such Indemnified
Person by reason of negligence or willful misconduct with respect to such acts
or omissions.
(c) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 9.4 shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Sponsor or Capital Security
Holders of the Trust or otherwise, both as to action in such Person's official
capacity and as to action in another capacity while holding such office. All
rights to indemnification under this Section 9.4 shall be deemed to be provided
by a contract between the Sponsor and each Indemnified Person who serves in such
capacity at any time while this Section 9.4 is in effect. Any repeal or
modification of this Section 9.4 shall not affect any rights or obligations then
existing.
(d) The Sponsor or the Trust may purchase and maintain insurance on
behalf of any Person who is or was an Indemnified Person against any liability
asserted against such Person and incurred by such Person in any such capacity,
or arising out of such Person's status as such, whether or not the Sponsor would
have the power to indemnify such Person against such liability under the
provisions of this Section 9.4.
(e) For purposes of this Section 9.4, references to "the Trust" shall
include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any Person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of another
entity, shall stand in the same position under the provisions of this Section
9.4 with respect to the resulting or surviving entity as such Person would have
with respect to such constituent entity if its separate existence had continued.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 9.4 shall, unless otherwise provided when
authorized or ratified, continue as to a Person who has ceased to be an
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a Person.
(g) The provisions of this Section 9.4 shall survive the termination of
this Declaration or the earlier resignation or removal of the Institutional
Trustee. The obligations of the Sponsor under this Section 9.4 to compensate and
indemnify the Trustees and to pay or reimburse the Trustees for expenses,
disbursements and advances shall constitute additional indebtedness hereunder.
Such additional indebtedness shall be secured by a lien prior to that of the
Securities upon all property and funds held or collected by the Trustees as
such, except funds held in trust for the benefit of the holders of particular
Capital Securities, provided, that the Sponsor is the holder of the Common
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Securities.
SECTION 9.5. Outside Businesses. Any Covered Person, the Sponsor, the
------------------
Delaware Trustee and the Institutional Trustee (subject to Section 4.3(c)) may
engage in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Trust, and the Trust and the Holders of Securities shall have no rights
by virtue of this Declaration in and to such independent ventures or the income
or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. None of any Covered Person, the Sponsor, the Delaware Trustee or the
Institutional Trustee shall be obligated to present any particular investment or
other opportunity to the Trust even if such opportunity is of a character that,
if presented to the Trust, could be taken by the Trust, and any Covered Person,
the Sponsor, the Delaware Trustee and the Institutional Trustee shall have the
right to take for its own account (individually or as a partner or fiduciary) or
to recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Institutional Trustee may engage or
be interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
SECTION 9.6. Compensation; Fee.
-----------------
(a) The Sponsor agrees:
(i) to pay to the Trustees from time to time such
compensation for all services rendered by them hereunder as
the parties shall agree in writing from time to time (which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express
trust); and
(ii) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable,
documented expenses, disbursements and advances incurred or
made by the Trustees in accordance with any provision of
this Declaration (including the reasonable compensation and
the expenses and disbursements of their respective agents
and counsel), except any such expense, disbursement or
advance attributable to their negligence or willful
misconduct.
(b) The provisions of this Section 9.6 shall survive the dissolution of
the Trust and the termination of this Declaration and the removal or resignation
of any Trustee.
ARTICLE X
ACCOUNTING
SECTION 10.1. Fiscal Year. he fiscal year (the "Fiscal Year") of the
-----------
Trust shall be the calendar year, or such other yearas is required by the Code.
SECTION 10.2. Certain Accounting Matters.
--------------------------
(a) At all times during the existence of the Trust, the Administrators
shall keep, or cause to be kept at the principal office of the Trust in the
United States, as defined for purposes of Treasury Regulations section
301.7701-7, full books of account, records and supporting documents, which shall
reflect in reasonable detail each transaction of the Trust. The books of account
shall be maintained on the accrual method of accounting, in accordance with
generally accepted accounting principles, consistently applied.
(b) The Administrators shall either (i) cause each Form 10-K and Form
10-Q prepared by the Sponsor and filed with the Commission in accordance with
the Exchange Act to be delivered to each Holder of Securities, within 90 days
after the filing of each Form 10-K and within 30 days after the filing of each
Form 10-Q or (ii) cause to be prepared at the principal office of the Trust in
the United States, as defined for purposes of Treasury Regulations section
301.7701-7, and delivered to each of the Holders of Securities, within 90 days
after the end of each Fiscal Year of the Trust, annual financial statements of
the Trust, including a balance sheet of the Trust as of the end of such Fiscal
Year, and the related statements of income or loss.
(c) The Administrators shall cause to be duly prepared and delivered to
each of the Holders of Securities Form 1099 or such other annual United States
federal income tax information statement required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right under the Code
to deliver any such statement at a later date, the Administrators shall endeavor
to deliver all such statements within 30 days after the end of each Fiscal Year
of the Trust.
(d) The Administrators shall cause to be duly prepared in the United
States, as defined for purposes of Treasury Regulations section 301.7701-7, and
filed an annual United States federal income tax return on a Form 1041 or such
other form required by United States federal income tax law, and any other
annual income tax returns required to be filed by the Administrators on behalf
of the Trust with any state or local taxing authority.
(e) So long as the only Holder of the Capital Securities is MM
Community Funding III, Ltd, the Administrators will cause the Sponsor's reports
on Form FR Y-9C, FR Y-9LP and FR Y-6 to be delivered to the Holder promptly
following their filing with the Federal Reserve.
SECTION 10.3. Banking. The Trust shall maintain one or more bank
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accounts in the United States, as defined for purposes of Treasury Regulations
section 301.7701-7, in the name and for the sole benefit of the Trust; provided,
however, that all payments of funds in respect of the Debentures held by the
Institutional Trustee shall be made directly to the Property Account and no
other funds of the Trust shall be deposited in the Property Account. The sole
signatories for such accounts (including the Property Account) shall be
designated by the Institutional Trustee.
SECTION 10.4. Withholding. The Institutional Trustee or any Paying
-----------
Agent and the Administrators shall comply with all withholding requirements
under United States federal, state and local law. The Institutional Trustee or
any Paying Agent shall request, and each Holder shall provide to the
Institutional Trustee or any Paying Agent, such forms or certificates as are
necessary to establish an exemption from withholding with respect to the Holder,
and any representations and forms as shall reasonably be requested by the
Institutional Trustee or any Paying Agent to assist it in determining the extent
of, and in fulfilling, its withholding obligations. The Administrators shall
file required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Institutional Trustee or any Paying Agent is required to withhold and pay over
any amounts to any authority with respect to distributions or allocations to any
Holder, the amount withheld shall be deemed to be a Distribution to the Holder
in the amount of the withholding. In the event of any claimed overwithholding,
Holders shall be limited to an action against the applicable jurisdiction. If
the amount required to be withheld was not withheld from actual Distributions
made, the Institutional Trustee or any Paying Agent may reduce subsequent
Distributions by the amount of such withholding.
ARTICLE XI
AMENDMENTS AND MEETINGS
SECTION 11.1. Amendments.
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(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by
(i) the Institutional Trustee,
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, the Delaware
Trustee,
(iii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Administrators, the Administrators,
and
(iv) the Holders of a Majority in liquidation amount of the
Common Securities.
(b) Notwithstanding any other provision of this Article XI, no
amendment shall be made, and any such purported amendment shall be void and
ineffective:
(i) unless the Institutional Trustee shall have first received
(A) an Officers' Certificate from each of the Trust and the
Sponsor that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the
Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor
or the Trust) that such amendment is permitted by, and conforms
to, the terms of this Declaration (including the terms of the
Securities) and that all conditions precedent to the execution
and delivery of such amendment have been satisfied; or
(ii) if the result of such amendment would be to
(A) cause the Trust to cease to be classified for purposes
of United States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the
Institutional Trustee in contravention of the Trust Indenture
Act;
(C) cause the Trust to be deemed to be an Investment Company
required to be registered under the Investment Company Act; or
(D) cause the Debenture Issuer to be unable to treat an
amount equal to the Liquidation Amount of the Debentures as "Tier
1 Capital" for purposes of the capital adequacy guidelines of the
Federal Reserve.
(c) Except as provided in Section 11.1(d), (e) or (g), no amendment
shall be made, and any such purported amendment shall be void and ineffective,
unless the Holders of a Majority in liquidation amount of the Capital Securities
shall have consented to such amendment.
(d) In addition to and notwithstanding any other provision in this
Declaration, without the consent of each affected Holder, this Declaration may
not be amended to (i) change the amount or timing of any Distribution on the
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Securities as of a specified date or (ii) restrict
the right of a Holder to institute suit for the enforcement of any such payment
on or after such date.
(e) Sections 9.1(b) and 9.1(c) and this Section 11.1 shall not be
amended without the consent of all of the Holders of the Securities.
(f) The rights of the Holders of the Capital Securities and Common
Securities, as applicable, under Article IV to increase or decrease the number
of, and appoint and remove, Trustees shall not be amended without the consent of
the Holders of a Majority in liquidation amount of the Capital Securities or
Common Securities, as applicable.
(g) This Declaration may be amended by the Institutional Trustee and
the Holder of a Majority in liquidation amount of the Common Securities without
the consent of the Holders of the Capital Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other provision of
this Declaration;
(iii) add to the covenants, restrictions or obligations of
the Sponsor; or
(iv) modify, eliminate or add to any provision of this
Declaration to such extent as may be necessary or desirable,
including, without limitation, to ensure that the Trust will be
classified for United States federal income tax purposes at all
times as a grantor trust and will not be required to register as
an Investment Company under the Investment Company Act (including
without limitation to conform to any change in Rule 3a-5, Rule
3a-7 or any other applicable rule under the Investment Company
Act or written change in interpretation or application thereof by
any legislative body, court, government agency or regulatory
authority) which amendment does not have a material adverse
effect on the right, preferences or privileges of the Holders of
Securities;
provided, however, that no such modification, elimination or addition referred
- -------- -------
to in clauses (i), (ii), (iii) or (iv) shall adversely affect the powers,
preferences or rights of Holders of Capital Securities.
SECTION 11.2. Meetings of the Holders of the Securities; Action by
- --------------------------------------------------------------------------------
Written Consent.
- ---------------
(a) Meetings of the Holders of any class of Securities may be called at
any time by the Administrators (or as provided in the terms of the Securities)
to consider and act on any matter on which Holders of such class of Securities
are entitled to act under the terms of this Declaration, the terms of the
Securities or the rules of any stock exchange on which the Capital Securities
are listed or admitted for trading, if any. The Administrators shall call a
meeting of the Holders of such class if directed to do so by the Holders of not
less than 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Administrators one or more calls in a
writing stating that the signing Holders of the Securities wish to call a
meeting and indicating the general or specific purpose for which the meeting is
to be called. Any Holders of the Securities calling a meeting shall specify in
writing the Certificates held by the Holders of the Securities exercising the
right to call a meeting and only those Securities represented by such
Certificates shall be counted for purposes of determining whether the required
percentage set forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of the
Securities:
(i) notice of any such meeting shall be given to all the
Holders of the Securities having a right to vote thereat at least
7 days and not more than 60 days before the date of such meeting.
Whenever a vote, consent or approval of the Holders of the
Securities is permitted or required under this Declaration or the
rules of any stock exchange on which the Capital Securities are
listed or admitted for trading, if any, such vote, consent or
approval may be given at a meeting of the Holders of the
Securities. Any action that may be taken at a meeting of the
Holders of the Securities may be taken without a meeting if a
consent in writing setting forth the action so taken is signed by
the Holders of the Securities owning not less than the minimum
amount of Securities that would be necessary to authorize or take
such action at a meeting at which all Holders of the Securities
having a right to vote thereon were present and voting. Prompt
notice of the taking of action without a meeting shall be given
to the Holders of the Securities entitled to vote who have not
consented in writing. The Administrators may specify that any
written ballot submitted to the Holders of the Securities for the
purpose of taking any action without a meeting shall be returned
to the Trust within the time specified by the Administrators;
(ii) each Holder of a Security may authorize any Person to
act for it by proxy on all matters in which a Holder of
Securities is entitled to participate, including waiving notice
of any meeting, or voting or participating at a meeting. No proxy
shall be valid after the expiration of 11 months from the date
thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the Holder of the Securities
executing it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as
if the Trust were a Delaware corporation and the Holders of the
Securities were stockholders of a Delaware corporation; each
meeting of the Holders of the Securities shall be conducted by
the Administrators or by such other Person that the
Administrators may designate; and
(iii) unless the Business Trust Act, this Declaration, the
terms of the Securities, the Trust Indenture Act or the listing
rules of any stock exchange on which the Capital Securities are
then listed for trading, if any, otherwise provides, the
Administrators, in their sole discretion, shall establish all
other provisions relating to meetings of Holders of Securities,
including notice of the time, place or purpose of any meeting at
which any matter is to be voted on by any Holders of the
Securities, waiver of any such notice, action by consent without
a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter
with respect to the exercise of any such right to vote; provided,
--------
however, that each meeting shall be conducted in the United
-------
States (as that term is defined in Treasury Regulations section
301.7701-7).
ARTICLE XII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 12.1. Representations and Warranties of Institutional Trustee.
-------------------------------------------------------
The Trustee that acts as initial Institutional Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Institutional Trustee represents and warrants to the Trust and
the Sponsor at the time of the Successor Institutional Trustee's acceptance of
its appointment as Institutional Trustee, that:
(a) the Institutional Trustee is a banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws of
the State of Delaware with trust power and authority to execute and deliver, and
to carry out and perform its obligations under the terms of, this Declaration;
(b) the Institutional Trustee has a combined capital and surplus of at
least fifty million U.S. dollars ($50,000,000);
(c) the Institutional Trustee is not an affiliate of the Sponsor, nor
does the Institutional Trustee offer or provide credit or credit enhancement to
the Trust;
(d) the execution, delivery and performance by the Institutional
Trustee of this Declaration has been duly authorized by all necessary corporate
action on the part of the Institutional Trustee. This Declaration has been duly
executed and delivered by the Institutional Trustee, and under Delaware law
(excluding any securities laws) constitutes a legal, valid and binding
obligation of the Institutional Trustee, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether considered in a proceeding in equity or at law);
(e) the execution, delivery and performance of this Declaration by the
Institutional Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Institutional Trustee; and
(f) no consent, approval or authorization of, or registration with or
notice to, any state or federal banking authority governing the trust powers of
the Institutional Trustee is required for the execution, delivery or performance
by the Institutional Trustee of this Declaration.
SECTION 12.2. Representations and Warranties of Delaware Trustee. The
--------------------------------------------------
Trustee that acts as initial Delaware Trustee represents and warrants to the
Trust and to the Sponsor at the date of this Declaration, and each Successor
Delaware Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee that:
(a) if it is not a natural person, the Delaware Trustee is duly
organized, validly existing and in good standing under the laws of the State of
Delaware; (b) if it is not a natural person, the execution, delivery and
performance by the Delaware Trustee of this Declaration has been duly authorized
by all necessary corporate action on the part of the Delaware Trustee. This
Declaration has been duly executed and delivered by the Delaware Trustee, and
under Delaware law (excluding any securities laws) constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether considered in a proceeding in equity or at law);
(c) if it is not a natural person, the execution, delivery and
performance of this Declaration by the Delaware Trustee does not conflict with
or constitute a breach of the charter or by-laws of the Delaware Trustee;
(d) it has trust power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, this Declaration;
(e) no consent, approval or authorization of, or registration with or
notice to, any state or federal banking authority governing the trust powers of
the Delaware Trustee is required for the execution, delivery or performance by
the Delaware Trustee of this Declaration; and
(f) the Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, it is an entity which has its
principal place of business in the State of Delaware and, in either case, a
Person that satisfies for the Trust the requirements of Section 3807 of the
Business Trust Act.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. Notices. All notices provided for in this Declaration
-------
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied (which telecopy shall be followed by notice delivered or
mailed by first class mail) or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrators at the Trust's
mailing address set forth below (or such other address as the Trust may give
notice of to the Holders of the Securities):
First Bank Capital Trust
c/o First Banks, Inc.
600 James S. McDonnell Blvd., Mail Code #014
Hazelwood, MO 63042
Attention: Allen H. Blake
Telecopy: (314) 592-6621
Telephone: (314) 592-6601
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as the Delaware Trustee may give notice of to the
Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telecopy: (302) 651-8882
Telephone: (302) 651-1000
(c) if given to the Institutional Trustee, at the Institutional
Trustee's mailing address set forth below (or such other address as the
Institutional Trustee may give notice of to the Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Telecopy: (302) 651-8882
Telephone: (302) 651-1000
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice of to the Trust):
First Banks, Inc.
600 James S. McDonnell Blvd., Mail Code #014
Hazelwood, MO 63042
Attention: Allen H. Blake
Telecopy: (314) 592-6621
Telephone: (314) 592-6601
(e) if given to any other Holder, at the address set forth on the books
and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 13.2. Governing Law. This Declaration and the rights and
--------------
obligations of the parties hereunder shall be governed by and interpreted in
accordance with the law of the State of Delaware and all rights, obligations and
remedies shall be governed by such laws without regard to the principles of
conflict of laws of the State of Delaware or any other jurisdiction that would
call for the application of the law of any jurisdiction other than the State of
Delaware.
SECTION 13.3. Submission to Jurisdiction.
--------------------------
(a) Each of the parties hereto agrees that any suit, action or
proceeding arising out of or based upon this Declaration, or the transactions
contemplated hereby, may be instituted in any of the courts of the State of New
York and the United States District Courts, in each case located in the Borough
of Manhattan, City and State of New York, and further agrees to submit to the
jurisdiction of any competent court in the place of its corporate domicile in
respect of actions brought against it as a defendant. In addition, each such
party irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of such suit,
action or proceeding brought in any such court and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum and irrevocably waives any right to which it
may be entitled on account of its place of corporate domicile. Each such party
hereby irrevocably waives any and all right to trial by jury in any legal
proceeding arising out of or relating to this Declaration or the transactions
contemplated hereby. Each such party agrees that final judgment in any
proceedings brought in such a court shall be conclusive and binding upon it and
may be enforced in any court to the jurisdiction of which it is subject by a
suit upon such judgment.
(b) Each of the Sponsor and the Holder of the Common Securities
irrevocably consents to the service of process on it in any such suit, action or
proceeding in any such court by the mailing thereof by registered or certified
mail, postage prepaid, to it at its address given in or pursuant to Section 13.1
hereof.
(c) To the extent permitted by law, nothing herein contained shall
preclude any party from effecting service of process in any lawful manner or
from bringing any suit, action or proceeding in respect of this Declaration in
any other state, country or place.
SECTION 13.4. Intention of the Parties. It is the intention of the
-------------------------
parties hereto that the Trust be classified for United States federal income tax
purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION 13.5. Headings. Headings contained in this Declaration are
--------
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.
SECTION 13.6. Successors and Assigns. Whenever in this Declaration any
----------------------
of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements in
this Declaration by the Sponsor and the Trustees shall bind and inure to the
benefit of their respective successors and assigns, whether or not so expressed.
SECTION 13.7. Partial Enforceability. If any provision of this
-----------------------
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
SECTION 13.8. Counterparts. This Declaration may contain more than one
------------
counterpart of the signature page and this Declaration may be executed by the
affixing of the signature of each of the Trustees and Administrators to any of
such counterpart signature pages. All of such counterpart signature pages shall
be read as though one, and they shall have the same force and effect as though
all of the signers had signed a single signature page.
IN WITNESS WHEREOF, the undersigned have caused this Declaration to be
duly executed as of the day and year first above written.
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: /s/ Anita E. Dallago
---------------------------------
Name: Anita E. Dallago
Title Senior Financial Services
Officer
WILMINGTON TRUST COMPANY,
as Institutional Trustee
By: /s/ Anita E. Dallago
---------------------------------
Name: Anita E. Dallago
Title Senior Financial Services
Officer
FIRST BANKS, INC.
as Sponsor
By: /s/Allen H. Blake
---------------------------------
Name: Allen H. Blake
Title: President and Chief Operating
Officer
By: /s/ Allen H. Blake
---------------------------------
Administrator
By: /s/ Lisa K. Vansickle
---------------------------------
Administrator
ANNEX I
TERMS OF
FLOATING RATE TRUPS(R) AND
FLOATING RATE COMMON SECURITIES
Pursuant to Section 6.1 of the Amended and Restated Declaration of
Trust, dated as of April 10, 2002 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration):
1. Designation and Number.
----------------------
(a) Capital Securities. 25,000 Capital Securities of First Bank Capital
Trust (the "Trust"), with an aggregate stated liquidation amount with respect to
the assets of the Trust of Twenty Five Million Dollars ($25,000,000) and a
stated liquidation amount with respect to the assets of the Trust of $1,000 per
Capital Security, are hereby designated for the purposes of identification only
as the "Floating Rate TRUPS(R)" (the "Capital Securities"). The Capital Security
Certificates evidencing the Capital Securities shall be substantially in the
form of Exhibit A-1 to the Declaration, with such changes and additions thereto
or deletions therefrom as may be required by ordinary usage, custom or practice
or to conform to the rules of any stock exchange on which the Capital Securities
are listed, if any.
(b) Common Securities. 774 Common Securities of the Trust (the "Common
Securities") will be evidenced by Common Security Certificates substantially in
the form of Exhibit A-2 to the Declaration, with such changes and additions
thereto or deletions therefrom as may be required by ordinary usage, custom or
practice. In the absence of an Event of Default, the Common Securities will have
an aggregate stated liquidation amount with respect to the assets of the Trust
of Seven Hundred Seventy Four Thousand Dollars ($774,000) and a stated
liquidation amount with respect to the assets of the Trust of $1,000 per Common
Security.
2. Distributions.
-------------
(a) Distributions payable on each Security will be payable at a
variable per annum rate of interest, reset semi-annually, equal to LIBOR, as
determined on the LIBOR Determination Date immediately preceding each
Distribution Payment Date, plus 3.875% (the "Coupon Rate") of the stated
liquidation amount of $1,000 per Security, such rate being the rate of interest
payable on the Debentures to be held by the Institutional Trustee; provided,
--------
that the applicable Coupon Rate may not exceed 11.00% through the Distribution
Payment Date in April 2007. Except as set forth below in respect of an Extension
Period, Distributions in arrears for more than one semi-annual period will bear
interest thereon compounded semi-annually at the applicable Coupon Rate for each
such semi-annual period (to the extent permitted by applicable law). The term
"Distributions" as used herein includes cash distributions, any such compounded
distributions and any Additional Interest payable on the Debentures unless
otherwise stated. A Distribution is payable only to the extent that payments are
made in respect of the Debentures held by the Institutional Trustee and to the
extent the Institutional Trustee has funds available in the Property Account
therefor. The amount of A-I-2 Distributions payable for any period will be
computed for any full semi-annual Distribution period on the basis of a 360-day
year and the actual number of days elapsed in the relevant Distribution period;
provided, however, that upon the occurrence of a Special Event redemption
- -------- -------
pursuant to paragraph 4(a) below the amounts payable pursuant to this
Declaration shall be calculated as set forth in the definition of Special
Redemption Price.
(b) LIBOR shall be determined by the Calculation Agent in accordance
with the following provisions:
(1) On the second LIBOR Business Day (provided, that on such day
--------
commercial banks are open for business (including dealings in foreign
currency deposits) in London (a "LIBOR Banking Day"), and otherwise
the next preceding LIBOR Business Day that is also a LIBOR Banking
Day) prior to May 1 and November 1 (except, with respect to the first
interest payment period, on April 8, 2002), (each such day, a "LIBOR
Determination Date"), LIBOR shall equal the rate, as obtained by the
Calculation Agent for six-month U.S. Dollar deposits in Europe, which
appears on Telerate Page 3750 (as defined in the International Swaps
and Derivatives Association, Inc. 1991 Interest Rate and Currency
Exchange Definitions) or such other page as may replace such Telerate
Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination
Date, as reported by Bloomberg Financial Markets Commodities News;
provided, however, that in the case of the first interest payment
-------- -------
period, LIBOR will be interpolated from LIBOR for six-month U.S.
Dollar deposits in Europe and LIBOR for seven month U.S. Dollar
deposits in Europe on a straight-line basis. "LIBOR Business Day"
means any day that is not a Saturday, Sunday or other day on which
commercial banking institutions in New York, New York or Wilmington,
Delaware are authorized or obligated by law or executive order to be
closed. If such rate is superseded on Telerate Page 3750 by a
corrected rate before 12:00 noon (London time) on the same LIBOR
Determination Date, the corrected rate as so substituted will be the
applicable LIBOR for that LIBOR Determination Date.
(2) If, on any LIBOR Determination Date, such rate does not
appear on Telerate Page 3750 as reported by Bloomberg Financial
Markets Commodities News or such other page as may replace such
Telerate Page 3750, the Calculation Agent shall determine the
arithmetic mean of the offered quotations of the Reference Banks (as
defined below) to leading banks in the London Interbank market for
six-month U.S. Dollar deposits in Europe (in an amount determined by
the Calculation Agent) by reference to requests for quotations as of
approximately 11:00 a.m. (London time) on the LIBOR Determination Date
made by the Calculation Agent to the Reference Banks. If, on any LIBOR
Determination Date, at least two of the Reference Banks provide such
quotations, LIBOR shall equal the arithmetic mean of such quotations.
If, on any LIBOR Determination Date, only one or none of the Reference
Banks provide such a quotation, LIBOR shall be deemed to be the
arithmetic mean of the offered quotations that at least two leading
banks in the City of New York (as selected by the Calculation Agent)
A-I-3 are quoting on the relevant LIBOR Determination Date for
six-month U.S. Dollar deposits in Europe at approximately 11:00 a.m.
(London time) (in an amount determined by the Calculation Agent). As
used herein, "Reference Banks" means four major banks in the London
interbank market selected by the Calculation Agent.
(3) If the Calculation Agent is required but is unable to
determine a rate in accordance with at least one of the procedures
provided above, LIBOR shall be LIBOR in effect on the previous LIBOR
Determination Date (whether or not LIBOR for such period was in fact
determined on such LIBOR Determination Date).
(c) All percentages resulting from any calculations on the Securities
will be rounded, if necessary, to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded upward
(e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655)), and
all dollar amounts used in or resulting from such calculation will be rounded to
the nearest cent (with one-half cent being rounded upward).
(d) On each LIBOR Determination Date, the Calculation Agent shall
notify, in writing, the Sponsor and the Paying Agent of the applicable Coupon
Rate in effect for the related Distribution payment period. The Calculation
Agent shall, upon the request of the Holder of any Securities, provide the
Coupon Rate then in effect. All calculations made by the Calculation Agent in
the absence of manifest error shall be conclusive for all purposes and binding
on the Sponsor and the Holders of the Securities. The Paying Agent shall be
entitled to rely on information received from the Calculation Agent or the
Sponsor as to the Coupon Rate. The Sponsor shall, from time to time, provide any
necessary information to the Paying Agent relating to any original issue
discount and interest on the Securities that is included in any payment and
reportable for taxable income calculation purposes.
(e) Distributions on the Securities will be cumulative, will accrue
from the date of original issuance, and will be payable, subject to extension of
Distribution payment periods as described herein, semi-annually in arrears on
April 22 and October 22 of each year, commencing on October 22, 2002 (each, a
"Distribution Payment Date"). The Debenture Issuer has the right under the
Indenture to defer payments of interest on the Debentures by extending the
interest payment period for up to 10 consecutive semi-annual periods (each, an
"Extension Period") at any time and from time to time on the Debentures, subject
to the conditions described below, during which Extension Period no interest
shall be due and payable (except any Additional Interest that may be due and
payable). During any Extension Period, interest will continue to accrue on the
Debentures, and interest on such accrued interest (such accrued interest and
interest thereon referred to herein as "Deferred Interest") will accrue at an
annual rate equal to the Coupon Rate in effect for each such Extension Period,
compounded semi-annually from the date such Deferred Interest would have been
payable were it not for the Extension Period, to the extent permitted by law. No
Extension Period may end on a date other than a Distribution Payment Date. At
the end of any such Extension Period, the Debenture Issuer shall pay all
Deferred Interest then accrued and unpaid on the Debentures; provided, however,
-------- -------
that no Extension Period may extend beyond the Maturity Date and provided,
--------
further, that, during any A-I-4 such Extension Period, the Debenture Issuer may
- -------
not (i) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Debenture
Issuer's capital stock or (ii) make any payment of principal of or interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Debenture Issuer that rank pari passu in all respects with or junior in interest
to the Debentures (other than (a) repurchases, redemptions or other acquisitions
of shares of capital stock of the Debenture Issuer (A) in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of one or more employees, officers, directors or consultants, (B) in
connection with a dividend reinvestment or stockholder stock purchase plan or
(C) in connection with the issuance of capital stock of the Debenture Issuer (or
securities convertible into or exercisable for such capital stock), as
consideration in an acquisition transaction entered into prior to the applicable
Extension Period, (b) as a result of any exchange or conversion of any class or
series of the Debenture Issuer's capital stock (or any capital stock of a
subsidiary of the Debenture Issuer) for any class or series of the Debenture
Issuer's capital stock or of any class or series of the Debenture Issuer's
indebtedness for any class or series of the Debenture Issuer's capital stock,
(c) the purchase of fractional interests in shares of the Debenture Issuer's
capital stock pursuant to the conversion or exchange provisions of such capital
stock or the security being converted or exchanged, (d) any declaration of a
dividend in connection with any stockholder's rights plan, or the issuance of
rights, stock or other property under any stockholder's rights plan, or the
redemption or repurchase of rights pursuant thereto, or (e) any dividend in the
form of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks pari passu with
or junior to such stock). Prior to the termination of any Extension Period, the
Debenture Issuer may further extend such period, provided, that such period
--------
together with all such previous and further consecutive extensions thereof shall
not exceed 10 consecutive semi-annual periods, or extend beyond the Maturity
Date. Upon the termination of any Extension Period and upon the payment of all
Deferred Interest, the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements. No interest or Deferred Interest shall be
due and payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Deferred Interest. If Distributions are
deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates, or, if such date is not a Distribution Payment
Date, on the immediately following Distribution Payment Date, to Holders of the
Securities as they appear on the books and records of the Trust on the record
date immediately preceding such date. Distributions on the Securities must be
paid on the dates payable (after giving effect to any Extension Period) to the
extent that the Trust has funds available for the payment of such distributions
in the Property Account of the Trust. The Trust's funds available for
Distribution to the Holders of the Securities will be limited to payments
received from the Debenture Issuer. The payment of Distributions out of moneys
held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.
(f) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Registrar on the relevant
record dates. The relevant record dates shall be selected by the Administrators,
which dates shall be 15 days before the relevant payment dates. Distributions
payable on any Securities that are not punctually paid on A-I-5 any Distribution
Payment Date, as a result of the Debenture Issuer having failed to make a
payment under the Debentures, as the case may be, when due (taking into account
any Extension Period), will cease to be payable to the Person in whose name such
Securities are registered on the relevant record date, and such defaulted
Distribution will instead be payable to the Person in whose name such Securities
are registered on the special record date or other specified date determined in
accordance with the Indenture. If any date on which Distributions are payable on
the Securities is not a Business Day, then payment of the Distribution payable
on such date will be made on the next succeeding day that is a Business Day (and
without any interest or other payment in respect of any such delay) except that,
if such Business Day is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each case with the same
force and effect as if made on such payment date.
(g) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed pro rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution. In the event of the
--------------------------------------------
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Trust (each, a "Liquidation") other than in connection with a redemption of
the Debentures, the Holders of the Securities will be entitled to receive out of
the assets of the Trust available for distribution to Holders of the Securities,
after satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Debenture Issuer), distributions equal to the aggregate of the
stated liquidation amount of $1,000 per Security plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"), unless in connection with such Liquidation, the Debentures in an
aggregate stated principal amount equal to the aggregate stated liquidation
amount of such Securities, with an interest rate equal to the Coupon Rate of,
and bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on, and having the same record date as, such Securities,
after paying or making reasonable provision to pay all claims and obligations of
the Trust in accordance with Section 3808(e) of the Business Trust Act, shall be
distributed on a Pro Rata basis to the Holders of the Securities in exchange for
such Securities.
The Sponsor, as the Holder of all of the Common Securities, has the
right at any time to dissolve the Trust (including without limitation upon the
occurrence of a Tax Event, an Investment Company Event or a Capital Treatment
Event), subject to the receipt by the Debenture Issuer of prior approval from
the Board of Governors of the Federal Reserve System (the "Federal Reserve"), if
then required under applicable capital guidelines or policies of the Federal
Reserve and, after satisfaction of liabilities to creditors of the Trust, cause
the Debentures to be distributed to the Holders of the Securities on a Pro Rata
basis in accordance with the aggregate stated liquidation amount thereof.
The Trust shall dissolve on the first to occur of (i) April 22, 2037,
the expiration of the term of the Trust, (ii) a Bankruptcy Event with respect to
the Sponsor, the Trust or the Debenture Issuer, (iii) (other than in connection
with a merger, consolidation or similar transaction not prohibited by the
Indenture, this Declaration or the Guarantee, as the case may be) the filing of
a certificate of dissolution of the Sponsor or upon the revocation of the
charter of A-I-6 the Sponsor and the expiration of 90 days after the date of
revocation without a reinstatement thereof, (iv) the distribution to the Holders
of the Securities of the Debentures, upon exercise of the right of the Holder of
all of the outstanding Common Securities to dissolve the Trust as described
above, (v) the entry of a decree of a judicial dissolution of the Sponsor or the
Trust, or (vi) when all of the Securities shall have been called for redemption
and the amounts necessary for redemption thereof shall have been paid to the
Holders in accordance with the terms of the Securities. As soon as practicable
after the dissolution of the Trust and upon completion of the winding up of the
Trust, the Trust shall terminate upon the filing of a certificate of
cancellation with the Secretary of State of the State of Delaware.
If a Liquidation of the Trust occurs as described in clause (i), (ii),
(iii) or (v) in the immediately preceding paragraph, the Trust shall be
liquidated by the Institutional Trustee of the Trust as expeditiously as such
Trustee determines to be possible by distributing, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law, to the
Holders of the Securities, the Debentures on a Pro Rata basis to the extent not
satisfied by the Debenture Issuer, unless such distribution is determined by the
Institutional Trustee not to be practical, in which event such Holders will be
entitled to receive out of the assets of the Trust available for distribution to
the Holders, after satisfaction of liabilities to creditors of the Trust to the
extent not satisfied by the Debenture Issuer, an amount equal to the Liquidation
Distribution. An early Liquidation of the Trust pursuant to clause (iv) of the
immediately preceding paragraph shall occur if the Institutional Trustee
determines that such Liquidation is possible by distributing, after satisfaction
of liabilities to creditors of Trust, to the Holders of the Securities on a Pro
Rata basis, the Debentures, and such distribution occurs.
If, upon any such Liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on such Capital Securities shall be paid to the Holders of the Securities
on a Pro Rata basis, except that if an Event of Default has occurred and is
continuing, the Capital Securities shall have a preference over the Common
Securities with regard to such distributions.
Upon any such Liquidation of the Trust involving a distribution of the
Debentures, if at the time of such Liquidation, the Capital Securities were
rated by at least one nationally-recognized statistical rating organization, the
Debenture Issuer will use its reasonable best efforts to obtain from at least
one such or other rating organization a rating for the Debentures.
After the date for any distribution of the Debentures upon dissolution
of the Trust, (i) the Securities of the Trust will be deemed to be no longer
outstanding, (ii) any certificates representing the Capital Securities will be
deemed to represent undivided beneficial interests in such of the Debentures as
have an aggregate principal amount equal to the aggregate stated liquidation
amount of, with an interest rate identical to the distribution rate of, and
bearing accrued and unpaid interest equal to accrued and unpaid distributions
on, the Securities until such certificates are presented to the Debenture Issuer
or its agent for transfer or reissuance (and until such certificates are so
surrendered, no payments of interest or principal shall be made to Holders of
Securities in respect of any payments due and payable under the Debentures) and
(iii) all rights of Holders of Securities under the Capital Securities or the
Common Securities, as applicable, shall cease, except the right of such Holders
to receive Debentures upon surrender of certificates representing such
Securities.
4. Redemption and Distribution.
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(a) The Debentures will mature on April 22, 2032. The Debentures may be
redeemed by the Debenture Issuer, in whole or in part, on any April 22 or
October 22 on or after April 22, 2007, at the Redemption Price, upon not less
than 30 nor more than 60 days' notice to Holders of such Debentures. In
addition, upon the occurrence and continuation of a Tax Event, an Investment
Company Event or a Capital Treatment Event, the Debentures may be redeemed by
the Debenture Issuer in whole but not in part, at any time within 90 days
following the occurrence of such Tax Event, Investment Company Event or Capital
Treatment Event, as the case may be (the "Special Redemption Date"), at the
Special Redemption Price, upon not less than 30 nor more than 60 days' notice to
Holders of the Debentures so long as such Tax Event, Investment Company Event or
Capital Treatment Event, as the case may be, is continuing. In each case, the
right of the Debenture Issuer to redeem the Debentures is subject to the
Debenture Issuer having received prior approval from the Federal Reserve, if
then required under applicable capital guidelines or policies of the Federal
Reserve.
"Tax Event" means the receipt by the Debenture Issuer and the Trust of
an opinion of counsel experienced in such matters to the effect that, as a
result of any amendment to or change (including any announced prospective
change) in the laws or any regulations thereunder of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official administrative pronouncement (including any private letter ruling,
technical advice memorandum, regulatory procedure, notice or announcement)(an
"Administrative Action") or judicial decision interpreting or applying such laws
or regulations, regardless of whether such Administrative Action or judicial
decision is issued to or in connection with a proceeding involving the Debenture
Issuer or the Trust and whether or not subject to review or appeal, which
amendment, clarification, change, Administrative Action or decision is enacted,
promulgated or announced, in each case on or after the date of original issuance
of the Debentures, there is more than an insubstantial risk that: (i) the Trust
is, or will be within 90 days of the date of such opinion, subject to United
States federal income tax with respect to income received or accrued on the
Debentures; (ii) interest payable by the Debenture Issuer on the Debentures is
not, or within 90 days of the date of such opinion, will not be, deductible by
the Debenture Issuer, in whole or in part, for United States federal income tax
purposes; or (iii) the Trust is, or will be within 90 days of the date of such
opinion, subject to more than a de minimis amount of other taxes (including
withholding taxes), duties, assessments or other governmental charges.
"Investment Company Event" means the receipt by the Debenture Issuer
and the Trust of an opinion of counsel experienced in such matters to the effect
that, as a result of a change in law or regulation or written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or, within 90 days of the date of such
opinion will be, considered an "investment company" that is required to be
registered under the Investment Company Act, which change or prospective change
becomes effective or would become effective, as the case may be, on or after the
date of the original issuance of the Debentures.
"Capital Treatment Event" means the receipt by the Debenture Issuer and
the Trust of an opinion of counsel experienced in such matters to the effect
that, as a result of any amendment to, or change in, the laws, rules or
regulations of the United States or any political subdivision thereof or
therein, or as the result of any official or administrative pronouncement or
action or decision interpreting or applying such laws, rules or regulations,
which amendment or change is effective or which pronouncement, action or
decision is announced on or after the date of original issuance of the
Debentures, there is more than an insubstantial risk that the Debenture Issuer
will not, within 90 days of the date of such opinion, be entitled to treat an
amount equal to the aggregate Liquidation Amount of the Capital Securities as
"Tier 1 Capital" (or the then equivalent thereof) for purposes of the capital
adequacy guidelines of the Federal Reserve (or any successor regulatory
authority with jurisdiction over bank holding companies), as then in effect and
applicable to the Debenture Issuer; provided, however, that the distribution of
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the Debentures in connection with the Liquidation of the Trust by the Debenture
Issuer shall not in and of itself constitute a Capital Treatment Event unless
such Liquidation shall have occurred in connection with a Tax Event or an
Investment Company Event.
"Special Event" means any of a Capital Treatment Event, a Tax Event or
an Investment Company Event.
"Redemption Price" means 100% of the principal amount of the Debentures
being redeemed plus accrued and unpaid interest on such Debentures to the
Redemption Date or, in the case of a redemption due to the occurrence of a
Special Event, to the Special Redemption Date if such Special Redemption Date is
on or after April 22, 2007.
"Special Redemption Price" means (1) if the Special Redemption Date is
before April 22, 2007, the greater of (a) 100% of the principal amount of the
Debentures being redeemed pursuant to Section 10.02 of the Indenture or (b) as
determined by a Quotation Agent, the sum of the present values of the principal
amount payable as part of the Redemption Price with respect to a redemption as
of April 22, 2007, together with the present value of interest payments
calculated at a fixed per annum rate of interest equal to 9.95% over the
Remaining Life of such Debentures, discounted to the Special Redemption Date on
a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate plus 0.50%, plus, in the case of either (a) or (b), accrued
and unpaid interest on such Debentures to the Special Redemption Date and (2) if
the Special Redemption Date is on or after April 22, 2007, the Redemption Price
for such Special Redemption Date.
"Comparable Treasury Issue" means with respect to any Special
Redemption Date, the United States Treasury security selected by the Quotation
Agent as having a maturity comparable to the Remaining Life that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the Remaining Life. If no United States Treasury security has a
maturity which is within a period from three months before to three months after
April 22, 2007, the two most closely corresponding United States Treasury
securities shall be used as the Comparable Treasury Issue, and the Treasury Rate
shall be interpolated or extrapolated on a straight-line basis, rounding to the
nearest month using such securities.
"Comparable Treasury Price" means (a) the average of five Reference
Treasury Dealer Quotations for such Special Redemption Date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or (b) if the
Quotation Agent obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Primary Treasury Dealer" means a primary United States Government
securities dealer in New York City.
"Quotation Agent" means Salomon Smith Barney Inc. and its successors;
provided, however, that if the foregoing shall cease to be a Primary Treasury
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Dealer, the Debenture Issuer shall substitute therefor another Primary Treasury
Dealer.
"Redemption Date" means the date fixed for the redemption of Capital
Securities, which shall be any April 22 or October 22 on or after April 22,
2007.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Debenture Trustee after
consultation with the Debenture Issuer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Special Redemption Date, the average, as
determined by the Quotation Agent, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Debenture Trustee by such Reference
Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day
preceding such Special Redemption Date.
"Remaining Life" means, with respect to any Debentures the period from
the Special Redemption Date for such Debentures to April 22, 2007.
"Treasury Rate" means (i) the yield, under the heading which represents
the average for the week immediately prior to the date of calculation, appearing
in the most recently published statistical release designated H.15 (519) or any
successor publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Remaining Life (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Special Redemption Date. The Treasury Rate shall be calculated on the third
Business Day preceding the Special Redemption Date.
(b) Upon the repayment in full at maturity or redemption in whole or in
part of the Debentures (other than following the distribution of the Debentures
to the Holders of the Securities), the proceeds from such repayment or payment
shall concurrently be applied to redeem Pro Rata at the applicable Redemption
Price, Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so repaid or redeemed; provided, however,
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that holders of such Securities shall be given not less than 30 nor more than 60
days' notice of such redemption (other than at the scheduled maturity of the
Debentures).
(c) If fewer than all the outstanding Securities are to be so redeemed,
the Common Securities and the Capital Securities will be redeemed Pro Rata and
the Capital Securities to be redeemed will be as described in Section 4(e)(ii)
below.
(d) The Trust may not redeem fewer than all the outstanding Capital
Securities unless all accrued and unpaid Distributions have been paid on all
Capital Securities for all semi-annual Distribution periods terminating on or
before the date of redemption.
(e) Redemption or Distribution Procedures.
(i) Notice of any redemption of, or notice of distribution of the
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder of
Securities to be redeemed or exchanged not fewer than 30 nor more than
60 days before the date fixed for redemption or exchange thereof
which, in the case of a redemption, will be the date fixed for
redemption of the Debentures. For purposes of the calculation of the
date of redemption or exchange and the dates on which notices are
given pursuant to this Section 4(e)(i), a Redemption/Distribution
Notice shall be deemed to be given on the day such notice is first
mailed by first-class mail, postage prepaid, to Holders of such
Securities. Each Redemption/Distribution Notice shall be addressed to
the Holders of such Securities at the address of each such Holder
appearing on the books and records of the Registrar. No defect in the
Redemption/Distribution Notice or in the mailing thereof with respect
to any Holder shall affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding Securities
are to be redeemed, the Securities to be redeemed shall be redeemed
Pro Rata from each Holder of Capital Securities.
(iii) If the Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice, which notice may only be issued if the
Debentures are redeemed as set out in this Section 4 (which notice
will be irrevocable), then, provided, that the Institutional Trustee
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has a sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, the Institutional Trustee
will pay the relevant Redemption Price to the Holders of such
Securities by check mailed to the address of each such Holder
appearing on the books and records of the Trust on the redemption
date. If a Redemption/Distribution Notice shall have been given and
funds deposited as required, then immediately prior to the close of
business on the date of such deposit, Distributions will cease to
accrue on the Securities so called for redemption and all rights of
Holders of such Securities so called for redemption will cease, except
the right of the Holders of such Securities to receive the applicable
Redemption Price specified in Section 4(a), but without interest on
such Redemption Price. If any date fixed for redemption of Securities
is not a Business Day, then payment of any such Redemption Price
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day falls in the next
calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Redemption Price
in respect of any Securities is improperly withheld or refused and not
paid either by the Trust or by the Debenture Issuer as guarantor
pursuant to the Guarantee, Distributions on such Securities will
continue to accrue at the then applicable rate from the original
redemption date to the actual date of payment, in which case the
actual payment date will be considered the date fixed for redemption
for purposes of calculating the Redemption Price. In the event of any
redemption of the Capital Securities issued by the Trust in part, the
Trust shall not be required to (i) issue, register the transfer of or
exchange any Security during a period beginning at the opening of
business 15 days before any selection for redemption of the Capital
Securities and ending at the close of business on the earliest date on
which the relevant notice of redemption is deemed to have been given
to all Holders of the Capital Securities to be so redeemed or (ii)
register the transfer of or exchange any Capital Securities so
selected for redemption, in whole or in part, except for the
unredeemed portion of any Capital Securities being redeemed in part.
(iv) Redemption/Distribution Notices shall be sent by the
Administrators on behalf of the Trust (A) in respect of the Capital
Securities, to the Holders thereof, and (B) in respect of the Common
Securities, to the Holder thereof.
(v) Subject to the foregoing and applicable law (including,
without limitation, United States federal securities laws), and
provided, that the acquiror is not the Holder of the Common Securities
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or the obligor under the Indenture, the Sponsor or any of its
subsidiaries may at any time and from time to time purchase
outstanding Capital Securities by tender, in the open market or by
private agreement.
5. Voting Rights - Capital Securities.
----------------------------------
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Capital Securities will
have no voting rights. The Administrators are required to call a meeting of the
Holders of the Capital Securities if directed to do so by Holders of not less
than 10% in liquidation amount of the Capital Securities.
(b) Subject to the requirements of obtaining a tax opinion by the
Institutional Trustee in certain circumstances set forth in the last sentence of
this paragraph, the Holders of a Majority in liquidation amount of the Capital
Securities, voting separately as a class, have the right to direct the time,
method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under the Declaration, including the right to direct the
Institutional Trustee, as holder of the Debentures, to (i) exercise the remedies
available under the Indenture as the holder of the Debentures, (ii) waive any
past default that is waivable under the Indenture, (iii) exercise any right to
rescind or annul a declaration that the principal of all the Debentures shall be
due and payable or (iv) consent on behalf of all the Holders of the Capital
Securities to any amendment, modification or termination of the Indenture or the
Debentures where such consent shall be required; provided, however, that, where
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a consent or action under the Indenture would require the consent or act of the
holders of greater than a simple majority in principal amount of Debentures (a
"Super Majority") affected thereby, the Institutional Trustee may only give such
consent or take such action at the written direction of the Holders of not less
than the proportion in liquidation amount of the Capital Securities outstanding
which the relevant Super Majority represents of the aggregate principal amount
of the Debentures outstanding. If the Institutional Trustee fails to enforce its
rights under the Debentures after the Holders of a Majority in liquidation
amount of such Capital Securities have so directed the Institutional Trustee, to
the fullest extent permitted by law, a Holder of the Capital Securities may
institute a legal proceeding directly against the Debenture Issuer to enforce
the Institutional Trustee's rights under the Debentures without first
instituting any legal proceeding against the Institutional Trustee or any other
person or entity. Notwithstanding the foregoing, if an Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Debenture Issuer to pay interest or principal on the Debentures on the date the
interest or principal is payable (or in the case of redemption, the redemption
date), then a Holder of record of the Capital Securities may directly institute
a proceeding for enforcement of payment, on or after the respective due dates
specified in the Debentures, to such Holder directly of the principal of or
interest on the Debentures having an aggregate principal amount equal to the
aggregate liquidation amount of the Capital Securities of such Holder. The
Institutional Trustee shall notify all Holders of the Capital Securities of any
default actually known to the Institutional Trustee with respect to the
Debentures unless (x) such default has been cured prior to the giving of such
notice or (y) the Institutional Trustee determines in good faith that the
withholding of such notice is in the interest of the Holders of such Capital
Securities, except where the default relates to the payment of principal of or
interest on any of the Debentures. Such notice shall state that such Indenture
Event of Default also constitutes an Event of Default hereunder. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy, the Institutional Trustee shall not take any of the actions described in
clause (i), (ii) or (iii) above unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that, as a result of such action, the Trust
will not be classified as other than a grantor trust for United States federal
income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of
the Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture, the Institutional Trustee shall
request the written direction of the Holders of the Securities with respect to
such amendment, modification or termination and shall vote with respect to such
amendment, modification or termination as directed by a Majority in liquidation
amount of the Securities voting together as a single class; provided, however,
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that where a consent under the Indenture would require the consent of a Super
Majority, the Institutional Trustee may only give such consent at the written
direction of the Holders of not less than the proportion in liquidation amount
of such Securities outstanding which the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding. The Institutional
Trustee shall not take any such action in accordance with the written directions
of the Holders of the Securities unless the Institutional Trustee has obtained
an opinion of tax counsel to the effect that, as a result of such action, the
Trust will not be classified as other than a grantor trust for United States
federal income tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver of
the corresponding Event of Default hereunder. Any required approval or direction
of Holders of the Capital Securities may be given at a separate meeting of
Holders of the Capital Securities convened for such purpose, at a meeting of all
of the Holders of the Securities in the Trust or pursuant to written consent.
The Institutional Trustee will cause a notice of any meeting at which Holders of
the Capital Securities are entitled to vote, or of any matter upon which action
by written consent of such Holders is to be taken, to be mailed to each Holder
of record of the Capital Securities. Each such notice will include a statement
setting forth the following information (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents. No vote or consent of the Holders of
the Capital Securities will be required for the Trust to redeem and cancel
Capital Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
Notwithstanding that Holders of the Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor
shall not entitle the Holder thereof to vote or consent and shall, for purposes
of such vote or consent, be treated as if such Capital Securities were not
outstanding.
In no event will Holders of the Capital Securities have the right to
vote to appoint, remove or replace the Administrators, which voting rights are
vested exclusively in the Sponsor as the Holder of all of the Common Securities
of the Trust. Under certain circumstances as more fully described in the
Declaration, Holders of Capital Securities have the right to vote to appoint,
remove or replace the Institutional Trustee and the Delaware Trustee.
6. Voting Rights - Common Securities.
---------------------------------
(a) Except as provided under Sections 6(b), 6(c) and 7 and as otherwise
required by law and the Declaration, the Common Securities will have no voting
rights.
(b) The Holders of the Common Securities are entitled, in accordance
with Article IV of the Declaration, to vote to appoint, remove or replace any
Administrators.
(c) Subject to Section 6.7 of the Declaration and only after each Event
of Default (if any) with respect to the Capital Securities has been cured,
waived or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may direct the time,
method, and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon the
Institutional Trustee under the Declaration, including (i) directing the time,
method, place of conducting any proceeding for any remedy available to the
Debenture Trustee, or exercising any trust or power conferred on the Debenture
Trustee with respect to the Debentures, (ii) waiving any past default and its
consequences that are waivable under the Indenture, or (iii) exercising any
right to rescind or annul a declaration that the principal of all the Debentures
shall be due and payable, provided, however, that, where a consent or action
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under the Indenture would require a Super Majority, the Institutional Trustee
may only give such consent or take such action at the written direction of the
Holders of not less than the proportion in liquidation amount of the Common
Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding. Notwithstanding this Section
6(c), the Institutional Trustee shall not revoke any action previously
authorized or approved by a vote or consent of the Holders of the Capital
Securities. Other than with respect to directing the time, method and place of
conducting any proceeding for any remedy available to the Institutional Trustee
or the Debenture Trustee as set forth above, the Institutional Trustee shall not
take any action described in clause (i), (ii) or (iii) above, unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect that
for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action. If the
Institutional Trustee fails to enforce its rights under the Declaration, to the
fullest extent permitted by law any Holder of the Common Securities may
institute a legal proceeding directly against any Person to enforce the
Institutional Trustee's rights under the Declaration, without first instituting
a legal proceeding against the Institutional Trustee or any other Person.
Any approval or direction of Holders of the Common Securities may be
given at a separate meeting of Holders of the Common Securities convened for
such purpose, at a meeting of all of the Holders of the Securities in the Trust
or pursuant to written consent. The Administrators will cause a notice of any
meeting at which Holders of the Common Securities are entitled to vote, or of
any matter upon which action by written consent of such Holders is to be taken,
to be mailed to each Holder of the Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
---------------------------------------
(a) In addition to any requirements under Section 11.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Trustees otherwise propose to effect, (i) any action that would adversely affect
the powers, preferences or special rights of the Securities, whether by way of
amendment to the Declaration or otherwise, or (ii) the Liquidation of the Trust,
other than as described in Section 7.1 of the Declaration, then the Holders of
outstanding Securities, voting together as a single class, will be entitled to
vote on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of the Holders of not less than a Majority in
liquidation amount of the Securities affected thereby; provided, however, if any
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amendment or proposal referred to in clause (i) above would adversely affect
only the Capital Securities or only the Common Securities, then only the
affected class will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of a
Majority in liquidation amount of such class of Securities.
(b) In the event the consent of the Institutional Trustee as the holder
of the Debentures is required under the Indenture with respect to any amendment,
modification or termination of the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification, or termination as directed by
a Majority in liquidation amount of the Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
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a Super Majority, the Institutional Trustee may only give such consent at the
written direction of the Holders of not less than the proportion in liquidation
amount of the Securities which the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding.
(c) Notwithstanding the foregoing, no amendment or modification may be
made to the Declaration if such amendment or modification would (i) cause the
Trust to be classified for purposes of United States federal income taxation as
other than a grantor trust, (ii) reduce or otherwise adversely affect the powers
of the Institutional Trustee or (iii) cause the Trust to be deemed an
"investment company" which is required to be registered under the Investment
Company Act.
(d) Notwithstanding any provision of the Declaration, the right of any
Holder of the Capital Securities to receive payment of distributions and other
payments upon redemption or otherwise, on or after their respective due dates,
or to institute a suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder. For the protection and enforcement of the foregoing provision, each and
every Holder of the Capital Securities shall be entitled to such relief as can
be given either at law or equity.
8. Pro Rata. A reference in these terms of the Securities to any
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payment, distribution or treatment as being "Pro Rata" shall mean pro rata to
each Holder of the Securities according to the aggregate liquidation amount of
the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a
payment, an Event of Default has occurred and is continuing, in which case any
funds available to make such payment shall be paid first to each Holder of the
Capital Securities Pro Rata according to the aggregate liquidation amount of the
Capital Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Capital Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Capital Securities, to
each Holder of the Common Securities Pro Rata according to the aggregate
liquidation amount of the Common Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Common Securities outstanding.
9. Ranking. The Capital Securities rank pari passu with, and payment
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thereon shall be made Pro Rata with, the Common Securities except that, where an
Event of Default has occurred and is continuing, the rights of Holders of the
Common Securities to receive payment of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights of the
Holders of the Capital Securities with the result that no payment of any
Distribution on, or Redemption Price of, any Common Security, and no other
payment on account of redemption, liquidation or other acquisition of Common
Securities, shall be made unless payment in full in cash of all accumulated and
unpaid Distributions on all outstanding Capital Securities for all distribution
periods terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all outstanding
Capital Securities then called for redemption, shall have been made or provided
for, and all funds immediately available to the Institutional Trustee shall
first be applied to the payment in full in cash of all Distributions on, or the
Redemption Price of, the Capital Securities then due and payable.
10. Acceptance of Guarantee and Indenture. Each Holder of the Capital
-------------------------------------
Securities and the Common Securities, by the acceptance of such Securities,
agrees to the provisions of the Guarantee, including the subordination
provisions therein and to the provisions of the Indenture.
11. No Preemptive Rights. The Holders of the Securities shall have no,
-- ------------------
and the issuance of the Securities is not subject to, preemptive or similar
rights to subscribe for any additional securities.
12. Miscellaneous. These terms constitute a part of the Declaration.
-------------
The Sponsor will provide a copy of the Declaration, the Guarantee, and the
Indenture to a Holder without charge on written request to the Sponsor at its
principal place of business.
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY
(A) TO THE DEBENTURE ISSUER OR THE TRUST, (B) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT
TO AN EXEMPTION FROM REGISTRATION TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE DEBENTURE
ISSUER'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (C) OR (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN
ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY OF WHICH
MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS
AND WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS
SECURITY UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
(EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY
REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,
95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR
HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO
WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING
ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY
USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE,
OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE
STATUTORY OR ADMINISTRATIVE EXEMPTION.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE
REQUIRED BY THE AMENDED AND RESTATED DECLARATION OF TRUST TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN
EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A
LIQUIDATION AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE
THE HOLDER OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE
RECEIPT OF DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL
BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.
Certificate Number [_____] Number of Capital Securities [_____]
CUSIP NO [___________]
Certificate Evidencing Capital Securities
of
FIRST BANK CAPITAL TRUST
Floating Rate TRUPS(R)
(liquidation amount $1,000 per Capital Security)
First Bank Capital Trust, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that
[______________] (the "Holder") is the registered owner of 25,000 capital
securities of the Trust representing undivided beneficial interests in the
assets of the Trust, designated the Floating Rate TRUPS(R) (liquidation amount
$1,000 per Capital Security) (the "Capital Securities"). Subject to the
Declaration (as defined below), the Capital Securities are transferable on the
books and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this Certificate duly endorsed and in proper form for transfer. The
Capital Securities represented hereby are issued pursuant to, and the
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities shall in all respects be subject to, the
provisions of the Amended and Restated Declaration of Trust of the Trust, dated
as of April 10, 2002, among Allen H. Blake and Lisa K. Vansickle, as
Administrators, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust
Company, as Institutional Trustee, First Banks, Inc., as Sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Trust, including the designation of the terms of the Capital Securities as set
forth in Annex I to the Declaration, as the same may be amended from time to
time (the "Declaration"). Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Holder is entitled to the
benefits of the Guarantee to the extent provided therein. The Sponsor will
provide a copy of the Declaration, the Guarantee, and the Indenture to the
Holder without charge upon written request to the Sponsor at its principal place
of business.
Upon receipt of this Security, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
By acceptance of this Security, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as indebtedness and the
Capital Securities as evidence of beneficial ownership in the Debentures.
This Capital Security is governed by, and shall be construed in
accordance with, the laws of the State of Delaware, without regard to principles
of conflict of laws.
IN WITNESS WHEREOF, the Trust has duly
executed this certificate.
FIRST BANK CAPITAL TRUST
By:______________________________
Name:
Title: Administrator
Dated:___________________________
CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as
the Institutional Trustee
By:______________________________
Authorized Officer
Dated:___________________________
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be payable at a
variable per annum rate of interest, reset semi-annually, equal to LIBOR (as
defined in the Declaration) plus 3.875% (the "Coupon Rate") of the stated
liquidation amount of $1,000 per Capital Security, such rate being the rate of
interest payable on the Debentures to be held by the Institutional Trustee
(provided, that the applicable Coupon Rate may not exceed 11.00% through the
--------
Distribution Payment Date in April 2007). Except as set forth below in respect
of an Extension Period, Distributions in arrears for more than one semi-annual
period will bear interest thereon compounded semi-annually at the applicable
Coupon Rate for each such semi-annual period (to the extent permitted by
applicable law). The term "Distributions" as used herein includes cash
distributions, any such compounded distributions and any Additional Interest
payable on the Debentures unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by
the Institutional Trustee and to the extent the Institutional Trustee has funds
available in the Property Account therefor. The amount of Distributions payable
for any period will be computed for any full semi-annual Distribution period on
the basis of a 360-day year and the actual number of days elapsed in the
relevant Distribution period.
Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable semi-annually in arrears on April 22 and October 22 of each
year, commencing on October 22, 2002 (each, a "Distribution Payment Date"). The
Debenture Issuer has the right under the Indenture to defer payments of interest
on the Debentures by extending the interest payment period for up to 10
consecutive semi-annual periods (each, an "Extension Period") at any time and
from time to time on the Debentures, subject to the conditions described below,
during which Extension Period no interest shall be due and payable (except any
Additional Interest that may be due and payable). During any Extension Period,
interest will continue to accrue on the Debentures, and interest on such accrued
interest (such accrued interest and interest thereon referred to herein as
"Deferred Interest") will accrue at an annual rate equal to the Coupon Rate in
effect for each such Extension Period, compounded semi-annually from the date
such Deferred Interest would have been payable were it not for the Extension
Period, to the extent permitted by law. No Extension Period may end on a date
other than a Distribution Payment Date. At the end of any such Extension Period,
the Debenture Issuer shall pay all Deferred Interest then accrued and unpaid on
the Debentures; provided, however, that no Extension Period may extend beyond
-------- -------
the Maturity Date. Prior to the termination of any Extension Period, the
Debenture Issuer may further extend such period, provided, that such period
--------
together with all such previous and further consecutive extensions thereof shall
not exceed 10 consecutive semi-annual periods, or extend beyond the Maturity
Date. Upon the termination of any Extension Period and upon the payment of all
Deferred Interest, the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements. No interest or Deferred Interest shall be
due and payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Deferred Interest. If Distributions are
deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust's funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.
The Capital Securities shall be redeemable as provided in the
Declaration.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:
- ------------------------------
- ------------------------------
- ------------------------------
(Insert assignee's social security or tax identification number)
- ------------------------------
- ------------------------------
- ------------------------------
(Insert address and zip code of assignee),
and irrevocably appoints ___________________________________________________ as
agent to transfer this Capital Security Certificate on the books of the Trust.
The agent may substitute another to act for it, him or her.
Date:________________________________
Signature:___________________________
(Sign exactly as your name appears on the other side
of this Capital Security Certificate)
Signature Guarantee:1_________________________
- ---------------------------
1 Signature must be guaranteed by an "eligible guarantor institution" that
is a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Security
registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.
EXCEPT AS SET FORTH IN SECTION 8.1(b) OF THE DECLARATION (AS DEFINED
BELOW), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED.
Certificate Number [_____] Number of Common Securities [____]
Certificate Evidencing Common Securities
of
FIRST BANK CAPITAL TRUST
First Bank Capital Trust, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that First Banks,
Inc. (the "Holder") is the registered owner of 774 common securities of the
Trust representing undivided beneficial interests in the assets of the Trust
(liquidation amount $1,000 per Common Security)(the "Common Securities"). The
Common Securities represented hereby are issued pursuant to, and the
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Common Securities shall in all respects be subject to, the
provisions of the Amended and Restated Declaration of Trust of the Trust, dated
as of April 10, 2002, among Allen H. Blake and Lisa K. Vansickle, as
Administrators, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust
Company, as Institutional Trustee, the Holder, as Sponsor, and the holders from
time to time of undivided beneficial interests in the assets of the Trust,
including the designation of the terms of the Common Securities as set forth in
Annex I to the Declaration, as the same may be amended from time to time (the
"Declaration"). Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Sponsor will provide a copy of the
Declaration and the Indenture to the Holder without charge upon written request
to the Sponsor at its principal place of business.
As set forth in the Declaration, when an Event of Default has occurred
and is continuing, the rights of Holders of Common Securities to payment in
respect of Distributions and payments upon Liquidation, redemption or otherwise
are subordinated to the rights of payment of Holders of the Capital Securities.
Upon receipt of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance of this Certificate, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness and
the Common Securities as evidence of undivided beneficial ownership in the
Debentures.
This Common Security is governed by, and shall be construed in
accordance with, the laws of the State of Delaware, without regard to principles
of conflict of laws.
IN WITNESS WHEREOF, the Trust has executed this certificate this ___
day of____, 2002.
FIRST BANK CAPITAL TRUST
By:______________________________
Name:
Title: Administrator
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be identical in
amount to the Distributions payable on each Capital Security, which is at a
variable per annum rate of interest, reset semi-annually, equal to LIBOR (as
defined in the Declaration) plus 3.875% (the "Coupon Rate") of the stated
liquidation amount of $1,000 per Capital Security, such rate being the rate of
interest payable on the Debentures to be held by the Institutional Trustee
(provided, that the applicable Coupon Rate may not exceed 11.00% through the
--------
Distribution Payment Date in April 2007). Except as set forth below in respect
of an Extension Period, Distributions in arrears for more than one semi-annual
period will bear interest thereon compounded semi-annually at the applicable
Coupon Rate for each such semi-annual period (to the extent permitted by
applicable law). The term "Distributions" as used herein includes cash
distributions, any such compounded distributions and any Additional Interest
payable on the Debentures unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by
the Institutional Trustee and to the extent the Institutional Trustee has funds
available in the Property Account therefor. The amount of Distributions payable
for any period will be computed for any full semi-annual Distribution period on
the basis of a 360-day year and the actual number of days elapsed in the
relevant Distribution period.
Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable semiannually in arrears on April 22 and October 22 of each
year, commencing on October 22, 2002 (each, a "Distribution Payment Date"). The
Debenture Issuer has the right under the Indenture to defer payments of interest
on the Debentures by extending the interest payment period for up to 10
consecutive semi-annual periods (each, an "Extension Period") at any time and
from time to time on the Debentures, subject to the conditions described below,
during which Extension Period no interest shall be due and payable (except any
Additional Interest that may be due and payable). During any Extension Period,
interest will continue to accrue on the Debentures, and interest on such accrued
interest (such accrued interest and interest thereon referred to herein as
"Deferred Interest") will accrue at an annual rate equal to the Coupon Rate in
effect for each such Extension Period, compounded semi-annually from the date
such Deferred Interest would have been payable were it not for the Extension
Period, to the extent permitted by law. No Extension Period may end on a date
other than a Distribution Payment Date. At the end of any such Extension Period,
the Debenture Issuer shall pay all Deferred Interest then accrued and unpaid on
the Debentures; provided, however, that no Extension Period may extend beyond
-------- -------
the Maturity Date. Prior to the termination of any Extension Period, the
Debenture Issuer may further extend such period, provided, that such period
--------
together with all such previous and further consecutive extensions thereof shall
not exceed 10 consecutive semi-annual periods, or extend beyond the Maturity
Date. Upon the termination of any Extension Period and upon the payment of all
Deferred Interest, the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements. No interest or Deferred Interest shall be
due and payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Deferred Interest. If Distributions are
deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust's funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.
The Common Securities shall be redeemable as provided in the
Declaration.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:
- --------------------------
- --------------------------
- --------------------------
(Insert assignee's social security or tax identification number)
- --------------------------
- --------------------------
- --------------------------
(Insert address and zip code of assignee),
and irrevocably appoints _________ as agent to transfer this Common Security
Certificate on the books of the Trust. The agent may substitute another to act
for him or her.
Date:_____________________________
Signature:________________________
(Sign exactly as your name appears on the other side of this
Common Security Certificate)
Signature Guarantee:1 _____________________________
- --------------------------------
1 Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union, meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Security
registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
EXHIBIT B
FORM OF TRANSFEREE CERTIFICATE
TO BE EXECUTED BY TRANSFEREES OTHER THAN QIBS
__________, [ ]
First Banks, Inc.
First Bank Capital Trust
600 James S. McDonnell Blvd., Mail Code #014
Hazelwood, MO 63042
Re: Purchase of $1,000 stated liquidation amount of Floating Rate TRUPS(R)
(the "Capital Securities") of First Bank Capital Trust
------------------------------------------------------
Ladies and Gentlemen:
In connection with our purchase of the Capital Securities we confirm
that:
1. We understand that the Floating Rate TRUPS(R) (the "Capital
Securities") of First Bank Capital Trust (the "Trust") (including the guarantee
(the "Guarantee") of First Banks, Inc. (the "Company") executed in connection
therewith) and the Floating Rate Junior Subordinated Debt Securities due 2032 of
the Company (the "Subordinated Debt Securities") (the Capital Securities, the
Guarantee and the Subordinated Debt Securities together being referred to herein
as the "Offered Securities"), have not been registered under the Securities Act
of 1933, as amended (the "Securities Act"), and may not be offered or sold
except as permitted in the following sentence. We agree on our own behalf and on
behalf of any investor account for which we are purchasing the Offered
Securities that, if we decide to offer, sell or otherwise transfer any such
Offered Securities, such offer, sale or transfer will be made only (a) to the
Company or the Trust, (b) pursuant to Rule 144A under the Securities Act, to a
person we reasonably believe is a qualified institutional buyer under Rule 144A
(a "QIB") that purchases for its own account or for the account of a QIB and to
whom notice is given that the transfer is being made in reliance on Rule 144A,
(c) pursuant to an exemption from registration, to an "accredited investor"
within the meaning of subparagraph (a) (1), (2), (3) or (7) of Rule 501 under
the Securities Act that is acquiring Offered Securities for its own account or
for the account of such an accredited investor for investment purposes and not
with a view to, or for offer or sale in connection with, any distribution
thereof in violation of the Securities Act, or (d) pursuant to another available
exemption from the registration requirements of the Securities Act, and in each
of the foregoing cases in accordance with any applicable state securities laws
and any requirements of law that govern the disposition of our property. The
foregoing restrictions on resale will not apply subsequent to the date on which,
in the written opinion of counsel, the Capital Securities are not "restricted
securities" within the meaning of Rule 144 under the Securities Act. If any
resale or other transfer of the Offered Securities is proposed to be made
pursuant to clause (c) or (d) above, the transferor shall deliver a letter from
the transferee substantially in the form of this letter to the Institutional
Trustee as Transfer Agent, which shall provide as applicable, among other
things, that the transferee is an "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act that
is acquiring such Securities for investment purposes and not for distribution in
violation of the Securities Act. We acknowledge on our behalf and on behalf of
any investor account for which we are purchasing Securities that the Trust and
the Company reserve the right prior to any offer, sale or other transfer
pursuant to clause (c) or (d) to require the delivery of any opinion of counsel,
certifications and/or other information satisfactory to the Trust and the
Company. We understand that the certificates for any Offered Security that we
receive will bear a legend substantially to the effect of the foregoing.
2. We are an "accredited investor" within the meaning of subparagraph
(a) (1), (2), (3) or (7) of Rule 501 under the Securities Act purchasing for our
own account or for the account of such an "accredited investor," and we are
acquiring the Offered Securities for investment purposes and not with view to,
or for offer or sale in connection with, any distribution in violation of the
Securities Act, and we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Offered Securities, and we and any account for which we are
acting are each able to bear the economic risks of our or its investment.
3. We are acquiring the Offered Securities purchased by us for our own
account (or for one or more accounts as to each of which we exercise sole
investment discretion and have authority to make, and do make, the statements
contained in this letter) and not with a view to any distribution of the Offered
Securities, subject, nevertheless, to the understanding that the disposition of
our property will at all times be and remain within our control.
4. In the event that we purchase any Capital Securities or any
Subordinated Debt Securities, we will acquire such Capital Securities having an
aggregate stated liquidation amount of not less than $100,000 or such
Subordinated Debt Securities having an aggregate principal amount not less than
$100,000, for our own account and for each separate account for which we are
acting.
5. We acknowledge that we either (A) are not a fiduciary of a pension,
profit-sharing or other employee benefit plan subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") (a "Plan"), or an entity whose
assets include "plan assets" by reason of any Plan's investment in the entity
and are not purchasing the Offered Securities on behalf of or with "plan assets"
by reason of any Plan's investment in the entity and are not purchasing the
Offered Securities on behalf of or with "plan assets" of any Plan or (B) are
eligible for the exemptive relief available under one or more of the following
prohibited transaction class exemptions ("PTCEs") issued by the U.S. Department
of Labor: PTCE 96-23, 95-60, 91-38, 90-1 or 84-14.
6. We acknowledge that the Trust and the Company and others will rely
upon the truth and accuracy of the foregoing acknowledgments, representations,
warranties and agreements and agree that if any of the acknowledgments,
representations, warranties and agreements deemed to have been made by our
purchase of the Offered Securities are no longer accurate, we shall promptly
notify the Placement Agent. If we are acquiring any Offered Securities as a
fiduciary or agent for one or more investor accounts, we represent that we have
sole discretion with respect to each such investor account and that we have full
power to make the foregoing acknowledgments, representations and agreement on
behalf of each such investor account.
__________________________________
(Name of Purchaser)
By:_______________________________
Date:_____________________________
Upon transfer, the Offered Securities would be registered in the name
of the new beneficial owner as follows.
Name:___________________________________
Address:________________________________
Taxpayer ID Number:_____________________
EXHIBIT C
FORM OF TRANSFEROR CERTIFICATE
TO BE EXECUTED FOR QIBs
__________, [ ]
First Banks, Inc.
First Bank Capital Trust
600 James S. McDonnell Blvd., Mail Code #014
Hazelwood, MO 63042
Re: Purchase of $1,000 stated liquidation amount of Floating Rate TRUPS(R)
(the "Capital Securities") of First Bank Capital Trust
------------------------------------------------------
Reference is hereby made to the Amended and Restated Declaration of
Trust of First Bank Capital Trust, dated as of April 10, 2002 (the
"Declaration"), among Allen H. Blake and Lisa K. Vansickle, as Administrators,
Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as
Institutional Trustee, First Banks, Inc., as Sponsor, and the holders from time
to time of undivided beneficial interests in the assets of First Bank Capital
Trust. Capitalized terms used but not defined herein shall have the meanings
given them in the Declaration.
This letter relates to $[_______________] aggregate liquidation amount
of Capital Securities which are held in the name of [name of transferor] (the
"Transferor").
In accordance with Section 8.2(b) of the Declaration, the Transferor
does hereby certify that such Capital Securities are being transferred in
accordance with (i) the transfer restrictions set forth in the Capital
Securities and (ii) Rule 144A under the Securities Act ("Rule 144A"), to a
transferee that the Transferor reasonably believes is purchasing the Capital
Securities for its own account or an account with respect to which the
transferee exercises sole investment discretion and the transferee and any such
account is a "qualified institutional buyer" within the meaning of Rule 144A, in
a transaction meeting the requirements of Rule 144A and in accordance with
applicable securities laws of any state of the United States or any other
jurisdiction.
You are entitled to rely upon this letter and are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
(Name of Transferor)
By: _____________________________
Name:________________________
Title: _____________________
Date:____________________________
Exhibit 4.18
FLOATING RATE JUNIOR SUBORDINATED DEBT SECURITY DUE 2032
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY
(A) TO THE COMPANY, (B) PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO AN EXEMPTION
FROM REGISTRATION TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN "ACCREDITED
INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE
IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (D)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSES (C) OR (D) TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN
ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY
WITH THE FOREGOING RESTRICTIONS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS AND
WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS SECURITY
UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
(EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY
REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,
95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR
HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO
WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING
ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY
USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE,
OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE
STATUTORY OR ADMINISTRATIVE EXEMPTION.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY
THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A
PRINCIPAL AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS
THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A PRINCIPAL
AMOUNT OF LESS THAN $100,00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER
OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO
HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.
THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES OR
ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE
CORPORATION (THE "FDIC"). THIS OBLIGATION IS SUBORDINATED TO THE CLAIMS OF
DEPOSITORS AND THE CLAIMS OF GENERAL AND SECURED CREDITORS OF THE COMPANY, IS
INELIGIBLE AS COLLATERAL FOR A LOAN BY THE COMPANY OR ANY OF ITS SUBSIDIARIES
AND IS NOT SECURED.
Floating Rate Junior Subordinated Debt Security due 2032
of
FIRST BANKS, INC.
First Banks, Inc., a bank holding company incorporated in Missouri (the
"Company"), for value received promises to pay to Wilmington Trust Company, not
in its individual capacity but solely as Institutional Trustee for First Bank
Capital Trust, a Delaware statutory business trust (the "Holder") or registered
assigns, the principal sum of Twenty Five Million Seven Hundred Seventy Four
Thousand Dollars ($25,774,000) on April 22, 2032, and to pay interest on said
principal sum from April 10, 2002, or from the most recent interest payment date
(each such date, an "Interest Payment Date") to which interest has been paid or
duly provided for, semi-annually (subject to deferral as set forth herein) in
arrears on April 22 and October 22 of each year commencing October 22, 2002, at
a variable per annum rate equal to LIBOR (as defined in the Indenture) plus
3.875% (the "Interest Rate") (provided, that the applicable Interest Rate may
----------
not exceed 11.00% through the Interest Payment Date in April 2007) until the
principal hereof shall have become due and payable, and on any overdue principal
and (without duplication and to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at an
annual rate equal to the Interest Rate in effect for each such Extension Period
compounded semi-annually. The amount of interest payable on any Interest Payment
Date shall be computed on the basis of a 360-day year and the actual number of
days elapsed in the relevant interest period. In the event that any date on
which the principal or interest is payable on this Debt Security is not a
Business Day, then payment payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the Person in whose name this Debt Security (or one or more
Predecessor Securities, as defined in said Indenture) is registered at the close
of business on the regular record date for such interest installment, except
that interest and any Deferred Interest payable on the Maturity Date shall be
paid to the Person to whom principal is paid. Any such interest installment not
punctually paid or duly provided for shall forthwith cease to be payable to the
registered holders on such regular record date and may be paid to the Person in
whose name this Debt Security (or one or more Predecessor Debt Securities) is
registered at the close of business on a special record date to be fixed by the
Trustee for the payment of such defaulted interest, notice whereof shall be
given to the registered holders of the Debt Securities not less than 10 days
prior to such special record date, all as more fully provided in the Indenture.
The principal of and interest on this Debt Security shall be payable at the
office or agency of the Trustee (or other paying agent appointed by the Company)
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made at the
-------- -------
option of the Company by check mailed to the registered holder at such address
as shall appear in the Debt Security Register or by wire transfer to an account
appropriately designated by the holder hereof. Notwithstanding the foregoing, so
long as the holder of this Debt Security is the Institutional Trustee, the
payment of the principal of and interest on this Debt Security will be made in
immediately available funds at such place and to such account as may be
designated by the Trustee.
So long as no Event of Default has occurred and is continuing, the Company
shall have the right, from time to time and without causing an Event of Default,
to defer payments of interest on the Debt Securities by extending the interest
payment period on the Debt Securities at any time and from time to time during
the term of the Debt Securities, for up to 10 consecutive semi-annual periods
(each such extended interest payment period, an "Extension Period"), during
which Extension Period no interest shall be due and payable (except any
Additional Interest that may be due and payable). During any Extension Period,
interest will continue to accrue on the Debt Securities, and interest on such
accrued interest (such accrued interest and interest thereon referred to herein
as "Deferred Interest") will accrue, at the Interest Rate, compounded
semi-annually from the date such Deferred Interest would have been payable were
it not for the Extension Period, both to the extent permitted by law. No
Extension Period may end on a date other than an Interest Payment Date. At the
end of any such Extension Period the Company shall pay all Deferred Interest
then accrued and unpaid on the Debt Securities; provided, however, that no
--------- --------
Extension Period may extend beyond the Maturity Date and provided, further,
--------- --------
however, during any such Extension Period, the Company may not (i) declare or
- --------
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or (ii)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company that rank pari passu in
all respects with or junior in interest to the Debt Securities (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company (A) in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of one or more employees, officers,
directors or consultants, (B) in connection with a dividend reinvestment or
stockholder stock purchase plan or (C) in connection with the issuance of
capital stock of the Company (or securities convertible into or exercisable for
such capital stock), as consideration in an acquisition transaction entered into
prior to the applicable Extension Period, (b) as a result of any exchange or
conversion of any class or series of the Company's capital stock (or any capital
stock of a subsidiary of the Company) for any class or series of the Company's
capital stock or of any class or series of the Company's indebtedness for any
class or series of the Company's capital stock, (c) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (d) any declaration of a dividend in connection with any
stockholder's rights plan, or the issuance of rights, stock or other property
under any stockholder's rights plan, or the redemption or repurchase of rights
pursuant thereto, or (e) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock). Prior
to the termination of any Extension Period, the Company may further extend such
period, provided, that such period together with all such previous and further
--------
consecutive extensions thereof shall not exceed 10 consecutive semi-annual
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all Deferred Interest, the Company may
commence a new Extension Period, subject to the foregoing requirements. No
interest or Deferred Interest shall be due and payable during an Extension
Period, except at the end thereof, but each installment of interest that would
otherwise have been due and payable during such Extension Period shall bear
Deferred Interest. The Company must give the Trustee notice of its election to
begin such Extension Period at least one Business Day prior to the earlier of
(i) the next succeeding date on which interest on the Debt Securities would have
been payable except for the election to begin such Extension Period or (ii) the
date such interest is payable, but in any event not later than the related
regular record date.
The indebtedness evidenced by this Debt Security is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and this Debt Security is issued
subject to the provisions of the Indenture with respect thereto. Each holder of
this Debt Security, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on such holder's behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Trustee such
holder's attorney-in-fact for any and all such purposes. Each holder hereof, by
such holder's acceptance hereof, hereby waives all notice of the acceptance of
the subordination provisions contained herein and in the Indenture by each
holder of Senior Indebtedness, whether now outstanding or hereafter incurred,
and waives reliance by each such holder upon said provisions.
The Company waives demand, presentment for payment, notice of nonpayment,
notice of protest, and all other notices.
This Debt Security shall not be entitled to any benefit under the Indenture
hereinafter referred to and shall not be valid or become obligatory for any
purpose until the certificate of authentication hereon shall have been signed by
or on behalf of the Trustee.
The provisions of this Debt Security are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has duly executed this certificate.
FIRST BANKS, INC.
By: /s/ Allen H. Blake
------------------------------------------
Name: Allen H. Blake
Title: President and Chief Operating
Officer
Dated: April 10, 2002
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Debt Securities referred to in the
within-mentioned Indenture.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as the Trustee
By: /s/ Anita E. Dallago
------------------------------------------
Authorized Officer
Dated: April 10, 2002
REVERSE OF SECURITY
-------------------
This Debt Security is one of a duly authorized series of Debt Securities of
the Company, all issued or to be issued pursuant to an Indenture (the
"Indenture"), dated as of April 10, 2002, duly executed and delivered between
the Company and Wilmington Trust Company, as Trustee (the "Trustee"), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the Debt
Securities (referred to herein as the "Debt Securities") of which this Debt
Security is a part. The summary of the terms of this Debt Security contained
herein does not purport to be complete and is qualified by reference to the
Indenture.
Upon the occurrence and continuation of a Tax Event, an Investment Company
Event or a Capital Treatment Event, this Debt Security may become due and
payable, in whole but not in part, at any time, within 90 days following the
occurrence of such Tax Event, Investment Company Event or Capital Treatment
Event (the "Special Redemption Date"), as the case may be, at the Special
Redemption Price. The Company shall also have the right to redeem this Debt
Security at the option of the Company, in whole or in part, on any April 22 or
October 22 on or after April 22, 2007 (a "Redemption Date"), at the Redemption
Price.
Any redemption pursuant to the preceding paragraph will be made, subject to
the receipt by the Company of prior approval from the Board of Governors of the
Federal Reserve System (the "Federal Reserve") if then required under applicable
capital guidelines or policies of the Federal Reserve, upon not less than 30
days' nor more than 60 days' notice. If the Debt Securities are only partially
redeemed by the Company, the Debt Securities will be redeemed pro rata or by lot
or by any other method utilized by the Trustee.
"Redemption Price" means 100% of the principal amount of the Debt
Securities being redeemed plus accrued and unpaid interest on such Debt
Securities to the Redemption Date or, in the case of a redemption due to the
occurrence of a Special Event, to the Special Redemption Date if such Special
Redemption Date is on or after April 22, 2007.
"Special Redemption Price" means (1) if the Special Redemption Date is
before April 22, 2007, the greater of (a) 100% of the principal amount of the
Debt Securities being redeemed pursuant to Section 10.02 of the Indenture or (b)
as determined by a Quotation Agent, the sum of the present values of the
principal amount payable as part of the Redemption Price with respect to a
redemption as of April 22, 2007, together with the present value of interest
payments calculated at a fixed per annum rate of interest equal to 9.95% over
the Remaining Life of such Debt Securities, discounted to the Special Redemption
Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 0.50%, plus, in the case of either (a) or (b),
accrued and unpaid interest on such Debt Securities to the Special Redemption
Date and (2) if the Special Redemption Date is on or after April 22, 2007, the
Redemption Price for such Special Redemption Date.
"Comparable Treasury Issue" means with respect to any Special Redemption
Date, the United States Treasury security selected by the Quotation Agent as
having a maturity comparable to the Remaining Life that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
Remaining Life. If no United States Treasury security has a maturity which is
within a period from three months before to three months after April 22, 2007,
the two most closely corresponding United States Treasury securities shall be
used as the Comparable Treasury Issue, and the Treasury Rate shall be
interpolated or extrapolated on a straight-line basis, rounding to the nearest
month using such securities.
"Comparable Treasury Price" means (a) the average of five Reference
Treasury Dealer Quotations for such Special Redemption Date, after excluding the
highest and lowest such Reference Treasury Dealer Quotations, or (b) if the
Quotation Agent receives fewer than five such Reference Treasury Dealer
Quotations, the average of all such Quotations.
"Primary Treasury Dealer" means a primary United States Government
securities dealer in New York City.
"Quotation Agent" means Salomon Smith Barney Inc. and its successors;
provided, however, that if the foregoing shall cease to be a Primary Treasury
Dealer, the Company shall substitute therefor another Primary Treasury Dealer.
"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any
other Primary Treasury Dealer selected by the Trustee after consultation with
the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any Special Redemption Date, the average, as
determined by the Quotation Agent, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m., New York City time, on the third Business Day preceding
such Special Redemption Date.
"Treasury Rate" means (i) the yield, under the heading which represents the
average for the week immediately prior to the date of calculation, appearing in
the most recently published statistical release designated H.15 (519) or any
successor publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities", for the
maturity corresponding to the Remaining Life (if no maturity is within three
months before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Remaining Life shall be determined
and the Treasury Rate shall be interpolated or extrapolated from such yields on
a straight-line basis, rounding to the nearest month) or (ii) if such release
(or any successor release) is not published during the week preceding the
calculation date or does not contain such yields, the rate per annum equal to
the semi-annual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Special Redemption Date. The Treasury Rate shall be calculated on the third
Business Day preceding the Special Redemption Date.
In the event of redemption of this Debt Security in part only, a new Debt
Security or Debt Securities for the unredeemed portion hereof will be issued in
the name of the holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Debt Securities may be
declared due and payable, and upon such declaration of acceleration shall become
due and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than a majority in aggregate
principal amount of the Debt Securities at the time outstanding affected
thereby, as specified in the Indenture, to execute supplemental indentures for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or of
modifying in any manner the rights of the holders of the Debt Securities;
provided, however, that no such supplemental indenture shall, among other
- --------- --------
things, without the consent of the holders of each Debt Security then
outstanding and affected thereby (i) extend the fixed maturity of the Debt
Securities, or reduce the principal amount thereof or any redemption premium
thereon, or reduce the rate or extend the time of payment of interest thereon,
or make the principal of, or any interest or premium on, the Debt Securities
payable in any coin or currency other than that provided in the Debt Securities,
or impair or affect the right of any holder of Debt Securities to institute suit
for the payment thereof, or (ii) reduce the aforesaid percentage of Debt
Securities, the holders of which are required to consent to any such
supplemental indenture. The Indenture also contains provisions permitting the
holders of a majority in aggregate principal amount of the Debt Securities at
the time outstanding, on behalf of all of the holders of the Debt Securities, to
waive any past default in the performance of any of the covenants contained in
the Indenture, or established pursuant to the Indenture, and its consequences,
except a default in the payment of the principal of or premium, if any, or
interest on any of the Debt Securities. Any such consent or waiver by the
registered holder of this Debt Security (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all future
holders and owners of this Debt Security and of any Debt Security issued in
exchange herefor or in place hereof (whether by registration of transfer or
otherwise), irrespective of whether or not any notation of such consent or
waiver is made upon this Debt Security.
No reference herein to the Indenture and no provision of this Debt Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Debt Security at the time and place and at the rate and in the
money herein prescribed.
As provided in the Indenture and subject to certain limitations herein and
therein set forth, this Debt Security is transferable by the registered holder
hereof on the Debt Security Register of the Company, upon surrender of this Debt
Security for registration of transfer at the office or agency of the Trustee in
Wilmington, Delaware accompanied by a written instrument or instruments of
transfer in form satisfactory to the Company or the Trustee duly executed by the
registered holder hereof or such holder's attorney duly authorized in writing,
and thereupon one or more new Debt Securities of authorized denominations and
for the same aggregate principal amount will be issued to the designated
transferee or transferees. No service charge will be made for any such
registration of transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this Debt
Security, the Company, the Trustee, any Authenticating Agent, any paying agent,
any transfer agent and the Debt Security registrar may deem and treat the
registered holder hereof as the absolute owner hereof (whether or not this Debt
Security shall be overdue and notwithstanding any notice of ownership or writing
hereon) for the purpose of receiving payment of or on account of the principal
hereof and interest due hereon and for all other purposes, and neither the
Company nor the Trustee nor any Authenticating Agent nor any paying agent nor
any transfer agent nor any Debt Security registrar shall be affected by any
notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debt Security, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
The Debt Securities are issuable only in registered certificated form
without coupons. As provided in the Indenture and subject to certain limitations
herein and therein set forth, Debt Securities are exchangeable for a like
aggregate principal amount of Debt Securities of a different authorized
denomination, as requested by the holder surrendering the same.
All terms used in this Debt Security that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
THE LAW OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THE DEBT
SECURITIES, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.
Exhibit 4.19
CAPITAL SECURITY CERTIFICATE
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS
ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY ONLY
(A) TO THE DEBENTURE ISSUER OR THE TRUST, (B) PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON THE HOLDER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS
OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT
TO AN EXEMPTION FROM REGISTRATION TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN
"ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE DEBENTURE
ISSUER'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSES (C) OR (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN
ACCORDANCE WITH THE AMENDED AND RESTATED DECLARATION OF TRUST, A COPY OF WHICH
MAY BE OBTAINED FROM THE DEBENTURE ISSUER OR THE TRUST. THE HOLDER OF THIS
SECURITY BY ITS ACCEPTANCE HEREOF AGREES THAT IT WILL COMPLY WITH THE FOREGOING
RESTRICTIONS.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, REPRESENTS AND
WARRANTS THAT IT WILL NOT ENGAGE IN HEDGING TRANSACTIONS INVOLVING THIS SECURITY
UNLESS SUCH TRANSACTIONS ARE IN COMPLIANCE WITH THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
(EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY
REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY AND NO PERSON INVESTING "PLAN
ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN,
UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23,
95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND
HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION
4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR
HOLDER OF THIS SECURITY OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE
REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN
EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO
WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING
ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY
USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE,
OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION
406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE
STATUTORY OR ADMINISTRATIVE EXEMPTION.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR
AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY
THE AMENDED AND RESTATED DECLARATION OF TRUST TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A
LIQUIDATION AMOUNT OF NOT LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS
THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING A LIQUIDATION
AMOUNT OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT
WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER
OF THIS SECURITY FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS SECURITY, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO
HAVE NO INTEREST WHATSOEVER IN THIS SECURITY.
Certificate Number P-1 Number of Capital Securities 25,000
Certificate Evidencing Capital Securities
of
FIRST BANK CAPITAL TRUST
Floating Rate TRUPS(R)
(liquidation amount $1,000 per Capital Security)
First Bank Capital Trust, a statutory business trust created under the laws
of the State of Delaware (the "Trust"), hereby certifies that JPMorgan Chase
Bank, as Trustee for the benefit of the Noteholders of MM Community Funding III,
Ltd (the "Holder") is the registered owner of 25,000 capital securities of the
Trust representing undivided beneficial interests in the assets of the Trust,
designated the Floating Rate TRUPS(R) (liquidation amount $1,000 per Capital
Security) (the "Capital Securities"). Subject to the Declaration (as defined
below), the Capital Securities are transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender of this
Certificate duly endorsed and in proper form for transfer. The Capital
Securities represented hereby are issued pursuant to, and the designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Capital Securities shall in all respects be subject to, the provisions of
the Amended and Restated Declaration of Trust of the Trust, dated as of April
10, 2002, among Allen H. Blake and Lisa K. Vansickle, as Administrators,
Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as
Institutional Trustee, First Banks, Inc., as Sponsor, and the holders from time
to time of undivided beneficial interests in the assets of the Trust, including
the designation of the terms of the Capital Securities as set forth in Annex I
to the Declaration, as the same may be amended from time to time (the
"Declaration"). Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration, the Guarantee, and the Indenture to the Holder without charge
upon written request to the Sponsor at its principal place of business.
Upon receipt of this Security, the Holder is bound by the Declaration and
is entitled to the benefits thereunder. By acceptance of this Security, the
Holder agrees to treat, for United States federal income tax purposes, the
Debentures as indebtedness and the Capital Securities as evidence of beneficial
ownership in the Debentures.
This Capital Security is governed by, and shall be construed in accordance
with, the laws of the State of Delaware, without regard to principles of
conflict of laws.
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
FIRST BANK CAPITAL TRUST
By: /s/ Allen H. Blake
--------------------------------------
Name: Allen H. Blake
Title: Administrator
Dated: April 10, 2002
------------------------------------
CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the within-
mentioned Declaration.
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely
as the Institutional Trustee
By: /s/ Anita E. Dallago
--------------------------------------
Authorized Officer
Dated: April 10, 2002
-------------------------------------
REVERSE OF SECURITY
-------------------
Distributions payable on each Capital Security will be payable at a
variable per annum rate of interest, reset semi-annually, equal to LIBOR (as
defined in the Declaration) plus 3.875% (the "Coupon Rate") of the stated
liquidation amount of $1,000 per Capital Security, such rate being the rate of
interest payable on the Debentures to be held by the Institutional Trustee
(provided, that the applicable Coupon Rate may not exceed 11.00% through the
Distribution Payment Date in April 2007). Except as set forth below in respect
of an Extension Period, Distributions in arrears for more than one semi-annual
period will bear interest thereon compounded semi-annually at the applicable
Coupon Rate for each such semi-annual period (to the extent permitted by
applicable law). The term "Distributions" as used herein includes cash
distributions, any such compounded distributions and any Additional Interest
payable on the Debentures unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Debentures held by
the Institutional Trustee and to the extent the Institutional Trustee has funds
available in the Property Account therefor. The amount of Distributions payable
for any period will be computed for any full semi-annual Distribution period on
the basis of a 360-day year and the actual number of days elapsed in the
relevant Distribution period.
Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable semi-annually in arrears on April 22 and October 22 of each
year, commencing on October 22, 2002 (each, a "Distribution Payment Date"). The
Debenture Issuer has the right under the Indenture to defer payments of interest
on the Debentures by extending the interest payment period for up to 10
consecutive semi-annual periods (each, an "Extension Period") at any time and
from time to time on the Debentures, subject to the conditions described below,
during which Extension Period no interest shall be due and payable (except any
Additional Interest that may be due and payable). During any Extension Period,
interest will continue to accrue on the Debentures, and interest on such accrued
interest (such accrued interest and interest thereon referred to herein as
"Deferred Interest") will accrue at an annual rate equal to the Coupon Rate in
effect for each such Extension Period, compounded semi-annually from the date
such Deferred Interest would have been payable were it not for the Extension
Period, to the extent permitted by law. No Extension Period may end on a date
other than a Distribution Payment Date. At the end of any such Extension Period,
the Debenture Issuer shall pay all Deferred Interest then accrued and unpaid on
the Debentures; provided, however, that no Extension Period may extend beyond
the Maturity Date. Prior to the termination of any Extension Period, the
Debenture Issuer may further extend such period, provided, that such period
together with all such previous and further consecutive extensions thereof shall
not exceed 10 consecutive semi-annual periods, or extend beyond the Maturity
Date. Upon the termination of any Extension Period and upon the payment of all
Deferred Interest, the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements. No interest or Deferred Interest shall be
due and payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Deferred Interest. If Distributions are
deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust's funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.
The Capital Securities shall be redeemable as provided in the Declaration.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:
- -----------------------
- -----------------------
- -----------------------
(Insert assignee's social security or tax identification number)
- -----------------------
- -----------------------
- -----------------------
(Insert address and zip code of assignee),
and irrevocably appoints _______________________________________________________
as agent to transfer this Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for it, him or her.
Date: _________________________________
Signature: ____________________________
(Sign exactly as your name appears on the other side of this
Capital Security Certificate)
Signature Guarantee:1
- ---------------------------
1 Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Security
registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
Exhibit 99.1
CERTIFICATION OF PERIODIC REPORT
I, James F. Dierberg, Chairman of the Board of Directors and Chief
Executive Officer of First Banks, Inc. (the Company), certify, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1) the Quarterly Report on Form 10-Q of the Company for the quarterly
period ended June 30, 2002 (the Report) fully complies with the requirements of
Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
Dated: August 12, 2002 /s/ James F. Dierberg
------------------------------------------
James F. Dierberg
Chairman of the Board of Directors and
Chief Executive Officer
Exhibit 99.2
CERTIFICATION OF PERIODIC REPORT
I, Allen H. Blake, President and Chief Financial Officer of First
Banks, Inc. (the Company), certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1) the Quarterly Report on Form 10-Q of the Company for the quarterly
period ended June 30, 2002 (the Report) fully complies with the requirements of
Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
Dated: August 12, 2002 /s/ Allen H. Blake
------------------------------------------
Allen H. Blake
President and Chief Financial Officer