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, 2003
[ ] 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 by check mark whether the registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act).
Yes No X
-------- --------
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, 2003
----- ----------------
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....................................................... 14
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.......................... 28
ITEM 4. CONTROLS AND PROCEDURES............................................................. 29
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.................................................... 30
SIGNATURES........................................................................................ 31
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
FIRST BANKS, INC.
CONSOLIDATED BALANCE SHEETS
(dollars expressed in thousands, except share and per share data)
June 30, December 31,
2003 2002
---- ----
(unaudited)
ASSETS
------
Cash and cash equivalents:
Cash and due from banks....................................................... $ 165,354 194,519
Interest-bearing deposits with other financial institutions
with maturities of three months or less..................................... 2,786 832
Federal funds sold............................................................ 116,100 7,900
------------ -----------
Total cash and cash equivalents.......................................... 284,240 203,251
------------ -----------
Investment securities:
Available for sale, at fair value............................................. 860,462 1,120,894
Held to maturity, at amortized cost (fair value of $14,104 and $16,978
at June 30, 2003 and December 31, 2002, respectively)....................... 13,486 16,426
------------ -----------
Total investment securities.............................................. 873,948 1,137,320
------------ -----------
Loans:
Commercial, financial and agricultural........................................ 1,401,159 1,443,016
Real estate construction and development...................................... 1,066,585 989,650
Real estate mortgage.......................................................... 2,442,267 2,444,122
Lease financing............................................................... 97,622 126,738
Consumer and installment...................................................... 87,438 86,763
Loans held for sale........................................................... 299,254 349,965
------------ -----------
Total loans.............................................................. 5,394,325 5,440,254
Unearned discount............................................................. (8,726) (7,666)
Allowance for loan losses..................................................... (107,848) (99,439)
------------ -----------
Net loans................................................................ 5,277,751 5,333,149
------------ -----------
Derivative instruments............................................................. 88,239 97,887
Bank premises and equipment, net of accumulated
depreciation and amortization................................................. 146,979 152,418
Goodwill........................................................................... 142,167 140,112
Bank-owned life insurance.......................................................... 95,022 92,616
Accrued interest receivable........................................................ 33,515 35,638
Deferred income taxes.............................................................. 87,846 92,157
Other assets....................................................................... 69,532 58,252
------------ -----------
Total assets............................................................. $ 7,099,239 7,342,800
============ ===========
The accompanying notes are an integral part of the consolidated financial statements.
FIRST BANKS, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(dollars expressed in thousands, except share and per share data)
June 30, December 31,
2003 2002
---- ----
(unaudited)
LIABILITIES
-----------
Deposits:
Demand:
Non-interest-bearing........................................................ $ 1,041,668 986,674
Interest-bearing............................................................ 846,030 819,429
Savings....................................................................... 2,107,417 2,176,616
Time:
Time deposits of $100 or more............................................... 416,192 469,904
Other time deposits......................................................... 1,603,479 1,720,197
------------ -----------
Total deposits........................................................... 6,014,786 6,172,820
Short-term borrowings.............................................................. 197,410 265,644
Note payable....................................................................... 34,500 7,000
Guaranteed preferred beneficial interests in
subordinated debentures....................................................... 210,701 270,039
Accrued interest payable........................................................... 9,395 11,751
Deferred income taxes.............................................................. 51,104 61,204
Accrued expenses and other liabilities............................................. 42,826 35,301
------------ -----------
Total liabilities........................................................ 6,560,722 6,823,759
------------ -----------
STOCKHOLDERS' EQUITY
--------------------
Preferred stock:
$1.00 par value, 5,000,000 shares authorized, no shares issued
and outstanding............................................................. -- --
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
Additional paid-in capital......................................................... 5,910 5,910
Retained earnings.................................................................. 467,092 433,689
Accumulated other comprehensive income............................................. 46,537 60,464
------------ -----------
Total stockholders' equity............................................... 538,517 519,041
------------ -----------
Total liabilities and stockholders' equity............................... $ 7,099,239 7,342,800
============ ===========
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,
------------------ -----------------
2003 2002 2003 2002
---- ---- ---- ----
Interest income:
Interest and fees on loans............................................ $ 89,680 98,782 180,292 197,824
Investment securities................................................. 8,278 7,868 16,831 15,149
Federal funds sold and other.......................................... 312 653 754 942
-------- -------- -------- --------
Total interest income............................................ 98,270 107,303 197,877 213,915
-------- -------- -------- --------
Interest expense:
Deposits:
Interest-bearing demand............................................. 1,478 2,281 3,151 3,953
Savings............................................................. 5,785 9,265 12,571 18,434
Time deposits of $100 or more....................................... 3,336 4,889 7,021 10,179
Other time deposits................................................. 11,088 16,970 23,282 35,851
Short-term borrowings................................................. 519 912 1,121 1,829
Note payable.......................................................... 50 181 186 530
Guaranteed preferred debentures....................................... 5,001 7,117 10,369 13,329
-------- -------- -------- --------
Total interest expense........................................... 27,257 41,615 57,701 84,105
-------- -------- -------- --------
Net interest income.............................................. 71,013 65,688 140,176 129,810
Provision for loan losses.................................................. 10,000 12,000 21,000 25,000
-------- -------- -------- --------
Net interest income after provision for loan losses.............. 61,013 53,688 119,176 104,810
-------- -------- -------- --------
Noninterest income:
Service charges on deposit accounts and customer service fees......... 9,005 7,014 17,649 13,494
Gain on mortgage loans sold and held for sale......................... 10,058 7,292 20,736 12,459
Net gain on sales of available-for-sale investment securities......... 307 -- 6,566 92
Bank-owned life insurance investment income........................... 1,433 1,526 2,704 2,813
Net gain (loss) on derivative instruments............................. 419 90 426 (249)
Other................................................................. 4,209 4,607 8,995 10,755
-------- -------- -------- --------
Total noninterest income......................................... 25,431 20,529 57,076 39,364
-------- -------- -------- --------
Noninterest expense:
Salaries and employee benefits........................................ 31,500 28,895 60,859 56,156
Occupancy, net of rental income....................................... 5,549 4,964 10,483 9,636
Furniture and equipment............................................... 4,535 4,396 9,104 8,539
Postage, printing and supplies........................................ 1,292 1,317 2,598 2,859
Information technology fees........................................... 8,409 8,497 16,442 16,597
Legal, examination and professional fees.............................. 2,165 2,106 3,771 3,597
Amortization of intangibles associated with
the purchase of subsidiaries........................................ 658 482 1,190 964
Communications........................................................ 668 908 1,273 1,704
Advertising and business development.................................. 925 1,507 2,234 2,951
Other................................................................. 8,350 6,148 15,782 13,075
-------- -------- -------- --------
Total noninterest expense........................................ 64,051 59,220 123,736 116,078
-------- -------- -------- --------
Income before provision for income taxes and
minority interest in income of subsidiary.................... 22,393 14,997 52,516 28,096
Provision for income taxes................................................. 7,693 5,328 18,785 10,099
-------- -------- -------- --------
Income before minority interest in income of subsidiary ......... 14,700 9,669 33,731 17,997
Minority interest in income of subsidiary.................................. -- 301 -- 629
-------- -------- -------- --------
Net income....................................................... 14,700 9,368 33,731 17,368
Preferred stock dividends.................................................. 132 132 328 328
-------- -------- -------- --------
Net income available to common stockholders...................... $ 14,568 9,236 33,403 17,040
======== ======== ======== ========
Basic earnings per common share............................................ $ 615.70 390.35 1,411.74 720.18
======== ======== ======== ========
Diluted earnings per common share.......................................... $ 606.04 384.48 1,390.06 712.75
======== ======== ======== ========
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, 2003 and 2002 and Six Months Ended December 31, 2002
(dollars expressed in thousands, except per share data)
Adjustable Rate Accu-
Preferred Stock mulated
--------------- Other Total
Class A Additional Compre- Compre- Stock-
Conver- Common Paid-In hensive Retained hensive holders'
tible Class B Stock Capital Income Earnings Income Equity
----- ------- ----- ------- ------ -------- ------ ------
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
Six months ended December 31, 2002:
Comprehensive income:
Net income................................. -- -- -- -- 27,799 27,799 -- 27,799
Other comprehensive income, net of tax:
Unrealized gains on securities, net of
reclassification adjustment (1)........ -- -- -- -- 1,289 -- 1,289 1,289
Derivative instruments:
Current period transactions............ -- -- -- -- 10,861 -- 10,861 10,861
------
Comprehensive income....................... -- -- -- -- 39,949
======
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.................. -- -- -- (48) -- -- (48)
------- ---- ----- ----- ------- ------ -------
Consolidated balances, December 31, 2002......... 12,822 241 5,915 5,910 433,689 60,464 519,041
Six months ended June 30, 2003:
Comprehensive income:
Net income................................. -- -- -- -- 33,731 33,731 -- 33,731
Other comprehensive income, net of tax:
Unrealized losses on securities, net of
reclassification adjustment (1)........ -- -- -- -- (6,288) -- (6,288) (6,288)
Derivative instruments:
Current period transactions............ -- -- -- -- (7,639) -- (7,639) (7,639)
------
Comprehensive income....................... 19,804
======
Class A preferred stock dividends,
$0.50 per share.......................... -- -- -- -- (321) -- (321)
Class B preferred stock dividends,
$0.04 per share.......................... -- -- -- -- (7) -- (7)
------- ---- ----- ----- ------- ------ -------
Consolidated balances, June 30, 2003............. $12,822 241 5,915 5,910 467,092 46,537 538,517
======= ==== ===== ===== ======= ====== =======
- -------------------------
(1) Disclosure of reclassification adjustment:
Three Months Ended Six Months Ended Six Months Ended
June 30, June 30, December 31,
------------------ ----------------
2003 2002 2003 2002 2002
---- ---- ---- ---- ----
Unrealized (losses) gains on investment securities
arising during the period.............................. $(430) 7,086 (2,020) 7,680 1,288
Less reclassification adjustment for gains
(losses) included in net income........................ 200 -- 4,268 60 (1)
----- ----- ------ ------ -----
Unrealized (losses) gains on investment securities........ $(630) 7,086 (6,288) 7,620 1,289
===== ===== ====== ===== =====
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,
-----------------------
2003 2002
---- ----
Cash flows from operating activities:
Net income........................................................................... $ 33,731 17,368
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization of bank premises and equipment....................... 9,713 9,261
Amortization, net of accretion..................................................... 11,706 7,020
Originations and purchases of loans held for sale.................................. (1,190,559) (806,713)
Proceeds from the sale of loans held for sale...................................... 1,125,264 757,023
Provision for loan losses.......................................................... 21,000 25,000
Provision for income taxes......................................................... 18,785 10,099
Payments of income taxes........................................................... (18,804) (15,792)
Decrease (increase)in accrued interest receivable.................................. 2,810 (218)
Interest accrued on liabilities.................................................... 57,701 84,105
Payments of interest on liabilities................................................ (60,201) (81,341)
Gain on mortgage loans sold and held for sale...................................... (20,736) (12,459)
Net gain on sales of available-for-sale investment securities...................... (6,566) (92)
Net (gain) loss on derivative instruments.......................................... (426) 249
Other operating activities, net.................................................... 5,376 3,147
Minority interest in income of subsidiary.......................................... -- 629
---------- ---------
Net cash used in operating activities........................................... (11,206) (2,714)
---------- ---------
Cash flows from investing activities:
Cash received for acquired entities, net of cash
and cash equivalents............................................................... 14,870 44,097
Proceeds from sales of investment securities available for sale...................... 120,784 192
Maturities of investment securities available for sale............................... 600,347 398,629
Maturities of investment securities held to maturity................................. 3,024 2,405
Purchases of investment securities available for sale................................ (324,419) (416,673)
Purchases of investment securities held to maturity.................................. (102) (2,260)
Net decrease in loans................................................................ 21,830 118,128
Recoveries of loans previously charged-off........................................... 10,317 8,297
Purchases of bank premises and equipment............................................. (1,858) (7,621)
Other investing activities, net...................................................... 4,369 4,721
---------- ---------
Net cash provided by investing activities....................................... 449,162 149,915
---------- ---------
Cash flows from financing activities:
(Decrease) increase in demand and savings deposits................................... (38,337) 58,743
Decrease in time deposits............................................................ (212,505) (114,739)
Decrease in federal funds purchased.................................................. (55,000) (81,000)
Decrease in Federal Home Loan Bank advances.......................................... (3,165) (4,600)
(Decrease) increase in securities sold under agreements to repurchase................ (11,617) 23,267
Advances drawn on note payable....................................................... 34,500 36,500
Repayments of note payable........................................................... (7,000) (54,000)
Proceeds from issuance of guaranteed preferred beneficial interests
in subordinated debentures......................................................... 68,735 24,233
Payments for redemption of guaranteed preferred beneficial
interests in subordinated debentures............................................... (132,250) --
Payment of preferred stock dividends................................................. (328) (328)
---------- ---------
Net cash used in financing activities........................................... (356,967) (111,924)
---------- ---------
Net increase in cash and cash equivalents....................................... 80,989 35,277
Cash and cash equivalents, beginning of period............................................ 203,251 241,874
---------- ---------
Cash and cash equivalents, end of period.................................................. $ 284,240 277,151
========== =========
Noncash investing and financing activities:
Loans transferred to other real estate............................................... $ 10,850 1,622
Loans held for sale transferred to loans............................................. 7,066 2,741
========== =========
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 2002
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 conformity with accounting principles generally accepted
in the United States of America. Actual results could differ from those
estimates. 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, 2003 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2003.
The consolidated financial statements include the accounts of First
Banks, Inc. and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated. Certain reclassifications of 2002 amounts
have been made to conform to the 2003 presentation.
First Banks operates through its wholly owned subsidiary bank holding
company, The San Francisco Company (SFC), headquartered in San Francisco,
California, and SFC's wholly owned subsidiary bank, First Bank, headquartered in
St. Louis County, Missouri.
(2) ACQUISITIONS, ACQUISITION AND INTEGRATION COSTS AND OTHER CORPORATE
TRANSACTIONS
On March 31, 2003, First Banks completed its acquisition of Bank of
Ste. Genevieve, Ste. Genevieve, Missouri, from Allegiant Bancorp, Inc.
(Allegiant) in exchange for approximately 974,150 shares of Allegiant common
stock that were previously held by First Banks. The purpose of the acquisition
was to further expand the Company's Midwest banking franchise. First Banks
continues to own approximately 232,000 shares, or approximately 1.52% of the
issued and outstanding shares of Allegiant common stock. At the time of the
transaction, Bank of Ste. Genevieve had $115.1 million in total assets, $42.9
million in loans, net of unearned discount, $797,000 in investment securities,
$93.7 million in deposits and operated two banking locations. The transaction
was accounted for using the purchase method of accounting. First Banks recorded
a gain of $6.3 million on the exchange of the common stock and goodwill of
approximately $2.1 million, which is not expected to be deductible for tax
purposes. The core deposit intangibles, which are expected to be deductible for
tax purposes, were approximately $3.5 million and will be amortized over seven
years utilizing the straight-line method. Bank of Ste. Genevieve was merged with
and into First Bank. Due to the immaterial effect on previously reported
financial information, pro forma disclosures have not been presented for the
aforementioned transaction.
On March 31, 2003, First Banks completed the merger of its two
wholly-owned bank subsidiaries, First Bank and First Bank & Trust, to allow
certain administrative and operational economies not available while the two
banks maintained separate charters.
We accrue certain costs associated with our acquisitions as of the
respective consummation dates. Essentially all of these accrued costs relate
either to adjustments to the staffing levels of the acquired entities or to the
anticipated termination of information technology or item processing contracts
of the acquired entities prior to their stated contractual expiration dates. The
most significant costs that we incur relate to salary continuation agreements,
or other similar agreements, of executive management and certain other employees
of the acquired entities that were in place prior to the acquisition dates.
These agreements provide for payments over various time periods generally
ranging from two to 15 years and are triggered as a result of the change in
control of the acquired entity. Other severance benefits for employees that are
terminated in conjunction with the integration of the acquired entities into our
existing operations are normally paid to the recipients within 90 days of the
respective consummation date. The balance of our accrued severance of $1.9
million identified in the following table is comprised of contractual
obligations under salary continuation agreements to 11 individuals and have
remaining terms ranging from six months to approximately 13 years. As the
obligation to make payments under these agreements are accrued at the
consummation dates, such payments do not have any impact on our consolidated
statements of income.
A summary of the cumulative acquisition and integration costs
attributable to our acquisitions, which were accrued as of the consummation
dates of the respective acquisitions, is listed below. These acquisition and
integration costs are reflected in accrued and other liabilities in our
consolidated financial statements.
Information
Severance Technology Fees Total
--------- --------------- -----
(dollars expressed in thousands)
Balance at December 31, 2002..................................... $ 2,351 28 2,379
Six Months Ended June 30, 2003:
Amounts accrued at acquisition date........................... 100 350 450
Payments...................................................... (599) (242) (841)
-------- ----- ------
Balance at June 30, 2003......................................... $ 1,852 136 1,988
======== ===== ======
We also incur costs associated with our acquisitions that are expensed
in our consolidated statements of income. These costs relate exclusively to
additional costs incurred in conjunction with the data processing conversions of
the respective entities.
(3) INTANGIBLE ASSETS ASSOCIATED WITH THE PURCHASE OF SUBSIDIARIES, NET OF
AMORTIZATION
Intangible assets associated with the purchase of subsidiaries, net of
amortization, were comprised of the following at June 30, 2003 and December 31,
2002:
June 30, 2003 December 31, 2002
---------------------------- ----------------------------
Gross Gross
Carrying Accumulated Carrying Accumulated
Amount Amortization Amount Amortization
------ ------------ ------ ------------
(dollars expressed in thousands)
Amortized intangible assets:
Core deposit intangibles.............. $ 17,391 (2,988) 13,871 (1,869)
Goodwill associated with
purchases of branch offices......... 2,210 (790) 2,210 (718)
--------- ------- ------- -------
Total............................ $ 19,601 (3,778) 16,081 (2,587)
========= ======= ======= =======
Unamortized intangible assets:
Goodwill associated with the
purchase of subsidiaries............ $ 140,747 138,620
========= =======
Amortization of intangibles associated with the purchase of
subsidiaries and branch offices was $658,000 and $1.2 million for the three and
six months ended June 30, 2003, respectively, and $482,000 and $964,000 for the
comparable periods in 2002. Amortization of intangibles associated with the
purchase of subsidiaries, including amortization of core deposit intangibles and
branch purchases, has been estimated through 2008 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:
2003 (1)........................................... $ 2,506
2004............................................... 2,632
2005............................................... 2,632
2006............................................... 2,632
2007............................................... 2,632
2008............................................... 2,632
--------
Total........................................... $ 15,666
========
------------------------
(1)Includes $1.2 million of amortization for the six months ended June 30, 2003.
Changes in the carrying amount of goodwill for the three and six months
ended June 30, 2003 and 2002 were as follows:
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ----------------------
2003 2002 2003 2002
---- ---- ---- ----
(dollars expressed in thousands)
Balance, beginning of period.................................... $ 141,102 128,670 140,112 115,860
Goodwill acquired during period................................. -- -- 1,026 12,577
Acquisition-related adjustments................................. 1,101 (838) 1,101 (569)
Amortization - purchases of branch offices...................... (36) (36) (72) (72)
--------- -------- -------- --------
Balance, end of period.......................................... $ 142,167 127,796 142,167 127,796
========= ======== ======== ========
(4) MORTGAGE BANKING ACTIVITIES
At June 30, 2003 and December 31, 2002, First Banks serviced loans for
others amounting to $1.28 billion and $1.29 billion, respectively. Borrowers'
escrow balances held by First Banks on such loans were $2.2 million and $517,000
at June 30, 2003 and December 31, 2002, respectively. Mortgage servicing rights
are amortized in proportion to the related estimated net servicing income on a
basis that approximates the disaggregated, discounted basis over the estimated
lives of the related mortgages considering the level of current and anticipated
repayments, which range from five to ten years. The weighted average
amortization period of the mortgage servicing rights is approximately five
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,
----------------------- --------------------
2003 2002 2003 2002
---- ---- ---- ----
(dollars expressed in thousands)
Balance, beginning of period................................ $ 15,678 11,746 14,882 10,125
Originated mortgage servicing rights........................ 2,521 1,522 4,494 3,960
Amortization................................................ (1,220) (914) (2,397) (1,731)
-------- ------- ------- -------
Balance, end of period...................................... $ 16,979 12,354 16,979 12,354
======== ======= ======= =======
The fair value of mortgage servicing rights was approximately $18.2
million and $18.8 million at June 30, 2003 and 2002, respectively, and $17.2
million at December 31, 2002. The excess of the fair value of mortgage servicing
rights over the carrying value was approximately $1.2 million and $6.4 million
at June 30, 2003 and 2002, respectively, and $2.3 million at December 31, 2002.
The decline in the excess of the fair value of mortgage servicing rights over
the carrying value represents the declining mortgage interest rate environment
in 2002 that resulted in a significant increase in the number of mortgages being
prepaid or refinanced. In addition, the increased prepayment experience that
occurred as a result of the reduced mortgage interest rate environment during
2002 resulted in a decline in the fair value of the remaining mortgage servicing
rights. However, the decline in the fair value of the mortgage servicing rights
did not result in the fair value being reduced below the carrying value at June
30, 2003.
Amortization of mortgage servicing rights, as it relates to the balance
at June 30, 2003 of $17.0 million, has been estimated through 2008 in the
following table:
(dollars expressed in thousands)
Year ending December 31:
2003 (1)........................................... $ 2,489
2004............................................... 4,592
2005............................................... 4,248
2006............................................... 3,521
2007............................................... 1,845
2008............................................... 284
---------
Total........................................... $ 16,979
=========
-----------------------------
(1) Excludes $2.4 million of amortization for the six months ended June 30, 2003.
(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, 2003:
Basic EPS - income available to common stockholders............. $ 14,568 23,661 $ 615.70
Effect of dilutive securities:
Class A convertible preferred stock........................... 128 588 (9.66)
--------- ------- ----------
Diluted EPS - income available to common stockholders........... $ 14,696 24,249 $ 606.04
========= ======= ==========
Three months ended June 30, 2002:
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
========= ======= ==========
Six months ended June 30, 2003:
Basic EPS - income available to common stockholders............. $ 33,403 23,661 $ 1,411.74
Effect of dilutive securities:
Class A convertible preferred stock........................... 321 600 (21.68)
--------- ------- ----------
Diluted EPS - income available to common stockholders........... $ 33,724 24,261 $ 1,390.06
========= ======= ==========
Six months ended June 30, 2002:
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
========= ======= ==========
(6) TRANSACTIONS WITH RELATED PARTIES
First Title Guarantee LLC (First Title), a corporation established and
administered by and for the benefit of First Banks' Chairman and members of his
immediate family, received approximately $138,000 and $251,000 for the three and
six months ended June 30, 2003, and $85,000 and $168,000 for the comparable
periods in 2002, respectively, in commissions for policies purchased by First
Banks or customers of First Bank from unaffiliated, third-party insurors. The
insurance premiums on which the aforementioned commissions were earned were
competitively bid, and First Banks deems the commissions First Title earned from
unaffiliated third-party companies to be comparable to those that would have
been earned by an unaffiliated third-party agent.
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 $725,000 and $1.6 million for the three and six
months ended June 30, 2003, and $978,000 and $1.7 million for the comparable
periods in 2002, 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 First
Bank.
First Services, L.P., a limited partnership indirectly owned by First
Banks' Chairman and members of his immediate family, provides information
technology and various related services to First Banks, Inc. and First Bank.
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, 2003 and 2002. During the
three months ended June 30, 2003 and 2002, First Services, L.P. paid First Banks
$1.0 and $975,000, respectively, and during the six months ended June 30, 2003
and 2002, First Services, L.P. paid First Banks $2.2 million and $1.9 million,
respectively, in rental fees for the use of data processing and other equipment
owned by First Banks.
During 2002, First Capital America, Inc., a corporation owned by First
Banks' Chairman and members of his immediate family, received approximately $1.0
million of origination and servicing fees associated with commercial leases
originated and serviced for First Bank by the employees of First Capital
America, Inc. Effective January 1, 2003, this relationship was discontinued.
First Bank has had in the past, and may have in the future, loan
transactions in the ordinary course of business with its directors or their
affiliates. These loan transactions have been on the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with unaffiliated persons and did not involve more than the normal
risk of collectibility or present other unfavorable features. Loans to
directors, their affiliates and executive officers of First Banks, Inc. were
approximately $16.3 million and $12.8 million at June 30, 2003 and December 31,
2002, respectively. First Bank does not extend credit to its officers or to
officers of First Banks, Inc., except for extensions of credit secured by
mortgages on personal residences, loans to purchase automobiles, overdraft
protection lines and personal credit card accounts.
(7) REGULATORY CAPITAL
First Banks and its subsidiary bank 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 its subsidiary bank 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 its subsidiary bank 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, 2003, First Banks and its subsidiary bank were each
well capitalized under the applicable regulations.
As of June 30, 2003, the most recent notification from First Banks'
primary regulator categorized First Banks and its subsidiary bank as well
capitalized under the regulatory framework for prompt corrective action. To be
categorized as well capitalized, First Banks and its subsidiary bank 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, 2003 and December 31, 2002, First
Banks' and its subsidiary bank's required and actual capital ratios were as
follows:
Actual To Be Well
------------------------ Capitalized Under
June 30, December 31, For Capital Prompt Corrective
2003 2002 Adequacy Purposes Action Provisions
---- ---- ----------------- -----------------
Total capital (to risk-weighted assets):
First Banks............................. 10.11% 10.68% 8.0% 10.0%
First Bank.............................. 10.60% 10.75 8.0 10.0
First Bank & Trust (1).................. -- 10.18 8.0 10.0
Tier 1 capital (to risk-weighted assets):
First Banks............................. 8.12 7.47 4.0 6.0
First Bank.............................. 9.34 9.49 4.0 6.0
First Bank & Trust (1).................. -- 8.93 4.0 6.0
Tier 1 capital (to average assets):
First Banks............................. 7.12 6.45 3.0 5.0
First Bank.............................. 8.20 7.79 3.0 5.0
First Bank & Trust (1) ................. -- 8.26 3.0 5.0
---------------------------
(1) First Bank & Trust was merged with and into First Bank on March 31, 2003.
(8) BUSINESS SEGMENT RESULTS
First Banks' business segment is its subsidiary bank. The reportable
business segment is consistent with the management structure of First Banks, the
subsidiary bank and the internal reporting system that monitors performance.
Through its branch network, First Bank provides similar products and
services in its 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, First Bank
markets 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. First Bank also offers 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 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 and trust, private banking and
institutional money management services. The revenues generated by First Bank
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 First Bank's respective geographic areas.
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:
Corporate, Other
and Intercompany
First Bank Reclassifications (1) Consolidated Totals
------------------------- ----------------------- ------------------------
June 30, December 31, June 30, December 31, June 30, December 31,
2003 2002 (2) 2003 2002 2003 2002
---- -------- ---- ---- ---- ----
(dollars expressed in thousands)
Balance sheet information:
Investment securities................... $ 868,765 1,114,479 5,183 22,841 873,948 1,137,320
Loans, net of unearned discount......... 5,385,599 5,432,589 -- (1) 5,385,599 5,432,588
Goodwill................................ 142,167 140,112 -- -- 142,167 140,112
Total assets............................ 7,099,926 7,357,155 (687) (14,355) 7,099,239 7,342,800
Deposits................................ 6,036,318 6,189,928 (21,532) (17,108) 6,014,786 6,172,820
Note payable............................ -- -- 34,500 7,000 34,500 7,000
Stockholders' equity.................... 779,132 777,548 (240,615) (258,507) 538,517 519,041
========== ========= ======== ======== ========= =========
Corporate, Other
and Intercompany
First Bank Reclassifications (1) Consolidated Totals
---------- --------------------- -----------------------
Three Months Ended Three Months Ended Three Months Ended
June 30, June 30, June 30,
---------------------- ---------------------- -----------------------
2003 2002 (2) 2003 2002 2003 2002
---- ---- ---- ---- ---- ----
Income statement information:
Interest income......................... $ 98,168 107,162 102 141 98,270 107,303
Interest expense........................ 22,278 34,352 4,979 7,263 27,257 41,615
---------- --------- -------- -------- --------- ---------
Net interest income................ 75,890 72,810 (4,877) (7,122) 71,013 65,688
Provision for loan losses............... 10,000 12,000 -- -- 10,000 12,000
---------- --------- -------- -------- --------- ---------
Net interest income after
provision for loan losses........ 65,890 60,810 (4,877) (7,122) 61,013 53,688
Noninterest income...................... 25,362 21,079 69 (550) 25,431 20,529
Noninterest expense..................... 62,497 58,585 1,554 635 64,051 59,220
---------- --------- -------- -------- --------- ---------
Income before provision for
income taxes and minority
interest in income of
subsidiary....................... 28,755 23,304 (6,362) (8,307) 22,393 14,997
Provision for income taxes.............. 10,410 8,087 (2,717) (2,759) 7,693 5,328
---------- --------- -------- -------- --------- ---------
Income before minority interest
in income of subsidiary.......... 18,345 15,217 (3,645) (5,548) 14,700 9,669
Minority interest in income
of subsidiary.................... -- -- -- 301 -- 301
---------- --------- -------- -------- --------- ---------
Net income......................... $ 18,345 15,217 (3,645) (5,849) 14,700 9,368
========== ========= ======== ======== ========= =========
Corporate, Other
and Intercompany
First Bank Reclassifications (1) Consolidated Totals
------------------------ ---------------------- -----------------------
Six Months Ended Six Months Ended Six Months Ended
June 30, June 30, June 30,
------------------------ ---------------------- -----------------------
2003 2002 (2) 2003 2002 2003 2002
---- ---- ---- ---- ---- ----
Income statement information:
Interest income.......................... $ 197,696 213,770 181 145 197,877 213,915
Interest expense......................... 47,282 70,443 10,419 13,662 57,701 84,105
--------- --------- -------- -------- --------- ---------
Net interest income................. 150,414 143,327 (10,238) (13,517) 140,176 129,810
Provision for loan losses................ 21,000 25,000 -- -- 21,000 25,000
--------- --------- -------- -------- --------- ---------
Net interest income after
provision for loan losses......... 129,414 118,327 (10,238) (13,517) 119,176 104,810
Noninterest income....................... 50,989 40,486 6,087 (1,122) 57,076 39,364
Noninterest expense...................... 121,810 114,266 1,926 1,812 123,736 116,078
--------- --------- -------- -------- --------- ---------
Income before provision for
income taxes and
minority interest in
income of subsidiary.............. 58,593 44,547 (6,077) (16,451) 52,516 28,096
Provision for income taxes............... 20,893 15,555 (2,108) (5,456) 18,785 10,099
--------- --------- -------- -------- --------- ---------
Income before minority interest in
income of subsidiary.............. 37,700 28,992 (3,969) (10,995) 33,731 17,997
Minority interest in income
of subsidiary..................... -- -- -- 629 -- 629
--------- --------- -------- -------- --------- ---------
Net income.......................... $ 37,700 28,992 (3,969) (11,624) 33,731 17,368
========= ========= ======== ======== ========= =========
- ---------------------------
(1) Corporate and other includes $5.0 million and $7.1 million of guaranteed preferred debentures expense for the three
months ended June 30, 2003 and 2002, respectively. The applicable income tax benefit associated with the guaranteed
preferred debentures expense was $1.8 million and $2.5 million for the three months ended June 30, 2003 and 2002,
respectively. For the six months ended June 2003 and 2002, corporate and other includes $10.4 million and $13.3
million of guaranteed preferred debenture expense, respectively. The applicable income tax benefit associated with
the guaranteed preferred debentures expense was $3.6 million and $4.7 million for the six months ended June 30, 2003
and 2002, respectively. In addition, corporate and other includes holding company expenses.
(2) First Bank & Trust was merged with and into First Bank on March 31, 2003 as further described in Note 2 to our
accompanying consolidated financial statements. Accordingly, the 2002 amounts have been restated to reflect this
combination of entities under common control.
(9) GUARANTEED PREFERRED BENEFICIAL INTERESTS IN SUBORDINATED DEBENTURES
On March 20, 2003, First Bank Statutory Trust (FBST), a newly formed
Connecticut statutory trust subsidiary of First Banks, issued 25,000 shares of
8.10% cumulative trust preferred securities at $1,000 per share in a private
placement, and issued 774 shares of common securities to First Banks at $1,000
per share. First Banks owns all of the common securities of FBST. The gross
proceeds of the offering were used by FBST to purchase $25.0 million of 8.10%
junior subordinated debentures from First Banks, maturing on March 20, 2033. The
maturity date of the subordinated debentures may be shortened to a date not
earlier than March 20, 2008, if certain conditions are met. The subordinated
debentures are the sole asset of FBST. In connection with the issuance of the
FBST 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 FBST under the FBST preferred securities. First
Banks' proceeds from the issuance of the subordinated debentures to FBST, net of
offering expenses, were $24.5 million. Distributions on FBST's preferred
securities are payable quarterly in arrears, beginning March 31, 2003, and are
included in interest expense in the consolidated statements of income.
Distributions on FBST's preferred securities were $528,000 and $592,000 for the
three and six months ended June 30, 2003, respectively.
On April 1, 2003, First Preferred Capital Trust IV (First Preferred
IV), a newly formed Delaware business trust subsidiary of First Banks, issued
1.84 million shares of 8.15% cumulative trust preferred securities at $25 per
share in an underwritten public offering, and issued 56,908 shares of common
securities to First Banks at $25 per share. First Banks owns all of First
Preferred IV's common securities. The gross proceeds of the offering were used
by First Preferred IV to purchase approximately $47.4 million of 8.15%
subordinated debentures from First Banks, maturing on June 30, 2033. The
maturity date may be shortened to a date not earlier than June 30, 2008, if
certain conditions are met. The subordinated debentures are the sole asset of
First Preferred IV. In connection with the issuance of the 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 First Preferred IV under the First Preferred IV preferred securities. First
Banks' proceeds from the issuance of the subordinated debentures to First
Preferred IV, net of underwriting fees and offering expenses, were approximately
$44.2 million. Distributions on First Preferred IV's preferred securities are
payable quarterly in arrears, beginning on June 30, 2003, and are included in
interest expense in the consolidated statements of income. Distributions on
First Preferred IV's preferred securities were $956,000 for the three and six
months ended June 30, 2003. First Banks utilized the entire net proceeds of the
offering to redeem $88.9 million of 9.25% trust preferred securities issued by
First Preferred Capital Trust in 1997. The remaining funds necessary for the
redemption were provided from available cash of approximately $20.2 million and
the net proceeds of $24.5 million from FBST's issuance of additional trust
preferred securities as described above.
On June 30, 2003, First Banks completed its redemption in full of the
$47.2 million of 8.50% trust preferred securities issued by First America
Capital Trust (FACT) in 1998. The funds necessary for the redemption were
provided from available cash of $12.7 million and an advance of $34.5 million on
First Banks' revolving credit line with a group of unaffiliated financial
institutions.
(10) CONTINGENT LIABILITIES
In October 2000, First Banks entered into two continuing guaranty
contracts. For value received, and for the purpose of inducing a pension fund
and its trustees and a welfare fund and its trustees (the Funds) to conduct
business with Missouri Valley Partners, Inc. (MVP), First Bank's institutional
investment management subsidiary, First Banks irrevocably and unconditionally
guaranteed payment of and promised to pay to each of the Funds any amounts up to
the sum of $5,000,000 to the extent MVP is liable to the Funds for a breach of
the Investment Management Agreements (including the Investment Policy Statement
and Investment Guidelines), by and between MVP and the Funds and/or any
violation of the Employee Retirement Income Security Act by MVP resulting in
liability to the Funds. The guaranties are continuing guaranties of all
obligations that may arise for transactions occurring prior to termination of
the Investment Management Agreements and are co-existent with the term of the
Investment Management Agreements. The Investment Management Agreements have no
specified term but may be terminated at any time upon written notice by the
Trustees or, at First Banks' option, upon thirty days written notice to the
Trustees. In the event of termination of the Investment Management Agreements,
such termination shall have no effect on the liability of First Banks with
respect to obligations incurred before such termination. The obligations of
First Banks are joint and several with those of MVP. First Banks does not have
any recourse provisions that would enable it to recover from third parties any
amounts paid under the contracts nor does First Banks hold any assets as
collateral that, upon occurrence of a required payment under the contract, could
be liquidated to recover all or a portion of the amount(s) paid. At June 30,
2003 and December 31, 2002, First Banks had not recorded a liability for the
obligations associated with these guaranty contracts, as the likelihood that
First Banks will be required to make payments under the contracts is remote.
(11) SUBSEQUENT EVENT - NOTE PAYABLE
On August 14, 2003, First Banks entered into a revolving credit line
with a group of unaffiliated financial institutions (Credit Agreement). The
Credit Agreement, dated August 14, 2003, replaced a similar revolving credit
agreement dated August 22, 2002. The Credit Agreement provides a $60.0 million
revolving credit line and a $20.0 million letter of credit facility. Interest is
payable on outstanding principal loan balances at a floating rate equal to
either the lender's prime rate or, at First Banks' option, the London Interbank
Offering Rate plus a margin determined by the outstanding loan balances and
First Banks' net income for the preceding four calendar quarters. If the loan
balances outstanding under the revolving credit line are accruing at the prime
rate, interest is paid monthly. If the loan balances outstanding under the
revolving credit line are accruing at the London Interbank Offering Rate,
interest is payable based on the one, two, three or six-month London Interbank
Offering Rate, as selected by First Banks. Amounts may be borrowed under the
Credit Agreement until August 12, 2004, at which time the principal and
interest outstanding is due and payable.
The Credit Agreement requires maintenance of certain minimum capital
ratios for First Banks and its subsidiary bank, certain maximum nonperforming
assets ratios for First Banks and its subsidiary bank and a minimum return on
assets ratio for First Banks. In addition, it prohibits the payment of dividends
on First Banks' common stock. Loans under the Credit Agreement are secured by
First Banks' ownership interest in the capital stock of its subsidiaries.
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 as well as the threat of future terrorist
activities, existing and potential wars and/or military actions related thereto,
and domestic responses to terrorism or threats of terrorism; 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; the credit risk associated with consumers who may not
repay loans; the geographic dispersion of our offices; the impact our hedging
activities may have on our operating results; the highly regulated environment
in which we operate; 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 competition of larger acquirers with greater resources; fluctuations
in the prices at which acquisition targets may be available for sale; the impact
of making acquisitions without using our common stock; and possible asset
quality issues, unknown liabilities or integration issues with the businesses
that we have acquired. We do not have a duty to and will not update these
forward-looking statements. 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 operate through our wholly owned subsidiary bank
holding company, The San Francisco Company, or SFC, headquartered in San
Francisco, California, and its wholly owned subsidiary bank, First Bank,
headquartered in St. Louis County, Missouri. First Bank currently operates 151
branch offices throughout California, Illinois, Missouri and Texas. At June 30,
2003, we had total assets of $7.10 billion, loans, net of unearned discount, of
$5.39 billion, total deposits of $6.01 billion and total stockholders' equity of
$538.5 million.
Through our subsidiary bank, 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 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 and
trust, private banking and institutional money management services.
Primary responsibility for managing our subsidiary banking unit rests
with its officers and directors. However, in keeping with our policy, we
centralize overall corporate policies, procedures and administrative functions
and provide operational support functions for our subsidiary bank. This practice
allows us to achieve various operating efficiencies while allowing our
subsidiary bank officers and directors to focus on customer service.
Financial Condition
Our total assets were $7.10 billion and $7.34 billion at June 30, 2003
and December 31, 2002, respectively. The decrease in total assets is primarily
attributable to weak loan demand and an anticipated level of attrition
associated with low deposit rates offset by the acquisition of Bank of Ste.
Genevieve on March 31, 2003, which provided assets of $115.1 million. Federal
funds sold increased by $108.2 million due to the investment of excess funds
resulting from reduced loan demand and maturities of investment securities.
Investment securities decreased $263.4 million to $873.9 million at June 30,
2003 from $1.14 million at December 31, 2002 primarily due to $603.4 million of
maturities of investment securities, $120.8 million of sales of
available-for-sales investment securities and $17.9 million relating to the
exchange of Allegiant Bancorp, Inc. common stock for a 100% ownership interest
in Bank of Ste. Genevieve, offset by purchases of investment securities of
$324.5 million and $797,000 in investment securities acquired with Bank of Ste.
Genevieve. The net proceeds associated with the decline in investment securities
were utilized primarily to fund our reduction in total deposits as further
discussed below. The decrease in our assets also reflects a decrease in loans,
net of unearned discount, of $47.0 million, which is further discussed under
"--Loans and Allowance for Loan Losses." Our derivative financial instruments
declined to $88.2 million from $97.9 million, consistent with a decline in the
fair value of certain derivative financial instruments and the call of a $46.0
million interest rate swap agreement by the counterparty, offset by two
additional interest rate swap agreements aggregating $71.0 million that we
entered into in 2003 as further discussed under "--Interest Rate Risk
Management." In addition, other assets increased $11.2 million to $69.5 million
at June 30, 2003 from $58.3 million at December 31, 2002. This increase
primarily results from a $7.5 million net increase in other real estate as
further discussed under "--Loans and Allowance for Loan Losses," and a $2.1
million increase in mortgage servicing rights.
Total deposits decreased by $158.0 million to $6.01 billion at June 30,
2003 from $6.17 billion at December 31, 2002. The decrease primarily reflects an
anticipated level of attrition associated with low deposit rates and continued
aggressive competition within our market areas offset by the $93.7 million in
deposits acquired from Bank of Ste. Genevieve. Short-term borrowings decreased
$68.2 million to $197.4 million at June 30, 2003 from $265.6 million at December
31, 2002, primarily due to a $55.0 million reduction in federal funds purchased
and a $11.6 million reduction in securities sold under agreements to repurchase.
Our note payable was fully repaid in February 2003 through dividends from our
subsidiaries. However, on June 30, 2003, we obtained a $34.5 million advance to
partially fund the redemption of $46.0 million of trust preferred securities.
Guaranteed preferred beneficial interests in subordinated debentures decreased
$59.3 million primarily due to the redemtion of $86.3 million of trust preferred
securities issued by First Preferred Capital Trust and $46.0 million of trust
preferred securities issued by First America Capital Trust, partially offset by
the additional trust preferred securities issued by First Bank Statutory Trust
on March 20, 2003 and First Preferred Capital Trust IV on April 1, 2003, as more
fully described in Note 9 to our consolidated financial statements and under
"--Interest Rate Risk Management." Furthermore, accrued expenses and other
liabilities increased $7.5 million to $42.8 million at June 30, 2003 compared to
$35.3 million at December 31, 2002. The increase primarily reflects an increase
in accrued real estate and income taxes and lease termination obligations as
well as the timing of certain payments. Accumulated other comprehensive income
decreased $14.0 million to $46.5 million at June 30, 2003 from $60.5 million at
December 31, 2002 due to $6.3 million associated with the change in unrealized
gains on available-for-sale investment securities as accounted for under
Statement of Financial Accounting Standards, or SFAS, No. 115, including the
$6.3 million reversal of the unrealized gain attributable to the exchange of the
Allegiant common stock, and $7.6 million associated with our derivative
financial instruments as accounted for under SFAS No. 133.
Results of Operations
Net Income
Net income was $14.7 million and $33.7 million for the three and six
months ended June 30, 2003, respectively, compared to $9.4 million and $17.4
million for the comparable periods in 2002. Results for the three and six months
ended June 30, 2003 reflect increased net interest income, noninterest income
and slightly reduced provisions for loan losses, offset by higher operating
expenses. Included in the first quarter of 2003 was a gain of $6.3 million,
before related income taxes, relating to the partial exchange of our investment
in Allegiant Bancorp, Inc. for a 100% ownership interest in Bank of Ste.
Genevieve as further described in Note 2 to our consolidated financial
statements. The increase in earnings in 2003 reflects our adaptation to the low
interest rate environment and weak economic conditions that have prevailed
during the last two years. During this time, we have focused on increasing our
net interest margin, improving asset quality and further strengthening our
overall financial position. Throughout 2002, we experienced higher-than-normal
loan charge-offs, loan delinquencies and nonperforming loans that led to
increased provisions for loan losses, thereby reducing net income. While we
believe we were successful in addressing the asset quality problems during 2002,
we are continuing to closely monitor our operations to address the ongoing
challenges posed by the current economic environment, including reduced loan
demand and lower prevailing interest rates. We experienced continuing growth of
net interest income primarily resulting from reduced deposit rates, the earnings
on our interest rate swap agreements that we entered into in conjunction with
our interest rate risk management program and a reduction in our outstanding
trust preferred securities. In addition, earning assets increased as a result of
our acquisitions of Bank of Ste. Genevieve in March 2003, which provided assets
of $115.1 million and Plains Financial Corporation in January 2002 and two Texas
branch purchases in June 2002, which provided assets of $256.3 million and $63.7
million, respectively. However, prevailing low interest rates, generally weaker
loan demand and overall economic conditions continue to exert pressure on our
net interest income.
Noninterest income was $25.4 million and $57.1 million for the three
and six months ended June 30, 2003, respectively, in comparison to $20.5 million
and $39.4 million for the comparable periods in 2002. The increase in
noninterest income is primarily due to a $6.3 million gain on the exchange of
common stock of Allegiant Bancorp, Inc. held by us for a 100% ownership interest
in Bank of Ste. Genevieve, as further described in Note 2 to our consolidated
financial statements. The increase also reflects increased gains on mortgage
loans sold and held for sale, resulting from growth of our mortgage banking
activities as well as high volumes of new originations and refinancings related
to continued reductions in mortgage loan rates, and increased service charges on
deposit accounts and customer service fees.
Operating expenses were $64.1 million and $123.7 million for the three
and six months ended June 30, 2003, respectively, compared to $59.2 million and
$116.1 million for the comparable periods in 2002. The increased operating
expenses in 2003 primarily result from increased salaries and employee benefit
expenses associated with acquisitions and staff realignments surrounding our
core business strategies and write-downs on operating leases associated with our
commercial leasing business. These higher operating expenses, exclusive of the
operating leases, are reflective of recently completed acquisitions and ongoing
investments made in conjunction with the execution of our overall business plan.
Net Interest Income
Net interest income (expressed on a tax equivalent basis) increased to
$71.4 million, or 4.44% of average interest-earning assets, for the three months
ended June 30, 2003, from $66.1 million, or 4.24% of average interest-earning
assets, for the comparable period in 2002. For the six months ended June 30,
2003 and 2002, net interest income (expressed on a tax equivalent basis) was
$140.9 million, or 4.40% of average interest-earning assets, and $130.5 million,
or 4.22% of average interest-earning assets, respectively. We credit the
increased net interest income primarily to reduced deposit rates, earnings on
our interest rate swap agreements that we entered into in conjunction with our
interest rate risk management program, which mitigate the effects of decreasing
interest rates, and a $61.3 million net reduction in our outstanding trust
preferred securities. As further discussed under "--Interest Rate Risk
Management," our derivative financial instruments used to hedge our interest
rate risk contributed $15.8 million and $30.8 million to net interest income for
the three and six months ended June 30, 2003, respectively, compared to $12.6
million and $23.8 million for the comparable periods in 2002. In addition,
during the second quarter of 2003, we redeemed $132.3 million of our trust
preferred securities that had been issued during 1997 and 1998. As more fully
described in Note 9 to our consolidated financial statements, in March 2003,
First Bank Statutory Trust issued $25.0 million of trust preferred securities in
a private placement and in April 2003, First Preferred Capital Trust IV issued
$46.0 million of trust preferred securities in an underwritten public offering.
These transactions, coupled with the use of additional derivative financial
instruments, have allowed us to reduce our overall expense associated with the
utilization of trust preferred securities, thereby improving our overall
financial performance; however, prevailing low interest rates, generally weak
loan demand and overall economic conditions continue to exert pressure on our
net interest margin.
Average loans, net of unearned discount, were $5.39 billion and $5.38
billion for the three and six months ended June 30, 2003, respectively, compared
to $5.39 billion and $5.44 billion for the comparable periods in 2002.
Additionally, the yield on our loan portfolio decreased to 6.68% and 6.77% for
the three and six months ended June 30, 2003, respectively, compared to 7.36%
and 7.34% for the comparable periods in 2002. We attribute the decline in the
average balance and yields primarily to general economic conditions resulting in
continued weak loan demand and lower prevailing interest rates. 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, 2003, the aggregate
weighted average rate paid on our deposit portfolio decreased to 1.72% and
1.81%, respectively, compared to 2.71% and 2.80% for the comparable periods in
2002. We attribute the decline in rates paid for the three and six months ended
June 30, 2003 primarily to rates paid on savings and time deposits, which have
continued to decline in conjunction with the interest rate reductions previously
discussed. The decline also reflects our continued efforts to restructure the
composition of our deposit base as the majority of our deposit development
programs are directed toward increased transaction accounts, such as demand and
savings accounts, rather than time deposits, and emphasize attracting more than
one account relationship with customers.
The aggregate weighted average rate paid on our note payable was 52.36%
and 17.44% for the three and six months ended June 30, 2003, respectively,
compared to 3.65% and 3.24% for the comparable periods in 2002. The increase in
the weighted average rate paid for the three and six months ended June 30, 2003
primarily reflects increased commitment, arrangement and other fees paid to
amend our secured credit agreement. Due to the small average balance outstanding
on our note payable during the three and six months ended June 30, 2003, the
timing of the recognition of these fees results in a disproportionate weighted
average rate paid for the periods. At December 31, 2002, our note payable had an
outstanding balance of $7.0 million, which was fully repaid from available cash
in February 2003. On June 30, 2003, we obtained a $34.5 million advance to fund
the redemption of our trust preferred securities issued by First America Capital
Trust in 1998, as further described in Note 9 to our consolidated financial
statements. Amounts outstanding under our $45.0 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 London Interbank Offering 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 and in
the outstanding balance of our note payable. The aggregate weighted average rate
paid on our short-term borrowings also declined for the three and six months
ended June 30, 2003, as compared to the comparable periods in 2002, reflecting
the current interest rate environment.
Guaranteed preferred debentures expense was $5.0 million and $10.4
million for the three and six months ended June 30, 2003, respectively, compared
to $7.1 million and $13.3 million for the comparable periods in 2002. As
previously discussed and as more fully described in Note 9 to our consolidated
financial statements, the decrease for 2003 primarily reflects the redemption of
$132.3 million of outstanding trust preferred securities, the issuance of $71.0
million of trust preferred securities at lower interest rates and earnings
associated with our interest rate swap agreements entered into in May and June
of 2002 and in March and April of 2003 as further discussed under "--Interest
Rate Risk Management." The aggregate weighted average rate paid on our
guaranteed preferred debentures declined to 6.99% and 7.46% for the three and
six months ended June 30, 2003, respectively, from 11.01% and 10.85% for the
comparable periods in 2002.
The following table sets forth, on a tax-equivalent basis, certain
information relating to First Banks' 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 three
and six months ended June 30, 2003 and 2002:
Three Months Ended June 30, Six Months Ended June 30,
-------------------------------------------------- -----------------------------------------------
2003 2002 2003 2002
------------------------- ---------------------- ---------------------- -----------------------
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:
Loans (1)(2)(3)(4)......... $5,394,650 89,802 6.68% $5,391,165 98,916 7.36% $5,377,314 180,540 6.77% $5,443,106 198,038 7.34%
Investment securities (4).. 941,811 8,523 3.63 701,470 8,127 4.65 951,131 17,314 3.67 679,733 15,644 4.64
Federal funds sold
and other................ 111,365 312 1.12 156,675 653 1.67 127,416 754 1.19 115,364 942 1.65
---------- ------ ---------- ------- ---------- ------- ---------- -------
Total interest-
earning assets...... 6,447,826 98,637 6.14 6,249,310 107,696 6.91 6,455,861 198,608 6.20 6,238,203 214,624 6.94
------ ------- ------- -------
Nonearning assets............ 712,762 663,241 717,565 667,649
---------- ---------- ---------- ----------
Total assets.......... $7,160,588 $6,912,551 $7,173,426 $6,905,852
========== ========== ========== ==========
Liabilities and
---------------
Stockholders' Equity
--------------------
Interest-bearing liabilities:
Interest-bearing deposits:
Interest-bearing demand
deposits............... $ 866,540 1,478 0.68% $ 731,513 2,281 1.25% $ 853,487 3,151 0.74% $ 695,901 3,953 1.15%
Savings deposits......... 2,115,298 5,785 1.10 1,928,691 9,265 1.93 2,141,369 12,571 1.18 1,921,210 18,434 1.93
Time deposits of $100
or more (3)............ 418,893 3,336 3.19 497,267 4,889 3.94 438,131 7,021 3.23 501,252 10,179 4.10
Other time deposits (3).. 1,654,476 11,088 2.69 1,794,830 16,970 3.79 1,672,850 23,282 2.81 1,812,161 35,851 3.99
---------- ------ ---------- ------- ---------- ------- ---------- -------
Total interest-
bearing deposits.... 5,055,207 21,687 1.72 4,952,301 33,405 2.71 5,105,837 46,025 1.81 4,930,524 68,417 2.80
Short-term borrowings...... 173,068 519 1.20 191,568 912 1.91 177,247 1,121 1.28 183,718 1,829 2.01
Notes payable.............. 383 50 52.36 19,911 181 3.65 2,151 186 17.44 32,987 530 3.24
Guaranteed preferred
debentures (3)......... 286,927 5,001 6.99 259,233 7,117 11.01 280,196 10,369 7.46 247,657 13,329 10.85
---------- ------ ---------- ------- ---------- ------- ---------- -------
Total interest-
bearing
liabilities......... 5,515,585 27,257 1.98 5,423,013 41,615 3.08 5,565,431 57,701 2.09 5,394,886 84,105 3.14
------ ------- ------- -------
Noninterest-bearing
liabilities:
Demand deposits............ 994,395 898,862 960,771 918,829
Other liabilities.......... 116,262 130,394 116,528 136,610
---------- ---------- ---------- ----------
Total liabilities..... 6,626,242 6,452,269 6,642,730 6,450,325
Stockholders' equity......... 534,346 460,282 530,696 455,527
---------- ---------- ---------- ----------
Total liabilities
and stockholders'
equity.............. $7,160,588 $6,912,551 $7,173,426 $6,905,852
========== ========== ========== ==========
Net interest income.......... 71,380 66,081 140,907 130,519
====== ======= ======= =======
Interest rate spread......... 4.16 3.83 4.11 3.80
Net interest margin (5)...... 4.44% 4.24% 4.40% 4.22%
===== ===== ===== =====
- --------------------
(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 $368,000 and $731,000 for the three and six months ended June 30, 2003, and $393,000 and $709,000 for
the comparable periods in 2002, 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 $10.0 million and $21.0 million for
the three and six months ended June 30, 2003, respectively, compared to $12.0
million and $25.0 million for the comparable periods in 2002. Beginning in late
2001, we experienced a higher level of problem loans and related loan
charge-offs and past due loans resulting from the economic conditions within our
markets, additional problems identified in two acquired loan portfolios and
continuing deterioration in the portfolio of leases to the airline industry,
necessitating a higher provision for loan losses than in prior periods. Net loan
charge-offs were $10.8 million and $13.3 million for the three and six months
ended June 30, 2003, respectively, compared to $7.9 million and $19.7 million
for the comparable periods in 2002. Net loan charge-offs for the six months
ended June 30, 2003 include charge-offs of $10.4 million associated with our
commercial leasing portfolio and were primarily concentrated in two equipment
leases aggregating $7.0 million. Nonperforming assets at June 30, 2003 increased
slightly to $83.2 million from $82.8 million at December 31, 2002 and $77.1
million at June 30, 2002. In recognition of this and other factors, our
allowance for loan losses increased to $107.8 million at June 30, 2003, compared
to $99.4 million at December 31, 2002 and $103.8 million at June 30, 2002.
Management expects nonperforming assets to remain at the higher levels recently
experienced and considers 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 $25.4 million and $57.1 million for the three
and six months ended June 30, 2003, respectively, in comparison to $20.5 million
and $39.4 million for the comparable periods in 2002. Noninterest income
consists primarily of service charges on deposit accounts and customer service
fees, mortgage-banking revenues, net gain on sales of available-for-sale
investment securities, bank owned life insurance investment income and other
income.
Service charges on deposit accounts and customer service fees were $9.0
million and $17.6 million for the three and six months ended June 30, 2003,
respectively, in comparison to $7.0 million and $13.5 million for the comparable
periods in 2002. We attribute the increase in service charges and customer
service fees to:
>> our acquisitions completed during 2002 and 2003;
>> additional products and services available and utilized by retail
and commercial customers;
>> increased fee income resulting from revisions of customer service
charge rates, effective July 1, 2002, 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 $10.1 million and
$20.7 million for the three and six months ended June 30, 2003, respectively, in
comparison to $7.3 million and $12.5 million for the comparable periods in 2002.
The increase reflects continued growth of our mortgage banking activities as
well as further reductions in mortgage loan rates, resulting in continued high
volumes of new originations and refinancings.
During the three months ended March 31, 2003, we recorded a $6.3
million gain on the exchange of 974,150 shares of our Allegiant common stock for
a 100% ownership interest in Bank of Ste. Genevieve as further discussed in Note
2 to our consolidated financial statements.
The net gain on derivative instruments was $419,000 and $426,000 for
the three and six months ended June 30, 2003, respectively, compared to a net
gain of $90,000 for the three months ended June 30, 2002 and a net loss of
$249,000 for the six months ended June 30, 2002, reflecting changes in the fair
value of our interest rate cap agreements and fair value hedges.
Other income was $4.2 million and $9.0 million for the three and six
months ended June 30, 2003, respectively, in comparison to $4.6 million and
$10.8 million for the comparable periods in 2002. The primary components of the
decrease in 2003 were:
>> a decline of approximately $1.0 million in loan servicing fees
that is primarily attributable to increased amortization of
mortgage servicing rights and a higher level of interest
shortfall, which equals the difference between the interest
collected from a loan-servicing customer upon prepayment of the
loan and a full month's interest that is required to be remitted
to the security owner;
>> an increase of approximately $664,000 in net losses associated
with the sale of repossessed assets, primarily related to leasing
equipment associated with our commercial leasing business;
>> a gain of approximately $448,000 recorded 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;
>> a decline of approximately $215,000 in brokerage revenue
primarily associated with overall market conditions and customer
demand;
>> a decline of approximately $128,000 in rental income associated
with our reduced commercial leasing activities; partially offset
by
>> increased rental fees from First Services, L.P. of approximately
$344,000 for the use of data processing and other equipment owned
by First Banks;
>> increased portfolio management fee income of approximately
$230,000 associated with our Institutional Money Management
division;
>> increased earnings associated with our international banking
products; and
>> our acquisitions completed during 2002.
Noninterest Expense
Noninterest expense was $64.1 million and $123.7 million for the three
and six months ended June 30, 2003, respectively, in comparison to $59.2 million
and $116.1 million for the comparable periods in 2002. The increase reflects the
noninterest expense of our acquisitions completed during 2002 as well as general
increases in salaries and employee benefit expenses, occupancy and furniture and
equipment expenses, legal, examination and professional fees and other expense,
offset by declines in advertising and business development and communications
expenses.
Salaries and employee benefits were $31.5 million and $60.9 million for
the three and six months ended June 30, 2003, respectively, in comparison to
$28.9 million and $56.2 million for the comparable periods in 2002. We primarily
associate the increase with our acquisitions, increased commissions paid to
mortgage loan originators due to continued higher loan volumes, and staff
realignments surrounding our core business strategies. However, the increase
also reflects generally higher salary and employee benefit costs associated with
employing and retaining qualified personnel.
Occupancy, net of rental income, and furniture and equipment expense
totaled $10.1 million and $19.6 million for the three and six months ended June
30, 2003, respectively, in comparison to $9.4 million and $18.2 million for the
comparable periods in 2002. The increases in these expenses are primarily
attributable to our acquisitions, technology expenditures for equipment,
continued expansion and renovation of various corporate and branch offices, the
relocation of certain branches and operational areas, increased depreciation
expense associated with capital expenditures and a $1.0 million lease
termination obligation associated with the relocation of our San Francisco-based
loan administration department to southern California.
Information technology fees were $8.4 million and $16.4 million for the
three and six months ended June 30, 2003, respectively, in comparison to $8.5
million and $16.6 million for the comparable periods in 2002. 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 overall decline in fees to expenses
associated with the data processing conversions of our acquisitions completed in
2002, offset by growth and technological advancements consistent with our
product and service offerings, continued expansion and upgrades to technological
equipment, networks and communication channels.
Legal, examination and professional fees were $2.2 million and $3.8
million for the three and six months ended June 30, 2003, respectively, in
comparison to $2.1 million and $3.6 million for the comparable periods in 2002.
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 acquired entities.
Amortization of intangibles associated with the purchase of
subsidiaries was $658,000 and $1.2 million for the three and six months ended
June 30, 2003, respectively, in comparison to $482,000 and $964,000 for the
comparable periods in 2002. The increase is solely attributable to core deposit
intangibles associated with our 2002 acquisitions.
Communications and advertising and business development expenses have
decreased to $1.6 million and $3.5 million for the three and six months ended
June 30, 2003, respectively, from $2.4 million and $4.7 million for the
comparable periods in 2002. We attribute the decline in these expenditures to
our efforts to reduce these expenditures through renegotiation of contracts with
new and existing vendors, reductions in the level of advertising campaigns and
ongoing cost containment efforts.
Other expense was $8.4 million and $15.8 million for the three and six
months ended June 30, 2003, respectively, in comparison to $6.1 million and
$13.1 million for the comparable periods in 2002. Other expense encompasses
numerous general and administrative expenses including travel, meals and
entertainment, insurance, freight and courier services, correspondent bank
charges, miscellaneous losses and recoveries, memberships and subscriptions,
transfer agent fees and sales taxes. We attribute the majority of the increase
in other expense in 2003 to:
>> increased other real estate expenditures of approximately $1.3
million, including gains and losses on sales of other real estate
properties. The majority of these increased expenditures are
associated with the operation of a residential and recreational
development property transferred to other real estate in January
2003;
>> increased write-downs of approximately $2.4 million on various
operating leases associated with our commercial leasing business,
which were primarily a result of reductions in estimated residual
values;
>> expenses associated with our acquisitions completed during 2002
and 2003; and
>> continued growth and expansion of our banking franchise; offset
by
>> reductions in various expense categories, primarily including
travel, meals and entertainment, director's fees, and transfer
agent fees, associated with economies achieved from completion of
our buyout of the minority interest in First Banks America, Inc.
on December 31, 2002, resulting in the elimination of our
public-company subsidiary.
Provision for Income Taxes
The provision for income taxes was $7.7 million and $18.8 million for
the three and six months ended June 30, 2003, representing an effective income
tax rate of 34.4% and 35.8%, respectively, in comparison to $5.3 million and
$10.1 million, representing an effective income tax rate of 35.5% and 35.9% for
the comparable periods in 2002.
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, 2003 December 31, 2002
------------------------ -----------------------
Notional Credit Notional Credit
Amount Exposure Amount Exposure
------ -------- ------ --------
(dollars expressed in thousands)
Cash flow hedges..................................... $1,050,000 2,305 1,050,000 2,179
Fair value hedges.................................... 326,200 12,181 301,200 11,449
Interest rate cap agreements......................... 450,000 -- 450,000 94
Interest rate lock commitments....................... 107,700 -- 89,000 --
Forward commitments to sell
mortgage-backed securities....................... 225,500 -- 235,000 --
========== ====== ========= ======
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, 2003, the net interest
income realized on our derivative financial instruments was $15.8 million and
$30.8 million, respectively, in comparison to $12.6 million and $23.8 million
for the comparable periods in 2002. The increase is primarily due to interest
income associated with the additional swap agreements entered into during March
and April 2003 as well as the decline in prevailing interest rates. In addition,
we realized a net gain on derivative instruments, which is included in
noninterest income, of $419,000 and $426,000 for the three and six months ended
June 30, 2003, compared to a net gain of $90,000 for the three months ended June
30, 2002 and a net loss of $249,000 for the six months ended June 30, 2002,
which reflects 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
underlying hedged assets are certain loans within our commercial loan portfolio.
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. The amount receivable by us under the swap agreements was $3.1 million
at June 30, 2003 and December 31, 2002, and the amount payable by us was
$763,000 at June 30, 2003 and $888,000 at December 31, 2002, respectively.
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, 2003 and December 31, 2002 were as follows:
Notional Interest Rate Interest Rate Fair
Maturity Date Amount Paid Received Value
------------- ------ ---- -------- -----
(dollars expressed in thousands)
June 30, 2003:
March 14, 2004.................................. $ 150,000 1.20% 3.93% $ 2,961
September 20, 2004.............................. 600,000 1.30 6.78 38,839
March 21, 2005.................................. 200,000 1.18 5.24 12,796
April 2, 2006................................... 100,000 1.18 5.45 9,554
---------- ---------
$1,050,000 1.25 5.95 $ 64,150
========== ===== ===== =========
December 31, 2002:
March 14, 2004.................................. $ 150,000 1.45% 3.93% $ 4,130
September 20, 2004.............................. 600,000 1.55 6.78 48,891
March 21, 2005.................................. 200,000 1.43 5.24 13,843
April 2, 2006................................... 100,000 1.43 5.45 9,040
---------- ---------
$1,050,000 1.50 5.95 $ 75,904
========== ===== ===== =========
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 underlying hedged
liabilities are a portion of our other time deposits. 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 $5.2
million at June 30, 2003 and December 31, 2002, and the amount
payable by us under the swap agreements was $595,000 and $821,000
at June 30, 2003 and December 31, 2002, respectively.
>> During May 2002, we entered into $55.2 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
2.30%. During June 2002, we entered into $86.3 million and $46.0
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 2.75% and 1.97%,
respectively. The underlying hedged liabilities are a portion of
our guaranteed preferred beneficial interest in our subordinated
debentures. The terms of the swap agreements provide for us to
pay and receive interest on a quarterly basis. There were no
amounts receivable or payable by us at June 30, 2003 or December
31, 2002. The $86.3 million notional amount interest rate swap
agreement was called by its counterparty in November 2002
resulting in final settlement of this swap agreement in December
2002. In addition, the $46.0 million notional amount interest
rate swap agreement was called by its counterparty on May 14,
2003 resulting in final settlement of this swap agreement on June
30, 2003. There was no gain or loss recorded as a result of these
transactions.
>> On March 31, 2003 and April 10, 2003, we entered into $25.0
million and $46.0 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
2.55%. The underlying hedged liabilities are a portion of our
guaranteed preferred beneficial interests in our subordinated
debentures. The terms of the swap agreements provide for us to
pay and receive interest on a quarterly basis. There were no
amounts receivable or payable by us at June 30, 2003.
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, 2003 and December 31, 2002 were as follows:
Notional Interest Rate Interest Rate Fair
Maturity Date Amount Paid Received Value
------------- ------ ---- -------- -----
(dollars expressed in thousands)
June 30, 2003:
January 9, 2004.................................. $ 50,000 1.29% 5.37% $ 1,110
January 9, 2006.................................. 150,000 1.29 5.51 13,932
December 31, 2031................................ 55,200 3.59 9.00 6,058
March 20, 2033................................... 25,000 3.84 8.10 617
June 30, 2033.................................... 46,000 3.87 8.15 1,246
--------- --------
$ 326,200 2.24 6.65 $ 22,963
========= ===== ===== ========
December 31, 2002:
January 9, 2004.................................. $ 50,000 1.76% 5.37% $ 1,972
January 9, 2006.................................. 150,000 1.76 5.51 13,476
June 30, 2028.................................... 46,000 3.77 8.50 495
December 31, 2031................................ 55,200 4.10 9.00 4,688
--------- --------
$ 301,200 2.49 6.58 $ 20,631
========= ===== ===== ========
Interest Rate Cap Agreements
In conjunction with the interest rate swap agreements designated as
cash flow hedges that mature on September 20, 2004, 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, 2003 and December 31, 2002, the carrying
value of these interest rate cap agreements, which is included in derivative
instruments in the consolidated balance sheets, was $0 and $94,000,
respectively.
Pledged Collateral
At June 30, 2003 and December 31, 2002, we had pledged investment
securities available for sale with a carrying value of $5.5 million and $5.8
million in connection with our interest rate swap agreements. In addition, at
June 30, 2003, and December 31, 2002, we had accepted, as collateral in
connection with our interest rate swap agreements, cash of $93.1 million and
$99.1 million, respectively.
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 bank. Interest and fees on loans were 91.3% and
91.1% of total interest income for the three and six months ended June 30, 2003,
respectively, in comparison to 92.1% and 92.5% for the comparable periods in
2002. Total loans, net of unearned discount, decreased to $5.39 billion, or
75.9% of total assets, at June 30, 2003, compared to $5.43 billion, or 74.0% of
total assets, at December 31, 2002. Exclusive of our acquisition of Bank of Ste.
Genevieve, which provided loans, net of unearned discount, of $42.9 million,
loans decreased $89.9 million at June 30, 2003 compared to December 31, 2002.
The decrease primarily results from:
>> continued weak loan demand from our commercial customers, which
is indicative of the current economic conditions prevalent within
most of our markets;
>> a decline of $41.9 million experienced in our commercial,
financial and agricultural portfolio due to an anticipated amount
of attrition associated with our acquisitions completed during
2002 and general runoff of balances within this portfolio;
>> continued declines in our lease financing portfolio consistent
with the discontinuation of our New Mexico based leasing
operation during 2002, the transfer of all responsibilities for
the existing portfolio to a new leasing staff in St. Louis,
Missouri and a change in our overall business strategy with
respect to leasing activities. Additionally, during the six
months ended June 30, 2003, we recorded net loan charge-offs of
$10.4 million associated with this portfolio, which further
contributed to the overall decline; and
>> a decline of $50.7 million in loans held for sale resulting
primarily from the timing of sales in the secondary mortgage
market; partially offset by
>> an increase of $76.9 million in our real estate construction and
development portfolio resulting primarily from seasonal increases
on existing and available credit lines.
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,
2003 2002
---- ----
(dollars expressed in thousands)
Commercial, financial and agricultural:
Nonaccrual..................................................... $ 20,474 15,787
Real estate construction and development:
Nonaccrual..................................................... 10,561 23,378
Real estate mortgage:
One-to-four family residential:
Nonaccrual..................................................... 17,102 14,833
Restructured................................................... 14 15
Multi-family residential loans:
Nonaccrual..................................................... 725 772
Commercial real estate loans:
Nonaccrual..................................................... 7,594 8,890
Restructured................................................... -- 1,907
Lease financing:
Nonaccrual..................................................... 11,010 8,723
Consumer and installment:
Nonaccrual..................................................... 554 860
----------- ----------
Total nonperforming loans.................................. 68,034 75,165
Other real estate................................................... 15,147 7,609
----------- ----------
Total nonperforming assets................................. $ 83,181 82,774
=========== ==========
Loans, net of unearned discount..................................... $ 5,385,599 5,432,588
=========== ==========
Loans past due 90 days or more and still accruing................... $ 9,582 4,635
=========== ==========
Ratio of:
Allowance for loan losses to loans............................. 2.00% 1.83%
Nonperforming loans to loans................................... 1.26 1.38
Allowance for loan losses to nonperforming loans............... 158.52 132.29
Nonperforming assets to loans and other real estate............ 1.54 1.52
=========== ==========
Nonperforming loans, consisting of loans on nonaccrual status and
certain restructured loans, were $68.0 million at June 30, 2003, in comparison
to $75.2 million at December 31, 2002. Loan charge-offs were $14.9 million and
$23.7 million for the three and six months ended June 30, 2003, respectively,
compared to $11.6 million and $28.0 million for the comparable periods in 2002.
As previously discussed, during the six months ended June 30, 2003, we
experienced further deterioration within our commercial leasing portfolio which
is reflected in net loan charge-offs of $10.4 and increased nonperforming loans
of $2.3 million associated with this portfolio. Additionally, in January 2003,
we foreclosed on a residential and recreational development property that had
previously been on nonaccrual status due to significant financial difficulties,
inadequate project financing, project delays and weak project management.
Consequently, other real estate increased to $15.1 million at June 30, 2003 from
$7.6 million at December 31, 2002, and nonperforming real estate construction
and development loans declined comparably. Our allowance for loan losses as a
percentage of loans, net of unearned discount, increased to 2.00% at June 30,
2003 from 1.83% at December 31, 2002, and our allowance for loan losses as a
percentage of nonperforming loans increased to 158.52% at June 30, 2003 from
132.29% at December 31, 2002. While we believe we were successful in addressing
the asset quality problems in 2002, we continue to closely monitor our loan and
leasing portfolios. We anticipate the higher trends in nonperforming and
delinquent loans recently experienced will continue in the near future and
primarily attribute them to the current economic conditions experienced in our
primary market areas.
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 by
risk rating. These are coupled with analyses of changes in the risk profile of
the portfolio, 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 level of risk in the portfolio. Factors
are applied to the loan portfolio for each category of loan risk to determine an
acceptable level of allowance for loan losses. We derive these factors from our
actual loss experience and from published national surveys of norms in the
industry. The calculated allowance required for the portfolio is then compared
to the actual allowance balance to determine the provisions necessary to
maintain the allowance at an appropriate level. 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.
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,
------------------ ------------------
2003 2002 2003 2002
---- ---- ---- ----
(dollars expressed in thousands)
Allowance for loan losses, beginning of period..... $ 108,696 99,683 99,439 97,164
Acquired allowances for loan losses................ -- -- 757 1,366
--------- -------- --------- -------
108,696 99,683 100,196 98,530
--------- -------- --------- -------
Loans charged-off.................................. (14,928) (11,625) (23,665) (28,033)
Recoveries of loans previously charged-off......... 4,080 3,736 10,317 8,297
--------- -------- --------- -------
Net loan charge-offs............................... (10,848) (7,889) (13,348) (19,736)
--------- -------- --------- -------
Provision for loan losses.......................... 10,000 12,000 21,000 25,000
--------- -------- --------- -------
Allowance for loan losses, end of period........... $ 107,848 103,794 107,848 103,794
========= ======== ========= =======
Liquidity
Our liquidity and the liquidity of our subsidiary bank is the ability
to maintain a cash flow that is adequate to fund operations, service debt
obligations and meet other commitments on a timely basis. Our subsidiary bank
receives 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 Bank and other borrowings, including our revolving credit line. The
aggregate funds acquired from these sources were $648.1 million and $742.5
million at June 30, 2003 and December 31, 2002, 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 note payable, at June 30, 2003:
Certificates of Deposit Other
of $100,000 or More Borrowings Total
------------------- ---------- -----
(dollars expressed in thousands)
Three months or less..................................... $ 121,971 219,527 341,498
Over three months through six months..................... 74,054 5,000 79,054
Over six months through twelve months.................... 86,087 -- 86,087
Over twelve months....................................... 134,080 7,383 141,463
--------- -------- --------
Total............................................... $ 416,192 231,910 648,102
========= ======== ========
In addition to these sources of funds, our subsidiary bank has
established a borrowing relationship with the Federal Reserve Bank. This
borrowing relationship, which is secured by commercial loans, provides an
additional liquidity facility that may be utilized for contingency purposes. At
June 30, 2003 and December 31, 2002, the borrowing capacity of our subsidiary
bank under the agreement was approximately $953.1 million and $1.22 billion,
respectively. In addition, our subsidiary bank's borrowing capacity through its
relationship with the Federal Home Loan Bank was approximately $212.0 million
and $223.6 million at June 30, 2003 and December 31, 2002, respectively.
Exclusive of the Federal Home Loan Bank advances outstanding of $12.4 million
and $14.0 million at June 30, 2003 and December 31, 2002, respectively, our
subsidiary bank had no amounts outstanding under either of these agreements at
June 30, 2003 and December 31, 2002.
In connection with our normal operations, we enter into various other
commitments and obligations such as long-term leasing arrangements, primarily of
bank premises, and certificates of deposit. The required payments under such
commitments and other obligations at June 30, 2003 are as follows:
Over 1 Year
Less than But Less Than Over
1 Year 5 Years 5 Years Total
------ ------- ------- -----
(dollars expressed in thousands)
Operating leases................................. $ 5,419 24,782 23,493 53,694
Certificates of deposit.......................... 1,331,565 687,664 442 2,019,671
Guaranteed preferred beneficial interest
in subordinated debentures.................. -- -- 210,701 210,701
Federal Home Loan Bank advances.................. 5,000 6,000 1,383 12,383
=========== ========= ========= ===========
Management believes the available liquidity and operating results of
our subsidiary bank 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 II, First Preferred Capital Trust
III, First Preferred Capital Trust IV, First Bank Capital Trust and First Bank
Statutory Trust.
Effects of New Accounting Standards
In June 2002, the Financial Accounting Standards Board, or FASB, issued
SFAS No. 146-- Accounting for Costs Associated with Exit or Disposal Activities.
SFAS No. 146 nullifies Emerging Issues Task Force, or EITF, Issue No. 94-3--
Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (including Certain Costs Incurred in a Restructuring). The
provisions of SFAS No. 146 are effective for exit or disposal activities that
are initiated after December 31, 2002, with early application encouraged. On
January 1, 2003, we implemented SFAS No. 146, which did not have a material
effect on our consolidated financial statements.
In November 2002, the FASB issued FASB Interpretation No. 45 --
Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, an interpretation of FASB
Statements No. 5, 57, and 107 and rescission of FASB Interpretation No. 34. This
interpretation elaborates on the disclosures to be made by a guarantor in its
interim and annual financial statements about its obligations under certain
guarantees that it has issued. It also clarifies that a guarantor is required to
recognize, at the inception of a guarantee, a liability for the fair value of
the obligation undertaken in issuing the guarantee. The initial recognition and
measurement provisions of this Interpretation are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002, irrespective of
the guarantor's fiscal year-end. The disclosure requirements are effective for
financial statements of interim or annual periods ending after December 15,
2002. On December 31, 2002, we implemented FASB Interpretation No. 45, which did
not have a material effect on our consolidated financial statements other than
the additional disclosure requirements.
On April 30, 2003, the FASB issued SFAS No. 149 -- Amendment of
Statement 133 on Derivative Instruments and Hedging Activities. SFAS No. 149
amends and clarifies financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities under SFAS No. 133. SFAS No. 149 is
effective for contracts entered into or modified after June 30, 2003, and for
hedging relationships designated after June 30, 2003. All provisions of SFAS No.
149 are required to be applied prospectively. We are currently evaluating the
requirements of SFAS No. 149 and believe such requirements will not have a
material effect on our consolidated financial statements.
On May 15, 2003, the FASB issued SFAS No. 150 -- Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity. SFAS
No. 150 improves the accounting for certain financial instruments that, under
previous guidance, issuers could account for as equity as it requires that those
instruments be classified as liabilities in statements of financial position.
Most of the guidance in SFAS No. 150 is effective for all financial instruments
entered into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. For private
companies, mandatorily redeemable financial instruments are subject to the
provisions of SFAS No. 150 for the fiscal period beginning after December 15,
2003. We are currently evaluating the requirements of SFAS No. 150 and believe
such requirements will not have a material effect on our consolidated financial
statements.
In January 2003, the FASB issued FASB Interpretation No. 46 --
Consolidation of Variable Interest Entities, an interpretation of ARB No. 51.
This Interpretation is intended to achieve more consistent application of
consolidation policies to variable interest entities and, thus, to improve
comparability between enterprises engaged in similar activities even if some of
those activities are conducted through variable interest entities. Including the
assets, liabilities, and results of activities of variable interest entities in
the consolidated financial statements of their primary beneficiaries will
provide more complete information about the resources, obligations, risks and
opportunities of the consolidated enterprise. This Interpretation applies
immediately to variable interest entities created after January 31, 2003, and to
variable interest entities in which an enterprise obtains an interest after that
date. It applies in the first fiscal year or interim period beginning after June
15, 2003, to variable interest entities in which an enterprise holds a variable
interest that it acquired before February 1, 2003. This Interpretation applies
to public enterprises as of the beginning of the applicable interim or annual
period, and it applies to nonpublic enterprises as of the end of the applicable
annual period. This Interpretation may be applied prospectively with a
cumulative-effect adjustment as of the date on which it is first applied or by
restating previously issued financial statements for one or more years with a
cumulative-effect adjustment as of the beginning of the first year restated.
The Company has several statutory and business trusts, some of which
were formed subsequent to January 31, 2003, for the purpose of issuing trust
preferred securities as further described in Note 9 to our accompanying
consolidated financial statements. We currently believe the continued
consolidation of these trusts is appropriate under Interpretation No. 46.
However, the application of Interpretation No. 46 to these types of trusts is an
emerging issue and a possible unintended consequence of Interpretation No. 46 is
the deconsolidation of these types of trusts. The Company is currently
evaluating the impact that deconsolidation of these trusts would have on its
consolidated financial statements.
In July 2003, the Board of Governors of the Federal Reserve System
issued a supervisory letter instructing bank holding companies to continue to
include the trust preferred securities in their Tier I capital for regulatory
capital purposes until notice is given to the contrary. The Federal Reserve
intends to review the regulatory implications of any accounting treatment
changes and, if necessary or warranted, provide further appropriate guidance.
There can be no assurance that the Federal Reserve will continue to allow bank
holding companies to include trust preferred securities in their Tier 1 capital
for regulatory capital purposes.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At December 31, 2002, our risk management program's simulation model
indicated a loss of projected net interest income in the event of a decline in
interest rates. We are "asset-sensitive," indicating that our assets would
generally reprice with changes in rates more rapidly than our liabilities. 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 7.3% of net interest income, based on
assets and liabilities at December 31, 2002. At June 30, 2003, 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 income
associated with our interest rate swap agreements offset by reductions in
prevailing interest rates throughout 2002 and 2003, is reflected in our net
interest margin for the three and six months ended June 30, 2003 as compared to
the comparable periods in 2002 and further discussed under "--Results of
Operations." During the three and six months ended June 30, 2003, our
asset-sensitive position and overall susceptibility to market risks have not
changed materially.
ITEM 4 - CONTROLS AND PROCEDURES
Within the 90-day period prior to the filing date of this report, our
Chief Executive Officer and Chief Financial Officer evaluated the effectiveness
of our "disclosure controls and procedures" (as defined in rules 13a-14(c) and
15d-14(c) under the Securities Exchange Act of 1934) and concluded on the basis
of the evaluation that, as of the date of such evaluation, our disclosure
controls and procedures were effective. There have been no significant changes
in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of that evaluation.
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
-------------- -----------
10.20 Agreement as to Expenses and Liabilities between
First Banks, Inc. and FirstPreferred Capital Trust
IV, dated April 1, 2003 (relating to First
Preferred Capital Trust IV ("First Preferred IV")
- filed herewith.
10.21 Preferred Securities Guarantee Agreement by and
between First Banks, Inc. and Fifth Third Bank,
dated April 1, 2003 (relating to First Preferred
IV) - filed herewith.
10.22 Indenture between First Banks, Inc. and Fifth
Third Bank, as Trustee, dated April 1, 2003
(relating to First Preferred IV) - filed herewith.
10.23 Amended and Restated Trust Agreement among First
Banks, Inc., as Depositor, Fifth Third Bank, as
Property Trustee, Wilmington Trust Company, as
Delaware Trustee, and the Administrative Trustees,
dated April 1, 2003 (relating to First Preferred
IV) - filed herewith.
10.24 Underwriting Agreement by and among First Banks,
Inc., Stifel, Nicolaus & Company, Incorporated
and Fahnestock & Co., Inc., dated March 26, 2003
(relating to First Preferred IV) - filed herewith.
10.25 First Banks, Inc. - Executive Incentive Compen-
sation Plan - filed herewith.
10.26 Second Amendment to Secured Credit Agreement by
and among First Banks, Inc., Wells Fargo Bank,
National Association, Bank One, N.A., LaSalle
Bank, National Association, The Northern Trust
Company, Union Bank of California, N.A., SunTrust
Bank, Nashville and Fifth Third Bank, dated March
31, 2003 - filed herewith.
31 Rule 13a-14(a) / 15d-14(a) Certifications - filed
herewith.
32 Section 1350 Certifications- filed herewith.
(b) We filed no reports on Form 8-K for the three months ended June 30,
2003.
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 14, 2003 By: /s/ Allen H. Blake
----------------------------------------
Allen H. Blake
President, Chief Executive Officer
and Chief Financial Officer
(Principal Executive Officer and
Principal Financial and
Accounting Officer)
EXHIBIT 31
CERTIFICATIONS REQUIRED BY
RULE 13a-14(a) (17 CFR 240.13a-14(a))
OR RULE 15d-14(a) (17 CFR 240.15d-14(a))
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Allen H. Blake, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q (the "Report") of First
Banks, Inc. (the "Registrant");
2. Based on my knowledge, this Report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
Report;
3. Based on my knowledge, the financial statements, and other financial
information included in this Report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the Registrant as of, and for, the periods presented in this Report;
4. The Registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
Registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this Report is being prepared;
b) Evaluated the effectiveness of the Registrant's disclosure controls
and procedures and presented in this Report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this Report based on such evaluation; and
c) Disclosed in this Report any change in the Registrant's internal
control over financial reporting that occurred during the Registrant's
most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Registrant's internal
control over financial reporting; and
5. The Registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the Registrant's auditors and the audit committee of the Registrant's board
of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal
control over financial reporting.
Date: August 14, 2003 By: /s/ Allen H. Blake
---------------------------------------
Allen H. Blake
President, Chief Executive Officer
and Chief Financial Officer
(Principal Executive Officer and
Principal Financial and Accounting
Officer)
Exhibit 32
CERTIFICATIONS REQUIRED BY
RULE 13a-14(b) (17 CFR 240.13a-4(b))
OR RULE 15d-14(b) (17 CFR 240.15d-14(b))
AND SECTION 1350 OF CHAPTER 63 OF
TITLE 18 OF THE UNITED STATES CODE (18 U.S.C. 1350)
I, Allen H. Blake, President, Chief Executive Officer 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, 2003 (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.
Date: August 14, 2003 By: /s/ Allen H. Blake
---------------------------------------
Allen H. Blake
President, Chief Executive Officer
and Chief Financial Officer
(Principal Executive Officer and
Principal Financial and Accounting
Officer)
Exhibit 10.20
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement")
----------
dated as of April 1, 2003 between FIRST BANKS, INC., a Missouri corporation
("First Banks"), and FIRST PREFERRED CAPITAL TRUST IV, a Delaware statutory
-----------
trust (the "Trust").
-----
RECITALS
WHEREAS, the Trust intends to issue its common securities (the
"Common Securities") to, and receive 8.15% Subordinated Debentures (the
-----------------
"Debentures") from, First Banks and to issue and sell up to 1,600,000 8.15%
----------
Cumulative Trust Preferred Securities (the "Preferred Securities") with such
powers, preferences and special rights and restrictions as are set forth in the
Amended and Restated Trust Agreement of the Trust dated as of April 1, 2003, as
the same may be amended from time to time (the "Trust Agreement");
---------------
WHEREAS, First Banks shall directly or indirectly own all of
the Common Securities of the Trust and shall issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by each
holder of the Preferred Securities, which purchase First Banks hereby agrees
shall benefit First Banks and which purchase First Banks acknowledges shall be
made in reliance upon the execution and delivery of this Agreement, First Banks,
including in its capacity as holder of the Common Securities, and the Trust
hereby agree as follows:
ARTICLE I
Section 1.1. Guarantee by First Banks.
Subject to the terms and conditions hereof, First Banks, including in
its capacity as holder of the Common Securities, hereby irrevocably and
unconditionally guarantees to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries") the full payment when
-------------
and as due, of any and all Obligations (as hereinafter defined) to such
Beneficiaries. As used herein, "Obligations" means any costs, expenses or
-----------
liabilities of the Trust other than obligations of the Trust to pay to the
holders of any Preferred Securities or other similar interests in the Trust the
amounts due such holders pursuant to the terms of the Preferred Securities or
such other similar interests, as the case may be. This Agreement is intended to
be for the benefit of, and to be enforceable by, all such Beneficiaries, whether
or not such Beneficiaries have received notice hereof.
Section 1.2. Term of Agreement.
This Agreement shall terminate and be of no further force and effect
upon the later of (a) the date on which full payment has been made of all
amounts payable to all holders of all the Preferred Securities (whether upon
redemption, liquidation, exchange or otherwise); and (b) the date on which there
are no Beneficiaries remaining; provided, however, that this Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any holder of the Preferred Securities or any Beneficiary must restore
payment of any sums paid under the Preferred Securities, under any obligation
under the Preferred Securities Guarantee Agreement dated the date hereof by
First Banks and Wilmington Trust Company as guarantee trustee, or under this
Agreement for any reason whatsoever. This Agreement is continuing, irrevocable,
unconditional and absolute.
Section 1.3. Waiver of Notice.
First Banks hereby waives notice of acceptance of this Agreement and of
any obligation to which it applies or may apply, and First Banks hereby waives
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
Section 1.4. No Impairment.
The obligations, covenants, agreements and duties of First Banks under
this Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all
or any portion of the Obligations or for the performance of any other obligation
under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the
part of the Beneficiaries to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Beneficiaries with respect to the Obligations
or any action on the part of the Trust granting indulgence or extension of any
kind; or
(c) 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 Trust or any of the
assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or
obtain the consent of, First Banks with respect to the happening of any of the
foregoing.
Section 1.5. Enforcement.
A Beneficiary may enforce this Agreement directly against First Banks,
and First Banks waives any right or remedy to require that any action be brought
against the Trust or any other person or entity before proceeding against First
Banks.
ARTICLE II
Section 2.1. Binding Effect.
All guarantees and agreements contained in this Agreement shall bind
the successors, assigns, receivers, trustees and representatives of First Banks
and shall inure to the benefit of the Beneficiaries.
Section 2.2. Amendment.
So long as there remains any Beneficiary or any Preferred Securities of
any series are outstanding, this Agreement shall not be modified or amended in
any manner adverse to such Beneficiary or to the holders of the Preferred
Securities.
Section 2.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same by facsimile
transmission (confirmed by mail), telex, or by registered or certified mail,
addressed as follows (and if so given, shall be deemed given when mailed or upon
receipt of an answer back, if sent by telex):
First Preferred Capital Trust IV
c/o First Banks, Inc.
600 James S. McDonnell Boulevard
Mail Code 014
Hazelwood, Missouri 63042
Facsimile No.: (314) 592-6621
Attention: Chief Financial Officer
First Banks, Inc.
600 James S. McDonnell Boulevard
Mail Code 014
Hazelwood, Missouri 63042
Facsimile No.: (314) 592-6621
Attention: Chief Financial Officer
Section 2.4. Governing Law.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Missouri (without regard to conflict of
laws principles).
[The remainder of this page has been left blank intentionally]
IN WITNESS WHEREOF, this Agreement is executed as of the day
and year first above written.
FIRST BANKS, INC.
By:
---------------------------------------
Its:
--------------------------------------
FIRST PREFERRED CAPITAL TRUST IV
By:
---------------------------------------
Name:
------------------------------
Title: Administrative Trustee
Exhibit 10.21
PREFERRED SECURITIES GUARANTEE AGREEMENT
by and between
FIRST BANKS, INC.
and
FIFTH THIRD BANK
Dated as of April 1, 2003
TABLE OF CONTENTS
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS AND INTERPRETATION................................................................1
Section 1.1. Definitions and Interpretation......................................................1
ARTICLE II TRUST INDENTURE ACT..........................................................................4
Section 2.1. Trust Indenture Act; Application....................................................4
Section 2.2 List of Holders of Securities.......................................................5
Section 2.3. Reports by the Guarantee Trustee....................................................5
Section 2.4. Periodic Reports to the Guarantee Trustee...........................................5
Section 2.5. Evidence of Compliance with Conditions Precedent....................................5
Section 2.6. Events of Default; Waiver...........................................................5
Section 2.7. Event of Default; Notice............................................................6
Section 2.8. Conflicting Interests...............................................................6
ARTICLE III POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE..........................................6
Section 3.1. Powers and Duties of the Guarantee Trustee..........................................6
Section 3.2. Certain Rights of the Guarantee Trustee.............................................8
Section 3.3. Not Responsible for Recitals or Issuance of Guarantee...............................9
ARTICLE IV GUARANTEE TRUSTEE............................................................................9
Section 4.1. Guarantee Trustee; Eligibility......................................................9
Section 4.2. Appointment, Removal and Resignation of Guarantee Trustee..........................10
ARTICLE V GUARANTEE ...................................................................................11
Section 5.1. Guarantee..........................................................................11
Section 5.2. Waiver of Notice and Demand........................................................11
Section 5.3. Obligations not Affected...........................................................11
Section 5.4. Rights of Holders..................................................................12
Section 5.5. Guarantee of Payment...............................................................12
Section 5.6. Subrogation........................................................................12
Section 5.7. Independent Obligations............................................................12
ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION...................................................13
Section 6.1. Limitation on Transactions.........................................................13
Section 6.2. Ranking............................................................................13
ARTICLE VII TERMINATION................................................................................13
Section 7.1. Termination........................................................................13
ARTICLE VIII INDEMNIFICATION...........................................................................13
Section 8.1. Exculpation........................................................................13
Section 8.2. Indemnification....................................................................14
ARTICLE IX MISCELLANEOUS...............................................................................14
Section 9.1. Successors and Assigns.............................................................14
Section 9.2. Amendments.........................................................................14
Section 9.3. Notices............................................................................14
Section 9.4. Benefit............................................................................15
Section 9.5. Governing Law......................................................................15
CROSS REFERENCE TABLE
Section of Trust Section of
Indenture Act of Guarantee
1939, as amended Agreement
---------------- ---------
310(a)................................................................................4.1(a)
310(b)................................................................................4.1(c), 2.8
310(c)................................................................................Not Applicable
311(a)................................................................................2.2(b)
311(b)................................................................................2.2(b)
311(c)................................................................................Not Applicable
312(a)................................................................................2.2(a)
312(b)................................................................................2.2(b)
314(a)................................................................................2.4
314(b)................................................................................Not Applicable
314(c)................................................................................2.5
314(d)................................................................................Not Applicable
314(e)................................................................................1.1, 2.5, 3.2
314(f)................................................................................2.1, 3.2
315(a)................................................................................3.1(d)
315(b)................................................................................2.7
315(c)................................................................................3.1
315(d)................................................................................3.1(d)
316(a)................................................................................1.1, 2.6, 5.4
316(b)................................................................................5.3
317(a)................................................................................3.1
317(b)................................................................................Not Applicable
318(a)................................................................................2.1(a)
318(b)................................................................................2.1
318(c)................................................................................2.1(b)
Note: This Cross-Reference Table does not constitute part of this Agreement
and shall not affect the interpretation of any of its terms or provisions.
PREFERRED SECURITIES GUARANTEE AGREEMENT
This PREFERRED SECURITIES GUARANTEE AGREEMENT (this "Preferred
---------
Securities Guarantee"), dated as of April 1, 2003, is executed and delivered by
- --------------------
FIRST BANKS, INC., a Missouri corporation (the "Guarantor"), and FIFTH THIRD
---------
BANK, a bank organized and existing under the laws of the United States of
America, as trustee (the "Guarantee Trustee"), for the benefit of the Holders
------------------
(as defined herein) from time to time of the Preferred Securities (as defined
herein) of First Preferred Capital Trust IV, a Delaware statutory trust (the
"Trust").
- ------
RECITALS
WHEREAS, pursuant to an Amended and Restated Trust Agreement (the
"Trust Agreement"), dated as of April 1, 2003, among the trustees of the Trust
----------------
named therein, the Guarantor, as depositor, and the holders from time to time of
undivided beneficial interests in the assets of the Trust, the Trust is issuing
on the date hereof up to 1,600,000 preferred securities, having an aggregate
liquidation amount of $40,000,000, designated the 8.15% Cumulative Trust
Preferred Securities (the "Preferred Securities");
--------------------
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Preferred Securities Guarantee, to pay to the
Holders of the Preferred Securities the Guarantee Payments (as defined herein)
and to make certain other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Preferred Securities
Guarantee for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1 Definitions and Interpretation. In this Preferred
Securities Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Preferred Securities Guarantee
but not defined in the preamble above have the respective meanings assigned to
them in this Section 1.1;
(b) terms defined in the Trust Agreement as at the date of
execution of this Preferred Securities Guarantee have the same meaning when used
in this Preferred Securities Guarantee, unless otherwise defined in this
Preferred Securities Guarantee;
(c) a term defined anywhere in this Preferred Securities Guarantee
has the same meaning throughout;
(d) all references to "the Preferred Securities Guarantee" or
"this Preferred Securities Guarantee" are to this Preferred Securities Guarantee
as modified, supplemented or amended from time to time;
(e) all references in this Preferred Securities Guarantee to
Articles and Sections are to Articles and Sections of this Preferred Securities
Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Preferred Securities Guarantee, unless otherwise defined in
this Preferred Securities Guarantee or unless the context otherwise requires;
and
(g) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of
---------
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Business Day" means any day other than a Saturday or a Sunday or a day
------------
on which federal or state banking institutions in the Borough of Manhattan, the
City of New York are authorized or required by law, executive order or
regulation to close or a day on which the Corporate Trust Office of the
Guarantee Trustee is closed for business.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"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 Preferred Securities Guarantee is located at 38 Fountain
Square Plaza, MD10AT60, Cincinnati, Ohio, 45202, Attention: Corporate Trust
Department.
"Covered Person" means any Holder or beneficial owner of Preferred
---------------
Securities.
"Debentures" means the 8.15% Subordinated Debentures due June 30, 2033,
----------
of the Debenture Issuer held by the Property Trustee of the Trust.
"Debenture Issuer" means the Guarantor.
----------------
"Event of Default" means a default by the Guarantor on any of its
-----------------
payments or other obligations under this Preferred Securities Guarantee.
"Guarantee Payments" means the following payments or distributions,
-------------------
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by the Trust: (i) any accrued and unpaid Distributions that are
required to be paid on such Preferred Securities, to the extent the Trust shall
have funds available therefor, (ii) the redemption price, including all accrued
and unpaid Distributions to the date of redemption (the "Redemption Price"), to
----------------
the extent the Trust has funds available therefor, with respect to any Preferred
Securities called for redemption by the Trust, and (iii) upon a voluntary or
involuntary dissolution, winding-up or termination of the Trust (other than in
connection with the distribution of the Debentures to the Holders in exchange
for the Preferred Securities as provided in the Trust Agreement), the lesser of
(A) the aggregate of the Liquidation Amount and all accrued and unpaid
Distributions on the Preferred Securities to the date of payment, to the extent
the Trust shall have funds available therefor (the "Liquidation Distribution"),
-------------------------
and (B) the amount of assets of the Trust remaining available for distribution
to Holders in liquidation of the Trust.
"Guarantee Trustee" means Fifth Third Bank, until a Successor Guarantee
-----------------
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Preferred Securities Guarantee and thereafter means each such
Successor Guarantee Trustee.
"Guarantor" means First Banks, Inc., a Missouri corporation.
---------
"Holder" means a Person in whose name a Preferred Security is or
------
Preferred Securities are registered in the Securities Register; provided,
however, that, in determining whether the holders of the requisite percentage of
the Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not include the Guarantor, the Guarantee Trustee or
any of their respective Affiliates.
"Indemnified Person" means the Guarantee Trustee, 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 1, 2003, among the
---------
Debenture Issuer and Fifth Third Bank, as trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued to the
Property Trustee of the Trust.
"Liquidation Amount" means the stated value of $25 per Preferred
-------------------
Security.
"Liquidation Distribution" has the meaning provided therefor in the
-------------------------
definition of Guarantee Payments.
"List of Holders" has the meaning set forth in Section 2.2 of this
----------------
Preferred Securities Guarantee.
"Majority in Liquidation Amount of the Preferred Securities" means the
-----------------------------------------------------------
Holders of more than 50% of the Liquidation Amount (plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all of the Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
-----------------------
certificate signed by two authorized officers of such Person, at least one of
whom shall be the principal executive officer, principal financial officer,
principal accounting officer, treasurer or any vice president of such Person.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Preferred Securities Guarantee shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition 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.
"Person" means a legal person, including any individual, corporation,
------
estate, partnership, limited partnership, joint venture, association, joint
stock company, limited liability company, trust, statutory trust, unincorporated
association, or government or any agency or political subdivision thereof, or
any other entity of whatever nature.
"Preferred Securities" means the 8.15% Cumulative Trust Preferred
---------------------
Securities representing undivided beneficial interests in the assets of the
Trust which rank pari passu with Common Securities issued by the Trust;
provided, however, that upon the occurrence and during the continuance of an
Event of Default, the rights of holders of Common Securities to payment in
respect of distributions and payments upon liquidation, redemption and otherwise
are subordinated to the rights of holders of Preferred Securities.
"Redemption Price" has the meaning provided therefor in the definition
-----------------
of Guarantee Payments.
"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 this Preferred Securities Guarantee,
including any vice-president, any assistant vice-president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer 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.
"Securities Register" and "Securities Registrar" have the meanings
-------------------- ---------------------
assigned to such terms as in the Trust Agreement (as defined in the Indenture).
"Successor Guarantee Trustee" means a successor Guarantee Trustee
-----------------------------
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
---------------------
amended, as in force at the date of which this instrument was executed;
provided, however, that in the event the Trust Indenture Act of 1939, as
amended, is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939, as so amended.
ARTICLE II
TRUST INDENTURE ACT
Section 2.1 Trust Indenture Act; Application.
(a) This Preferred Securities Guarantee is subject to the
provisions of the Trust Indenture Act that are required to be part of this
Preferred Securities Guarantee and shall, to the extent applicable, be governed
by such provisions.
(b) If and to the extent that any provision of this Preferred
Securities Guarantee limits, qualifies or conflicts with the duties imposed by
Section 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties
shall control.
Section 2.2 List of Holders of Securities.
(a) In the event the Guarantee Trustee is not also the Securities
Registrar, the Guarantor shall provide the Guarantee Trustee with a list, in
such form as the Guarantee Trustee may reasonably require, of the names and
addresses of the Holders of the Preferred Securities (the "List of Holders") as
---------------
of such date, (i) within one Business Day after January 1 and June 30 of each
year, and (ii) at any other time within 30 days of receipt by the Guarantor of a
written request for a List of Holders as of a date no more than fifteen (15)
days before such List of Holders is given to the Guarantee Trustee; provided,
that the Guarantor shall not be obligated to provide such List of Holders at any
time the List of Holders does not differ from the most recent List of Holders
given to the Guarantee Trustee by the Guarantor. The Guarantee Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
Section 2.3 Reports by the Guarantee Trustee. On or before July
15 of each year, the Guarantee Trustee shall provide to the Holders of the
Preferred Securities such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
Section 2.4 Periodic Reports to the Guarantee Trustee. The
Guarantor shall provide to the Guarantee Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act.
Section 2.5 Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Preferred Securities
Guarantee that relate to any of the matters set forth in Section 314(c) of the
Trust Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
Section 2.6 Events of Default; Waiver. The Holders of a Majority
in Liquidation Amount of the Preferred Securities may, by vote, on behalf of the
Holders of all of the Preferred Securities, waive any past Event of Default and
its consequences. Upon such waiver, any such Event of Default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Preferred Securities Guarantee, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.
Section 2.7 Event of Default; Notice.
(a) The Guarantee Trustee shall, within ninety (90) days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders of the Preferred 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, that,
except in the case of a default by Guarantor on any of its payment obligations,
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
Preferred Securities.
(b) The Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default unless the Guarantee Trustee shall have received written
notice, or of which a Responsible Officer of the Guarantee Trustee charged with
the administration of the Trust Agreement shall have obtained actual knowledge
of such Event of Default.
Section 2.8 Conflicting Interests. The Trust Agreement shall be
deemed to be specifically described in this Preferred Securities Guarantee for
the purposes of clause (i) of the first proviso contained in Section 310(b) of
the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF THE GUARANTEE TRUSTEE
Section 3.1 Powers and Duties of the Guarantee Trustee.
(a) This Preferred Securities Guarantee shall be held by the
Guarantee Trustee for the benefit of the Holders of the Preferred Securities,
and the Guarantee Trustee shall not transfer this Preferred Securities Guarantee
to any Person except a Holder of Preferred Securities exercising his or her
rights pursuant to Section 5.4(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 Preferred Securities Guarantee for the benefit of the Holders
of the Preferred Securities.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Preferred Securities Guarantee, and no implied covenants shall be read into
this Preferred Securities Guarantee against the Guarantee Trustee. In case an
Event of Default has occurred (that has not been cured or waived pursuant to
Section 2.6) and is actually known to a Responsible Officer of the Guarantee
Trustee, the Guarantee Trustee shall exercise such of the rights and powers
vested in it by this Preferred Securities Guarantee, and use the same degree of
care and skill in its exercise thereof, as a prudent Person would exercise or
use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Preferred Securities 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 such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions of this
Preferred Securities 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 Preferred Securities Guarantee, and no
implied covenants or obligations shall be read into this Preferred
Securities 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 Preferred
Securities Guarantee; but in the case of any such certificates or
opinions that by any provision hereof are specifically required to be
furnished to the Guarantee Trustee, the Guarantee Trustee shall be
under a duty to examine the same to determine whether or not they
conform to the requirements of this Preferred Securities 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 the Guarantee Trustee
was negligent in ascertaining the pertinent facts upon which such
judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in Liquidation Amount of the Preferred Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or exercising any trust or power
conferred upon the Guarantee Trustee under this Preferred Securities
Guarantee; and
(iv) no provision of this Preferred Securities 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 or liability is not reasonably assured to it
under the terms of this Preferred Securities Guarantee or indemnity,
reasonably satisfactory to the Guarantee Trustee, against such risk or
liability is not reasonably assured to it.
Section 3.2 Certain Rights of the Guarantee Trustee.
(a) Subject to the provisions of Section 3.1:
(i) the Guarantee Trustee may conclusively rely, and shall
be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document 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 Preferred Securities Guarantee shall be sufficiently evidenced by
an Officers' Certificate;
(iii) whenever, in the administration of this Preferred
Securities 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 Officers'
Certificate 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 any
rerecording, refiling or registration thereof);
(v) the Guarantee Trustee may consult with counsel, and the
written 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 Preferred
Securities 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 Preferred
Securities 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 c omplying with such
request or direction, including such reasonable advances as may be
requested by the Guarantee Trustee; provided that, nothing contained in
this Section 3.2(a)(vi) shall be taken to relieve the Guarantee
Trustee, upon the occurrence and during the continuance of an Event of
Default, of its obligation to exercise the rights and powers vested in
it by this Preferred Securities 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) 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 Preferred Securities
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 Preferred
Securities 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 Preferred 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.
(b) No provision of this Preferred Securities 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 3.3 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 Preferred Securities
Guarantee.
ARTICLE IV
GUARANTEE TRUSTEE
Section 4.1 Guarantee Trustee; Eligibility.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States or any state or territory thereof or of the
District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having (or the obligations of which are
guaranteed by an entity having) a combined capital and surplus of at
least $50,000,000, and subject to supervision or examination by
federal, state, territorial or District of Columbia authority. If such
corporation, trust company or national banking association publishes
reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to
above, then, for the purposes of this Section 4.1(a)(ii), the combined
capital and surplus of such corporation, trust company or national
banking association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee shall immediately
resign in the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and the Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.
Section 4.2 Appointment, Removal and Resignation of Guarantee
Trustee.
(a) Subject to Section 4.2(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.2(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 instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within sixty (60) days
after delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee 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 Preferred Securities Guarantee or
removal or resignation of the Guarantee Trustee pursuant to this Section 4.2,
the Guarantor shall pay to the Guarantee Trustee all fees and expenses accrued
to the date of such termination, removal or resignation.
ARTICLE V
GUARANTEE
Section 5.1 Guarantee. The Guarantor irrevocably and
unconditionally agrees to pay in full to the Holders the Guarantee Payments
(without duplication of amounts theretofore paid by the Trust), as and when due,
regardless of any defense, right of set-off or counterclaim that the Trust 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 Trust to pay such amounts to the Holders.
Section 5.2 Waiver of Notice and Demand. The Guarantor hereby
waives notice of acceptance of this Preferred Securities Guarantee and of any
liability to which it applies or may apply, presentment, demand for payment, any
right to require a proceeding first against the Trust or any other Person before
proceeding against the Guarantor, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
Section 5.3 Obligations not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Preferred Securities Guarantee
shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution or
any other sums payable under the terms of the Preferred Securities or the
extension of time for the performance of any other obligation under, arising out
of, or in connection with, the Preferred Securities (other than an extension of
time for payment of Distributions, Redemption Price, Liquidation Distribution or
other sum payable that results from the extension of any interest payment period
on the Debentures 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 Preferred
Securities, or any action on the part of the Trust granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Trust or any of the assets of
the Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) any failure or omission to receive any regulatory approval or
consent required in connection with the Preferred Securities (or the common
equity securities issued by the Trust), including the failure to receive any
approval of the Board of Governors of the Federal Reserve System required for
the redemption of the Preferred Securities;
(g) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(h) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
Section 5.4 Rights of Holders.
(a) The Holders of a Majority in Liquidation Amount of the
Preferred Securities have the right to direct the time, method and place of
conducting of any proceeding for any remedy available to the Guarantee Trustee
in respect of this Preferred Securities Guarantee or exercising any trust or
power conferred upon the Guarantee Trustee under this Preferred Securities
Guarantee.
(b) Any Holder of Preferred Securities may institute and prosecute
a legal proceeding directly against the Guarantor to enforce its rights under
this Preferred Securities Guarantee, without first instituting and prosecuting a
legal proceeding against the Trust, the Guarantee Trustee or any other Person.
Section 5.5 Guarantee of Payment. This Preferred Securities
Guarantee creates a guarantee of payment and not of collection.
Section 5.6 Subrogation. The Guarantor shall be subrogated to all
(if any) rights of the Holders of the Preferred Securities against the Trust in
respect of any amounts paid to such Holders by the Guarantor under this
Preferred Securities Guarantee; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to
enforce or exercise any right that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Preferred Securities Guarantee, if, at the time of any such payment,
any amounts are due and unpaid under this Preferred Securities Guarantee. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
Section 5.7 Independent Obligations. The Guarantor acknowledges
that its obligations hereunder are independent of the obligations of the Trust
with respect to the Preferred Securities, and that the Guarantor shall be liable
as principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Preferred Securities Guarantee notwithstanding the occurrence of
any event referred to in subsections (a) through (h), inclusive, of Section 5.3
hereof.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
Section 6.1 Limitation on Transactions. So long as any Preferred
Securities remain outstanding, if there shall have occurred and be continuing an
Event of Default under this Preferred Securities Guarantee, an event of default
under the Trust Agreement or during an Extension Period (as defined in the
Indenture), then (a) neither the Guarantor nor any of its Subsidiaries (as
defined in the Indenture) shall declare or pay any dividend on, make any
distributions with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (as such term is
defined in the Indenture), except as permitted in such circumstances by the
Indenture; (b) the Guarantor shall not make any payment of interest, principal
or premium, if any, or repay, repurchase or redeem any debt securities issued by
the Guarantor which rank pari passu with (including without limitation the
Guarantor's 9.25% Subordinated Debentures due 2027 issued to First Preferred
Capital Trust I, the Guarantor's 10.24% Subordinated Debentures due 2030 issued
to First Preferred Capital Trust II and the Guarantor's 9.00% Subordinated
Debentures due 2031 issued to First Preferred Capital Trust III) or junior to
the Debentures or make any guarantee payments with respect to any guarantee of
the Guarantor of the debt securities of any Subsidiary of the Guarantor if such
guarantee ranks pari passu with or junior to the Debentures, other than payments
under this Preferred Securities Guarantee; and (c) the Guarantor shall not
redeem, purchase or acquire less than all of the Outstanding Debentures or any
of the Preferred Securities.
Section 6.2 Ranking. This Preferred Securities Guarantee will
constitute an unsecured obligation of the Guarantor and will rank subordinate
and junior in right of payment to all Senior Debt, Subordinated Debt and
Additional Senior Obligations (as defined in the Indenture) of the Guarantor, to
the extent and in the manner set forth in the Indenture, and the applicable
provisions of the Indenture will apply in all relevant respects to the
obligations of the Guarantor hereunder.
ARTICLE VII
TERMINATION
Section 7.1 Termination. This Preferred Securities Guarantee shall
terminate upon (a) full payment of the Redemption Price of all the Preferred
Securities, (b) full payment of the amounts payable in accordance with the Trust
Agreement upon liquidation of the Trust, or (c) distribution of the Debentures
to the Holders of the Preferred Securities. Notwithstanding the foregoing, this
Preferred Securities Guarantee shall continue to be effective or shall be
reinstated, as the case may be, if at any time any Holder of Preferred
Securities must restore payment of any sums paid under the Preferred Securities
or under this Preferred Securities Guarantee.
ARTICLE VIII
INDEMNIFICATION
Section 8.1 Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Preferred Securities Guarantee and in a manner that such Indemnified Person
reasonably believed to be within the scope of the authority conferred on such
Indemnified Person by this Preferred Securities Guarantee or by law, except that
an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's negligence or willful misconduct
with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to the Holders of the Preferred
Securities might properly be paid.
Section 8.2 Indemnification. The Guarantor agrees to indemnify
each Indemnified Person for, and to hold each Indemnified Person harmless
against, any loss, liability or expense incurred without negligence or bad faith
on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against, or investigating, any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The obligation
to indemnify as set forth in this Section 8.2 shall survive the termination of
this Preferred Securities Guarantee.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Successors and Assigns. All guarantees and agreements
contained in this Preferred Securities Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the Holders of the Preferred Securities then
outstanding.
Section 9.2 Amendments. Except with respect to any changes that
do not materially and adversely affect the rights of the Holders (in which case
no consent of the Holders will be required), this Preferred Securities Guarantee
may only be amended with the prior approval of the Holders of at least a
Majority in Liquidation Amount of the Preferred Securities. The provisions of
Article VI of the Trust Agreement with respect to meetings of the Holders of the
Preferred Securities apply to the giving of such approval.
Section 9.3 Notices. All notices provided for in this Preferred
Securities Guarantee shall be in writing, duly signed by the party giving such
notice, and shall be delivered, telecopied or mailed by registered or certified
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 Preferred Securities):
Fifth Third Bank
1209 North Milwaukee Ave.
Chicago, IL 60622
Attention: Ms. Sheetal Shah
(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 Preferred Securities):
First Banks, Inc.
600 James S. McDonnell Boulevard
Mail Code 014
Hazelwood, Missouri 63042
Attention: Chief Financial Officer
(c) If given to any Holder of Preferred Securities, 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 9.4 Benefit. This Preferred Securities Guarantee is
solely for the benefit of the Holders of the Preferred Securities and, subject
to Section 3.1(a), is not separately transferable from the Preferred Securities.
Section 9.5 Governing Law. THIS PREFERRED SECURITIES GUARANTEE
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF MISSOURI.
[The remainder of this page has been left blank intentionally]
IN WITNESS WHEREOF, this Preferred Securities Guarantee is executed as
of the day and year first above written.
FIRST BANKS, INC.
By:
-------------------------------------------------------
Its:
------------------------------------------------------
FIFTH THIRD BANK, as Property Trustee
By:
-------------------------------------------------------
Its:
------------------------------------------------------
Exhibit 10.22
================================================================================
FIRST BANKS, INC.
AND
FIFTH THIRD BANK, AS TRUSTEE
INDENTURE
8.15% SUBORDINATED DEBENTURES DUE 2033
DATED AS OF APRIL 1, 2003
================================================================================
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS....................................................................................1
Section 1.1. Definitions of Terms...............................................................1
ARTICLE II ISSUE, DESCRIPTION, TERMS, CONDITIONS, REGISTRATION AND EXCHANGE OF THE DEBENTURES...........10
Section 2.1. Designation and Principal Amount..................................................10
Section 2.2. Maturity..........................................................................10
Section 2.3. Form and Payment..................................................................11
Section 2.4. [Intentionally Omitted]...........................................................11
Section 2.5. Interest..........................................................................11
Section 2.6. Execution and Authentication......................................................12
Section 2.7. Registration of Transfer and Exchange.............................................13
Section 2.8. Temporary Debentures..............................................................13
Section 2.9. Mutilated, Destroyed, Lost or Stolen Debentures...................................14
Section 2.10. Cancellation......................................................................15
Section 2.11. Benefit of Indenture..............................................................15
Section 2.12. Authenticating Agent..............................................................15
ARTICLE III REDEMPTION OF DEBENTURES....................................................................16
Section 3.1. Redemption........................................................................16
Section 3.2. Special Event Redemption..........................................................16
Section 3.3. Optional Redemption by the Company................................................16
Section 3.4. Notice of Redemption..............................................................17
Section 3.5. Payment Upon Redemption...........................................................18
Section 3.6. No Sinking Fund...................................................................18
ARTICLE IV EXTENSION OF INTEREST PAYMENT PERIOD.........................................................18
Section 4.1. Extension of Interest Payment Period..............................................18
Section 4.2. Notice of Extension...............................................................19
Section 4.3. Limitation on Transactions........................................................19
ARTICLE V PARTICULAR COVENANTS OF THE COMPANY...........................................................20
Section 5.1. Payment of Principal and Interest.................................................20
Section 5.2. Maintenance of Agency.............................................................20
Section 5.3. Paying Agents.....................................................................21
Section 5.4. Appointment to Fill Vacancy in Office of Trustee..................................21
Section 5.5. Compliance with Consolidation Provisions..........................................21
Section 5.6. Limitation on Transactions........................................................22
Section 5.7. Covenants as to the Trust.........................................................22
Section 5.8. Covenants as to Purchases.........................................................23
Section 5.9. Waiver of Usury; Stay or Extension Laws...........................................23
Section 5.10. Limitation on Additional Junior Indebtedness......................................23
ARTICLE VI DEBENTUREHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE...........................25
Section 6.1. Company to Furnish the Trustee Names and Addresses of
Debentureholders..................................................................25
Section 6.2. Preservation of Information Communications with the Debentureholders..............25
Section 6.3. Reports by the Company............................................................25
Section 6.4. Reports by the Trustee............................................................26
ARTICLE VII REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS ON EVENT OF DEFAULT............................26
Section 7.1. Events of Default.................................................................26
Section 7.2. Collection of Indebtedness and Suits for Enforcement by Trustee...................28
Section 7.3 Application of Money Collected....................................................29
Section 7.4. Limitation on Suits...............................................................29
Section 7.5. Rights and Remedies Cumulative; Delay or Omission Not Waiver......................30
Section 7.6. Control by Debentureholders.......................................................30
Section 7.7. Undertaking to Pay Costs..........................................................31
Section 7.8. Direct Action; Right of Set-Off...................................................31
ARTICLE VIII FORM OF DEBENTURE AND ORIGINAL ISSUE.......................................................32
Section 8.1. Form of Debenture.................................................................32
Section 8.2. Original Issue of the Debentures..................................................32
ARTICLE IX CONCERNING THE TRUSTEE.......................................................................32
Section 9.1. Certain Duties and Responsibilities of the Trustee................................32
Section 9.2. Notice of Defaults................................................................33
Section 9.3. Certain Rights of Trustee. Except as otherwise provided in Section 9.1:..........33
Section 9.4. Trustee Not Responsible for Recitals, etc.........................................34
Section 9.5. May Hold the Debentures...........................................................35
Section 9.6. Money Held in Trust...............................................................35
Section 9.7. Compensation and Reimbursement....................................................35
Section 9.8. Reliance on Officers' Certificate.................................................35
Section 9.9. Disqualification; Conflicting Interests...........................................36
Section 9.10. Corporate Trustee Required; Eligibility...........................................36
Section 9.11. Resignation and Removal; Appointment of Successor.................................36
Section 9.12. Acceptance of Appointment by Successor............................................37
Section 9.13. Merger, Conversion, Consolidation or Succession to Business.......................38
Section 9.14. Preferential Collection of Claims Against the Company.............................38
ARTICLE X CONCERNING THE DEBENTUREHOLDERS...............................................................38
Section 10.1. Evidence of Action by Holders.....................................................38
Section 10.2. Proof of Execution by Debentureholders............................................39
Section 10.3. Who May be Deemed Owners..........................................................39
Section 10.4. Certain Debentures Owned by Company Disregarded...................................39
Section 10.5. Actions Binding on Future Debentureholders........................................40
ARTICLE XI SUPPLEMENTAL INDENTURES......................................................................40
Section 11.1. Supplemental Indentures Without the Consent of Debentureholders...................40
Section 11.2. Supplemental Indentures with Consent of Debentureholders..........................41
Section 11.3. Effect of Supplemental Indentures.................................................41
Section 11.4. The Debentures Affected by Supplemental Indentures................................41
Section 11.5. Execution of Supplemental Indentures..............................................42
ARTICLE XII SUCCESSOR CORPORATION.......................................................................42
Section 12.1. Company May Consolidate, etc......................................................42
Section 12.2. Successor Corporation Substituted.................................................43
Section 12.3. Evidence of Consolidation, etc. to Trustee........................................43
ARTICLE XIII SATISFACTION AND DISCHARGE.................................................................43
Section 13.1. Satisfaction and Discharge of Indenture...........................................43
Section 13.2. Discharge of Obligations..........................................................44
Section 13.3. Deposited Money to be Held in Trust...............................................44
Section 13.4. Payment of Money Held by Paying Agents............................................44
Section 13.5. Repayment to the Company..........................................................44
ARTICLE XIV IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS.............................44
Section 14.1. No Recourse.......................................................................44
ARTICLE XV MISCELLANEOUS PROVISIONS.....................................................................45
Section 15.1. Effect on Successors and Assigns..................................................45
Section 15.2. Actions by Successor..............................................................45
Section 15.3. Surrender of Company Powers.......................................................45
Section 15.4. Notices...........................................................................45
Section 15.5. Governing Law.....................................................................45
Section 15.6. Treatment of Debentures as Debt...................................................46
Section 15.7. Compliance Certificates and Opinions..............................................46
Section 15.8. Payments on Business Days.........................................................46
Section 15.9. Conflict with Trust Indenture Act.................................................46
Section 15.10. Counterparts........................................................................46
Section 15.11. Separability........................................................................46
Section 15.12. Assignment..........................................................................47
Section 15.13. Acknowledgment of Rights............................................................47
ARTICLE XVI SUBORDINATION OF THE DEBENTURES.............................................................47
Section 16.1. Agreement to Subordinate..........................................................47
Section 16.2 Default on Senior Debt, Subordinated Debt or Additional
Senior Obligations................................................................47
Section 16.3. Liquidation; Dissolution; Bankruptcy..............................................48
Section 16.4. Subrogation.......................................................................49
Section 16.5. Trustee to Effectuate Subordination...............................................50
Section 16.6. Notice by the Company.............................................................50
Section 16.7. Rights of the Trustee; Holders of the Senior Indebtedness.........................51
Section 16.8. Subordination May Not be Impaired.................................................51
CROSS-REFERENCE TABLE
Section of
Trust Indenture Act Section of
of 1939, as amended Indenture
- ------------------- ---------
310(a).........................................................................................................9.10
310(b)....................................................................................................9.9, 9.11
310(c)...............................................................................................Not Applicable
311(a).........................................................................................................9.14
311(b).........................................................................................................9.14
311(c)...............................................................................................Not Applicable
312(a)................................................................................................. 6.1, 6.2(a)
312(b)...................................................................................................... 6.2(c)
312(c)...................................................................................................... 6.2(c)
313(a)...................................................................................................... 6.4(a)
313(b)...................................................................................................... 6.4(b)
313(c)...............................................................................................6.4(a), 6.4(b)
313(d).......................................................................................................6.4(c)
314(a).......................................................................................................6.3(a)
314(b)...............................................................................................Not Applicable
314(c).........................................................................................................15.7
314(d)...............................................................................................Not Applicable
314(e).........................................................................................................15.7
314(f)...............................................................................................Not Applicable
315(a)..................................................................................................9.1(a), 9.3
315(b)..........................................................................................................9.2
315(c).......................................................................................................9.1(a)
315(d).......................................................................................................9.1(b)
315(e)..........................................................................................................7.7
316(a).....................................................................................................1.1, 7.6
316(b).......................................................................................................7.4(b)
316(c)......................................................................................................10.1(b)
317(a)..........................................................................................................7.2
317(b)..........................................................................................................5.3
318(a).........................................................................................................15.9
Note: This Cross-Reference Table does not constitute part of this Indenture and shall not affect the interpretation
of any of its terms or provisions.
INDENTURE
INDENTURE, dated as of April 1, 2003, between FIRST BANKS, INC., a
Missouri corporation (the "Company") and FIFTH THIRD BANK, a bank duly organized
-------
and existing under the laws of the United States of America, as trustee
(the "Trustee");
-------
RECITALS
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the execution and delivery of this Indenture to provide for the
issuance of securities to be known as its 8.15% Subordinated Debentures due 2033
(hereinafter referred to as the "Debentures"), the form and substance of such
----------
Debentures and the terms, provisions and conditions thereof to be set forth as
provided in this Indenture;
WHEREAS, First Preferred Capital Trust IV, a Delaware statutory trust
(the "Trust"), has offered to the public $40,000,000 aggregate liquidation
-----
amount of its Preferred Securities (as defined herein) ($46,000,000 if the
Underwriters exercise their Option (as defined herein)) and proposes to invest
the proceeds from such offering, together with the proceeds of the issuance and
sale by the Trust to the Company of $1,237,125 aggregate liquidation amount of
its Common Securities (as defined herein) ($1,422,700 if the Underwriters
exercise their Option), in $41,237,125 aggregate principal amount of the
Debentures ($47,422,700 if the Underwriters exercise their Option); and
WHEREAS, the Company has requested that the Trustee execute and deliver
this Indenture; and
WHEREAS, all requirements necessary to make this Indenture a valid
instrument in accordance with its terms, and to make the Debentures, when
executed by the Company and authenticated and delivered by the Trustee, the
valid obligations of the Company, have been performed, and the execution and
delivery of this Indenture have been duly authorized in all respects; and
WHEREAS, to provide the terms and conditions upon which the Debentures
are to be authenticated, issued and delivered, the Company has duly authorized
the execution of this Indenture; and
WHEREAS, all things necessary to make this Indenture a valid agreement
of the Company, in accordance with its terms, have been done.
NOW, THEREFORE, in consideration of the premises and the purchase of
the Debentures by the Trust, it is mutually covenanted and agreed as follows for
the equal and ratable benefit of the holders of the Debentures:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions of Terms. The terms defined in this Section
1.1 (except as in this Indenture otherwise expressly provided or unless the
context otherwise requires) for all purposes of this Indenture and of any
indenture supplemental hereto shall have the respective meanings specified in
this Section 1.1 and shall include the plural as well as the singular. All other
terms used in this Indenture that are defined in the Trust Indenture Act, or
that are by reference in the Trust Indenture Act defined in the Securities Act
(except as herein otherwise expressly provided or unless the context otherwise
requires), shall have the meanings assigned to such terms in the Trust Indenture
Act and in the Securities Act as in force at the date of the execution of this
instrument. All accounting terms used herein and not expressly defined shall
have the meanings assigned to such terms in accordance with Generally Accepted
Accounting Principles.
"Accelerated Maturity Date" means if the Company elects to accelerate
---------------------------
the Maturity Date in accordance with Section 2.2(b), the date selected by the
Company which is prior to the Scheduled Maturity Date, but is after June 30,
2008.
"Additional Junior Indebtedness" means, without duplication, (A) any
------------------------------
indebtedness, liabilities or obligations of the Company, or any Subsidiary of
the Company, under debt securities (or guarantees in respect of debt securities)
initially issued to any trust, or a trustee of a trust, partnership or other
entity affiliated with the Company that is, directly or indirectly, a finance
subsidiary (as such term is defined in Rule 3a-5) under the Investment Company
Act (or any successor Rule applicable thereto)) or other financing vehicle of
the Company or any Subsidiary of the Company in connection with the issuance by
that entity of preferred securities or other securities that are intended to
qualify for Tier 1 capital treatment (or the then equivalent thereof) for
purposes of the capital adequacy guidelines of the Federal Reserve, as then in
effect and applicable to the Company, other than the Debentures; provided,
however, that the inability of the Company to treat all or any portion of the
Additional Junior Indebtedness as Tier 1 capital shall not disqualify it as
Additional Junior Indebtedness if such inability results from the Company having
cumulative preferred stock, minority interests in consolidated subsidiaries, or
any other class of security or interest to which the Federal Reserve now accords
or may hereafter accord Tier 1 capital treatment (including the Debentures) in
excess of the amount which may qualify for treatment as Tier 1 capital under
applicable capital adequacy guidelines of the Federal Reserve and (B) any
indebtedness, liabilities or obligations of the Company, or any Subsidiary of
the Company, that is junior or otherwise subordinate in right of payment to
Senior Indebtedness of the Company and that has a maturity or is otherwise due
and payable by the Company on a date twelve (12) months or more after its date
of original issuance, other than the Debentures.
"Additional Payments" shall have the meaning set forth in Section
--------------------
2.5(c).
"Additional Senior Obligations" means all indebtedness of the Company
-------------------------------
whether incurred on or prior to the date of this Indenture or thereafter
incurred, for claims in respect of derivative products such as interest and
foreign exchange rate contracts, commodity contracts and similar arrangements;
provided, however, that Additional Senior Obligations does not include claims in
respect of Senior Debt or Subordinated Debt or obligations which, by their
terms, are expressly stated to be not superior in right of payment to the
Debentures or to rank pari passu in right of payment with the Debentures,
including the Company's 9.25% Subordinated Debentures due 2027 issued to First
Preferred Capital Trust I, the Company's 10.24% Subordinated Debentures due 2030
issued to First Preferred Capital Trust II, the Company's 9.00% Subordinated
Debentures due 2031 issued to First Preferred Capital Trust III, the Company's
Floating Rate Junior Subordinated Debt Securities due 2032 issued to First Bank
Capital Trust, and by virtue of First Banks America, Inc.'s merger with and into
the Company, the First Banks America, Inc. 8.50% Subordinated Debentures due
2028 issued to First America Capital Trust. For purposes of this definition,
"claim" shall have the meaning assigned thereto in Section 101(4) of the United
States Bankruptcy Code of 1978, as amended.
"Administrative Trustees" shall have the meaning set forth in the Trust
-----------------------
Agreement.
"Affiliate" means, with respect to a specified Person, (a) any Person
---------
directly or indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person; (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person; (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person; (d) a partnership in which the specified Person is a
general partner; (e) any officer or director of the specified Person; and (f) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.
"Authenticating Agent" means an authenticating agent with respect to
---------------------
the Debentures appointed by the Trustee pursuant to Section 2.12.
"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 of the Company or any
------------------
duly authorized committee of such Board.
"Board Resolution" means a copy of a resolution certified by the
-----------------
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification.
"Business Day" means, with respect to the Debentures, any day other
-------------
than a Saturday or a Sunday or a day on which federal or state banking
institutions in the Borough of Manhattan, the City of New York, are authorized
or required by law, executive order or regulation to close, or a day on which
the Corporate Trust Office of the Trustee or the Property Trustee is closed for
business.
"Capital Treatment Event" means the receipt by the Company and the
-------------------------
Trust of an Opinion of Counsel, rendered by a law firm having a recognized
banking law practice within a reasonable period of time after the applicable
occurrence, 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 thereof or
therein, or as a result of any official or administrative pronouncement, action
or judicial decision interpreting or applying such laws or regulations, which
amendment or change is effective or which pronouncement, action or judicial
decision is announced on or after the date of issuance of the Preferred
Securities under the Trust Agreement, there is more than an insubstantial risk
of impairment of the Company's ability to treat the aggregate Liquidation Amount
(as defined in the Trust Agreement) of the Preferred Securities (or any
substantial portion thereof) as Tier 1 capital (or the then equivalent thereof)
for purposes of the capital adequacy guidelines of the Federal Reserve, as then
in effect and applicable to the Company; provided, however, that the Trust or
the Company shall have requested and received such an Opinion of Counsel with
regard to such matters within a reasonable period of time after the Trust or the
Company shall have become aware of the occurrence or the possible occurrence of
any of the events described above.
"Certificate" means a certificate signed by the principal executive
-----------
officer, the principal financial officer, the principal accounting officer, the
treasurer or any vice president of the Company. The Certificate need not comply
with the provisions of Section 15.7.
"Change in 1940 Act Law" shall have the meaning set forth in the
------------------------
definition of "Investment Company Event."
"Commission" means the Securities and Exchange Commission, as from time
----------
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Securities" means undivided beneficial interests in the assets
-----------------
of the Trust which rank pari passu with the Preferred Securities; provided,
however, that upon the occurrence and during the continuation of an Event of
Default, the rights of holders of Common Securities to payment in respect of (i)
distributions, and (ii) payments upon liquidation, redemption and otherwise, are
subordinated to the rights of holders of Preferred Securities.
"Company" means First Banks, Inc., a corporation duly organized and
-------
existing under the laws of the State of Missouri, and, subject to the provisions
of Article XII, shall also include its successors and assigns.
"Compounded Interest" shall have the meaning set forth in Section 4.1.
--------------------
"Corporate Trust Office" means the office of the Trustee at which, at
-----------------------
any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at 38 Fountain Square
Plaza, MD10AT60, Cincinnati, Ohio 45202 Attention: Corporate Trust Department.
"Coupon Rate" shall have the meaning set forth in Section 2.5(a).
------------
"Custodian" means any receiver, trustee, assignee, liquidator, or
---------
similar official under any Bankruptcy Law.
"Debentures" shall have the meaning set forth in the Recitals hereto.
----------
"Debentureholder," "holder of Debentures," "registered holder," or
--------------- --------------------- ------------------
other similar term, means the Person or Persons in whose name or names a
particular Debenture shall be registered on the books of the Company or the
Trustee kept for that purpose in accordance with the terms of this Indenture.
"Debenture Register" shall have the meaning set forth in Section
-------------------
2.7(b).
"Debenture Registrar" shall have the meaning set forth in Section
--------------------
2.7(b).
"Debt" means with respect to any Person, whether recourse is to all or
----
a portion of the assets of such Person and whether or not contingent, (i) every
obligation of such Person for money borrowed; (ii) every obligation of such
Person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of such Person; (iv) every obligation of such Person issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of such Person; and (vi) and every
obligation of the type referred to in clauses (i) through (v) of another Person
and all dividends of another Person the payment of which, in either case, such
Person has guaranteed or is responsible or liable, directly or indirectly, as
obligor or otherwise.
"Default" means any event, act or condition that with notice or lapse
-------
of time, or both, would constitute an Event of Default.
"Deferred Payment" shall have the meaning set forth in Section 4.1.
-----------------
"Direct Action" shall have the meaning set forth in Section 7.8.
--------------
"Dissolution Event" means that as a result of the occurrence and
------------------
continuation of a Special Event, the Trust is to be dissolved in accordance with
the Trust Agreement and the Debentures held by the Property Trustee are to be
distributed to the holders of the Trust Securities issued by the Trust pro rata
in accordance with the Trust Agreement.
"Distribution" shall have the meaning set forth in the Trust Agreement.
------------
"Event of Default" means, with respect to the Debentures, any event
----------------
specified in Section 7.1, which has continued for the period of time, if any,
and after the giving of the notice, if any therein designated.
"Exchange Act," means the Securities Exchange Act of 1934, as amended,
------------
as in effect at the date of execution of this Indenture.
"Extension Period" shall have the meaning set forth in Section 4.1.
-----------------
"Federal Reserve" means the Board of Governors of the Federal Reserve
----------------
System.
"Guarantee" shall have the meaning set forth in the Trust Agreement.
---------
"Generally Accepted Accounting Principles" means such accounting
--------------------------------------------
principles as are generally accepted at the time of any computation required
hereunder.
"Governmental Obligations" means securities that are (i) direct
--------------------------
obligations of the United States of America for the payment of which its full
faith and credit is pledged; or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America that, in either case, are not
callable or redeemable at the option of the issuer thereof, and shall also
include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such Governmental
Obligation or a specific payment of principal of or interest on any such
Governmental Obligation held by such custodian for the account of the holder of
such depository receipt; provided, however, that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depositary receipt from any amount received by the
custodian in respect of the Governmental Obligation or the specific payment of
principal of or interest on the Governmental Obligation evidenced by such
depositary receipt.
"Herein," "hereof," and "hereunder," and other words of similar import,
------ ------ ---------
refer to this Indenture as a whole and not to any particular Article, Section or
other subdivision.
"Indenture" means this instrument as originally executed or as it may
---------
from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into in accordance with the terms hereof.
"Interest Payment Date" shall have the meaning set forth in Section
-----------------------
2.5(a).
"Investment Company Act," means the Investment Company Act of 1940, as
-----------------------
amended, as in effect at the date of execution of this Indenture.
"Investment Company Event" means the receipt by the Company and the
--------------------------
Trust of an Opinion of Counsel, rendered by a law firm having a recognized tax
and securities law practice within a reasonable period of time after the
applicable occurrence, to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), the Trust is or shall be considered an
----------------------
"investment company" that is required to be registered under the Investment
Company Act, which Change in 1940 Act Law becomes effective on or after the date
of original issuance of the Preferred Securities under the Trust Agreement;
provided, however, that the Trust or the Company shall have requested and
received such an Opinion of Counsel with regard to such matters within a
reasonable period of time after the Trust or the Company shall have become aware
of the occurrence or the possible occurrence of any such Change in 1940 Act Law.
"Maturity Date" means the date on which the Debentures mature and on
--------------
which the principal shall be due and payable together with all accrued and
unpaid interest thereon including Compounded Interest and Additional Payments,
if any.
"Ministerial Action" shall have the meaning set forth in Section 3.2.
------------------
"Officers' Certificate" means a certificate signed by the President or
----------------------
a Vice President and by the Treasurer or an Assistant Treasurer or the
Controller or an Assistant Controller or the Secretary or an Assistant Secretary
of the Company that is delivered to the Trustee in accordance with the terms
hereof. Each such certificate shall include the statements provided for in
Section 15.7, if and to the extent required by the provisions thereof.
"Opinion of Counsel" means an opinion in writing of independent,
------------------
outside legal counsel that is delivered to the Trustee in accordance with the
terms hereof. Each such opinion shall include the statements provided for in
Section 15.7, if and to the extent required by the provisions thereof.
"Outstanding," when used with respect to the Debentures, means, subject
-----------
to the provisions of Section 10.4, as of the date of determination, all of the
Debentures theretofore authenticated and delivered by the Trustee under this
Indenture, except (a) Debentures theretofore canceled by the Trustee or any
Paying Agent, or delivered to the Trustee or any Paying Agent for cancellation;
(b) Debentures or portions thereof for the payment or redemption of which money
or Governmental Obligations in the necessary amount shall have been deposited in
trust with the Trustee or any Paying Agent (other than the Company) or shall
have been set aside and segregated in trust by the Company (if the Company shall
act as its own Paying Agent); provided, however, that if such Debentures or
portions of such Debentures are to be redeemed prior to the maturity thereof,
notice of such redemption shall have been given as in Article III provided, or
provision satisfactory to the Trustee shall have been made for giving such
notice; and (c) Debentures which have been paid or in lieu of or in substitution
for which other Debentures shall have been authenticated and delivered pursuant
to the terms of Section 2.6; provided, however, that in determining whether the
holders of the requisite percentage of Debentures have given any request,
notice, consent or waiver hereunder, Debentures held by the Company or any
Affiliate of the Company shall not be included; provided, further, that the
Trustee shall be protected in relying upon any request, notice, consent or
waiver unless a Responsible Officer of the Trustee shall have actual knowledge
that the holder of such Debenture is the Company or an Affiliate thereof. The
Debentures so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Debentures, and the pledgee is
not a Person directly or indirectly controlling or controlled by or under direct
or indirect common control with the Company or any such other obligor.
"Paying Agent" means any paying agent or co-paying agent appointed
-------------
pursuant to Section 5.3.
"Person" means any individual, corporation, estate, partnership,
------
limited partnership, joint venture, trust, association, joint-stock company,
limited liability company, trust, statutory trust, unincorporated organization
or government or any agency or political subdivision thereof or any other entity
of whatever nature.
"Predecessor Debenture" means every previous Debenture evidencing all
----------------------
or a portion of the same debt as that evidenced by such particular Debenture;
and, for the purposes of this definition, any Debenture authenticated and
delivered under Section 2.9 in lieu of a lost, destroyed or stolen Debenture
shall be deemed to evidence the same debt as the lost, destroyed or stolen
Debenture.
"Preferred Securities" means the 8.15% Cumulative Trust Preferred
---------------------
Securities representing undivided beneficial interests in the assets of the
Trust which rank pari passu with Common Securities issued by the Trust;
provided, however, that upon the occurrence and during the continuation of an
Event of Default, the rights of holders of Common Securities to payment in
respect of distributions and payments upon liquidation, redemption and otherwise
are subordinated to the rights of holders of Preferred Securities.
"Preferred Securities Guarantee" means any guarantee that the Company
--------------------------------
may enter into with the Trustee or other Persons that operates directly or
indirectly for the benefit of holders of Preferred Securities.
"Property Trustee" has the meaning set forth in the Trust Agreement.
----------------
"Redemption Price" shall have the meaning set forth in Section 3.2.
----------------
"Responsible Officer" when used with respect to the Trustee means any
--------------------
officer within the Corporate Trust Office of the Trustee with direct
responsibility for the administration of this Indenture, including any vice
president, any assistant vice president, any assistant secretary or any other
officer or assistant officer of the Trustee who customarily performs functions
similar to those performed by the Persons who at the time shall be such
officers, respectively, or to whom any corporate trust matter is referred
because of his or her knowledge of and familiarity with the particular subject.
"Scheduled Maturity Date" means June 30, 2033.
-----------------------
"Securities Act," means the Securities Act of 1933, as amended, as in
--------------
effect at the date of execution of this Indenture.
"Senior Debt" means the principal of (and premium, if any) and
------------
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on all
Debt, whether incurred on or prior to the date of this Indenture or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to the Debentures or to other Debt which is pari
passu with (including without limitation the Company's 9.25% Subordinated
Debentures due 2027 issued to First Preferred Capital Trust I, the Company's
10.24% Subordinated Debentures due 2030 issued to First Preferred Capital Trust
II, the Company's 9.00% Subordinated Debentures due 2031 issued to First
Preferred Capital Trust III, the Company's Floating Rate Junior Subordinated
Debt Securities due 2032 issued to First Bank Capital Trust, and by virtue of
First Banks America, Inc.'s merger with and into the Company, the First Banks
America, Inc. 8.50% Subordinated Debentures due 2028 issued to First America
Capital Trust), or subordinated to, the Debentures; provided, however, that
Senior Debt shall not be deemed to include any (a) Debt of the Company which
when incurred and without respect to any election under section 1111(b) of the
United States Bankruptcy Code of 1978, as amended, was without recourse to the
Company; (b) the Guarantee Agreement; (c) Debt to any employee of the Company;
(d) Debt which by its terms is subordinated to trade accounts payable or accrued
liabilities arising in the ordinary course of business to the extent that
payments made to the holders of such Debt by the holders of the Debentures as a
result of the subordination provisions of this Indenture would be greater than
they otherwise would have been as a result of any obligation of such holders to
pay amounts over to the obligees on such trade accounts payable or accrued
liabilities arising in the ordinary course of business as a result of
subordination provisions to which such Debt is subject; and (e) Debt which
constitutes Subordinated Debt.
"Senior Indebtedness" shall have the meaning set forth in Section 16.1.
-------------------
"Special Event" means a Tax Event, a Capital Treatment Event or an
-------------
Investment Company Event.
"Subordinated Debt" means the principal of (and premium, if any) and
------------------
interest, if any (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the Company whether or
not such claim for post-petition interest is allowed in such proceeding), on
Debt (other than the Debentures), whether incurred on or prior to the date of
this Indenture or thereafter incurred, which is by its terms expressly provided
to be junior and subordinate to other Debt of the Company (other than the
Debentures); provided, however, that Subordinated Debt will not be deemed to
include (i) any Debt of the Company which when incurred and without respect to
any election under section 1111(b) of the United States Bankruptcy Code of 1978,
as amended, was without recourse to the Company, (ii) any Debt of the Company
owed to any of its subsidiaries, (iii) any Debt owed to any employee of the
Company, (iv) any Debt which by its terms is subordinated to trade accounts
payable or accrued liabilities arising in the ordinary course of business to the
extent that payments made to the holders of such Debt by the holders of the
Subordinated Debentures as a result of the subordination provisions of this
Indenture would be greater than they otherwise would have been as a result of
any obligation of such holders to pay amounts over to the obligees on such trade
accounts payable or accrued liabilities arising in the ordinary course of
business as a result of subordination provisions to which such Debt is subject,
(v) Debt which constitutes Senior Debt, (vi) any Debt of the Company under debt
securities (and guarantees in respect of these debt securities) initially issued
to any trust, or a trustee of a trust, partnership or other entity affiliated
with the Company that is, directly or indirectly, a financing vehicle of the
Company in connection with the issuance by that entity of preferred securities
or other securities which are intended to qualify for Tier 1 capital treatment,
or (vii) any Debt of its Subsidiaries (including any Debt of First Banks
America, Inc. under debt securities and guarantees in respect of such securities
initially issued to any trust, or a trustee of a trust, partnership or other
entity affiliated with First Banks America, Inc. that is, directly or
indirectly, a financing vehicle of First Banks America, Inc. in connection with
the issuance by that entity of preferred securities or other securities which
are intended to qualify for Tier 1 capital treatment) unless, by its terms, such
Debt is subordinated to the Debentures.
"Subsidiary" means, with respect to any Person, (i) any corporation at
----------
least a majority of whose outstanding Voting Stock shall at the time be owned,
directly or indirectly, by such Person or by one or more of its Subsidiaries or
by such Person and one or more of its Subsidiaries; (ii) any general
partnership, limited liability company, joint venture, trust or similar entity,
at least a majority of whose outstanding partnership or similar interests shall
at the time be owned by such Person, or by one or more of its Subsidiaries, or
by such Person and one or more of its Subsidiaries; and (iii) any limited
partnership of which such Person or any of its Subsidiaries is a general
partner.
"Tax Event" means the receipt by the Company and the Trust of an
----------
Opinion of Counsel, rendered by a law firm having a recognized tax and
securities law practice within a reasonable period of time after the applicable
occurrence, to the effect that, as a result of any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, or as a result of any official administrative
pronouncement or judicial decision interpreting or applying such laws or
regulations, which amendment or change is effective or which pronouncement or
decision is announced on or after the date of issuance of the Preferred
Securities under the Trust Agreement, there is more than an insubstantial risk
that (i) the Trust is, or shall be within ninety (90) days after the date of
such Opinion of Counsel, subject to United States federal income tax with
respect to income received or accrued on the Debentures; (ii) interest payable
by the Company on the Debentures is not, or within ninety (90) days after the
date of such Opinion of Counsel, shall not be, deductible by the Company, in
whole or in part, for United States federal income tax purposes; or (iii) the
Trust is, or shall be within 90 days after the date of such Opinion of Counsel,
subject to more than a de minimis amount of other taxes, duties, assessments or
other governmental charges; provided, however, that the Trust or the Company
shall have requested and received such an Opinion of Counsel with regard to such
matters within a reasonable period of time after the Trust or the Company shall
have become aware of the occurrence or the possible occurrence of any of the
events described in clauses (i) through (iii) above.
"Trust" means First Preferred Capital Trust IV, a Delaware statutory
-----
trust.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
---------------
April 1, 2003, of the Trust.
"Trustee" means Fifth Third Bank and, subject to the provisions of
-------
Article IX, shall also include its successors and assigns, and, if at any time
there is more than one Person acting in such capacity hereunder, "Trustee" shall
mean each such Person.
"Trust Indenture Act," means the Trust Indenture Act of 1939, as
---------------------
amended, subject to the provisions of Sections 11.1, 11.2, and 12.1, as in
effect at the date of execution of this Indenture.
"Trust Securities" means the Common Securities and Preferred
----------------
Securities, collectively.
"Voting Stock," as applied to stock of any Person, means shares,
-------------
interests, participations or other equivalents in the equity interest (however
designated) in such Person having ordinary voting power for the election of a
majority of the directors (or the equivalent) of such Person, other than shares,
interests, participations or other equivalents having such power only by reason
of the occurrence of a contingency.
ARTICLE II
ISSUE, DESCRIPTION, TERMS, CONDITIONS,
REGISTRATION AND EXCHANGE OF THE DEBENTURES
Section 2.1 Designation and Principal Amount. There is hereby
authorized Debentures designated the "8.15% Subordinated Debentures due 2033,"
limited in aggregate principal amount up to $47,422,700 which amount shall be as
set forth in any written order of the Company for the authentication and
delivery of Debentures pursuant to Section 2.6.
Section 2.2 Maturity.
(a) The Maturity Date shall be either:
(i) the Scheduled Maturity Date; or
(ii) if the Company elects to accelerate the Maturity Date
to be a date prior to the Scheduled Maturity Date in accordance with Section
2.2(c), the Accelerated Maturity Date.
(b) The Company may at any time before the day which is ninety
(90) days before the Scheduled Maturity Date and after June 30, 2008 elect to
shorten the Maturity Date only once to the Accelerated Maturity Date, provided
that the Company has received the prior approval of the Federal Reserve if then
required under applicable capital guidelines, policies or regulations of the
Federal Reserve.
(c) If the Company elects to accelerate the Maturity Date in
accordance with Section 2.2(b), the Company shall give notice to the Trustee and
the Trust (unless the Trust is not the holder of the Debentures, in which case
the Trustee will give notice to the holders of the Debentures) of the
acceleration of the Maturity Date and the Accelerated Maturity Date at least
thirty (30) days and no more than 180 days before the Accelerated Maturity Date;
provided, however, that nothing provided in this Section 2.2 shall limit the
Company's rights, as provided in Article III hereof, to redeem all or a portion
of the Debentures at such time or times on or after June 30, 2008, as the
Company may so determine, or at any time upon the occurrence of a Special Event.
Section 2.3 Form and Payment. The Debentures shall be issued in
fully registered certificated form without interest coupons. Principal and
interest on the Debentures issued in certificated form shall be payable, the
transfer of such Debentures shall be registrable and such Debentures shall be
exchangeable for Debentures bearing identical terms and provisions at the office
or agency of the Trustee; provided, however, that payment of interest may be
made at the option of the Company by check mailed to the holder at such address
as shall appear in the Debenture Register or by wire transfer to an account
maintained by the holder as specified in the Debenture Register, provided that
the holder provides proper transfer instructions by the regular record date.
Notwithstanding the foregoing, so long as the holder of any Debentures is the
Property Trustee, the payment of principal of and interest (including Compounded
Interest and Additional Payments, if any) on such Debentures held by the
Property Trustee shall be made at such place and to such account as may be
designated by the Property Trustee.
Section 2.4 [Intentionally Omitted].
Section 2.5 Interest.
(a) Each Debenture shall bear interest at a rate of 8.15% per
annum (the "Coupon Rate") from the original date of issuance until the principal
thereof becomes due and payable, and on any overdue principal and (to the extent
that payment of such interest is enforceable under applicable law) on any
overdue installment of interest at the Coupon Rate, compounded quarterly,
payable (subject to the provisions of Article IV) quarterly in arrears on March
31, June 30, September 30, and December 31 of each year (each, an "Interest
--------
Payment Date"), commencing on June 30, 2003, to the Person in whose name such
- -------------
Debenture or any Predecessor Debenture is registered, at the close of business
on the regular record date for such interest installment, which shall be the
fifteenth day of the last month of the calendar quarter.
(b) The amount of interest payable for any period shall be
computed on the basis of a 360-day year of twelve 30-day months. The amount of
interest payable for any period shorter than a full quarterly period for which
interest is computed shall be computed on the basis of the number of days
elapsed in a 360-day year of twelve 30-day months. In the event that any date on
which interest is payable on the Debentures is not a Business Day, then payment
of interest payable on such date shall be made on the next succeeding day which
is a Business Day (and without any interest or other payment in respect of any
such delay) with the same force and effect as if made on the date such payment
was originally payable.
(c) If, at any time while the Property Trustee is the holder of
any Debentures, the Trust or the Property Trustee is required to pay any taxes,
duties, assessments or governmental charges of whatever nature (other than
withholding taxes) imposed by the United States, or any other taxing authority,
then, in any case, the Company shall pay as additional payments ("Additional
----------
Payments") on the Debentures held by the Property Trustee, such additional
- --------
amounts as shall be required so that the net amounts received and retained by
the Trust and the Property Trustee after paying such taxes, duties, assessments
or other governmental charges shall be equal to the amounts the Trust and the
Property Trustee would have received had no such taxes, duties, assessments or
other government charges been imposed.
Section 2.6 Execution and Authentication.
(a) The Debentures shall be signed on behalf of the Company by its
Chairman, Chief Executive Officer, President or one of its Vice Presidents,
under its corporate seal attested by its Secretary or one of its Assistant
Secretaries. Signatures may be in the form of a manual or facsimile signature.
The Company may use the facsimile signature of any Person who shall have been a
Chairman, Chief Executive Officer, President or Vice President thereof, or of
any Person who shall have been a Secretary or Assistant Secretary thereof,
notwithstanding the fact that at the time the Debentures shall be authenticated
and delivered or disposed of such Person shall have ceased to be the Chairman,
Chief Executive Officer, President or a Vice President, or the Secretary or an
Assistant Secretary, of the Company (and any such signature shall be binding on
the Company). The seal of the Company may be in the form of a facsimile of such
seal and may be impressed, affixed, imprinted or otherwise reproduced on the
Debentures. The Debentures may contain such notations, legends or endorsements
required by law, stock exchange rule or usage. Each Debenture shall be dated the
date of its authentication by the Trustee.
(b) A Debenture shall not be valid until manually authenticated
by an authorized signatory of the Trustee, or by an Authenticating Agent. Such
signature shall be conclusive evidence that the Debenture so authenticated has
been duly authenticated and delivered hereunder and that the holder is entitled
to the benefits of this Indenture.
(c) At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Debentures executed by the
Company to the Trustee for authentication, together with a written order of the
Company for the authentication and delivery of such Debentures signed by its
Chairman, Chief Executive Officer, President or any Vice President and its
Treasurer or any Assistant Treasurer, and the Trustee in accordance with such
written order shall authenticate and deliver such Debentures.
(d) In authenticating such Debentures and accepting the
additional responsibilities under this Indenture in relation to such Debentures,
the Trustee shall be entitled to receive, and (subject to Section 9.1) shall be
fully protected in relying upon, an Opinion of Counsel stating that the form and
terms thereof have been established in conformity with the provisions of this
Indenture.
(e) The Trustee shall not be required to authenticate such
Debentures if the issue of such Debentures pursuant to this Indenture shall
affect the Trustee's own rights, duties or immunities under the Debentures and
this Indenture or otherwise in a manner that is not reasonably acceptable to the
Trustee.
Section 2.7 Registration of Transfer and Exchange.
(a) Debentures may be exchanged upon presentation thereof at the
office or agency of the Company designated for such purpose or at the office of
the Debenture Registrar, for other Debentures and for a like aggregate principal
amount in denominations of integral multiples of $25, upon payment of a sum
sufficient to cover any tax or other governmental charge in relation thereto,
all as provided in this Section 2.7. In respect of any Debentures so surrendered
for exchange, the Company shall execute, the Trustee shall authenticate and such
office or agency shall deliver in exchange therefor the Debenture or Debentures
that the Debentureholder making the exchange shall be entitled to receive,
bearing numbers not contemporaneously outstanding.
(b) The Company shall keep, or cause to be kept, at its office or
agency designated for such purpose or at the office of the Debenture Registrar,
or such other location designated by the Company a register or registers (herein
referred to as the "Debenture Register") in which, subject to such reasonable
-------------------
regulations as the Debenture Registrar (as defined below) may prescribe, the
Company shall register the Debentures and the transfers of Debentures as in this
Article II provided and which at all reasonable times shall be open for
inspection by the Trustee. The registrar for the purpose of registering
Debentures and transfer of Debentures as herein provided shall initially be the
Trustee and thereafter as may be appointed by the Company as authorized by Board
Resolution (the "Debenture Registrar"). Upon surrender for transfer of any
--------------------
Debenture at the office or agency of the Company designated for such purpose,
the Company shall execute, the Trustee shall authenticate and such office or
agency shall deliver in the name of the transferee or transferees a new
Debenture or Debentures for a like aggregate principal amount. All Debentures
presented or surrendered for exchange or registration of transfer, as provided
in this Section 2.7, shall be accompanied (if so required by the Company or the
Debenture Registrar) by a written instrument or instruments of transfer, in form
satisfactory to the Company or the Debenture Registrar, duly executed by the
registered holder or by such holder's duly authorized attorney in writing.
(c) No service charge shall be made for any exchange or
registration of transfer of Debentures, or issue of new Debentures in case of
partial redemption, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge in relation thereto, other than
exchanges pursuant to Section 2.8, Section 3.5(b) and Section 11.4 not involving
any transfer.
(d) The Company shall not be required (i) to issue, exchange or
register the transfer of any Debentures during a period beginning at the opening
of business fifteen (15) days before the day of the mailing of a notice of
redemption of less than all the Outstanding Debentures and ending at the close
of business on the day of such mailing; nor (ii) to register the transfer of or
exchange any Debentures or portions thereof called for redemption.
(e) Debentures may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Indenture. Any
transfer or purported transfer of any Debenture not made in accordance with this
Indenture shall be null and void.
Section 2.8 Temporary Debentures. Pending the preparation of
definitive Debentures, the Company may execute, and the Trustee shall
authenticate and deliver, temporary Debentures (printed, lithographed, or
typewritten). Such temporary Debentures shall be substantially in the form of
the definitive Debentures in lieu of which they are issued, but with such
omissions, insertions and variations as may be appropriate for temporary
Debentures, all as may be determined by the Company. Every temporary Debenture
shall be executed by the Company and be authenticated by the Trustee upon the
same conditions and in substantially the same manner, and with like effect, as
the definitive Debentures. Without unnecessary delay the Company shall execute
and shall furnish definitive Debentures and thereupon any or all temporary
Debentures may be surrendered in exchange therefor (without charge to the
holders), at the office or agency of the Company designated for the purpose and
the Trustee shall authenticate and such office or agency shall deliver in
exchange for such temporary Debentures an equal aggregate principal amount of
definitive Debentures, unless the Company advises the Trustee to the effect that
definitive Debentures need not be authenticated and furnished until further
notice from the Company. Until so exchanged, the temporary Debentures shall be
entitled to the same benefits under this Indenture as definitive Debentures
authenticated and delivered hereunder.
Section 2.9 Mutilated, Destroyed, Lost or Stolen Debentures.
(a) In case any temporary or definitive Debenture shall become
mutilated or be destroyed, lost or stolen, the Company (subject to the next
succeeding sentence) shall execute, and upon the Company's request the Trustee
(subject as aforesaid) shall authenticate and deliver, a new Debenture bearing a
number not contemporaneously outstanding, in exchange and substitution for the
mutilated Debenture, or in lieu of and in substitution for the Debenture so
destroyed, lost, stolen or mutilated. In every case the applicant for a
substituted Debenture shall furnish to the Company and the Trustee such security
or indemnity as may be required by them to save each of them harmless, and, in
every case of destruction, loss or theft, the applicant shall also furnish to
the Company and the Trustee evidence to their satisfaction of the destruction,
loss or theft of the applicant's Debenture and of the ownership thereof. The
Trustee shall authenticate any such substituted Debenture and deliver the same
upon the written request or authorization of the Chairman, Chief Executive
Officer, President or any Vice President and the Treasurer or any Assistant
Treasurer of the Company. Upon the issuance of any substituted Debenture, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
In case any Debenture that has matured or is about to mature shall become
mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Debenture, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated Debenture) if the applicant
for such payment shall furnish to the Company and the Trustee such security or
indemnity as they may require to save them harmless, and, in case of
destruction, loss or theft, evidence to the satisfaction of the Company and the
Trustee of the destruction, loss or theft of such Debenture and of the ownership
thereof.
(b) Every replacement Debenture issued pursuant to the provisions
of this Section 2.9 shall constitute an additional contractual obligation of the
Company whether or not the mutilated, destroyed, lost or stolen Debenture shall
be found at any time, or be enforceable by anyone, and shall be entitled to all
the benefits of this Indenture equally and proportionately with any and all
other Debentures duly issued hereunder. All Debentures shall be held and owned
upon the express condition that the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Debentures, and shall preclude (to the extent lawful) any and all other rights
or remedies, notwithstanding any law or statute existing or hereafter enacted to
the contrary with respect to the replacement or payment of negotiable
instruments or other securities without their surrender.
Section 2.10 Cancellation. All Debentures surrendered for the
purpose of payment, redemption, exchange or registration of transfer shall, if
surrendered to the Company or any Paying Agent, be delivered to the Trustee for
cancellation, or, if surrendered to the Trustee, shall be canceled by it, and no
Debentures shall be issued in lieu thereof except as expressly required or
permitted by any of the provisions of this Indenture. On request of the Company
at the time of such surrender, the Trustee shall deliver to the Company canceled
Debentures held by the Trustee. In the absence of such request the Trustee may
dispose of canceled Debentures in accordance with its standard procedures and
deliver a certificate of disposition to the Company. If the Company shall
otherwise acquire any of the Debentures, however, such acquisition shall not
operate as a redemption or satisfaction of the indebtedness represented by such
Debentures unless and until the same are delivered to the Trustee for
cancellation.
Section 2.11 Benefit of Indenture. Nothing in this Indenture or in
the Debentures, express or implied, shall give or be construed to give to any
Person, other than the parties hereto and the holders of the Debentures (and,
with respect to the provisions of Article XVI, the holders of the Senior
Indebtedness) any legal or equitable right, remedy or claim under or in respect
of this Indenture, or under any covenant, condition or provision herein
contained; all such covenants, conditions and provisions being for the sole
benefit of the parties hereto and of the holders of the Debentures (and, with
respect to the provisions of Article XVI, the holders of the Senior
Indebtedness).
Section 2.12 Authenticating Agent.
(a) So long as any of the Debentures remain Outstanding there may
be an Authenticating Agent for any or all such Debentures, which Authenticating
Agent the Trustee shall have the right to appoint. Said Authenticating Agent
shall be authorized to act on behalf of the Trustee to authenticate Debentures
issued upon exchange, transfer or partial redemption thereof, and Debentures so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. All references in this Indenture to the authentication of Debentures
by the Trustee shall be deemed to include authentication by an Authenticating
Agent. Each Authenticating Agent shall be acceptable to the Company and shall be
a corporation that has a combined capital and surplus, as most recently reported
or determined by it, sufficient under the laws of any jurisdiction under which
it is organized or in which it is doing business to conduct a trust business,
and that is otherwise authorized under such laws to conduct such business and is
subject to supervision or examination by federal or state authorities. If at any
time any Authenticating Agent shall cease to be eligible in accordance with
these provisions, it shall resign immediately.
(b) Any Authenticating Agent may at any time resign by giving
written notice of resignation to the Trustee and to the Company. The Trustee may
at any time (and upon request by the Company shall) terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and to the Company. Upon resignation, termination or
cessation of eligibility of any Authenticating Agent, the Trustee may appoint a
successor Authenticating Agent eligible under the provisions of Section 2.12(a)
of this Indenture. Any successor Authenticating Agent, upon acceptance of its
appointment hereunder, shall become vested with all the rights, powers and
duties of its predecessor hereunder as if originally named as an Authenticating
Agent pursuant hereto.
ARTICLE III
REDEMPTION OF DEBENTURES
Section 3.1 Redemption. Subject to the Company having received
prior approval of the Federal Reserve, if then required under the applicable
capital guidelines, policies or regulations of the Federal Reserve, the Company
may redeem the Debentures issued hereunder on and after the dates set forth in
and in accordance with the terms of this Article III.
Section 3.2 Special Event Redemption. Subject to the Company
having received the prior approval of the Federal Reserve, if then required
under the applicable capital guidelines, policies or regulations of the Federal
Reserve, if a Special Event has occurred and is continuing, then,
notwithstanding Section 3.3(a) but subject to Section 3.3(b), the Company shall
have the right upon not less than thirty (30) days' nor more than sixty (60)
days' notice to the holders of the Debentures to redeem the Debentures, in whole
but not in part, for cash within 180 days following the occurrence of such
Special Event (the "180-Day Period") at a redemption price equal to 100% of the
---------------
principal amount to be redeemed plus any accrued and unpaid interest thereon to
the date of such redemption (the "Redemption Price"), provided, that if at the
----------------
time there is available to the Company the opportunity to eliminate, within the
180-Day Period, a Tax Event by taking some ministerial action (a "Ministerial
-----------
Action"), such as filing a form or making an election, or pursuing some other
- ------
similar reasonable measure which has no adverse effect on the Company, the Trust
or the holders of the Trust Securities issued by the Trust, the Company shall
pursue such Ministerial Action in lieu of redemption, and, provided, further,
that the Company shall have no right to redeem the Debentures pursuant to this
Section 3.2 while it is pursuing any Ministerial Action pursuant to its
obligations hereunder, and, provided, further, that, if it is determined that
the taking of a Ministerial Action would not eliminate the Tax Event within the
180 Day Period, the Company's right to redeem the Debentures pursuant to this
Section 3.2 shall be restored and it shall have no further obligations to pursue
the Ministerial Action. The Redemption Price shall be paid prior to 12:00 noon,
New York time, on the date of such redemption or such earlier time as the
Company determines, provided that the Company shall deposit with the Trustee an
amount sufficient to pay the Redemption Price by 10:00 a.m., New York time, on
the date such Redemption Price is to be paid.
Section 3.3 Optional Redemption by the Company.
(a) Subject to the provisions of Section 3.3(c), except as
otherwise may be specified in this Indenture, the Company shall have the right
to redeem the Debentures, in whole or in part, from time to time, on or after
June 30, 2008, at a Redemption Price equal to 100% of the principal amount to be
redeemed plus any accrued and unpaid interest thereon to the date of such
redemption. Any redemption pursuant to this Section 3.3(a) shall be made upon
not less than thirty (30) days' nor more than sixty (60) days' notice to the
holder of the Debentures, at the Redemption Price. If the Debentures are only
partially redeemed pursuant to this Section 3.3(a), the Debentures shall be
redeemed by lot. The Redemption Price shall be paid prior to 12:00 noon, New
York time, on the date of such redemption or at such earlier time as the Company
determines, provided that the Company shall deposit with the Trustee an amount
sufficient to pay the Redemption Price by 10:00 a.m., New York time, on the date
such Redemption Price is to be paid.
(b) Subject to the provisions of Section 3.3(c), the Company shall
have the right to redeem Debentures at any time and from time to time in a
principal amount equal to the Liquidation Amount (as defined in the Trust
Agreement) of any Preferred Securities purchased and beneficially owned by the
Company, plus an additional principal amount of Debentures equal to the
Liquidation Amount (as defined in the Trust Agreement) of that number of Common
Securities that bears the same proportion to the total number of Common
Securities then outstanding as the number of Preferred Securities to be redeemed
bears to the total number of Preferred Securities then outstanding. Such
Debentures shall be redeemed pursuant to this Section 3.3(b) only in exchange
for and upon surrender by the Company to the Property Trustee of the Preferred
Securities and a proportionate amount of Common Securities, whereupon the
Property Trustee shall cancel the Preferred Securities and Common Securities so
surrendered and a Like Amount (as defined in the Trust Agreement) of Debentures
shall be extinguished by the Trustee and shall no longer be deemed Outstanding.
(c) If a partial redemption of the Debentures would result in
the termination of inclusion of the Preferred Securities in the Nasdaq National
Market or the delisting of the Preferred Securities from any national securities
exchange or other self-regulatory organization on or in which the Preferred
Securities are then included, listed, quoted or included, the Company shall not
be permitted to effect such partial redemption and may only redeem the
Debentures in whole.
Section 3.4 Notice of Redemption.
(a) Except in the case of a redemption pursuant to Section 3.3(b),
in case the Company shall desire to exercise such right to redeem all or, as the
case may be, a portion of the Debentures in accordance with the right reserved
so to do, the Company shall, or shall cause the Trustee to, upon receipt of
forty-five (45) days' written notice from the Company (which notice shall, in
the event of a partial redemption, include a representation to the effect that
such partial redemption will not result in the delisting of the Preferred
Securities as described in Section 3.3(c) above), give notice of such redemption
to holders of the Debentures to be redeemed by mailing, first class postage
prepaid, a notice of such redemption not less than thirty (30) days and not more
than sixty (60) days before the date fixed for redemption to such holders at
their last addresses as they shall appear upon the Debenture Register unless a
shorter period is specified in the Debentures to be redeemed. Any notice that is
mailed in the manner herein provided shall be conclusively presumed to have been
duly given, whether or not the registered holder receives the notice. In any
case, failure duly to give such notice to the holder of any Debenture designated
for redemption in whole or in part, or any defect in the notice, shall not
affect the validity of the proceedings for the redemption of any other
Debentures. In the case of any redemption of Debentures prior to the expiration
of any restriction on such redemption provided in the terms of such Debentures
or elsewhere in this Indenture, the Company shall furnish the Trustee with an
Officers' Certificate evidencing compliance with any such restriction. Each such
notice of redemption shall specify the date fixed for redemption and the
Redemption Price and shall state that payment of the Redemption Price shall be
made at the Corporate Trust Office, upon presentation and surrender of such
Debentures, that interest accrued to the date fixed for redemption shall be paid
as specified in said notice and that from and after said date interest shall
cease to accrue. If less than all the Debentures are to be redeemed, the notice
to the holders of the Debentures shall specify the particular Debentures to be
redeemed. If the Debentures are to be redeemed in part only, the notice shall
state the portion of the principal amount thereof to be redeemed and shall state
that on and after the redemption date, upon surrender of such Debenture, a new
Debenture or Debentures in principal amount equal to the unredeemed portion
thereof shall be issued.
(b) Except in the case of a redemption pursuant to Section 3.3(b),
if less than all the Debentures are to be redeemed, the Company shall give the
Trustee at least forty-five (45) days' written notice in advance of the date
fixed for redemption as to the aggregate principal amount of Debentures to be
redeemed, and thereupon the Trustee shall select, by lot the portion or portions
(equal to $25 or any integral multiple thereof) of the Debentures to be redeemed
and shall thereafter promptly notify the Company in writing of the numbers of
the Debentures to be redeemed, in whole or in part. The Company may, if and
whenever it shall so elect pursuant to the terms hereof, by delivery of
instructions signed on its behalf by its Chairman, Chief Executive Officer,
President or any Vice President, instruct the Trustee or any Paying Agent to
call all or any part of the Debentures for redemption and to give notice of
redemption in the manner set forth in this Section 3.4, such notice to be in the
name of the Company or its own name as the Trustee or such Paying Agent may deem
advisable. In any case in which notice of redemption is to be given by the
Trustee or any such Paying Agent, the Company shall deliver or cause to be
delivered to, or permit to remain with, the Trustee or such Paying Agent, as the
case may be, such Debenture Register, transfer books or other records, or
suitable copies or extracts therefrom, sufficient to enable the Trustee or such
Paying Agent to give any notice by mail that may be required under the
provisions of this Section 3.4.
Section 3.5 Payment Upon Redemption.
(a) If the giving of notice of redemption shall have been
completed as above provided, the Debentures or portions of Debentures to be
redeemed specified in such notice shall become due and payable on the date and
at the place stated in such notice at the applicable Redemption Price, and
interest on such Debentures or portions of Debentures shall cease to accrue on
and after the date fixed for redemption, unless the Company shall default in the
payment of such Redemption Price with respect to any such Debenture or portion
thereof. On presentation and surrender of such Debentures on or after the date
fixed for redemption at the place of payment specified in the notice, said
Debentures shall be paid and redeemed at the Redemption Price (but if the date
fixed for redemption is an Interest Payment Date, the interest installment
payable on such date shall be payable to the registered holder at the close of
business on the applicable record date pursuant to Section 2.5).
(b) Upon presentation of any Debenture that is to be redeemed in
part only, the Company shall execute and the Trustee shall authenticate and the
office or agency where the Debenture is presented shall deliver to the holder
thereof, at the expense of the Company, a new Debenture of authorized
denomination in principal amount equal to the unredeemed portion of the
Debenture so presented.
Section 3.6 No Sinking Fund. The Debentures are not entitled to
the benefit of any sinking fund.
ARTICLE IV
EXTENSION OF INTEREST PAYMENT PERIOD
Section 4.1 Extension of Interest Payment Period. The Company
shall have the right, at any time and from time to time during the term of the
Debentures so long as no Event of Default has occurred and is continuing, to
defer payments of interest by extending the interest payment period of such
Debentures for a period not exceeding twenty (20) consecutive quarters (the
"Extension Period"), during which Extension Period no interest shall be due and
----------------
payable; provided that no Extension Period may extend beyond the Maturity Date
or end on a date other than an Interest Payment Date. To the extent permitted by
applicable law, interest, the payment of which has been deferred because of the
extension of the interest payment period pursuant to this Section 4.1, shall
bear interest thereon at the Coupon Rate compounded quarterly for each quarter
of the Extension Period ("Compounded Interest"). At the end of the Extension
--------------------
Period, the Company shall calculate (and deliver such calculation to the
Trustee) and pay all interest accrued and unpaid on the Debentures, including
any Additional Payments and Compounded Interest (together, "Deferred Payments")
-----------------
that shall be payable to the holders of the Debentures in whose names the
Debentures are registered in the Debenture Register on the first record date
after the end of the Extension Period. Before the termination of any Extension
Period, the Company may further extend such period so long as no Event of
Default has occurred and is continuing, provided that such period together with
all such further extensions thereof shall not exceed twenty (20) consecutive
quarters, or extend beyond the Maturity Date of the Debentures or end on a date
other than an Interest Payment Date. Upon the termination of any Extension
Period and upon the payment of all Deferred Payments then due, the Company may
commence a new Extension Period, subject to the foregoing requirements. No
interest shall be due and payable during an Extension Period, except at the end
thereof, but the Company may prepay at any time all or any portion of the
interest accrued during an Extension Period.
Section 4.2 Notice of Extension.
(a) If the Property Trustee is the only registered holder of the
Debentures at the time the Company selects an Extension Period, the Company
shall give written notice to the Administrative Trustees, the Property Trustee
and the Trustee of its selection of such Extension Period at least two (2)
Business Days before the earlier of (i) the next succeeding date on which
Distributions on the Trust Securities issued by the Trust are payable; or (ii)
the date the Trust is required to give notice of the record date, or the date
such Distributions are payable, to the Nasdaq National Market or other
applicable exchange or self-regulatory organization or to holders of the
Preferred Securities issued by the Trust, but in any event at least one Business
Day before such record date.
(b) If the Property Trustee is not the only holder of the
Debentures at the time the Company selects an Extension Period, the Company
shall give the holders of the Debentures and the Trustee written notice of its
selection of such Extension Period at least two Business Days before the earlier
of (i) the next succeeding Interest Payment Date; or (ii) the date the Company
is required to give notice of the record or payment date of such interest
payment to The Nasdaq National Market or other applicable self-regulatory
organization or to holders of the Debentures, but in any event at least one
Business Day before such record date.
(c) The quarter in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 4.2 shall be counted as one of the twenty
(20) quarters permitted in the maximum Extension Period permitted under Section
4.1.
Section 4.3 Limitation on Transactions. If (i) the Company shall
exercise its right to defer payment of interest as provided in Section 4.1; or
(ii) there shall have occurred and be continuing any Event of Default, then (a)
neither the Company nor any of its Subsidiaries shall declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
(other than (A) dividends or distributions in common stock of the Company or
such Subsidiary, as the case may be, or any declaration of a non-cash dividend
in connection with the implementation of a shareholder rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (B) purchases of common stock of
the Company related to the rights under any of the Company's benefit plans for
its directors, officers or employees), (C) as a result of a reclassification of
its capital stock for another class of its capital stock, or (D) dividends or
distributions made by a Subsidiary to the Company , or (E) dividends or
distributions made by a Subsidiary to a Subsidiary); (b) neither the Company nor
any Subsidiary shall make any payment of interest, principal or premium, if any,
or repay, repurchase or redeem any debt securities issued by the Company or any
Subsidiary which rank pari passu with (including without limitation the
Company's 9.25% Subordinated Debentures due 2027 issued to First Preferred
Capital Trust I, the Company's 10.24% Subordinated Debentures due 2030 issued to
First Preferred Capital Trust II and the Company's 9.00% Subordinated Debentures
due 2031 issued to First Preferred Capital Trust III) or junior to the
Debentures or make any guarantee payments with respect to any guarantee by the
Company of the debt securities of any subsidiary of the Company if such
guarantee ranks pari passu with or junior in interest to the Debentures;
provided, however, that notwithstanding the foregoing the Company may make
payments pursuant to its obligations under the Preferred Securities Guarantee;
and (c) the Company shall not redeem, purchase or acquire less than all of the
Outstanding Debentures or any of the Preferred Securities. The term "capital
stock" as used in this Indenture shall not include the 8.50% Subordinated
Debentures due 2028 issued by First Banks America, Inc. to First America Capital
Trust or the 8.50% Cumulative Trust Preferred Securities issued by First America
Capital Trust.
ARTICLE V
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1 Payment of Principal and Interest. The Company shall
duly and punctually pay or cause to be paid the principal of and interest on the
Debentures at the time and place and in the manner provided herein. Each such
payment of the principal of and interest on the Debentures shall relate only to
the Debentures, shall not be combined with any other payment of the principal of
or interest on any other obligation of the Company, and shall be clearly and
unmistakably identified as pertaining to the Debentures.
Section 5.2 Maintenance of Agency. So long as any of the
Debentures remain Outstanding, the Company shall maintain an office or agency at
such other location or locations as may be designated as provided in this
Section 5.2, where (i) Debentures may be presented for payment; (ii) Debentures
may be presented as hereinabove authorized for registration of transfer and
exchange; and (iii) notices and demands to or upon the Company in respect of the
Debentures and this Indenture may be given or served, such designation to
continue with respect to such office or agency until the Company shall, by
written notice signed by its President or a Vice President and delivered to the
Trustee, designate some other office or agency for such purposes or any of them.
If at any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Trustee with the address thereof, such
presentations, notices and demands may be made or served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, notices and demands. The Company shall give
the Trustee prompt written notice of any such designation or rescission thereof.
Section 5.3 Paying Agents.
(a) The Trustee shall initially act as the Paying Agent. If the
Company shall appoint one or more Paying Agents for the Debentures, other than
the Trustee, the Company shall cause each such Paying Agent to execute and
deliver to the Trustee an instrument in which such agent shall agree with the
Trustee, subject to the provisions of this Section 5.3:
(i) that it shall hold all sums held by it as such agent
for the payment of the principal of or interest on the Debentures (whether such
sums have been paid to it by the Company or by any other obligor of such
Debentures) in trust for the benefit of the Persons entitled thereto;
(ii) that it shall give the Trustee notice of any failure
by the Company (or by any other obligor of such Debentures) to make any payment
of the principal of or interest on the Debentures when the same shall be due and
payable;
(iii) that it shall, at any time during the continuance of
any failure referred to in the preceding paragraph (a)(ii) above, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent; and
(iv) that it shall perform all other duties of Paying Agent
as set forth in this Indenture.
(b) If the Company shall act as its own Paying Agent with respect
to the Debentures, it shall on or before each due date of the principal of or
interest on such Debentures, set aside, segregate and hold in trust for the
benefit of the Persons entitled thereto a sum sufficient to pay such principal
or interest so becoming due on Debentures until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and shall promptly notify
the Trustee of such action, or any failure (by it or any other obligor on such
Debentures) to take such action. Whenever the Company shall have one or more
Paying Agents for the Debentures, it shall, prior to each due date of the
principal of or interest on any Debentures, deposit with the Paying Agent a sum
sufficient to pay the principal or interest so becoming due, such sum to be held
in trust for the benefit of the Persons entitled to such principal or interest,
and (unless such Paying Agent is the Trustee) the Company shall promptly notify
the Trustee of this action or failure so to act.
(c) Notwithstanding anything in this Section 5.3 to the contrary, (i)
the agreement to hold sums in trust as provided in this Section 5.3 is subject
to the provisions of Section 13.3 and 13.4; and (ii) the Company may at any
time, for the purpose of obtaining the satisfaction and discharge of this
Indenture or for any other purpose, pay, or direct any Paying Agent to pay, to
the Trustee all sums held in trust by the Company or such Paying Agent, such
sums to be held by the Trustee upon the same terms and conditions as those upon
which such sums were held by the Company or such Paying Agent; and, upon such
payment by any Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Section 5.4 Appointment to Fill Vacancy in Office of Trustee. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
shall appoint, in the manner provided in Section 9.11, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 5.5 Compliance with Consolidation Provisions. The Company
shall not, while any of the Debentures remain Outstanding, consolidate with, or
merge into, or merge into itself, or sell or convey all or substantially all of
its property to any other company unless the provisions of Article XII hereof
are complied with.
Section 5.6 Limitation on Transactions. If Debentures are issued
to the Trust or a trustee of the Trust in connection with the issuance of Trust
Securities by the Trust and (i) there shall have occurred and be continuing any
event that would constitute an Event of Default; (ii) the Company shall be in
default with respect to its payment of any obligations under the Preferred
Securities Guarantee relating to the Trust; or (iii) the Company shall have
given notice of its election to defer payments of interest on such Debentures by
extending the interest payment period as provided in this Indenture and such
Extension Period, or any extension thereof, shall be continuing, then (a)
neither the Company nor any of its Subsidiaries shall declare or pay any
dividend on, make any distributions with respect to, or redeem, purchase,
acquire or make a liquidation payment with respect to, any of its capital stock
(other than (A) dividends or distributions in common stock of the Company or
such Subsidiary, as the case may be, or any declaration of a non-cash dividend
in connection with the implementation of a shareholder rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, (B) purchases of common stock of
the Company related to the rights under any of the Company's benefit plans for
its directors, officers or employees), (C) as a result of a reclassification of
its capital stock, or (D) dividends or distributions made by a Subsidiary to the
Company, or (E) dividends or distributions made by a Subsidiary to a
Subsidiary); (b) neither the Company nor any Subsidiary shall make any payment
of principal, interest or premium, if any, or repay, repurchase or redeem any
debt securities issued by the Company or any Subsidiary which rank pari passu
with (including without limitation the Company's 9.25% Subordinated Debentures
due 2027 issued to First Preferred Capital Trust I, the Company's 10.24%
Subordinated Debentures due 2030 issued to First Preferred Capital Trust II, the
Company's 9.00% Subordinated Debentures due 2031 issued to First Preferred
Capital Trust III, the Company's Floating Rate Junior Subordinated Debt
Securities due 2032 issued to First Bank Capital Trust, and the First Banks
America, Inc. 8.50% Subordinated Debentures due 2028 issued to First America
Capital Trust) or junior in interest to the Debentures; provided, however, that
the Company may make payments pursuant to its obligations under the Preferred
Securities Guarantee; and (c) the Company shall not redeem, purchase or acquire
less than all of the Outstanding Debentures or any of the Preferred Securities.
Section 5.7 Covenants as to the Trust. For so long as the Trust
Securities of the Trust remain outstanding, the Company shall (i) maintain 100%
direct or indirect ownership of the Common Securities of the Trust; provided,
however, that any permitted successor of the Company under this Indenture may
succeed to the Company's ownership of the Common Securities; (ii) not
voluntarily terminate, wind up or liquidate the Trust, except upon prior
approval of the Federal Reserve if then so required under applicable capital
guidelines, regulations or policies of the Federal Reserve and use its
reasonable efforts to cause the Trust (a) to remain a business trust (and to
avoid involuntary termination, winding up or liquidation), except in connection
with a distribution of Debentures, the redemption of all of the Trust Securities
of the Trust or certain mergers, consolidations or amalgamations, each as
permitted by the Trust Agreement; and (b) to otherwise continue not to be
treated as an association taxable as a corporation or partnership for United
States federal income tax purposes; (iii) use its reasonable efforts to cause
each holder of Trust Securities to be treated as owning an undivided beneficial
interest in the Debentures; and (iv) including any successor to the Company,
shall use best efforts to maintain the eligibility of the Preferred Securities
for listing, quotation or inclusion on or in any national securities exchange or
other self-regulatory organization on or in which the Preferred Securities are
then listed, quoted or included (including, if applicable, the Nasdaq National
Market) and shall use best efforts to keep the Preferred Securities so listed,
quoted or included for so long as the Preferred Securities remain outstanding.
In connection with the distribution of the Debentures to the holders of the
Preferred Securities issued by the Trust upon a Dissolution Event, the Company
shall use its best efforts to include such Debentures in the Nasdaq National
Market or on such other exchange or to include such Debentures in such
self-regulatory organization as the Preferred Securities are then listed, quoted
or included.
Section 5.8 Covenants as to Purchases. Except upon the exercise
by the Company of its right to redeem the Debentures pursuant to Section 3.2
upon the occurrence and continuation of a Special Event or pursuant to Section
3.3(b), the Company shall not purchase any Debentures, in whole or in part, from
the Trust prior to June 30, 2008.
Section 5.9 Waiver of Usury; Stay or Extension Laws. The Company
shall not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any usury, stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performances of this Indenture, and the Company (to the extent it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
Section 5.10 Limitation on Additional Junior Indebtedness. The
Company shall not, and it shall not cause or permit any Subsidiary of the
Company to, incur, issue or be obligated on any Additional Junior Indebtedness,
either directly or indirectly, by way of guarantee, suretyship or otherwise,
other than:
(a) Additional Junior Indebtedness that, by its terms, is
expressly stated to be junior and subordinate in all respects to the Debentures;
or
(b) Additional Junior Indebtedness that, by its terms, is
expressly stated to be pari passu and rank equally in all respects with the
Debentures; provided, however, that neither the Company nor any of its
Subsidiaries shall incur, issue or otherwise become obligated on any Additional
Junior Indebtedness pursuant to this Section 5.10(b) unless the quotient of "X"
divided by "Y" is less than 65% upon incurring, issuing or otherwise obligated
on any Additional Junior Indebtedness, where "X" and "Y" are calculated as
described in Section 5.10(c) and 5.10(d), respectively.
(c) As used in Section 5.10(b), "X" means the sum of the
following:
(i) the aggregate liquidation amount or principal amount,
as the case may be, of the Debentures Outstanding at the time of the proposed
issuance of such Additional Junior Indebtedness pursuant to Section 5.10(b),
plus
(ii) the aggregate liquidation amount or principal amount,
as the case may be, of any Additional Junior Indebtedness previously issued and
outstanding at the time of the proposed issuance of such Additional Junior
Indebtedness pursuant to Section 5.10(b), excluding any such Additional Junior
Indebtedness that, by its terms, is expressly stated to be junior and
subordinate in all respects to the Debentures, plus
(iii) the aggregate liquidation amount or principal amount,
as the case may be, of the Additional Junior Indebtedness proposed to be issued
or otherwise incurred pursuant to Section 5.10(b), plus
(iv) the principal amount of any Senior Indebtedness of the
Company outstanding at the time of the proposed issuance of such Additional
Junior Indebtedness pursuant to Section 5.10(b) for amounts borrowed;
less, any indebtedness described in clauses (i) to (iv) above to
be paid with the proceeds of the Additional Junior Indebtedness then proposed to
be incurred, issued or upon which the Company is then to become obligated.
(d) As used in Section 5.10(b), "Y" means the sum of the
following:
(i) the stockholder's equity (excluding any amount of
accumulated other comprehensive income or loss) of the Company, each calculated
on a consolidated basis and in accordance with accounting principles generally
accepted in the United States of America, determined as of the last day of the
month immediately preceding the month during which the proposed issuance of the
Additional Junior Indebtedness pursuant to Section 5.10(b) is scheduled to
occur, (provided, however, that in no event shall any portion of the Debentures,
the Additional Junior Indebtedness or the Senior Indebtedness described in
Section 5.10(c) also be included in "Y" under this Section 5.10(d)), plus
(ii) the aggregate liquidation amount or principal amount,
as the case may be, of any Additional Junior Indebtedness, which by its terms is
expressly stated to be junior and subordinate in all respects to the Debentures
and which was previously issued and outstanding at the time of the proposed
issuance of such Additional Junior Indebtedness pursuant to Section 5.10(b).
(e) Notwithstanding the foregoing, the limitations of this Section
5.10 shall not in any way preclude the Company from merging with or into, or
from acquiring or being acquired by, another Person (including by way of merger,
stock purchase or acquisition of assets) that is not directly or indirectly
controlling, controlled by or under common control with the Company in an arm's
length transaction entered into in good faith, even though the pro forma
consolidated balance sheet of the surviving Person immediately following the
consummation of such merger, or of the acquiror immediately following the
completion of such acquisition transaction, may include Additional Junior
Indebtedness in amounts in excess of amounts that would otherwise be permitted
by this Section 5.10; provided, however, that thereafter the limitations on
future incurrences of Additional Junior Indebtedness in this Section 5.10 shall
continue to apply to the Company (in the event that it is the surviving
corporation in such merger transaction or the acquiror in such acquisition
transaction) and shall apply to the other Person (in the event that it is the
surviving corporation in such merger transaction or the acquiror in such
acquisition transaction) whether or not such other Person is expressly made a
party hereto.
(f) The Company will not pay dividends or make any payments on
account of the purchase, redemption or other retirement of any of its common
stock, or make any distribution in respect thereof, directly or indirectly, if
after such payment or distribution, the quotient referred to in Section 5.10(b)
would exceed 60%.
ARTICLE VI
DEBENTUREHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
Section 6.1 Company to Furnish the Trustee Names and Addresses of
Debentureholders. The Company shall furnish or cause to be furnished to the
Trustee (a) on a quarterly basis on each regular record date (as described in
Section 2.5) a list, in such form as the Trustee may reasonably require, of the
names and addresses of the holders of the Debentures as of such regular record
date, provided that the Company shall not be obligated to furnish or cause to be
furnished such list at any time that the list shall not differ in any respect
from the most recent list furnished to the Trustee by the Company (in the event
the Company fails to provide such list on a quarterly basis, the Trustee shall
be entitled to rely on the most recent list provided by the Company); and (b) at
such other times as the Trustee may request in writing within thirty (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 fifteen (15) days prior to the time such list
is furnished; provided, however, that, in either case, no such list need be
furnished if the Trustee shall be the Debenture Registrar.
Section 6.2 Preservation of Information Communications with the
Debentureholders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Debentures contained in the most recent list furnished to it as
provided in Section 6.1 and as to the names and addresses of holders of
Debentures received by the Trustee in its capacity as Debenture Registrar for
the Debentures (if acting in such capacity).
(b) The Trustee may destroy any list furnished to it as provided
in Section 6.1 upon receipt of a new list so furnished.
(c) Debentureholders may communicate as provided in Section 312(b)
of the Trust Indenture Act with other Debentureholders with respect to their
rights under this Indenture or under the Debentures.
Section 6.3 Reports by the Company.
(a) The Company covenants and agrees to file with the Trustee,
within fifteen (15) days after the Company is required to file the same with the
Commission, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) that the
Company may be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act; or, if the Company is not required to file
information, documents or reports pursuant to either of such sections, then to
file with the Trustee and the Commission, in accordance with the rules and
regulations prescribed from time to time by the Commission, such of the
supplementary and periodic information, documents and reports that may be
required pursuant to Section 13 of the Exchange Act in respect of a security
listed and registered on a national securities exchange as may be prescribed
from time to time in such rules and regulations.
(b) The Company covenants and agrees to file with the Trustee and
the Commission, in accordance with the rules and regulations prescribed from
time to time by the Commission, such additional information, documents and
reports with respect to compliance by the Company with the conditions and
covenants provided for in this Indenture as may be required from time to time by
such rules and regulations.
(c) The Company covenants and agrees to transmit by mail, first
class postage prepaid, or reputable overnight delivery service that provides for
evidence of receipt, to the Debentureholders, as their names and addresses
appear upon the Debenture Register, within thirty (30) days after the filing
thereof with the Trustee, such summaries of any information, documents and
reports required to be filed by the Company pursuant to subsections (a) and (b)
of this Section 6.3 as may be required by rules and regulations prescribed from
time to time by the Commission.
Section 6.4 Reports by the Trustee.
(a) On or before July 15 in each year in which any of the
Debentures are Outstanding, the Trustee shall transmit by mail, first class
postage prepaid, to the Debentureholders, as their names and addresses appear
upon the Debenture Register, a brief report dated as of the preceding May 15, if
and to the extent required under Section 313(a) of the Trust Indenture Act.
(b) The Trustee shall comply with Section 313(b) and 313(c) of
the Trust Indenture Act.
(c) A copy of each such report shall, at the time of such
transmission to Debentureholders, be filed by the Trustee with the Company, with
the Nasdaq National Market, or any stock exchange on which any Debentures are
listed and/or any other self-regulatory organization on or in which any
Debentures are quoted or included (if so listed, quoted or included) and also
with the Commission. The Company agrees to notify the Trustee when any
Debentures become designated for inclusion in the Nasdaq National Market or
listed on any other stock exchange or other self-regulatory organization.
ARTICLE VII
REMEDIES OF THE TRUSTEE AND DEBENTUREHOLDERS
ON EVENT OF DEFAULT
Section 7.1 Events of Default.
(a) Whenever used herein with respect to the Debentures, "Event
-----
of Default" means any one or more of the following events that has occurred and
- ----------
is continuing:
(i) the Company defaults in the payment of any installment
of interest upon any of the Debentures, as and when the same shall become due
and payable, and continuance of such default for a period of thirty (30) days;
provided, however, that a valid extension of an interest payment period by the
Company in accordance with the terms of this Indenture shall not constitute a
default in the payment of interest for this purpose;
(ii) the Company defaults in the payment of the principal
on the Debentures as and when the same shall become due and payable whether at
maturity, upon redemption, by declaration or otherwise;
(iii) the Company fails to observe or perform any other
of its covenants or agreements with respect to the Debentures for a period of
ninety (90) days after the date on which written notice of such failure,
requiring the same to be remedied and stating that such notice is a "Notice of
---------
Default" hereunder, shall have been given to the Company by the Trustee, by
- -------
registered or certified mail, or to the Company and the Trustee by the holders
of at least twenty-five percent (25%) in principal amount of the Debentures at
the time Outstanding;
(iv) the Company pursuant to or within the meaning of any
Bankruptcy Law (A) commences a voluntary case; (B) consents to the entry of an
order for relief against it in an involuntary case; (C) consents to the
appointment of a Custodian of it or for all or substantially all of its
property; or (D) makes a general assignment for the benefit of its creditors;
(v) a court of competent jurisdiction enters an order under
any Bankruptcy Law that (A) is for relief against the Company in an involuntary
case; (B) appoints a Custodian of the Company for all or substantially all of
its property; or (C) orders the liquidation of the Company, and in any of such
events the order or decree remains unstayed and in effect for 60 consecutive
days; or
(vi) the Trust shall have voluntarily or involuntarily
dissolved, wound-up its business or otherwise terminated its existence except in
connection with (A) the distribution of Debentures to holders of Trust
Securities in liquidation of their interests in the Trust; (B) the redemption of
all of the outstanding Trust Securities of the Trust; or (C) certain mergers,
consolidations or amalgamations, each as permitted by the Trust Agreement.
(b) In each and every such case referred to in paragraphs (i)
through (vi) of Section 7.1(a), unless the principal of all the Debentures shall
have already become due and payable, either the Trustee or the holders of not
less than twenty-five percent (25%) in aggregate principal amount of the
Debentures then Outstanding hereunder, by notice in writing to the Company (and
to the Trustee if given by such Debentureholders) may declare the principal of
all the Debentures to be due and payable immediately, and upon any such
declaration the same shall become and shall be immediately due and payable,
notwithstanding anything contained in this Indenture or in the Debentures.
(c) At any time after the principal of the Debentures shall have
been so declared due and payable, and before any judgment or decree for the
payment of the money due shall have been obtained or entered as hereinafter
provided, the holders of a majority in aggregate principal amount of the
Debentures then Outstanding hereunder, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if: (i) the
Company has paid or deposited with the Trustee a sum sufficient to pay all
matured installments of interest upon all the Debentures and the principal of
any and all Debentures that shall have become due otherwise than by acceleration
(with interest upon such principal, and, to the extent that such payment is
enforceable under applicable law, upon overdue installments of interest, at the
rate per annum expressed in the Debentures to the date of such payment or
deposit) and the amount payable to the Trustee under Section 9.7; and (ii) any
and all Events of Default under this Indenture, other than the nonpayment of
principal on Debentures that shall not have become due by their terms, shall
have been remedied or waived as provided in Section 7.6. No such rescission and
annulment shall extend to or shall affect any subsequent default or impair any
right consequent thereon.
(d) In case the Trustee shall have proceeded to enforce any right
with respect to Debentures under this Indenture and such proceedings shall have
been discontinued or abandoned because of such rescission or annulment or for
any other reason or shall have been determined adversely to the Trustee, then
and in every such case the Company and the Trustee shall be restored
respectively to their former positions and rights hereunder, and all rights,
remedies and powers of the Company and the Trustee shall continue as though no
such proceedings had been taken.
Section 7.2 Collection of Indebtedness and Suits for Enforcement by
Trustee.
(a) The Company covenants that (i)in case it shall default in the
payment of any installment of interest on any of the Debentures, and such
default shall have continued for a period of thirty (30) days (other than by
reason of a valid extension of an interest payment period by the Company in
accordance with the terms of this Indenture); or (ii) in case it shall default
in the payment of the principal of any of the Debentures when the same shall
have become due and payable, whether upon maturity of the Debentures or upon
redemption or upon declaration or otherwise, then, upon demand of the Trustee,
the Company shall pay to the Trustee, for the benefit of the holders of the
Debentures, the whole amount that then shall have become due and payable on all
such Debentures for principal or interest, or both, as the case may be, with
interest upon the overdue principal and (to the extent that payment of such
interest is enforceable under applicable law and, if the Debentures are held by
the Trust or a trustee of the Trust, without duplication of any other amounts
paid by the Trust or trustee in respect thereof) upon overdue installments of
interest at the rate per annum expressed in the Debentures; and, in addition
thereto, such further amount as shall be sufficient to cover the costs and
expenses of collection, and the amount payable to the Trustee under Section 9.7.
(b) If the Company shall fail to pay such amounts set forth in
Section 7.2(a) forthwith upon such demand, the Trustee, in its own name and as
trustee of an express trust, shall be entitled and empowered to institute any
action or proceedings at law or in equity for the collection of the sums so due
and unpaid, and may prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against the Company or
other obligor upon the Debentures and collect the money adjudged or decreed to
be payable in the manner provided by law out of the property of the Company or
other obligor upon the Debentures, wherever situated.
(c) In case of any receivership, insolvency, liquidation,
bankruptcy, reorganization, readjustment, arrangement, composition or judicial
proceedings affecting the Company, the Trust or the creditors or property of
either, the Trustee shall have power to intervene in such proceedings and take
any action therein that may be permitted by the court and shall (except as may
be otherwise provided by law) be entitled to file such proofs of claim and other
papers and documents as may be necessary or advisable in order to have the
claims of the Trustee and of the holders of the Debentures allowed for the
entire amount due and payable by the Company under this Indenture at the date of
institution of such proceedings and for any additional amount that may become
due and payable by the Company after such date, and to collect and receive any
money or other property payable or deliverable on any such claim, and to
distribute the same after the deduction of the amount payable to the Trustee
under Section 9.7; and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of the holders of the Debentures to
make such payments to the Trustee, and, in the event that the Trustee shall
consent to the making of such payments directly to such Debentureholders, to pay
to the Trustee any amount due it under Section 9.7.
(d) All rights of action and of asserting claims under this
Indenture, or under any of the terms established with respect to the Debentures,
may be enforced by the Trustee without the possession of any of such Debentures,
or the production thereof at any trial or other proceeding 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,
after provision for payment to the Trustee of any amounts due under Section 9.7,
be for the ratable benefit of the holders of the Debentures. In case of an Event
of Default hereunder which is continuing, the Trustee may in its discretion
proceed to protect and enforce the rights vested in it by this Indenture by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any of such rights, either at law or in equity or in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law. Nothing contained herein
shall be deemed to authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Debentureholder any plan of reorganization, arrangement,
adjustment or composition affecting the Debentures or the rights of any holder
thereof or to authorize the Trustee to vote in respect of the claim of any
Debentureholder in any such proceeding.
Section 7.3 Application of Money Collected. Any money or other
assets collected by the Trustee pursuant to this Article VII with respect to the
Debentures shall be applied in the following order, at the date or dates fixed
by the Trustee and, in case of the distribution of such money or other assets on
account of principal or interest, upon presentation of the Debentures, and
notation thereon of the payment, if only partially paid, and upon surrender
thereof if fully paid:
FIRST: To the payment of costs and expenses of collection and of all
amounts payable to the Trustee under Section 9.7;
SECOND: To the payment of all Senior Indebtedness of the Company if and
to the extent required by Article XVI; and
THIRD: To the payment of the amounts then due and unpaid upon the
Debentures for principal and interest, in respect of which or for the benefit of
which such money has been collected, ratably, without preference or priority of
any kind, according to the amounts due and payable on such Debentures for
principal and interest, respectively.
Section 7.4 Limitation on Suits.
(a) Except as set forth in this Indenture, no holder of any
Debenture shall have any right by virtue or by availing of any provision of this
Indenture to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Indenture or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless (i) such holder previously
shall have given to the Trustee written notice of an Event of Default and of the
continuance thereof with respect to the Debentures specifying such Event of
Default, as hereinbefore provided; (ii) the holders of not less than twenty-five
percent (25%) in aggregate principal amount of the Debentures then Outstanding
shall have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as trustee hereunder; (iii) such holder or holders
shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred therein or thereby;
and (iv) the Trustee for sixty (60) days after its receipt of such notice,
request and offer of indemnity shall have failed to institute any such action,
suit or proceeding and during such sixty (60) day period, the holders of a
majority in principal amount of the Debentures do not give the Trustee a
direction inconsistent with the request.
(b) Notwithstanding anything contained herein to the contrary or
any other provisions of this Indenture, the right of any holder of the
Debentures to receive payment of the principal of and interest on the
Debentures, as therein provided, on or after the respective due dates expressed
in such Debenture (or in the case of redemption, on the redemption date), or to
institute suit for the enforcement of any such payment on or after such
respective dates or redemption date, shall not be impaired or affected without
the consent of such holder and by accepting a Debenture hereunder it is
expressly understood, intended and covenanted by the taker and holder of every
Debenture with every other such taker and holder and the Trustee that no one or
more holders of the Debentures shall have any right in any manner whatsoever by
virtue or by availing of any provision of this Indenture to affect, disturb or
prejudice the rights of the holders of any other of such Debentures, or to
obtain or seek to obtain priority over or preference to any other such holder,
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal, ratable and common benefit of all holders of the
Debentures. For the protection and enforcement of the provisions of this Section
7.4, each and every Debentureholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.
Section 7.5 Rights and Remedies Cumulative; Delay or Omission Not
Waiver.
(a) Except as otherwise provided in Section 2.9(b), all powers and
remedies given by this Article VII to the Trustee or to the Debentureholders
shall, to the extent permitted by law, be deemed cumulative and not exclusive of
any other powers and remedies available to the Trustee or the holders of the
Debentures, by judicial proceedings or otherwise, to enforce the performance or
observance of the covenants and agreements contained in this Indenture or
otherwise established with respect to such Debentures.
(b) No delay or omission of the Trustee or of any holder of any of
the Debentures to exercise any right or power accruing upon any Event of Default
occurring and continuing as aforesaid shall impair any such right or power, or
shall be construed to be a waiver of any such default or an acquiescence
therein; and, subject to the provisions of Section 7.4, every power and remedy
given by this Article VII or by law to the Trustee or the Debentureholders may
be exercised from time to time, and as often as shall be deemed expedient, by
the Trustee or by the Debentureholders.
Section 7.6 Control by Debentureholders. The holders of a
majority in aggregate principal amount of the Debentures at the time
Outstanding, determined in accordance with Section 10.4, shall have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee; provided, however, that such direction shall not be in conflict with
any rule of law or with this Indenture. Subject to the provisions of Section
9.1, the Trustee shall have the right to decline to follow any such direction if
the Trustee in good faith shall, by a Responsible Officer or Officers of the
Trustee, determine that the proceeding so directed would involve the Trustee in
personal liability. The holders of a majority in aggregate principal amount of
the Debentures at the time Outstanding affected thereby, determined in
accordance with Section 10.4, may on behalf of the holders of all of the
Debentures waive any past default in the performance of any of the covenants
contained herein and its consequences, except (i) a default in the payment of
the principal of or interest on any of the Debentures as and when the same shall
become due by the terms of such Debentures otherwise than by acceleration
(unless such default has been cured and a sum sufficient to pay all matured
installments of principal and interest has been deposited with the Trustee (in
accordance with Section 7.1(c)); (ii) a default in the covenants contained in
Section 5.7; or (iii) in respect of a covenant or provision hereof which cannot
be modified or amended without the consent of the holder of each Outstanding
Debenture affected; provided, however, that if the Debentures are held by the
Trust or a trustee of the Trust, such waiver or modification to such waiver
shall not be effective until the holders of a majority in liquidation preference
of Trust Securities of the Trust shall have consented to such waiver or
modification to such waiver; provided, further, that if the Debentures are held
by the Trust or a trustee of the Trust, and if the consent of the holder of each
Outstanding Debenture is required, such waiver shall not be effective until each
holder of the Trust Securities of the Trust shall have consented to such waiver.
Upon any such waiver, the default covered thereby shall be deemed to be cured
for all purposes of this Indenture and the Company, the Trustee and the holders
of the Debentures shall be restored to their former positions and rights
hereunder, respectively; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 7.7 Undertaking to Pay Costs. All parties to this
Indenture agree, and each holder of any Debentures by such holder's acceptance
thereof shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken or omitted by
it as the Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 7.7 shall not apply to any suit instituted by the
Trustee, to any suit instituted by any Debentureholder, or group of the
Debentureholders holding more than ten percent (10%) in aggregate principal
amount of the Outstanding Debentures, or to any suit instituted by any
Debentureholder for the enforcement of the payment of the principal of or
interest on the Debentures, on or after the respective due dates expressed in
such Debenture or established pursuant to this Indenture.
Section 7.8 Direct Action; Right of Set-Off. In the event that an
Event of Default has occurred and is continuing and such event is attributable
to the failure of the Company to pay interest on or principal of the Debentures
on an Interest Payment Date or Maturity Date, as applicable, then a holder of
Preferred Securities may institute and prosecute a legal proceeding directly
against the Company for enforcement of payment to such holder of the principal
of or interest on such Debentures having a principal amount equal to the
aggregate Liquidation Amount of the Preferred Securities of such holders (a
"Direct Action"). In connection with such Direct Action, the Company will have a
-------------
right of set-off under this Indenture to the extent of any payment actually made
by the Company to such holder of the Preferred Securities with respect to such
Direct Action.
ARTICLE VIII
FORM OF DEBENTURE AND ORIGINAL ISSUE
Section 8.1 Form of Debenture. The Debenture and the Trustee's
Certificate of Authentication to be endorsed thereon are to be substantially in
the forms contained as Exhibit A to this Indenture attached hereto and
incorporated herein by reference.
Section 8.2 Original Issue of the Debentures. Debentures in the
aggregate principal amount of $41,237,125 may, upon execution of this Indenture,
be executed by the Company and delivered to the Trustee for authentication. If
the Underwriters exercise their Option and there is an Option Closing Date (as
such terms are defined in the Underwriting Agreement dated March 26, 2003, by
and among the Company, the Trust and Stifel, Nicolaus & Company, Incorporated
and Fahnestock & Co. Inc., as representatives of the several Underwriters named
therein), then on such Option Closing Date, Debentures in the additional
aggregate principal amount of up to $6,185,575 may be executed by the Company
and delivered to the Trustee for authentication. In either such event, the
Trustee shall thereupon authenticate and deliver said Debentures to or upon the
written order of the Company, signed by its Chairman, its Chief Executive
Officer, its President, or any Vice President and its Treasurer or an Assistant
Treasurer, without any further action by the Company.
ARTICLE IX
CONCERNING THE TRUSTEE
Section 9.1 Certain Duties and Responsibilities of the Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default
and after the curing of all Events of Default that may have occurred, shall
undertake to perform with respect to the Debentures such duties and only such
duties as are specifically set forth in this Indenture, and no implied covenants
shall be read into this Indenture against the Trustee. In case an Event of
Default has occurred and is continuing and 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 its exercise, as a
prudent Person would exercise or use under the circumstances in the conduct of
his or her own affairs.
(b) No provision of this 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:
(i) prior to the occurrence of an Event of Default and
after the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Trustee shall with
respect to the Debentures be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable with
respect to the Debentures except for the performance of such duties and
obligations as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(B) in the absence of bad faith on the part of the Trustee,
the Trustee may with respect to the Debentures conclusively rely, as to
the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture; but in
the case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Indenture;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the holders of not less than a majority in principal amount of the
Debentures at the time Outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Indenture with respect
to the Debentures; and
(iv) none of the provisions contained in this Indenture
shall require the Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if there is reasonable ground for
believing that the repayment of such funds or liability is not reasonably
assured to it under the terms of this Indenture or adequate indemnity against
such risk is not reasonably assured to it.
Section 9.2 Notice of Defaults. Within ninety (90) days after
actual knowledge by a Responsible Officer of the Trustee of the occurrence of
any Default hereunder with respect to the Debentures, the Trustee shall transmit
by mail to all holders of the Debentures, as their names and addresses appear in
the Debenture Register, notice of such default, unless such Default shall have
been cured or waived; provided, however, that, except in the case of a Default
in the payment of the principal or interest (including any Additional Payments)
on any Debenture, the Trustee shall be protected in withholding such notice if
and so long as the board of directors, the executive committee or a trust
committee of the directors and/or Responsible Officers of the Trustee determines
in good faith that the withholding of such notice is in the interests of the
holders of such Debentures; and provided, further, that in the case of any
Default of the character specified in section 7.1(a)(iii), no such notice to
holders of Debentures need be sent until at least thirty (30) days after the
occurrence thereof.
Section 9.3 Certain Rights of Trustee. Except as otherwise
provided in Section 9.1:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, security or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) Any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by a Board Resolution or an
instrument signed in the name of the Company by the President or any Vice
President and by the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer thereof (unless other evidence in respect thereof is
specifically prescribed herein);
(c) The Trustee shall not be deemed to have knowledge of a Default
or an Event of Default, other than an Event of Default specified in Section
7.1(a)(i) or (ii), unless and until it receives written notification of such
Event of Default from the Company or by holders of at least twenty-five percent
(25%) of the aggregate principal amount of the Debentures at the time
Outstanding;
(d) The Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or omitted hereunder
in good faith and in reliance thereon;
(e) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Debentureholders, pursuant to the provisions of this
Indenture, unless such Debentureholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that may be incurred therein or thereby; nothing contained herein shall,
however, relieve the Trustee of the obligation, upon the occurrence of an Event
of Default (that is continuing and has not been cured or waived) to exercise
with respect to the Debentures such of the rights and powers vested in it by
this Indenture, and to use the same degree of care and skill in its exercise, as
a prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs;
(f) The Trustee shall not be liable for any action taken or
omitted to be taken by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Indenture;
(g) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond,
security, or other papers or documents, unless requested in writing so to do by
the holders of not less than a majority in principal amount of the Outstanding
Debentures (determined as provided in Section 10.4); 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 costs, expenses or liabilities as a condition
to so proceeding, and the reasonable expense of every such examination shall be
paid by the Company or, if paid by the Trustee, shall be repaid by the Company
upon demand; and
(h) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder.
Section 9.4 Trustee Not Responsible for Recitals, etc.
(a) The Recitals contained herein and in the Debentures shall be
taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same.
(b) The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Debentures.
(c) The Trustee shall not be accountable for the use or
application by the Company of any of the Debentures or of the proceeds of such
Debentures, or for the use or application of any money paid over by the Trustee
in accordance with any provision of this Indenture, or for the use or
application of any money received by any Paying Agent other than the Trustee.
Section 9.5 May Hold the Debentures. The Trustee or any Paying
Agent or Debenture Registrar for the Debentures, in its individual or any other
capacity, may become the owner or pledgee of the Debentures with the same rights
it would have if it were not Trustee, Paying Agent or Debenture Registrar.
Section 9.6 Money Held in Trust. Subject to the provisions of
Section 13.5, all money received by the Trustee shall, until used or applied as
herein provided, be held in trust for the purposes for which they were received,
but need not be segregated from other funds except to the extent required by
law. The Trustee shall be under no liability for interest on any money received
by it hereunder except such as it may agree with the Company to pay thereon.
Section 9.7 Compensation and Reimbursement.
(a) The Company covenants and agrees to pay to the Trustee, and
the Trustee shall be entitled to, such reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust), as the Company and the Trustee may from time to time agree in
writing, for all services rendered by it in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee, and, except as otherwise expressly provided herein,
the Company shall pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the Trustee
in accordance with any of the provisions of this Indenture (including the
reasonable compensation and the expenses and disbursements of its counsel and of
all Persons not regularly in its employ) except any such expense, disbursement
or advance as may arise from its negligence or bad faith. The Company also
covenants to indemnify the Trustee (and its officers, agents, directors and
employees) for, and to hold it harmless against, any loss, liability or expense
incurred without negligence or bad faith on the part of the Trustee and arising
out of or in connection with the acceptance or administration of this Indenture,
including the costs and expenses of defending itself against any claim of
liability in the premises.
(b) The obligations of the Company under this Section 9.7 to
compensate and indemnify the Trustee and to pay or reimburse the Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder. Such additional indebtedness shall be secured by a lien prior to that
of the Debentures 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
Debentures.
Section 9.8 Reliance on Officers' Certificate. Except as
otherwise provided in Section 9.1, whenever in the administration of the
provisions of this Indenture the Trustee shall deem it necessary or desirable
that a matter be proved or established prior to taking or suffering or omitting
to take any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may, in the absence of negligence or
bad faith on the part of the Trustee, be deemed to be conclusively proved and
established by an Officers' Certificate delivered to the Trustee and such
certificate, in the absence of negligence or bad faith on the part of the
Trustee, shall be full warrant to the Trustee for any action taken, suffered or
omitted to be taken by it under the provisions of this Indenture upon the faith
thereof.
Section 9.9 Disqualification; Conflicting Interests. If the
Trustee has or shall acquire any "conflicting interest" within the meaning of
Section 310(b) of the Trust Indenture Act, the Trustee and the Company shall in
all respects comply with the provisions of Section 310(b) of the Trust Indenture
Act.
Section 9.10 Corporate Trustee Required; Eligibility. There shall
at all times be a Trustee with respect to the Debentures issued hereunder which
shall at all times be a corporation organized and doing business under the laws
of the United States or any state or territory thereof or of the District of
Columbia, or a corporation or other Person permitted to act as trustee by the
Commission, authorized under such laws to exercise corporate trust powers,
having (or the obligations of which are guaranteed by an entity having) a
combined capital and surplus of at least $50,000,000, and subject to supervision
or examination by federal, state, territorial, or District of Columbia
authority. If such Person publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section 9.10, the combined capital and
surplus of such Person shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. The Company may
not, nor may any Person directly or indirectly controlling, controlled by, or
under common control with the Company, serve as Trustee. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 9.10, the Trustee shall resign immediately in the manner and with the
effect specified in Section 9.11.
Section 9.11 Resignation and Removal; Appointment of Successor.
(a) The Trustee or any successor hereafter appointed, may at any
time resign by giving written notice thereof to the Company and by transmitting
notice of resignation by mail, first class postage prepaid, to the
Debentureholders, as their names and addresses appear upon the Debenture
Register. Upon receiving such notice of resignation, the Company shall promptly
appoint a successor trustee with respect to Debentures by written instrument, in
duplicate, executed by order of the Board of Directors, one copy of which
instrument shall be delivered to the resigning Trustee and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted appointment within thirty (30) days after the mailing of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee with respect to
Debentures, or any Debentureholder who has been a bona fide holder of a
Debenture or Debentures for at least six (6) months may, subject to the
provisions of Sections 9.9 and 9.10, 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 one of the following shall occur:
(i) the Trustee shall fail to comply with the provisions of
Section 9.9 after written request therefor by the Company or by any
Debentureholder who has been a bona fide holder of a Debenture or Debentures for
at least six months; or
(ii) the Trustee shall cease to be eligible in accordance
with the provisions of Section 9.10 and shall fail to resign after written
request therefor by the Company or by any such Debentureholder; or
(iii) the Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or commence a voluntary bankruptcy
proceeding, or a receiver of the Trustee or of its property shall be appointed
or consented to, or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then, in any such case, the Company may remove the Trustee with respect to all
Debentures and appoint a successor trustee by written instrument, in duplicate,
executed by order of the Board of Directors, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor trustee,
or, subject to the provisions of Sections 9.9 and 9.10, unless the Trustee's
duty to resign is stayed as provided herein, any Debentureholder who has been a
bona fide holder of a Debenture or Debentures for at least six months may, on
behalf of that holder and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Trustee and the appointment of a
successor trustee. Such court may thereupon after such notice, if any, as it may
deem proper and prescribe, remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in principal amount of the
Debentures at the time Outstanding may at any time remove the Trustee by so
notifying the Trustee and the Company and may appoint a successor Trustee with
the consent of the Company.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee with respect to the Debentures pursuant to any of the
provisions of this Section 9.11 shall become effective upon acceptance of
appointment by the successor trustee as provided in Section 9.12.
(e) Any successor trustee appointed pursuant to this Section 9.11
may be appointed with respect to the Debentures, and at any time there shall be
only one Trustee with respect to the Debentures.
Section 9.12 Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor trustee
with respect to the Debentures, every successor trustee so appointed shall
execute, acknowledge and deliver to the Company and to the retiring Trustee an
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor trustee, such retiring Trustee shall, upon
payment of its charges, execute and deliver an instrument transferring to such
successor trustee all the rights, powers, and trusts of the retiring Trustee and
shall duly assign, transfer and deliver to such successor trustee all property
and money held by such retiring Trustee hereunder.
(b) Upon request of any successor trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor trustee all such rights, powers and trusts referred
to in paragraph (a) of this Section 9.12.
(c) No successor trustee shall accept its appointment unless at
the time of such acceptance such successor trustee shall be qualified and
eligible under this Article IX.
(d) Upon acceptance of appointment by a successor trustee as
provided in this Section 9.12, the Company shall transmit notice of the
succession of such trustee hereunder by mail, first class postage prepaid, to
the Debentureholders, as their names and addresses appear upon the Debenture
Register. If the Company fails to transmit such notice within ten days after
acceptance of appointment by the successor trustee, the successor trustee shall
cause such notice to be transmitted at the expense of the Company.
Section 9.13 Merger, Conversion, Consolidation or Succession to
Business. Any Person into which the Trustee may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any Person
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided, that such Person shall be
qualified under the provisions of Section 9.9 and eligible under the provisions
of Section 9.10, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding. In case any Debentures shall have been authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such authentication and
deliver the Debentures so authenticated with the same effect as if such
successor Trustee had itself authenticated such Debentures.
Section 9.14 Preferential Collection of Claims Against the
Company. The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship described in Section 311(b) of the
Trust Indenture Act. A Trustee who has resigned or been removed shall be subject
to Section 311(a) of the Trust Indenture Act to the extent included therein.
ARTICLE X
CONCERNING THE DEBENTUREHOLDERS
Section 10.1 Evidence of Action by Holders.
(a) Whenever in this Indenture it is provided that the holders of
a majority or specified percentage in principal amount of the Debentures may
take any action (including the making of any demand or request, the giving of
any notice, consent or waiver or the taking of any other action), the fact that
at the time of taking any such action the holders of such majority or specified
percentage have joined therein may be evidenced by any instrument or any number
of instruments of similar tenor executed by such holders of Debentures in Person
or by agent or proxy appointed in writing.
(b) If the Company shall solicit from the Debentureholders any
request, demand, authorization, direction, notice, consent, waiver or other
action, the Company may, at its option, as evidenced by an Officers'
Certificate, fix in advance a record date for the determination of
Debentureholders entitled to give such request, demand, authorization,
direction, notice, consent, waiver or other action, but the Company shall have
no obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action may be given
before or after the record date, but only the Debentureholders of record at the
close of business on the record date shall be deemed to be Debentureholders for
the purposes of determining whether Debentureholders of the requisite proportion
of Outstanding Debentures have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other
action, and for that purpose the Outstanding Debentures shall be computed as of
the record date; provided, however, that no such authorization, agreement or
consent by such Debentureholders on the record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture
not later than six (6) months after the record date.
Section 10.2 Proof of Execution by Debentureholders. Subject to
the provisions of Section 9.1, proof of the execution of any instrument by a
Debentureholder (such proof shall not require notarization) or such
Debentureholder's agent or proxy and proof of the holding by any Person of any
of the Debentures shall be sufficient if made in the following manner:
(a) The fact and date of the execution by any such Person of any
instrument may be proved in any reasonable manner acceptable to the Trustee.
(b) The ownership of Debentures shall be proved by the Debenture
Register of such Debentures or by a certificate of the Debenture Registrar
thereof.
(c) The Trustee may require such additional proof of any matter
referred to in this Section 10.2 as it shall deem necessary.
Section 10.3 Who May be Deemed Owners. Prior to the due
presentment for registration of transfer of any Debenture, the Company, the
Trustee, any Paying Agent, any Authenticating Agent and any Debenture Registrar
may deem and treat the Person in whose name such Debenture shall be registered
upon the books of the Company as the absolute owner of such Debenture (whether
or not such Debenture shall be overdue and notwithstanding any notice of
ownership or writing thereon made by anyone other than the Debenture Registrar)
for the purpose of receiving payment of or on account of the principal of and
interest on such Debenture (subject to Section 2.3) and for all other purposes;
and neither the Company nor the Trustee nor any Paying Agent nor any
Authenticating Agent nor any Debenture Registrar shall be affected by any notice
to the contrary.
Section 10.4 Certain Debentures Owned by Company Disregarded. In
determining whether the holders of the requisite principal amount of the
Debentures have concurred in any direction, consent or waiver under this
Indenture, the Debentures that are owned by the Company or any other obligor on
the Debentures or by any Person directly or indirectly controlling or controlled
by or under common control with the Company or any other obligor on the
Debentures shall be disregarded and deemed not to be Outstanding for the purpose
of any such determination, except that (i) for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, consent
or waiver, only Debentures that the Trustee actually knows are so owned shall be
so disregarded; and (ii) for purposes of this Section 10.4, the Trust shall be
deemed not to be controlled by the Company. The Debentures so owned that have
been pledged in good faith may be regarded as Outstanding for the purposes of
this Section 10.4, if the pledgee shall establish to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Debentures and that
the pledgee is not a Person directly or indirectly controlling or controlled by
or under direct or indirect common control with the Company or any such other
obligor. In case of a dispute as to such right, any decision by the Trustee
taken upon the advice of counsel shall be full protection to the Trustee.
Section 10.5 Actions Binding on Future Debentureholders. At any
time prior to (but not after) the evidencing to the Trustee, as provided in
Section 10.1, of the taking of any action by the holders of the majority or
percentage in principal amount of the Debentures specified in this Indenture in
connection with such action, any holder of a Debenture that is shown by the
evidence to be included in the Debentures the holders of which have consented to
such action may, by filing written notice with the Trustee, and upon proof of
holding as provided in Section 10.2, revoke such action so far as concerns such
Debenture. Except as aforesaid any such action taken by the holder of any
Debenture shall be conclusive and binding upon such holder and upon all future
holders and owners of such Debenture, and of any Debenture issued in exchange
therefor, on registration of transfer thereof or in place thereof, irrespective
of whether or not any notation in regard thereto is made upon such Debenture.
Any action taken by the holders of the majority or percentage in principal
amount of the Debentures specified in this Indenture in connection with such
action shall be conclusively binding upon the Company, the Trustee and the
holders of all the Debentures.
ARTICLE XI
SUPPLEMENTAL INDENTURES
Section 11.1 Supplemental Indentures Without the Consent of
Debentureholders. In addition to any supplemental indenture otherwise authorized
by this Indenture, the Company and the Trustee may from time to time and at any
time enter into an indenture or indentures supplemental hereto (which shall
conform to the provisions of the Trust Indenture Act as then in effect), without
the consent of the Debentureholders, for one or more of the following purposes:
(a) to cure any ambiguity, defect, or inconsistency herein, or in
the Debentures;
(b) to provide for uncertificated Debentures in addition to or in
place of certificated Debentures;
(c) to add to the covenants of the Company for th benefit of the
holders of all or any of the Debentures or to surrender any right or power
herein conferred upon the Company;
(d) to make any change that does not adversely affect the rights
of any Debentureholder in any material respect;
(e) to qualify or maintain the qualification of this Indenture
under the Trust Indenture Act;
(f) to evidence a consolidation or merger involving the Company as
permitted under Section 12.1;
(g) to add to, delete from, or revise the conditions, limitations,
and restrictions on the authorized amount, terms, or purposes of issue,
authentication, and delivery of Debentures, only as herein set forth; or
(h) to provide for the issuance of and establish the form and
terms and conditions of the Debentures, to establish the form of any
certifications required to be furnished pursuant to the terms of this Indenture
or of the Debentures, or to add to the rights of the holders of the Debentures.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, and to make any further
appropriate agreements and stipulations that may be therein contained, but the
Trustee shall not be obligated to enter into any such supplemental indenture
that affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise. Any supplemental indenture authorized by the provisions of this
Section 11.1 may be executed by the Company and the Trustee without the consent
of the holders of any of the Debentures at the time Outstanding, notwithstanding
any of the provisions of Section 11.2.
Section 11.2 Supplemental Indentures with Consent of
Debentureholders. With the consent (evidenced as provided in Section 10.1) of
the holders of not less than a majority in principal amount of the Debentures at
the time Outstanding, the Company, when authorized by Board Resolutions, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as then in effect) for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Indenture or of any supplemental indenture or of modifying in any manner not
covered by Section 11.1 the rights of the holders of the Debentures under this
Indenture; provided, however, that no such supplemental indenture shall without
the consent of the holders of each Debenture then Outstanding and affected
thereby, (i) extend the fixed maturity of any Debentures, reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon; or (ii) reduce the aforesaid percentage of Debentures, the holders of
which are required to consent to any such supplemental indenture; provided,
further, that if the Debentures are held by the Trust or a trustee of the Trust,
such supplemental indenture shall not be effective until the holders of a
majority in liquidation preference of Trust Securities of the Trust shall have
consented to such supplemental indenture; provided, further, that if the consent
of the holder of each Outstanding Debenture is required, such supplemental
indenture shall not be effective until each holder of the Trust Securities of
the Trust shall have consented to such supplemental indenture. It shall not be
necessary for the consent of the Debentureholders affected thereby under this
Section 11.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 11.3 Effect of Supplemental Indentures. Upon the execution
of any supplemental indenture pursuant to the provisions of this Article XI,
this Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of Debentures shall thereafter be determined, exercised and enforced hereunder
subject in all respects to such modifications and amendments, and all the terms
and conditions of any such supplemental indenture shall be and be deemed to be
part of the terms and conditions of this Indenture for any and all purposes.
Section 11.4 The Debentures Affected by Supplemental Indentures.
The Debentures affected by a supplemental indenture, authenticated and delivered
after the execution of such supplemental indenture pursuant to the provisions of
this Article XI, may bear a notation in form approved by the Company, provided,
such form meets the requirements of any exchange or automated quotation system
upon which the Debentures may be listed or quoted, as to any matter provided for
in such supplemental indenture. If the Company shall so determine, new
Debentures so modified as to conform, in the opinion of the Board of Directors
of the Company, to any modification of this Indenture contained in any such
supplemental indenture may be prepared by the Company, authenticated by the
Trustee and delivered in exchange for the Debentures then Outstanding.
Section 11.5 Execution of Supplemental Indentures.
(a) Upon the request of the Company, accompanied by its Board
Resolutions authorizing the execution of any such supplemental indenture, and
upon the filing with the Trustee of evidence of the consent of the
Debentureholders required to consent thereto as aforesaid, the Trustee shall
join with the Company in the execution of such supplemental indenture unless
such supplemental indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion but shall not be obligated to enter into such supplemental
indenture. The Trustee, subject to the provisions of Sections 9.1, may receive
an Opinion of Counsel as conclusive evidence that any supplemental indenture
executed pursuant to this Article XI is authorized or permitted by, and conforms
to, the terms of this Article XI and that it is proper for the Trustee under the
provisions of this Article XI to join in the execution thereof.
(b) Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of this Section 11.5, the
Trustee shall transmit by mail, first class postage prepaid, a notice, setting
forth in general terms the substance of such supplemental indenture, to the
Debentureholders as their names and addresses appear upon the Debenture
Register. Any failure of the Trustee to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
ARTICLE XII
SUCCESSOR CORPORATION
Section 12.1 Company May Consolidate, etc. Nothing contained in
this Indenture or in any of the Debentures shall prevent any consolidation or
merger of the Company with or into any other corporation or corporations
(whether or not affiliated with the Company, as the case may be), or successive
consolidations or mergers in which the Company, as the case may be, or its
successor or successors shall be a party or parties, or shall prevent any sale,
conveyance, transfer or other disposition of the property of the Company, as the
case may be, or its successor or successors as an entirety, or substantially as
an entirety, to any other corporation (whether or not affiliated with the
Company, as the case may be, or its successor or successors) authorized to
acquire and operate the same; provided, however, that the Company hereby
covenants and agrees that (a) upon any such consolidation, merger, sale,
conveyance, transfer or other disposition, the due and punctual payment, in the
case of the Company, of the principal of and interest on all of the Debentures,
according to their tenor and the due and punctual performance and observance of
all of the covenants and conditions of this Indenture to be kept or performed by
the Company, as the case may be, shall be expressly assumed, by supplemental
indenture (which shall conform to the provisions of the Trust Indenture Act, as
then in effect) satisfactory in form to the Trustee executed and delivered to
the Trustee by the entity formed by such consolidation, or into which the
Company, as the case may be, shall have been merged, or by the entity which
shall have acquired such property; (b) in case the Company consolidates with or
merges into another Person or conveys or transfers its properties and assets
substantially as an entirety to any Person, the successor Person is organized
under the laws of the United States or any state or the District of Columbia;
and (c) immediately after giving effect thereto, no Default or Event of Default
shall have occurred and be continuing.
Section 12.2 Successor Corporation Substituted.
(a) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition and upon the assumption by the successor
corporation, by supplemental indenture, executed and delivered to the Trustee
and satisfactory in form to the Trustee, of, in the case of the Company, the due
and punctual payment of the principal of and interest on all of the Debentures
Outstanding and the due and punctual performance of all of the covenants and
conditions of this Indenture to be performed by the Company, as the case may be,
such successor corporation shall succeed to, and be substituted for, the Company
with the same effect as if it had been named as the Company herein and thereupon
the predecessor corporation shall be relieved of all obligations and covenants
under this Indenture and the Debentures.
(b) In case of any such consolidation, merger, sale, conveyance,
transfer or other disposition such changes in phraseology and form (but not in
substance) may be made in the Debentures thereafter to be issued as may be
appropriate.
(c) Nothing contained in this Indenture or in any of the
Debentures shall prevent the Company from merging into itself or acquiring by
purchase or otherwise, all or any part of, the property of any other Person
(whether or not affiliated with the Company).
Section 12.3 Evidence of Consolidation, etc. to Trustee. The
Trustee, subject to the provisions of Section 9.1, may receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, sale,
conveyance, transfer or other disposition, and any such assumption, comply with
the provisions of this Article XII.
ARTICLE XIII
SATISFACTION AND DISCHARGE
Section 13.1 Satisfaction and Discharge of Indenture. If at any
time: (a) the Company shall have delivered to the Trustee for cancellation all
Debentures theretofore authenticated (other than any Debentures that shall have
been destroyed, lost or stolen and that shall have been replaced or paid as
provided in Section 2.9) and all Debentures for whose payment money or
Governmental Obligations have theretofore been deposited in trust or segregated
and held in trust by the Company (and thereupon repaid to the Company or
discharged from such trust, as provided in Section 13.5); or (b) all such
Debentures not theretofore delivered to the Trustee for cancellation shall have
become due and payable, or are by their terms to become due and payable within
one year or are to be called for redemption within one year under arrangements
satisfactory to the Trustee for the giving of notice of redemption, and the
Company shall deposit or cause to be deposited with the Trustee as trust funds
the entire amount in money or Governmental Obligations sufficient, or a
combination thereof sufficient, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay at maturity or upon redemption all Debentures
not theretofore delivered to the Trustee for cancellation, including principal
and interest due or to become due on such date of maturity or date fixed for
redemption, as the case may be, and if the Company shall also pay or cause to be
paid all other sums payable hereunder by the Company; then this Indenture shall
thereupon cease to be of further effect except for the provisions of Sections
2.3, 2.7, 2.9, 5.1, 5.2, 5.3, 9.7 and 9.10, that shall survive until the date of
maturity or redemption date, as the case may be, and Sections 9.7 and 13.5, that
shall survive to such date and thereafter, and the Trustee, on demand of the
Company and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture.
Section 13.2 Discharge of Obligations. If at any time all
Debentures not heretofore delivered to the Trustee for cancellation or that have
not become due and payable as described in Section 13.1 shall have been paid by
the Company by depositing irrevocably with the Trustee as trust funds money or
an amount of Governmental Obligations sufficient in the opinion of a nationally
recognized certified public accounting firm to pay at maturity or upon
redemption all Debentures not theretofore delivered to the Trustee for
cancellation, including principal and interest due or to become due to such date
of maturity or date fixed for redemption, as the case may be, and if the Company
shall also pay or cause to be paid all other sums payable hereunder by the
Company, then after the date such money or Governmental Obligations, as the case
may be, are deposited with the Trustee, the obligations of the Company under
this Indenture shall cease to be of further effect except for the provisions of
Sections 2.3, 2.7, 2.9, 5.1, 5.2, 5.3, 9.6, 9.7, 9.10 and 13.5 hereof that shall
survive until such Debentures shall mature and be paid. Thereafter, Sections 9.7
and 13.5 shall survive.
Section 13.3 Deposited Money to be Held in Trust. All money or
Governmental Obligations deposited with the Trustee pursuant to Sections 13.1 or
13.2 shall be held in trust and shall be available for payment as due, either
directly or through any Paying Agent (including the Company acting as its own
Paying Agent), to the holders of the Debentures for the payment or redemption of
which such money or Governmental Obligations have been deposited with the
Trustee.
Section 13.4 Payment of Money Held by Paying Agents. In connection
with the satisfaction and discharge of this Indenture, all money or Governmental
Obligations then held by any Paying Agent under the provisions of this Indenture
shall, upon demand of the Company, be paid to the Trustee and thereupon such
Paying Agent shall be released from all further liability with respect to such
money or Governmental Obligations.
Section 13.5 Repayment to the Company. Any money or Governmental
Obligations deposited with any Paying Agent or the Trustee, or then held by the
Company in trust, for payment of principal of or interest on the Debentures that
are not applied but remain unclaimed by the holders of such Debentures for at
least two years after the date upon which the principal of or interest on such
Debentures shall have respectively become due and payable, shall be repaid to
the Company, as the case may be, on December 31 of each year or (if then held by
the Company) shall be discharged from such trust; and thereupon the Paying Agent
and the Trustee shall be released from all further liability with respect to
such money or Governmental Obligations, and the holder of any of the Debentures
entitled to receive such payment shall thereafter, as an unsecured general
creditor, look only to the Company for the payment thereof.
ARTICLE XIV
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
Section 14.1 No Recourse. No recourse under or upon any
obligation, covenant or agreement of this Indenture, or of the Debentures, or
for any claim based thereon or otherwise in respect thereof, shall be had
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or successor corporation,
either directly or through the Company or any such predecessor or successor
corporation, whether by virtue of any constitution, statute or rule of law, or
by the enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Indenture and the obligations issued hereunder are solely
corporate obligations, and that no such personal liability whatever, shall
attach to, or is or shall be incurred by, the incorporators, stockholders,
officers or directors as such, of the Company or of any predecessor or successor
corporation, or any of them, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations, covenants or agreements
contained in this Indenture or in any of the Debentures or implied therefrom;
and that any and all such personal liability of every name and nature, either at
common law or in equity or by constitution or statute, and any and all such
rights and claims against, every such incorporator, stockholder, officer or
director as such, because of the creation of the indebtedness hereby authorized,
or under or by reason of the obligations, covenants or agreements contained in
this Indenture or in any of the Debentures or implied therefrom, are hereby
expressly waived and released as a condition of, and as a consideration for, the
execution of this Indenture and the issuance of such Debentures.
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.1 Effect on Successors and Assigns. All the covenants,
stipulations, promises and agreements in this Indenture contained by or on
behalf of the Company shall bind its respective successors and assigns, whether
so expressed or not.
Section 15.2 Actions by Successor. Any act or proceeding by any
provision of this Indenture authorized or required to be done or performed by
any board, committee or officer of the Company shall and may be done and
performed with like force and effect by the corresponding board, committee or
officer of any corporation that shall at the time be the lawful sole successor
of the Company.
Section 15.3 Surrender of Company Powers. The Company by
instrument in writing executed by appropriate authority of its Board of
Directors and delivered to the Trustee may surrender any of the powers reserved
to the Company, and thereupon such power so surrendered shall terminate both as
to the Company, as the case may be, and as to any successor corporation.
Section 15.4 Notices. Except as otherwise expressly provided
herein any notice or demand that by any provision of this Indenture is required
or permitted to be given or served by the Trustee or by the holders of
Debentures to or on the Company may be given or served by being deposited first
class postage prepaid in a post-office letterbox addressed (until another
address is filed in writing by the Company with the Trustee), as follows: First
Banks, Inc., 600 James S. McDonnell Boulevard, Mail Code 014, Hazelwood,
Missouri 63042, Attention: Chief Financial Officer. Any notice, election,
request or demand by the Company or any Debentureholder to or upon the Trustee
shall be deemed to have been sufficiently given or made, for all purposes, if
given or made in writing at the Corporate Trust Office of the Trustee.
Section 15.5 Governing Law. This Indenture and each Debenture shall
be deemed to be a contract made under the internal laws of the State of Missouri
and for all purposes shall be construed in accordance with the laws of said
State.
Section 15.6 Treatment of Debentures as Debt. It is intended that
the Debentures shall be treated as indebtedness and not as equity for federal
income tax purposes. The provisions of this Indenture shall be interpreted to
further this intention. The Company (with respect to its separate books and
records), the Trustee, and, by acceptance of a Debenture, each holder of a
Debenture, agree to treat the Debentures as indebtedness of the Company and not
as equity for all tax (including without limitation federal income tax) and
financial accounting purposes.
Section 15.7 Compliance Certificates and Opinions.
(a) Upon any application or demand by the Company to the Trustee
to take any action under any of the provisions of this Indenture, the Company
shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent have been complied with,
except that in the case of any such application or demand as to which the
furnishing of such documents is specifically required by any provision of this
Indenture relating to such particular application or demand, no additional
certificate or opinion need be furnished.
(b) Each certificate or opinion of the Company provided for in
this Indenture and delivered to the Trustee with respect to compliance with a
condition or covenant in this Indenture shall include (i) a statement that the
Person making such certificate or opinion has read such covenant or condition;
(ii) 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; (iii) a statement that, in the opinion of such
Person, he or she has made such examination or investigation as, in the opinion
of such Person, 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 (iv)
a statement as to whether or not, in the opinion of such Person, such condition
or covenant has been complied with; provided, however, that each such
certificate shall comply with the provisions of Section 34 of the Trust
Indenture Act.
Section 15.8 Payments on Business Days. In any case where the date
of maturity of interest or principal of any Debenture or the date of redemption
of any Debenture shall not be a Business Day, then payment of interest or
principal may be made on the next succeeding Business Day with the same force
and effect as if made on the nominal date of maturity or redemption, and no
interest shall accrue for the period after such nominal date.
Section 15.9 Conflict with Trust Indenture Act. If and to the
extent that any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture
Act, such imposed duties shall control.
Section 15.10. Counterparts. This Indenture may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 15.11. Separability. In case any one or more of the provisions
contained in this Indenture or in the Debentures shall for any reason be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provisions of this Indenture or
of the Debentures, but this Indenture and the Debentures shall be construed as
if such invalid or illegal or unenforceable provision had never been contained
herein or therein.
Section 15.12. Assignment. The Company shall have the right at all
times to assign any of its respective rights or obligations under this Indenture
to a direct or indirect wholly owned Subsidiary of the Company, provided, that
in the event of any such assignment, the Company shall remain liable for all
such obligations. Subject to the foregoing, this Indenture is binding upon and
inures to the benefit of the parties thereto and their respective successors and
assigns. This Indenture may not otherwise be assigned by the parties thereto.
Section 15.13. Acknowledgment of Rights. The Company acknowledges
that, with respect to any Debentures held by the Trust or a trustee of the
Trust, if the Property Trustee fails to enforce its rights under this Indenture
as the holder of the Debentures held as the assets of the Trust, any holder of
Preferred Securities may institute legal proceedings directly against the
Company to enforce such Property Trustee's rights under this Indenture without
first instituting any legal proceedings against such Property Trustee or any
other person or entity. Notwithstanding the foregoing, if an Event of Default
has occurred and is continuing and such event is attributable to the failure of
the Company to pay principal or interest on the Debentures on the date such
principal or interest is otherwise payable (or in the case of redemption, on the
redemption date), the Company acknowledges that a holder of Preferred Securities
may directly institute a proceeding for enforcement of payment to such holder of
the principal of or interest on the Debentures having a principal amount equal
to the aggregate liquidation amount of the Preferred Securities of such holder
on or after the respective due date specified in the Debentures.
ARTICLE XVI
SUBORDINATION OF THE DEBENTURES
Section 16.1 Agreement to Subordinate. The Company covenants and
agrees, and each holder of the Debentures issued hereunder by such holder's
acceptance thereof likewise covenants and agrees, that all the Debentures shall
be issued subject to the provisions of this Article XVI; and each holder of a
Debenture, whether upon original issue or upon transfer or assignment thereof,
accepts and agrees to be bound by such provisions. The payment by the Company of
the principal of and interest on all the Debentures issued hereunder shall, to
the extent and in the manner hereinafter set forth, be subordinated and junior
in right of payment to the prior payment in full of all Senior Debt,
Subordinated Debt and Additional Senior Obligations of the Company
(collectively, "Senior Indebtedness") to the extent provided herein, whether
--------------------
outstanding at the date of this Indenture or thereafter incurred. No provision
of this Article XVI shall prevent the occurrence of any Default or Event of
Default hereunder. Notwithstanding any provision of this Indenture to the
contrary, the obligations of the Company under this Indenture shall not be (i)
superior in right of payment or (ii) subordinate and junior in right of payment,
to the Company's 9.25% Subordinated Debentures due 2027 issued to First
Preferred Capital Trust I, the Company's 10.24% Subordinated Debentures due 2030
issued to First Preferred Capital Trust II, the Company's 9.00% Subordinated
Debentures due 2031 issued to First Preferred Capital Trust III, the Company's
Floating Rate Junior Subordinated Debt Securities due 2032 issued to First Bank
Capital Trust, or the First Banks America, Inc. 8.50% Subordinated Debentures
due 2028 issued to First America Capital Trust.
Section 16.2 Default on Senior Debt, Subordinated Debt or
Additional Senior Obligations. 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, or in the event that the maturity
of any Senior Indebtedness has been accelerated because of a default, then, in
either case, no payment shall be made by the Company with respect to the
principal (including redemption payments) of or interest on the Debentures. In
the event that, notwithstanding the foregoing, any payment shall be received by
the Trustee when such payment is prohibited by the preceding sentence of this
Section 16.2, such payment shall be held in trust for the benefit of, and shall
be paid over or delivered to, the holders of Senior Indebtedness or their
respective representatives, or to the trustee or trustees under any indenture
pursuant to which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, but only to the extent that the holders of the
Senior Indebtedness (or their representative or representatives or a trustee)
notify the 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 the Senior Indebtedness.
Section 16.3 Liquidation; Dissolution; Bankruptcy.
(a) Upon any payment by the Company or distribution of assets of
the Company of any kind or character, whether in cash, property or securities,
to creditors upon any dissolution or winding-up or liquidation or reorganization
of the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due upon all Senior Indebtedness
shall first be paid in full, or payment thereof provided for in money in
accordance with its terms, before any payment is made by the Company on account
of the principal or interest on the Debentures; and upon any such dissolution or
winding-up or liquidation or reorganization, any payment by the Company, or
distribution of assets of the Company of any kind or character, whether in cash,
property or securities, to which the holders of the Debentures or the Trustee
would be entitled to receive from the Company, except for the provisions of this
Article XVI, shall be paid by the Company or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the holders of the Debentures or by the Trustee under this
Indenture if received by them or it, directly to the holders of Senior
Indebtedness (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 holders of the Debentures or to the Trustee.
(b) In the event that, notwithstanding the foregoing, any payment
or distribution of assets of the Company of any kind or character, whether in
cash, property or securities, prohibited by the foregoing, shall be received by
the Trustee before all Senior Indebtedness 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, as the case may be,
remaining unpaid to the extent necessary to pay such Senior Indebtedness in full
in money in accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the benefit of the holders of such Senior
Indebtedness.
(c) For purposes of this Article XVI, the words "cash, property
or securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article XVI with respect
to the Debentures to the payment of all Senior Indebtedness, as the case may be,
that may at the time be outstanding, provided, that (i) such Senior Indebtedness
is assumed by the new corporation, if any, resulting from any such
reorganization or readjustment; and (ii) the rights of the holders of such
Senior Indebtedness are not, without the consent of such holders, altered by
such reorganization or readjustment. The consolidation of the Company with, or
the merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided for in Article XII shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 16.3 if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article
XII. Nothing in Section 16.2 or in this Section 16.3 shall apply to claims of,
or payments to, the Trustee under or pursuant to Section 9.7.
Section 16.4 Subrogation.
(a) Subject to the payment in full of all Senior Indebtedness,
the rights of the holders of the Debentures shall be subrogated to the rights of
the holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company, as the case may be, applicable to
such Senior Indebtedness until the principal of and interest on the Debentures
shall be paid in full; and, for the purposes of such subrogation, no payments or
distributions to the holders of such Senior Indebtedness of any cash, property
or securities to which the holders of the Debentures or the Trustee would be
entitled except for the provisions of this Article XVI, and no payment over
pursuant to the provisions of this Article XVI to or for the benefit of the
holders of such Senior Indebtedness by holders of the Debentures or the Trustee,
shall, as between the Company, its creditors other than holders of Senior
Indebtedness of the Company, and the holders of the Debentures, be deemed to be
a payment by the Company to or on account of such Senior Indebtedness. It is
understood that the provisions of this Article XVI are and are intended solely
for the purposes of defining the relative rights of the holders of the
Debentures, on the one hand, and the holders of such Senior Indebtedness on the
other hand.
(b) Nothing contained in this Article XVI or elsewhere in this
Indenture or in the Debentures is intended to or shall impair, as between the
Company, its creditors (other than the holders of Senior Indebtedness), and the
holders of the Debentures, the obligation of the Company, which is absolute and
unconditional, to pay to the holders of the Debentures the principal of and
interest on the Debentures as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the holders of the Debentures and creditors of the Company, as the
case may be, other than the holders of Senior Indebtedness, as the case may be,
nor shall anything herein or therein prevent the Trustee or the holder of any
Debenture from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article XVI of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company, as the case may be, received upon the
exercise of any such remedy.
(c) Upon any payment or distribution of assets of the Company
referred to in this Article XVI, the Trustee, subject to the provisions of
Article IX, and the holders of the Debentures shall be entitled to conclusively
rely upon any order or decree made by any court of competent jurisdiction in
which such dissolution, winding-up, liquidation or reorganization proceedings
are pending, or a certificate of the receiver, trustee in bankruptcy,
liquidation trustee, agent or other Person making such payment or distribution,
delivered to the Trustee or to the holders of the Debentures, for the purposes
of ascertaining the Persons entitled to participate in such distribution, the
holders of Senior Indebtedness and other indebtedness of the Company, as the
case may be, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
XVI.
Section 16.5 Trustee to Effectuate Subordination. Each holder of
Debentures by such holder's acceptance thereof authorizes and directs the
Trustee on such holder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article XVI and
appoints the Trustee such holder's attorney-in-fact for any and all such
purposes.
Section 16.6 Notice by the Company.
(a) The Company shall give prompt written notice to a Responsible
Officer of the Trustee of any fact known to the Company that would prohibit the
making of any payment of money to or by the Trustee in respect of the Debentures
pursuant to the provisions of this Article XVI. Notwithstanding the provisions
of this Article XVI or any other provision of this Indenture, the Trustee shall
not be charged with knowledge of the existence of any facts that would prohibit
the making of any payment of money to or by the Trustee in respect of the
Debentures pursuant to the provisions of this Article XVI, unless and until a
Responsible Officer of the Trustee shall have received written notice thereof
from the Company or a holder or holders of Senior Indebtedness or from any
trustee therefor; and before the receipt of any such written notice, the
Trustee, subject to the provisions of Section 9.1, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 16.6 at
least two Business Days prior to the date upon which by the terms hereof any
money may become payable for any purpose (including, without limitation, the
payment of the principal of or interest on any Debenture), then, anything herein
contained to the contrary notwithstanding, the Trustee shall have full power and
authority to receive such money and to apply the same to the purposes for which
they were received, and shall not be affected by any notice to the contrary that
may be received by it within two Business Days prior to such date.
(b) The Trustee, subject to the provisions of Section 9.1, shall
be entitled to conclusively rely on the delivery to it of a written notice by a
Person representing himself or herself to be a holder of Senior Indebtedness (or
a trustee on behalf of such holder) to establish that such notice has been given
by a holder of such Senior Indebtedness or a trustee on behalf of any such
holder or holders. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of such Senior Indebtedness to participate in any payment or distribution
pursuant to this Article XVI, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of such
Senior Indebtedness held by such Person, the extent to which such Person is
entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article XVI, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
Section 16.7 Rights of the Trustee; Holders of the Senior
Indebtedness.
(a) The Trustee in its individual capacity shall be entitled to
all the rights set forth in this Article XVI in respect of any Senior
Indebtedness at any time held by it, to the same extent as any other holder of
Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of
any of its rights as such holder. The Trustee's right to compensation and
reimbursement of expenses as set forth in Section 9.7 shall not be subject to
the subordination provisions of the Article XVI.
(b) With respect to the holders of the Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article XVI, and no implied
covenants or obligations with respect to the holders of such Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of such Senior Indebtedness and,
subject to the provisions of Section 9.1, the Trustee shall not be liable to any
holder of such Senior Indebtedness if it shall pay over or deliver to holders of
Debentures, the Company or any other Person money or assets to which any holder
of such Senior Indebtedness shall be entitled by virtue of this Article XVI or
otherwise.
Section 16.8 Subordination May Not be Impaired.
(a) No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at any time in
any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and covenants
of this Indenture, regardless of any knowledge thereof that any such holder may
have or otherwise be charged with.
(b) Without in any way limiting the generality of Section 16.8(a),
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the holders of the
Debentures, without incurring responsibility to the holders of the Debentures
and without impairing or releasing the subordination provided in this Article
XVI or the obligations hereunder of the holders of the Debentures to the holders
of such Senior Indebtedness, do any one or more of the following: (i) change the
manner, place or terms of payment or extend the time of payment of, or renew or
alter, such Senior Indebtedness, or otherwise amend or supplement in any manner
such Senior Indebtedness or any instrument evidencing the same or any agreement
under which such Senior Indebtedness is outstanding; (ii) sell, exchange,
release or otherwise deal with any property pledged, mortgaged or otherwise
securing such Senior Indebtedness; (iii) release any Person liable in any manner
for the collection of such Senior Indebtedness; and (iv) exercise or refrain
from exercising any rights against the Company and any other Person.
[The remainder of this page has been left blank intentionally]
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
FIRST BANKS, INC.
By:
-----------------------------------------------
Name:
----------------------------------------------
Title:
--------------------------------------------
FIFTH THIRD BANK, as Trustee
By:
-----------------------------------------------
Name:
----------------------------------------------
Title:
--------------------------------------------
STATE OF MISSOURI )
) ss
COUNTY OF ST. LOUIS )
On this ______ day of ______________, 2003, before me appeared
_____________, to me personally known, who, being by me duly sworn, did say that
he is the _________________ of First Banks, Inc., and that the seal affixed to
said instrument is the corporate seal of said corporation, and that said
instrument was signed and sealed in behalf of said corporation by authority of
its Board of Directors and said _______________ acknowledged said instrument to
be the free act and deed of said corporation.
In testimony whereof I have hereunto set my hand and affixed my
official seal at my office in said county and state the day and year last above
written.
Notary Public ________________________
My term expires: ________________________
[seal]
STATE OF OHIO )
) ss
COUNTY OF __________ )
On this ______ day of ________________, 2003, before me appeared
___________________, to me personally known, who, being by me duly sworn, did
say that he is the _____________________ of Fifth Third Bank, and that the seal
affixed to said instrument is the corporate seal of said corporation, and that
said instrument was signed and sealed in behalf of said corporation by authority
of its Board of Directors and said _____________________________ acknowledged
said instrument to be the free act and deed of said corporation.
In testimony whereof I have hereunto set my hand and affixed my
official seal at my office in said county and state the day and year last above
written.
Notary Public _______________________
My term expires: _______________________
[seal]
EXHIBIT A
(Form of Face of Debenture)
FIRST BANKS, INC.
____% SUBORDINATED DEBENTURE
DUE JUNE 30, 2033
No. ___ $__________
CUSIP No. ___________
First Banks, Inc., a Missouri corporation (the "Company," which term
-------
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to _______________ or registered
assigns, the principal sum of _________________________ ($___________) on June
30, 2033 (the "Stated Maturity"), and to pay interest on said principal sum from
---------------
___________, 2003, or from the most recent interest payment date (each such
date, an "Interest Payment Date") to which interest has been paid or duly
-----------------------
provided for, quarterly (subject to deferral as set forth herein) in arrears on
the last day of March, June, September and December of each year commencing June
30, 2003, at the rate of ______% per annum 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 the same rate per annum
compounded quarterly. The amount of interest payable on any Interest Payment
Date shall be computed on the basis of a 360 day year of twelve 30 day months.
The amount of interest for any partial period shall be computed on the basis of
the number of days elapsed in a 360 day year of twelve 30 day months. In the
event that any date on which interest is payable on this Debenture is not a
Business Day, then payment of interest payable on such date shall be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) with the same force and effect as if made
on such date. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date shall, as provided in the Indenture,
be paid to the person in whose name this Debenture (or one or more Predecessor
Debentures, as defined in said Indenture) is registered at the close of business
on the regular record date for such interest installment. Any such interest
installment not punctually paid or duly provided for shall forthwith cease to be
payable to the registered holders on such regular record date and may be paid to
the Person in whose name this Debenture (or one or more Predecessor Debentures)
is registered at the close of business on a special record date to be fixed by
the Trustee for the payment of such defaulted interest, notice thereof shall be
fixed by the Trustee for the payment of such defaulted interest, notice thereof
shall be given to the registered holders of the Debentures not less than 10 days
prior to such special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
or quotation system on or in which the Debentures may be listed or quoted, and
upon such notice as may be required by such exchange, all as more fully provided
in the Indenture. The principal of and the interest on this Debenture shall be
payable at the office or agency of the Trustee maintained for that purpose in
any coin or currency of the United States of America that at the time of payment
is legal tender for payment of public and private debts; provided, however, that
payment of interest may be made at the option of the Company by check mailed to
the registered holder at such address as shall appear in the Debenture Register.
Notwithstanding the foregoing, so long as the holder of this Debenture is the
Property Trustee, the payment of the principal of and interest on this Debenture
shall be made at such place and to such account as may be designated by the
Trustee.
The Stated Maturity may be shortened at any time by the Company to any
date not earlier than June 30, 2008, subject to the Company having received
prior approval of the Federal Reserve if then required under applicable capital
guidelines, policies or regulations of the Federal Reserve.
The indebtedness evidenced by this Debenture is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness (as defined in the Indenture). This
Debenture is issued subject to the provisions of the Indenture with respect
thereto. Each holder of this Debenture, by accepting the same, (a) agrees to and
shall be bound by such provisions; (b) authorizes and directs the Trustee on his
or her behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination so provided; and (c) appoints the
Trustee his or her attorney-in-fact for any and all such purposes. Each holder
hereof, by his or her acceptance hereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Senior Indebtedness, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.
This Debenture shall not be entitled to any benefit under the Indenture
hereinafter referred to, be valid or become obligatory for any purpose until the
Certificate of Authentication hereon shall have been signed by or on behalf of
the Trustee.
The provisions of this Debenture are continued on the reverse side
hereof and such continued provisions shall for all purposes have the same effect
as though fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
Dated ___________________, 2003
FIRST BANKS, INC.
By:
--------------------------------
Name:
-------------------------------
Title:
------------------------------
Attest:
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
FORM OF CERTIFICATE OF AUTHENTICATION
This is one of the Debentures described in the within-mentioned Indenture.
Dated:_________________________, 2003
Fifth Third Bank, -----------------------------
as Trustee or Authenticating Agent
By: _______________________________ By: -----------------------------
Authorized Signatory
FORM OF REVERSE OF DEBENTURE
_____% SUBORDINATED DEBENTURE DUE 2033
(CONTINUED)
This Debenture is one of the subordinated debentures of the Company
(herein sometimes referred to as the "Debentures"), all issued or to be issued
----------
under and pursuant to an Indenture dated as of ______________ ___, 2003 (the
"Indenture") duly executed and delivered between the Company and Fifth Third
---------
Bank, as Trustee (the "Trustee"), to which Indenture reference is hereby made
-------
for a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the
Debentures. The Debentures are limited in aggregate principal amount as
specified in the Indenture.
Because of the occurrence and continuation of a Special Event (as
defined in the Indenture), in certain circumstances, this Debenture may become
due and payable at the principal amount together with any interest accrued
thereon (the "Redemption Price"). The Redemption Price shall be paid prior to
-----------------
12:00 noon, Eastern Standard Time, on the date of such redemption or at such
earlier time as the Company determines. The Company shall have the right as set
forth in the Indenture to redeem this Debenture at the option of the Company,
without premium or penalty, in whole or in part at any time on or after June 30,
2008 (an "Optional Redemption"), or at any time in certain circumstances upon
--------------------
the occurrence of a Special Event, at a Redemption Price equal to 100% of the
principal amount hereof plus any accrued but unpaid interest hereon, to the date
of such redemption. Any redemption pursuant to this paragraph shall be made upon
not less than thirty (30) days nor more than thirty (60) days notice, at the
Redemption Price. The Redemption Price shall be paid at the time and in the
manner provided therefor in the Indenture. If the Debentures are only partially
redeemed by the Company pursuant to an Optional Redemption, the Debentures shall
be redeemed by lot as described in the Indenture.
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures for the unredeemed portion hereof shall be issued in the
name of the holder hereof upon the cancellation hereof.
In case an Event of Default (as defined in the Indenture) shall have
occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Debentures at the time Outstanding (as defined
in the Indenture) to execute supplemental indentures for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of any supplemental indenture or of modifying in any manner
the rights of the holders of the Debentures; provided, however, that no such
supplemental indenture shall, except as provided in the Indenture, (i) extend
the fixed maturity of the Debentures or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, without the
consent of the holder of each Debenture so affected thereby; or (ii) reduce the
aforesaid percentage of Debentures, the holders of which are required to consent
to any such supplemental indenture, without the consent of the holders of each
Debenture then Outstanding and affected thereby. The Indenture also contains
provisions permitting the holders of a majority in aggregate principal amount of
the Debentures at the time Outstanding, on behalf of all of the holders of the
Debentures, to waive any past default in the performance of any of the covenants
contained in the Indenture, and its consequences, except (i) a default in the
payment of the principal of or interest on any of the Debentures (except as
otherwise provided in the Indenture) and (ii) default in the performance of
certain covenants as specified in the Indenture. Any such consent or waiver by
the registered holder of this Debenture (unless revoked as provided in the
Indenture) shall be conclusive and binding upon such holder and upon all future
holders and owners of this Debenture and of any Debenture issued in exchange
herefor or in place hereof (whether by registration of transfer or otherwise),
irrespective of whether or not any notation of such consent or waiver is made
upon this Debenture.
No reference herein to the Indenture and no provision of this Debenture
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal and interest on this
Debenture at the time and place and at the rate and in the money herein
prescribed.
Provided certain conditions are met, the Company shall have the right
at any time during the term of the Debentures and from time to time to extend
the interest payment period of such Debentures for up to twenty (20) consecutive
quarters (each, an "Extension Period"), at the end of which period the Company
-----------------
shall pay all interest then accrued and unpaid (together with interest thereon
at the rate specified for the Debentures to the extent that payment of such
interest is enforceable under applicable law). Before the termination of any
such Extension Period, so long as no Event of Default shall have occurred and be
continuing, the Company may further extend such Extension Period, provided that
such Extension Period together with all such further extensions thereof shall
not exceed twenty (20) consecutive quarters, extend beyond June 30, 2033, or end
on a date other than an Interest Payment Date. At the termination of any such
Extension Period and upon the payment of all accrued and unpaid interest and any
additional amounts then due and subject to the foregoing conditions, the Company
may commence a new Extension Period.
As provided in the Indenture and subject to certain limitations therein
set forth, this Debenture is transferable by the registered holder hereof on the
Debenture Register (as defined in the Indenture) of the Company, upon surrender
of this Debenture for registration of transfer at the office or agency of the
Trustee accompanied by a written instrument or instruments of transfer in form
satisfactory to the Company or the Trustee duly executed by the registered
holder hereof or his or her attorney duly authorized in writing, and thereupon
one or more new Debentures of authorized denominations and for the same
aggregate principal amount shall be issued to the designated transferee or
transferees. No service charge shall be made for any such transfer, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in relation thereto.
Prior to due presentment for registration of transfer of this
Debenture, the Company, the Trustee, any Paying Agent (as defined in the
Indenture) and the Debenture Registrar may deem and treat the registered holder
hereof as the absolute owner hereof (whether or not this Debenture shall be
overdue and notwithstanding any notice of ownership or writing hereon made by
anyone other than the Debenture Registrar) for the purpose of receiving payment
of or on account of the principal hereof and interest due hereon and for all
other purposes, and neither the Company nor the Trustee nor any Paying Agent nor
any Debenture Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect 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 Debentures are issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof (or such other
denominations and any integral multiple thereof as may be deemed necessary by
the Company for the purpose of maintaining the eligibility of the Debentures for
listing on the New York Stock Exchange or any successor thereto).
All terms used in this Debenture that are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
Exhibit 10.23
FIRST PREFERRED CAPITAL TRUST IV
AMENDED AND RESTATED
TRUST AGREEMENT
among
FIRST BANKS, INC., as Depositor
FIFTH THIRD BANK,
as Property Trustee
WILMINGTON TRUST COMPANY, as Delaware Trustee,
and
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
DATED AS OF APRIL 1, 2003
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINED TERMS.........................................................................................2
Section 101. Definitions.................................................................................2
ARTICLE II ESTABLISHMENT OF THE TRUST...........................................................................10
Section 201. Name.......................................................................................10
Section 202. Office of the Delaware Trustee; Principal Place of Business................................10
Section 203. Initial Contribution of Trust Property; Organizational Expenses............................10
Section 204. Issuance of the Preferred Securities.......................................................10
Section 205. Issuance of the Common Securities; Subscription and Purchase of Debentures.................11
Section 206. Declaration of Trust.......................................................................11
Section 207. Authorization to Enter into Certain Transactions...........................................12
Section 208. Assets of Trust............................................................................15
Section 209. Title to Trust Property....................................................................15
ARTICLE III PAYMENT ACCOUNT.....................................................................................15
Section 301. Payment Account............................................................................15
ARTICLE IV DISTRIBUTIONS; REDEMPTION............................................................................16
Section 401. Distributions..............................................................................16
Section 402. Redemption.................................................................................16
Section 403. Subordination of Common Securities.........................................................18
Section 404. Payment Procedures.........................................................................19
Section 405. Tax Returns and Reports....................................................................19
Section 406. Payment of Taxes, Duties, etc. of the Trust................................................19
Section 407. Payments Under Indenture...................................................................20
ARTICLE V TRUST SECURITIES CERTIFICATES.........................................................................20
Section 501. Initial Ownership..........................................................................20
Section 502. The Trust Securities Certificates..........................................................20
Section 503. Execution, Authentication and Delivery of Trust Securities Certificates....................20
Section 503A. Global Preferred Security..................................................................21
Section 504. Registration of Transfer and Exchange of Preferred Securities Certificates.................22
Section 505. Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates.........................23
Section 506. Persons Deemed Securityholders.............................................................23
Section 507. Access to List of Securityholders' Names and Addresses.....................................24
Section 508. Maintenance of Office or Agency............................................................24
Section 509. Appointment of Paying Agent................................................................24
Section 510. Ownership of Common Securities by Depositor................................................25
Section 511. Preferred Securities Certificates..........................................................25
Section 512. Notices to Clearing Agencies...............................................................25
Section 513. Rights of Securityholders..................................................................25
ARTICLE VI ACTS OF SECURITYHOLDERS; MEETINGS; VOTING............................................................26
Section 601. Limitations on Voting Rights...............................................................26
Section 602. Notice of Meetings.........................................................................27
Section 603. Meetings of Preferred Securityholders......................................................27
Section 604. Voting Rights..............................................................................28
Section 605. Proxies, etc...............................................................................28
Section 606. Securityholder Action by Written Consent...................................................28
Section 607. Record Date for Voting and Other Purposes..................................................28
Section 608. Acts of Securityholders....................................................................29
Section 609. Inspection of Records......................................................................30
ARTICLE VII REPRESENTATIONS AND WARRANTIES......................................................................30
Section 701. Representations and Warranties of the Bank and the Property Trustee........................30
Section 702. Representations and Warranties of the Delaware Bank and the Delaware Trustee...............31
Section 703. Representations and Warranties of the Depositor............................................32
ARTICLE VIII TRUSTEES...........................................................................................32
Section 801. Certain Duties and Responsibilities........................................................32
Section 802. Certain Notices............................................................................34
Section 803. Certain Rights of Property Trustee.........................................................34
Section 804. Not Responsible for Recitals or Issuance of Securities.....................................36
Section 805. May Hold Securities........................................................................36
Section 806. Compensation; Indemnity; Fees..............................................................36
Section 807. Corporate Property Trustee Required; Eligibility of Trustees...............................37
Section 808. Conflicting Interests......................................................................37
Section 809. Co-Trustees and Separate Trustee...........................................................37
Section 810. Resignation and Removal; Appointment of Successor..........................................39
Section 811. Acceptance of Appointment by Successor.....................................................40
Section 812. Merger, Conversion, Consolidation or Succession to Business................................41
Section 813. Preferential Collection of Claims Against Depositor or Trust...............................41
Section 814. Reports by Property Trustee................................................................41
Section 815. Reports to the Property Trustee............................................................41
Section 816. Evidence of Compliance with Conditions Precedent...........................................41
Section 817. Number of Trustees.........................................................................42
Section 818. Delegation of Power........................................................................42
Section 819. Voting.....................................................................................42
ARTICLE IX TERMINATION, LIQUIDATION AND MERGER..................................................................42
Section 901. Termination Upon Expiration Date...........................................................42
Section 902. Early Termination..........................................................................42
Section 903. Termination................................................................................43
Section 904. Liquidation................................................................................43
Section 905. Mergers, Consolidations, Amalgamations or Replacements of the Trust........................45
ARTICLE X MISCELLANEOUS PROVISIONS..............................................................................46
Section 1001. Limitation of Rights of Securityholders....................................................46
Section 1002. Amendment..................................................................................46
Section 1003. Separability...............................................................................47
Section 1004. Governing Law..............................................................................47
Section 1005. Payments Due on Non-Business Day...........................................................47
Section 1006. Successors.................................................................................48
Section 1007. Headings...................................................................................48
Section 1008. Reports, Notices and Demands...............................................................48
Section 1009. Agreement Not to Petition..................................................................48
Section 1010. Trust Indenture Act; Conflict with Trust Indenture Act.....................................49
Section 1011. Acceptance of Terms of Trust Agreement, Guarantee and Indenture............................49
ARTICLE I.......................................................................................................54
Section 1.1. Guarantee by First Banks...................................................................54
Section 1.2. Term of Agreement..........................................................................54
Section 1.3. Waiver of Notice...........................................................................55
Section 1.4. No Impairment..............................................................................55
Section 1.5. Enforcement................................................................................55
ARTICLE II......................................................................................................55
Section 2.1. Binding Effect.............................................................................55
Section 2.2. Amendment..................................................................................56
Section 2.3. Notices....................................................................................56
Section 2.4. Governing Law..............................................................................56
CROSS-REFERENCE TABLE
Section of Section of
Trust Indenture Act Amended and Restated
of 1939, as amended Trust Agreement
- ------------------- ---------------
310(a)(1)...........................................................................807
310(a)(2)...........................................................................807
310(a)(3)...........................................................................807
310(a)(4)...........................................................................207(a)(ii)
310(b)..............................................................................808
311(a)..............................................................................813
311(b)..............................................................................813
312(a)..............................................................................507
312(b)..............................................................................507
312(c)..............................................................................507
313(a)..............................................................................814(a)
313(a)(4)...........................................................................814(b)
313(b)..............................................................................814(b)
313(c)..............................................................................1008
313(d)..............................................................................814(c)
314(a)..............................................................................815
314(b)..............................................................................Not Applicable
314(c)(1)...........................................................................816
314(c)(2)...........................................................................816
314(c)(3)...........................................................................Not Applicable
314(d)..............................................................................Not Applicable
314(e)..............................................................................101, 816
315(a)..............................................................................801(a), 803(a)
315(b)..............................................................................802, 1008
315(c)..............................................................................801(a)
315(d)..............................................................................801, 803
316(a)(2)...........................................................................Not Applicable
316(b)..............................................................................Not Applicable
316(c)..............................................................................607
317(a)(1)...........................................................................Not Applicable
317(a)(2)...........................................................................Not Applicable
317(b)..............................................................................509
318(a)..............................................................................1010
Note: This Cross-Reference Table does not constitute part of this Agreement and shall not affect the
interpretation of any of its terms or provisions.
AMENDED AND RESTATED TRUST AGREEMENT
AMENDED AND RESTATED TRUST AGREEMENT, dated as of April 1, 2003, among
(i) FIRST BANKS, INC., a Missouri corporation (including any successors or
assigns, the "Depositor"), (ii) FIFTH THIRD BANK, a bank duly organized and
----------
existing under the laws of the United States of America, as property trustee
(the "Property Trustee" and, in its separate corporate capacity and not in its
-----------------
capacity as Property Trustee, the "Bank"), (iii) WILMINGTON TRUST COMPANY, a
----
Delaware banking corporation duly organized and existing under the laws of the
State of Delaware, as Delaware trustee (the "Delaware Trustee," and, in its
-----------------
separate corporate capacity and not in its capacity as Delaware Trustee, the
"Delaware Bank"), (iv) ALLEN H. BLAKE, an individual, TERRANCE M. MCCARTHY, an
-------------
individual, and LISA K. VANSICKLE, an individual, each of whose address is c/o
First Banks, Inc., 600 James S. McDonnell Boulevard, Mail Code 014, Hazelwood,
Missouri 63042 (each an "Administrative Trustee" and collectively the
------------------------
"Administrative Trustees") (the Property Trustee, the Delaware Trustee and the
------------------------
Administrative Trustees referred to collectively as the "Trustees"), and (v) the
--------
several Holders (as hereinafter defined).
RECITALS
WHEREAS, the Depositor, the Delaware Trustee, James F. Dierberg, as an
original administrative trustee, and Allen H. Blake and Lisa K. Vansickle, each
as an Administrative Trustee, have heretofore duly declared and established a
statutory trust pursuant to the Delaware Statutory Trust Act by entering into
that certain Trust Agreement, dated as of January 2, 2003 (the "Original Trust
--------------
Agreement"), and by the execution and filing by the Delaware Trustee, the
- ---------
Depositor and the Administrative Trustees with the Secretary of State of the
State of Delaware of the Certificate of Trust, filed on January 2, 2003, the
form of which is attached as Exhibit A;
---------
WHEREAS, effective January 6, 2003 James F. Dierberg resigned as an
administrative trustee, the Depositor appointed Terrance M. McCarthy as a
successor trustee and Terrance M. McCarthy accepted the appointment as an
Administrative Trustee;
WHEREAS, the Depositor, the Delaware Trustee, the Property Trustee and
the Administrative Trustees desire to amend and restate the Original Trust
Agreement in its entirety as set forth herein to provide for, among other
things, (a) the issuance of the Common Securities (as defined herein) by the
Trust (as defined herein) to the Depositor; (b) the issuance and sale of the
Preferred Securities (as defined herein) by the Trust pursuant to the
Underwriting Agreement (as defined herein); (c) the acquisition by the Trust
from the Depositor of all of the right, title and interest in the Debentures (as
defined herein); and (d) the appointment of the Trustees;
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the benefit of the
other parties and for the benefit of the Securityholders (as defined herein),
hereby amends and restates the Original Trust Agreement in its entirety and
agrees as follows:
ARTICLE I
DEFINED TERMS
Section 101. Definitions.
For all purposes of this Trust Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article I have the meanings
assigned to them in this Article I and include the plural as well as the
singular;
(b) all other terms used herein that are defined in the
Trust Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) unless the context otherwise requires, any reference
to an "Article" or a "Section" refers to an Article or a Section, as the case
may be, of this Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Trust Agreement as a whole and not
to any particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 608.
---
"Additional Amount" means, with respect to Trust Securities of a given
------------------
Liquidation Amount and/or a given period, the amount of additional interest
accrued on interest in arrears and paid by the Depositor on a Like Amount of
Debentures for such period.
"Additional Payments" has the meaning specified in Section 1.1 of the
--------------------
Indenture.
"Administrative Trustee" means each of Allen H. Blake, Terrance M.
-----------------------
McCarthy and Lisa K. Vansickle, solely in his or her capacity as Administrative
Trustee of the Trust formed and continued hereunder and not in his or her
individual capacity, or such Administrative Trustee's successor in interest in
such capacity, or any successor trustee appointed as herein provided.
"Affiliate" means, with respect to a specified Person, (a) any Person
---------
directly or indirectly owning, controlling or holding with power to vote 10% or
more of the outstanding voting securities or other ownership interests of the
specified Person; (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person; (c) any Person
directly or indirectly controlling, controlled by, or under common control with
the specified Person; (d) a partnership in which the specified Person is a
general partner; (e) any officer or director of the specified Person; and (f) if
the specified Person is an individual, any entity of which the specified Person
is an officer, director or general partner.
"Authenticating Agent" means an authenticating agent with respect to
---------------------
the Preferred Securities appointed by the Property Trustee pursuant to Section
503.
"Bank" has the meaning specified in the Preamble to this Trust
----
Agreement.
"Bankruptcy Event" means, with respect to any Person:
----------------
(a) the entry of a decree or order by a court having
jurisdiction in the premises adjudging such Person a bankrupt or insolvent, or
approving as properly filed a petition seeking liquidation or reorganization of
or in respect of such Person under the United States Bankruptcy Code of 1978, as
amended, or any other similar applicable federal or state law, and the
continuance of any such decree or order unvacated and unstayed for a period of
ninety (90) days; or the commencement of an involuntary case under the United
States Bankruptcy Code of 1978, as amended, in respect of such Person, which
shall continue undismissed for a period of ninety (90) days or entry of an order
for relief in such case; or the entry of a decree or order of a court having
jurisdiction in the premises for the appointment on the ground of insolvency or
bankruptcy of a receiver, custodian, liquidator, trustee or assignee in
bankruptcy or insolvency of such Person or of its property, or for the winding
up or liquidation of its affairs, and such decree or order shall have remained
in force unvacated and unstayed for a period of ninety (90) days; or
(b) the institution by such Person of proceedings to be
adjudicated a voluntary bankrupt, or the consent by such Person to the filing of
a bankruptcy proceeding against it, or the filing by such Person of a petition
or answer or consent seeking liquidation or reorganization under the United
States Bankruptcy Code of 1978, as amended, or other similar applicable Federal
or State law, or the consent by such Person to the filing of any such petition
or to the appointment on the ground of insolvency or bankruptcy of a receiver or
custodian or liquidator or trustee or assignee in bankruptcy or insolvency of
such Person or of its property, or a general assignment by such Person for the
benefit of creditors.
"Bankruptcy Laws" has the meaning specified in Section 1009.
---------------
"Board Resolution" means a copy of a resolution certified by the
-----------------
Secretary or an Assistant Secretary of the Depositor to have been duly adopted
by the Depositor's Board of Directors, or such committee of the Board of
Directors or officers of the Depositor to which authority to act on behalf of
the Board of Directors has been delegated, and to be in full force and effect on
the date of such certification, and delivered to the appropriate Trustee.
"Business Day" means any day other than a Saturday or Sunday, a day on
------------
which banking institutions in The City of Cincinnati, Ohio are authorized or
required by law, executive order or regulation to remain closed, or a day on
which the Property Trustee's Corporate Trust Office or the Corporate Trust
Office of the Debenture Trustee is closed for business.
"Certificate of Trust" means the certificate of trust filed with the
---------------------
Secretary of State of the State of Delaware with respect to the Trust, as
amended or restated from time to time.
"Change in 1940 Act Law" shall have the meaning set forth in the
------------------------
definition of "Investment Company Event."
"Clearing Agency" means an organization registered as a "clearing
----------------
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. DTC shall be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank or other
----------------------------
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means the date of execution and delivery of this Trust
-------------
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Commission" means the Securities and Exchange Commission, as from time
----------
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Common Security" means an undivided beneficial interest in the assets
---------------
of the Trust, having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing
--------------------------------
ownership of Common Securities, substantially in the form attached as Exhibit B.
"Common Securityholder" means First Banks, Inc.
---------------------
"Company" means First Banks, Inc.
-------
"Corporate Trust Office" means the office at which, at any particular
-----------------------
time, the corporate trust business of the Property Trustee or the Debenture
Trustee, as the case may be, shall be principally administered, which office at
the date hereof, in each such case, is located at 38 Fountain Square Plaza,
MD10AT60, Cincinnati, Ohio 45202 Attention: Corporate Trust Department.
"Debenture Event of Default" means an "Event of Default" as defined in
---------------------------
Section 7.1 of the Indenture.
"Debenture Redemption Date" means, with respect to any Debentures to be
-------------------------
redeemed under the Indenture, the date fixed for redemption under the Indenture.
"Debenture Tax Event" means a "Tax Event" as specified in Section 1.1
-------------------
of the Indenture.
"Debenture Trustee" means Fifth Third Bank, a bank organized under the
------------------
laws of the United States of America, and any successor thereto, as trustee
under the Indenture.
"Debentures" means the $41,237,125 (or $47,422,700 if the Underwriters
----------
exercise their Option (as such terms are defined in the Underwriting Agreement))
aggregate principal amount of the Depositor's 8.15% Subordinated Debentures due
2033, issued pursuant to the Indenture.
"Definitive Preferred Securities Certificates" means the Preferred
-----------------------------------------------
Securities Certificates issued in certificated, fully registered form as
provided in Section 511.
"Delaware Bank" has the meaning specified in the Preamble to this Trust
-------------
Agreement.
"Delaware Statutory Trust Act" means Chapter 38 of Title 12 of the
-------------------------------
Delaware Code, 12 Delaware Code Sections 3801 et seq., as it may be amended from
time to time.
"Delaware Trustee" means the commercial bank or trust company
------------------
identified as the "Delaware Trustee" in the Preamble to this Trust Agreement,
solely in its capacity as Delaware Trustee of the Trust formed and continued
hereunder and not in its individual capacity, or its successor in interest in
such capacity, or any successor trustee appointed as herein provided.
"Depositary" means DTC or any successor thereto.
----------
"Depositor" has the meaning specified in the Preamble to this Trust
---------
Agreement.
"Distribution Date" has the meaning specified in Section 401(a).
-----------------
"Distributions" means amounts payable in respect of the Trust
-------------
Securities as provided in Section 401.
"DTC" means The Depository Trust Company.
---
"Early Termination Event" has the meaning specified in Section 902.
-----------------------
"Event of Default" means any one of the following events (whatever the
----------------
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of a Debenture Event of Default; or
(b) default by the Trust or the Property Trustee in the
payment of any Distribution when it becomes due and payable, and continuation of
such default for a period of thirty (30) days; or
(c) default by the Trust or the Property Trustee in the
payment of any Redemption Price of any Trust Security when it becomes due and
payable; or
(d) default in the performance, or breach, in any
material respect, of any covenant or warranty of the Trustees in this Trust
Agreement (other than a covenant or warranty a default in the performance of
which or the breach of which is dealt with in clause (b) or (c), above) and
continuation of such default or breach for a period of sixty (60) days after
there has been given, by registered or certified mail, to the defaulting Trustee
or Trustees by the Holders of at least 25% in aggregate Liquidation Amount of
the Outstanding Preferred Securities a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to
the Property Trustee and the failure by the Depositor to appoint a successor
Property Trustee within (sixty) 60 days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Expense Agreement" means the Agreement as to Expenses and Liabilities
------------------
between the Depositor and the Trust, substantially in the form attached as
Exhibit C, as amended from time to time.
"Expiration Date" has the meaning specified in Section 901.
---------------
"Extension Period" has the meaning specified in Section 4.1 of the
-----------------
Indenture.
"Global Preferred Securities Certificate" means a Preferred Securities
----------------------------------------
Certificate evidencing ownership of Global Preferred Securities.
"Global Preferred Security" means a Preferred Security, the ownership
-------------------------
and transfer of which shall be made through book entries by a Clearing Agency as
described herein.
"Guarantee" means the Preferred Securities Guarantee Agreement executed
---------
and delivered by the Depositor and Fifth Third Bank, as trustee,
contemporaneously with the execution and delivery of this Trust Agreement, for
the benefit of the Preferred Securityholders, as amended from time to time.
"Indenture" means the Indenture, dated as of April 1, 2003, between the
---------
Depositor and the Debenture Trustee, as trustee, as amended or supplemented from
time to time pertaining to the Debentures of the Depositor.
"Investment Company Act," means the Investment Company Act of 1940, as
-----------------------
amended, as in effect at the date of execution of this instrument.
"Investment Company Event" means the receipt by the Trust and the
--------------------------
Depositor of an Opinion of Counsel, rendered by a law firm having a recognized
national tax and securities law practice within a reasonable period of time
after the applicable occurrence, to the effect that, as a result of the
occurrence of a change in law or regulation or a change in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), the Trust is or
----------------------
shall be considered an "investment company" that is required to be registered
under the Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the date of original issuance of the Preferred Securities under this
Trust Agreement.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
----
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (a) with respect to a redemption of Trust
------------
Securities, Trust Securities having an aggregate Liquidation Amount equal to the
aggregate principal amount of Debentures to be contemporaneously redeemed in
accordance with the Indenture and the proceeds of which shall be used to pay the
Redemption Price of such Trust Securities; and (b) with respect to a
distribution of Debentures to Holders of Trust Securities in connection with a
termination or liquidation of the Trust, Debentures having a principal amount
equal to the Liquidation Amount of the Trust Securities of the Holder to whom
such Debentures are distributed. Each Debenture distributed pursuant to clause
(b) above shall carry with it accrued interest in an amount equal to the accrued
and unpaid interest then due on such Debentures.
"Liquidation Amount" means the stated amount of $25 per Trust Security.
------------------
"Liquidation Date" means the date on which Debentures are to be
----------------
distributed to Holders of Trust Securities in connection with a termination and
liquidation of the Trust pursuant to Section 904(a).
"Liquidation Distribution" has the meaning specified in Section 904(d).
------------------------
"Officers' Certificate" means a certificate signed by the President or
---------------------
a Vice President and by the Treasurer or an Assistant Treasurer or the
Controller or an Assistant Controller or the Secretary or an Assistant
Secretary, of the Depositor, and delivered to the appropriate Trustee. One of
the officers signing an Officers' Certificate given pursuant to Section 816
shall be the principal executive, financial or accounting officer of the
Depositor. Any Officers' Certificate delivered with respect to compliance with a
condition or covenant provided for in this Trust Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering the
Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such officer, such condition or covenant has been complied with.
"Opinion of Counsel" means an opinion in writing of independent,
------------------
outside legal counsel, who may be counsel for the Trust, the Property Trustee,
the Delaware Trustee or the Depositor and who shall be reasonably acceptable to
the Property Trustee.
"Original Trust Agreement" has the meaning specified in the Recitals to
------------------------
this Trust Agreement.
"Outstanding", when used with respect to Preferred Securities, means,
-----------
as of the date of determination, all Preferred Securities theretofore executed
and delivered under this Trust Agreement, except:
(a) Preferred Securities theretofore canceled by the
Property Trustee or delivered to the Property Trustee for cancellation;
(b) Preferred Securities for whose payment or redemption
money in the necessary amount has been theretofore deposited with the Property
Trustee or any Paying Agent for the Holders of such Preferred Securities;
provided that, if such Preferred Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Trust Agreement; and
(c) Preferred Securities which have been paid or in
exchange for or in lieu of which other Preferred Securities have been executed
and delivered pursuant to Sections 504, 505, 511 and 513; provided, however,
that in determining whether the Holders of the requisite Liquidation Amount of
the Outstanding Preferred Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Preferred
Securities owned by the Depositor, any Trustee or any Affiliate of the Depositor
or any Trustee shall be disregarded and deemed not to be Outstanding, except
that (i) in determining whether any Trustee shall be protected in relying upon
any such request, demand, authorization, direction, notice, consent or waiver,
only Preferred Securities that such Trustee knows to be so owned shall be so
disregarded; and (ii) the foregoing shall not apply at any time when all of the
Outstanding Preferred Securities are owned by the Depositor, one or more of the
Trustees and/or any such Affiliate. Preferred Securities so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Administrative Trustees the pledgee's
right so to act with respect to such Preferred Securities and the pledgee is not
the Depositor or any other Obligor upon the Preferred Securities or a Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Depositor or any Affiliate of the Depositor.
"Paying Agent" means any paying agent or co paying agent appointed
-------------
pursuant to Section 509 and shall initially be the Bank.
"Payment Account" means a segregated non-interest-bearing corporate
----------------
trust account maintained by the Property Trustee with the Bank in its trust
department for the benefit of the Securityholders in which all amounts paid in
respect of the Debentures shall be held and from which the Property Trustee
shall make payments to the Securityholders in accordance with Sections 401 and
402.
"Person" means any individual, corporation, estate, partnership,
------
limited partnership, joint venture, trust, association, joint-stock company,
limited liability company, trust, statutory trust, unincorporated organization
or government or any agency or political subdivision thereof or any other entity
of whatever nature.
"Preferred Securities Certificate", means a certificate evidencing
----------------------------------
ownership of Preferred Securities, substantially in the form attached as Exhibit
-------
D.
- -
"Preferred Security" means an undivided beneficial interest in the
-------------------
assets of the Trust, having a Liquidation Amount of $25 and having the rights
provided therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Preferred Securityholder" means a Holder of a Preferred Security.
------------------------
"Property Trustee" means the commercial bank or trust company
------------------
identified as the "Property Trustee," in the Preamble to this Trust Agreement
-----------------
solely in its capacity as Property Trustee of the Trust heretofore formed and
continued hereunder and not in its individual capacity, or its successor in
interest in such capacity, or any successor property trustee appointed as herein
provided.
"Redemption Date" means, with respect to any Trust Security to be
----------------
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the stated maturity
of the Debentures shall be a Redemption Date for a Like Amount of Trust
Securities.
"Redemption Price" means, with respect to any Trust Security, the
-----------------
Liquidation Amount of such Trust Security, plus accumulated and unpaid
Distributions to the Redemption Date, allocated on a pro rata basis (based on
Liquidation Amounts) among the Trust Securities.
"Relevant Trustee" shall have the meaning specified in Section 810.
----------------
"Securities Register" and "Securities Registrar" have the respective
--------------------
meanings specified in Section 504.
"Securityholder" or "Holder" means a Person in whose name a Trust
-------------- -----
Security or Securities is registered in the Securities Register; any such Person
is a beneficial owner within the meaning of the Delaware Statutory Trust Act.
"Trust" means the Delaware statutory trust created and continued hereby
-----
and identified on the cover page to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as
----------------
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for all
purposes of this Trust Agreement and any such modification, amendment or
supplement, the provisions of the Trust Indenture Act that are deemed to be a
part of and govern this Trust Agreement and any such modification, amendment or
supplement, respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
---------------------
amended, as in force at the date as of which this instrument was executed;
provided, however, that in the event the Trust Indenture Act of 1939, as
amended, is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Property" means (a) the Debentures; (b) the rights of the
---------------
Property Trustee under the Guarantee; (c) any cash on deposit in, or owing to,
the Payment Account; and (d) all proceeds and rights in respect of the foregoing
and any other property and assets for the time being held or deemed to be held
by the Property Trustee pursuant to this Trust Agreement.
"Trust Security" means any one of the Common Securities or the
---------------
Preferred Securities.
"Trust Securities Certificate" means any one of the Common Securities
-----------------------------
Certificates or the Preferred Securities Certificates.
"Trustees" means, collectively, the Property Trustee, the Delaware
--------
Trustee and the Administrative Trustees.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
----------------------
March 26, 2003, among the Trust, the Depositor, Stifel Nicolaus & Company,
Incorporated, Fahnestock & Co. Inc. and the Underwriters named therein.
ARTICLE II
ESTABLISHMENT OF THE TRUST
Section 201. Name.
The Trust continued hereby shall be known as "FIRST PREFERRED CAPITAL
TRUST IV," as such name may be modified from time to time by the Administrative
Trustees following written notice to the Holders of Trust Securities and the
other Trustees, in which name the Trustees may engage in the transactions
contemplated hereby, make and execute contracts and other instruments on behalf
of the Trust and sue and be sued.
Section 202. Office of the Delaware Trustee; Principal Place of
Business.
The address of the Delaware Trustee in the State of Delaware is c/o
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration, or
such other address in the State of Delaware as the Delaware Trustee may
designate by written notice to the Securityholders and the Depositor. The
principal executive office of the Trust is c/o First Banks, Inc., 600 James S.
McDonnell Boulevard, Mail Code 014, Hazelwood, Missouri 63042.
Section 203. Initial Contribution of Trust Property; Organizational
Expenses.
The Trustees acknowledge receipt in trust from the Depositor in
connection with the Original Trust Agreement of the sum of $25, which
constituted the initial Trust Property. The Depositor shall pay organizational
expenses of the Trust as they arise or shall, upon request of any Trustee,
promptly reimburse such Trustee for any such expenses paid by such Trustee. The
Depositor shall make no claim upon the Trust Property for the payment of such
expenses.
Section 204. Issuance of the Preferred Securities.
On March 26, 2003, the Depositor and an Administrative Trustee, on
behalf of the Trust and pursuant to the Original Trust Agreement, executed and
delivered the Underwriting Agreement. Contemporaneously with the execution and
delivery of this Trust Agreement, an Administrative Trustee, on behalf of the
Trust, shall execute in accordance with Section 502 and deliver in accordance
with the Underwriting Agreement, Preferred Securities Certificates, registered
in the name of the Persons entitled thereto, in an aggregate amount of 1,600,000
Preferred Securities having an aggregate Liquidation Amount of $40,000,000
against receipt of the aggregate purchase price of such Preferred Securities of
$40,000,000, which amount such Administrative Trustee shall promptly deliver to
the Property Trustee. If the Underwriters exercise their Option and there is an
Option Closing Date (as defined in the Underwriting Agreement), then an
Administrative Trustee, on behalf of the Trust, shall execute in accordance with
Section 502, and deliver in accordance with the Underwriting Agreement,
additional Preferred Securities Certificates, registered in the name of the
Persons entitled thereto in an aggregate amount of up to 240,000 Preferred
Securities having an aggregate Liquidation Amount of up to $6,000,000 against
receipt of the aggregate purchase price of such Preferred Securities of up to
$6,000,000, which amount such Administrative Trustee shall promptly deliver to
the Property Trustee.
Section 205. Issuance of the Common Securities; Subscription and
Purchase of Debentures.
(a) Contemporaneously with the execution and delivery of
this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall
execute in accordance with Section 502 and deliver to the Depositor Common
Securities Certificates registered in the name of the Depositor, in an aggregate
amount of 49,485 Common Securities having an aggregate Liquidation Amount of
$1,237,125 against payment by the Depositor of such amount. Contemporaneously
therewith, an Administrative Trustee, on behalf of the Trust, shall subscribe to
and purchase from the Depositor Debentures, registered in the name of the
Property Trustee on behalf of the Trust and having an aggregate principal amount
equal to $41,237,125 and, in satisfaction of the purchase price for such
Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the
Depositor the sum of $41,237,125.
(b) If the Underwriters exercise the Option and there is
an Option Closing Date, then an Administrative Trustee, on behalf of the Trust,
shall execute in accordance with Section 502, and deliver to the Depositor,
Common Securities Certificates, registered in the name of the Depositor, in an
additional aggregate amount of up to 7,423 Common Securities having an aggregate
Liquidation Amount of up to $185,575 against payment by the Depositor of such
amount. Contemporaneously therewith, an Administrative Trustee, on behalf of the
Trust, shall subscribe to and purchase from the Depositor, additional
Debentures, registered in the name of the Property Trustee on behalf of the
Trust and having an aggregate principal amount of up to $6,185,575, and, in
satisfaction of the purchase price of such Debentures, the Property Trustee, on
behalf of the Trust, shall deliver to the Depositor up to $6,185,575, such
aggregate amount equal to the sum of the amounts received from the Depositor
pursuant to the first sentence of this Section 205(b) and from one of the
Administrative Trustees pursuant to the last sentence of Section 204.
Section 206. Declaration of Trust.
The exclusive purposes and functions of the Trust are (a) to issue and
sell Trust Securities and use the proceeds from such sale to acquire the
Debentures; and (b) to engage in those activities necessary, advisable or
incidental thereto. The Depositor hereby appoints the Trustees as trustees of
the Trust, to have all the rights, powers and duties to the extent set forth
herein, and the Trustees hereby accept such appointment. The Property Trustee
hereby declares that it shall hold the Trust Property in trust upon and subject
to the conditions set forth herein for the benefit of the Securityholders. The
Administrative Trustees shall have all rights, powers and duties set forth
herein and in accordance with applicable law with respect to accomplishing the
purposes of the Trust. The Delaware Trustee shall not be entitled to exercise
any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Property Trustee or the Administrative Trustees set
forth herein. The Delaware Trustee shall be one of the Trustees of the Trust for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the Delaware Statutory Trust Act.
Section 207. Authorization to Enter into Certain Transactions.
(a) The Trustees shall conduct the affairs of the Trust
in accordance with the terms of this Trust Agreement. Subject to the limitations
set forth in paragraph (b) of this Section 207 and Article VIII, and in
accordance with the following provisions (i) and (ii), the Administrative
Trustees shall have the authority to enter into all transactions and agreements
determined by the Administrative Trustees to be appropriate in exercising the
authority, express or implied, otherwise granted to the Administrative Trustees
under this Trust Agreement, and to perform all acts in furtherance thereof,
including without limitation, the following:
(i) As among the Trustees, each Administrative Trustee, acting
singly or jointly, shall have the power and authority to act on behalf
of the Trust with respect to the following matters:
(A) the issuance and sale of the Trust Securities and
compliance with the Underwriting Agreement in connection
therewith;
(B) to cause the Trust to enter into, and to execute,
deliver and perform on behalf of the Trust, the Expense
Agreement and such other agreements or documents as may be
necessary or desirable in connection with the purposes and
function of the Trust;
(C) assisting in the registration of the Preferred
Securities under the Securities Act of 1933, as amended, and
under state securities or blue sky laws, and the
qualification of this Trust Agreement as a trust indenture
under the Trust Indenture Act;
(D) assisting in the inclusion of the Preferred Securities
in the Nasdaq National Market or in the listing of the
Preferred Securities on such securities exchange or
exchanges as shall be determined by the Depositor and the
registration of the Preferred Securities under the Exchange
Act, the compliance with the listing requirements of The
Nasdaq National Market or the applicable securities
exchanges and the preparation and filing of all periodic and
other reports and other documents pursuant to the foregoing;
(E) the sending of notices (other than notices of default)
and other information regarding the Trust Securities and the
Debentures to the Securityholders in accordance with this
Trust Agreement;
(F) the appointment of a Paying Agent, Authenticating Agent
and Securities Registrar in accordance with this Trust
Agreement;
(G) to the extent provided in this Trust Agreement, the
winding up of the affairs of and liquidation of the Trust
and the preparation, execution and filing of the certificate
of cancellation with the Secretary of State of the State of
Delaware;
(H) the taking of all action that may be necessary or
appropriate for the preservation and the continuation of the
Trust's valid existence, rights, franchises and privileges
as a statutory business trust under the laws of the State of
Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of
the Preferred Securityholders or to enable the Trust to
effect the purposes for which the Trust was created; and
(I) the taking of any action incidental to the foregoing as
the Administrative Trustees may from time to time determine
is necessary or advisable to give effect to the terms of
this Trust Agreement for the benefit of the Securityholders
(without consideration of the effect of any such action on
any particular Securityholder).
(ii) As among the Trustees, the Property Trustee shall have
the power, duty and authority to act on behalf of the Trust with
respect to the following matters:
(A) the establishment of the Payment Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other
payments made in respect of the Debentures in the Payment
Account;
(D) the distribution of amounts owed to the Securityholders
in respect of the Trust Securities in accordance with the
terms of this Trust Agreement;
(E) the exercise of all of the rights, powers and privileges
of a holder of the Debentures;
(F) the sending of notices of default and other information
regarding the Trust Securities and the Debentures to the
Securityholders in accordance with this Trust Agreement;
(G) the distribution of the Trust Property in accordance
with the terms of this Trust Agreement;
(H) to the extent provided in this Trust Agreement, the
winding up of the affairs of and liquidation of the Trust;
(I) after an Event of Default, the taking of any action
incidental to the foregoing as the Property Trustee may from
time to time determine is necessary or advisable to give
effect to the terms of this Trust Agreement and protect and
conserve the Trust Property for the benefit of the
Securityholders (without consideration of the effect of any
such action on any particular Securityholder);
(J) registering transfers of the Trust Securities in
accordance with this Trust Agreement; and
(K) except as otherwise provided in this Section 207(a)(ii),
the Property Trustee shall have none of the duties,
liabilities, powers or the authority of the Administrative
Trustees set forth in Section 207(a)(i).
(b) So long as this Trust Agreement remains in effect,
the Trust (or the Trustees acting on behalf of the Trust) shall not undertake
any business, activities or transaction except as expressly provided herein or
contemplated hereby. In particular, the Trustees shall not (i) acquire any
investments or engage in any activities not authorized by this Trust Agreement;
(ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise
dispose of any of the Trust Property or interests therein, including to
Securityholders, except as expressly provided herein; (iii) take any action that
would cause the Trust to fail or cease to qualify as a "grantor trust" for
United States federal income tax purposes; (iv) incur any indebtedness for
borrowed money or issue any other debt; or (v) take or consent to any action
that would result in the placement of a Lien on any of the Trust Property. The
Administrative Trustees shall defend all claims and demands of all Persons at
any time claiming any Lien on any of the Trust Property adverse to the interest
of the Trust or the Securityholders in their capacity as Securityholders.
(c) In connection with the issue and sale of the
Preferred Securities, the Depositor shall have the right and responsibility to
assist the Trust with respect to, or effect on behalf of the Trust, the
following (and any actions taken by the Depositor in furtherance of the
following prior to the date of this Trust Agreement are hereby ratified and
confirmed in all respects):
(i) the preparation and filing by the Trust with the
Commission and the execution on behalf of the Trust of a
registration statement on the appropriate form in relation to the
Preferred Securities, the Debentures and the Guarantee, including
any amendments thereto;
(ii) the determination of the states in which to take
appropriate action to qualify or, register for sale all or part
of the Preferred Securities and to do any and all such acts,
other than actions which must be taken by or on behalf of the
Trust, and advise the Trustees of actions they must take on
behalf of the Trust, and prepare for execution and filing any
documents to be executed and filed by the Trust or on behalf of
the Trust, as the Depositor deems necessary or advisable in order
to comply with the applicable laws of any such states;
(iii) the preparation for filing by the Trust and execution
on behalf of the Trust of an application to The Nasdaq National
Market or a national stock exchange or other organization for
inclusion, listing or quotation upon notice of issuance of any
Preferred Securities and to file or cause an Administrative
Trustee to file thereafter with such exchange or organization
such notifications and documents as may be necessary from time to
time;
(iv) the preparation for filing by the Trust with the
Commission and the execution on behalf of the Trust of a
registration statement on Form 8 A relating to the registration
of the Preferred Securities under Section 12(b) or 12(g) of the
Exchange Act, including any amendments thereto;
(v) the negotiation of the terms of, and the execution and
delivery of, the Underwriting Agreement providing for the sale of
the Preferred Securities; and
(vi) the taking of any other actions necessary or desirable
to carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrative Trustees are authorized and directed to conduct the affairs of
the Trust and to operate the Trust so that the Trust shall not be deemed to be
an "investment company" required to be registered under the Investment Company
Act, shall be classified as a "grantor trust" and not as an association taxable
as a corporation for United States federal income tax purposes and so that the
Debentures shall be treated as indebtedness of the Depositor for United States
federal income tax purposes. In this connection, subject to Section 1002, the
Depositor and the Administrative Trustees are authorized to take any action, and
the Administrative Trustees are authorized to direct the Property Trustee in
writing to take any action not inconsistent with applicable law or this Trust
Agreement, that each of the Depositor and the Trustees determines in their
discretion to be necessary or desirable for such purposes. The Property Trustee
shall take any action so directed by one or more of the Administrative Trustees.
Section 208. Assets of Trust.
The assets of the Trust shall consist of the Trust Property.
Section 209. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee for the benefit of the Securityholders in accordance with
this Trust Agreement.
ARTICLE III
PAYMENT ACCOUNT
Section 301. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee
shall establish the Payment Account. The Property Trustee and any agent of the
Property Trustee shall have exclusive control and sole right of withdrawal with
respect to the Payment Account for the purpose of making deposits and
withdrawals from the Payment Account in accordance with this Trust Agreement.
All monies and other property deposited or held from time to time in the Payment
Account shall be held by the Property Trustee in the Payment Account for the
exclusive benefit of the Securityholders and for distribution as herein
provided, including (and subject to) any priority of payments provided for
herein.
(b) The Property Trustee shall deposit in the Payment
Account, promptly upon receipt, all payments of principal of or interest on, and
any other payments or proceeds with respect to, the Debentures. Amounts held in
the Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
Section 401. Distributions.
(a) Distributions on the Trust Securities shall be
cumulative, and shall accumulate whether or not there are funds of the Trust
available for the payment of Distributions. Distributions shall accumulate from
the date of issuance of the Trust Securities and, except during any Extension
Period with respect to the Debentures, shall be payable quarterly in arrears on
March 31, June 30, September 30 and December 31 of each year, commencing on June
30, 2003. If any date on which a Distribution is otherwise payable on the Trust
Securities is not a Business Day, then the payment of such Distribution shall be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) with the same force and effect as
if made on such date (each date on which Distributions are payable in accordance
with this Section 401(a), a "Distribution Date").
(b) The Trust Securities represent undivided beneficial
interests in the Trust Property. The Distributions on the Trust Securities shall
be payable at a rate of 8.15% per annum of the Liquidation Amount of the Trust
Securities. The amount of Distributions payable for any full period shall be
computed on the basis of a 360 day year of twelve 30 day months. The amount of
Distributions for any partial period shall be computed on the basis of the
number of days elapsed in a 360 day year of twelve 30 day months. During any
Extension Period with respect to the Debentures, Distributions on the Preferred
Securities shall be deferred for a period equal to the Extension Period.
(c) Distributions on the Trust Securities shall be made
by the Property Trustee solely from the Payment Account and shall b e payable on
each Distribution Date only to the extent that the Trust has funds then on hand
and immediately available by 12:30 p.m. on each Distribution Date in the Payment
Account for the payment of such Distributions.
(d) Distributions on the Trust Securities with respect to
a Distribution Date shall be payable to the Holders thereof as they appear on
the Securities Register for the Trust Securities on the relevant record date,
which shall be the 15th day of March, June, September or December for
Distributions payable on the last calendar day of the respective month;
provided, however, that for any Trust Securities held in global form,
Distributions shall be payable to the Holder thereof as of one Business Day
immediately preceding the Distribution Date.
Section 402. Redemption.
(a) On each Debenture Redemption Date and on the maturity
of the Debentures, the Trust shall be required to redeem a Like Amount of Trust
Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property
Trustee by first-class mail, postage prepaid, mailed not less than thirty (30)
nor more than sixty (60) days prior to the Redemption Date to each Holder of
Trust Securities to be redeemed, at such Holder's address appearing in the
Securities Register. The Property Trustee shall have no responsibility for the
accuracy of any CUSIP number contained in such notice. All notices of redemption
shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities are
to be redeemed, the identification and the aggregate Liquidation Amount
of the particular Trust Securities to be redeemed;
(v) that, on the Redemption Date, the Redemption Price
shall become due and payable upon each such Trust Security to be
redeemed and that Distributions thereon shall cease to accumulate on
and after said date, except as provided in Section 402(d); and
(vi) the place or places at which Trust Securities are to
be surrendered for the payment of the Redemption Price.
(c) The Trust Securities redeemed on each Redemption Date
shall be redeemed at the Redemption Price with the proceeds from the
contemporaneous redemption of the Debentures. Redemptions of the Trust
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Trust has immediately available
funds then on hand and available in the Payment Account for the payment of such
Redemption Price.
(d) If the Property Trustee gives a notice of redemption
in respect of any Preferred Securities, then, by 12:00 noon, New York City time,
on the Redemption Date, subject to Section 402(c), the Property Trustee, subject
to Section 402(c), shall, with respect to Preferred Securities held in global
form, deposit with the Clearing Agency for such Preferred Securities, to the
extent available therefor, funds sufficient to pay the applicable Redemption
Price and will give such Clearing Agency irrevocable instructions and authority
to pay the Redemption Price to the Holders of the Preferred Securities. With
respect to Trust Securities that are not held in global form, the Property
Trustee, subject to Section 402(c), shall deposit with the Paying Agent funds
sufficient to pay the applicable Redemption Price and shall give the Paying
Agent irrevocable instructions and authority to pay the Redemption Price to the
Holders thereof upon surrender of their Preferred Securities Certificates.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Trust Securities called for redemption shall be payable
to the Holders of such Trust Securities as they appear on the Securities
Register for the Trust Securities on the relevant record dates for the related
Distribution Dates. If notice of redemption shall have been given and funds
deposited as required, then upon the date of such deposit, (i) all rights of
Securityholders holding Trust Securities so called for redemption shall cease,
except the right of such Securityholders to receive the Redemption Price, but
without interest and (ii) such Securities shall cease to be Outstanding. In the
event that any date on which any Redemption Price is payable is not a Business
Day, then payment of the Redemption Price payable on such date shall be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) with the same force and effect as if
made on such date. In the event that payment of the Redemption Price in respect
of any Trust Securities called for redemption is improperly withheld or refused
and not paid either by the Trust or by the Depositor pursuant to the Guarantee,
Distributions on such Trust Securities shall continue to accumulate, at the then
applicable rate, from the Redemption Date originally established by the Trust
for such Trust Securities to the date such Redemption Price is actually paid, in
which case the actual payment date shall be the date fixed for redemption for
purposes of calculating the Redemption Price.
(e) Payment of the Redemption Price on the Trust
Securities shall be made to the record holders thereof as they appear on the
Securities Register for the Trust Securities on the relevant record date, which
shall be the date fifteen (15) days prior to the relevant Redemption Date;
provided, however, that for any Trust Securities held in global form,
Distributions shall be payable to the Holder thereof as of one Business Day
immediately preceding the Distribution Date.
(f) Subject to Section 403(a), if less than all the
Outstanding Trust Securities are to be redeemed on a Redemption Date, then the
aggregate Liquidation Amount of Trust Securities to be redeemed shall be
allocated on a pro rata basis (based on Liquidation Amounts) among the Common
Securities and the Preferred Securities. The particular Preferred Securities to
be redeemed shall be selected not more than sixty (60) days prior to the
Redemption Date by the Property Trustee from the Outstanding Preferred
Securities not previously called for redemption, by such method (including,
without limitation, by lot) as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
(equal to such Liquidation Amount or an integral multiple of such Liquidation
Amount in excess thereof) of the Liquidation Amount of Preferred Securities of a
denomination larger than the Liquidation Amount; provided, however, that in the
event the redemption relates only to Preferred Securities purchased and held by
the Depositor being redeemed in exchange for a Like Amount of Debentures, the
Property Trustee shall select those particular Preferred Securities for
redemption. The Property Trustee shall promptly notify the Securities Registrar
in writing of the Preferred Securities selected for redemption and, in the case
of any Preferred Securities selected for partial redemption, the Liquidation
Amount thereof to be redeemed, it being understood that, in the case of
Preferred Securities registered in the name of and held of record by the
Clearing Agency or its nominee, the distribution of the proceeds of such
redemption will be made in accordance with the procedures of the Clearing Agency
or its nominee. For all purposes of this Trust Agreement, unless the context
otherwise requires, all provisions relating to the redemption of Preferred
Securities shall relate, in the case of any Preferred Securities redeemed or to
be redeemed only in part, to the portion of the Liquidation Amount of Preferred
Securities which has been or is to be redeemed, it being understood that, in the
case of Preferred Securities registered in the name of and held of record by the
Clearing Agency or its nominee, the distribution of the proceeds of such
redemption will be made in accordance with the procedures of the Clearing Agency
or its nominee.
Section 403. Subordination of Common Securities.
(a) Payment of Distributions (including Additional
Amounts, if applicable) on, and the Redemption Price of, the Trust Securities,
as applicable, shall be made, subject to Section 402(f), pro rata among the
Common Securities and the Preferred Securities based on the Liquidation Amount
of the Trust Securities; provided, however, that if on any Distribution Date or
Redemption Date any Event of Default resulting from a Debenture Event of Default
shall have occurred and be continuing, no payment of any Distribution (including
Additional Amounts, if applicable) on, or Redemption Price of, any Common
Security, and no other payment on account of the redemption, liquidation or
other acquisition of Common Securities, shall be made unless payment in full in
cash of all accumulated and unpaid Distributions (including Additional Amounts,
if applicable) on all Outstanding Preferred Securities for all Distribution
periods terminating on or prior thereto, or in the case of payment of the
Redemption Price the full amount of such Redemption Price on all Outstanding
Preferred Securities then called for redemption, shall have been made or
provided for, and all funds immediately available to the Property Trustee shall
first be applied to the payment in full in cash of all Distributions (including
Additional Amounts, if applicable) on, or the Redemption Price of, Preferred
Securities then due and payable.
(b) In the case of the occurrence of any Event of Default
resulting from a Debenture Event of Default, the Common Securityholders shall be
deemed to have waived any right to act with respect to any such Event of Default
under this Trust Agreement until the effect of all such Events of Default with
respect to the Preferred Securities shall have been cured, waived or otherwise
eliminated. Until any such Event of Default under this Trust Agreement with
respect to the Preferred Securities shall have been so cured, waived or
otherwise eliminated, the Property Trustee shall act solely on behalf of the
Preferred Securityholders and not the Common Securityholder, and only the
Preferred Securityholders shall have the right to direct the Property Trustee to
act on their behalf.
Section 404. Payment Procedures.
Payments of Distributions (including Additional Amounts, if applicable)
in respect of the Preferred Securities shall be made by check mailed to the
address of the Person entitled thereto as such address shall appear on the
Securities Register or, if the Preferred Securities are held by a Clearing
Agency, such Distributions shall be made to the Clearing Agency in immediately
available funds, which will credit the relevant accounts on the applicable
Distribution Dates. Payments in respect of the Common Securities shall be made
in such manner as shall be mutually agreed between the Property Trustee and the
Common Securityholder.
Section 405. Tax Returns and Reports.
The Administrative Trustees shall prepare (or cause to be prepared), at
the Depositor's expense, and file all United States federal, state and local tax
and information returns and reports required to be filed by or in respect of the
Trust. In this regard, the Administrative Trustees shall (a) prepare and file
(or cause to be prepared and filed) the appropriate Internal Revenue Service
forms required to be filed in respect of the Trust in each taxable year of the
Trust; and (b) prepare and furnish (or cause to be prepared and furnished) to
each Securityholder the appropriate Internal Revenue Service forms required to
be furnished to such Securityholder or the information required to be provided
on such forms. The Administrative Trustees shall provide the Depositor with a
copy of all such returns and reports promptly after such filing or furnishing.
The Property Trustee shall comply with United States federal withholding and
backup withholding tax laws and information reporting requirements with respect
to any payments to Securityholders under the Trust Securities.
Section 406. Payment of Taxes, Duties, etc. of the Trust.
Upon receipt under the Debentures of Additional Payments, the Property
Trustee, at the direction of an Administrative Trustee or the Depositor, shall
promptly pay any taxes, duties or governmental charges of whatsoever nature
(other than withholding taxes) imposed on the Trust by the United States or any
other taxing authority.
Section 407 Payments Under Indenture. Any amount payable hereunder
to any Preferred Securityholder shall be reduced by the amount of any
corresponding payment such Holder has directly received under the Indenture
pursuant to Section 513(b) or (c) hereof.
ARTICLE V
TRUST SECURITIES CERTIFICATES
Section 501. Initial Ownership.
Upon the creation of the Trust and the contribution by the Depositor
pursuant to Section 203 and until the issuance of the Trust Securities, and at
any time during which no Trust Securities are Outstanding, the Depositor shall
be the sole beneficial owner of the Trust.
Section 502. The Trust Securities Certificates.
The Preferred Securities Certificates shall be issued in minimum
denominations of the Liquidation Amount and integral multiples of the
Liquidation Amount in excess thereof, and the Common Securities Certificates
shall be issued in denominations of the Liquidation Amount and multiples thereof
(which may, in the case of the Common Securities, include fractional amounts).
The Trust Securities Certificates shall be executed on behalf of the Trust by
manual or facsimile signature of at least one Administrative Trustee. Trust
Securities Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign on behalf of the Trust, shall be validly issued and entitled
to the benefits of this Trust Agreement, notwithstanding that such individuals
or any of them shall have ceased to be so authorized prior to the delivery of
such Trust Securities Certificates or did not hold such offices at the date of
delivery of such Trust Securities Certificates. A transferee of a Trust
Securities Certificate shall become a Securityholder, and shall be entitled to
the rights and subject to the obligations of a Securityholder hereunder, upon
due registration of such Trust Securities Certificate in such transferee's name
pursuant to Sections 504, 511 and 513.
Section 503. Execution, Authentication and Delivery of Trust
Securities Certificates.
(a) On the Closing Date and, if applicable, the Option
Closing Date, the Administrative Trustees shall cause Trust Securities
Certificates, in an aggregate Liquidation Amount as provided in Sections 204 and
205, to be executed on behalf of the Trust by at least one of the Administrative
Trustees and delivered to or upon the written order of the Depositor, signed by
its Chief Executive Officer, President, any Vice President, the Treasurer or any
Assistant Treasurer without further corporate action by the Depositor, in
authorized denominations.
(b) A Preferred Securities Certificate shall not be valid
until authenticated by the manual signature of an authorized signatory of the
Property Trustee. The signature shall be conclusive evidence that the Preferred
Securities Certificate has been authenticated under this Trust Agreement. Each
Preferred Security Certificate shall be dated the date of its authentication.
Upon the written order of the Trust signed by one of the Administrative
Trustees, the Property Trustee shall authenticate and make available for
delivery the Preferred Securities Certificates.
The Property Trustee may appoint an Authenticating Agent acceptable to
the Trust to authenticate the Preferred Securities. An Authenticating Agent may
authenticate the Preferred Securities whenever the Property Trustee may do so.
Each reference in this Trust Agreement to authentication by the Property Trustee
includes authentication by such agent. An Authenticating Agent has the same
rights as the Property Trustee to deal with the Company or the Trust.
Section 503A. Global Preferred Security.
(a) Any Global Preferred Security issued under this Trust
Agreement shall be registered in the name of the nominee of the Clearing Agency
and delivered to such custodian therefor, and such Global Preferred Security
shall constitute a single Preferred Security for all purposes of this Trust
Agreement.
(b) Notwithstanding any other provision in this Trust
Agreement, no Global Preferred Security may be exchanged for Preferred
Securities registered in the names of persons other than the Depositary or its
nominee unless (i) the Depositary notifies the Property Trustee that it is
unwilling or unable to continue as a depositary for such Global Preferred
Securities and the Depositor is unable to locate a qualified successor
depositary, (ii) the Depositor executes and delivers to the Property Trustee a
written order stating that it elects to terminate the book-entry system through
the Depositary or (iii) there shall have occurred and be continuing a Debenture
Event of Default.
(c) If a Preferred Security is to be exchanged in whole
or in part for a beneficial interest in a Global Preferred Security, then either
(i) such Global Preferred Security shall be so surrendered for exchange or
cancellation as provided in this Article V or (ii) the Liquidation Amount
thereof shall be reduced or increased by an amount equal to the portion thereof
to be so exchanged or canceled, or equal to the Liquidation Amount of such other
Preferred Securities to be so exchanged for a beneficial interest therein, as
the case may be, by means of an appropriate adjustment made on the records of
the Securities Registrar, whereupon the Property Trustee, in accordance with the
rules and procedures of the Depositary for such Global Preferred Security (the
"Applicable Procedures"), shall instruct the Clearing Agency or its authorized
----------------------
representative to make a corresponding adjustment to its records. Upon any such
surrender or adjustment of a Global Preferred Security by the Clearing Agency,
accompanied by registration instructions, the Administrative Trustees shall
execute and the Property Trustee shall, subject to Section 504(b) and as
otherwise provided in this Article V, authenticate and deliver any Preferred
Securities issuable in exchange for such Global Preferred Security (or any
portion thereof) in accordance with the instructions of the Clearing Agency. The
Property Trustee shall not be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be fully protected in
relying on, such instructions.
(d) Every Preferred Security executed, authenticated and
delivered upon registration of transfer of, or in exchange for or in lieu of, a
Global Preferred Security or any portion thereof, whether pursuant to this
Article V or otherwise, shall be executed, authenticated and delivered in the
form of, and shall be, a Global Preferred Security, unless such Global Preferred
Security is registered in the name of a Person other than the Clearing Agency
for such Global Preferred Security or a nominee thereof.
(e) The Clearing Agency or its nominee, as the registered
owner of a Global Preferred Security, shall be considered the Holder of the
Preferred Securities represented by such Global Preferred Security for all
purposes under this Trust Agreement and the Preferred Securities, and owners of
beneficial interests in such Global Preferred Security shall hold such interests
pursuant to the Applicable Procedures and, except as otherwise provided herein,
shall not be entitled to receive physical delivery of any such Preferred
Securities in definitive form and shall not be considered the Holders thereof
under this Trust Agreement. Accordingly, any such owner's beneficial interest in
the Global Preferred Securities shall be shown only on, and the transfer of such
interest shall be effected only through, records maintained by the Clearing
Agency or its nominee. Neither the Property Trustee, the Securities Registrar
nor the Depositor shall have any liability in respect of any transfers effected
by the Clearing Agency.
(f) The rights of owners of beneficial interests in a
Global Preferred Security shall be exercised only through the Clearing Agency
and shall be limited to those established by law and agreements between such
owners and the Clearing Agency.
Section 504. Registration of Transfer and Exchange of Preferred
Securities Certificates.
(a) The Depositor shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 508, a register or registers for
the purpose of registering Trust Securities Certificates and, subject to the
provisions of Section 503A, transfers and exchanges of Preferred Securities
Certificates (herein referred to as the "Securities Register") in which the
--------------------
registrar designated by the Depositor (the "Securities Registrar"), subject to
---------------------
such reasonable regulations as it may prescribe, shall provide for the
registration of Preferred Securities Certificates and Common Securities
Certificates (subject to Section 510 in the case of the Common Securities
Certificates) and registration of transfers and exchanges of Preferred
Securities Certificates as herein provided. The Property Trustee shall be the
initial Securities Registrar.
(b) Subject to the provisions of Section 503A, upon
surrender for registration of transfer of any Preferred Securities Certificate
at the office or agency maintained pursuant to Section 508, the Administrative
Trustees or any one of them shall execute and deliver, in the name of the
designated transferee or transferees, one or more new Preferred Securities
Certificates in authorized denominations of a like aggregate Liquidation Amount
dated the date of execution by such Administrative Trustee or Trustees. The
Securities Registrar shall not be required to register the transfer of any
Preferred Securities that have been called for redemption. At the option of a
Holder, Preferred Securities Certificates may be exchanged for other Preferred
Securities Certificates in authorized denominations of the same class and of a
like aggregate Liquidation Amount upon surrender of the Preferred Securities
Certificates to be exchanged at the office or agency maintained pursuant to
Section 508.
(c) Every Preferred Securities Certificate presented or
surrendered for registration of transfer or exchange, subject to the provisions
of Section 503A, shall be accompanied by a written instrument of transfer in
form satisfactory to the Property Trustee and the Securities Registrar duly
executed by the Holder or his attorney duly authorized in writing. Each
Preferred Securities Certificate surrendered for registration of transfer or
exchange shall be canceled and subsequently disposed of by the Property Trustee
in accordance with its customary practice. The Trust shall not be required to
(i) issue, register the transfer of, or exchange any Preferred Securities during
a period beginning at the opening of business 15 calendar days before the date
of mailing of a notice of redemption of any Preferred Securities called for
redemption and ending at the close of business on the day of such mailing; or
(ii) register the transfer of or exchange any Preferred Securities so selected
for redemption, in whole or in part, except the unredeemed portion of any such
Preferred Securities being redeemed in part.
(d) No service charge shall be made for any registration
of transfer or exchange of Preferred Securities Certificates, subject to the
provisions of Section 503A, but the Securities Registrar may require payment of
a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Preferred Securities Certificates.
(e) Preferred Securities may only be transferred, in
whole or in part, in accordance with the terms and conditions set forth in this
Trust Agreement. Any transfer or purported transfer of any Preferred Security
not made in accordance with this Trust Agreement shall be null and void. A
Preferred Security that is not a Global Preferred Security may be transferred,
in whole or in part, to a Person who takes delivery in the form of another
Preferred Security that is not a Global Preferred Security as provided in
Section 504(a). A beneficial interest in a Global Preferred Security may be
exchanged for a Preferred Security that is not a Global Preferred Security only
as provided in Section 503A.
Section 505. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (a) any mutilated Trust Securities Certificate shall be surrendered
to the Securities Registrar, or if the Securities Registrar shall receive
evidence to its satisfaction of the destruction, loss or theft of any Trust
Securities Certificate, and (b) there shall be delivered to the Securities
Registrar, the Property Trustee and the Administrative Trustees such security or
indemnity as may be required by them to save each of them harmless, then in the
absence of notice that such Trust Securities Certificate shall have been
acquired by a bona fide purchaser, the Administrative Trustees, or any one of
them, on behalf of the Trust shall execute and make available for delivery, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust
Securities Certificate, a new Trust Securities Certificate of like class, tenor
and denomination. In connection with the issuance of any new Trust Securities
Certificate under this Section 505, the Administrative Trustees or the
Securities Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Trust Securities Certificate issued pursuant to this Section 505
shall constitute conclusive evidence of an undivided beneficial interest in the
assets of the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Trust Securities Certificate shall be found at any time.
Section 506. Persons Deemed Securityholders.
The Trustees, the Paying Agent and the Securities Registrar shall treat
the Person in whose name any Trust Securities Certificate shall be registered in
the Securities Register as the owner of such Trust Securities Certificate for
the purpose of receiving Distributions and for all other purposes whatsoever,
and neither the Trustees nor the Securities Registrar shall be bound by any
notice to the contrary.
Section 507. Access to List of Securityholders' Names and Addresses.
At any time when the Property Trustee is not also acting as the
Securities Registrar, the Administrative Trustees or the Depositor shall furnish
or cause to be furnished to the Property Trustee (a) within five Business Days
after March 15, June 15, September 15 and December 15 in each year, a list, in
such form as the Property Trustee may reasonably require, of the names and
addresses of the Securityholders as of the most recent record date; and (b)
promptly after receipt by any Administrative Trustee or the Depositor of a
request therefor from the Property Trustee in order to enable the Property
Trustee to discharge its obligations under this Trust Agreement, in each case to
the extent such information is in the possession or control of the
Administrative Trustees or the Depositor and is not identical to a previously
supplied list or has not otherwise been received by the Property Trustee in its
capacity as Securities Registrar. The rights of Securityholders to communicate
with other Securityholders with respect to their rights under this Trust
Agreement or under the Trust Securities and the corresponding rights of the
Trustee shall be as provided in the Trust Indenture Act. Each Holder, by
receiving and holding a Trust Securities Certificate, and each owner shall be
deemed to have agreed not to hold the Depositor, the Property Trustee or the
Administrative Trustees accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
Section 508. Maintenance of Office or Agency.
The Administrative Trustees shall maintain or cause to be maintained in
The City of New York or other location designated by the Administrative
Trustees, an office or offices or agency or agencies where Preferred Securities
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Trustees in respect of the Trust
Securities Certificates may be served. The Administrative Trustees initially
designate the Corporate Trust Office of the Property Trustee, 38 Fountain Square
Plaza, MD10AT60, Cincinnati, Ohio, 45202, as the principal corporate trust
office for such purposes. The Administrative Trustees shall give prompt written
notice to the Depositor and to the Securityholders of any change in the location
of the Securities Register or any such office or agency.
Section 509. Appointment of Paying Agent.
The Property Trustee shall be the initial Paying Agent, and any
co-paying agent chosen by the Property Trustee must be acceptable to the
Administrative Trustees and the Depositor. The Paying Agent shall make
Distributions to Securityholders from the Payment Account and shall report the
amounts of such Distributions to the Property Trustee and the Administrative
Trustees. Any Paying Agent shall have the revocable power to withdraw funds from
the Payment Account for the purpose of making the Distributions referred to
above. The Administrative Trustees may revoke such power and remove the Paying
Agent if such Trustees determine in their sole discretion that the Paying Agent
shall have failed to perform its obligations under this Trust Agreement in any
material respect. The Paying Agent shall initially be the Property Trustee, and
any co paying agent chosen by the Property Trustee must be acceptable to the
Administrative Trustees and the Depositor. Any Person acting as Paying Agent
shall be permitted to resign as Paying Agent upon thirty (30) days' written
notice to the Administrative Trustees, the Property Trustee and the Depositor.
In the event that the Property Trustee shall no longer be the Paying Agent or a
successor Paying Agent shall resign or its authority to act be revoked, the
Administrative Trustees shall appoint a successor (which shall be a bank or
trust company) that is acceptable to the Property Trustee and the Depositor to
act as Paying Agent. The Administrative Trustees shall cause such successor
Paying Agent or any additional Paying Agent appointed by the Administrative
Trustees to execute and deliver to the Trustees an instrument in which such
successor Paying Agent or additional Paying Agent shall agree with the Trustees
that as Paying Agent, such successor Paying Agent or additional Paying Agent
shall hold all sums, if any, held by it for payment to the Securityholders in
trust for the benefit of the Securityholders entitled thereto until such sums
shall be paid to such Securityholders. The Paying Agent shall return all
unclaimed funds to the Property Trustee and, upon removal of a Paying Agent,
such Paying Agent shall also return all funds in its possession to the Property
Trustee. The provisions of Sections 801, 803 and 806 shall apply to the Property
Trustee also in its role as Paying Agent, for so long as the Property Trustee
shall act as Paying Agent and, to the extent applicable, to any other Paying
Agent appointed hereunder. Any reference in this Agreement to the Paying Agent
shall include any co paying agent unless the context requires otherwise.
Section 510. Ownership of Common Securities by Depositor.
On the Closing Date, the Depositor shall acquire and retain beneficial
and record ownership of the Common Securities. To the fullest extent permitted
by law, any attempted transfer of the Common Securities (other than a transfer
in connection with a merger or consolidation of the Depositor into another
corporation pursuant to Section 12.1 of the Indenture) shall be void. The
Administrative Trustees shall cause each Common Securities Certificate issued to
the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE
EXCEPT IN COMPLIANCE WITH SECTION 510 OF THE TRUST AGREEMENT."
Section 511. Preferred Securities Certificates.
(a) Upon their original issuance, Preferred Securities
Certificates shall be issued in the form of one or more fully registered Global
Preferred Securities Certificates which will be deposited with or on behalf of
the Clearing Agency and registered in the name of the Clearing Agency's nominee.
Unless and until it is exchangeable in whole or in part for the Preferred
Securities in definitive form, a global security may not be transferred except
as a whole by the Clearing Agency to a nominee of the Clearing Agency or by a
nominee of the Clearing Agency to the Clearing Agency or another nominee of the
Clearing Agency or by the Clearing Agency or any such nominee to a successor of
such Clearing Agency or a nominee of such successor.
(b) A single Common Securities Certificate representing
the Common Securities shall be issued to the Depositor in the form of a
definitive Common Securities Certificate.
Section 512. Notices to Clearing Agencies.
To the extent that a notice or other communication to the Holders is
required under this Trust Agreement, for so long as Preferred Securities are
represented by a Global Preferred Securities Certificate, the Trustees shall
give all such notices and communications specified herein to be given to the
Clearing Agency, and shall have no obligation to provide notice to the owners of
the beneficial interest in the Global Preferred Securities.
Section 513. Rights of Securityholders.
(a) The legal title to the Trust Property is vested
exclusively in the Property Trustee (in its capacity as such) in accordance with
Section 209, and the Securityholders shall not have any right or title therein
other than the undivided beneficial interest in the assets of the Trust
conferred by their Trust Securities, and they shall have no right to call for
any partition or division of property, profits or rights of the Trust except as
described below. The Trust Securities shall be personal property giving only the
rights specifically set forth therein and in this Trust Agreement. The Trust
Securities shall have no preemptive or similar rights. When issued and delivered
to Preferred Securityholders against payment of the purchase price therefor, the
Preferred Securities shall be fully paid and nonassessable interests in the
Trust. The Preferred Securityholders, in their capacities as such, shall be
entitled to the same limitation of personal liability extended to stockholders
of private corporations for profit organized under the General Corporation Law
of the State of Delaware.
(b) For so long as any Preferred Securities remain
Outstanding, if, upon a Debenture Event of Default, the Debenture Trustee fails
or the holders of not less than twenty-five percent (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 at least
twenty-five (25%) in Liquidation Amount of the Preferred Securities then
Outstanding shall have such right by a notice in writing to the Depositor and
the Debenture Trustee; and upon any such declaration such principal amount of
and the accrued interest on all of the Debentures shall become immediately due
and payable, provided that the payment of principal and interest on such
Debentures shall remain subordinated to the extent provided in the Indenture.
(c) For so long as any Preferred Securities remain
Outstanding, upon a Debenture Event of Default arising from the failure to pay
interest or principal on the Debentures, the Holders of any Preferred Securities
then Outstanding shall, to the fullest extent permitted by law, have the right
to directly institute proceedings for enforcement of payment to such Holders of
principal of or interest on the Debentures having a principal amount equal to
the Liquidation Amount of the Preferred Securities of such Holders.
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
Section 601. Limitations on Voting Rights.
(a) Except as provided in this Section 601, in Sections
513, 810 and 1002 and in the Indenture and as otherwise required by law, no
Preferred Securityholder shall have any right to vote or in any manner otherwise
control the administration, operation and management of the Trust or the
obligations of the parties hereto, nor shall anything herein set forth, or
contained in the terms of the Trust Securities Certificates, be construed so as
to constitute the Securityholders from time to time as partners or members of an
association.
(b) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with respect to
such Debentures; (ii) waive any past default which is waivable under Article VII
of the Indenture; (iii) exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and payable; or (iv)
consent to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of at least a majority in
Liquidation Amount of all Outstanding Preferred Securities; provided, however,
that where a consent under the Indenture would require the consent of each
holder of outstanding Debentures affected thereby, no such consent shall be
given by the Property Trustee without the prior written consent of each
Preferred Securityholder. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Preferred Securityholders, except by a
subsequent vote of the Preferred Securityholders. The Property Trustee shall
notify each Preferred Securityholder of any notice of default received from the
Debenture Trustee with respect to the Debentures. In addition to obtaining the
foregoing approvals of the Preferred Securityholders, prior to taking any of the
foregoing actions, the Trustees shall, at the expense of the Depositor, obtain
an Opinion of Counsel experienced in such matters to the effect that the Trust
shall continue to be classified as a grantor trust and not as an association
taxable as a corporation for United States federal income tax purposes on
account of such action.
(c) If any proposed amendment to the Trust Agreement
provides for, or the Trustees otherwise propose to effect, (i) any action that
would adversely affect in any material respect the powers, preferences or
special rights of the Preferred Securities, whether by way of amendment to the
Trust Agreement or otherwise; or (ii) the dissolution, winding up or termination
of the Trust, other than pursuant to the terms of this Trust Agreement, then the
Holders of Outstanding Preferred Securities as a class shall be entitled to vote
on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of the Holders of, with respect to matters
described in (i) above, at least 66 2/3% in Liquidation Amount of the
Outstanding Preferred Securities and with respect to matters described in (ii)
above, at least a majority in Liquidation Amount of the Outstanding Preferred
Securities. No amendment to this Trust Agreement may be made if, as a result of
such amendment, the Trust would cease to be classified as a grantor trust or
would be classified as an association taxable as a corporation for United States
federal income tax purposes.
Section 602. Notice of Meetings.
Notice of all meetings of the Preferred Securityholders, stating the
time, place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 1008 to each Preferred Securityholder of record, at his or
her registered address, at least fifteen (15) days and not more than ninety (90)
days before the meeting. At any such meeting, any business properly before the
meeting may be so considered whether or not stated in the notice of the meeting.
Any adjourned meeting may be held as adjourned without further notice.
Section 603. Meetings of Preferred Securityholders.
(a) No annual meeting of Securityholders is required to
be held. The Administrative Trustees, however, shall call a meeting of
Securityholders to vote on any matter in respect of which Preferred
Securityholders are entitled to vote upon the written request of the Preferred
Securityholders of twenty-five percent (25%) of the Outstanding Preferred
Securities (based upon their aggregate Liquidation Amount) and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of Preferred Securityholders to vote on any matters
as to which the Preferred Securityholders are entitled to vote.
(b) Preferred Securityholders of record of fifty percent
(50%) of the Outstanding Preferred Securities (based upon their aggregate
Liquidation Amount), present in person or by proxy, shall constitute a quorum at
any meeting of Securityholders.
(c) If a quorum is present at a meeting, an affirmative
vote by the Preferred Securityholders of record present, in person or by proxy,
holding more than a majority of the Preferred Securities (based upon their
aggregate Liquidation Amount) held by the Preferred Securityholders of record
present, either in person or by proxy, at such meeting shall constitute the
action of the Securityholders, unless this Trust Agreement requires a greater
number of affirmative votes.
Section 604. Voting Rights.
Securityholders shall be entitled to one vote for each dollar value of
Liquidation Amount represented by their Trust Securities (with any fractional
multiple thereof rounded up or down as the case may be to the closest integral
multiple) in respect of any matter as to which such Securityholders are entitled
to vote (and such dollar value shall be $25 per Preferred Security until such
time, if any, as the Liquidation Amount is changed as provided herein).
Section 605. Proxies, etc.
At any meeting of Securityholders, any Securityholder entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Administrative Trustees, or
with such other officer or agent of the Trust as the Administrative Trustees may
direct, for verification prior to the time at which such vote shall be taken.
Only Holders shall be entitled to vote. When Trust Securities are held jointly
by several persons, any one of them may vote at any meeting in person or by
proxy in respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be executed
by or on behalf of a Securityholder shall be deemed valid unless challenged at
or prior to its exercise, and, the burden of proving invalidity shall rest on
the challenger. No proxy shall be valid more than three years after its date of
execution.
Section 606. Securityholder Action by Written Consent.
Any action which may be taken by Securityholders at a meeting may be
taken without a meeting if Securityholders holding more than a majority of all
Outstanding Trust Securities (based upon their aggregate Liquidation Amount)
entitled to vote in respect of such action (or such larger proportion thereof as
shall be required by any express provision of this Trust Agreement) shall
consent to the action in writing (based upon their aggregate Liquidation
Amount).
Section 607. Record Date for Voting and Other Purposes.
For the purposes of determining the Securityholders who are entitled to
notice of and to vote at any meeting or by written consent, or to participate in
any Distribution on the Trust Securities in respect of which a record date is
not otherwise provided for in this Trust Agreement, or for the purpose of any
other action, the Administrative Trustees or the Property Trustee may from time
to time fix a date, not more than 90 days prior to the date of any meeting of
Securityholders or the payment of Distribution or other action, as the case may
be, as a record date for the determination of the identity of the
Securityholders of record for such purposes.
Section 608. Acts of Securityholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided or permitted by this Trust Agreement to
be given, made or taken by Securityholders may be embodied in and evidenced by
one or more instruments of substantially similar tenor signed by such
Securityholders in person or by an agent duly appointed in writing; and, except
as otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to an Administrative Trustee. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Securityholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Trust Agreement and (subject to Section 801) conclusive in favor
of the Trustees, if made in the manner provided in this Section 608.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved by the affidavit of a witness of
such execution or by a certificate of a notary public or other officer
authorized by law to take acknowledgments of deeds, certifying that the
individual signing such instrument or writing acknowledged to him the execution
thereof. Where such execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority. The fact and date of the execution of any
such instrument or writing, or the authority of the Person executing the same,
may also be proved in any other manner which any Trustee receiving the same
deems sufficient.
(c) The ownership of Preferred Securities shall be proved
by the Securities Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Securityholder of any Trust Security shall
bind every future Securityholder of the same Trust Security and the
Securityholder of every Trust Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustees or the Trust in reliance thereon,
whether or not notation of such action is made upon such Trust Security.
(e) Without limiting the foregoing, a Securityholder
entitled hereunder to take any action hereunder with regard to any particular
Trust Security may do so with regard to all or any part of the Liquidation
Amount of such Trust Security or by one or more duly appointed agents, each of
which may do so pursuant to such appointment with regard to all or any part of
such Liquidation Amount.
(f) A Securityholder may institute a legal proceeding
directly against the Depositor under the Guarantee to enforce its rights under
the Guarantee without first instituting a legal proceeding against the Guarantee
Trustee (as defined in the Guarantee), the Trust or any Person.
Section 609. Inspection of Records.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Trust shall be open to inspection at the principal
executive office of the Trust (as indicated in Section 202) by Holders of the
Trust Securities during normal business hours for any purpose reasonably related
to such Securityholder's interest as a Securityholder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
Section 701. Representations and Warranties of the Bank and the
Property Trustee.
The Bank and the Property Trustee, each severally on behalf of and as
to itself, as of the date hereof, and each successor Property Trustee at the
time of the successor Property Trustee's acceptance of its appointment as
Property Trustee hereunder (the term "Bank" being used to refer to such
----
successor Property Trustee in its separate corporate capacity) hereby represents
and warrants (as applicable) for the benefit of the Depositor and the
Securityholders that:
(a) the Bank is a national banking association duly
organized, validly existing and in good standing under the laws of the United
States of America;
(b) the Bank has full corporate power, authority and
legal right to execute, deliver and perform its obligations under this Trust
Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized,
executed and delivered by the Property Trustee and constitutes the valid and
legally binding agreement of the Property Trustee enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles;
(d) the execution, delivery and performance by the
Property Trustee of this Trust Agreement has been duly authorized by all
necessary corporate or other action on the part of the Property Trustee and does
not require any approval of stockholders of the Bank, and such execution,
delivery and performance shall not (i) violate the Bank's charter or by laws;
(ii) violate any provision of, or constitute, with or without notice or lapse of
time, a default under, or result in the creation or imposition of, any Lien on
any properties included in the Trust Property pursuant to the provisions of, any
indenture, mortgage, credit agreement, license or other agreement or instrument
to which the Property Trustee or the Bank is a party or by which it is bound; or
(iii) violate any law, governmental rule or regulation of the United States or
the State of Ohio, as the case may be, governing the banking or trust powers of
the Bank or the Property Trustee (as appropriate in context) or any order,
judgment or decree applicable to the Property Trustee or the Bank;
(e) neither the authorization, execution or delivery by
the Property Trustee of this Trust Agreement nor the consummation of any of the
transactions by the Property Trustee contemplated herein or therein requires the
consent or approval of, the giving of notice to, the registration with or the
taking of any other action with respect to any governmental authority or agency
under any existing federal law governing the banking or trust powers of the Bank
or the Property Trustee, as the case may be, under the laws of the United States
or the State of Ohio;
(f) there are no proceedings pending or, to the best of
the Property Trustee's knowledge, threatened against or affecting the Bank or
the Property Trustee in any court or before any governmental authority, agency
or arbitration board or tribunal which, individually or in the aggregate, would
materially and adversely affect the Trust or would question the right, power and
authority of the Property Trustee to enter into or perform its obligations as
one of the Trustees under this Trust Agreement; and
(g) the Property Trustee is a Person eligible pursuant to
the Trust Indenture Act to act as such and has (or the obligations of which are
guaranteed by an entity having) a combined capital and surplus of at least
$50,000,000.
Section 702. Representations and Warranties of the Delaware Bank and
the Delaware Trustee.
The Delaware Bank and the Delaware Trustee, each severally on behalf of
and as to itself, as of the date hereof, and each successor Delaware Trustee at
the time of the successor Delaware Trustee's acceptance of appointment as
Delaware Trustee hereunder (the term "Delaware Bank" being used to refer to such
successor Delaware Trustee in its separate corporate capacity), hereby
represents and warrants (as applicable) for the benefit of the Depositor and the
Securityholders that:
(a) the Delaware Bank is a Delaware banking corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware;
(b) the Delaware Bank has full corporate power, authority
and legal right to execute, deliver and perform its obligations under this Trust
Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized,
executed and delivered by the Delaware Trustee and constitutes the valid and
legally binding agreement of the Delaware Trustee enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors, rights and to general equity principles;
(d) the execution, delivery and performance by the
Delaware Trustee of this Trust Agreement has been duly authorized by all
necessary corporate or other action on the part of the Delaware Trustee and does
not require any approval of stockholders of the Delaware Bank, and such
execution, delivery and performance shall not (i) violate the Delaware Bank's
charter or by laws; (ii) violate any provision of, or constitute, with or
without notice or lapse of time, a default under, or result in the creation or
imposition of, any Lien on any properties included in the Trust Property
pursuant to the provisions of, any indenture, mortgage, credit agreement,
license or other agreement or instrument to which the Delaware Bank or the
Delaware Trustee is a party or by which it is bound; or (iii) violate any law,
governmental rule or regulation of the United States or the State of Delaware,
as the case may be, governing the banking or trust powers of the Delaware Bank
or the Delaware Trustee (as appropriate in context) or any order, judgment or
decree applicable to the Delaware Bank or the Delaware Trustee;
(e) neither the authorization, execution or delivery by
the Delaware Trustee of this Trust Agreement nor the consummation of any of the
transactions by the Delaware Trustee contemplated herein or therein requires the
consent or approval of, the giving of notice to, the registration with or the
taking of any other action with respect to any governmental authority or agency
under any existing federal law governing the banking or trust powers of the
Delaware Bank or the Delaware Trustee, as the case may be, under the laws of the
United States or the State of Delaware; and
(f) there are no proceedings pending or, to the best of
the Delaware Trustee's knowledge, threatened against or affecting the Delaware
Bank or the Delaware Trustee in any court or before any governmental authority,
agency or arbitration board or tribunal which, individually or in the aggregate,
would materially and adversely affect the Trust or would question the right,
power and authority of the Delaware Trustee to enter into or perform its
obligations as one of the Trustees under this Trust Agreement.
Section 703. Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants for the benefit of the
Securityholders that:
(a) the Trust Securities Certificates issued on the
Closing Date or the Option Closing Date, if applicable, on behalf of the Trust
have been duly authorized and shall have been duly and validly executed, issued
and delivered by the Administrative Trustees pursuant to the terms and
provisions of, and in accordance with the requirements of, this Trust Agreement,
and the Securityholders shall be, as of such date, entitled to the benefits of
this Trust Agreement; and
(b) there are no taxes, fees or other governmental
charges payable by the Trust (or the Trustees on behalf of the Trust) under the
laws of the State of Delaware or any political subdivision thereof in connection
with the execution, delivery and performance by the Bank, the Property Trustee
or the Delaware Trustee, as the case may be, of this Trust Agreement.
ARTICLE VIII
TRUSTEES
Section 801. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Trustees shall
be as provided by this Trust Agreement and, in the case of the Property Trustee,
by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this
Trust Agreement shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers, if they
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it. No Administrative Trustee nor the Delaware Trustee shall be liable for its
act or omissions hereunder except as a result of its own gross negligence or
willful misconduct. The Property Trustee's liability shall be determined under
the Trust Indenture Act. Whether or not therein expressly so provided, every
provision of this Trust Agreement relating to the conduct or affecting the
liability of or affording protection to the Trustees shall be subject to the
provisions of this Section 801. To the extent that, at law or in equity, the
Delaware Trustee or an Administrative Trustee has duties (including fiduciary
duties) and liabilities relating thereto to the Trust or to the Securityholders,
the Delaware Trustee or such Administrative Trustee shall not be liable to the
Trust or to any Securityholder for such Trustee's good faith reliance on the
provisions of this Trust Agreement. The provisions of this Trust Agreement, to
the extent that they restrict the duties and liabilities of the Delaware Trustee
or the Administrative Trustees otherwise existing at law or in equity, are
agreed by the Depositor and the Securityholders to replace such other duties and
liabilities of the Delaware Trustee or the Administrative Trustees, as the case
may be.
(b) All payments made by the Property Trustee or a Paying
Agent in respect of the Trust Securities shall be made only from the revenue and
proceeds from the Trust Property and only to the extent that there shall be
sufficient revenue or proceeds from the Trust Property to enable the Property
Trustee or a Paying Agent to make payments in accordance with the terms hereof.
With respect to the relationship of each Securityholder and the Trustees, each
Securityholder, by its acceptance of a Trust Security, agrees that it shall look
solely to the revenue and proceeds from the Trust Property to the extent legally
available for distribution to it as herein provided and that the Trustees are
not personally liable to it for any amount distributable in respect of any Trust
Security or for any other liability in respect of any Trust Security. This
Section 801(b) does not limit the liability of the Trustees expressly set forth
elsewhere in this Trust Agreement or, in the case of the Property Trustee, in
the Trust Indenture Act.
(c) No provision of this Trust Agreement shall be
construed to relieve the Property Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) the Property Trustee shall not be liable for any error of
judgment made in good faith by an authorized officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(ii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
majority in Liquidation Amount of the Trust Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under this Trust Agreement;
(iii) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Payment Account shall be to deal with such property in a similar
manner as the Property Trustee deals with similar property for its own
account, subject to the protections and limitations on liability
afforded to the Property Trustee under this Trust Agreement and the
Trust Indenture Act;
(iv) the Property Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree with the
Depositor and money held by the Property Trustee need not be segregated
from other funds held by it except in relation to the Payment Account
maintained by the Property Trustee pursuant to Section 301 and except
to the extent otherwise required by law; and
(v) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Depositor with their respective duties under this Trust Agreement, nor
shall the Property Trustee be liable for the negligence, default or
misconduct of the Administrative Trustees or the Depositor.
Section 802. Certain Notices.
(a) Within five (5) Business Days after the occurrence of
any Event of Default actually known to the Property Trustee, the Property
Trustee shall transmit, in the manner and to the extent provided in Section
1008, notice of such Event of Default to the Securityholders, the Administrative
Trustees and the Depositor, unless such Event of Default shall have been cured
or waived. For purposes of this Section 802 the term "Event of Default" means
----------------
any event that is, or after notice or lapse of time or both would become, an
Event of Default.
(b) The Administrative Trustees shall transmit to the
Securityholders, in the manner and to the extent provided in Section 1008,
notice of the Depositor's election to begin or further extend an Extension
Period on the Debentures (unless such election shall have been revoked) and of
any election by the Depositor to accelerate the Maturity Date of the Debentures
within the time specified for transmitting such notice to the holders of the
Debentures pursuant to the Indenture as originally executed.
Section 803. Certain Rights of Property Trustee.
Subject to the provisions of Section 801:
(a) the Property Trustee may rely and shall be protected
in acting or refraining from acting in good faith upon any resolution, Opinion
of Counsel, certificate, written representation of a Holder or transferee,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond, debenture,
note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) if (i) in performing its duties under this Trust
Agreement the Property Trustee is required to decide between alternative courses
of action; or (ii) in construing any of the provisions of this Trust Agreement
the Property Trustee finds the same ambiguous or inconsistent with other
provisions contained herein; or (iii) the Property Trustee is unsure of the
application of any provision of this Trust Agreement, then, except as to any
matter as to which the Preferred Securityholders are entitled to vote under the
terms of this Trust Agreement, the Property Trustee shall deliver a notice to
the Depositor requesting written instructions of the Depositor as to the course
of action to be taken, and the Property Trustee shall take such action, or
refrain from taking such action, as the Property Trustee shall be instructed in
writing to take, or to refrain from taking, by the Depositor; provided, however,
that if the Property Trustee does not receive such instructions of the Depositor
within ten (10) Business Days after it has delivered such notice, or such
reasonably shorter period of time set forth in such notice (which to the extent
practicable shall not be less than two (2) Business Days), it may, but shall be
under no duty to, take or refrain from taking such action not inconsistent with
this Trust Agreement as it shall deem advisable and in the best interests of the
Securityholders, in which event the Property Trustee shall have no liability
except for its own bad faith, negligence or willful misconduct;
(c) any direction or act of the Depositor or the
Administrative Trustees contemplated by this Trust Agreement shall be
sufficiently evidenced by an Officers' Certificate;
(d) whenever in the administration of this Trust
Agreement, the Property Trustee shall deem it desirable that a matter be
established before undertaking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and conclusively rely upon an
Officer's Certificate which, upon receipt of such request, shall be promptly
delivered by the Depositor or the Administrative Trustees;
(e) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing or
continuation statement or, except as provided in Section 405, any filing under
tax or securities laws) or any rerecording, refiling or reregistration thereof;
(f) the Property Trustee may consult with counsel of its
choice (which counsel may be counsel to the Depositor or any of its Affiliates),
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon and, in accordance with such advice, such
counsel may be counsel to the Depositor or any of its Affiliates, and may
include any of its employees; the Property Trustee shall have the right at any
time to seek instructions concerning the administration of this Trust Agreement
from any court of competent jurisdiction;
(g) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Trust Agreement at the
request or direction of any of the Securityholders pursuant to this Trust
Agreement, unless such Securityholders shall have offered to the Property
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction; nothing contained herein shall, however, relieve the Property Trustee
of the obligation, upon the occurrence of any Event of Default (that has not
been waived) to exercise such of the rights and powers vested in it by the Trust
Agreement, and to use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs;
(h) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, unless requested in writing to do so by the Holders of not less
than a majority in Liquidation Amount of the Outstanding Preferred Securities,
but the Property Trustee may make such further inquiry or investigation into
such facts or matters as it may see fit;
(i) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys, provided that the Property Trustee shall be
responsible for its own negligence or recklessness with respect to selection of
any agent or attorney appointed by it hereunder;
(j) whenever in the administration of this Trust
Agreement the Property Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other action
hereunder, the Property Trustee (i) may request instructions from the Holders of
the Trust Securities which instructions may only be given by the Holders of the
same proportion in Liquidation Amount of the Trust Securities as would be
entitled to direct the Property Trustee under the terms of the Trust Securities
in respect of such remedy, right or action; (ii) may refrain from enforcing such
remedy or right or taking such other action until such instructions are
received; and (iii) shall be protected in acting in accordance with such
instructions; and
(k) except as otherwise expressly provided by this Trust
Agreement, the Property Trustee shall not be under any obligation to take any
action that is discretionary under the provisions of this Trust Agreement. No
provision of this Trust Agreement shall be deemed to impose any duty or
obligation on the Property Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it, in any jurisdiction
in which it shall be illegal, or in which the Property Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts, or to exercise any such right, power, duty or obligation. No
permissive power or authority available to the Property Trustee shall be
construed to be a duty.
Section 804. Not Responsible for Recitals or Issuance of Securities.
The Recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Trust, and the Trustees do not assume
any responsibility for their correctness. The Trustees shall not be accountable
for the use or application by the Depositor of the proceeds of the Debentures.
Section 805. May Hold Securities.
Any Trustee or any other agent of any Trustee or the Trust, in its
individual or any other capacity, may become the owner or pledgee of Trust
Securities and, subject to Sections 808 and 813 and except as provided in the
definition of the term "Outstanding" in Article I, may otherwise deal with the
-----------
Trust with the same rights it would have if it were not a Trustee or such other
agent.
Section 806. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay to the Trustees from time to time reasonable
compensation for all services rendered by them hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable expenses, disbursements
and advances incurred or made by the Trustees in accordance with any provision
of this Trust Agreement (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to such Trustee's negligence, bad
faith or willful misconduct (or, in the case of the Administrative Trustees or
the Delaware Trustee, any such expense, disbursement or advance as may be
attributable to its, his or her gross negligence, bad faith or willful
misconduct); and
(c) to indemnify each of the Trustees or any predecessor
Trustee for, and to hold the Trustees harmless against, any loss, damage,
claims, liability, penalty or expense of any kind or nature whatsoever, arising
out of or in connection with the acceptance or administration of this Trust
Agreement, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder, except any such expense, disbursement or advance as
may be attributable to such Trustee's negligence, bad faith or willful
misconduct (or, in the case of the Administrative Trustees or the Delaware
Trustee, any such expense, disbursement or advance as may be attributable to
its, his or her gross negligence, bad faith or willful misconduct).
No Trustee may claim any Lien or charge on Trust Property as a result
of any amount due pursuant to this Section 806.
Section 807. Corporate Property Trustee Required; Eligibility of
Trustees.
(a) There shall at all times be a Property Trustee
hereunder with respect to the Trust Securities. The Property Trustee shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has (or the obligations of which are guaranteed by an entity having) a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this Section
807, the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Property Trustee with respect to the Trust
Securities shall cease to be eligible in accordance with the provisions of this
Section 807, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article VIII.
(b) There shall at all times be one or more
Administrative Trustees hereunder with respect to the Trust Securities. Each
Administrative Trustee shall be either a natural person who is at least 21 years
of age or a legal entity that shall act through one or more persons authorized
to bind that entity.
(c) There shall at all times be a Delaware Trustee with
respect to the Trust Securities. The Delaware Trustee shall either be (i) a
natural person who is at least 21 years of age and a resident of the State of
Delaware; or (ii) a legal entity with its principal place of business in the
State of Delaware and that otherwise meets the requirements of applicable
Delaware law that shall act through one or more persons authorized to bind such
entity.
Section 808. Conflicting Interests.
If the Property Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.
Section 809. Co-Trustees and Separate Trustee.
(a) Unless a Debenture Event of Default shall have
occurred and be continuing, at any time or times, for the purpose of meeting the
legal requirements of the Trust Indenture Act or of any jurisdiction in which
any part of the Trust Property may at the time be located, the Depositor shall
have power to appoint, and upon the written request of the Property Trustee, the
Depositor shall for such purpose join with the Property Trustee in the
execution, delivery and performance of all instruments and agreements necessary
or proper to appoint, one or more Persons approved by the Property Trustee
either to act as co-trustee, jointly with the Property Trustee, of all or any
part of such Trust Property, or to the extent required by law to act as separate
trustee of any such property, in either case with such powers as may be provided
in the instrument of appointment, and to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Section 809. If the Depositor
does not join in such appointment within 15 days after the receipt by it of a
request so to do, or in case a Debenture Event of Default has occurred and is
continuing, the Property Trustee alone shall have power to make such
appointment. Any co-trustee or separate trustee appointed pursuant to this
Section 809 shall either be (i) a natural person who is at least 21 years of age
and a resident of the United States; or (ii) a legal entity with its principal
place of business in the United States that shall act through one or more
persons authorized to bind such entity.
(b) Should any written instrument from the Depositor be
required by any co-trustee or separate trustee so appointed for more fully
confirming to such co-trustee or separate trustee such property, title, right,
or power, any and all such instruments shall, on request, be executed,
acknowledged, and delivered by the Depositor.
(c) Every co-trustee or separate trustee shall, to the
extent permitted by law, but to such extent only, be appointed subject to the
following terms, namely:
(i) The Trust Securities shall be executed and delivered
all rights, powers, duties and obligations hereunder in respect
of the custody of securities, cash and other personal property
held by, or required to be deposited or pledged with, the
Trustees specified hereunder, shall be exercised, solely by such
Trustees and not by such co-trustee or separate trustee.
(ii) The rights, powers, duties and obligations hereby
conferred or imposed upon the Property Trustee in respect of any
property covered by such appointment shall be conferred or
imposed upon and exercised or performed by the Property Trustee
or by the Property Trustee and such co-trustee or separate
trustee jointly, as shall be provided in the instrument
appointing such co-trustee or separate trustee, except to the
extent that under any law of any jurisdiction in which any
particular act is to be performed, the Property Trustee shall be
incompetent or unqualified to perform such act, in which event
such rights, powers, duties and obligations shall be exercised
and performed by such co-trustee or separate trustee.
(iii) The Property Trustee at any time, by an instrument in
writing executed by it, with the written concurrence of the
Depositor, may accept the resignation of or remove any co-trustee
or separate trustee appointed under this Section 809, and, in
case a Debenture Event of Default has occurred and is continuing,
the Property Trustee shall have the power to accept the
resignation of, or remove, any such co-trustee or separate
trustee without the concurrence of the Depositor. Upon the
written request of the Property Trustee, the Depositor shall join
with the Property Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper
to effectuate such resignation or removal. A successor to any
co-trustee or separate trustee so resigned or removed may be
appointed in the manner provided in this Section 809.
(iv) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the
Property Trustee or any other trustee hereunder.
(v) The Property Trustee shall not be liable by reason of
any act of a co-trustee or separate trustee.
(vi) Any Act of Holders delivered to the Property Trustee
shall be deemed to have been delivered to each such co-trustee
and separate trustee.
Section 810. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of any Trustee (the
"Relevant Trustee") and no appointment of a successor Trustee pursuant to this
----------------
Article VIII shall become effective until the acceptance of appointment by the
successor Trustee in accordance with the applicable requirements of Section 811.
(b) Subject to the immediately preceding paragraph, the
Relevant Trustee may resign at any time with respect to the Trust Securities by
giving written notice thereof to the Securityholders. If the instrument of
acceptance by the successor Trustee required by Section 811 shall not have been
delivered to the Relevant Trustee within thirty (30) days after the giving of
such notice of resignation, the Relevant Trustee may petition, at the expense of
the Depositor, any court of competent jurisdiction for the appointment of a
successor Relevant Trustee with respect to the Trust Securities.
(c) Unless a Debenture Event of Default shall have
occurred and be continuing, any Trustee may be removed at any time by Act of the
Common Securityholder. If a Debenture Event of Default shall have occurred and
be continuing, the Property Trustee or the Delaware Trustee, or both of them,
may be removed at such time by Act of the Holders of a majority in Liquidation
Amount of the Preferred Securities, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust). An Administrative Trustee may
be removed by the Common Securityholder at any time.
(d) If any Trustee shall resign, be removed or become
incapable of acting as Trustee, or if a vacancy shall occur in the office of any
Trustee for any cause, at a time when no Debenture Event of Default shall have
occurred and be continuing, the Common Securityholder, by Act of the Common
Securityholder delivered to the retiring Trustee, shall promptly appoint a
successor Trustee or Trustees with respect to the Trust Securities and the
Trust, and the successor Trustee shall comply with the applicable requirements
of Section 811. If the Property Trustee or the Delaware Trustee shall resign, be
removed or become incapable of continuing to act as the Property Trustee or the
Delaware Trustee, as the case may be, at a time when a Debenture Event of
Default shall have occurred and is continuing, the Preferred Securityholders, by
Act of the Securityholders of a majority in Liquidation Amount of the Preferred
Securities then Outstanding delivered to the retiring Relevant Trustee, shall
promptly appoint a successor Relevant Trustee or Trustees with respect to the
Trust Securities and the Trust, and such successor Trustee shall comply with the
applicable requirements of Section 811. If an Administrative Trustee shall
resign, be removed or become incapable of acting as Administrative Trustee, at a
time when a Debenture Event of Default shall have occurred and be continuing,
the Common Securityholder, by Act of the Common Securityholder delivered to an
Administrative Trustee, shall promptly appoint a successor Administrative
Trustee or Administrative Trustees with respect to the Trust Securities and the
Trust, and such successor Administrative Trustee or Administrative Trustees
shall comply with the applicable requirements of Section 811. If no successor
Relevant Trustee with respect to the Trust Securities shall have been so
appointed by the Common Securityholder or the Preferred Securityholders and
accepted appointment in the manner required by Section 811, any Securityholder
who has been a Securityholder of Trust Securities on behalf of himself and all
others similarly situated may petition a court of competent jurisdiction for the
appointment Trustee with respect to the Trust Securities.
(e) The Property Trustee shall give notice of each
resignation and each removal of a Trustee and each appointment of a successor
Trustee to all Securityholders in the manner provided in Section 1008 and shall
give notice to the Depositor. Each notice shall include the name of the
successor Relevant Trustee and the address of its Corporate Trust Office if it
is the Property Trustee.
(f) Notwithstanding the foregoing or any other provision
of this Trust Agreement, in the event any Administrative Trustee or a Delaware
Trustee who is a natural person dies or becomes, in the opinion of the
Depositor, incompetent or incapacitated, the vacancy created by such death,
incompetence or incapacity may be filled by (a) the unanimous act of remaining
Administrative Trustees if there are at least two of them; or (b) otherwise by
the Depositor (with the successor in each case being a Person who satisfies the
eligibility requirement for Administrative Trustees set forth in Section 807).
Section 811. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor
Relevant Trustee with respect to the Trust Securities and the Trust, the
retiring Relevant Trustee and each successor Relevant Trustee with respect to
the Trust Securities shall execute and deliver an instrument hereto wherein each
successor Relevant Trustee shall accept such appointment and which shall contain
such provisions as shall be necessary or desirable to transfer and confirm to,
and to vest in, each successor Relevant Trustee all the rights, powers, trusts
and duties of the retiring Relevant Trustee with respect to the Trust Securities
and the Trust and upon the execution and delivery of such instrument the
resignation or removal of the retiring Relevant Trustee shall become effective
to the extent provided therein and each such successor Relevant Trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Trust Securities and the Trust; but, on request of the Trust or any successor
Relevant Trustee such 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 Trust Securities and the Trust.
(b) Upon request of any such successor Relevant Trustee,
the Trust shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Relevant Trustee all such rights,
powers and trusts referred to in the immediately preceding paragraph, as the
case may be.
(c) No successor Relevant Trustee shall accept its
appointment unless at the time of such acceptance such successor Relevant
Trustee shall be qualified and eligible under this Article VIII.
Section 812. Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which such Relevant Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of such Relevant Trustee, shall be the successor of such Relevant Trustee
hereunder, provided such Person shall be otherwise qualified and eligible under
this Article VIII, without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
Section 813. Preferential Collection of Claims Against Depositor or
Trust.
If and when the Property Trustee or the Delaware Trustee shall be or
become a creditor of the Depositor or the Trust (or any other obligor upon the
Debentures or the Trust Securities), the Property Trustee or the Delaware
Trustee, as the case may be, shall be subject to and shall take all actions
necessary in order to comply with the provisions of the Trust Indenture Act
regarding the collection of claims against the Depositor or Trust (or any such
other obligor).
Section 814. Reports by Property Trustee.
(a) The Property Trustee shall transmit to the
Securityholders such reports concerning the Property Trustee, its actions under
this Trust Agreement and the property and funds in its possession in its
capacity as the Property Trustee as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with the Nasdaq
National Market or each national securities exchange or other organization upon
which the Trust Securities are listed, and also with the Commission and the
Depositor.
Section 815. Reports to the Property Trustee.
The Depositor and the Administrative Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314(a) of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act.
Section 816. Evidence of Compliance with Conditions Precedent.
Each of the Depositor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Trust Agreement that relate
to any of the matters set forth in Section 314(c) of the Trust Indenture Act.
Any certificate or opinion required to be given by an officer pursuant to
Section 314(c)(1) of the Trust Indenture Act shall be given in the form of an
Officers' Certificate.
Section 817. Number of Trustees.
(a) The number of Trustees shall be five, provided that
the Common Securityholder by written instrument may increase or decrease the
number of Administrative Trustees. The Property Trustee and the Delaware Trustee
may be the same Person.
(b) If an Administrative Trustee ceases to hold office for
any reason and the number of Administrative Trustees is not reduced pursuant to
Section 817(a), or if the number of Trustees is increased pursuant to Section
817(a), a vacancy shall occur. The vacancy shall be filled with a Trustee
appointed in accordance with Section 810.
(c) The death, resignation, retirement, removal,
bankruptcy, incompetence or incapacity to perform the duties of a Trustee shall
not operate to annul the Trust. Whenever a vacancy in the number of
Administrative Trustees shall occur, until such vacancy is filled by the
appointment of an Administrative Trustee in accordance with Section 810, the
Administrative Trustees in office, regardless of their number (and
notwithstanding any other provision of this Agreement), shall have all the
powers granted to the Administrative Trustees and shall discharge all the duties
imposed upon the Administrative Trustees by this Trust Agreement.
Section 818. Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 207(a); and
(b) The Administrative Trustees shall have power to
delegate from time to time to such of their number or to the Depositor the doing
of such things and the execution of such instruments either in the name of the
Trust or the names of the Administrative Trustees or otherwise as the
Administrative Trustees may deem expedient, to the extent such delegation is not
prohibited by applicable law or contrary to the provisions of the Trust, as set
forth herein.
Section 819. Voting.
Except as otherwise provided in this Trust Agreement, the consent or
approval of the Administrative Trustees shall require consent or approval by not
less than a majority of the Administrative Trustees, unless there are only two,
in which case both must consent.
ARTICLE IX
TERMINATION, LIQUIDATION AND MERGER
Section 901. Termination Upon Expiration Date.
Unless earlier dissolved, the Trust shall automatically dissolve on
June 30, 2033 (the "Expiration Date"), subject to distribution of the Trust
----------------
Property in accordance with Section 904.
Section 902. Early Termination.
The first to occur of any of the following events is an "Early
-----
Termination Event:"
- -----------------
(a) the occurrence of a Bankruptcy Event in respect of,
or the dissolution or liquidation of, the Depositor;
(b) delivery of written direction to the Property Trustee
by the Depositor at any time (which direction is wholly optional and within the
discretion of the Depositor, subject to Depositor having received prior approval
of the Board of Governors of the Federal Reserve System if so required under
applicable guidelines, policies or regulations thereof) to dissolve the Trust
and distribute the Debentures to Securityholders in exchange for the Preferred
Securities in accordance with Section 904;
(c) the redemption of all of the Preferred Securities in
connection with the redemption of all of the Debentures (whether upon a
Debenture Redemption Date or the maturity of the Debentures); and
(d) an order for dissolution of the Trust shall have been
entered by a court of competent jurisdiction.
Section 903. Termination.
The respective obligations and responsibilities of the Trustees and the
Trust created and continued hereby shall terminate upon the latest to occur of
the following: (a) the distribution by the Property Trustee to Securityholders
upon the liquidation of the Trust pursuant to Section 904, or upon the
redemption of all of the Trust Securities pursuant to Section 402, of all
amounts required to be distributed hereunder upon the final payment of the Trust
Securities; (b) the payment of any expenses owed by the Trust; (c) the discharge
of all administrative duties of the Administrative Trustees, including the
performance of any tax reporting obligations with respect to the Trust or the
Securityholders; and (d) the filing of a Certificate of Cancellation by an
Administrative Trustee under the Delaware Business Trust Act.
Section 904. Liquidation.
(a) If an Early Termination Event specified in clause
(a), (b), or (d) of Section 902 occurs or upon the Expiration Date, the Trust
shall be liquidated by the Trustees as expeditiously as the Trustees determine
to be practicable by distributing, after satisfaction of liabilities to
creditors of the Trust as provided by applicable law, to each Securityholder a
Like Amount of Debentures, subject to Section 904(d). Notice of liquidation
shall be given by the Property Trustee by first-class mail, postage prepaid,
mailed not later than thirty (30) nor more than sixty (60) days prior to the
Liquidation Date to each Holder of Trust Securities at such Holder's address
appearing in the Securities Register. All notices of liquidation shall:
(i) state the Liquidation Date;
ii) state that from and after the Liquidation Date, the
Trust Securities shall no longer be deemed to be Outstanding and
any Trust Securities Certificates not surrendered for exchange
shall be deemed to represent a Like Amount of Debentures; and
(iii) provide such information with respect to the mechanics
by which Holders may exchange Trust Securities Certificates for
Debentures, or, if Section 904(d) applies, receive a Liquidation
Distribution, as the Administrative Trustees or the Property
Trustee shall deem appropriate.
(b) Except where Section 902(c) or 904(d) applies, in
order to effect the liquidation of the Trust and distribution of the Debentures
to Securityholders, the Property Trustee shall establish a record date for such
distribution (which shall be not more than 45 days prior to the Liquidation
Date) and, either itself acting as exchange agent or through the appointment of
a separate exchange agent, shall establish such procedures as it shall deem
appropriate to effect the distribution of Debentures in exchange for the
Outstanding Trust Securities Certificates.
(c) Except where Section 902(c) or 904(d) applies, after
the Liquidation Date, (i) the Trust Securities shall no longer be deemed to be
Outstanding; (ii) certificates representing a Like Amount of Debentures shall be
issued to holders of Trust Securities Certificates upon surrender of such
certificates to the Administrative Trustees or their agent for exchange; (iii)
the Depositor shall use its reasonable efforts to have the Debentures included
in the Nasdaq National Market or on such other securities exchange or other
organization as the Preferred Securities are then listed or traded; (iv) any
Trust Securities Certificates not so surrendered for exchange shall be deemed to
represent a Like Amount of Debentures, accruing interest at the rate provided
for in the Debentures from the last Distribution Date on which a Distribution
was made on such Trust Securities Certificates until such certificates are so
surrendered (and until such certificates are so surrendered, no payments of
interest or principal shall be made to holders of Trust Securities Certificates
with respect to such Debentures); and (v) all rights of Securityholders holding
Trust Securities shall cease, except the right of such Securityholders to
receive Debentures upon surrender of Trust Securities Certificates.
(d) In the event that, notwithstanding the other
provisions of this Section 904, whether because of an order for dissolution
entered by a court of competent jurisdiction or otherwise, distribution of the
Debentures in the manner provided herein is determined by the Property Trustee
not to be practical, the Trust Property shall be liquidated, and the Trust shall
be dissolved, wound up or terminated, by the Property Trustee in such manner as
the Property Trustee determines. In such event, on the date of the dissolution,
winding up or other termination of the Trust, Securityholders shall be entitled
to receive out of the assets of the Trust available for distribution to
Securityholders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, an amount equal to the Liquidation Amount per Trust
Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"). If, upon any such
-------------------------
dissolution, winding up or termination, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then, subject to the next succeeding
sentence, the amounts payable by the Trust on the Trust Securities shall be paid
on a pro rata basis (based upon Liquidation Amounts, subject to Section 407).
The Common Securityholder shall be entitled to receive Liquidation Distributions
upon any such dissolution, winding up or termination pro rata (determined as
aforesaid) with Preferred Securityholders, except that, if a Debenture Event of
Default has occurred and is continuing, the Preferred Securities shall have a
priority over the Common Securities.
Section 905. Mergers, Consolidations, Amalgamations or Replacements
of the Trust.
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other Person, except pursuant
to this Section 905. At the request of the Depositor, with the consent of the
Administrative Trustees and without the consent of the Preferred
Securityholders, the Property Trustee or the Delaware Trustee, the Trust may
merge with or into, consolidate, amalgamate, be replaced by or convey, transfer
or lease its properties and assets substantially as an entirety to a trust
organized as such under the laws of any state; provided, that (i) such successor
entity either (a) expressly assumes all of the obligations of the Trust with
respect to the Preferred Securities, or (b) substitutes for the Preferred
Securities other securities having substantially the same terms as the Preferred
Securities (the "Successor Securities") so long as the Successor Securities rank
--------------------
the same as the Preferred Securities rank in priority with respect to
distributions and payments upon liquidation, redemption and otherwise; (ii) the
Depositor expressly appoints a trustee of such successor entity possessing
substantially the same powers and duties as the Property Trustee as the holder
of the Debentures; (iii) the Successor Securities are listed or traded, or any
Successor Securities shall be listed or traded upon notification of issuance, on
any national securities exchange or other organization on which the Preferred
Securities are then listed, if any; (iv) such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Preferred Securityholders
(including any Successor Securities) in any material respect; (v) such successor
entity has a purpose substantially identical to that of the Trust; (vi) prior to
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease, the Depositor has received an Opinion of Counsel to the effect that (a)
such merger, consolidation, amalgamation, replacement, conveyance, transfer or
lease does not adversely affect the rights, preferences and privileges of the
Preferred Securityholders (including any Successor Securities) in any material
respect, and (b) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor such successor
entity shall be required to register as an "investment company" under the
Investment Company Act; and (vii) the Depositor owns all of the Common
Securities of such successor entity and guarantees the obligations of such
successor entity under the Successor Securities at least to the extent provided
by the Guarantee, the Debentures, this Trust Agreement and the Expense
Agreement. For purposes of this Section 905, any such consolidation, merger,
sale, conveyance, transfer or other disposition as a result of which (a) the
Company is not the surviving Person, and (b) the same Person is not both (i) the
primary obligor in respect of the Debentures and (ii) the Guarantor under that
certain Preferred Securities Guarantee Agreement of even date herewith (the
"Guarantee") between the Company and Fifth Third Bank, shall be deemed to
---------
constitute a replacement of the Trust by a successor entity; provided further,
that, notwithstanding the foregoing, in the event that upon the consummation of
such a consolidation, merger, sale, conveyance, transfer or other disposition,
the parent company (if any) of the Company, or its successor, is a bank holding
company or financial holding company or comparably regulated financial
institution, such parent company shall guarantee the obligations of the Trust
(and any successor thereto) under the Preferred Securities (including any
Successor Securities) at least to the extent provided by the Guarantee, the
Debentures, the Trust Agreement and the Expense Agreement. Notwithstanding the
foregoing, the Trust shall not, except with the consent of the Holders of 100%
in Liquidation Amount of the Preferred Securities, consolidate, amalgamate,
merge with or into, or be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to any other Person or permit
any other Person to consolidate, amalgamate, merge with or into, or replace it
if such consolidation, amalgamation, merger or replacement would cause the Trust
or the successor entity to be classified as other than a grantor trust for
United States federal income tax purposes.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 1001. Limitation of Rights of Securityholders.
The death or incapacity of any Person having an interest, beneficial or
otherwise, in Trust Securities shall not operate to terminate this Trust
Agreement, nor entitle the legal representatives or heirs of such Person or any
Securityholder for such Person, to claim an accounting, take any action or bring
any proceeding in any court for a partition or winding up of the arrangements
contemplated hereby, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
Section 1002. Amendment.
(a) This Trust Agreement may be amended from time to time
by the Trustees and the Depositor, without the consent of any Securityholders,
(i) as provided in Section 811 with respect to acceptance of appointment by a
successor Trustee; (ii) to cure any ambiguity, correct or supplement any
provision herein or therein which may be inconsistent with any other provision
herein or therein, or to make any other provisions with respect to matters or
questions arising under this Trust Agreement, that shall not be inconsistent
with the other provisions of this Trust Agreement; (iii) to modify, eliminate or
add to any provisions of this Trust Agreement to such extent as shall be
necessary to ensure that the Trust shall be classified for United States federal
income tax purposes as a grantor trust at all times that any Trust Securities
are Outstanding or to ensure that the Trust shall not be required to register as
an "investment company" under the Investment Company Act; or (iv) to reduce or
increase the Liquidation Amount per Trust Security and simultaneously to
increase or decrease correspondingly the number of Trust Securities issued and
Outstanding solely for the purpose of maintaining the eligibility of the
Preferred Securities for quotation or listing on any national securities
exchange or other organization on which the Preferred Securities are then
included, quoted or listed (including, if applicable, the Nasdaq National
Market); provided, however, that in the case of clause (ii), such action shall
not adversely affect in any material respect the interests of any
Securityholder; and provided further, that in the case of clause (iv), the
aggregate Liquidation Amount of the Trust Securities Outstanding upon completion
of any such reduction must be the same as the aggregate Liquidation Amount of
the Trust Securities Outstanding immediately prior to such reduction or
increase. Any amendments of this Trust Agreement shall become effective when
notice thereof is given to the Securityholders or, in the case of an amendment
pursuant to clause (iv), as of the date specified in the notice.
(b) Except as provided in Section 601(c) or Section
1002(c) hereof, any provision of this Trust Agreement may be amended by the
Trustees and the Depositor (i) with the consent of the Securityholders
representing not less than a majority (based upon Liquidation Amounts) of the
Trust Securities then Outstanding; and (ii) upon receipt by the Trustees of an
Opinion of Counsel to the effect that such amendment or the exercise of any
power granted to the Trustees in accordance with such amendment shall not affect
the Trust's status as a grantor trust for United States federal income tax
purposes or the Trust's exemption from status of an "investment company" under
the Investment Company Act.
(c) In addition to and notwithstanding any other
provision in this Trust Agreement, without the consent of each affected
Securityholder (such consent being obtained in accordance with Section 603 or
606 hereof), this Trust Agreement may not be amended to (i) change the amount or
timing of any Distribution on the Trust Securities or otherwise adversely affect
the amount of any Distribution required to be made in respect of the Trust
Securities as of a specified date; or (ii) restrict the right of a
Securityholder to institute suit for the enforcement of any such payment on or
after such date; notwithstanding any other provision herein, without the
unanimous consent of the Securityholders (such consent being obtained in
accordance with Section 603 or 606 hereof), this paragraph (c) of this Section
1002 may not be amended.
(d) Notwithstanding any other provisions of this Trust
Agreement, no Trustee shall enter into or consent to any amendment to this Trust
Agreement which would cause the Trust to fail or cease to qualify for the
exemption from status of an "investment company" under the Investment Company
Act or to fail or cease to be classified as a grantor trust for United States
federal income tax purposes.
(e) Notwithstanding anything in this Trust Agreement to
the contrary, without the consent of the Depositor, this Trust Agreement may not
be amended in a manner which imposes any additional obligation on the Depositor.
(f) In the event that any amendment to this Trust
Agreement is made, the Administrative Trustees shall promptly provide to the
Depositor a copy of such amendment.
(g) Neither the Property Trustee nor the Delaware Trustee
shall be required to enter into any amendment to this Trust Agreement which
affects its own rights, duties or immunities under this Trust Agreement. The
Property Trustee shall be entitled to receive an Opinion of Counsel and an
Officers' Certificate stating that any amendment to this Trust Agreement is in
compliance with this Trust Agreement.
Section 1003. Separability.
In case any provision in this Trust Agreement or in the Trust
Securities Certificates shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 1004. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT
AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO ITS CONFLICT OF LAWS
PRINCIPLES).
Section 1005. Payments Due on Non-Business Day.
If the date fixed for any payment on any Trust Security shall be a day
that is not a Business Day, then such payment need not be made on such date but
may be made on the next succeeding day which is a Business Day with the same
force and effect as though made on the date fixed for such payment, and no
distribution shall accumulate thereon for the period after such date.
Section 1006. Successors.
This Trust Agreement shall be binding upon and shall inure to the
benefit of any successor to the Depositor, the Trust or the Relevant Trustee(s),
including any successor by operation of law. Except in connection with a
consolidation, merger or sale involving the Depositor that is permitted under
Article XII of the Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.
Section 1007. Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
Section 1008. Reports, Notices and Demands.
Any report, notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given or served
to or upon any Securityholder or the Depositor may be given or served in writing
by deposit thereof, first-class postage prepaid, in the United States mail, hand
delivery or facsimile transmission, in each case, addressed, (a) in the case of
a Preferred Securityholder, to such Preferred Securityholder as such
Securityholder's name and address may appear on the Securities Register; and (b)
in the case of the Common Securityholder or the Depositor, to First Banks, Inc.,
600 James S. McDonnell Boulevard, Hazelwood, Missouri 63042, Attention: Chief
Financial Officer, facsimile no.: (314) 592-6621. Any notice to Preferred
Securityholders shall also be given to such owners as have, within two years
preceding the giving of such notice, filed their names and addresses with the
Property Trustee for that purpose. Such notice, demand or other communication to
or upon a Securityholder shall be deemed to have been sufficiently given or
made, for all purposes, upon hand delivery, mailing or transmission.
Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Trust, the Property Trustee or the Administrative Trustees shall be given in
writing addressed (until another address is published by the Trust) as follows:
(a) with respect to the Property Trustee to Fifth Third Bank, 1209 North
Milwaukee Ave., Chicago, IL, 60622, Attention: Ms. Sheetal Shah; (b) with
respect to the Delaware Trustee, to Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Administration; and (c) with respect to the Administrative
Trustees, to them at the address above for notices to the Depositor, marked
"Attention: Administrative Trustees of First Preferred Capital Trust IV." Such
notice, demand or other communication to or upon the Trust or the Property
Trustee shall be deemed to have been sufficiently given or made only upon actual
receipt of the writing by the Trust or the Property Trustee.
Section 1009. Agreement Not to Petition.
Each of the Trustees and the Depositor agrees for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been terminated in accordance with Article IX, they shall not file, or join in
the filing of, a petition against the Trust under any bankruptcy, insolvency,
reorganization or other similar law (including, without limitation, the United
States Bankruptcy Code of 1978, as amended) (collectively, "Bankruptcy Laws") or
---------------
otherwise join in the commencement of any proceeding against the Trust under any
Bankruptcy Law. In the event the Depositor or any of the Trustees takes action
in violation of this Section 1009, the Property Trustee agrees, for the benefit
of Securityholders, that at the expense of the Depositor (which expense shall be
paid prior to the filing), it shall file an answer with the bankruptcy court or
otherwise properly contest the filing of such petition by the Depositor or such
Trustee against the Trust or the commencement of such action and raise the
defense that the Depositor or such Trustee has agreed in writing not to take
such action and should be stopped and precluded therefrom. The provisions of
this Section 1009 shall survive the termination of this Trust Agreement.
Section 1010. Trust Indenture Act; Conflict with Trust Indenture Act.
(a) This Trust Agreement is subject to the provisions of
the Trust Indenture Act that are required to be part of this Trust Agreement and
shall, to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which
is a trustee for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or
conflicts with another provision hereof which is required to be included in this
Trust Agreement by any of the provisions of the Trust Indenture Act, such
required provision shall control. If any provision of this Trust Agreement
modifies or excludes any provision of the Trust Indenture Act which may be so
modified or excluded, the latter provision shall be deemed to apply to this
Trust Agreement as so modified or to be excluded, as the case may be.
(d) The application of the Trust Indenture Act to this
Trust Agreement shall not affect the nature of the Securities as equity
securities representing undivided beneficial interests in the assets of the
Trust.
Section 1011. Acceptance of Terms of Trust Agreement, Guarantee and
Indenture.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN
BY OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY
SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND
AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND
THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH
SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST
AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND
SUCH SECURITYHOLDER AND SUCH OTHERS. WITHOUT LIMITING THE FOREGOING, BY
ACCEPTANCE OF A PREFERRED SECURITY, EACH INITIAL AND SUBSEQUENT HOLDER THEREOF
SHALL BE DEEMED TO HAVE AGREED TO TREAT, FOR ALL FINANCIAL ACCOUNTING AND UNITED
STATES FEDERAL INCOME TAX PURPOSES, THE DEBENTURES AS INDEBTEDNESS OF THE
COMPANY AND THE PREFERRED SECURITIES AS EVIDENCING AN UNDIVIDED BENEFICIAL
OWNERSHIP INTEREST IN THE DEBENTURES.
[The remainder of this page has been left blank intentionally]
IN WITNESS WHEREOF, the parties hereto have caused this
Amended and Restated Trust Agreement to be duly executed as of the day and year
first above written.
FIRST BANKS, INC.
By:
-------------------------------------------------
Its:
------------------------------------------------
FIFTH THIRD BANK,
as Property Trustee
By:
------------------------------------------------
Its:
------------------------------------------------
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By:
-------------------------------------------------
Its:
------------------------------------------------
----------------------------------------------------
Allen H. Blake, as Administrative Trustee
----------------------------------------------------
TERRANCE M. MCCARTHY, as Administrative Trustee
----------------------------------------------------
Lisa K. Vansickle, as Administrative Trustee
EXHIBIT A
CERTIFICATE OF TRUST
OF
FIRST PREFERRED CAPITAL TRUST IV
THIS CERTIFICATE OF TRUST OF FIRST PREFERRED CAPITAL TRUST IV (the
"Trust"), dated as of __________ ___, 2003, is being duly executed and filed by
Wilmington Trust Company, a Delaware banking corporation, and ______________,
________________ and __________________, each an individual, as trustees, to
form a statutory trust under the Delaware Statutory Trust Act (12 Delaware Code
Section 3801 et seq.).
1. NAME. The name of the statutory trust formed hereby is First Preferred
Capital Trust IV.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware is Wilmington Trust Company, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention:
Corporate Trust Department.
3. EFFECTIVE DATE. This Certificate of Trust shall be effective on ________
___, 2003.
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Trust as of the date first above written, in accordance with Section 3811(a) of
the Delaware Statutory Trust Act.
WILMINGTON TRUST COMPANY, as Trustee
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
_______________________________________________
_______________________, as Trustee
_______________________________________________
_______________________, as Trustee
_______________________________________________
________________________, as Trustee
EXHIBIT B
THIS CERTIFICATE IS NOT TRANSFERABLE
EXCEPT IN COMPLIANCE WITH
SECTION 510 OF THE TRUST AGREEMENT
CERTIFICATE NUMBER _________ NUMBER OF COMMON SECURITIES_______.
CERTIFICATE EVIDENCING COMMON SECURITIES
OF
FIRST PREFERRED CAPITAL TRUST IV
COMMON SECURITIES
LIQUIDATION AMOUNT $25 PER COMMON SECURITY
FIRST PREFERRED CAPITAL TRUST IV, a statutory 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 ____________________
------
(___________) common securities of the Trust representing undivided beneficial
interests in the assets of the Trust and designated the _____% Common Securities
(liquidation amount $25 per Common Security) (the "Common Securities"). In
------------------
accordance with Section 510 of the Trust Agreement (as defined below), the
Common Securities are not transferable, and any attempted transfer hereof (other
than a transfer in compliance with Section 510 of the Trust Agreement) shall be
void. The designations, rights, privileges, restrictions, preferences, and other
terms and provisions of the Common Securities are set forth in, and this
certificate and the Common Securities represented hereby are issued and shall in
all respects be subject to the terms and provisions of, the Amended and Restated
Trust Agreement of the Trust dated as of _____________ _____, 2003, as the same
may be amended from time to time (the "Trust Agreement"), including the
----------------
designation of the terms of the Common Securities as set forth therein. The
Trust shall furnish a copy of the Trust Agreement to the Holder without charge
upon written request to the Trust at its principal place of business or
registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has
executed this certificate this ____ day of ____________, 2003.
FIRST PREFERRED CAPITAL TRUST IV
By:
--------------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
EXHIBIT C
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") dated as
---------
of_______________ _____, 2003 between FIRST BANKS, INC., a Missouri corporation
("First Banks"), and FIRST PREFERRED CAPITAL TRUST IV, a Delaware statutory
------------
trust (the "Trust").
-----
RECITALS
WHEREAS, the Trust intends to issue its common securities (the "Common
------
Securities") to, and receive ____% Subordinated Debentures (the "Debentures")
- ---------- ----------
from, First Banks and to issue and sell up to 1,600,000 ____% Cumulative Trust
Preferred Securities (the "Preferred Securities") with such powers,
--------------------
preferences and special rights and restrictions as are set forth in the Amended
and Restated Trust Agreement of the Trust dated as of _______ ___, 2003, as the
same may be amended from time to time (the "Trust Agreement");
---------------
WHEREAS, First Banks shall directly or indirectly own all of the Common
Securities of the Trust and shall issue the Debentures;
NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, which purchase First Banks hereby agrees shall benefit
First Banks and which purchase First Banks acknowledges shall be made in
reliance upon the execution and delivery of this Agreement, First Banks,
including in its capacity as holder of the Common Securities, and the Trust
hereby agree as follows:
ARTICLE I
Section 1.1. Guarantee by First Banks.
Subject to the terms and conditions hereof, First Banks, including in
its capacity as holder of the Common Securities, hereby irrevocably and
unconditionally guarantees to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries") the full payment when
-------------
and as due, of any and all Obligations (as hereinafter defined) to such
Beneficiaries. As used herein, "Obligations" means any costs, expenses or
-----------
liabilities of the Trust other than obligations of the Trust to pay to the
holders of any Preferred Securities or other similar interests in the Trust the
amounts due such holders pursuant to the terms of the Preferred Securities or
such other similar interests, as the case may be. This Agreement is intended to
be for the benefit of, and to be enforceable by, all such Beneficiaries, whether
or not such Beneficiaries have received notice hereof.
Section 1.2. Term of Agreement.
This Agreement shall terminate and be of no further force and effect
upon the later of (a) the date on which full payment has been made of all
amounts payable to all holders of all the Preferred Securities (whether upon
redemption, liquidation, exchange or otherwise); and (b) the date on which there
are no Beneficiaries remaining; provided, however, that this Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any holder of the Preferred Securities or any Beneficiary must restore
payment of any sums paid under the Preferred Securities, under any obligation
under the Preferred Securities Guarantee Agreement dated the date hereof by
First Banks and Wilmington Trust Company as guarantee trustee, or under this
Agreement for any reason whatsoever. This Agreement is continuing, irrevocable,
unconditional and absolute.
Section 1.3. Waiver of Notice.
First Banks hereby waives notice of acceptance of this Agreement and of
any obligation to which it applies or may apply, and First Banks hereby waives
presentment, demand for payment, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.
Section 1.4. No Impairment.
The obligations, covenants, agreements and duties of First Banks under
this Agreement shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of
all or any portion of the Obligations or for the performance of any other
obligation under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on
the part of the Beneficiaries to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Beneficiaries with respect to the
Obligations or any action on the part of the Trust granting indulgence or
extension of any kind; or
(c) 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 Trust or any of the assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or
obtain the consent of, First Banks with respect to the happening of any of the
foregoing.
Section 1.5. Enforcement.
A Beneficiary may enforce this Agreement directly against First Banks,
and First Banks waives any right or remedy to require that any action be brought
against the Trust or any other person or entity before proceeding against First
Banks.
ARTICLE II
Section 2.1. Binding Effect.
All guarantees and agreements contained in this Agreement shall bind
the successors, assigns, receivers, trustees and representatives of First Banks
and shall inure to the benefit of the Beneficiaries.
Section 2.2. Amendment.
So long as there remains any Beneficiary or any Preferred Securities of
any series are outstanding, this Agreement shall not be modified or amended in
any manner adverse to such Beneficiary or to the holders of the Preferred
Securities.
Section 2.3. Notices.
Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same by facsimile
transmission (confirmed by mail), telex, or by registered or certified mail,
addressed as follows (and if so given, shall be deemed given when mailed or upon
receipt of an answer back, if sent by telex):
First Preferred Capital Trust IV
c/o First Banks, Inc.
600 James S. McDonnell Boulevard
Mail Code 014
Hazelwood, Missouri 63042
Facsimile No.: (314) 592-6621
Attention: Chief Financial Officer
First Banks, Inc.
600 James S. McDonnell Boulevard
Mail Code 014
Hazelwood, Missouri 63042
Facsimile No.: (314) 592-6621
Attention: Chief Financial Officer
Section 2.4. Governing Law.
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of Missouri (without regard to conflict of
laws principles).
IN WITNESS WHEREOF, this Agreement is executed as of the day and year
first above written.
FIRST BANKS, INC.
By:
-------------------------------------------
Its:
------------------------------------------
FIRST PREFERRED CAPITAL TRUST IV
By:
-------------------------------------------
Name:
----------------------------------
Title: Administrative Trustee
EXHIBIT D
Certificate Number Number of Preferred Securities ________
P
CERTIFICATE EVIDENCING PREFERRED SECURITIES
OF
FIRST PREFERRED CAPITAL TRUST IV
____% CUMULATIVE TRUST PREFERRED SECURITIES
(LIQUIDATION AMOUNT $25 PER PREFERRED SECURITY)
CUSIP NO. ______________
FIRST PREFERRED CAPITAL TRUST IV, a statutory trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that
-----
________________ (the "Holder") is the registered owner of _____ preferred
------
securities of the Trust representing undivided beneficial interests in the
assets of the Trust and designated the ____% Cumulative Trust Preferred
Securities (Liquidation Amount $25 per Preferred Security) (the "Preferred
---------
Securities"). The Preferred Securities are transferable on the books and records
- ----------
of the Trust, in person or by a duly authorized attorney, upon surrender of this
Certificate duly endorsed and in proper form for transfer as provided in Section
504 of the Trust Agreement (as defined herein). The designations, rights,
privileges, restrictions, preferences, and other terms and provisions of the
Preferred Securities are set forth in, and this Certificate and the Preferred
Securities represented hereby are issued and shall in all respects be subject to
the terms and provisions of, the Amended and Restated Trust Agreement of the
Trust dated as of _____________ ____, 2003, as the same may be amended from time
to time (the "Trust Agreement"), including the designation of the terms of
----------------
Preferred Securities as set forth therein. The Holder is entitled to the
benefits of the Preferred Securities Guarantee Agreement entered into by First
Banks, Inc., a Missouri corporation, and Fifth Third Bank, as guarantee trustee,
dated as of ________________ ___, 2003, (the "Guarantee"), to the extent
---------
provided therein. The Trust shall furnish a copy of the Trust Agreement and the
Guarantee to the Holder without charge upon written request to the Trust at its
principal place of business or registered office.
Upon receipt of this Certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
Unless the Certificate of Authentication has been manually executed by
the Authentication Agent, this Certificate is not valid or effective.
IN WITNESS WHEREOF, the Administrative Trustees of the Trust have
executed this certificate this ______ day of _____________, 2003.
Dated: _________________, 2003 FIRST PREFERRED CAPITAL TRUST IV
CERTIFICATE OF AUTHENTICATION By:-------------------------------
This is one of the ____% Trustee
Cumulative Trust Preferred
Securities referred to in the
within-mentioned Trust Agreement.
FIFTH THIRD BANK, By:-------------------------------
as Authentication Agent and Registrar Trustee
By:-------------------------------
Trustee
By:--------------------------------------
Authorized Signature
LEGEND
FOR CERTIFICATES EVIDENCING
GLOBAL PREFERRED SECURITIES ONLY:
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Issuer or its agent
---
for registration of transfer, exchange, or payment, and any certificate issued
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.
[FORM OF REVERSE OF CERTIFICATE]
The Trust will furnish without charge to any registered owner of Preferred
Securities who so requests, a copy of the Trust Agreement and the Guarantee. Any
such request should be in writing and addressed to First Preferred Capital Trust
IV, c/o First Banks, Inc., 600 James S. McDonnell Boulevard, Mail Code 014,
Hazelwood, Missouri 63042, Facsimile No.: (314) 592-6621 or to the Registrar
named on the face of this Certificate.
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -as tenants in common UNIF GIFT MIN ACT -......Custodian........
(Cust) (Minor)
TEN ENT -as tenants by the under Uniform Gifts to
entireties Minors Act............
(State)
JT TEN -as joint tenants UNIF TRF MIN ACT -......Custodian
with right of (until age)............
survivorship and
not as tenants in ......... Under Uniform
common (Minor)
Transfers to Minors
Act....................
(State)
TOD -transfer on death
direction in event owner's
death, to person named on
face and subject to TOD
rules referenced
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, the undersigned hereby sell, assign and transfer
unto:
--------------------------------------------------------------------------
(Please insert Social Security or other identifying number of assignee)
-------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
Preferred Securities represented by the within Certificate, and do(es) hereby
irrevocably constitute and appoint
---------------------------------------------
attorney to transfer the said Preferred Securities on the books of the
within-named Trust with full power of substitution in the premises.
Dated:
--------------------------------------
Signature:
---------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERNATION OR ENLARGEMENT OR ANY CHANGE WHATEVER.
SIGNATURE(S) GUARANTEED:
- --------------------------------------------------------------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED MEDALLION SIGNATURE GUARANTEE PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
Exhibit 10.24
1,600,000 Preferred Securities
First Preferred Capital Trust IV
8.15% Cumulative Trust Preferred Securities
(Liquidation Amount of $25.00 per Preferred Security)
UNDERWRITING AGREEMENT
March 26, 2003
STIFEL, NICOLAUS & COMPANY, INCORPORATED
One Financial Plaza
501 North Broadway, 9th Floor
St. Louis, Missouri 63102
FAHNESTOCK & CO. INC.
125 Broad Street
New York, New York 10004
As Representatives of the Several Underwriters
named in Schedule I hereto
Dear Sirs:
First Banks, Inc., a Missouri corporation (the "Company"), and
-------
its financing subsidiary, First Preferred Capital Trust IV, a Delaware statutory
trust (the "Trust," and hereinafter together with the Company, the "Offerors"),
----- --------
propose that the Trust issue and sell to the several underwriters listed on
Schedule I hereto (the "Underwriters"), pursuant to the terms of this Agreement,
------------
1,600,000 of the Trust's 8.15% Cumulative Trust Preferred Securities, with a
liquidation amount of $25.00 per preferred security (the "Preferred
Securities"), to be issued under the Trust Agreement (as hereinafter defined),
the terms of which are more fully described in the Prospectus (as hereinafter
defined). The aforementioned 1,600,000 Preferred Securities to be sold to the
Underwriters are herein called the "Firm Preferred Securities." Solely for the
--------------------------
purpose of covering over-allotments in the sale of the Firm Preferred
Securities, the Offerors further propose that the Trust issue and sell to the
Underwriters, at their option, up to an additional 240,000 Preferred Securities
(the "Option Preferred Securities") upon exercise of the over-allotment option
----------------------------
granted in Section 1 hereof. The Firm Preferred Securities and any Option
Preferred Securities are herein collectively referred to as the "Designated
Preferred Securities." Stifel, Nicolaus & Company, Incorporated and Fahnestock &
Co. Inc. are acting jointly as representatives of the Underwriters and in such
capacity are sometimes herein referred to as the "Representatives."
The Offerors hereby confirm as follows their agreement with
each of the Underwriters in connection with the proposed purchase of the
Designated Preferred Securities.
1. Sale, Purchase and Delivery of Designated Preferred
--------------------------------------------------------------
Securities; Description of Designated Preferred Securities.
- ----------------------------------------------------------
(a) On the basis of the representations, warranties and
agreements herein contained, and subject to the terms and conditions herein set
forth, the Offerors hereby agree that the Trust shall issue and sell to each of
the Underwriters and each of the Underwriters agrees, severally and not jointly,
to purchase from the Trust, at a purchase price of $25.00 per share (the
"Purchase Price"), the respective number of Firm Preferred Securities set forth
--------------
opposite the name of such Underwriter in Schedule I hereto. Because the proceeds
from the sale of the Firm Preferred Securities will be used to purchase from the
Company its Debentures (as hereinafter defined and as described in the
Prospectus), the Company shall pay to each Underwriter a commission of $0.8125
per Firm Preferred Security purchased (the "Firm Preferred Securities
----------------------------
Commission"). The Representatives may by notice to the Company amend Schedule I
- ----------
to add, eliminate or substitute names set forth therein (other than to eliminate
the name of the Representatives) and to amend the number of Firm Preferred
Securities to be purchased by any firm or corporation listed thereon, provided
that the total number of Firm Preferred Securities listed on Schedule I shall
equal 1,600,000.
In addition, on the basis of the representations, warranties
and agreements herein contained and subject to the terms and conditions herein
set forth, the Trust hereby grants to the Underwriters, severally and not
jointly, an option to purchase all or any portion of the 240,000 Option
Preferred Securities, and upon the exercise of such option in accordance with
this Section 1, the Offerors hereby agree that the Trust shall issue and sell to
the Underwriters, severally and not jointly, all or any portion of the Option
Preferred Securities at the same Purchase Price per share paid for the Firm
Preferred Securities. If any Option Preferred Securities are to be purchased,
each Underwriter, severally and not jointly, agrees to purchase from the Trust
that proportion (subject to adjustment as the Representatives may determine to
avoid fractional shares) of the number of Option Preferred Securities to be
purchased that the number of Firm Preferred Securities set forth opposite the
name of such Underwriter in Schedule I hereto (or such number increased as set
forth in Section 9 hereof) bears to 1,600,000. Because the proceeds from the
sale of the Option Preferred Securities will be used to purchase from the
Company its Debentures, the Company shall pay to the Underwriters a commission
of $0.8125 per Option Preferred Security for each Option Preferred Security
purchased (the "Option Preferred Securities Commission"). The option hereby
-----------------------------------------
granted (the "Option") shall expire thirty (30) days after the Effective Date
------
(as defined herein) and may be exercised only for the purpose of covering over
allotments which may be made in connection with the offering and distribution of
the Firm Preferred Securities. The Option may be exercised in whole or in part
at any time (but not more than once) by you giving notice (confirmed in writing)
to the Company and the Trust setting forth the number of Option Preferred
Securities as to which the Underwriters are exercising the Option and the time,
date and place for payment and delivery of certificates for such Option
Preferred Securities. Such time and date of payment and delivery for the Option
Preferred Securities (the "Option Closing Date") shall be determined by you, but
-------------------
shall not be earlier than two nor later than five full business days after the
exercise of such Option, nor in any event prior to the Closing Date (as
hereinafter defined). The Option Closing Date may be the same as the Closing
Date.
Payment of the Purchase Price and the Firm Preferred
Securities Commission and delivery of certificates for the Firm Preferred
Securities shall be made at the offices of Stifel, Nicolaus & Company,
Incorporated, One Financial Plaza, 501 North Broadway, Ninth Floor, St. Louis,
Missouri 63102, or such other place as shall be agreed to by you and the
Offerors, at 10:00 a.m., St. Louis time, on the third (or, if permitted by Rule
15c6-1(c) of the Securities Exchange Act of 1934, as amended (the "1934 Act"),
--------
not later than 12:00 p.m. on the fourth) full business day following the date of
this Agreement (the "Closing Date"), or unless postponed in accordance with the
------------
provisions of Section 9. If the Underwriters exercise the Option to purchase any
or all of the Option Preferred Securities, payment of the Purchase Price and
Option Preferred Securities Commission and delivery of certificates for such
Option Preferred Securities shall be made on the Option Closing Date at the
offices of Stifel, Nicolaus & Company, Incorporated, One Financial Plaza, 501
North Broadway, Ninth Floor, St. Louis, Missouri 63102, or at such other place
as the Offerors and you shall determine. Such payments shall be made to an
account designated by the Trust by wire transfer of same-day funds, in the
amount of the Purchase Price therefor, against delivery by or on behalf of the
Trust to you for the respective accounts of the several Underwriters of
certificates for the Designated Preferred Securities to be purchased by the
Underwriters. Delivery of the Designated Preferred Securities may be made by
credit through full FAST transfer to the accounts at The Depository Trust
Company ("DTC") designated by the Representatives. The Designated Preferred
---
Securities shall be represented in the form of one or more fully registered
global securities in book-entry form registered in the name of the nominee of
DTC.
Time shall be of the essence, and delivery of the certificates
for the Designated Preferred Securities at the time and place specified pursuant
to this Agreement is a further condition of the obligations of each Underwriter
hereunder.
(b) The Offerors propose that the Trust issue the Designated
Preferred Securities pursuant to an Amended and Restated Trust Agreement among
Fifth Third Bank, as Property Trustee named therein, Wilmington Trust Company,
as Delaware Trustee named therein, the Administrative Trustees named therein,
(collectively, the "Trustees"), and the Company, in substantially the form
--------
heretofore delivered to the Underwriters, said Agreement being hereinafter
referred to as the "Trust Agreement." In connection with the issuance of the
----------------
Designated Preferred Securities, the Company proposes (i) to issue its 8.15%
Subordinated Debentures due 2033 (the "Debentures") pursuant to an Indenture, to
----------
be dated as of April 1, 2003, between the Company and Fifth Third Bank, as
indenture trustee (the "Indenture") and (ii) to guarantee certain payments on
---------
the Designated Preferred Securities pursuant to a Guarantee Agreement, to be
dated as of April 1, 2003, between the Company and Fifth Third Bank, as
guarantee trustee (the "Guarantee"), to the extent described therein.
---------
2. Representations and Warranties.
------------------------------
The Offerors jointly and severally represent and warrant to,
and agree with, each of the Underwriters that:
(a) The reports filed with the Securities and Exchange
Commission (the "Commission") by the Company under the 1934 Act, and the rules
----------
and regulations thereunder (the "1934 Act Regulations") at the time the reports
--------------------
were filed with the Commission, complied as to form in all material respects
with the requirements of the 1934 Act and the 1934 Act Regulations and did not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.
(b) The Offerors have prepared and filed with the Commission a
registration statement on Form S-2 (File Numbers 333-102549 and 333-102549-01)
for the registration of the Designated Preferred Securities, the Guarantee and
$47,422,700 aggregate principal amount of Debentures under the Securities Act of
1933, as amended (the "1933 Act"), including the related prospectus subject to
--------
completion, and one or more amendments to such registration statement may have
been so filed, in each case in conformity in all material respects with the
requirements of the 1933 Act, the rules and regulations promulgated thereunder
(the "1933 Act Regulations") and the Trust Indenture Act of 1939, as amended
---------------------
(the "Trust Indenture Act"), and the rules and regulations thereunder. Copies of
-------------------
such registration statement, including any amendments thereto and any documents
incorporated by reference therein, each Preliminary Prospectus (as defined
herein) contained therein and the exhibits, financial statements and schedules
to such registration statement, as finally amended and revised, have heretofore
been delivered by the Offerors to the Representatives. After the execution of
this Agreement, the Offerors will file with the Commission (A) if such
registration statement, as it may have been amended, has been declared by the
Commission to be effective under the 1933 Act, a prospectus in the form most
recently included in an amendment to such registration statement (or, if no such
amendment shall have been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A of the 1933 Act Regulations
("Rule 430A") or permitted by Rule 424(b) of the 1933 Act Regulations ("Rule
---------- ----
424(b)") and as have been provided to and not objected to by the Representatives
- ------
prior to (or as are agreed to by the Representatives subsequent to) the
execution of this Agreement, or (B) if such registration statement, as it may
have been amended, has not been declared by the Commission to be effective under
the 1933 Act, an amendment to such registration statement, including a form of
final prospectus, necessary to permit such registration statement to become
effective, a copy of which amendment has been furnished to and not objected to
by the Representatives prior to (or is agreed to by the Representatives
subsequent to) the execution of this Agreement. As used in this Agreement, the
term "Registration Statement" means such registration statement, as amended at
-----------------------
the time when it was or is declared effective under the 1933 Act, including (1)
all financial schedules and exhibits thereto, (2) all documents (or portions
thereof) incorporated by reference therein filed under the 1934 Act and (3) any
information omitted therefrom pursuant to Rule 430A and included in the
Prospectus (as hereinafter defined); the term "Preliminary Prospectus" means
-----------------------
each prospectus subject to completion filed with such registration statement or
any amendment thereto including all documents (or portions thereof) incorporated
by reference therein under the 1934 Act (including the prospectus subject to
completion, if any, included in the Registration Statement and each prospectus
filed pursuant to Rule 424(a) under the 1933 Act); and the term "Prospectus"
----------
means the prospectus first filed with the Commission pursuant to Rule 424(b)(1)
or (4) or, if no prospectus is required to be filed pursuant to Rule 424(b)(1)
or (4), the prospectus included in the Registration Statement, in each case
including the financial schedules and all documents (or portions thereof)
incorporated by reference therein under the 1934 Act. The date on which the
Registration Statement becomes effective is hereinafter referred to as the
"Effective Date."
(c) The documents incorporated by reference in the Preliminary
Prospectus or Prospectus or from which information is so incorporated by
reference, when they became effective or were filed with the Commission, as the
case may be, complied in all material respects with the requirements of the 1934
Act and the 1934 Act Regulations, and when read together and with the other
information in the Preliminary Prospectus or Prospectus, as the case may be, at
the time the Registration Statement became or becomes effective and at the
Closing Date and any Option Closing Date, did not or will not, as the case may
be, contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. As of
the date that each Preliminary Prospectus was filed with the Commission or as of
the date that the Prospectus and any amendment or supplement thereto was filed
with the Commission (or, if not filed, on the date provided by the Offerors to
the Underwriters in connection with the offering and sale of the Preferred
Securities), as the case may be, no event has or will have occurred which should
have been set forth in an amendment or supplement to any of the documents
incorporated by reference in the Preliminary Prospectus or Prospectus which has
not then been set forth in such an amendment or supplement.
(d) No order preventing or suspending the use of any
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) has been issued by the Commission, nor has the
Commission, to the knowledge of the Offerors, threatened to issue such an order
or instituted proceedings for that purpose. Each Preliminary Prospectus, at the
time of filing thereof, (A) complied in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and (B) did not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty does not apply to
statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Offerors by any of the Underwriters expressly for
inclusion in the Prospectus (which includes only the information appearing
beneath the heading "Underwriting" and the paragraph immediately following the
price table on the cover page of the Prospectus (such information referred to
herein as the "Underwriters' Information")). As of the date that each
--------------------------
Preliminary Prospectus was filed with the Commission or as of the date that the
Prospectus and any amendment or supplement thereto was filed with the Commission
(or, if not filed, on the date provided by the Offerors to the Underwriters in
connection with the offering and sale of the Preferred Securities), as the case
may be, no event has or will have occurred which should have been set forth in
an amendment or supplement to the Preliminary Prospectus or Prospectus which has
not then been set forth in the Preliminary Prospectus, Prospectus or such an
amendment or supplement. Each Preliminary Prospectus and the Prospectus will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
("EDGAR") system, except to the extent permitted by Regulation S-T.
-----
(e) The Registration Statement has been declared effective
under the 1933 Act, and no post-effective amendment to the Registration
Statement has been filed with the Commission as of the date of this Agreement.
No stop order suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose has been instituted or, to the
Company's knowledge, threatened by the Commission. At the Effective Date and at
all times subsequent thereto, up to and including the Closing Date and, if
applicable, the Option Closing Date, the Registration Statement and any
post-effective amendment thereto (A) complied and will comply in all material
respects with the requirements of the 1933 Act, the 1933 Act Regulations and the
Trust Indenture Act (and the rules and regulations thereunder) and (B) did not
and will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, not misleading. At the Effective Date and at all times when the
Prospectus is required to be delivered in connection with offers and sales of
Designated Preferred Securities, including, without limitation, the Closing Date
and, if applicable, the Option Closing Date, the Prospectus, as amended or
supplemented, (A) complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and the Trust
Indenture Act (and the rules and regulations thereunder) and (B) did not contain
and will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty does not
apply to Underwriters' Information. As of the date that the Registration
Statement was filed with the Commission, no event has or will have occurred
which should have been set forth in the Registration Statement or an amendment
or supplement to the Registration Statement which has not then been set forth in
such an amendment or supplement. The Registration Statement will be identical to
the electronically transmitted copy thereof filed with the Commission pursuant
to its EDGAR system, except to the extent permitted by Regulation S-T.
(f) (i) The Company is duly organized, validly existing and
in good standing under the laws of the State of Missouri, with full
corporate and other power and authority to own, lease and operate its
properties and conduct its business as described in and contemplated by
the Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) and as
currently being conducted and is duly registered as a bank holding
company under the Bank Holding Company Act of 1956, as amended (the
"BHC Act").
-------
(ii) The Trust has been duly created and is validly
existing as a statutory trust in good standing under the Delaware
Statutory Trust Act with the power and authority (trust and other) to
own its property and conduct its business as described in the
Registration Statement and Prospectus, to issue and sell its common
securities (the "Common Securities") to the Company pursuant to the
------------------
Trust Agreement, to issue and sell the Designated Preferred
Securities, to enter into and perform its obligations under this
Agreement and to consummate the transactions herein contemplated; the
Trust has no subsidiaries and is duly qualified to transact business
and is in good standing in each jurisdiction in which the conduct of
its business or the ownership of its property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Trust; the Trust has conducted and will conduct no
business other than the transactions contemplated by this Agreement,
the Trust Agreement and described in the Prospectus; the Trust is not
a party to or bound by any agreement or instrument other than this
Agreement, the Trust Agreement and the agreements and instruments
contemplated by the Trust Agreement and described in the Prospectus;
the Trust has no liabilities or obligations other than those arising
out of the transactions contemplated by this Agreement and the Trust
Agreement and described in the Prospectus; the Trust is not a party to
or subject to any action, suit or proceeding of any nature; the Trust
is, and at the Closing Date or any Option Closing Date will be,
classified as a grantor trust for United States federal income tax
purposes; the Trust is not, and at the Closing Date or any Option
Closing Date will not be, to the knowledge of the Offerors, classified
as an association taxable as a corporation for United States federal
income tax purposes; and the Trust is, and as of the Closing Date or
any Option Closing Date will be, treated as a consolidated subsidiary
of the Company pursuant to accounting principles generally accepted in
the United States of America.
(g) The Company has fifteen (15) direct or indirect
subsidiaries that have material ongoing operations. They are listed on Exhibit A
attached hereto and incorporated herein (the "Subsidiaries"). The Company does
------------
not own or control, directly or indirectly, more than 5% of any class of equity
security of any corporation, association or other entity that conducts material
ongoing operations other than the Subsidiaries, except for the ownership of
1,205,929 shares (approximately 7.61 %, based on the number of shares
outstanding on September 30, 2002) of the common stock of Allegiant Bancorp,
Inc. First Bank and First Bank & Trust are collectively referred to as the
"Banks." Each Subsidiary is a bank holding company, state bank, trust company,
-----
statutory trust or corporation duly organized or incorporated (as applicable),
validly existing and in active status or good standing, as applicable, with all
applicable Regulators (as defined below) and under the laws of its respective
jurisdiction of organization or incorporation. Each such Subsidiary has full
corporate and other power and authority to own, lease and operate its properties
and to conduct its business as described in and contemplated by the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) and as currently being conducted. The
deposit accounts of the Banks are insured by the Bank Insurance Fund or Savings
Association Insurance Fund, both administered by the Federal Deposit Insurance
Corporation (the "FDIC") up to the maximum amount provided by law; and no
----
proceedings for the modification, termination or revocation of any such
insurance are pending or, to the knowledge of the Offerors, threatened.
(h) The Company and each of the Subsidiaries is duly qualified
or authorized to transact business as a foreign corporation and is in active
status or good standing, as applicable, in each other jurisdiction in which it
owns or leases property or conducts its business so as to require such
qualification or authorization and in which the failure to be so qualified or
authorized would, individually or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), earnings, affairs, business,
prospects or results of operations of the Company and the Subsidiaries on a
consolidated basis. All of the issued and outstanding shares of capital stock of
the Subsidiaries (A) have been duly authorized and are validly issued, (B) are
fully paid and nonassessable except to the extent such shares may be deemed
assessable under 12 U.S.C. Section 1831o or under applicable state banking law,
and (C) except as disclosed in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), are directly or indirectly
owned by the Company free and clear of any security interest, mortgage, pledge,
lien, encumbrance, restriction upon voting or transfer, preemptive rights, claim
or equity.
(i) The capital stock of the Company and the equity securities
of the Trust conform to the description thereof contained in the Registration
Statement and Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus). The outstanding shares of capital stock and
equity securities of each Offeror have been duly authorized and validly issued
and are fully paid and nonassessable, and no such shares were issued in
violation of the preemptive or similar rights of any security holder of an
Offeror; no person has any preemptive or similar right to purchase any shares of
capital stock or equity securities of the Offerors. Except as disclosed in the
Registration Statement and Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), there are no outstanding
rights, options or warrants to acquire any securities of the Offerors or the
Subsidiaries, and there are no outstanding securities convertible into or
exchangeable for any securities of the Offerors or the Subsidiaries and no
restrictions upon the voting or transfer of any capital stock of the Company or
equity securities of the Trust pursuant to the Company's corporate charter or
bylaws, the Trust Agreement or any agreement or other instrument to which an
Offeror is a party or by which an Offeror is bound. The Company has an
authorized and outstanding capitalization as set forth in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
(j) (i) The Trust has all requisite power and authority
to issue, sell and deliver the Designated Preferred Securities in
accordance with and upon the terms and conditions set forth in this
Agreement, the Trust Agreement, the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). All corporate and trust action required to be
taken by the Offerors for the authorization, issuance, sale and
delivery of the Designated Preferred Securities in accordance with
such terms and conditions has been validly and sufficiently taken. The
Designated Preferred Securities, when delivered and paid for in
accordance with this Agreement, will be duly and validly issued and
outstanding, will be fully paid and nonassessable undivided beneficial
interests in the assets of the Trust, will be entitled to the benefits
of the Trust Agreement, will not be issued in violation of or subject
to any preemptive or similar rights, and will conform to the
description thereof contained in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and the Trust Agreement. None of the
Designated Preferred Securities, immediately prior to delivery, will
be subject to any security interest, lien, mortgage, pledge,
encumbrance, restriction upon voting or transfer, preemptive rights,
claim or equity.
(ii) The Debentures have been duly and validly
authorized, and, when duly and validly executed, authenticated and
issued as provided in the Indenture and delivered against payment
thereof to the Trust pursuant to the Trust Agreement, will constitute
valid and legally binding obligations of the Company, enforceable
against the Company in accordance with their terms, except to the
extent that enforcement thereof may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of
creditors generally and subject to general principles of equity, and
except as any indemnification or contribution provisions thereof may
be limited under applicable securities laws, will be in the form
contemplated by, and entitled to the benefits of, the Indenture, will
conform to the description thereof contained in the Prospectus and
will be owned by the Trust free and clear of any security interest,
mortgage, pledge, lien, encumbrance, restriction upon transfer,
preemptive rights, claim or equity.
(iii) The Guarantee has been duly and validly
authorized, and, when duly and validly executed and delivered to the
guarantee trustee for the benefit of the holders of the Designated
Preferred Securities, will constitute a valid and legally binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally and subject
to general principles of equity, and will conform to the description
thereof contained in the Prospectus.
(iv) The Agreement as to Expenses and Liabilities
between the Company and the Trust (the "Expense Agreement") has been
------------------
duly and validly authorized, and, when duly and validly executed and
delivered by the Company, will constitute a valid and legally binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent that enforcement
thereof may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the rights of creditors generally and subject
to general principles of equity, and will conform to the description
thereof contained in the Prospectus.
(k) The Offerors and the Subsidiaries have complied with all
foreign, federal, state and local statutes, regulations, ordinances and rules
applicable to the ownership and operation of their properties or the conduct of
their businesses as described in or contemplated by the Registration Statement
and the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) and as currently being conducted, except where the
failure to be in compliance would not have a material adverse effect upon the
condition (financial or otherwise), earnings, affairs, business, prospects or
results of operations of the Offerors and the Subsidiaries on a consolidated
basis.
(l) The Offerors and the Subsidiaries have all permits,
easements, consents, licenses, franchises and other governmental and regulatory
authorizations from all appropriate federal, state, local or other public
authorities ("Permits") as are necessary to own and lease their properties and
-------
conduct their businesses in the manner described in and contemplated by the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), except where the failure to
have such Permits would not have a material adverse effect upon the condition
(financial or otherwise), earnings, affairs, business, prospects or results of
operations of the Offerors and the Subsidiaries on a consolidated basis. All
material Permits are in full force and effect and each of the Offerors and the
Subsidiaries are in all material respects complying therewith, and no event has
occurred that allows, or after notice or lapse of time would allow, revocation
or termination thereof or will result in any other material impairment of the
rights of the holder of any material Permit, subject in each case to such
qualification as may be adequately disclosed in the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus). No
material Permit contains any restriction that would materially impair the
ability of the Company or the Subsidiaries to conduct their businesses in the
manner consistent with their past practices. Neither the Offerors nor any of the
Subsidiaries has received notice or otherwise has knowledge of any proceeding or
action relating to the revocation or modification of any material Permit.
(m) Neither of the Offerors nor any of the Subsidiaries is in
breach or violation of its corporate charter, by-laws or other governing
documents (including without limitation, the Trust Agreement) in any material
respect. Neither of the Offerors nor any of the Subsidiaries is, and to the
knowledge of the Offerors no other party is, in violation, breach or default
(with or without notice or lapse of time or both) in the performance or
observance of any term, covenant, agreement, obligation, representation,
warranty or condition contained in (A) any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease, franchise, license, material
Permit or any other agreement or instrument to which it is a party or by which
it or any of its properties may be bound, which breach, violation or default
could have a material adverse effect on the condition (financial or otherwise),
earnings, affairs, business, prospects or results of operations of the Offerors
and the Subsidiaries on a consolidated basis, and to the knowledge of the
Offerors, no other party has asserted that the Offerors or any of the
Subsidiaries is in such violation, breach or default (provided that the
foregoing shall not apply to defaults by borrowers or lessees from the Banks),
or (B) except as disclosed in the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), any order, decree, judgment,
rule or regulation of any court, arbitrator, government, or governmental agency
or instrumentality, domestic or foreign, having jurisdiction over the Offerors
or the Subsidiaries or any of their respective properties the breach, violation
or default of which could have a material adverse effect on the condition
(financial or otherwise), earnings, affairs, business, prospects, or results of
operations of the Offerors and the Subsidiaries on a consolidated basis.
(n) The execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated by this Agreement, the
Trust Agreement, the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) do not
and will not conflict with, result in the creation or imposition of any material
lien, claim, charge, encumbrance or restriction upon any property or assets of
the Offerors or the Subsidiaries or the Designated Preferred Securities pursuant
to, constitute a breach or violation of, or constitute a default under, with or
without notice or lapse of time or both, any of the terms, provisions or
conditions of the charter or by-laws of the Company or the Subsidiaries, the
Trust Agreement, the Guarantee, the Indenture, any indenture, mortgage, deed of
trust, loan or credit agreement or note, or any material contract, lease,
franchise, license, Permit or any other agreement or instrument to which the
Offerors or the Subsidiaries is a party or by which any of them or any of their
respective properties may be bound or any order, decree, judgment, rule or
regulation of any court, arbitrator, government, or governmental agency or
instrumentality, domestic or foreign, having jurisdiction over the Offerors or
the Subsidiaries or any of their respective properties which conflict, creation,
imposition, breach, violation or default would have either singly or in the
aggregate a material adverse effect on the condition (financial or otherwise),
earnings, affairs, business, prospects or results of operations of the Offerors
and the Subsidiaries on a consolidated basis. No authorization, approval,
consent or order of or filing, registration or qualification with, any person
(including, without limitation, any court, governmental body or authority) is
required in connection with the transactions contemplated by this Agreement, the
Trust Agreement, the Indenture, the Guarantee, the Registration Statement and
the Prospectus, except such as have been obtained under the 1933 Act, the Trust
Indenture Act and from the New York Stock Exchange relating to the listing of
the Designated Preferred Securities, and such as may be required under state
securities laws or Interpretations or Rules of the National Association of
Securities Dealers, Inc. ("NASD") in connection with the purchase and
----
distribution of the Designated Preferred Securities by the Underwriters.
(o) The Offerors have all requisite power and authority to
enter into this Agreement, and this Agreement has been duly and validly
authorized, executed and delivered by the Offerors and constitutes the legal,
valid and binding agreement of the Offerors, enforceable against the Offerors in
accordance with its terms, except as the enforcement thereof may be limited by
general principles of equity and by bankruptcy or other laws relating to or
affecting creditors' rights generally and except as any indemnification or
contribution provisions thereof may be limited under applicable securities laws.
Each of the Indenture, the Trust Agreement, the Guarantee and the Expense
Agreement has been duly authorized by the Company, and, when executed and
delivered by the Company on the Closing Date, each of said agreements will
constitute a valid and legally binding obligation of the Company and will be
enforceable against the Company in accordance with its terms, except to the
extent that enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting the rights of creditors generally and
subject to general principles of equity and except as any indemnification or
contribution provisions thereof may be limited under applicable securities laws.
Each of the Indenture, the Trust Agreement and the Guarantee has been duly
qualified under the Trust Indenture Act and will conform to the description
thereof contained in the Prospectus.
(p) The Company and the Subsidiaries have good and marketable
title in fee simple to all real property and good title to all personal property
owned by them and material to their business, in each case free and clear of all
security interests, liens, mortgages, pledges, encumbrances, restrictions,
claims, equities and other defects except such as are referred to in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) or such as do not materially affect the value of such
property in the aggregate and do not materially interfere with the use made or
proposed to be made of such property; and all of the leases under which the
Company or the Subsidiaries hold real or personal property are valid, existing
and enforceable leases and in full force and effect with such exceptions as are
not material and do not materially interfere with the use made or proposed to be
made of such real or personal property, and neither the Company nor any of the
Subsidiaries is in default in any material respect of any of the terms or
provisions of any leases.
(q) KPMG LLP, who have certified the consolidated financial
statements of the Company and its subsidiaries, including the notes thereto,
included or incorporated by reference in the Registration Statement and
Prospectus, are independent public accountants with respect to the Company and
its subsidiaries, as required by the 1933 Act and the 1933 Act Regulations.
(r) The consolidated financial statements including the notes
thereto, included or incorporated by reference in the Registration Statement and
the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) with respect to the Company and its subsidiaries comply
in all material respects with the 1933 Act and the 1933 Act Regulations and
present fairly the consolidated financial position of the Company and its
subsidiaries as of the dates indicated and the consolidated statements of
income, cash flows and changes in stockholders' equity and comprehensive income
of the Company and its subsidiaries for the periods specified and have been
prepared in conformity with accounting principles generally accepted in the
United States of America applied on a consistent basis, except that the interim
financial statements are subject to normal year-end adjustments and do not
include all footnotes required by accounting principles generally accepted in
the United States of America for audited financial statements. The selected
consolidated financial data concerning the Offerors and the Company's
subsidiaries included in the Registration Statement and the Prospectus (or such
Preliminary Prospectus) comply in all material respects with the 1933 Act and
the 1933 Act Regulations, have been derived from the financial statements or
operating records of the Company, present fairly the information set forth
therein, and have been compiled on a basis consistent with that of the
consolidated financial statements of the Offerors and the Company's subsidiaries
in the Registration Statement and the Prospectus (or such Preliminary
Prospectus). The other financial, statistical and numerical information included
in the Registration Statement and the Prospectus (or such Preliminary
Prospectus) complies in all material respects with the 1933 Act and the 1933 Act
Regulations, has been derived from the financial statements or operating records
of the Company, presents fairly the information shown therein, and to the extent
applicable has been compiled on a basis consistent with the consolidated
financial statements of the Company and its subsidiaries included in the
Registration Statement and the Prospectus (or such Preliminary Prospectus).
(s) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus), except as otherwise
stated therein:
(i) neither of the Offerors nor any of the
Subsidiaries has sustained any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental
action, order or decree which is material to the condition (financial
or otherwise), earnings, affairs, business, prospects or results of
operations of the Offerors and the Subsidiaries on a consolidated
basis;
(ii) there has not been any material adverse change
in, or any development which is reasonably likely to have a material
adverse effect on, the condition (financial or otherwise), earnings,
affairs, business, prospects or results of operations of the Offerors
and the Subsidiaries on a consolidated basis, whether or not arising
in the ordinary course of business;
(iii) neither of the Offerors nor any of the
Subsidiaries has incurred any liabilities or obligations, direct or
contingent, or entered into any material transactions, other than in
the ordinary course of business, which are material to the condition
(financial or otherwise), earnings, affairs, business, prospects or
results of operations of the Offerors and the Subsidiaries on a
consolidated basis;
(iv) neither of the Offerors has declared or paid any
dividend and neither of the Offerors nor any of the Subsidiaries has
become delinquent in the payment of principal or interest on any
outstanding borrowings, except for dividends on the Company's Class A
and Class B preferred stock declared in January 2003, in amounts
comparable to those declared and paid in prior periods;
(v) there has not been any change in the capital
stock, trust preferred securities, long-term debt, obligations under
capital leases or, other than in the ordinary course of business,
short-term borrowings of the Offerors or the Subsidiaries; and
(vi) there has not occurred any other event and there
has arisen no set of circumstances required by the 1933 Act or the
1933 Act Regulations to be disclosed in the Registration Statement or
Prospectus which has not been so set forth in the Registration
Statement or such Prospectus as fairly and accurately summarized
therein.
(t) Except as set forth in the Registration Statement and the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), no charge, investigation, action, suit or proceeding is
pending or, to the knowledge of the Offerors, threatened, against or affecting
the Offerors or the Subsidiaries or any of their respective properties before or
by any court or any regulatory, administrative or governmental official,
commission, board, agency or other authority or body, or any arbitrator, wherein
an unfavorable decision, ruling or finding would have a material adverse effect
on the consummation of this Agreement or the transactions contemplated herein or
the condition (financial or otherwise), earnings, affairs, business, prospects
or results of operations of the Offerors and the Subsidiaries on a consolidated
basis or which is required to be disclosed in the Registration Statement or the
Prospectus (or such Preliminary Prospectus) and is not so disclosed.
(u) There are no contracts or other documents required to be
filed as exhibits to the Registration Statement by the 1933 Act or the 1933 Act
Regulations or the Trust Indenture Act (or any rules or regulations thereunder)
which have not been filed as exhibits to or incorporated by reference into the
Registration Statement, or that are required to be summarized in the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus) that are not so summarized.
(v) Neither of the Offerors has taken, directly or indirectly,
any action causing or resulting in or which has constituted or which might
reasonably be expected to cause or result in stabilization or manipulation of
any security of the Offerors in connection with the sale or resale of the
Designated Preferred Securities in violation of the Commission's rules and
regulations, including, but not limited to, Regulation M, nor is either Offeror
aware of any such action having been taken or to be taken by any affiliate of
the Offerors.
(w) The Offerors and the Subsidiaries own, or possess adequate
rights to use, all patents, copyrights, trademarks, service marks, trade names
and other rights necessary to conduct the businesses now conducted by them in
all material respects or as described in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), and neither the
Offerors nor the Subsidiaries have received any notice of infringement or
conflict with asserted rights of others with respect to any patents, copyrights,
trademarks, service marks, trade names or other rights which, individually or in
the aggregate, if the subject of an unfavorable decision, ruling or finding,
would have a material adverse effect on the condition (financial or otherwise),
earnings, affairs, business, prospects or results of operations of the Offerors
and the Subsidiaries on a consolidated basis, and the Offerors do not know of
any basis for any such infringement or conflict.
(x) Except as adequately disclosed in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus), no
labor dispute involving the Company or the Subsidiaries exists or, to the
knowledge of the Offerors, is imminent which might be expected to have a
material adverse effect on the condition (financial or otherwise), earnings,
affairs, business, prospects or results of operations of the Offerors and the
Subsidiaries on a consolidated basis or which is required to be disclosed in the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus). Neither the Company nor any of the Subsidiaries has
received notice of any existing or threatened labor dispute by the employees of
any of its principal suppliers, customers or contractors which might be expected
to have a material adverse effect on the condition (financial or otherwise),
earnings, affairs, business, prospects or results of operations of the Company
and the Subsidiaries on a consolidated basis.
(y) The Offerors and the Subsidiaries have timely and properly
prepared and filed, or have timely and properly filed extensions for, all
necessary federal, state, local and foreign tax returns which are required to be
filed and have paid all taxes shown as due thereon and have paid all other taxes
and assessments to the extent that the same shall have become due, except such
as are being contested in good faith or where the failure to so timely and
properly prepare and file would not have a material adverse effect on the
condition (financial or otherwise), earnings, affairs, business, prospects or
results of operations of the Offerors and the Subsidiaries on a consolidated
basis. The Offerors have no knowledge of any tax deficiency which has been or
might be assessed against the Offerors or the Subsidiaries which, if the subject
of an unfavorable decision, ruling or finding, would have a material adverse
effect on the condition (financial or otherwise), earnings, affairs, business,
prospects or results of operations of the Offerors and the Subsidiaries on a
consolidated basis.
(z) Each of the material contracts, agreements and instruments
described or referred to in the Registration Statement or the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus) and
each contract, agreement and instrument filed as an exhibit to the Registration
Statement is in full force and effect and is the legal, valid and binding
agreement of the Offerors or the Subsidiaries, enforceable in accordance with
its terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity. Except as disclosed in
the Prospectus (or such Preliminary Prospectus), to the knowledge of the
Offerors, no other party to any such agreement is (with or without notice or
lapse of time or both) in breach or default in any material respect thereunder.
(aa) No relationship, direct or indirect, exists between or
among the Offerors or the Subsidiaries, on the one hand, and the directors,
officers, trustees, shareholders, customers or suppliers of the Offerors or the
Subsidiaries, on the other hand, which is required to be described in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) which is not adequately
described therein.
(bb) No person has the right to request or require the
Offerors or the Subsidiaries to register any securities for offering and sale
under the 1933 Act by reason of the filing of the Registration Statement with
the Commission or the issuance and sale of the Designated Preferred Securities
except as adequately disclosed in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(cc) The Designated Preferred Securities have been approved
for listing on the New York Stock Exchange, subject to official notice of
issuance.
(dd) Except as described in or contemplated by the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), there are no contractual encumbrances or restrictions or material
legal restrictions required to be described therein, on the ability of any of
the Subsidiaries (A) to pay dividends or make any other distributions on its
capital stock or to pay any indebtedness owed to the Offerors, (B) to make any
loans or advances to, or investments in, the Offerors or (C) to transfer any of
its property or assets to the Offerors.
(ee) Except for Star Lane Trust, neither of the Offerors nor
any Subsidiary is an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended (the "Investment Company Act"). Star Lane Trust has timely and
------------------------
properly prepared and filed all necessary documents and information which are
required to be filed with the Commission under the Investment Company Act and
has operated in compliance with the Investment Company Act. No order preventing
or suspending Star Lane Trust from acting as an "investment company" has been
issued by the Commission, nor has the Commission, to the knowledge of the
Offerors, threatened to issue such an order or instituted proceedings for that
purpose.
(ff) The Offerors have not distributed and will not distribute
prior to the Closing Date any prospectus in connection with the Offering, other
than a Preliminary Prospectus, the Prospectus, the Registration Statement and
the other materials permitted by the 1933 Act and the 1933 Act Regulations and
reviewed by the Representatives.
(gg) The activities of the Offerors and the Subsidiaries are
permitted under applicable federal and state banking laws and regulations. The
Company has all necessary approvals, including the approval of the FDIC, the
State of Missouri Division of Finance (the "SMDF"), the California Department of
----
Financial Institutions (the "CDFI") and the Board of Governors of the Federal
----
Reserve System ("FRB"), as applicable, to own the capital stock of the
---
Subsidiaries. Neither the Company nor any of the Subsidiaries is a party or
subject to any agreement or memorandum with, or directive or other order issued
by, the FRB, the SMDF, the CDFI, the FDIC or other regulatory authority having
jurisdiction over it (each, a "Regulator," and collectively, the "Regulators"),
--------- ----------
which imposes any restrictions or requirements not generally applicable to
entities of the same type as the Company and the Subsidiaries. Neither the
Company nor any Subsidiary is subject to any directive from any Regulator to
make any material change in the method of conducting their respective
businesses, and no such directive is pending or threatened by such Regulators.
(hh) Each Bank has properly administered all accounts for
which it acts as a fiduciary, including but not limited to accounts for which it
serves as a trustee, agent, custodian, personal representative, guardian,
conservator or investment advisor, in accordance with the terms of the governing
documents and applicable state and federal law and regulation and common law,
except where the failure to be in compliance would not have a material adverse
effect upon the condition (financial or otherwise), earnings, affairs, business,
prospects or results of operations of the Offerors and the Subsidiaries taken as
a whole. No Bank or any directors, officers or employees of any Bank, has
committed any material breach of trust with respect to any such fiduciary
account, and the accountings for each such fiduciary account are true and
correct in all material respects and accurately reflect the assets of such
fiduciary account in all material respects.
(ii) The Offerors are eligible for the use of Form S-2.
(jj) The Offerors and the Subsidiaries are in compliance with
all provisions of Section 517.075, Florida Statutes, relating to doing business
with the Government of Cuba or with any person or affiliate located in Cuba.
(kk) Neither the Company nor any Subsidiary has any liability
under any "pension plan," as defined in the Employee Retirement Income Security
Act of 1974, as amended.
(ll) Each of the Company and the Subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with management's
general or specific authorizations, (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America and to maintain
asset accountability, (C) access to assets is permitted only in accordance with
management's general or specific authorization and (D) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
books, records and accounts and systems of internal accounting controls of the
Company and each of the Subsidiaries comply in all material respects with the
requirements of Section 13(b)(2) of the 1934 Act.
(mm) Other than as contemplated by this Agreement and as
disclosed in the Registration Statement, the Company has not incurred any
liability for any finder's or broker's fee or agent's commission in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.
(nn) No report or application filed by the Company or any of
its Subsidiaries with the FRB, the FDIC, the SMDF, the CDFI or any other state
or federal regulatory authority, as of the date it was filed or amended,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading when made or failed to comply in all material respects with the
applicable requirements of the FRB, the FDIC, the SMDF, the CDFI or any other
state or federal regulatory authority, as the case may be.
(oo) Based upon current guidelines of the FRB, the Debentures
will constitute "Tier 1" capital (as defined in 12 C.F.R. Part 225), subject to
applicable regulatory restrictions on the amount thereof that can be included in
Tier 1 capital.
(pp) To the best knowledge of the Offerors, no hazardous
substances, hazardous wastes, pollutants or contaminants have been deposited or
disposed of in, on or under the properties of the Company or any of the
Subsidiaries (including properties owned, managed or controlled by a Subsidiary
in connection with its lending activities) during the period in which the
Company or the Subsidiary has owned, occupied, managed, controlled or operated
such properties, in violation of any environmental, safety, health or similar
laws or regulations, orders, decrees or permits relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Regulations"), or any order,
-------------------------
judgment, decree or permit which would require remedial action under any
Environmental Regulation, except for any violations or remedial actions which
would not have, in the aggregate, a material adverse effect upon the condition
(financial or otherwise), earnings, affairs, business, prospects or results of
operations of the Offerors and the Subsidiaries on a consolidated basis. The
Company and each of the Subsidiaries (i) is in material compliance with all
applicable Environmental Regulations and (ii) has received all permits,
licenses, consents or other approvals required under applicable Environmental
Regulations to conduct its business, in each case except where the failure to do
so would not have a material adverse effect upon the condition (financial or
otherwise), earnings, affairs, business, prospects or results of operations of
the Offerors and the Subsidiaries on a consolidated basis.
(qq) None of the Offerors, the Subsidiaries or, to the best
knowledge of the Offerors, any other person associated with or acting on behalf
of the Offerors or any of the Subsidiaries, including, without limitation, any
director, officer, agent, or employee of any of the Subsidiaries or the Company
has, directly or indirectly, while acting on behalf of such Offeror or
Subsidiary (i) used any corporate funds for unlawful contributions, gifts,
entertainment, or other unlawful expenses relating to political activity; (ii)
made any unlawful contribution to any candidate for foreign or domestic office,
or to any foreign or domestic government officials or employees or other person
charged with similar public or quasi-public duties, other than payments required
or permitted by the laws of the United States or any jurisdiction thereof or to
foreign or domestic political parties or campaigns from corporate funds, or
failed to disclose fully any contribution in violation of law; (iii) violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv)
made any other payment of funds of either or both of the Offerors or a
Subsidiary or retained any funds which constitute a violation of any law, rule
or regulation or which was or is required to be disclosed in the Registration
Statement or the Prospectus pursuant to the requirements of the 1933 Act or the
1933 Act Regulations.
(rr) The employee benefit plans, including employee welfare
benefit plans, of the Company and each of the Subsidiaries (the "Employee
--------
Plans") have been operated in material compliance with the applicable provisions
- -----
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
-----
the Internal Revenue Code of 1986, as amended (the "Code"), all regulations,
----
rulings and announcements promulgated or issued thereunder and all other
applicable governmental laws and regulations (except to the extent such
noncompliance would not, in the aggregate, have a material adverse effect upon
the condition (financial or otherwise) earnings, affairs, business, prospects or
results of operations of the Offerors or the Subsidiaries on a consolidated
basis). No reportable event under Section 4043(c) of ERISA has occurred with
respect to any Employee Plan of the Company or any of the Subsidiaries for which
the reporting requirements have not been waived by the Pension Benefit Guaranty
Corporation. No prohibited transaction under Section 406 of ERISA, for which an
exemption does not apply, has occurred with respect to any Employee Plan of the
Company or any of the Subsidiaries. There are no pending or, to the knowledge of
the Offerors, threatened, claims by or on behalf of any Employee Plan, by any
employee or beneficiary covered under any such Employee Plan or by any
governmental authority or otherwise involving such Employee Plans or any of
their respective fiduciaries (other than for routine claims for benefits). All
Employee Plans that are group health plans have been operated in material
compliance with the group health plan continuation coverage requirements of
Section 4980B of the Code.
(ss) Except for Missouri Valley Partners, Inc., neither of the
Offerors nor any Subsidiary is an "investment adviser" within the meaning of the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), required to
-------------
register, become licensed or qualify as a broker dealer with the Commission or
any state securities authority. Missouri Valley Partners, Inc. is duly
registered and has timely and properly prepared and filed all necessary
documents and information which are required to be filed with the Commission
under the Advisers Act and has operated in compliance with the Advisers Act. All
investment adviser representatives employed or otherwise utilized by Missouri
Valley Partners, Inc. are licensed and/or registered, in each case if required,
with the appropriate federal and/or state authorities. No order preventing or
suspending any investment adviser representative of Missouri Valley Partners,
Inc. from acting as an "investment adviser representative" has been issued by
the Commission or any such state authority, nor has the Commission or any state
authority, to the knowledge of the Offerors, threatened to issue such an order
or instituted proceedings for that purpose.
3. Offering by the Underwriters. After the Registration
---------------------------------
Statement becomes effective or, if the Registration Statement is already
effective, after this Agreement becomes effective, the Underwriters propose to
offer the Firm Preferred Securities for sale to the public upon the terms and
conditions set forth in the Prospectus. The Underwriters may from time to time
thereafter reduce the public offering price and change the other selling terms,
provided the proceeds to the Trust shall not be reduced as a result of such
reduction or change. Because the NASD may view the Preferred Securities as
interests in a direct participation program, the offering of the Preferred
Securities is being made in compliance with the applicable provisions of Rule
2810 of the NASD's Conduct Rules.
The Underwriters may reserve and sell such of the Designated
Preferred Securities purchased by the Underwriters as the Underwriters may elect
to dealers chosen by you (the "Selected Dealers") at the public offering price
-----------------
set forth in the Prospectus less the applicable Selected Dealers' concessions
set forth therein, for re-offering by Selected Dealers to the public at the
public offering price. The Underwriters may allow, and Selected Dealers may
re-allow, a concession set forth in the Prospectus to certain other brokers and
dealers.
4. Certain Covenants of the Offerors. The Offerors jointly and
---------------------------------
severally covenant with the Underwriters as follows:
(a) The Offerors shall use their best efforts to cause the
Registration Statement and any amendments thereto, if not effective at the time
of execution of this Agreement, to become effective as promptly as possible. If
the Registration Statement has become or becomes effective pursuant to Rule 430A
and information has been omitted therefrom in reliance on Rule 430A, then, the
Offerors will prepare and file in accordance with Rule 430A and Rule 424(b), the
Prospectus or, if required by Rule 430A, a post-effective amendment to the
Registration Statement (including the Prospectus) containing all information so
omitted and will provide evidence satisfactory to the Representatives of such
timely filing.
(b) The Offerors shall notify you immediately, and, if
requested by you, shall promptly confirm such notice in writing:
(i) when the Registration Statement or any post
effective amendment to the Registration Statement, has become
effective, or when the Prospectus or any supplement to the Prospectus
or any amended Prospectus has been filed;
(ii) of the receipt of any comments or requests from
the Commission relating to the Registration Statement or the
Prospectus;
(iii) of any request of the Commission to amend or
supplement the Registration Statement, any Preliminary Prospectus or
the Prospectus or for additional information; and
(iv) of the issuance by the Commission or any state
or other regulatory body of any stop order or other order suspending
the effectiveness of the Registration Statement, preventing or
suspending the use of any Preliminary Prospectus or the Prospectus, or
suspending the qualification of any of the Designated Preferred
Securities for offering or sale in any jurisdiction or the institution
or threat of institution of any proceedings for any of such purposes.
The Offerors shall use their best efforts to prevent the issuance of
any such stop order or of any other such order and if any such order is
issued, to cause such order to be withdrawn or lifted as soon as
possible.
(c) The Offerors shall furnish to the Underwriters, from time
to time without charge, as soon as available, as many copies as the Underwriters
may reasonably request of (i) the registration statement as originally filed and
of all amendments thereto, in executed form, including exhibits, whether filed
before or after the Effective Date, (ii) all exhibits and documents incorporated
therein or filed therewith, (iii) all consents and certificates of experts in
executed form, (iv) each Preliminary Prospectus and all amendments and
supplements thereto, and (v) the Prospectus, and all amendments and supplements
thereto.
(d) During the time when a prospectus is required to be
delivered under the 1933 Act, the Offerors shall comply to the best of their
ability with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the
1934 Act Regulations so as to permit the completion of the distribution of the
Designated Preferred Securities as contemplated herein and in the Trust
Agreement and the Prospectus. The Offerors shall not file any amendment to the
registration statement as originally filed or to the Registration Statement and
shall not file any amendment thereto or make any amendment or supplement to any
Preliminary Prospectus or to the Prospectus unless you shall previously have
been advised in writing and provided a copy a reasonable time prior to the
proposed filings thereof and to which you or counsel for the Underwriters shall
not have objected. If it is necessary, in the Company's reasonable opinion or in
the reasonable opinion of the Company's counsel to amend or supplement the
Registration Statement or the Prospectus in connection with the distribution of
the Designated Preferred Securities, the Offerors shall forthwith amend or
supplement the Registration Statement or the Prospectus, as the case may be, by
preparing and filing with the Commission (provided the Underwriters or counsel
for the Underwriters do not reasonably object), and furnishing to you, such
number of copies as you may reasonably request of an amendment or amendments of,
or a supplement or supplements to, the Registration Statement or the Prospectus,
as the case may be (in form and substance reasonably satisfactory to you and
counsel for the Underwriters). If any event shall occur as a result of which it
is necessary to amend or supplement the Prospectus to correct an untrue
statement of a material fact or to include a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or if for any reason it is necessary at any time to amend or
supplement the Prospectus to comply with the 1933 Act and the 1933 Act
Regulations, the Offerors shall, subject to the second sentence of this
subsection (d), forthwith amend or supplement the Prospectus by preparing and
filing with the Commission, and furnishing to you, such number of copies as you
may reasonably request of an amendment or amendments of, or a supplement or
supplements to, the Prospectus (in form and substance satisfactory to you and
counsel for the Underwriters) so that, as so amended or supplemented, the
Prospectus shall not contain an untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(e) The Offerors shall use their best efforts to permit the
Designated Preferred Securities to be eligible for clearance and settlement
through the facilities of DTC.
(f) The Offerors shall make generally available to their
security holders in the manner contemplated by Rule 158 of the 1933 Act
Regulations and furnish to you as soon as practicable, but in any event not
later than sixteen (16) months after the Effective Date, a consolidated earnings
statement of the Offerors in reasonable detail, covering a period of at least
twelve (12) consecutive months beginning after the Effective Date, conforming
with the requirements of Section 11(a) of the 1933 Act and Rule 158.
(g) The Offerors shall use the proceeds from the sale of the
Designated Preferred Securities to be sold by the Trust hereunder in the manner
specified in the Prospectus under the caption "Use of Proceeds."
(h) For five years from the Effective Date, the Offerors shall
furnish to the Representatives copies of all reports and communications
(financial or otherwise) furnished by the Offerors to the holders of the
Designated Preferred Securities as a class, copies of all reports and financial
statements filed with or furnished to the Commission (other than portions for
which confidential treatment has been obtained from the Commission) or with the
Nasdaq National Market, any national securities exchange, or other
self-regulatory organization, and such other documents, reports and information
concerning the business and financial conditions of the Offerors as the
Representatives may reasonably request, other than such documents, reports and
information for which the Offerors have the legal obligation not to reveal to
the Representatives.
(i) Until the earlier of the Option Closing Date or the
expiration of the Option, the Offerors shall not, directly or indirectly, offer
for sale, sell or agree to sell or otherwise dispose of any Designated Preferred
Securities other than pursuant to this Agreement, any other beneficial interests
in the assets of the Trust or any securities of the Trust or the Company that
are substantially similar to the Designated Preferred Securities or the
Debentures, including any guarantee of such beneficial interests or
substantially similar securities, or securities convertible into or exchangeable
for or that represent the right to receive any such beneficial interest or
substantially similar securities, without the prior written consent of the
Representatives.
(j) The Offerors shall use their best efforts to cause the
Designated Preferred Securities to become included in the Nasdaq National Market
or in lieu thereof to be listed or quoted on a national securities exchange, and
to remain so listed, quoted or included for at least five (5) years from the
Effective Date or for such shorter period as may be specified in a written
consent of the Representatives, provided this shall not prevent the Company from
redeeming the Designated Preferred Securities pursuant to the terms of the Trust
Agreement. If the Designated Preferred Securities are then listed and are
exchanged for Debentures, the Company will use its best efforts to have the
Debentures promptly included in the Nasdaq National Market or a national stock
exchange or to be listed, quoted or included on a national securities exchange
or other organization in or on which the Designated Preferred Securities are
then listed, quoted or included, and to have the Debentures promptly registered
under the Exchange Act.
(k) Subsequent to the date of this Agreement and through the
date which is the later of (i) the day following the date on which the Option to
purchase the Option Preferred Securities shall expire or (ii) the day following
the Option Closing Date with respect to any Option Preferred Securities that the
Underwriters shall elect to purchase, except as described in or contemplated by
the Prospectus, neither the Offerors nor any of the Subsidiaries shall take any
action (or refrain from taking any action) which will result in the Offerors or
the Subsidiaries incurring any material liability or obligation, direct or
contingent, or enter into any material transaction, except in the ordinary
course of business, and there will not be any material change in the financial
position, capital stock, or any material increase in long-term debt, obligations
under capital leases or, other than in the ordinary course of business,
short-term borrowings of the Offerors and the Subsidiaries on a consolidated
basis.
(l) The Offerors shall not, for a period of 180 days after the
date hereof, without the prior written consent of the Representatives, purchase,
redeem or call for redemption, or prepay or give notice of prepayment (or
announce any redemption or call for redemption, or any repayment or notice of
prepayment) any of the Offerors' securities, except for the trust preferred
securities issued by First Preferred Capital Trust and First America Capital
Trust and the related debentures issued by the Company and First Banks America,
Inc.
(m) The Offerors shall not take, directly or indirectly, any
action designed to result in or which has constituted or which might reasonably
be expected to cause or result in stabilization or manipulation of the price of
any security of the Offerors in connection with the sale or resale of the
Designated Preferred Securities in violation of the Commission's rules and
regulations, including, but not limited to, Regulation M, and the Offerors are
not aware of any such action taken or to be taken by any affiliate of the
Offerors.
(n) Prior to the Closing Date (and, if applicable, the Option
Closing Date), the Offerors will not issue any press release or other
communication directly or indirectly or hold any press conference with respect
to the Offerors, the Subsidiaries or the offering of the Designated Preferred
Securities (the "Offering") without your prior consent; provided, however, that
if an Offeror is advised by legal counsel that it is legally required to issue a
press release or other communication, then such Offeror shall be permitted to do
so, after giving written notice thereof to you.
(o) The Offerors shall inform the Florida Department of
Banking and Finance at any time prior to the consummation of the distribution of
the Securities by the Underwriters if either of the Offerors or any of the
Subsidiaries commences engaging in business with the government of Cuba or with
a person or affiliate located in Cuba, with such information to be provided
within ninety (90) days after the commencement thereof or after a change occurs
with respect to previously reported information.
5. Payment of Expenses. Whether or not this Agreement is
-------------------
terminated or the sale of the Designated Preferred Securities to the
Underwriters is consummated, the Company covenants and agrees that it will pay
or cause to be paid (directly or by reimbursement) all costs and expenses
incident to the performance of the obligations of the Offerors under this
Agreement, including:
(a) the preparation, printing, filing, delivery and shipping
of the initial registration statement, the Preliminary Prospectus or
Prospectuses, the Registration Statement and the Prospectus and any amendments
or supplements thereto, and the printing, delivery and shipping of this
Agreement and any other underwriting documents (including, without limitation,
selected dealers agreements), the certificates for the Designated Preferred
Securities and the Preliminary and Final Blue Sky Memoranda and any legal
investment surveys and any supplements thereto;
(b) all fees, expenses and disbursements of the Offerors'
counsel and accountants;
(c) all fees and disbursements of counsel for the Underwriters
in connection with the preparation of the Preliminary and Final Blue Sky
Memoranda and any legal investment surveys and any supplements thereto;
(d) all filing fees and expenses incurred in connection with
filings made with the NASD;
(e) any applicable fees and other expenses incurred in
connection with the listing of the Designated Preferred Securities and, if
applicable, the Guarantee and the Debentures on the New York Stock Exchange;
(f) the cost of furnishing to you copies of the initial
registration statements, any Preliminary Prospectus, the Registration Statement
and the Prospectus and all amendments or supplements thereto;
(g) the costs and charges of any transfer agent or registrar
and the fees and disbursements of counsel for any transfer agent or registrar;
(h) all costs and expenses (including stock transfer taxes)
incurred in connection with the printing, issuance and delivery of the
Designated Preferred Securities to the Underwriters;
(i) all expenses incident to the preparation, execution and
delivery of the Trust Agreement, the Indenture and the Guarantee; and
(j) all other costs and expenses incident to the performance
of the obligations of the Company hereunder and under the Trust Agreement that
are not otherwise specifically provided for in this Section 5.
If the sale of Designated Preferred Securities contemplated by
this Agreement is not completed due to the termination pursuant to the terms
hereof (other than pursuant to Section 9 hereof), the Company will pay you your
accountable out-of-pocket expenses in connection herewith or in contemplation of
the performance of your obligations hereunder, including without limitation
travel expenses, reasonable fees, expenses and disbursements of counsel or other
out-of-pocket expenses incurred by you in connection with any discussion of the
Offering or the contents of the Registration Statement, any investigation of the
Offerors and the Subsidiaries, or any preparation for the marketing, purchase,
sale or delivery of the Designated Preferred Securities, in each case following
presentation of reasonably detailed invoices therefor.
If the sale of Designated Preferred Securities contemplated by
this Agreement is completed, the Company shall not be responsible for payment of
fees or disbursements of counsel for the Underwriters other than in accordance
with paragraph (c) above, or for the reimbursement of any expenses of the
Underwriters.
6. Conditions of the Underwriters' Obligations. The obligations
---------------------------------------------
of the Underwriters to purchase and pay for the Firm Preferred Securities and,
following exercise of the Option, the Option Preferred Securities, are subject
to the accuracy of the representations and warranties and to compliance with the
agreements of the Offerors herein as of the date hereof and as of the Closing
Date (or in the case of the Option Preferred Securities, if any, as of the
Option Closing Date), to the accuracy of the written statements of the Offerors
made pursuant to the provisions hereof, to the performance by the Offerors of
their covenants and obligations hereunder and to the following additional
conditions:
(a) If the Registration Statement or any amendment thereto
filed prior to the Closing Date has not been declared effective prior to the
time of execution hereof, the Registration Statement shall become effective not
later than 10:00 a.m., St. Louis time, on the first business day following the
time of execution of this Agreement, or at such later time and date as you may
agree to in writing. If required, the Prospectus and any amendment or supplement
thereto shall have been timely filed in accordance with Rule 424(b) and Rule
430A under the 1933 Act and Section 4(a) hereof. No stop order suspending the
effectiveness of the Registration Statement or any amendment or supplement
thereto shall have been issued under the 1933 Act or any applicable state
securities laws and no proceedings for that purpose shall have been instituted
or shall be pending, or, to the knowledge of the Offerors or the
Representatives, shall be contemplated by the Commission or any state authority.
Any request on the part of the Commission or any state authority for additional
information (to be included in the Registration Statement or Prospectus or
otherwise) shall have been disclosed to you and complied with to your
satisfaction and to the satisfaction of counsel for the Underwriters.
(b) No Underwriter shall have advised the Company at or before
the Closing Date (and, if applicable, the Option Closing Date) that the
Registration Statement or any post-effective amendment thereto, or the
Prospectus or any amendment or supplement thereto, contains an untrue statement
of a fact which, in your opinion, is material or omits to state a fact which, in
your opinion, is material and is required to be stated therein or is necessary
to make statements therein (in the case of the Prospectus or any amendment or
supplement thereto, in light of the circumstances under which they were made)
not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement, the Trust Agreement,
and the Designated Preferred Securities, and the authorization and form of the
Registration Statement and Prospectus, other than financial statements and other
financial data, and all other legal matters relating to this Agreement and the
transactions contemplated hereby or by the Trust Agreement shall be satisfactory
in all material respects to counsel for the Underwriters, and the Offerors and
the Subsidiaries shall have furnished to such counsel all documents and
information relating thereto that they may reasonably request to enable them to
pass upon such matters.
(d) Jackson Walker L.L.P. ("Jackson Walker"), counsel for the
--------------
Offerors, shall have furnished to you their signed opinion, dated as of the
Closing Date or the Option Closing Date, as the case may be, in form and
substance satisfactory to counsel for the Underwriters, to the effect that:
(i) The Company has been duly incorporated and is
validly existing and in good standing under the laws of the State of
Missouri, and is duly registered as a bank holding company under the
BHC Act. Each of the Subsidiaries is validly existing and in active
status or good standing under the laws of its jurisdiction of
incorporation or organization, as the case may be. Each of the Company
and the Subsidiaries has full corporate or other power and authority to
own or lease its properties and to conduct its business as such
business is described in the Prospectus and is currently conducted in
all material respects. To the best of such counsel's knowledge, all
outstanding shares of capital stock of the Subsidiaries have been duly
authorized and validly issued and are fully paid and nonassessable
except to the extent such shares may be deemed assessable under 12
U.S.C. Section 1831o and, to the best of such counsel's knowledge,
except as disclosed in the Prospectus, there are no outstanding rights,
options or warrants to purchase any such shares or securities
convertible into or exchangeable for any such shares of capital stock
of the Subsidiaries;
(ii) The capital stock, Debentures and Guarantee of
the Company and the equity securities of the Trust conform to the
description thereof contained in the Prospectus in all material
respects. The capital stock of the Company authorized as of September
30, 2002 is as set forth under the caption "Capitalization" in the
Prospectus, and the shares issued and outstanding have been duly
authorized and validly issued, and are fully paid and nonassessable,
except to the extent that such shares may be deemed assessable under 12
U.S.C. Section 1831o. To the best of such counsel's knowledge, and
except as described in the Registration Statement or the Prospectus (or
if the Prospectus is not yet in existence, the most recent Preliminary
Prospectus) there are no outstanding rights, options or warrants to
purchase, no other outstanding securities convertible into or
exchangeable for, and no commitments, plans or arrangements to issue,
any shares of capital stock of the Company or equity securities of the
Trust, except as described in the Prospectus;
(iii) The issuance, sale and delivery of the
Designated Preferred Securities and Debentures in accordance with the
terms and conditions of this Agreement and the Indenture have been duly
authorized by all necessary corporate and trust actions of the
Offerors. All of the Designated Preferred Securities have been duly and
validly authorized and, when delivered in accordance with this
Agreement will be duly and validly issued, fully paid and
nonassessable, and will conform to the description thereof in the
Registration Statement, the Prospectus and the Trust Agreement. The
Designated Preferred Securities have been approved for listing on the
New York Stock Exchange subject to official notice of issuance. There
are no preemptive or other rights to subscribe for or to purchase, and
other than as disclosed in the Prospectus, no restrictions upon the
voting or transfer of any shares of capital stock or equity securities
of the Offerors or the Subsidiaries pursuant to the corporate charter,
by-laws or other governing documents (including without limitation, the
Trust Agreement) of the Offerors or any of the Subsidiaries, or, to the
best of such counsel's knowledge, any agreement or other instrument to
which either Offeror or any of the Subsidiaries is a party or by which
either Offeror or any of the Subsidiaries may be bound. The issuance of
the Designated Preferred Securities is not subject to preemptive
rights;
(iv) The Offerors have all requisite corporate and
trust power to enter into and perform their obligations under this
Agreement, and this Agreement has been duly and validly authorized,
executed and delivered by the Offerors and constitutes the legal, valid
and binding obligations of the Offerors enforceable in accordance with
its terms, except as the enforcement hereof or thereof may be limited
by general principles of equity and by bankruptcy or other laws
relating to or affecting creditors' rights generally, and except as the
indemnification and contribution provisions hereof may be limited under
applicable laws and certain remedies may not be available in the case
of a non-material breach;
(v) Each of the Indenture, the Trust Agreement and
the Guarantee has been duly qualified under the Trust Indenture Act,
has been duly authorized, executed and delivered by the Company, and is
a valid and legally binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to the effect
of bankruptcy, insolvency, reorganization, receivership, moratorium and
other laws affecting the rights and remedies of creditors generally and
of general principles of equity;
(vi) The Debentures have been duly authorized,
executed, authenticated and delivered by the Company, are entitled to
the benefits of the Indenture and are legal, valid and binding
obligations of the Company enforceable against the Company in
accordance with their terms, subject to the effect of bankruptcy,
insolvency, reorganization, receivership, moratorium and other laws
affecting the rights and remedies of creditors generally and of general
principles of equity;
(vii) The Expense Agreement has been duly authorized,
executed and delivered by the Company, and is a valid and legally
binding obligation of the Company enforceable against the Company in
accordance with its terms, subject to the effect of bankruptcy,
insolvency, reorganization, receivership, moratorium and other laws
affecting the rights and remedies of creditors generally and of general
principles of equity;
(viii) To the best of such counsel's knowledge,
neither of the Offerors nor any of the Subsidiaries is in breach or
violation of, or default under, with or without notice or lapse of time
or both, its corporate charter, by-laws or governing document
(including without limitation, the Trust Agreement). The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated by this Agreement, and the Trust Agreement do
not and will not conflict with, result in the creation or imposition of
any material lien, claim, charge, encumbrance or restriction upon any
property or assets of the Offerors or the Subsidiaries or the
Designated Preferred Securities pursuant to, or constitute a material
breach or violation of, or constitute a material default under, with or
without notice or lapse of time or both, any of the terms, provisions
or conditions of the charter, by-laws or governing document (including
without limitation, the Trust Agreement) of the Offerors or the
Subsidiaries, or to the best of such counsel's knowledge, any material
contract, indenture, mortgage, deed of trust, loan or credit agreement,
note, lease, franchise, license or any other agreement or instrument to
which either Offeror or the Subsidiaries is a party or by which any of
them or any of their respective properties may be bound or any order,
decree, judgment, franchise, license, material Permit, or rule or
regulation of any court, arbitrator, government, or governmental agency
or instrumentality, domestic or foreign, known to such counsel having
jurisdiction over the Offerors or the Subsidiaries or any of their
respective properties which, in each case, is material to the Offerors
and the Subsidiaries on a consolidated basis. No authorization,
approval, consent or order of, or filing, registration or qualification
with, any person (including, without limitation, any court,
governmental body or authority) is required under Delaware law in
connection with the transactions contemplated by this Agreement in
connection with the purchase and distribution of the Designated
Preferred Securities by the Underwriters;
(ix) To the best of such counsel's knowledge, holders
of securities of the Offerors either do not have any right that, if
exercised, would require the Offerors to cause such securities to be
included in the Registration Statement or have waived such right. To
the best of such counsel's knowledge, neither the Offerors nor any of
the Subsidiaries is a party to any agreement or other instrument which
grants rights for or relating to the registration of any securities of
the Offerors;
(x) Except as set forth in the Registration Statement
and the Prospectus, to the best of such counsel's knowledge, (i) no
action, suit or proceeding at law or in equity is pending or threatened
in writing to which any of the Offerors or the Subsidiaries is or could
reasonably be expected to become a party, and (ii) no action, suit or
proceeding is pending or threatened in writing against or affecting the
Offerors or the Subsidiaries or any of their properties, before or by
any court or governmental official, commission, board or other
administrative agency, authority or body, or any arbitrator, wherein an
unfavorable decision, ruling or finding could reasonably be expected to
have a material adverse effect on the consummation of this Agreement or
the issuance and sale of the Designated Preferred Securities as
contemplated herein or the condition (financial or otherwise),
earnings, affairs, business, or results of operations of the Offerors
and the Subsidiaries on a consolidated basis or which is required to be
disclosed in the Registration Statement or the Prospectus and is not so
disclosed;
(xi) No authorization, approval, consent or order of
or filing, registration or qualification with, any person (including,
without limitation, any court, governmental body or authority) is
required in connection with the transactions contemplated by this
Agreement, the Trust Agreement, the Registration Statement and the
Prospectus, except such as have been obtained under the 1933 Act, the
1934 Act, and the Trust Indenture Act, and except such as may be
required under state securities laws or Interpretations or Rules of the
NASD in connection with the purchase and distribution of the Designated
Preferred Securities by the Underwriters, as to which such counsel need
express no opinion;
(xii) The Registration Statement and the Prospectus and
any amendments or supplements thereto and any documents incorporated
therein by reference (other than the financial statements or other
financial or statistical data included therein or omitted therefrom and
Underwriters' Information, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations as of their
respective dates of effectiveness;
(xiii) To the best of such counsel's knowledge, there
are no contracts, agreements, leases or other documents of a character
required to be disclosed in the Registration Statement or Prospectus or
to be filed as exhibits to the Registration Statement that are not so
disclosed or filed;
(xiv) The statements under the captions "Business-
Supervision and Regulation," "Description of the Trust," "Description
of the Preferred Securities," "Description of the Subordinated
Debentures," "Book-Entry Issuance," "Description of the Guarantee,"
"Relationship Among the Preferred Securities, the Subordinated
Debentures and the Guarantee," "Federal Income Tax Consequences," and
"ERISA Considerations" in the Prospectus, insofar as such statements
constitute a summary of legal and regulatory matters, documents or
instruments referred to therein, are accurate descriptions of the
matters summarized therein in all material respects and fairly present
the information called for with respect to such legal matters,
documents and instruments, other than financial and statistical data as
to which said counsel shall not be required to express any opinion or
belief;
(xv) Such counsel has been advised by the staff of the
Commission that the Registration Statement has become effective
under the 1933 Act; any required filing of the Prospectus pursuant to
Rule 424(b) has been made within the time period required by Rule
424(b); to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for a stop order are pending or threatened by
the Commission;
(xvi) Except as described in or contemplated by the
Prospectus, to the best of such counsel's knowledge, there are no
contractual encumbrances or restrictions, or material legal
restrictions required to be described therein on the ability of any of
the Subsidiaries (A) to pay dividends or make any other distributions
on its capital stock or to pay indebtedness owed to the Offerors, (B)
to make any loans or advances to, or investments in, the Offerors or
(C) to transfer any of its property or assets to the Offerors; and
(xvii) To the best of such counsel's knowledge, (A) the
business and operations of the Offerors and the Subsidiaries comply
in all material respects with all statutes, ordinances, laws, rules and
regulations applicable thereto and which are material to the Offerors
and the Subsidiaries on a consolidated basis, except in those instances
where non-compliance would not materially impair the ability of the
Offerors and the Subsidiaries to conduct their business; and (B) the
Offerors and the Subsidiaries possess and are operating in all
material respects in compliance with the terms, provisions and
conditions of all Permits that are required to conduct their
businesses as described in the Prospectus and that are material to the
Offerors and the Subsidiaries on a consolidated basis, except in those
instances where the loss thereof or non-compliance therewith would not
hav e a material adverse effect on the condition (financial or
otherwise), earnings, affairs, business, prospects or results of
operations of the Offerors and the Subsidiaries on a consolidated
basis; to the best of such counsel's knowledge, no action suit or
proceeding is pending or threatened which may lead to the revocation,
termination, suspension or non-renewal of any such Permit, except in
those instances where the loss thereof or non-compliance therewith
would not materially impair the ability of the Offerors or the
Subsidiaries to conduct their businesses.
In giving the above opinion, such counsel may state that,
insofar as such opinion involves factual matters, they have relied upon
certificates of officers of the Offerors including, without limitation,
certificates as to the identity of any and all material contracts, indentures,
mortgages, deeds of trust, loans or credit agreements, notes, leases,
franchises, licenses or other agreements or instruments, and all material
Permits, easements, consents, licenses, franchises and government regulatory
authorizations, for purposes of paragraphs (viii), (xiii) and (xvi) hereof and
certificates of public officials. In giving such opinion, such counsel may rely
as to matters of Delaware law upon the opinion of Richards, Layton & Finger,
P.A. described herein.
Such counsel shall also confirm that, in connection with the
preparation of the Registration Statement and Prospectus, such counsel has
participated in conferences with officers and representatives of the Offerors
and with their independent public accountants and with you and your counsel, at
which conferences such counsel made inquiries of such officers, representatives
and accountants and discussed in detail the contents of the Registration
Statement and Prospectus and the documents incorporated therein by reference
(without taking further action to verify independently the statements made in
the Registration Statement and the Prospectus, and without assuming
responsibility for the accuracy or completeness of such statements, except to
the extent expressly provided above) and such counsel has no reason to believe
(A) that the Registration Statement or any amendment thereto (except for the
financial statements and related schedules and statistical data and exhibits
included therein or omitted therefrom or Underwriters' Information, as to which
such counsel need express no opinion), at the time the Registration Statement or
any such amendment became effective, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or (B) that the
Prospectus or any amendment or supplement thereto or the documents incorporated
therein by reference (except for the financial statements and related schedules
and statistical data and exhibits included therein or omitted therefrom or
Underwriters' Information, as to which such counsel need express no opinion), at
the Effective Date (or, if the term "Prospectus" refers to the prospectus first
filed pursuant to Rule 424(b) of the 1933 Act Regulations, at the time the
Prospectus was issued), at the time any such amended or supplemented Prospectus
was issued, at the Closing Date and, if applicable, the Option Closing Date,
contained or contains any untrue statement of a material fact or omitted or
omits to state any material fact in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, or (C)
that there is any amendment to the Registration Statement required to be filed
that has not already been filed.
(e) John S. Daniels, Esq. ("JSD"), counsel for the Offerors,
---
shall have furnished to you his signed opinion, dated as of the Closing Date or
the Option Closing Date, as the case may be, in form and substance satisfactory
to counsel for the Underwriters, to the effect that, in connection with the
preparation of the Registration Statement and Prospectus, such counsel has
participated in conferences with officers and representatives of the Offerors
and with you and your counsel, at which conferences such counsel made inquiries
of such officers and representatives and discussed the contents of the
Registration Statement and Prospectus and the documents incorporated therein by
reference (without taking further action to verify independently the statements
made in the Registration Statement and the Prospectus, and without assuming
responsibility for the accuracy or completeness of such statements, except to
the extent expressly provided above) and such counsel has no reason to believe
(A) that the Registration Statement or any amendment thereto (except for the
financial statements and related schedules and statistical data included therein
or omitted therefrom or Underwriters' Information, as to which such counsel need
express no opinion), at the time the Registration Statement or any such
amendment became effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading or (B) that the Prospectus or any amendment or supplement
thereto or the documents incorporated therein by reference (except for the
financial statements and related schedules and statistical data included therein
or omitted therefrom or Underwriters' Information, as to which such counsel need
express no opinion), at the time the Registration Statement became effective
(or, if the term "Prospectus" refers to the prospectus first filed pursuant to
Rule 424(b) of the 1933 Act Regulations, at the time the Prospectus was issued),
at the time any such amended or supplemented Prospectus was issued, at the
Closing Date and, if applicable, the Option Closing Date, contained or contains
any untrue statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they were made,
or (C) that there is any amendment to the Registration Statement required to be
filed that has not already been filed.
(f) Richards, Layton & Finger, P.A., special Delaware counsel
to the Offerors, shall have furnished to you their signed opinion, dated as of
Closing Date or the Option Closing Date, as the case may be, in form and
substance satisfactory to counsel for the Underwriters, to the effect that:
(i) The Trust has been duly created and is validly
existing in good standing as a statutory trust under the Delaware
Statutory Trust Act.
(ii) The Trust Agreement constitutes a valid and
binding obligation of the Company and the Trustees and is enforceable
against the Company and the Trustees in accordance with its terms.
iii) Under the Delaware Statutory Trust Act and the
Trust Agreement, the Trust has the trust powers and authority (a) to
execute and deliver, and to perform its obligations under this
Agreement, (b) to issue and perform its obligations under the Trust
Securities; and (c) to conduct its business as described in the
Prospectus.
(iv) Under the Delaware Statutory Trust Act and the
Trust Agreement, the execution and delivery by the Trust of this
Agreement, and the performance by the Trust of its obligations under
this Agreement, have been duly authorized by all necessary trust action
on the part of the Trust.
(v) The Preferred Securities have been duly authorized
by the Trust Agreement and are validly issued and subject to the
qualification expressed in paragraph (vi) below, fully paid and
nonassessable beneficial interests in the assets of the Trust and are
entitled to the benefits of the Trust Agreement. The form of
Certificate has been duly authorized by the Trust and complies with all
applicable requirements of the Delaware Statutory Trust Act.
(vi) Holders of Designated Preferred Securities, as
beneficial owners of the Trust, will be entitled to the same limitation
of personal liability extended to shareholders of private, for-profit
corporations organized under the General Corporation Law of the State
of Delaware. Such opinion may note that the holders of Designated
Preferred Securities may be obligated to make payments as set forth in
the Trust Agreement.
(vii) Under the Delaware Statutory Trust Act and the
Trust Agreement, the issuance of the Designated Preferred Securities is
not subject to preemptive rights.
(viii) The issuance and sale by the Trust of the
Designated Preferred Securities and the Common Securities, the
execution, delivery and performance by the Trust of this Agreement, and
the consummation by the Trust of the transactions contemplated by this
Agreement, do not violate (a) any provisions of the Trust Agreement, or
(b) any applicable Delaware law, rule or regulation.
(ix) Neither the execution, delivery and performance
by the Trust of this Agreement, nor the offering, issuance, sale or
delivery of the Preferred Securities, requires the consent or approval
of, the withholding of objection on the part of, the giving of notice
to, the filing, registration or qualification with, or the taking of
any action in respect of, any governmental authority or agency of the
State of Delaware, other than the filing of the Certificate of Trust
with the Secretary of State.
Such opinion may state that it is limited to the laws of the
State of Delaware and that the opinions expressed in paragraphs (ii) and (iii)
above are subject to the effect upon the Trust Agreement, the Debentures, the
Indenture, the Guarantee and the Expense Agreement of (i) bankruptcy,
insolvency, moratorium, receivership, reorganization, liquidation, fraudulent
conveyance and other similar laws relating to or affecting the rights and
remedies of creditors generally, (ii) principles of equity, including applicable
law relating to fiduciary duties (regardless of whether considered and applied
in a proceeding in equity or at law), and (iii) the effect of applicable public
policy on the enforceability of provisions relating to indemnification or
contribution.
(g) Bryan Cave LLP, counsel for the Underwriters, shall have
furnished you their signed opinion, dated the Closing Date or the Option Closing
Date, as the case may be, with respect to the sufficiency of all corporate
procedures and other legal matters relating to this Agreement, the validity of
the Designated Preferred Securities, the Registration Statement, the Prospectus
and such other related matters as you may reasonably request and there shall
have been furnished to such counsel such documents and other information as they
may request to enable them to pass on such matters. In giving such opinion,
Bryan Cave LLP may rely as to matters of fact upon statements and certifications
of officers of the Offerors and of other appropriate persons and may rely as to
matters of law, other than law of the United States and the State of Missouri,
upon the opinions of JSD, Jackson Walker and Richards, Layton & Finger, P.A.
described herein.
(h) On the date of this Agreement and on the Closing Date
(and, if applicable, any Option Closing Date), the Representatives shall have
received from KPMG LLP a letter, dated the date of this Agreement and the
Closing Date (and, if applicable, the Option Closing Date), respectively, in
form and substance satisfactory to the Representatives, confirming that they are
independent public accountants with respect to Company (which shall be inclusive
of its subsidiaries for purposes of this Section 6(g)), within the meaning of
the 1933 Act and the 1933 Act Regulations, and stating in effect that:
(i) In their opinion, the consolidated financial
statements of the Company audited by them and included in the
Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act, the 1933 Act
Regulations, the 1934 Act and the 1934 Act Regulations.
(ii) On the basis of the procedures specified by the
American Institute of Certified Public Accountants as described in SAS
No. 71, "Interim Financial Information," inquiries of officials of the
Company responsible for financial and accounting matters, and such
other inquiries and procedures as may be specified in such letter,
which procedures do not constitute an audit in accordance with U.S.
generally accepted auditing standards, nothing came to their attention
that caused them to believe that, if applicable, the unaudited interim
consolidated financial statements of the Company included in the
Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of the 1933 Act,
1933 Act Regulations, including without limitation, Regulation S-K, or
are not in conformity with U.S. generally accepted accounting
principles applied on a basis substantially consistent, except as
noted in the Registration Statement, with the basis for the audited
consolidated financial statements of the Company included in the
Registration Statement.
(iii) On the basis of limited procedures, not
constituting an audit in accordance with U.S. generally accepted
auditing standards, consisting of a reading of the unaudited interim
financial statements and other information referred to below, a reading
of the latest available unaudited condensed consolidated financial
statements of the Company, inspection of the minute books of the
Company since the date of the latest audited financial statements of
the Company included or incorporated by reference in the Registration
Statement, inquiries of officials of the Company responsible for
financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) as of a specified date not more than
five days prior to the date of such letter, there have been
any changes in the consolidated capital stock of the Company,
any increase in the consolidated debt of the Company, any
decreases in consolidated total assets or shareholders' equity
of the Company, or any changes, decreases or increases in
other items specified by the Representatives, in each case as
compared with amounts shown in the latest unaudited interim
consolidated statement of financial condition of the Company
included in the Registration Statement except in each case for
changes, increases or decreases which the Registration
Statement specifically discloses, have occurred or may occur
or which are described in such letter; and
(B) for the period from the date of the
latest unaudited interim consolidated financial statements of
the Company included in the Registration Statement to the
specified date referred to in clause (iii)(A), there were any
decreases in the consolidated interest income, net interest
income, or net income of the Company or in the per share
amount of net income of the Company, or any changes, decreases
or increases in any other items specified by the
Representatives, in each case as compared with the comparable
period of the preceding year and with any other period of
corresponding length specified by the Representatives, except
in each case for increases or decreases which the Registration
Statement discloses have occurred or may occur, or which are
described in such letter.
(iv) In addition to the audit referred to in their
report included in the Registration Statement and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (ii) and (iii) above, they have carried out
certain specified procedures, not constituting an audit in accordance
with U.S. generally accepted auditing standards, with respect to
certain amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records
and consolidated financial statements of the Company which appea r in
the Registration Statement, and have compared such amounts, percentages
and financial information with the accounting records and the material
derived from such records and consolidated financial statements of the
Company have found them to be in agreement.
In the event that the letters to be delivered referred to
above set forth any such changes, decreases or increases as specified in clauses
(iii)(A) or (iii)(B) above, or any exceptions from such agreement specified in
clause (iv) above, it shall be a further condition to the obligations of the
Underwriters that the Representatives shall have determined, after discussions
with officers of the Company responsible for financial and accounting matters,
that such changes, decreases, increases or exceptions as are set forth in such
letters do not (x) reflect a material adverse change in the items specified in
clause (iii)(A) above as compared with the amounts shown in the latest unaudited
consolidated statement of financial condition of the Company included in the
Registration Statement, (y) reflect a material adverse change in the items
specified in clause (iii)(B) above as compared with the corresponding periods of
the prior year or other period specified by the Representatives, or (z) reflect
a material change in items specified in clause (iv) above from the amounts shown
in the Preliminary Prospectus distributed by the Underwriters in connection with
the offering contemplated hereby or from the amounts shown in the Prospectus.
(i) [Reserved].
(j) At the Closing Date and, if applicable, the Option Closing
Date, you shall have received certificates of the President and Chief Operating
Officer and the Executive Vice President and Chief Financial Officer of the
Company, which certificates shall be deemed to be made on behalf of the Company
dated as of the Closing Date and, if applicable, the Option Closing Date,
evidencing satisfaction of the conditions of Section 6(a) and stating that (i)
the representations and warranties of the Company set forth in Section 2(a)
hereof are accurate as of the Closing Date and, if applicable, the Option
Closing Date, and that the Offerors have complied with all agreements and
satisfied all conditions on their part to be performed or satisfied at or prior
to such Closing Date; (ii) since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not been any
material adverse change in the condition (financial or otherwise), earnings,
affairs, business, prospects or results of operations of the Offerors and the
Subsidiaries on a consolidated basis; (iii) since such dates there has not been
any material transaction entered into by the Offerors or the Subsidiaries other
than transactions in the ordinary course of business; and (iv) they have
carefully examined the Registration Statement and the Prospectus as amended or
supplemented and nothing has come to their attention that would lead them to
believe that either the Registration Statement or the Prospectus, or any
amendment or supplement thereto as of their respective effective or issue dates,
contained, and the Prospectus as amended or supplemented at such Closing Date
(and, if applicable, the Option Closing Date), contains any untrue statement of
a material fact, or omits to state a material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; and (v) covering such
other matters as you may reasonably request. The officers' certificate of the
Company shall further state that no stop order affecting the Registration
Statement is in effect or, to their knowledge, threatened.
(k) At the Closing Date and, if applicable, the Option Closing
Date, you shall have received a certificate of an authorized representative of
the Trust to the effect that to the best of his or her knowledge based upon a
reasonable investigation, the representations and warranties of the Trust in
this Agreement are true and correct as though made on and as of the Closing Date
(and, if applicable, the Option Closing Date); the Trust has complied with all
the agreements and satisfied all the conditions required by this Agreement to be
performed or satisfied by the Trust on or prior to the Closing Date and since
the most recent date as of which information is given in the Prospectus, except
as contemplated by the Prospectus, the Trust has not incurred any material
liabilities or obligations, direct or contingent, or entered into any material
transactions not in the ordinary course of business and there has not been any
material adverse change in the condition (financial or otherwise) of the Trust.
(l) On the Closing Date, you shall have received duly executed
counterparts of the Trust Agreement, the Guarantee, the Indenture and the
Expense Agreement.
(m) The NASD, upon review of the terms of the public offering
of the Designated Preferred Securities, shall not have objected to the
Underwriters' participation in such offering.
(n) Prior to the Closing Date and, if applicable, the Option
Closing Date, the Offerors shall have furnished to you and counsel for the
Underwriters all such other documents, certificates and opinions as they have
reasonably requested.
All opinions, certificates, letters and other documents shall
be in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to you. The Offerors shall furnish you with
conformed copies of such opinions, certificates, letters and other documents as
you shall reasonably request.
If any of the conditions referred to in this Section 6 shall
not have been fulfilled when and as required by this Agreement, this Agreement
and all of the Underwriters' obligations hereunder may be terminated by you on
notice to the Company at, or at any time before, the Closing Date or the Option
Closing Date, as applicable. Any such termination shall be without liability of
the Underwriters to the Offerors.
7. Indemnification and Contribution.
--------------------------------
(a) The Offerors jointly and severally agree to indemnify and
hold harmless each Underwriter, each of its directors, officers and agents, and
each person, if any, who controls any Underwriter within the meaning of the 1933
Act, against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation and attorneys' fees and expenses),
joint or several, arising out of or based upon: (i) any untrue statement or
alleged untrue statement of a material fact made by the Company or the Trust
contained in Section 2(a) of this Agreement (or any certificate delivered by the
Company or the Trust pursuant to Sections 6(j), 6(k) or 6(n) hereof) or the
registration statement as originally filed or the Registration Statement, any
Preliminary Prospectus or the Prospectus, or in any amendment or supplement
thereto; (ii) any omission or alleged omission to state a material fact in the
registration statement as originally filed or the Registration Statement, the
Preliminary Prospectus or the Prospectus, or in any amendment or supplement
thereto, required to be stated therein or necessary to make the statements
therein not misleading, and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation and
attorneys' fees), joint or several, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus or the Prospectus, or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading; or (iii) the enforcement of this indemnification provision
or the contribution provisions of Section 7(d); and shall reimburse each such
indemnified party for any legal or other expenses as incurred (but in no event
less frequently than 30 days after each invoice is submitted, incurred) by them
in connection with investigating or defending against or appearing as a
third-party witness in connection with any such loss, claim, damage, liability
or action, notwithstanding the possibility that payments for such expenses might
later be held to be improper, in which case such payments shall be promptly
refunded; provided, however, that the Offerors shall not be liable in any such
case to the extent, but only to the extent, that any such losses, claims,
damages, liabilities and expenses arise out of or are based upon any untrue
statement or omission or allegation thereof that has been made therein or
omitted therefrom in reliance upon and in conformity with the Underwriters'
Information; provided, that the indemnification contained in this paragraph with
respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or of any person controlling any Underwriter) to the extent any
such losses, claims, damages, liabilities or expenses directly results from the
fact that such Underwriter sold Designated Preferred Securities to a person to
whom there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the Prospectus (as amended or supplemented if any
amendments or supplements thereto shall have been furnished to you in sufficient
time to distribute same with or prior to the written confirmation of the sale
involved), if required by law, and if such loss, claim, damage, liability or
expense would not have arisen but for the failure to give or send such person
such document. The foregoing indemnity agreement is in addition to any liability
the Company or the Trust may otherwise have to any such indemnified party.
(b) Each Underwriter, severally and not jointly, agrees to
indemnify and hold harmless each Offeror, each of its directors, each of its
officers who signed the Registration Statement and each person, if any, who
controls an Offeror within the meaning of the 1933 Act, to the same extent as
required by the foregoing indemnity from the Company to each Underwriter, but
only with respect to the Underwriters' Information. The foregoing indemnity
agreement is in addition to any liability which any Underwriter may otherwise
have to any such indemnified party.
(c) If any action or claim shall be brought or asserted
against any indemnified party or any person controlling an indemnified party in
respect of which indemnity may be sought from the indemnifying party, such
indemnified party or controlling person shall promptly notify the indemnifying
party in writing, and the indemnifying party shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all expenses; provided, however, that the failure so to
notify the indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under such paragraph, and
further, shall only relieve it from liability under such paragraph to the extent
prejudiced thereby. Any indemnified party or any such controlling person shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or such controlling person unless (i) the
employment thereof has been specifically authorized by the indemnifying party in
writing, (ii) the indemnifying party has failed to assume the defense or to
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
such indemnified party or such controlling person and the indemnifying party and
such indemnified party or such controlling person shall have been advised by
such counsel that there may be one or more legal defenses available to it that
are different from or in addition to those available to the indemnifying party
(in which case, if such indemnified party or controlling person notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party
or such controlling person) it being understood, however, that the indemnifying
party shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys at any time and for all
such indemnified parties and controlling persons, which firm shall be designated
in writing by the indemnified party(ies) (and, if such indemnified parties are
Underwriters, by you, as Representatives). Each indemnified party and each
controlling person, as a condition of such indemnity, shall use reasonable
efforts to cooperate with the indemnifying party in the defense of any such
action or claim. The indemnifying party shall not be liable for any settlement
of any such action effected without its written consent, but if there be a final
judgment for the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party and any such controlling
person from and against any loss, claim, damage, liability or expense by reason
of such settlement or judgment.
An indemnifying party shall not, without the prior written
consent of each indemnified party, settle, compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnity may be sought hereunder (whether or not such
indemnified party or any person who controls such indemnified party within the
meaning of the 1933 Act is a party to such claim, action, suit or proceeding),
unless such settlement, compromise or consent includes a release of each such
indemnified party reasonably satisfactory to each such indemnified party and
each such controlling person from all liability arising out of such claim,
action, suit or proceeding or unless the indemnifying party shall confirm in a
written agreement with each indemnified party, that notwithstanding any federal,
state or common law, such settlement, compromise or consent shall not alter the
right of any indemnified party or controlling person to indemnification or
contribution as provided in this Agreement.
(d) If the indemnification provided for in this Section 7 is
unavailable or insufficient to hold harmless an indemnified party under
paragraphs (a), (b) or (c) hereof in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses (i) in such proportion as is appropriate to
reflect the relative benefits received by the Offerors on the one hand and the
Underwriters on the other from the offering of the Designated Preferred
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Offerors on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative benefits received by the Offerors on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Designated
Preferred Securities (before deducting expenses) received by the Offerors bear
to the total underwriting discounts, commissions and compensation received by
the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault of the Offerors on the one hand and of the
Underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Offerors or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Offerors and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this paragraph
(d) were determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to herein.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in the first sentence of
this paragraph (d) shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this paragraph (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Designated Preferred Securities underwritten by such
Underwriter and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
For purposes of this paragraph (d), each person who controls
an Underwriter within the meaning of the 1933 Act shall have the same rights to
contribution as such Underwriter, and each person who controls an Offeror within
the meaning of the 1933 Act, each officer and trustee of an Offeror who shall
have signed the Registration Statement and each director of an Offeror shall
have the same rights to contribution as the Offerors subject in each case to the
preceding sentence. The obligations of the Offerors under this paragraph (d)
shall be in addition to any liability which the Offerors may otherwise have and
the obligations of the Underwriters under this paragraph (d) shall be in
addition to any liability that the Underwriters may otherwise have.
(e) The indemnity and contribution agreements contained in
this Section 7 and the representations and warranties of the Offerors set forth
in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling an Underwriter or by or on behalf of the Offerors, or
such directors, trustees or officers (or any person controlling an Offeror, (ii)
acceptance of any Designated Preferred Securities and payment therefor hereunder
and (iii) any termination of this Agreement. A successor of any Underwriter or
of an Offeror, such directors, trustees or officers (or of any person
controlling an Underwriter or an Offeror) shall be entitled to the benefits of
the indemnity, contribution and reimbursement agreements contained in this
Section 7.
(f) The Company agrees to indemnify the Trust against any and
all losses, claims, damages or liabilities that may become due from the Trust
under this Section 7.
8. Termination. You shall have the right to terminate this Agreement at
-----------
any time by written notice at or prior to the Closing Date or, with respect to
the Underwriters' obligation to purchase the Option Preferred Securities, at any
time at or prior to the Option Closing Date, without liability on the part of
the Underwriters to the Offerors, if:
(a) Either Offeror shall have failed, refused, or been unable
to perform any agreement on its part to be performed under this Agreement, or
any of the conditions referred to in Section 6 shall not have been fulfilled,
when and as required by this Agreement;
(b) The Offerors or any of the Subsidiaries shall have
sustained any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree which in the
judgment of the Representatives materially impairs the investment quality of the
Designated Preferred Securities;
(c) There has been since the respective dates as of which
information is given in the Registration Statement or the Prospectus, any
materially adverse change in, or any development which is reasonably likely to
have a material adverse effect on, the condition (financial or otherwise),
earnings, affairs, business, prospects or results of operations of the Offerors
and the Subsidiaries on a consolidated basis, whether or not arising in the
ordinary course of business;
(d) There has occurred any outbreak of hostilities or other
calamity or crisis or material change in general economic, political or
financial conditions, or internal conditions, the effect of which on the
financial markets of the United States is such as to make it, in your reasonable
judgment, impracticable to market the Designated Preferred Securities or enforce
contracts for the sale of the Designated Preferred Securities;
(e) Trading generally on the New York Stock Exchange, the
American Stock Exchange or the Nasdaq National Market shall have been suspended,
or minimum or maximum prices for trading shall have been fixed, or maximum
ranges for prices for securities shall have been required, by any of said
exchanges or market system or by the Commission or any other governmental
authority;
(f) A banking moratorium shall have been declared by either
federal, Missouri, Illinois, Texas or California authorities; or
(g) Any action shall have been taken by any government in
respect of its monetary affairs which, in your reasonable judgment, has a
material adverse effect on the United States securities markets.
If this Agreement shall be terminated pursuant to this Section
8, the Offerors shall not then be under any liability to the Underwriters except
as provided in Sections 5 and 7 hereof.
9. Default of Underwriters. If any Underwriter or Underwriters
-------------------------
shall default in its or their obligations to purchase Designated Preferred
Securities hereunder, the other Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Designated
Preferred Securities which such defaulting Underwriter or Underwriters agreed
but failed to purchase; provided, however, that the non-defaulting Underwriters
shall be under no obligation to purchase that portion of such Designated
Preferred Securities to the extent that the aggregate number of Designated
Preferred Securities to be purchased by such non-defaulting Underwriters shall
exceed 110% of the aggregate underwriting commitments with respect to such non-
defaulting Underwriters as set forth in Schedule I hereto, and provided further,
that no non-defaulting Underwriter shall be obligated to purchase Designated
Preferred Securities to the extent that the number of such Designated Preferred
Securities is more than 110% of such Underwriter's underwriting commitment set
forth in Schedule I hereto.
In the event that the non-defaulting Underwriters are not
obligated under the above paragraph to purchase the Designated Preferred
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase, the Representatives may in their discretion arrange for one or more of
the Underwriters or for another party or parties to purchase such Designated
Preferred Securities on the terms contained herein. If within one business day
after such default the Representatives do not arrange for the purchase of such
Designated Preferred Securities, then the Company shall be entitled to a further
period of one business day within which to procure another party or parties
satisfactory to the Representatives to purchase such Designated Preferred
Securities on such terms.
In the event that the Representatives or the Company do not
arrange for the purchase of any Designated Preferred Securities to which a
default relates as provided above, this Agreement shall be terminated.
If the remaining Underwriters or substituted underwriters are
required hereby or agree to take up all or a part of the Designated Preferred
Securities of a defaulting Underwriter or Underwriters as provided in this
Section 9, (i) you shall have the right to postpone the Closing Date for a
period of not more than five full business days, in order to effect any changes
that, in the opinion of counsel for the Underwriters or the Company, may thereby
be made necessary in the Registration Statement or the Prospectus, or in any
other documents or agreements, and the Company agrees promptly to file any
amendments to the Registration Statement or supplements to the Prospectus which,
in its opinion, may thereby be made necessary and (ii) the respective numbers of
Designated Preferred Securities to be purchased by the remaining Underwriters or
substituted underwriters shall be taken as the basis of their underwriting
obligation for all purposes of this Agreement. Nothing herein contained shall
relieve any defaulting Underwriter of any liability it may have for damages
occasioned by its default hereunder. Any termination of this Agreement pursuant
to this Section 9 shall be without liability on the part of any non-defaulting
Underwriter or the Company, except for expenses to be paid or reimbursed
pursuant to Section 5 and except for the provisions of Section 7.
10. Effective Date of Agreement. If the Registration Statement is
---------------------------
not effective at the time of execution of this Agreement, this Agreement shall
become effective on the Effective Date at the time the Commission declares the
Registration Statement effective. The Company shall immediately notify the
Underwriters when the Registration Statement becomes effective.
If the Registration Statement is effective at the time of
execution of this Agreement, this Agreement shall become effective at the
earlier of 11:00 a.m. St. Louis time, on the first full business day following
the day on which this Agreement is executed, or at such earlier time as the
Representatives shall release the Designated Preferred Securities for initial
public offering. The Representatives shall notify the Offerors immediately after
they have taken any action which causes this Agreement to become effective.
Until such time as this Agreement shall have become effective,
it may be terminated by the Offerors, by notifying you or by you, as
Representatives of the several Underwriters, by notifying either Offeror, except
that the provisions of Sections 5 and 7 shall at all times be effective.
11. Representations, Warranties and Agreements to Survive
--------------------------------------------------------------
Delivery. The representations, warranties, indemnities, agreements and other
- --------
statements of the Offerors and their officers and trustees set forth in or made
pursuant to this Agreement and the agreements of the Underwriters contained in
Section 7 hereof shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of the Offerors or controlling persons
of either Offeror, or by or on behalf of the Underwriters or controlling persons
of the Underwriters, and shall survive delivery of and payment for the
Designated Preferred Securities. The obligations of the Company pursuant to
Section 5 shall survive delivery of and payment for the Designated Preferred
Securities and shall survive any termination or cancellation of this Agreement.
12. Notices. Except as otherwise provided in this Agreement, all
-------
notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand, mailed by registered or
certified mail, return receipt requested, or transmitted by any standard form of
telecommunication and confirmed. Notices to either Offeror shall be sent to
First Banks, Inc., 600 James S. McDonnell Boulevard, Hazelwood, Missouri 63042,
Attention: Allen H. Blake (with a copy to John S. Daniels, Esq., 6440 North
Central Expressway, Suite 503, Dallas, Texas 75206 and to Jackson Walker L.L.P.,
901 Main Street, Suite 6000, Dallas, Texas 75202, Attention: James S. Ryan, III,
Esq.); and notices to the Underwriters shall be sent to Stifel, Nicolaus &
Company, Incorporated, One Financial Plaza, 501 North Broadway, 9th Floor, St.
Louis, Missouri 63102, Attention: Rick E. Maples, and to Fahnestock & Co. Inc.,
125 Broad Street, New York, New York 10004, Attention: Corporate Syndicate (with
a copy to Bryan Cave LLP, 211 North Broadway, Suite 3600, St. Louis, Missouri
63102, Attention: Harold R. Burroughs, Esq.). In all dealings with the Company
under this Agreement, Stifel, Nicolaus & Company, Incorporated, shall act
jointly as representatives of and on behalf of the several Underwriters, and the
Company shall be entitled to act and rely upon any statement, request, notice or
agreement on behalf of the Underwriters, made or given by Stifel, Nicolaus &
Company, Incorporated and Fahnestock & Co. Inc. on behalf of the Underwriters,
as if the same shall have been made or given in writing by the Underwriters. No
statement, request, notice, agreement or action issued or taken in connection
with the Offering by Stifel, Nicolaus & Company, Incorporated or Fahnestock &
Co. Inc. acting alone, without the express written agreement of the other party,
shall be valid and binding against the other or the several Underwriters.
13. Parties. The Agreement herein set forth is made solely for the
-------
benefit of the Underwriters and the Offerors and, to the extent expressed,
directors, trustees and officers of the Offerors, any person controlling the
Offerors or the Underwriters, and their respective successors and assigns. No
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser, in
his status as such purchaser, from the Underwriters of the Designated Preferred
Securities.
14. Governing Law. This Agreement shall be governed by the laws of
-------------
the State of Missouri, without giving effect to the choice of law or conflicts
of law principles thereof.
15. Counterparts. This Agreement may be executed in one or more
------------
counterparts, and when a counterpart has been executed by each party hereto all
such counterparts taken together shall constitute one and the same Agreement.
[The remainder of this page has been left blank intentionally]
If the foregoing is in accordance with the your understanding
of our agreement, please sign and return to us a counterpart hereof, whereupon
this shall become a binding agreement between the Company, the Trust and you in
accordance with its terms.
Very truly yours,
FIRST BANKS, INC.
By:
--------------------------------------------
Name: Allen H. Blake
Title: President, Chief Financial Officer
and Secretary
FIRST PREFERRED CAPITAL TRUST IV
By:
---------------------------------------------
Name: Allen H. Blake
Title: Administrative Trustee
CONFIRMED AND ACCEPTED,
as of March 26, 2003
STIFEL, NICOLAUS & COMPANY, INCORPORATED
By:
-----------------------------------------
Name: Mark J. Ross
Title: Managing Director
FAHNESTOCK & CO. INC.
By:
-----------------------------------------
Name: Jason Janosz
Title: Senior Vice President
For themselves and as Representatives of the several
Underwriters named in Schedule I hereto.
SCHEDULE I
----------
Underwriter Number of Preferred Securities
- ----------- ------------------------------
Stifel, Nicolaus & Company, Incorporated 1,200,000
Fahnestock & Co., Inc. 400,000
---------
Total 1,600,000
=========
EXHIBIT A
LIST OF SIGNIFICANT DIRECT AND INDIRECT SUBSIDIARIES
First Bank
First Bank & Trust
First America Capital Trust
First Land Trustee Corp.
FB Commercial Finance, Inc.
Star Lane Holdings Trust, Statutory Trust
Star Lane Trust
First Preferred Capital Trust
Missouri Valley Partners, Inc.
First Banc Mortgage, Inc.
First Preferred Capital Trust II
First Preferred Capital Trust III
Bank of San Francisco Realty Investors, Inc.
The San Francisco Company
First Bank Capital Trust
Exhibit 10.25
First Banks Executive Incentive Compensation Plan
OBJECTIVES
o Promote superior short- and long-term financial performance of the
institution through the efforts of key executive officers.
o Reward those key executive officers who deliver solid results with
market-competitive incentives; provide above-market incentives for those
who far exceed expectations.
o Attract, motivate, and retain skilled and experienced individuals who can
increase the size and profitability of the institution.
ELIGIBLE PARTICIPANTS
The Chairman and the Board will annually determine those eligible to participate
in the Plan. Aside from the CEO, the Plan is designed for the handful of
executive officers whose impact is felt in every region and business unit of the
company and whose contribution to the organization's success is difficult to
measure by objective criteria alone. Although it is anticipated that individuals
such as the CFO, COO, CCO, Director of Sales and Marketing, Director of
Operations, and Director of Technology would be eligible participants, the
Chairman of the Board retains full discretion to determine eligibility in the
Plan. Lineal descendants of James F. Dierberg and their spouses are not eligible
to participate in the Plan, regardless of position.
Employees who are hired or promoted into eligible positions prior to July 1 of
the Plan Year will be considered for participation on a prorated basis. The
Chairman and the Board will make the determination.
INCENTIVE COMPENSATION FUNDING
Funding of incentive compensation is based on the weighted average Return On
Equity (ROE). For the CEO, the weighted average ROE is defined as the current
plan year ROE times 60% plus the preceding year's ROE times 25% plus the ROE two
years prior times 15%. For all other participants, the weighted average ROE is
defined as the current plan year ROE times 75% plus the preceding year's ROE
times 25%. For purposes of calculating the weighted average ROE, Equity does not
include unrealized gain or loss on derivatives.
There are separate funding formulae for the CEO and all other participants, as
outlined below. If the weighted average ROE is less than Threshold (13.5% for
the CEO, 11% for all other participants), no incentive amount will be generated.
CEO Funding Formula:
- --------------------
62 * (weighted average ROE - 13.5%)1.35 * CEO's annual base salary at end of
plan year
Other Participants Funding Formula:
- -----------------------------------
22 * (weighted average ROE - 11%)1.35 * total of all participants' annual base
salaries at end of plan year
INCENTIVE COMPENSATION DISTRIBUTION
Distributions of incentive funds, if any, are handled separately for the CEO and
all other participants. Unless determined otherwise by the Chairman and the
Board, the CEO will receive the full amount funded under the incentive formula
outlined above.
The funding generated under the incentive formula outlined above for
participants other than the CEO will be distributed among the participants
proportionately based on the ratio of each participant's annual base salary at
the end of the Plan Year to the aggregate of all participants' annual base
salaries at the end of the Plan Year, provided however, that the CEO may
exercise discretion in awarding a greater or lesser amount to any one or more
participants, such that the total amount funded is ultimately awarded among all
participants. Such discretion will be exercised based on the CEO's best judgment
as to the relative contributions (or lack thereof) made by each participant
toward improving ROE during the Plan Year.
NEW PARTICIPANTS
Funding with respect to those individuals who become participants between
January 1st and June 30th of the plan year will be prorated for the number of
full months during such year that they are participants. The distribution for
individuals who become participants between January 1st and June 30th of the
plan year should also be prorated for the number of full months during such year
that they are participants.
SPECIAL ADJUSTMENTS
Extraordinary items, catastrophic events, or other occurrences and circumstance
outside of the control and influence of participants that would inordinately
distort the generation of the incentive compensation funding or the calculation
of any individual incentive award may be taken into consideration and such
adjustments made (upward or downward) as deemed appropriate by the Chairman and
the Board.
The CEO has the discretion to reduce the funding for executives other than the
CEO if one or more participants receives a performance review below "Achieves
Performance Requirements" (or equivalent). The funding may be reduced up to an
amount equal to the reduction in distribution to the executive(s) failing to
receive a "Achieves Performance Requirements" review or better. The purpose of
this provision is to prevent distortions that might otherwise occur if one or
more executives received little or no distribution and the total amount of
funding had to be allocated among the remaining participants.
In the event that there are fewer than three participants, other than the CEO,
due to termination, reorganization, or any other cause, the Chairman of the
Board and CEO have the discretion to increase or decrease the total funding up
to 20%.
INCENTIVE CAP
Incentives are capped at 155% of year-end annual base salary for the CEO, and
85% of year-end annual base salary for all other participants.
SALARY AND EMPLOYEE BENEFIT ADMINISTRATION
Salary administration policies and procedures for the First Bank employees who
are participants in this Plan will continue to be administered as in the past
and will remain the same as for all other employees. Payments made pursuant to
this incentive plan will not be used in determining benefit levels under any
First Bank employee benefit program, unless such benefit plan documents
specifically provide for their inclusion.
PAYMENT DATE
Payments will be made to eligible participants as soon as practical following
the close of the Plan Year and the determination of financial results.
Participants must be employed by First Banks, its Subsidiaries or Affiliates, on
the date that payments are made, unless payment is required earlier under
applicable State laws or regulations.
TERMINATION
Those participants, whose employment is terminated during the Plan Year due to
retirement, death, disability, or involuntary termination not for Cause, are
eligible to be considered for an award at such time as other award
determinations are made. Such awards, if any, will be prorated through the date
of termination and are payable at the time all other awards under this Plan are
made. Participants who voluntarily terminate during the Plan Year, or whose
employment is terminated involuntarily for Cause, are not eligible to receive an
award under this Plan.
PLAN NONCONTRACTUAL
Nothing herein contained shall be construed as a commitment or agreement on the
part of any person employed by First Banks, Inc. or any of its Subsidiaries or
Affiliates to continue such person's employment with First Banks, Inc., its
Subsidiaries or Affiliates, and nothing herein contained shall be construed as a
commitment or agreement on the part of First Banks, Inc., its Subsidiaries or
Affiliates to continue the employment of or the annual rate of compensation of
any such person for any period, and all participants shall remain subject to
discharge to the same extent as if the Plan had never been put into effect.
PLAN AMENDMENTS
This Plan, its formulas and goals, will be reviewed annually and recommendations
made to renew, amend, or discontinue it as deemed appropriate by the Board of
Directors.
PLAN YEAR
January 1, 2003 to December 31. 2003.
Exhibit 10.26
SECOND AMENDMENT TO
SECURED CREDIT AGREEMENT
This Second Amendment is made as of this 31st day of March, 2003, by
and among First Banks, Inc., a Missouri corporation (the "Borrower"); Wells
Fargo Bank, National Association, a national banking association (the "Agent");
and the undersigned financial institutions.
WHEREAS the parties have made and entered into a Secured Credit
Agreement dated as of August 22, 2002, as amended by a First Amendment to
Secured Credit Agreement made as of December 31, 2002 (as so amended, the
"Credit Agreement"). Terms used in this Second Amendment and not defined herein
shall have the meanings ascribed to such terms in the Credit Agreement.
WHEREAS certain related transactions have taken place in which (i) FBA
has "gone private" and has been merged into the Borrower, (ii) the Intercompany
Note has been cancelled; (iii) Union Financial has been merged into San
Francisco Company and (iv) the Bank Subsidiaries have merged, and First Bank
(Missouri) is the surviving Bank Subsidiary.
WHEREAS by the terms of the Credit Agreement, San Francisco Company has
agreed to guarantee payment of the Obligations and execute such agreements as
the Agent may reasonably request to grant a first priority security interest to
the Agent for the benefit of the Lenders in the stock of all Bank Subsidiaries.
WHEREAS by reason of the above-described related transactions, the
existing covenant set forth in Section 7.05(b) of the Credit Agreement must be
replaced.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter set forth, the parties agree as follows:
1. The following definitions in Section 1.01 of the Credit Agreement
are hereby amended, to be and read as follows:
"Collateral" means the Borrower's Special Account and all
property which is subject or is to be subject to the Liens granted by
the 2003 Pledge Agreement and the San Francisco Company Security
Agreement.
"Compliance Certificate" means a certificate in substantially the
form of Exhibit A to the Second Amendment to this Agreement, or such
other form as the Borrower and the Required Lenders may from time to
time agree upon in writing, executed by the Chief Financial Officer of
the Borrower, stating (i) that any financial statements delivered
therewith have been prepared in accordance with GAAP, subject to
year-end audit adjustments, (ii) whether or not such officer has
knowledge of the occurrence of any Default or Event of Default and
stating in reasonable details the facts with respect to such Default
or Event of Default, (iii) all relevant facts in reasonable detail to
evidence, and the computations as to, whether or not the Borrower is
in compliance with the Financial Covenants, and (iv) all relevant
facts in reasonable detail to evidence, and the computations as to,
whether or not the Borrower is in compliance with the other covenants.
"Loan Documents" means this Agreement, the Notes, the 2003 Pledge
Agreement and the San Francisco Company Security Agreement, as each
may be renewed, extended, amended, rearranged, restructured, restated,
replaced or otherwise modified from time to time.
2. Section 1.01 of the Credit Agreement is hereby further amended by
adding the following definitions:
"2003 Pledge Agreement" means the Pledge Agreement in the form of
Exhibit B to the Second Amendment to this Agreement, pledging to the
Agent for the ratable benefit of the Lenders all of the stock of San
Francisco Company that is owned by the Borrower, as well as certain
stock acquired after the date of this Agreement.
"San Francisco Company Guarantee" means the Guaranty in the form
of Exhibit C to the Second Amendment to this Agreement, whereby San
Francisco Company guarantees to the Lenders payment of the
Obligations.
"San Francisco Company Security Agreement" means the San
Francisco Company Security Agreement in the form of Exhibit D to the
Second Amendment to this Agreement, pledging to the Agent for the
ratable benefit of the Lenders all of the stock of First Bank
(Missouri) that is owned by San Francisco Company, as well as certain
stock acquired after the date of the Second Amendment to this
Agreement.
3. Section 5.01 of the Credit Agreement is hereby amended by
deleting subparagraphs c and d thereof.
4. Section 5.08 of the Credit Agreement is hereby amended to be and
read as follows:
"Section 5.08. Additional Collateral. The Borrower will deliver,
---------------------
and cause San Francisco Company to deliver, to the Agent any shares of
capital stock of any FDIC-insured financial institution or its holding
company acquired in whole or in part with the proceeds of Advances if
either (A) 20 percent or more of any class of the voting securities of
such entity are acquired, or (B) the Borrower's investment therein is
$1 million or more; provided, however, that the Borrower need not
-------- -------
deliver such shares if such entity is immediately merged with or
consolidated into a Subsidiary. Any shares of capital stock so
delivered shall constitute additional collateral under the 2003 Pledge
Agreement (if delivered by the Borrower) or the San Francisco Company
Security Agreement (if delivered by San Francisco Company). The
Borrower need not deliver to the Agent any shares of capital stock of
any FDIC-insured financial institution or its holding company acquired
in whole or in part with the proceeds of Advances unless it either
acquires 20 percent or more of any class of the voting securities or
its investment therein is $1 million or more; however the Borrower
will not, and will not permit San Francisco Company to, grant any
security interest in such shares to any third party."
5. Section 5.09 of the Credit Agreement is deleted.
6. Section 6.09 of the Credit Agreement is hereby amended to be and
read as follows:
Section 6.09. Issuance of Additional Stock. Neither the Borrower
----------------------------
nor any Subsidiary whose shares are pledged pursuant to the 2003
Pledge Agreement or the San Francisco Company Security Agreement will
issue any additional shares of capital stock unless such additional
shares are immediately pledged pursuant to the 2003 Pledge Agreement
or the San Francisco Company Security Agreement, as applicable.
7. Section 7.05(b) of the Credit Agreement is hereby amended to be
and read as follows:
(b) The Borrower will cause First Bank (Missouri) to maintain its
Non-Performing Assets at an amount not greater than 15 percent of
its Primary Equity Capital, determined as of each quarter end.
For purposes of this Section 7.05(b), First Bank (Missouri)'s
non-performing asset known as the Lake of the Ozarks Development
in an amount not in excess of $17 million shall not be treated as
a non-performing asset.
8. Section 9.06 of the Credit Agreement is hereby amended by
revising clause (iv) to be and read as follows: "(iv) release any Collateral
from the lien created by the 2003 Pledge Agreement or the San Francisco Company
Security Agreement, or".
9. Exhibit B to the Credit Agreement (the Compliance Certificate) is
hereby replaced by Exhibit A to this Second Amendment.
10. Schedule 4.04 to the Credit Agreement is hereby replaced with a
new Schedule 4.04 in the form attached to this Second Amendment.
11. This Second Amendment shall become effective when counterparts
hereof executed by the Borrower, the Agent and each Lender have been delivered
to the Agent and the Agent has received all of the following, each dated as of
the date of this Second Amendment, in form and substance satisfactory to each
Lender:
(a) The 2003 Pledge Agreement, duly executed by the Borrower.
(b) One or more certificates, representing in the aggregate all of
the issued and outstanding capital stock of San Francisco Company
that is owned by the Borrower, and one blank stock power executed
by the Borrower for each such certificate.
(c) The San Francisco Company Guarantee, duly executed by San
Francisco Company.
(d) The San Francisco Company Security Agreement, duly executed by
San Francisco Company.
(e) One or more certificates, representing in the aggregate all of
the issued and outstanding capital stock of First Bank (Missouri)
that is owned by San Francisco Company, and one blank stock power
executed by San Francisco Company for each such certificate.
(f) A signed copy of an opinion of counsel for the Borrower and its
Subsidiaries, addressed to the Lenders, substantially in the form
of Exhibit E to this Second Amendment.
12. Except as amended by this Second Amendment, all of the original
terms and conditions of the Credit Agreement shall remain in full force and
effect. On the date this Second Amendment becomes effective, each reference in
the Credit Agreement to "this Agreement" shall be deemed to be a reference to
the Credit Agreement as amended by this Second Amendment. On the date this
Second Amendment becomes effective, the Agent will deliver to the Borrower the
stock certificates of First Bank (Missouri) (registered in the name of Union
Financial Group, Ltd.), Union Financial, First Bank (California), San Francisco
Company (registered in the name of First Banks America, Inc.) and FBA that are
described in the schedule to this Second Amendment. All such certificates will
be promptly cancelled. Further, it is recognized and agreed that on the
effective date of this Second Amendment, the Pledge Agreement, the FBA Security
Agreement, the Third Party Pledge Agreement, the Union Financial Guarantee and
the Union Financial Security Agreement shall be of no further force and effect.
13. This Second Amendment may be executed in any number of
counterparts, each of which shall be an original with the same effect as if the
signatures hereto were upon the same instrument.
14. The Borrower will reimburse the Agent upon demand for its
out-of-pocket expenses, including fees and expenses of outside counsel, in
connection with the preparation and review of this Second Amendment and any
related documents and agreements.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed by their respective officers thereunto duly
authorized as of the date first above written.
(Signature Page Follows)
Address: FIRST BANKS, INC.
600 James S. McDonnell Blvd.
Mail Code M1-199-014
Hazelwood, MO 63042
Attention: Allen H. Blake By /s/ Allen H. Blake
----------------------------------
Telecopier: (314) 592-6621 Its President
-------------------------------
Address: WELLS FARGO BANK, NATIONAL
MAC: N9305-071 ASSOCIATION, as Agent
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Douglas A. Gallun
By /s/ Douglas A. Gallun
Telecopier: (612) 667-3510 ----------------------------------
Its Vice President
------------------------------
Address: WELLS FARGO BANK, NATIONAL
MAC: N9305-071 ASSOCIATION, as a Lender
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Douglas A. Gallun
By /s/ Douglas A. Gallun
Telecopier:(612) 667-3510 ----------------------------------
Its Vice President
------------------------------
Address: BANK ONE, N.A.
120 South LaSalle Street
Chicago, Illinois 60603-3400
Attention: Thomas H. Hackett
By /s/ Thomas H. Hackett
Telecopier: (312) 661-9511 ----------------------------------
Its First Vice President
------------------------------
Address: LASALLE BANK NATIONAL
One Metropolitan Square ASSOCIATION
211 North Broadway, Suite 4050
St. Louis, Missouri 63102
Attention: Robert J. Mathias
By /s/ Robert J. Mathias
Telecopier: (314) 621-3947 ----------------------------------
Its Senior Banker
------------------------------
Address: THE NORTHERN TRUST COMPANY
50 South LaSalle Street
Chicago, Illinois 60675
Attention: Thomas E. Bernhardt By /s/ Thomas E. Bernhardt
----------------------------------
Telecopier: (312) 557-8337 Its Vice President
------------------------------
Address: UNION BANK OF CALIFORNIA, N.A.
445 South Figureroa Street
Los Angeles, California 90071
Attention: Dennis A. Cattell By /s/ Dennis A. Cattell
----------------------------------
Telecopier: (213) 236-5548 Its Vice President
------------------------------
Address: SUNTRUST BANK, NASHVILLE
201 Fourth Avenue North
Nashville, Tennessee 37219
Attention: Richard B. Boring By /s/ Richard B. Boring
----------------------------------
Telecopier: (615) 748-5161 Its Vice President
------------------------------
Address: FIFTH THIRD BANK
1701 Golf Road, Tower One, Suite 700
Rolling Meadows, IL 60008
Attention: Patrick A. Horne By /s/ Patrick A. Horne
----------------------------------
Telecopier: (847) 871-6026 Its Vice President
------------------------------
EXHIBIT A
COMPLIANCE CERTIFICATE
This Compliance Certificate is being submitted on this ___ day of
__________________, 200__, for the quarter ending on the ___ day of
__________________, 200__, pursuant to the terms of the Secured Credit Agreement
dated as of August ___, 2002, as most recently amended by a Second Amendment
dated as of March 31, 2003 (as so amended, the "Credit Agreement"), as the same
may be thereafter amended from time to time, among Wells Fargo Bank, National
Association (the "Agent"), the Lenders that are parties thereto, and First
Banks, Inc., as Borrower. Capitalized terms used but not defined herein shall
have the meanings set forth in the Credit Agreement.
The undersigned officers of First Banks, Inc. jointly and severally
certify to the Lenders that as of the date hereof:
A. The representations and warranties contained in Article IV of the
Credit Agreement are correct as of the date hereof, except to the
extent that the same relate specifically to an earlier date;
B. No Default or Event of Default has occurred and is continuing;
C. Attached is an accurate listing of the current Subsidiaries of
First Banks, Inc.; and
D. The computation of Margin and L/C Margin and compliance with the
covenants contained in Article VII of the Credit Agreement are
are supported by the following:
2.03 Funded Debt Ratio
-----------------
(i) First Banks, Inc. (consolidated) (2) Ratio of L/C
Net Income for the quarter ended: Funded Debt (2) to (1) Margin Margin
- --------------------------------- ----------- ---------- ------ ------
$
- ----------------- ---------------
- ----------------- ---------------
- ----------------- ---------------
- ----------------- ---------------
Total Net Income $ (1) % bp bp
--------------- ----------- ---------- ------ ------
7.01 Total Risk Based Capital Ratio
------------------------------
(2)
Weighted-Risk
Assets and Off- Minimum
(1) Balance Sheet Ratio of Ratio
Total Capital Items (1) to (2) Permitted
------------- ----- ---------- ---------
First Banks, Inc. (consolidated) % 10.0%
------------- ---------- ---------- -----
First Bank (Missouri) % 10.0%
------------- ---------- ---------- -----
7.02 Tier I Risk Based Capital Ratio
------------------------------
(2)
Weighted-Risk
Assets and Off- Minimum
(1) Balance Sheet Ratio of Ratio
Tier I Capital Items (1) to (2) Permitted
-------------- ----- ---------- ---------
First Banks, Inc. (consolidated) % 6.0%
-------------- ----------- --------- ----
First Bank (Missouri) % 6.0%
-------------- ----------- --------- ----
7.03 Leverage Ratio
--------------
Minimum
(1) (2) Ratio of Ratio
Tier I Capital Total Assets (1) to (2) Permitted
-------------- ------------ ---------- ---------
First Banks, Inc. (consolidated) % 5.0%
-------------- ------------ --------- ----
First Bank (Missouri) % 5.0%
-------------- ------------ --------- ----
7.04 Minimum Return on Assets
------------------------
Minimum
Net Income for the quarter ended: Average Total Ratio of Ratio
- --------------------------------- Assets (2) (1) to (2) Permitted
----------- ---------- ---------
First Banks, Inc. (consolidated)
$
- --------------------------- --------------------
- --------------------------- --------------------
- --------------------------- --------------------
- --------------------------- --------------------
Total Net Income $ (1) % 0.70%
-------------------- ------------ ---------- -----
7.05 Non-Performing Assets
---------------------
(1) (2) Maximum
Non-Performing Primary Ratio of Ratio
Assets Equity Capital (1) to (2) Permitted
------ -------------- ---------- ---------
First Banks, Inc. (consolidated) % 25%
-------------- ---------- ---------- ---
First Bank (Missouri) * % 15%
-------------- ---------- ---------- ---
* Not including the Lake of the Ozarks Development asset, currently $__________; or, if the Lake of the Ozarks asset
---
is currently valued in excess of $17,000,000, including only excess of Lake of Ozarks asset over $17,000,000.
----
7.06 Allowance for Loan and Lease Losses
-----------------------------------
(1)
Allowance (2) Minimum
for Loan and Non-Performing Ratio of Ratio
Lease Losses Assets (1) to (2) Permitted
------------ ------ ---------- ---------
First Bank (Missouri) % 100%
------------ ------------ --------- ----
7.07 Current Quarter Return on Assets
--------------------------------
Consolidated
Net Income for the quarter ended: Assets as of
- --------------------------------- Minimum
__________, Ratio of Ratio
2003 (1) to (2) Permitted
---- ---------- ---------
First Banks, Inc. (consolidated)
, 200
- ------------------------------ ----------
Multiplied by Four 4
- ------------------------------ ----------
Total Net Income $ % 0.80%
- ------------------------------ ---------- ------------ ---------- -----
Signed as of the day and year first above written.
FIRST BANKS, INC.
By:
----------------------------------------------------
Chief Executive Officer
By:
----------------------------------------------------
Chief Financial Officer
By:
----------------------------------------------------
Senior Vice President - Chief Accounting Officer
By:
----------------------------------------------------
Chief Operating Officer
By:
----------------------------------------------------
Chief Credit Officer
EXHIBIT B
PLEDGE AGREEMENT
This Agreement is made as of this 31st day of March, 2003, by and
between FIRST BANKS, INC., a Missouri Corporation ("Debtor") and WELLS FARGO
BANK, NATIONAL ASSOCIATION, a national banking association, as Agent for the
"Lenders" pursuant to the Secured Credit Agreement described below ("Secured
Party").
RECITALS
Debtor, Secured Party and certain financial institutions have executed
a secured credit agreement dated as of August 22, 2002, as most recently amended
by a Second Amendment of even date herewith (as so amended, the "Credit
Agreement"), pursuant to which such financial institutions (the "Lenders") have
agreed to lend up to $45,000,000 to Debtor and pursuant to which Secured Party
has agreed to issue up to $20,000,000 in face amount of standby letters of
credit for the account of Debtor.
One condition to the Lenders' and Secured Party's commitments under the
Credit Agreement is that Debtor execute, deliver and perform this Collateral
Pledge Agreement, thereby granting a security interest to Secured Party, as
agent for the Lenders, in the Collateral described herein.
Now, therefore, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto hereby agree as follows:
1. Security Interest and Collateral. To secure the payment and
performance of the "Obligations," as such term is defined in the Credit
Agreement, Debtor hereby grants Secured Party (for its own account and as agent
for the Lenders) a security interest (the "Security Interest") in (i) all of the
capital stock of The San Francisco Company, a Delaware corporation, owned by
Debtor, (ii) any capital stock that Debtor may hereafter acquire and deliver to
Secured Party pursuant to Section 5.08 of the Credit Agreement, and (iii) all
proceeds of such capital stock and all other rights in connection with such
property (collectively the "Collateral").
2. Representations, Warranties and Covenants. Debtor represents,
warrants and covenants that:
(a) Debtor will join with Secured Party in taking any action
required by Secured Party in order to perfect the Security Interest
and to protect the rights and priorities of Secured Party with respect
to the Collateral. To that end, Debtor has delivered to Secured Party
certificates representing all of the shares of capital stock
constituting Collateral and executed and delivered one blank stock
power for each such certificate. Debtor will, at Secured Party's
request at any one or more times (i) duly endorse, in blank, each and
every additional security certificate and instrument constituting
Collateral by signing on such certificate or instrument or by signing
a separate document of assignment or transfer; (ii) join with Secured
Party in executing any instructions or agreements with securities
intermediaries for the purpose of obtaining control of any investment
property that may hereafter constitute Collateral; and (iii) instruct
the issuer of any security that may hereafter constitute Collateral to
register such security in the name of Secured Party.
(b) Debtor is the owner of the Collateral free and clear of all
liens, encumbrances, security interests and restrictions except the
Security Interest and any restrictive legend appearing on any security
certificate or any instrument constituting Collateral.
(c) Debtor will keep the Collateral free and clear of all liens,
encumbrances and security interests, except the Security Interest.
(d) Debtor will pay, when due, all taxes and other governmental
charges levied or assessed upon or against any Collateral.
(e) Debtor will upon receipt deliver to Secured Party all
investment property distributed on account of Collateral, such as
stock dividends and securities resulting from stock splits,
reorganizations and recapitalizations. The Security Interest shall
attach to all such proceeds.
3. Events of Default. The occurrence of any Event of Default under the
Credit Agreement shall be an Event of Default hereunder.
4. Remedies Upon Event of Default. Upon the occurrence of an Event of
Default and during the continuance thereof, Secured Party may exercise any one
or more of the rights and remedies specified in the Credit Agreement, and also
any one or more of the following rights or remedies: (i) notify the obligor on
or issuer of any Collateral or any securities intermediary to make payment to
Secured Party of any amounts due or distributable on any Collateral, (ii) in
Debtor's name or Secured Party's name enforce collection of any Collateral by
suit or otherwise, or surrender, release or exchange all or any part of it, or
compromise, extend or renew for any period any obligation evidenced by the
Collateral, (iii) receive and keep in its possession or under its control
subject to the Security Interest all proceeds of Collateral, except that any
money received from the Collateral may, at Secured Party's option, be applied in
reduction of the Obligations; (iv) exercise all voting and other rights as a
holder of any Collateral; (v) exercise and enforce any or all rights and
remedies available upon default to a secured party under the Uniform Commercial
Code, including the right to (A) order any securities intermediary to sell any
Collateral on any established market or over the counter or to cause any
Collateral to be redeemed; (B) give any transfer or redemption order to any
issuer of Collateral; or (C) offer and sell Collateral privately to purchasers
who will agree to take the Collateral for investment and not with a view to
distribution and who will agree to the imposition of restrictive legends on any
certificates representing Collateral, and the right to arrange for a sale which
would otherwise qualify as exempt from registration under the Securities Act of
1933; and if notice to Debtor of any intended disposition of Collateral or any
other intended action is required by law in a particular instance, such notice
shall be deemed commercially reasonable if given at least 10 calendar days prior
to the date of intended disposition or other action; and (vi) exercise or
enforce any or all other rights or remedies available to Secured Party by law or
agreement against any Collateral, against Debtor or against any other person or
property.
5. Secured Party's Duties. Secured Party's duty of care with respect to
Collateral in its possession (as imposed by law) shall be deemed fulfilled if
Secured Party exercises reasonable care in physically safekeeping such
Collateral, or in the case of Collateral in the custody or possession of a
securities intermediary or other third person, exercises reasonable care in the
selection of the securities intermediary or other third person and Secured Party
need not otherwise preserve, protect, insure or care for any Collateral. Secured
Party shall not be obligated to preserve any rights Debtor may have against
prior parties, to exercise at all or in any particular manner any voting rights
which may be available with respect to any Collateral, to realize on the
Collateral at all or in any particular manner or order, or to apply any cash
proceeds of Collateral in any particular order of application. Regardless of the
manner in which Secured Party chooses to exercise control over Collateral
(whether by possession, by agreement with an issuer or Securities Intermediary,
by transferring security entitlements into its own account, or otherwise),
Secured Party shall not be deemed to be under any obligation to Debtor, whether
as fiduciary, trustee, agent or otherwise, except the duty of good faith, the
duties specifically imposed upon Secured Party by this Agreement, and the duties
imposed upon it as a secured party by Articles 1, 8 and 9 of the Uniform
Commercial Code, as in effect in Minnesota.
6. Miscellaneous. Any disposition of Collateral in the manner provided
in Section 4 shall be deemed commercially reasonable. This Agreement can be
waived, modified, amended, terminated or discharged, and the Security Interest
can be released, only explicitly in a writing signed by Secured Party. A waiver
signed by Secured Party shall be effective only in the specific instance and for
the specific purpose given. Mere delay or failure to act shall not preclude the
exercise or enforcement of any of Secured Party's rights or remedies. All rights
and remedies of Secured Party shall be cumulative and may be exercised
singularly or concurrently, at Secured Party's option, and the exercise or
enforcement of any one such right or remedy shall neither be a condition to nor
bar the exercise or enforcement of any other. All notices to be given to Debtor
shall be deemed sufficiently given if delivered or mailed by registered or
certified mail, postage prepaid, to Debtor at the address set forth following
its signature on the signature page of this Agreement or at the most recent
address shown on Secured Party's records. Debtor will reimburse Secured Party
for all expenses (including reasonable attorneys' fees and legal expenses)
incurred by Secured Party in the protection, defense or enforcement of the
Security Interest, including expenses incurred in any litigation or bankruptcy
or insolvency proceedings. This Agreement shall be binding upon and inure to the
benefit of Debtor and Secured Party and their successors and assigns and shall
take effect when signed by Debtor and delivered to Secured Party, and Debtor
waives notice of Secured Party's acceptance hereof. This Agreement shall be
governed by the internal laws of Minnesota and, unless the context otherwise
requires, all terms used herein which are defined in Articles 1, 8 and 9 of the
Uniform Commercial Code, as in effect in Minnesota, shall have the meanings
therein stated. If any provision or application of this Agreement is held
unlawful or unenforceable in any respect, such illegality or unenforceability
shall not affect other provisions or applications which can be given effect, and
this Agreement shall be construed as if the unlawful or unenforceable provision
or application had never been contained herein or prescribed hereby. All
representations and warranties contained in this Agreement shall survive the
execution, delivery and performance of this Agreement and the creation and
payment of the Obligations.
IN WITNESS WHEREOF, Debtor has executed this Agreement as of the day
first above written.
FIRST BANKS, INC.
By
--------------------------------------------
Its
---------------------------------------
Address:
600 James S. McDonnell Blvd.
Mail Code M1-199-014
Hazelwood, MO 63042-2302
EXHIBIT C
GUARANTY
-------------, ----------
March 31, 2003
This Guaranty is made as of the above date by the undersigned, The San
Francisco Company, a Delaware corporation, in favor of Wells Fargo Bank,
National Association, a national banking association, as Agent for the "Lenders"
pursuant to the Secured Credit Agreement described below.
RECITALS
First Banks, Inc. (the "Borrower"), the Agent and certain financial
institutions have executed a secured credit agreement dated as of August 22,
2002, as most recently amended by a Second Amendment of even date herewith (as
so amended, the "Secured Credit Agreement"), pursuant to which such financial
institutions (the "Lenders") have agreed to lend up to $45,000,000 to the
Borrower and pursuant to which the Agent has agreed to issue up to $20,000,000
in face amount of standby letters of credit for the account of the Borrower.
One condition to the Lenders' and Agent's commitment under the Secured
Credit Agreement is that the undersigned execute, deliver and perform this
Guaranty, thereby guaranteeing the payment and performance of all debts,
liabilities and obligations of the Borrower to the Agent and the Lenders arising
out of the Secured Credit Agreement and any extensions, renewals or replacements
thereof (the "Indebtedness").
Now, therefore, in consideration of the premises, the undersigned
hereby agrees as follows:
1. No act or thing need occur to establish the liability of the
undersigned hereunder, and no act or thing, except full payment and discharge of
all Indebtedness, shall in any way exonerate the undersigned or modify, reduce,
limit, or release the liability of the undersigned hereunder.
2. This is an absolute, unconditional and continuing guaranty of
payment of the Indebtedness and shall continue to be in force and be binding
upon the undersigned, whether or not all Indebtedness is paid in full, until
this Guaranty is revoked prospectively as to future transactions, by written
notice actually received by the Agent, and such revocation shall not be
effective as to Indebtedness existing or committed for at the time of actual
receipt of such notice by the Agent, or as to any renewals, extensions and
refinancings thereof.
3. If the undersigned shall be dissolved or shall be or become
insolvent then the Agent shall have the right to declare immediately due and
payable, and the undersigned will forthwith pay to the Agent, the full amount of
all Indebtedness, whether due and payable or unmatured. If the undersigned
voluntarily commences or there is commenced involuntarily against the
undersigned a case under the United States Bankruptcy Code, the full amount of
all Indebtedness, whether due and payable or unmatured, shall be immediately due
and payable without demand or notice thereof.
4. The undersigned shall be liable for all Indebtedness, without any
limitation as to amount, plus accrued interest thereon and all attorneys' fees,
collection costs and enforcement expenses referable thereto. Indebtedness may be
created and continued in any amount, whether or not in excess of such principal
amount, without affecting or impairing the liability of the undersigned
hereunder. The Agent may apply any sums received by or available to the Agent on
account of the Indebtedness from Borrower or any other person (except the
undersigned), from their properties, out of any collateral security or from any
other source to payment of the excess. Such application of receipts shall not
reduce, affect or impair the liability of the undersigned hereunder.
5. The undersigned will not exercise or enforce any right of
contribution, reimbursement, recourse or subrogation available to the
undersigned against any person liable to payment of the Indebtedness, or as to
any collateral security therefor, unless and until all of the Indebtedness shall
have been fully paid and discharged.
6. The undersigned will pay or reimburse the Agent for all costs and
expenses (including reasonable attorneys' fees and legal expenses) incurred by
the Agent in connection with the protection, defense or enforcement of this
Guaranty in any litigation or bankruptcy or insolvency proceedings.
7. Whether or not any existing relationship between the undersigned and
Borrower has been changed or ended and whether or not this Guaranty has been
revoked, the Agent may, but shall not be obligated to, enter into transactions
resulting in the creation or continuance of Indebtedness, without any consent or
approval by the undersigned and without any notice to the undersigned. The
liability of the undersigned shall not be affected or impaired by any of the
following acts or things (which the Agent is expressly authorized to do, omit or
suffer from time to time, both before and after revocation of this Guaranty,
without notice to or approval by the undersigned): (i) any acceptance of
collateral security, guarantors, accommodation parties or sureties for any or
all Indebtedness; (ii) any one or more extensions or renewals of Indebtedness
(whether or not for longer than the original period) or any modification of the
interest rates, maturities or other contractual terms applicable to any
Indebtedness; (iii) any waiver or indulgence granted to Borrower, any delay or
lack of diligence in the enforcement of Indebtedness, or any failure to
institute proceedings, file a claim, give any required notices or otherwise
protect any Indebtedness, (iv) any full or partial release of, settlement with,
or agreement not to sue, Borrower or any other guarantor or other person liable
in respect of any Indebtedness; (v) any discharge of any evidence of
Indebtedness or the acceptance of any instrument in renewal thereof or
substitution therefor; (vi) any failure to obtain collateral security (including
rights of setoff) for Indebtedness, or to see to the proper or sufficient
creation and perfection thereof, or to establish the priority thereof, or to
protect, insure, or enforce any collateral security; or any modification,
substitution, discharge, impairment, or loss of any collateral security; (vii)
any foreclosure or enforcement of any collateral security; (viii) any transfer
of any Indebtedness or any evidence thereof; (ix) any order of application of
any payments or credits upon Indebtedness; (x) any election by the Agent under
ss. 1111(b)(2) of the United States Bankruptcy Code.
8. The undersigned waives any and all defenses, claims and discharges
of Borrower, or any other obligor, pertaining to Indebtedness, except the
defense of discharge by payment in full. Without limiting the generality of the
foregoing, the undersigned will not assert, plead or enforce against the Agent
any defense of waiver, release, discharge in bankruptcy, statute of limitations,
res judicata, statute of frauds, anti-deficiency statute, fraud, incapacity,
minority, usury, illegality or unenforceability which may be available to
Borrower or any other person liable in respect of any Indebtedness, or any
setoff available against the Agent to Borrower or any such other person, whether
or not on account of a related transaction. The undersigned expressly agrees
that the undersigned shall be and remain liable for any deficiency remaining
after foreclosure of any mortgage or security interest securing Indebtedness,
whether or not the liability of Borrower or any other obligor for such
deficiency is discharged pursuant to statute or judicial decision.
9. The undersigned waives presentment, demand for payment, notice of
dishonor or nonpayment, and protest of any instrument evidencing Indebtedness.
The Agent shall not be required first to resort for payment of the Indebtedness
to Borrower or other persons or their properties, or first to enforce, realize
upon or exhaust any collateral security for Indebtedness, before enforcing this
Guaranty.
10. If any payment applied by the Agent to Indebtedness is thereafter
set aside, recovered, rescinded or required to be returned for any reason
(including, without limitation, the bankruptcy, insolvency or reorganization of
Borrower or any other obligor), the Indebtedness to which such payment was
applied shall for the purposes of this Guaranty be deemed to have continued in
existence, notwithstanding such application, and this Guaranty shall be
enforceable as to such Indebtedness as fully as if such application had never
been made.
11. The liability of the undersigned under this Guaranty is in addition
to and shall be cumulative with all other liabilities of the undersigned to the
undersigned as guarantor or otherwise, without any limitation as to amount,
unless the instrument or agreement evidencing or creating such other liability
specifically provides to the contrary.
12. This Guaranty shall be effective upon delivery to the Agent,
without further act, condition or acceptance by the Agent, shall be binding upon
the undersigned and the successors and assigns of the undersigned and shall
inure to the benefit of the Agent and the Lenders and their respective
participants, successors and assigns. Any invalidity or unenforceability of any
provision or application of this Guaranty shall not affect other lawful
provisions and application hereof, and to this end the provisions of this
Guaranty are declared to be severable. This Guaranty may not be waived,
modified, amended, terminated, released or otherwise changed except by a writing
signed by the undersigned and the Agent. This Guaranty shall be governed by the
laws of the State of Minnesota. The undersigned waives notice of the Agent's
acceptance hereof and waives the right to a trial by jury in any action based on
or pertaining to this Guaranty.
In witness whereof, the undersigned has executed this Guaranty as of
the day and year first above written.
THE SAN FRANCISCO COMPANY
By
--------------------------------------
Its
---------------------------------
EXHIBIT D
SAN FRANCISCO COMPANY SECURITY AGREEMENT
This Agreement is made as of this 31st day of March, 2003, by and
between THE SAN FRANCISCO COMPANY, a Delaware Corporation ("Debtor") and WELLS
FARGO BANK, NATIONAL ASSOCIATION, a national banking association, as Agent for
the "Lenders" pursuant to the Secured Credit Agreement described below ("Secured
Party").
RECITALS
First Banks, Inc. (the "Borrower"), Secured Party and certain financial
institutions have executed a secured credit agreement dated as of August 22,
2002, as most recently amended by a Second Amendment of even date herewith (as
so amended, the "Credit Agreement"), pursuant to which such financial
institutions (the "Lenders") have agreed to lend up to $45,000,000 to Borrower
and pursuant to which Secured Party has agreed to issue up to $20,000,000 in
face amount of standby letters of credit for the account of Borrower.
One condition to the Lenders' and Secured Party's commitments under the
Credit Agreement is that Debtor execute, deliver and perform this Agreement,
thereby granting a security interest to Secured Party, as agent for the Lenders,
in the Collateral described herein.
Now, therefore, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto hereby agree as follows:
1. Security Interest and Collateral. To secure the payment and
performance of the "Obligations," as such term is defined in the Credit
Agreement, Debtor hereby grants Secured Party (for its own account and as agent
for the Lenders) a security interest (the "Security Interest") in (i) all of the
capital stock of First Bank, a Missouri state bank, owned by Debtor, and (ii)
any capital stock that Debtor may hereafter acquire and deliver to Secured Party
pursuant to Section 5.08 of the Credit Agreement, and (iii) all proceeds of such
capital stock and all other rights in connection with such property
(collectively the "Collateral").
2. Representations, Warranties and Covenants. Debtor represents,
warrants and covenants that:
(a) Debtor will join with Secured Party in taking any action
required by Secured Party in order to perfect the Security Interest
and to protect the rights and priorities of Secured Party with respect
to the Collateral. To that end, Debtor has delivered to Secured Party
certificates representing all of the shares of capital stock
constituting Collateral and executed and delivered one blank stock
power for each such certificate. Debtor will, at Secured Party's
request at any one or more times (i) duly endorse, in blank, each and
every additional security certificate and instrument constituting
Collateral by signing on such certificate or instrument or by signing
a separate document of assignment or transfer; (ii) join with Secured
Party in executing any instructions or agreements with securities
intermediaries for the purpose of obtaining control of any investment
property that may hereafter constitute Collateral; and (iii) instruct
the issuer of any security that may hereafter constitute Collateral to
register such security in the name of Secured Party.
(b) Debtor is the owner of the Collateral free and clear of all
liens, encumbrances, security interests and restrictions except the
Security Interest and any restrictive legend appearing on any security
certificate or any instrument constituting Collateral.
(c) Debtor will keep the Collateral free and clear of all liens,
encumbrances and security interests, except the Security Interest.
(d) Debtor will pay, when due, all taxes and other governmental
charges levied or assessed upon or against any Collateral.
(e) Debtor will upon receipt deliver to Secured Party all
investment property distributed on account of Collateral, such as
stock dividends and securities resulting from stock splits,
reorganizations and recapitalizations. The Security Interest shall
attach to all such proceeds.
3. Events of Default. The occurrence of any Event of Default under
the Credit Agreement shall be an Event of Default hereunder.
4. Remedies Upon Event of Default. Upon the occurrence of an Event
of Default and during the continuance thereof, Secured Party may exercise any
one or more of the rights and remedies specified in the Credit Agreement, and
also any one or more of the following rights or remedies: (i) notify the obligor
on or issuer of any Collateral or any securities intermediary to make payment to
Secured Party of any amounts due or distributable on any Collateral, (ii)
receive and keep in its possession or under its control subject to the Security
Interest all proceeds of Collateral, except that any money received from the
Collateral may, at Secured Party's option, be applied in reduction of the
Obligations; (iii) exercise all voting and other rights as a holder of any
Collateral; (iv) exercise and enforce any or all rights and remedies available
upon default to a secured party under the Uniform Commercial Code, including the
right to (A) order any securities intermediary to sell any Collateral on any
established market or over the counter or to cause any Collateral to be
redeemed; (B) give any transfer or redemption order to any issuer of Collateral;
or (C) offer and sell Collateral privately to purchasers who will agree to take
the Collateral for investment and not with a view to distribution and who will
agree to the imposition of restrictive legends on any certificates representing
Collateral, and the right to arrange for a sale which would otherwise qualify as
exempt from registration under the Securities Act of 1933; and if notice to
Debtor of any intended disposition of Collateral or any other intended action is
required by law in a particular instance, such notice shall be deemed
commercially reasonable if given at least 10 calendar days prior to the date of
intended disposition or other action; and (v) exercise or enforce any or all
other rights or remedies available to Secured Party by law or agreement against
any Collateral, against Debtor or against any other person or property.
5. Secured Party's Duties. Secured Party's duty of care with respect
to Collateral in its possession (as imposed by law) shall be deemed fulfilled
if Secured Party exercises reasonable care in physically safekeeping such
Collateral, or in the case of Collateral in the custody or possession of a
securities intermediary or other third person, exercises reasonable care in the
selection of the securities intermediary or other third person and Secured Party
need not otherwise preserve, protect, insure or care for any Collateral. Secured
Party shall not be obligated to preserve any rights Debtor may have against
prior parties, to exercise at all or in any particular manner any voting rights
which may be available with respect to any Collateral, to realize on the
Collateral at all or in any particular manner or order, or to apply any cash
proceeds of Collateral in any particular order of application. Regardless of the
manner in which Secured Party chooses to exercise control over Collateral
(whether by possession, by agreement with an issuer or Securities Intermediary,
by transferring security entitlements into its own account, or otherwise),
Secured Party shall not be deemed to be under any obligation to Debtor, whether
as fiduciary, trustee, agent or otherwise, except the duty of good faith, the
duties specifically imposed upon Secured Party by this Agreement, and the duties
imposed upon it as a secured party by Articles 1, 8 and 9 of the Uniform
Commercial Code, as in effect in Minnesota.
6. Miscellaneous. Any disposition of Collateral in the manner
provided in Section 4 shall be deemed commercially reasonable. This Agreement
can be waived, modified, amended, terminated or discharged, and the Security
Interest can be released, only explicitly in a writing signed by Secured Party.
A waiver signed by Secured Party shall be effective only in the specific
instance and for the specific purpose given. Mere delay or failure to act shall
not preclude the exercise or enforcement of any of Secured Party's rights or
remedies. All rights and remedies of Secured Party shall be cumulative and may
be exercised singularly or concurrently, at Secured Party's option, and the
exercise or enforcement of any one such right or remedy shall neither be a
condition to nor bar the exercise or enforcement of any other. All notices to be
given to Debtor shall be deemed sufficiently given if delivered or mailed by
registered or certified mail, postage prepaid, to Debtor at the address set
forth following its signature on the signature page of this Agreement or at the
most recent address shown on Secured Party's records. Debtor will reimburse
Secured Party for all expenses (including reasonable attorneys' fees and legal
expenses) incurred by Secured Party in the protection, defense or enforcement of
the Security Interest, including expenses incurred in any litigation or
bankruptcy or insolvency proceedings. This Agreement shall be binding upon and
inure to the benefit of Debtor and Secured Party and their successors and
assigns and shall take effect when signed by Debtor and delivered to Secured
Party, and Debtor waives notice of Secured Party's acceptance hereof. This
Agreement shall be governed by the internal laws of Minnesota and, unless the
context otherwise requires, all terms used herein which are defined in Articles
1, 8 and 9 of the Uniform Commercial Code, as in effect in Minnesota, shall have
the meanings therein stated. If any provision or application of this Agreement
is held unlawful or unenforceable in any respect, such illegality or
unenforceability shall not affect other provisions or applications which can be
given effect, and this Agreement shall be construed as if the unlawful or
unenforceable provision or application had never been contained herein or
prescribed hereby. All representations and warranties contained in this
Agreement shall survive the execution, delivery and performance of this
Agreement and the creation and payment of the Obligations.
IN WITNESS WHEREOF, Debtor has executed this Agreement as of the day
first above written.
THE SAN FRANCISCO COMPANY
Address:
By
- ------------------------------- -------------------------------------
Its
- ------------------------------- ----------------------------------
- -------------------------------
EXHIBIT 31
CERTIFICATIONS REQUIRED BY
RULE 13a-14(a) (17 CFR 240.13a-14(a))
OR RULE 15d-14(a) (17 CFR 240.15d-14(a))
OF THE SECURITIES EXCHANGE ACT OF 1934
I, Allen H. Blake, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q (the "Report") of First
Banks, Inc. (the "Registrant");
2. Based on my knowledge, this Report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
Report;
3. Based on my knowledge, the financial statements, and other financial
information included in this Report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the Registrant as of, and for, the periods presented in this Report;
4. The Registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have:
a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
Registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in
which this Report is being prepared;
b) Evaluated the effectiveness of the Registrant's disclosure controls
and procedures and presented in this Report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this Report based on such evaluation; and
c) Disclosed in this Report any change in the Registrant's internal
control over financial reporting that occurred during the Registrant's
most recent fiscal quarter that has materially affected, or is
reasonably likely to materially affect, the Registrant's internal
control over financial reporting; and
5. The Registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the Registrant's auditors and the audit committee of the Registrant's board
of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the Registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the Registrant's internal
control over financial reporting.
Date: August 14, 2003 By: /s/ Allen H. Blake
------------------------------------------------
Allen H. Blake
President, Chief Executive Officer and
Chief Financial Officer
(Principal Executive Officer and Principal
Financial and Accounting Officer)
Exhibit 32
CERTIFICATIONS REQUIRED BY
RULE 13a-14(b) (17 CFR 240.13a-4(b))
OR RULE 15d-14(b) (17 CFR 240.15d-14(b))
AND SECTION 1350 OF CHAPTER 63 OF
TITLE 18 OF THE UNITED STATES CODE (18 U.S.C. 1350)
I, Allen H. Blake, President, Chief Executive Officer 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, 2003 (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.
Date: August 14, 2003 By: /s/ Allen H. Blake
-----------------------------------------------
Allen H. Blake
President, Chief Executive Officer and
Chief Financial Officer
(Principal Executive Officer and Principal
Financial and Accounting Officer)