FIRST BANKS, INC - 10-K - 20070328 - DIRECTORS_AND_OFFICERS
Item 10. Directors, Executive Officers and Corporate Governance
Board of Directors and Committees of the Board
Our Board of Directors consists of seven members. The Board determined that
Messrs. Gundaker, Steward and Yaeger are independent. Each of our directors
identified in the following table was elected or appointed to serve a one-year
term and until his successor has been duly qualified for office.
Director Principal Occupation(s) During Last Five Years
Name Age Since and Directorships of Public Companies
---- --- ----- -------------------------------------
James F. Dierberg (1) 69 1979 Chairman of the Board of Directors of First Banks, Inc. since 1988;
Chief Executive Officer of First Banks, Inc. from 1988 to April
2003; President of First Banks, Inc. from 1979 to 1992 and from
1994 to October 1999; Chairman of the Board of Directors, President
and Chief Executive Officer of First Banks America, Inc.from 1994
until its merger with First Banks, Inc. in December 2002.
Allen H. Blake (2) 64 1988 President of First Banks, Inc. since October 1999; Chief Executive
Officer of First Banks, Inc. since April 2003; Chief Financial
Officer of First Banks, Inc. from 1984 to September 1999 and from
May 2001 to August 31, 2005; Chief Operating Officer of First
Banks, Inc. from 1998 to July 2002; Director of First Banks, Inc.
since 1988; Director, Executive Vice President, Chief Operating
Officer and Secretary of First Banks America, Inc. from 1998 until
its merger with First Banks, Inc. in December 2002; Chief
Financial Officer of First Banks America, Inc. from 1994 to
September 1999 and from May 2001 until December 2002.
Terrance M. McCarthy (2) 52 2003 Senior Executive Vice President and Chief Operating Officer of
First Banks, Inc. since August 2002; Director of First Banks, Inc.
since April 2003; Director of First Banks America, Inc. from July
2001 until its merger with First Banks, Inc. in December 2002;
Executive Vice President of First Banks America, Inc. from 1999 to
December 2002; Chairman of the Board of Directors of First Bank
since January 2003; President and Chief Executive Officer of First
Bank since August 2002; Chairman of the Board of Directors,
President and Chief Executive Officer of First Bank and Trust from
April 2000 until its merger with and into First Bank in March 2003.
Steven F. Schepman (1) 34 2004 Director of First Banks, Inc. since July 2004; Senior Vice
President and Chief Financial Officer of First Banks, Inc. since
August 31, 2005; Director of First Bank from April 2001 to October
2004; Senior Vice President - Private Banking, Wealth Management
and Trust Services of First Bank from November 2000 to August 31,
2005; From May 1999 to November 2000, Mr. Schepman was employed in
various other senior management capacities with First Banks, Inc.
Gordon A. Gundaker (3) 73 2001 President and Chief Executive Officer of Coldwell Banker Gundaker,
a full-service real estate brokerage company, in St. Louis,
Missouri.
David L. Steward (3) 55 2000 Chairman of the Board of Directors of World Wide Technology
Holding Co., Inc., an electronic procurement and logistics company
in the information technology industry, in St. Louis, Missouri;
Director of Centene Corporation, Civic Progress of St.
Louis, the St. Louis Regional Commerce and Growth Association,
the Regional Business Council, Webster University, Barnes Jewish
Hospital, the United Way of Greater St. Louis and Greater St.
Louis Area Council - Boy Scouts of America.
Douglas H. Yaeger (3)(4) 58 2000 Chairman of the Board of Directors, President and Chief Executive
Officer of The Laclede Group, Inc., an exempt public utility
holding company in St. Louis, Missouri since 2001; Chairman of the
Board of Directors, President and Chief Executive Officer of
Laclede Gas Company since 1999; President of Laclede Gas Company
since 1997; Director and Chief Operating Officer of Laclede Gas
Company from 1997 to 1999; Executive Vice President - Operations
and Marketing of Laclede Gas Company from 1995 to 1997; Director
and past Chairman of the Board of Directors of the St. Louis
Regional Commerce and Growth Association; Director and past
Chairman of Southern Gas Association; Director of American Gas
Association; Director and incoming Chairman of the Missouri Energy
Development Association; Commissioner of the St. Louis Science
Center; Director of Barnes-Jewish Hospital, Greater St. Louis
Area Council - Boy Scouts of America, The Municipal Theatre
Association of St. Louis, the United Way of Greater St. Louis
and Webster University; President of Civic Progress.
--------------------------------------
(1) Mr. Steven F. Schepman is the son-in-law of Mr. James F. Dierberg.
(2) At the regular meeting of the First Banks, Inc. Board of Directors held on January 26, 2007, Mr. Allen H. Blake
announced his retirement and resigned his positions as a Director, President and Chief Executive Officer of First
Banks, effective March 31, 2007. Upon acceptance of Mr. Blake's resignation, the Board of Directors elected
Mr. Terrance M. McCarthy as President and Chief Executive Officer of First Banks, effective April 1, 2007.
(3) Member of the Audit Committee.
(4) Mr. Douglas H. Yaeger serves as Chairman of the Audit Committee and the audit committee financial expert.
Committees and Meetings of the Board of Directors
Three members of our Board of Directors currently serve on the Audit Committee,
all of whom the Board of Directors determined to be independent; there are no
other committees of the Board of Directors. The Audit Committee assists the
Board of Directors in fulfilling the Board's oversight responsibilities with
respect to the quality and integrity of the consolidated financial statements,
financial reporting process and systems of internal controls. The Audit
Committee also assists the Board of Directors in monitoring the independence and
performance of the independent auditors, the internal audit department and the
operation of ethics programs. The Audit Committee operates under a written
charter adopted by the Board of Directors.
The members of the Audit Committee as of March 28, 2007 were Mr. Gordon A.
Gundaker, Mr. David L. Steward and Mr. Douglas H. Yaeger, who serves as the
Chairman of the Audit Committee and the audit committee financial expert.
Audit Committee Report
The Audit Committee is responsible for oversight of our financial reporting
process on behalf of the Board of Directors. Management has primary
responsibility for our financial statements and financial reporting, including
internal controls, subject to the oversight of the Audit Committee and the Board
of Directors. In fulfilling its responsibilities, the Audit Committee reviewed
the audited consolidated financial statements with management and discussed the
acceptability of the accounting principles used, the reasonableness of
significant judgments made and the clarity of the disclosures.
The Audit Committee reviewed with the Independent Registered Public Accounting
Firm, who is responsible for planning and carrying out a proper audit and
expressing an opinion on the conformity of our audited consolidated financial
statements with U.S. generally accepted accounting principles, their judgments
as to the acceptability of the accounting principles we use, and such other
matters as are required to be discussed with the Audit Committee by Statement on
Auditing Standards No. 61, Communications with Audit Committees, as amended. In
addition, the Audit Committee discussed with the Independent Registered Public
Accounting Firm its independence from management and the Company, including the
matters required by Standard No. 1 of the Independence Standards Board, and the
Audit Committee considered the compatibility of non-audit services provided by
the Independent Registered Public Accounting Firm with the firm's independence.
KPMG LLP has provided the Audit Committee with the written disclosures and
letter required by Standard No. 1 of the Independence Standards Board.
The Audit Committee discussed with our Internal Audit Department and Independent
Registered Public Accounting Firm the overall scope and plans for their
respective audits. The Audit Committee met with the Internal Audit Department
and Independent Registered Public Accounting Firm with and without management
present to discuss the results of their examinations, their evaluations of our
internal controls and the overall quality of our financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in the Annual Report on Form 10-K as of and for
the year ended December 31, 2006 for filing with the SEC.
Audit Committee
Douglas H. Yaeger, Chairman of the Audit Committee
Gordon A. Gundaker
David L. Steward
Code of Ethics for Principal Executive Officer and Financial Professionals
The Board of Directors has approved a Code of Ethics for Principal Executive
Officer and Financial Professionals that covers the Principal Executive Officer,
the Chief Financial Officer, the Chief Operating Officer, the Chief Credit
Officer, the Chief Investment Officer, the Senior Vice President and Controller,
the Senior Vice President - Director of Taxes, the Senior Vice President -
Director of Management Accounting, and all professionals serving in a Corporate
Finance, Accounting, Treasury, Tax or Investor Relations role. These individuals
are also subject to the policies and procedures adopted by First Banks that
govern the conduct of all of its employees. The Code of Ethics for Principal
Executive Officer and Financial Professionals is included as an exhibit to this
Annual Report on Form 10-K.
Code of Conduct for Employees, Officers and Directors
The Board of Directors has approved a Code of Conduct applicable to all
employees, officers and directors of First Banks that addresses conflicts of
interest, honesty and fair dealing, accounting and auditing matters, political
activities and application and enforcement of the Code of Conduct. The Code of
Conduct is available on First Banks' website, www.firstbanks.com, under "About
us." ------------------
Executive Officers
Our executive officers, each of whom was elected to the office(s) indicated by
the Board of Directors, as of March 28, 2007, were as follows:
Current First Banks Principal Occupation(s)
Name Age Office(s) Held During Last Five Years
---- --- -------------- ----------------------
James F. Dierberg 69 Chairman of the Board of Directors. See "Item 10 - Directors, Executive
Officers and Corporate Governance -
Board of Directors."
Allen H. Blake 64 President, Chief Executive Officer See "Item 10 - Directors, Executive
and Director. Officers and Corporate Governance -
Board of Directors."
Terrance M. McCarthy 52 Senior Executive Vice President, See "Item 10 - Directors, Executive
Chief Operating Officer and Officers and Corporate Governance -
Director; Chairman of the Board of Board of Directors."
Directors, President and Chief
Executive Officer of First Bank.
Steven F. Schepman 34 Senior Vice President, Chief See "Item 10 - Directors, Executive
Financial Officer and Director. Officers and Corporate Governance -
Board of Directors."
Russell L. Goldammer 50 Executive Vice President and Chief Executive Vice President and Chief
Information Officer. Information Officer since November
2004; Chief Information Officer of
Outsourcing Solutions, Inc., St. Louis,
Missouri, from April 2001 to October
2004; Senior Vice President of U.S.
Bank in Milwaukee, Wisconsin, from
October 1999 to April 2001.
Daniel W. Jasper 61 Executive Vice President and Chief Executive Vice President and Chief
Credit Officer; Director and Credit Officer of First Banks, Inc.
Executive Vice President of First since October 2003; Senior Vice
Bank. President and Acting Chief Credit
Officer of First Banks, Inc. from May
2003 to October 2003; Senior Vice
President - Credit Administration of
First Banks, Inc. from 1995 to May 2003.
F. Christopher McLaughlin 53 Executive Vice President and Executive Vice President and Director of
Director of Sales, Marketing and Sales, Marketing and of Products First
Products; Director of First Bank. Banks, Inc. since September 2003;
Director of First Bank since Otober
2004; Executive Vice President-Personal
Banking Division, HSBC Bank USA in
Buffalo, New York from 1998 to June
2002; Independent Consultant from July
2002 to August 2003.
Mary P. Sherrill 52 Executive Vice President and Executive Vice President and Director
Director of Operations; Director of of Operations of First Banks, Inc.
First Bank. since April 2003; Director of First
Bank since April 2003; Director, Vice
Chairman and Chief of Bank Operations
Southwest Bank in St. Louis, Missouri
from April 1999 to March 2003.
Item 11. Executive Compensation
Compensation Discussion and Analysis. As outlined in the stock ownership table
included in "Item 12 - Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters," all of our voting stock is owned by
various trusts, established by and administered by and for the benefit of Mr.
James F. Dierberg, our Chairman of the Board, and members of his immediate
family. Therefore, we do not use equity awards in our compensation program.
The objective of our executive compensation policies and practices is to attract
and retain talented key executives that will contribute to the achievement of
strategic goals and the growth and success of the Company in order to enhance
the long-term value of our Company. Compensation is based upon the achievement
of corporate goals and objectives, as established by key corporate executives
and reported to the Board of Directors. Rewards for performance are designed to
motivate the continued strong performance of key executives on a long-term
basis.
Our executive compensation programs are designed to reward the achievement of
financial results in accordance with our corporate goals and objectives. The
elements of our executive compensation programs include base salary, annual
bonus compensation and the ability to participate in a nonqualified deferred
compensation plan. Our executive compensation programs are cash-based and do not
include any other forms of non-cash compensation. We do not provide the named
executive officers with employment contracts or severance agreements, and
consequently, we are under no obligation to make additional payments to any of
the named executive officers in the event of severance, change in control,
retirement or resignation. The individual components of compensation to
executive officers are periodically evaluated using various factors, as further
discussed below.
Salary. Base salaries of executive officers are dependent upon the evaluation of
certain factors and are based, in part, on non-quantifiable considerations, at
the discretion of the Chairman and/or certain executive officers. The level of
base salaries of executive officers is designed to reward the officer's
performance based upon an evaluation of the following factors: (i) the
performance of the Company and the achievement of corporate goals and
objectives, considering general business and industry conditions, among other
factors, and the contributions of specific executives towards the overall
performance; (ii) each executive officer's areas of responsibility and the
Company's performance in those areas; and (iii) the level of compensation paid
to comparable executives by other financial institutions of comparable size in
the market areas in which we operate to ensure we maintain a competitive
compensation package. Our corporate goals and objectives provide particular
measurements to which the Board of Directors and executive management assign
significance, such as net income, organic and external growth in target market
areas, expense control, net interest margin, credit quality, and regulatory
examination results. These factors are taken into consideration by the Chairman
of the Board, who evaluates the appropriate base salary and related annual
salary increases of the President and Chief Executive Officer, and by the
Chairman of the Board and certain senior executive officers, who evaluate the
appropriate base salary and related annual salary increases of executive
officers and other employees. Base salaries of executive officers are reviewed
on an ongoing basis and are generally adjusted on an annual basis, and may be
further adjusted periodically as a result of significant changes in
responsibility, employment market conditions, and other factors.
Bonus. We offer our key executive officers additional compensation through an
Executive Incentive Compensation Plan, or the Plan. The objectives of the Plan
are to promote superior short-term and long-term financial performance of the
Company through its key executives; to reward those key executive officers who
deliver solid results with market-competitive incentives; and to attract,
motivate and retain skilled and experienced individuals who can increase the
size and profitability of the Company. Our Chairman of the Board has full
discretion to determine on an annual basis those executives who are eligible to
participate in the Plan. Each of the named executive officers is a participant
in the Plan, along with certain other executive officers, with the exception of
Mr. Schepman, son-in-law to Mr. James F. Dierberg, as lineal descendants of Mr.
Dierberg and their spouses are not eligible to participate in Plan. Mr. Schepman
received a discretionary bonus in 2006.
The bonus award amounts under the Plan are determined by a mathematical formula
that is based primarily on our weighted average return on equity multiplied by a
weighting component and the named executive officer's annual salary. Payments
under the Plan are made annually based upon the results of the above-referenced
formulas, unless determined otherwise by the Board of Directors for the Chief
Executive Officer or by the Chief Executive Officer for the other participants.
In considering any adjustment to payments to other executive officers, the Chief
Executive Officer will evaluate each executive officer's contribution to
improving our return on equity during the plan year.
Deferred Compensation. We offer a deferred compensation plan to the executive
officers and other key employees to promote retention by providing a long-term
savings opportunity on a tax-effective basis.
The Board of Directors and President and Chief Executive Officer periodically
review the various components of our executive compensation programs. The
salaries paid, annual bonuses awarded and deferred compensation balances for the
named executives in 2006 are further described in the "Summary Compensation
Table" and "Nonqualified Deferred Compensation Table" below.
Executive Compensation. The following table sets forth certain information
regarding compensation earned by the named executive officers for the year ended
December 31, 2006:
SUMMARY COMPENSATION TABLE
--------------------------
All Other
Name and Principal Position(s) Salary (1) Bonus (1) Compensation (2) Total (1)
------------------------------ ------ ----- ------------ -----
James F. Dierberg $ 610,000 -- 8,800 618,800
Chairman of the Board of Directors
Allen H. Blake 470,000 413,800 8,800 892,600
President and Chief Executive Officer
Steven F. Schepman 175,400 20,000 8,300 203,700
Senior Vice President
and Chief Financial Officer
Terrance M. McCarthy 409,000 345,000 8,800 762,800
Senior Executive Vice President
and Chief Operating Officer
Daniel W. Jasper 245,600 215,000 8,800 469,400
Executive Vice President
and Chief Credit Officer
--------------------------
(1) Salary and bonus reported for Messrs. Allen H. Blake, Steven F. Schepman, Terrance M. McCarthy
and Daniel W. Jasper include payments deferred in our NQDC Plan, as further described below,
of $300,900, $5,000, $213,400 and $67,600, respectively, or an aggregate of $586,900. Salary
reported for Mr. Dierberg did not include any payments deferred in our NQDC Plan. Earnings
by the named executives on their NQDC Plan balances did not include any above-market or
preferential earnings.
(2) All other compensation reported reflects matching contributions to our 401(k) Plan.
Nonqualified Deferred Compensation. Officers that meet certain position and base
salary criteria and non-employee directors are eligible to participate in our
Nonqualified Deferred Compensation Plan, or NQDC Plan. Participants are allowed
to defer, on an annual basis, up to 25% of their salary and up to 100% of their
bonus payments, and hypothetically invest in various investment options
available in the NQDC Plan that are selected by the participant and may be
changed by the participant at any time. These investment options mirror the
investment options that we offer through our 401(k) plan and include various
investment funds such as equity funds, international stock funds, capital
appreciation funds, money market funds, bond funds, mid-cap value funds and
growth funds.
The NQDC Plan allows for us to credit the deferred compensation accounts of any
participant with discretionary contributions, however, we have not made any such
discretionary contributions under the NQDC Plan since its inception. Any such
contributions, if made, would vest over a five-year period. Earnings or losses
on participant account balances resulting from the participant's investment
choices are credited or charged to the participant accounts on a monthly basis.
We recognized these earnings or losses in our consolidated statements of income
on a monthly basis. In the event of retirement, payment of the vested portion of
the participant's deferred compensation account balance is either made through a
single lump sum payment or annual payments over five or ten years, subject to
the election by the participant. Payment of the vested portion of the
participant's deferred compensation account balance is made through a single
lump sum payment in the event the participant terminates his or her employment
for reasons other than retirement. We did not make any withdrawals or
distributions to the named executive officers or the non-employee directors from
our NQDC Plan for the year ended December 31, 2006.
The following table sets forth certain information regarding nonqualified
deferred compensation earned by the named executive officers for the year ended
December 31, 2006:
NONQUALIFIED DEFERRED COMPENSATION TABLE
----------------------------------------
Executive Aggregate Aggregate
Contributions in Earnings in Balance at
Name and Principal Position(s) Last Fiscal Year (1) Last Fiscal Year December 31, 2006
------------------------------ ---------------- ---------------- -----------------
James F. Dierberg $ -- 22,200 392,800 (2)
Chairman of the Board of Directors
Allen H. Blake (3) 300,900 65,700 1,111,100 (4)
President and Chief Executive Officer
Steven F. Schepman 5,000 200 5,200
Senior Vice President
and Chief Financial Officer
Terrance M. McCarthy 213,400 52,700 502,300 (5)
Senior Executive Vice President
and Chief Operating Officer
Daniel W. Jasper 67,600 18,600 187,200 (6)
Executive Vice President
and Chief Credit Officer
----------------------------
(1) All executive contributions represent the deferral of base salary and/or bonus payments
reflected in the "Summary Compensation Table." We did not make any discretionary
contributions under the NQDC Plan as of and for the year ended December 31, 2006.
(2) Of this amount, $305,500 represents deferrals of cash consideration from prior years that
were reflected in the "Summary Compensation Table" in our Annual Report on Form 10-K for
the relevant years. The remaining balance represents the cumulative earnings on the
original deferred amounts and the participant's 2006 activity.
(3) Following his retirement, which will be effective on March 31, 2007, Mr. Allen H. Blake
will receive his NQDC Plan participant account balance, which is fully vested, in annual
distributions over a period of ten years.
(4) Of this amount, $605,800 represents deferrals of cash consideration from prior years that
were reflected in the "Summary Compensation Table" in our Annual Report on Form 10-K for
the relevant years. The remaining balance represents the cumulative earnings on the
original deferred amounts and the participant's 2006 activity.
(5) Of this amount, $189,900 represents deferrals of cash consideration from prior years that
were reflected in the "Summary Compensation Table" in our Annual Report on Form 10-K for
the relevant years. The remaining balance represents the cumulative earnings on the
original deferred amounts and the participant's 2006 activity.
(6) Of this amount, $92,500 represents deferrals of cash consideration from prior years that
were reflected in the "Summary Compensation Table" in our Annual Report on Form 10-K for
the relevant years. The remaining balance represents the cumulative earnings on the
original deferred amounts and the participant's 2006 activity.
Potential Payments Upon Termination. Upon termination of employment, the
executive officers will receive payments of their vested portion of the
executive's deferred compensation account balance under our NQDC Plan as
described above.
Compensation of Directors. The following table sets forth compensation earned by
the named non-employee directors for the year ended December 31, 2006:
DIRECTOR COMPENSATION TABLE
Fees
Earned
or Paid
Name in Cash Total
---- ------- -----
Gordon A. Gundaker $ 29,000 29,000
David L. Steward (1) 29,000 29,000
Hal J. Upbin (2) 8,000 8,000
Douglas H. Yaeger (1)(3) 33,000 33,000
-----------------------------
(1) Fees paid for Messrs. David L. Steward and Douglas H. Yaeger include
payments deferred in our NQDC Plan of $29,000 and $33,000, respectively, or
an aggregate of $62,000. Earnings by the directors on their NQDC Plan
balances did not include any above-market or preferential earnings.
(2) Mr. Hal J. Upbin resigned his positions as a Director and as an independent
member of the Audit Committee at the regular meeting of the First Banks
Board of Directors held on January 27, 2006.
(3) Mr. Douglas H. Yaeger serves as Chairman of the Audit Committee and the
audit committee financial expert.
Our executive officers that are also directors do not receive remuneration other
than salaries and bonuses for serving on our Board of Directors. Only those
directors who are neither our employees nor employees of any of our subsidiaries
receive cash remuneration for their services as directors. Such non-employee
directors, as shown in the table above, received a fee of $3,000 for each Board
meeting attended and $1,000 for each Audit Committee meeting attended in 2006.
Messr. Douglas H. Yaeger also received a fee of $4,000 per calendar quarter for
his service as Chairman of the Audit Committee, and Messrs. Gordon A. Gundaker,
David L. Steward and Hal J. Upbin also received a fee of $3,000 per calendar
quarter for their service as members of the Audit Committee. Our non-employee
directors are also eligible to participate in our NQDC Plan. Our directors do
not receive any retainers or other compensation, and there are no arrangements
for amounts to be paid to directors upon resignation or any other termination of
such director or a change in control of the Company. The Audit Committee is
currently the only committee of our Board of Directors.
Compensation Committee Interlocks and Insider Participation. We do not have a
compensation committee, therefore, our Board of Directors performs the functions
of such a committee. Messrs. Dierberg, Blake, McCarthy and Schepman serve or
have served as executive officers and/or members of our Board of Directors.
Except for the foregoing, none of our executive officers served during 2006 as a
member of our compensation committee, or any other committee performing similar
functions, or as a director of another entity, any of whose executive officers
or directors served on our Board of Directors.
See further information regarding transactions with related parties in Note 19
to our Consolidated Financial Statements appearing on pages 100 through 101 of
this report.
Compensation Committee Report.
Our Board of Directors, which performs the functions of our compensation
committee, has reviewed the Compensation Discussion and Analysis and discussed
such with management. Based on such review and discussions, the Board of
Directors recommended the Compensation Discussion and Analysis be included in
the Company's Annual Report on Form 10-K as of and for the year ended December
31, 2006.
Board of Directors
James F. Dierberg, Chairman of the Board of Directors
Allen H. Blake
Gordon A. Gundaker
Terrance M. McCarthy
Steven F. Schepman
David L. Steward
Douglas H. Yaeger
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
The following table sets forth, as of March 28, 2007, certain information with
respect to the beneficial ownership of all classes of our voting capital stock
by each person known to us to be the beneficial owner of more than five percent
of the outstanding shares of the respective classes of our stock:
Percent of
Number of Total
Title of Class Shares Percent Voting
and Name of Owner Owned of Class Power
----------------- ----- -------- -----
Common Stock ($250.00 par value)
--------------------------------
James F. Dierberg II Family Trust (1)........................ 7,714.677 (2) 32.605% *
Ellen C. Dierberg Family Trust (1)........................... 7,714.676 (2) 32.605 *
Michael J. Dierberg Family Trust (1)......................... 4,255.319 (2) 17.985 *
Michael J. Dierberg Irrevocable Trust (1).................... 3,459.358 (2) 14.621 *
First Trust (Mary W. Dierberg and First Bank, Trustees) (1).. 516.830 (3) 2.184 *
Class A Convertible Adjustable Rate Preferred Stock
---------------------------------------------------
($20.00 par value)
------------------
James F. Dierberg, Trustee of the James F. Dierberg
Living Trust (1)......................................... 641,082 (4)(5) 100% 77.7%
Class B Non-Convertible Adjustable Rate Preferred Stock
-------------------------------------------------------
($1.50 par value)
-----------------
James F. Dierberg, Trustee of the James F. Dierberg
Living Trust (1)......................................... 160,505 (5) 100% 19.4%
All executive officers and directors
other than Mr. James F. Dierberg
and members of his immediate family.......................... 0 0% 0.0%
--------------------
* Represents less than 1.0%.
(1) Each of the above-named trustees and beneficial owners are United States citizens, and the business
address for each such individual is 135 North Meramec, Clayton, Missouri 63105. Mr. James F. Dierberg,
our Chairman of the Board, and Mrs. Mary W. Dierberg, are husband and wife, and Messrs. James F.
Dierberg II and Michael J. Dierberg and Mrs. Ellen D. Schepman, formerly Ms. Ellen C. Dierberg, are
their adult children.
(2) Due to the relationship between Mr. James F. Dierberg, his wife and their children, Mr. Dierberg is
deemed to share voting and investment power over these shares.
(3) Due to the relationship between Mr. James F. Dierberg, his wife and First Bank, Mr. Dierberg is
deemed to share voting and investment power over these shares.
(4) Convertible into common stock, based on the appraised value of the common stock at the date of
conversion. Assuming an appraised value of the common stock equal to the book value, the number of
shares of common stock into which the Class A Preferred Stock is convertible at December 31, 2006 is
385, which shares are not included in the above table.
(5) Sole voting and investment power.
Item 13. Certain Relationships and Related Transactions, and Director
Independence
Review and Approval of Related Person Transactions. We review all relationships
and transactions in which we and our directors and executive officers and their
immediate family members and entities in which such persons have a significant
interest are participants to determine whether such persons have a direct or
indirect material interest. Our management collects information from the
executive officers and the directors regarding the related person transactions
and determines whether we or a related person has a direct or indirect material
interest in the transaction. If we determine that a transaction is directly or
indirectly material to us or a related person, then the transaction is disclosed
in accordance with applicable requirements. In addition, the Audit Committee of
our Board of Directors reviews and approves or ratifies any related person
transaction that is required to be so disclosed. In the event that a member of
the Audit Committee is a related person to such a transaction, such member may
not participate in the discussion or vote regarding approval or ratification of
the transaction.
Related Person Transactions. Outside of normal customer relationships, no
directors, executive officers or shareholders holding over 5% of our voting
securities, and no corporations or firms with which such persons or entities are
associated, currently maintain or have maintained since the beginning of the
last full fiscal year, any significant business or personal relationship with
our subsidiaries or us, other than that which arises by virtue of such position
or ownership interest in our subsidiaries or us, except as set forth in "Item 11
- Executive Compensation - Compensation of Directors," or as described in the
following paragraphs.
First Bank has had in the past, and may have in the future, loan transactions
and related banking services in the ordinary course of business with our
directors and/or their affiliates. These loan transactions have been made 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. First Bank does not extend credit to our officers or to officers of
First Bank, except extensions of credit secured by mortgages on personal
residences, loans to purchase automobiles and personal credit card accounts.
Certain of our shareholders, directors and officers and their respective
affiliates have deposit accounts and related banking services with First Bank.
It is First Bank's policy not to permit any of its officers or directors or
their affiliates to overdraw their respective deposit accounts. Deposit account
overdraft protection may be approved for persons or entities under a plan
whereby a credit limit has been established in accordance with First Bank's
standard credit criteria.
Transactions with related parties, including transactions with affiliated
persons and entities, are described in Note 19 to our Consolidated Financial
Statements on pages 100 through 101 of this report.
Director Independence. Our Board of Directors has determined that Messrs. Gordon
A. Gundaker, David L. Steward and Douglas H. Yaeger have no material
relationship with us and each is independent. Our Audit Committee of the Board
of Directors is composed only of independent directors. In order to be
considered independent, our Board of Directors must determine that a director
does not have any direct or indirect material relationship with us as provided
under the rules of the New York Stock Exchange, or NYSE. In making such a
determination, the Board of Directors considers all relationships between us, or
any of our subsidiaries, and the director, or any of his immediate family
members, or any entity with which the director or any of his immediate family
members is affiliated by reason of being a partner, officer or significant
shareholder thereof. In assessing the independence of our directors, the Board
of Directors considered all relationships between us and our directors based
primarily upon responses of the directors to questions posed through a
directors' and officers' questionnaire. The Board of Directors considered each
of the related person transaction discussed above in making its independence
determination.
First Banks has only preferred securities listed on the NYSE and, pursuant to
the General Application section of NYSE Rule 303A, is not subject to NYSE Rule
303A.01 requiring a majority of independent directors. Messrs. Dierberg, Blake,
McCarthy and Schepman are not independent because they are each current or
former executive officers of the company.
Item 14. Principal Accounting Fees and Services
Fees of Independent Registered Public Accounting Firm
During 2006 and 2005, KPMG LLP served as our Independent Registered Public
Accounting Firm and provided services to our affiliates and us. The following
table sets forth fees for professional audit services rendered by KPMG LLP for
the audit of our consolidated financial statements and other audit services in
2006 and 2005:
2006 2005
---- ----
Audit fees, excluding audit related fees (1)......................... $ 601,500 820,500
Audit related fees................................................... -- --
Tax fees (2)......................................................... 82,637 111,676
All other fees....................................................... -- --
--------- --------
Total......................................................... $ 684,137 932,176
========= ========
------------------------
(1) For 2006 and 2005, audit fees include the audits of the consolidated financial statements of
First Banks and SBLS LLC, as well as services provided for reporting requirements under
FDICIA and mortgage banking activities, which are included in the audit fees of First Banks,
as these services are closely related to the audit of First Banks' consolidated financial
statements. Audit fees also include other accounting and reporting consultations. Audit fees
for 2005 also include audits of the consolidated financial statements of Hillside and
subsidiaries.
(2) For 2006, tax services include tax compliance and general tax planning and advice. For 2005,
tax services include preparation of amended income tax returns, tax compliance and general
tax planning and advice.
Policy Regarding the Approval of Independent Auditor Provision of Audit and
Non-Audit Services
Consistent with the Securities and Exchange Commission requirements regarding
auditor independence, the Audit Committee recognizes the importance of
maintaining the independence, in fact and appearance, of our independent
auditors. As such, the Audit Committee has adopted a policy for pre-approval of
all audit and permissible non-audit services provided by our independent
auditors. Under the policy, the Audit Committee, or its designated member, must
pre-approve services prior to commencement of the specified service. The
requests for pre-approval are submitted to the Audit Committee or its designated
member by the Director of Audit with a statement as to whether in his/her view
the request is consistent with the Securities and Exchange Commission's rules on
auditor independence. The Audit Committee reviews the pre-approval requests and
the fees paid for such services at their regularly scheduled quarterly meetings
or at special meetings.
PART IV
Item 15. Exhibits, Financial Statement Schedules
(a) 1. Financial Statements and Supplementary Data - The financial
statements and supplementary data filed as part of this Report
are included in Item 8.
2. Financial Statement Schedules - These schedules are omitted
for the reason they are not required or are not applicable.
3. Exhibits - The exhibits are listed in the index of exhibits
required by Item 601 of Regulation S-K at Item (b) below and
are incorporated herein by reference.
(b) The index of required exhibits is included beginning on page 110
of this Report.
(c) Not Applicable.
FIRST BANKS, INC.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
First Banks, Inc.:
We have audited the accompanying consolidated balance sheets of First Banks,
Inc. and subsidiaries (the Company) as of December 31, 2006 and 2005, and the
related consolidated statements of income, changes in stockholders' equity and
comprehensive income, and cash flows for each of the years in the three-year
period ended December 31, 2006. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of First Banks, Inc.
and subsidiaries as of December 31, 2006 and 2005, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 2006, in conformity with U.S. generally accepted accounting
principles.
/s/ KPMG LLP
------------
St. Louis, Missouri
March 28, 2007
FIRST BANKS, INC.
CONSOLIDATED BALANCE SHEETS
------------------------------------------------------------------------------------------------------------------
(dollars expressed in thousands, except share and per share data)
December 31,
----------------------------
2006 2005
---- ----
ASSETS
------
Cash and cash equivalents:
Cash and due from banks........................................................ $ 215,974 212,667
Short-term investments......................................................... 153,583 73,985
----------- ---------
Total cash and cash equivalents........................................... 369,557 286,652
----------- ---------
Investment securities:
Trading........................................................................ 81,168 3,389
Available for sale............................................................. 1,359,729 1,311,289
Held to maturity (fair value of $23,971 and $25,791, respectively)............. 24,049 26,105
----------- ---------
Total investment securities............................................... 1,464,946 1,340,783
----------- ---------
Loans:
Commercial, financial and agricultural......................................... 1,934,912 1,619,822
Real estate construction and development....................................... 1,832,504 1,564,255
Real estate mortgage........................................................... 3,615,148 3,469,788
Consumer and installment....................................................... 83,008 64,724
Loans held for sale............................................................ 216,327 315,134
----------- ---------
Total loans............................................................... 7,681,899 7,033,723
Unearned discount.............................................................. (15,418) (12,952)
Allowance for loan losses...................................................... (145,729) (135,330)
----------- ---------
Net loans................................................................. 7,520,752 6,885,441
----------- ---------
Bank premises and equipment, net.................................................... 178,417 144,941
Goodwill and other intangible assets................................................ 295,382 191,901
Bank-owned life insurance........................................................... 113,778 111,442
Deferred income taxes............................................................... 100,175 128,938
Other assets........................................................................ 115,707 80,235
----------- ---------
Total assets.............................................................. $10,158,714 9,170,333
=========== =========
LIABILITIES
-----------
Deposits:
Noninterest-bearing demand..................................................... $ 1,281,108 1,299,350
Interest-bearing demand........................................................ 981,939 981,837
Savings........................................................................ 2,352,575 2,106,470
Time deposits of $100 or more.................................................. 1,419,579 1,076,908
Other time deposits............................................................ 2,407,885 2,077,266
----------- ---------
Total deposits............................................................ 8,443,086 7,541,831
Other borrowings.................................................................... 373,899 539,174
Notes payable....................................................................... 65,000 100,000
Subordinated debentures............................................................. 297,966 215,461
Deferred income taxes............................................................... 42,826 27,104
Accrued expenses and other liabilities.............................................. 130,033 61,762
Minority interest in subsidiary..................................................... 5,469 6,063
----------- ---------
Total liabilities......................................................... 9,358,279 8,491,395
----------- ---------
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.......................................................... 9,685 5,910
Retained earnings................................................................... 784,864 673,956
Accumulated other comprehensive loss................................................ (13,092) (19,906)
----------- ---------
Total stockholders' equity................................................ 800,435 678,938
----------- ---------
Total liabilities and stockholders' equity................................ $10,158,714 9,170,333
=========== =========
The accompanying notes are an integral part of the consolidated financial statements.
FIRST BANKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
------------------------------------------------------------------------------------------------------------------
(dollars expressed in thousands, except share and per share data)
Years Ended December 31,
----------------------------------
2006 2005 2004
---- ---- ----
Interest income:
Interest and fees on loans............................................... $ 581,503 424,095 341,479
Investment securities:
Taxable................................................................ 57,017 65,895 50,170
Nontaxable............................................................. 1,875 1,739 1,490
Short-term investments................................................... 5,909 2,211 1,643
--------- -------- --------
Total interest income................................................ 646,304 493,940 394,782
--------- -------- --------
Interest expense:
Deposits:
Interest-bearing demand................................................ 8,147 4,398 3,472
Savings................................................................ 53,297 29,592 20,128
Time deposits of $100 or more.......................................... 59,114 28,010 13,762
Other time deposits.................................................... 96,138 65,157 35,705
Other borrowings......................................................... 16,803 18,240 6,102
Notes payable............................................................ 5,530 2,305 506
Subordinated debentures.................................................. 22,833 20,557 15,092
--------- -------- --------
Total interest expense............................................... 261,862 168,259 94,767
--------- -------- --------
Net interest income.................................................. 384,442 325,681 300,015
Provision for loan losses................................................... 12,000 (4,000) 25,750
--------- -------- --------
Net interest income after provision for loan losses.................. 372,442 329,681 274,265
--------- -------- --------
Noninterest income:
Service charges on deposit accounts and customer service fees............ 43,310 39,776 38,230
Gain on loans sold and held for sale..................................... 26,020 20,804 18,497
Net (loss) gain on investment securities................................. (1,813) (2,873) 257
Bank-owned life insurance investment income.............................. 3,103 4,860 5,201
Investment management income............................................. 8,412 8,573 6,870
Insurance product income................................................. 4,848 -- --
Other.................................................................... 29,063 24,945 18,144
--------- -------- --------
Total noninterest income............................................. 112,943 96,085 87,199
--------- -------- --------
Noninterest expense:
Salaries and employee benefits........................................... 166,864 139,764 117,492
Occupancy, net of rental income.......................................... 26,953 22,081 19,882
Furniture and equipment.................................................. 16,960 16,015 17,017
Postage, printing and supplies........................................... 6,721 5,743 5,010
Information technology fees.............................................. 37,099 35,472 32,019
Legal, examination and professional fees................................. 8,783 9,319 7,412
Amortization of intangible assets........................................ 8,195 4,850 2,912
Communications........................................................... 2,425 2,012 1,866
Advertising and business development..................................... 7,128 7,043 5,493
Charitable contributions................................................. 6,462 5,922 577
Other.................................................................... 31,626 29,417 23,538
--------- -------- --------
Total noninterest expense............................................ 319,216 277,638 233,218
--------- -------- --------
Income before provision for income taxes and minority interest in
loss of subsidiary................................................ 166,169 148,128 128,246
Provision for income taxes.................................................. 55,062 52,509 45,338
--------- -------- --------
Income before minority interest in loss of subsidiary................ 111,107 95,619 82,908
Minority interest in loss of subsidiary..................................... (587) (1,287) --
--------- -------- --------
Net income........................................................... 111,694 96,906 82,908
Preferred stock dividends................................................... 786 786 786
--------- -------- --------
Net income available to common stockholders.......................... $ 110,908 96,120 82,122
========= ======== ========
Basic earnings per common share............................................. $4,687.38 4,062.36 3,470.80
========= ======== ========
Diluted earnings per common share........................................... $4,630.72 4,007.46 3,421.58
========= ======== ========
Weighted average shares of common stock outstanding......................... 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
Three Years Ended December 31, 2006
------------------------------------------------------------------------------------------------------------------------------------
(dollars expressed in thousands, except per share data)
Accu-
Adjustable Rate mulated
Preferred Stock Other
------------------- Compre- Total
Class A Additional hensive Stock-
Conver- Common Paid-in Retained Income holders'
tible Class B Stock Capital Earnings (Loss) Equity
----- ------- ----- ------- -------- ------ ------
Consolidated balances, January 1, 2004............... $12,822 241 5,915 5,910 495,714 29,213 549,815
-------
Year ended December 31, 2004:
Comprehensive income:
Net income..................................... -- -- -- -- 82,908 -- 82,908
Other comprehensive loss, net of tax:
Unrealized losses on investment securities... -- -- -- -- -- (5,711) (5,711)
Reclassification adjustment for investment
securities gains included in net income.... -- -- -- -- -- (167) (167)
Derivative instruments:
Current period transactions................ -- -- -- -- -- (25,166) (25,166)
-------
Total comprehensive income....................... 51,864
Class A preferred stock dividends,
$1.20 per share................................ -- -- -- -- (769) -- (769)
Class B preferred stock dividends,
$0.11 per share................................ -- -- -- -- (17) -- (17)
------- --- ----- ----- ------- ------- -------
Consolidated balances, December 31, 2004............. 12,822 241 5,915 5,910 577,836 (1,831) 600,893
-------
Year ended December 31, 2005:
Comprehensive income:
Net income..................................... -- -- -- -- 96,906 -- 96,906
Other comprehensive loss, net of tax:
Unrealized losses on investment securities... -- -- -- -- -- (15,659) (15,659)
Reclassification adjustment for investment
securities losses included in net income... -- -- -- -- -- 1,867 1,867
Derivative instruments:
Current period transactions................ -- -- -- -- -- (4,283) (4,283)
-------
Total comprehensive income....................... 78,831
Class A preferred stock dividends,
$1.20 per share................................ -- -- -- -- (769) -- (769)
Class B preferred stock dividends,
$0.11 per share................................ -- -- -- -- (17) -- (17)
------- --- ----- ----- ------- ------- -------
Consolidated balances, December 31, 2005............. 12,822 241 5,915 5,910 673,956 (19,906) 678,938
-------
Year ended December 31, 2006:
Comprehensive income:
Net income..................................... -- -- -- -- 111,694 -- 111,694
Other comprehensive income, net of tax:
Unrealized gains on investment securities.... -- -- -- -- -- 3,666 3,666
Reclassification adjustment for investment
securities losses included in net income... -- -- -- -- -- 1,242 1,242
Derivative instruments
Current period transactions................ -- -- -- -- -- 1,906 1,906
-------
Total comprehensive income....................... 118,508
Adjustment for the utilization of net
operating losses associated with prior
acquisitions................................. -- -- -- 3,775 -- -- 3,775
Class A preferred stock dividends,
$1.20 per share................................ -- -- -- -- (769) -- (769)
Class B preferred stock dividends,
$0.11 per share................................ -- -- -- -- (17) -- (17)
------- --- ----- ----- ------- ------- -------
Consolidated balances, December 31, 2006............. $12,822 241 5,915 9,685 784,864 (13,092) 800,435
======= === ===== ===== ======= ======= =======
The accompanying notes are an integral part of the consolidated financial statements.
FIRST BANKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------------------------------------------------------------------------------------
(dollars expressed in thousands)
Years ended December 31,
------------------------------------
2006 2005 2004
---- ---- ----
Cash flows from operating activities:
Net income.............................................................. $ 111,694 96,906 82,908
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization of bank premises and equipment....... 18,912 17,381 18,579
Amortization, net of accretion..................................... 13,863 16,111 17,102
Originations and purchases of loans held for sale.................. (1,000,765) (1,327,890) (1,036,548)
Proceeds from sales of loans held for sale......................... 1,229,574 1,201,695 1,104,254
Provision for loan losses.......................................... 12,000 (4,000) 25,750
Provision for deferred income taxes................................ 10,208 (1,216) (747)
Increase in accrued interest receivable............................ (9,781) (2,280) (696)
Increase in accrued interest payable............................... 6,230 6,115 1,361
Proceeds from sales of trading securities.......................... 9,947 -- --
Purchases of trading securities.................................... (88,494) (3,389) --
Gain on loans sold and held for sale............................... (26,020) (20,804) (18,497)
Net loss (gain) on sales of investment securities.................. 1,813 2,873 (257)
Gain on sales of branches, net of expenses......................... -- -- (1,000)
Other operating activities, net.................................... 42,973 20,323 13,513
Minority interest in loss of subsidiary............................ (587) (1,287) --
---------- ---------- ----------
Net cash provided by operating activities..................... 331,567 538 205,722
---------- ---------- ----------
Cash flows from investing activities:
Cash (paid) received for acquired entities, net of cash and
cash equivalents received (paid)...................................... (204,690) (11,579) 21,098
Proceeds from sales of investment securities available for sale......... 198,061 147,120 26,340
Maturities of investment securities available for sale.................. 1,003,970 658,803 680,631
Maturities of investment securities held to maturity.................... 2,887 5,635 4,632
Purchases of investment securities available for sale................... (1,065,738) (325,642) (1,029,993)
Purchases of investment securities held to maturity..................... (865) (6,509) (19,031)
Proceeds from sale of leases............................................ -- -- 35,544
Net increase in loans................................................... (510,054) (569,255) (211,104)
Recoveries of loans previously charged-off.............................. 15,394 19,757 25,876
Purchases of bank premises and equipment................................ (37,904) (17,128) (10,960)
Sale of minority interest in subsidiary................................. -- 7,350 --
Other investing activities, net......................................... 12 1,834 15,358
---------- ---------- ----------
Net cash used in investing activities......................... (598,927) (89,614) (461,609)
---------- ---------- ----------
Cash flows from financing activities:
Increase (decrease) in demand and savings deposits...................... 10,185 (50,119) 23,355
Increase (decrease) in time deposits.................................... 415,562 199,255 (11,521)
Decrease in Federal Home Loan Bank advances............................. (43,410) (6,144) (29,020)
Decrease in federal funds purchased..................................... -- (78) --
(Decrease) increase in securities sold under agreements to repurchase... (135,464) (59,232) 286,928
Advances drawn on notes payable......................................... -- 100,000 15,000
Repayments of notes payable............................................. (35,000) (15,000) (17,000)
Proceeds from issuance of subordinated debentures....................... 139,178 -- 61,857
Repayments of subordinated debentures................................... -- (59,278) --
Cash paid for sales of branches, net of cash and cash equivalents sold.. -- -- (19,353)
Payment of preferred stock dividends.................................... (786) (786) (786)
---------- ---------- ----------
Net cash provided by financing activities..................... 350,265 108,618 309,460
---------- ---------- ----------
Net increase in cash and cash equivalents..................... 82,905 19,542 53,573
Cash and cash equivalents, beginning of year................................. 286,652 267,110 213,537
---------- ---------- ----------
Cash and cash equivalents, end of year....................................... $ 369,557 286,652 267,110
========== ========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest on liabilities............................................... $ 255,632 162,144 93,406
Income taxes.......................................................... 45,497 56,591 42,701
========== ========== ==========
Noncash investing and financing activities:
Securitization and transfer of loans to investment securities......... $ 138,944 -- --
Loans transferred to other real estate................................ 7,542 3,737 5,142
========== ========== ==========
The accompanying notes are an integral part of the consolidated financial statements.
FIRST BANKS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies
followed by First Banks, Inc. and subsidiaries (First Banks or the Company):
Basis of Presentation. The accompanying consolidated financial
statements of First Banks have been prepared in accordance with U.S. generally
accepted accounting principles 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 U.S. generally accepted accounting
principles. Actual results could differ from those estimates.
Principles of Consolidation. The consolidated financial statements
include the accounts of the parent company and its subsidiaries, giving effect
to the minority interest in one subsidiary, as more fully described below, and
in Note 2 and Note 19 to the Consolidated Financial Statements. All significant
intercompany accounts and transactions have been eliminated. Certain
reclassifications of 2005 and 2004 amounts have been made to conform to the 2006
presentation.
First Banks operates through its wholly owned subsidiary bank holding
company, The San Francisco Company (SFC), and SFC's wholly owned subsidiary
bank, First Bank, both headquartered in St. Louis, Missouri. First Bank operates
through its branch banking offices and subsidiaries: First Bank Business
Capital, Inc.; Missouri Valley Partners, Inc. (MVP); Adrian N. Baker & Company
(Adrian Baker); Universal Premium Acceptance Corporation (UPAC) and its wholly
owned subsidiary, UPAC of California, Inc.; and Small Business Loan Source LLC
(SBLS LLC). All of the subsidiaries are wholly owned, except for SBLS LLC, which
is 51.0% owned by First Bank and 49.0% owned by First Capital America, Inc.
(FCA) as of December 31, 2006.
Cash and Cash Equivalents. Cash, due from banks and short-term
investments, which include federal funds sold and interest-bearing deposits, are
considered to be cash and cash equivalents for purposes of the consolidated
statements of cash flows. Federal funds sold were $152.2 million and $65.0
million at December 31, 2006 and 2005, respectively, and interest-bearing
deposits were $1.4 million and $9.0 million at December 31, 2006 and 2005,
respectively.
First Bank is required to maintain certain daily reserve balances on
hand in accordance with regulatory requirements. These reserve balances
maintained in accordance with such requirements were $24.7 million and $24.3
million at December 31, 2006 and 2005, respectively.
Investment Securities. The classification of investment securities as
trading, available for sale or held to maturity is determined at the date of
purchase.
Investment securities designated as trading, which represent any
security held for near term sale, are stated at fair value. Realized and
unrealized gains and losses are included in noninterest income.
Investment securities designated as available for sale, which represent
any security that First Banks has no immediate plan to sell but which may be
sold in the future under different circumstances, are stated at fair value.
Realized gains and losses are included in noninterest income, based on the
amortized cost of the individual security sold. Unrealized gains and losses, net
of related income tax effects, are recorded in accumulated other comprehensive
income. All previous fair value adjustments included in the separate component
of accumulated other comprehensive income (loss) are reversed upon sale.
Premiums and discounts incurred relative to the par value of securities
purchased are amortized or accreted, respectively, on the level-yield method
taking into consideration the level of current and anticipated prepayments.
Investment securities designated as held to maturity, which represent
any security that First Banks has the positive intent and ability to hold to
maturity, are stated at cost, net of amortization of premiums and accretion of
discounts computed on the level-yield method taking into consideration the level
of current and anticipated prepayments.
A decline in the market value of any available-for-sale or
held-to-maturity investment security below its carrying value that is deemed to
be other than temporary results in a reduction in the cost basis of the carrying
value to fair value. The other-than-temporary impairment is charged to
noninterest income and a new cost basis is established. When determining
other-than-temporary impairment, consideration is given as to whether First
Banks has the ability and intent to hold the investment security until a market
price recovery and whether evidence indicating the carrying value of the
investment security is recoverable outweighs evidence to the contrary.
Loans Held for Portfolio. Loans held for portfolio are carried at cost,
adjusted for amortization of premiums and accretion of discounts using the
interest method. Interest and fees on loans are recognized as income using the
interest method. Loan origination fees are deferred and accreted to interest
income over the estimated life of the loans using the interest method. Loans
held for portfolio are stated at cost as First Banks has the ability and it is
management's intention to hold them to maturity.
The accrual of interest on loans is discontinued when it appears that
interest or principal may not be paid in a timely manner in the normal course of
business or once principal or interest payments become 90 days past due under
the contractual terms of the loan agreement. Generally, payments received on
nonaccrual and impaired loans are recorded as principal reductions. Interest
income is recognized after all delinquent principal has been repaid or an
improvement in the condition of the loan has occurred that warrants resumption
of interest accruals.
A loan is considered impaired when it is probable that First Banks will
be unable to collect all amounts due, both principal and interest, according to
the contractual terms of the loan agreement. Loans on nonaccrual status are
considered to be impaired loans. When measuring impairment, the expected future
cash flows of an impaired loan are discounted at the loan's effective interest
rate. Alternatively, impairment is measured by reference to an observable market
price, if one exists, or the fair value of the collateral for a
collateral-dependent loan. Regardless of the historical measurement method used,
First Banks measures impairment based on the fair value of the collateral when
foreclosure is probable. Additionally, impairment of a restructured loan is
measured by discounting the total expected future cash flows at the loan's
effective rate of interest as stated in the original loan agreement.
Loans Held for Sale. Loans held for sale are comprised of residential
mortgage loans held for sale in the secondary mortgage market, frequently in the
form of a mortgage-backed security, U.S. Small Business Administration (SBA)
loans awaiting sale of the guaranteed portion to the SBA, and commercial real
estate loans which may be identified for sale to specific buyers to achieve
credit or loan concentration objectives. Loans held for sale are carried at the
lower of cost or market value, which is determined on an individual loan basis.
Additionally, the carrying value of the residential mortgage loans held for sale
also includes the cost of hedging the loans held for sale. The amount by which
cost exceeds market value is recorded in a valuation allowance as a reduction of
loans held for sale. Changes in the valuation allowance are reflected as part of
the gain on loans sold and held for sale in the consolidated statements of
income in the periods in which the changes occur. Gains or losses on the sale of
loans held for sale are determined on a specific identification basis and
reflect the difference between the value received upon sale and the carrying
value of the loans held for sale, including the cost of hedging the residential
mortgage loans held for sale. Loans held for sale transferred to loans held for
portfolio or available-for-sale investment securities are transferred at fair
value.
Loan Servicing Income. Loan servicing income is included in noninterest
income and represents fees earned for servicing real estate mortgage loans owned
by investors and originated by First Bank's mortgage banking operation, as well
as SBA loans to small business concerns that are originated by SBLS LLC, First
Bank's majority-owned subsidiary that originates, sells and services SBA loans.
These fees are net of federal agency guarantee fees, interest shortfall,
amortization of loan servicing rights and impairment valuation allowances. Such
fees are generally calculated on the outstanding principal balance of the loans
serviced and are recorded as income when earned.
Allowance for Loan Losses. The allowance for loan losses is maintained
at a level considered adequate to provide for probable losses. The provision for
loan losses is based on a monthly analysis of the loans held for portfolio,
considering, among other factors, current economic conditions, loan portfolio
composition, past loan loss experience, independent appraisals, loan collateral,
payment experience and selected key financial ratios. Adjustments are reflected
in the consolidated statements of income in the periods in which they become
known. In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the allowance for loan losses. Such
agencies may require First Banks to modify its allowance for loan losses based
on their judgment about information available to them at the time of their
examination.
Derivative Instruments and Hedging Activities. First Banks utilizes
derivative instruments and hedging strategies to assist in the management of
interest rate sensitivity and to modify the repricing, maturity and option
characteristics of certain assets and liabilities. First Banks uses such
derivative instruments solely to reduce its interest rate risk exposure.
Derivative instruments are recorded in the consolidated balance sheets and
measured at fair value. At inception of a derivative transaction, First Banks
designates the derivative instrument as either a hedge of the fair value of a
recognized asset or liability or of an unrecognized firm commitment (fair value
hedges) or a hedge of a forecasted transaction or the variability of cash flows
to be received or paid related to a recognized asset or liability (cash flow
hedges). For all hedging relationships, First Banks documents the hedging
relationship and its risk-management objectives and strategy for entering into
the hedging relationship including the hedging instrument, the hedged item(s),
the nature of the risk being hedged, how the hedging instrument's effectiveness
in offsetting the hedged risk will be assessed and a description of the method
the Company will utilize to measure hedge ineffectiveness. This process also
includes linking all derivative instruments that are designated as fair value
hedges or cash flow hedges to the underlying assets and liabilities or to
specific firm commitments or forecasted transactions. First Banks also assesses,
both at the hedge's inception and on an ongoing basis, whether the derivative
instruments that are used in hedging transactions are highly effective in
offsetting changes in fair values or cash flows of the hedged item(s). First
Banks discontinues hedge accounting prospectively when it is determined that the
derivative instrument is no longer effective in offsetting changes in the fair
value or cash flows of the hedged item(s), the derivative instrument expires or
is sold, terminated, or exercised, the derivative instrument is de-designated as
a hedging instrument because it is unlikely that a forecasted transaction will
occur, a hedged firm commitment no longer meets the definition of a firm
commitment, or management determines that designation of the derivative
instrument as a hedging transaction is no longer appropriate.
A summary of First Banks' accounting policies for its derivative
instruments and hedging activities is as follows:
>> Interest Rate Swap Agreements - Cash Flow Hedges. Interest rate
swap agreements designated as cash flow hedges are accounted for
at fair value. The effective portion of the change in the cash
flow hedge's gain or loss is initially reported as a component of
other comprehensive income and subsequently reclassified into
noninterest income when the underlying transaction affects
earnings. The ineffective portion of the change in the cash flow
hedge's gain or loss is recorded in noninterest income on each
monthly measurement date. The net interest differential is
recognized as an adjustment to interest income or interest
expense of the related asset or liability being hedged. In the
event of early termination, the net proceeds received or paid on
the interest rate swap agreements are recognized immediately in
noninterest income.
>> Interest Rate Swap Agreements - Fair Value Hedges. Interest rate
swap agreements designated as fair value hedges are accounted for
at fair value. Changes in the fair value of the swap agreements
are recognized currently in noninterest income. The change in the
fair value of the underlying hedged item is recognized as an
adjustment to the carrying amount of the underlying hedged item
and is also reflected currently in noninterest income. All
changes in fair value are measured on a monthly basis. The net
interest differential is recognized as an adjustment to interest
income or interest expense of the related asset or liability
being hedged. In the event of early termination or
ineffectiveness, the net proceeds received or paid on the
interest rate swap agreements are recognized immediately in
noninterest income and the future net interest differential, if
any, is recognized prospectively in noninterest income. The
cumulative change in the fair value of the underlying hedged item
is deferred and amortized or accreted to interest income or
interest expense over the weighted average life of the related
asset or liability. If, however, the underlying hedged item is
repaid, the cumulative change in the fair value of the underlying
hedged item is recognized immediately in noninterest income.
>> Interest Rate Cap and Floor Agreements. Interest rate cap and
floor agreements are accounted for at fair value. Changes in the
fair value of interest rate cap and floor agreements are
recognized in noninterest income on each monthly measurement
date.
>> Interest Rate Lock Commitments. Commitments to originate loans
for subsequent sale in the secondary market (interest rate lock
commitments), which primarily consist of commitments to originate
fixed rate residential mortgage loans, are recorded at fair
value. Changes in the fair value are recognized in noninterest
income on a monthly basis.
>> Forward Commitments to Sell Mortgage-Backed Securities. Forward
commitments to sell mortgage-backed securities are recorded at
fair value. Changes in the fair value of forward commitments to
sell mortgage-backed securities are recognized in noninterest
income on a monthly basis.
Bank Premises and Equipment, Net. Bank premises and equipment are
carried at cost less accumulated depreciation and amortization. Depreciation is
computed using the straight-line method over the estimated useful lives of the
related assets. Amortization of leasehold improvements is calculated using the
straight-line method over the shorter of the useful life of the related asset or
the term of the lease. Bank premises and improvements are depreciated over five
to 40 years and equipment is depreciated over three to seven years.
Goodwill and Other Intangible Assets. Goodwill and other intangible
assets consist of goodwill, core deposit intangibles and customer list
intangibles. Goodwill and intangible assets with indefinite useful lives are not
amortized, but instead tested for impairment at least annually. Intangible
assets with definite useful lives are amortized over their respective estimated
useful lives to their estimated residual values, and reviewed for impairment in
accordance with SFAS No. 144. First Banks amortizes, on a straight-line basis,
its core deposit intangibles, customer list intangibles and goodwill associated
with transactions structured as purchases of certain assets and assumption of
selected liabilities (P&A Transactions). Core deposit intangibles are amortized
over the estimated periods to be benefited, which has been estimated at five to
seven years, and customer list intangibles are amortized over the estimated
periods to be benefited, which has been estimated at seven to 16 years. Goodwill
associated with P&A Transactions is amortized over the estimated periods to be
benefited, which has been estimated to be 15 years. Goodwill associated with
stock purchases is not amortized, but instead, is tested annually for impairment
in accordance with First Banks' existing methods of measuring and recording
impairment losses, as described below.
First Banks reviews intangible assets for impairment whenever events or
changes in circumstances indicate the carrying value of an underlying asset may
not be recoverable. First Banks measures recoverability based upon the future
cash flows expected to result from the use of the underlying asset and its
eventual disposition. If the sum of the expected future cash flows (undiscounted
and without interest charges) is less than the carrying value of the underlying
asset, First Banks recognizes an impairment loss. The impairment loss recognized
represents the amount by which the carrying value of the underlying asset
exceeds the fair value of the underlying asset. If an asset being tested for
recoverability was acquired in a business combination accounted for using the
purchase method, goodwill that arose in the transaction is included as part of
the asset grouping in determining recoverability. If some but not all of the
assets acquired in that transaction are being tested, goodwill is allocated to
the assets being tested for recoverability on a pro rata basis using the
relative fair values of the long-lived assets and identifiable intangibles
acquired at the acquisition dates. In instances where goodwill is identified
with assets that are subject to an impairment loss, the carrying amount of the
identified goodwill is eliminated before reducing the carrying amounts of
impaired long-lived assets and identifiable intangibles. As such adjustments
become necessary, they are reflected in the consolidated statements of income in
the periods in which they become known.
Mortgage Servicing Rights. Mortgage servicing rights are capitalized by
allocating the total cost of the mortgage loans to mortgage servicing rights and
the loans (without mortgage servicing rights) based on the relative fair values
of the two components. Upon capitalizing the mortgage servicing rights, they are
amortized, in proportion to the related estimated net servicing income on a
basis that approximates the disaggregated, discounted basis, over the expected
lives of the related loans, which is approximately five to seven years. The
weighted average amortization period of mortgage servicing rights is
approximately five years.
The value of mortgage servicing rights is adversely affected when
mortgage interest rates decline which normally causes mortgage loan prepayments
to increase. When loans are prepaid or refinanced, the related unamortized
balance of the mortgage servicing rights is charged to amortization expense. The
determination of the fair value of the mortgage servicing rights is performed
quarterly based upon an independent third party valuation. Based on these
analyses, a comparison of the fair value of the mortgage servicing rights with
the carrying value of the mortgage servicing rights is made, with impairment, if
any, recognized at that time. The impairment analyses are prepared using
stratifications of the mortgage servicing rights based on the predominant risk
characteristics of the underlying mortgage loans, including size, interest rate,
weighted average original term, weighted average remaining term and estimated
prepayment speeds. As part of these analyses, the fair value of the mortgage
servicing rights for each stratum is compared to the carrying value of the
mortgage servicing rights for each stratum. To the extent the carrying value of
the mortgage servicing rights exceeds the fair value of the mortgage servicing
rights for a stratum, First Banks recognizes impairment equal to the amount by
which the carrying value of the mortgage servicing rights for a stratum exceeds
the fair value. Impairment is recognized through a valuation allowance that is
recorded as a reduction of mortgage servicing rights. The valuation allowance
may be reversed based upon subsequent improvement in the fair value of a
stratum; however, First Banks does not recognize fair value of the mortgage
servicing rights in excess of the carrying value of mortgage servicing rights
for any stratum. Changes in the valuation allowance are reflected in the
consolidated statements of income in the periods in which the change occurs.
SBA Servicing Rights. SBA servicing rights are capitalized by
allocating the total cost of the SBA loans to servicing rights and the loans
(without servicing rights) based on the relative fair values of the two
components. The fair value of servicing rights is computed using the present
value of the estimated future servicing income in excess of such income
estimated at a normal servicing fee rate. The servicing rights, net of the
valuation allowance, are amortized in proportion to, and over the period of, the
estimated net servicing revenue of the underlying SBA loans, which range from
seven to 25 years. The weighted average amortization period of the SBA servicing
rights is approximately 18 years. The determination of the fair value of the SBA
servicing rights is performed monthly based upon quarterly independent third
party valuation analyses. Based on these analyses, a comparison of the fair
value of the SBA servicing rights with the carrying value of the SBA servicing
rights is made, with impairment, if any, recognized at that time. The
predominant risk characteristics of the underlying SBA loans used to stratify
SBA servicing rights for purposes of measuring impairment include size, interest
rate, weighted average original term, weighted average remaining term and
estimated prepayment speeds. To the extent the carrying value of the SBA
servicing rights exceeds the fair value of the SBA servicing rights, First Banks
recognizes impairment equal to the amount by which the carrying value of the SBA
servicing rights exceeds the fair value. Impairment is recognized through a
valuation allowance that is recorded as a reduction of SBA servicing rights.
Changes in the valuation allowance are reflected in the consolidated statements
of income in the periods in which the change occurs. First Banks does not
recognize fair value of the SBA servicing rights in excess of the carrying value
of SBA servicing rights for any stratum.
Other Real Estate. Other real estate, consisting of real estate
acquired through foreclosure or deed in lieu of foreclosure, is stated at the
lower of cost or fair value less applicable selling costs. The excess of cost
over fair value of the property at the date of acquisition is charged to the
allowance for loan losses. Subsequent reductions in carrying value, to reflect
current fair value or costs incurred in maintaining the properties, are charged
to expense as incurred. Other real estate was $6.4 million and $2.0 million at
December 31, 2006 and 2005, respectively.
Income Taxes. Deferred tax assets and liabilities are reflected at
currently enacted income tax rates applicable to the period in which the
deferred tax assets or liabilities are expected to be realized or settled. As
changes in the tax laws or rates are enacted, deferred tax assets and
liabilities are adjusted through the provision for income taxes. First Banks,
Inc. and its eligible subsidiaries file a consolidated federal income tax return
and unitary or consolidated state income tax returns in all applicable states.
Financial Instruments With Off-Balance Sheet Risk. A financial
instrument is defined as cash, evidence of an ownership interest in an entity,
or a contract that conveys or imposes on an entity the contractual right or
obligation to either receive or deliver cash or another financial instrument.
First Banks utilizes financial instruments to reduce the interest rate risk
arising from its financial assets and liabilities. These instruments involve, in
varying degrees, elements of interest rate risk and credit risk in excess of the
amount recognized in the consolidated balance sheets. "Interest rate risk" is
defined as the possibility that interest rates may move unfavorably from the
perspective of First Banks due to maturity and/or interest rate adjustment
timing differences between interest-earning assets and interest-bearing
liabilities. The risk that a counterparty to an agreement entered into by First
Banks may default is defined as "credit risk."
First Banks is a party to commitments to extend credit and commercial
and standby letters of credit in the normal course of business to meet the
financing needs of its customers. These commitments involve, in varying degrees,
elements of interest rate risk and credit risk in excess of the amount reflected
in the consolidated balance sheets.
Earnings Per Common Share. Basic earnings per common share (EPS) are
computed by dividing the income available to common stockholders (the numerator)
by the weighted average number of shares of common stock outstanding (the
denominator) during the year. The computation of dilutive EPS is similar except
the denominator is increased to include the number of additional shares of
common stock that would have been outstanding if the dilutive potential shares
had been issued. In addition, in computing the dilutive effect of convertible
securities, the numerator is adjusted to add back any convertible preferred
dividends.
(2) ACQUISITIONS AND INTEGRATION COSTS
Completed Acquisitions. During the three years ended December 31, 2006,
First Banks completed the following acquisitions:
Goodwill
Total Purchase and Other
Entity Date Assets Price Intangibles
------ ---- ------ ----- -----------
(dollars expressed in thousands)
2006
----
MidAmerica National Bank
Peoria and Bloomington, Illinois
Branch Offices (1) November 10, 2006 $ 158,300 -- 2,400
First Bank of Beverly Hills
Beverly Hills, California
Branch Office (1) November 3, 2006 157,500 -- 8,700
TeamCo, Inc.
Oak Lawn, Illinois August 31, 2006 67,900 13,900 9,600
San Diego Community Bank
Chula Vista, California August 15, 2006 91,700 25,500 11,800
Universal Premium Acceptance
Corporation (2)
Lenexa, Kansas May 31, 2006 152,800 52,700 44,700
First Independent National Bank
Plano, Texas May 1, 2006 68,200 19,200 11,800
Pittsfield Community Bancorp, Inc.
Pittsfield, Illinois April 28, 2006 17,600 5,100 1,300
Adrian N. Baker & Company
Clayton, Missouri March 31, 2006 3,000 7,400 8,000
Dallas National Bank
Richardson, Texas
Branch Office (1) January 20, 2006 1,100 -- --
First National Bank of Sachse
Sachse, Texas January 3, 2006 76,200 20,800 12,400
---------- -------- --------
$ 794,300 144,600 110,700
========== ======== ========
2005
----
Northway State Bank
Grayslake, Illinois October 31, 2005 $ 50,400 10,300 5,400
International Bank of California
Los Angeles, California September 30, 2005 151,600 33,700 15,800
Bank and Trust Company
Roodhouse, Illinois
Branch Office (1) September 23, 2005 5,000 -- 100
FBA Bancorp, Inc.
Chicago, Illinois April 29, 2005 73,300 10,500 4,500
---------- -------- --------
$ 280,300 54,500 25,800
========== ======== ========
2004
----
Hillside Investors, Ltd.
Hillside, Illinois November 30, 2004 $1,196,700 67,400 10,600
Small Business Loan Source, Inc.
Houston, Texas August 31, 2004 47,100 45,600 5,900
Continental Mortgage Corporation -
Delaware (3)
Aurora, Illinois July 30, 2004 140,700 4,200 2,100
---------- -------- --------
$1,384,500 117,200 18,600
========== ======== ========
---------------
(1) First Bank acquired the branch offices through a purchase of certain assets and assumption of certain
liabilities of the branch offices. Total assets consisted of cash received upon assumption of the
deposit liabilities and loans.
(2) In conjunction with the acquisition of UPAC, First Bank repaid in full the outstanding senior and
subordinated notes of UPAC, including accumulated accrued and unpaid interest, totaling $125.9
million.
(3) In conjunction with the acquisition of Continental Mortgage Corporation- Delaware (CMC), First Banks
redeemed in full all of the outstanding subordinated promissory notes of CMC, including accumulated
accrued and unpaid interest, totaling $4.5 million in aggregate.
Goodwill and other intangible assets associated with the acquisitions
included in the table above are not deductible for tax purposes, with the
exception of P&A Transactions and the goodwill associated with the purchase of
assets and assumption of liabilities of Small Business Loan Source, Inc. (SBLS).
For 2006, 2005 and 2004 acquisitions, goodwill and other intangible assets in
the amounts of $110.7 million, $25.8 million and $18.6 million, respectively,
were assigned to First Bank.
The consolidated financial statements include the financial position
and results of operations of the aforementioned transactions for the periods
subsequent to the respective acquisition dates, and the assets acquired and
liabilities assumed were recorded at their estimated fair value on the
acquisition dates. These fair value adjustments for the acquisitions completed
in 2006 represent current estimates and are subject to further adjustments as
the valuation data is finalized. The aforementioned acquisitions were funded
from available cash reserves, borrowings under First Banks' term loan and
revolving credit agreements, and/or proceeds from the issuance of subordinated
debentures.
On July 30, 2004, First Banks completed its acquisition of CMC and its
wholly owned banking subsidiary, Continental Community Bank and Trust Company
(CCB) for $4.2 million in cash, and redeemed in full all of the outstanding
subordinated promissory notes of CMC, including accumulated accrued and unpaid
interest, totaling $4.5 million in aggregate. The acquisition served to expand
First Banks' banking franchise in Chicago, Illinois. The transaction was funded
through internally generated funds. CMC, through CCB, operated two banking
offices in the Chicago suburban communities of Aurora and Villa Park. At the
time of the transaction, CMC had assets of $140.7 million, loans, net of
unearned discount, of $73.6 million and deposits of $104.6 million. Preliminary
goodwill of $1.5 million was subsequently adjusted to $100,000 during the third
quarter of 2005, and the core deposit intangibles, which are being amortized
over seven years utilizing the straight-line method, were $2.0 million. CMC was
merged with and into SFC and CCB was merged with and into First Bank at the time
of the acquisition.
On August 31, 2004, SBLS LLC, a Nevada-based limited liability company
and subsidiary of First Bank, purchased substantially all of the assets and
assumed certain liabilities of SBLS, headquartered in Houston, Texas, in
exchange for cash and certain payments contingent on future valuations of
specifically identified assets, including servicing assets and retained
interests in securitizations, as further described in Note 24 to the
Consolidated Financial Statements. The transaction was funded through internally
generated funds. At the time of the transaction, SBLS LLC purchased from SBLS
assets of $47.1 million, including $24.0 million of SBA loans, net of unearned
discount, and $15.1 million of SBA servicing rights, and assumed $1.5 million of
liabilities, resulting in a net cash payment of $45.6 million. Goodwill was $5.9
million. In conjunction with this transaction, on August 30, 2004, First Bank
granted to FCA, a corporation owned by First Banks' Chairman and members of his
immediate family, an option to purchase Membership Interests of SBLS LLC. FCA
exercised this option on June 30, 2005 and paid First Bank $7.4 million in cash.
As a result of this transaction, SBLS LLC became 51.0% owned by First Bank and
49.0% owned by FCA, and accordingly, effective June 30, 2005, FCA's ownership
interest is recognized as minority interest in subsidiary in the consolidated
balance sheets and, beginning July 1, 2005, the related minority interest in
income or loss of subsidiary is recognized in the consolidated statements of
income.
On November 30, 2004, First Banks completed its acquisition of Hillside
Investors, Ltd. (Hillside) and its wholly owned banking subsidiary, CIB Bank
(collectively, CIB Bank), headquartered in Hillside, Illinois, for approximately
$67.4 million in cash. The acquisition served to significantly expand First
Banks' banking franchise in Chicago, Illinois. The transaction was funded
through the issuance of subordinated debentures associated with two private
placements of $60.0 million in aggregate of trust preferred securities through
newly formed affiliated statutory trusts, as further described in Note 12 to the
Consolidated Financial Statements. The acquisition was also funded through
borrowings under the Company's revolving line of credit with a group of
unaffiliated financial institutions. CIB Bank operated 16 banking offices in the
Chicago, Illinois metropolitan area, including ten offices in Cook County, three
offices in Lake County, two offices in Will County and one office in DuPage
County. At the time of the transaction, CIB Bank had assets of $1.20 billion,
loans, net of unearned discount, of $683.3 million, investment securities of
$393.2 million and deposits of $1.10 billion. Preliminary goodwill was $4.3
million and the core deposit intangibles, which are being amortized over seven
years utilizing the straight-line method, were $13.4 million. As further
described below, goodwill and core deposit intangibles were subsequently
adjusted during the first quarter of 2005. Hillside was merged with and into SFC
and CIB Bank was merged with and into First Bank on December 1, 2004.
During the first quarter of 2005, First Banks recorded certain
acquisition-related adjustments pertaining to its acquisition of CIB Bank.
Acquisition-related adjustments included additional purchase accounting
adjustments necessary to appropriately adjust the preliminary goodwill of $4.3
million recorded at the time of the acquisition, which was based upon current
estimates available at that time, to reflect the receipt of additional valuation
data. The aggregate adjustments resulted in a purchase price reallocation among
goodwill, core deposit intangibles and bank premises and equipment. The purchase
price reallocation resulted in the reallocation of $3.1 million of negative
goodwill to core deposit intangibles and bank premises and equipment, thereby
reducing such assets by $2.8 million and $2.4 million, net of the related tax
effect of $1.1 million and $941,000, respectively. Following the recognition of
the acquisition-related adjustments, goodwill recorded was reduced from $4.3
million to zero and the core deposit intangibles, which are being amortized over
seven years utilizing the straight-line method, were reduced from $13.4 million
to $10.6 million, net of the related tax effect. The individual components of
the $4.3 million acquisition-related adjustments to goodwill and the $3.1
million purchase price reallocation recorded in the first quarter of 2005 are
summarized as follows:
>> a $1.6 million increase in goodwill to adjust time deposits, net
of the related tax effect, to their estimated fair value;
>> a $967,000 increase in goodwill to adjust other real estate
owned, net of the related tax effect, to its estimated fair
value;
>> a $10.0 million reduction in goodwill to adjust loans held for
sale, net of the related tax effect, to their estimated fair
value. These adjustments were based upon the receipt of loan
payoffs and significantly higher sales prices received over the
original third-party bid estimates, for certain loans held for
sale. All of the acquired nonperforming loans that had been held
for sale as of December 31, 2004 had either been sold or repaid
as of March 31, 2005, with the exception of one credit
relationship, which was subsequently sold in April 2005;
>> a $1.7 million increase in goodwill, net of the related tax
effect, and a related decrease in core deposit intangibles of
$2.8 million, resulting from the purchase price reallocation; and
>> a $1.4 million increase in goodwill, net of the related tax
effect, and a related decrease in bank premises and equipment of
$2.4 million, resulting from the purchase price reallocation.
On April 29, 2005, First Banks completed its acquisition of FBA
Bancorp, Inc. (FBA) and its wholly owned subsidiary, First Bank of the Americas,
S.S.B. (FBOTA), for $10.5 million in cash. The acquisition served to expand
First Banks' banking franchise in Chicago, Illinois. The transaction was funded
through internally generated funds. FBA was headquartered in Chicago, Illinois,
and through FBOTA, operated three banking offices in the southwestern Chicago
metropolitan communities of Back of the Yards, Little Village and Cicero. At the
time of the acquisition, FBA had assets of $73.3 million, loans, net of unearned
discount, of $54.3 million and deposits of $55.7 million. Goodwill was $2.8
million, and the core deposit intangibles, which are being amortized over seven
years utilizing the straight-line method, were $1.7 million. FBA was merged with
and into SFC, and FBOTA was merged with and into First Bank at the time of the
acquisition.
On September 23, 2005, First Bank completed its acquisition of certain
assets and assumption of the deposit liabilities of the Roodhouse, Illinois
branch office of Bank and Trust Company, an Illinois commercial bank (Roodhouse
Branch). At the time of the transaction, the Roodhouse Branch had deposit
liabilities of $5.1 million. Total assets consisted primarily of cash received
upon assumption of the deposit liabilities. The core deposit intangibles, which
are being amortized over seven years utilizing the straight-line method, were
$100,000.
On September 30, 2005, First Banks completed its acquisition of
International Bank of California (IBOC) for $33.7 million in cash. The
acquisition served to further expand First Banks' banking franchise in Southern
California, providing five additional banking offices in Los Angeles,
California, including one branch in downtown Los Angeles and four branches in
eastern Los Angeles County, in Alhambra, Arcadia, Artesia and Rowland Heights.
The transaction was funded with a portion of the proceeds of First Banks' $100.0
million term loan, as further described in Note 11 to the Consolidated Financial
Statements. At the time of the acquisition, IBOC had assets of $151.6 million,
loans, net of unearned discount, of $113.5 million and deposits of $132.1
million. Goodwill was $12.0 million, and the core deposit intangibles, which are
being amortized over seven years utilizing the straight-line method, were $3.8
million. IBOC was merged with and into First Bank at the time of the
acquisition.
On October 31, 2005, First Banks completed its acquisition of Northway
State Bank (NSB) for $10.3 million in cash. The acquisition served to expand
First Banks' banking franchise in Chicago, Illinois. The transaction was funded
through internally generated funds. NSB was headquartered in Grayslake,
Illinois, and operated one banking office in Lake County in the northern Chicago
metropolitan area. At the time of the acquisition, NSB had assets of $50.4
million, loans, net of unearned discount, of $41.8 million and deposits of $45.2
million. Preliminary goodwill of $3.8 million was subsequently adjusted to $4.5
million during the third quarter of 2006, and the core deposit intangibles,
which are being amortized over seven years utilizing the straight-line method,
were $909,000. NSB was merged with and into First Bank at the time of the
acquisition.
On January 3, 2006, First Banks acquired the majority of the
outstanding common stock of First National Bank of Sachse (FNBS), and
subsequently acquired the remaining outstanding common stock of FNBS in January
2006, for $20.8 million in cash, in aggregate. FNBS was headquartered and
operated one banking office in Sachse, Texas, located in the northeast Dallas
metropolitan area. The acquisition served to expand First Banks' banking
franchise in Texas. The transaction was funded through internally generated
funds. At the time of the acquisition, FNBS had assets of $76.2 million, loans,
net of unearned discount, of $49.3 million, deposits of $66.2 million and
stockholders' equity of $9.9 million. Goodwill was $8.8 million, and the core
deposit intangibles, which are being amortized over five years utilizing the
straight-line method, were $3.6 million. FNBS was merged with and into First
Bank on January 24, 2006.
On January 20, 2006, First Bank completed its acquisition of the branch
office of Dallas National Bank in Richardson, Texas (Richardson Branch). At the
time of the acquisition, the Richardson Branch had assets of $1.1 million,
including loans, net of unearned discount, of $144,000, and deposits of $1.1
million. Total assets consisted primarily of loans, fixed assets and cash
received upon assumption of deposit liabilities and certain assets.
On March 31, 2006, First Bank completed its acquisition of Adrian Baker
for $7.4 million in cash and certain payments contingent on the future earnings
of Adrian Baker for each of the years in the three-year period following the
closing date of the transaction. Adrian Baker is an insurance brokerage agency
based in Clayton, Missouri that provides a comprehensive range of employee
benefit and commercial and personal insurance services on a nationwide basis.
The acquisition served to diversify First Banks' products and services in this
specialized industry. The transaction was funded through internally generated
funds. At the time of the acquisition, Adrian Baker had assets of $3.0 million
and stockholders' equity of $810,000. Goodwill was $4.3 million, and the
customer list intangibles, which are being amortized over 15 years utilizing the
straight-line method, were $3.7 million. Adrian Baker operates as a wholly owned
subsidiary of First Bank.
On April 28, 2006, First Banks completed its acquisition of Pittsfield
Community Bancorp, Inc. and its wholly owned banking subsidiary, Community Bank
of Pittsfield (collectively, Community Bank) for $5.1 million in cash. Community
Bank was headquartered in Pittsfield, Illinois and operated two banking offices,
one in Pittsfield, Illinois, and one in Mount Sterling, Illinois. On June 16,
2006, First Bank completed its sale of the Mount Sterling office to Beardstown
Savings, s.b. The acquisition served to expand First Banks' banking franchise in
Pittsfield, Illinois. The transaction was funded through internally generated
funds. At the time of the acquisition, after giving effect to the sale of the
Mount Sterling office, Community Bank had assets of $17.6 million, loans, net of
unearned discount, of $11.1 million, deposits of $12.3 million and stockholder's
equity of $3.9 million. Goodwill was $807,000, and the core deposit intangibles,
which are being amortized over five years utilizing the straight-line method,
were $517,000. Community Bank was merged with and into First Bank at the time of
the acquisition.
On May 1, 2006, First Banks acquired the majority of the outstanding
common stock of First Independent National Bank (FINB), and subsequently
acquired the remaining outstanding common stock in May 2006, for $19.2 million
in cash, in aggregate. FINB was headquartered in Plano, Texas and operated two
banking offices in Plano, Texas, located in Collin County. In addition, at the
time of the acquisition, FINB was in the process of opening a de novo branch
banking office located in the Preston Forest Shopping Center in Dallas County,
which subsequently opened on June 26, 2006. The acquisition served to expand
First Banks' banking franchise in Texas. The transaction was funded through
internally generated funds and the issuance of subordinated debentures
associated with a private placement of $40.0 million of trust preferred
securities through a newly formed affiliated statutory trust, as further
described in Note 12 to the Consolidated Financial Statements. At the time of
the acquisition, FINB had assets of $68.2 million, loans, net of unearned
discount, of $59.6 million, deposits of $55.5 million and stockholders' equity
of $7.3 million. Goodwill was $9.3 million, and the core deposit intangibles,
which are being amortized over five years utilizing the straight-line method,
were $2.5 million. FINB was merged with and into First Bank on May 16, 2006.
On May 31, 2006, First Bank completed its acquisition of KIF, Inc., an
Iowa corporation, and its wholly owned subsidiaries, UPAC, a Missouri
corporation, and UPAC of California, Inc., a California corporation
(collectively, UPAC), for $52.7 million in cash. In conjunction with the
acquisition of UPAC, First Banks repaid in full the outstanding senior and
subordinated notes of UPAC, which totaled $125.9 million at the time of the
acquisition. UPAC is an insurance premium financing company headquartered in the
Kansas City suburb of Lenexa, Kansas and operates in 49 states. The acquisition
served to diversify First Banks' products and services in this
highly-specialized industry. The transaction was funded through internally
generated funds and a $52.0 million short-term Federal Home Loan Bank (FHLB)
advance. At the time of the acquisition, UPAC had assets of $152.8 million,
loans, net of unearned discount, of $149.2 million and stockholders' equity of
$18.3 million. Goodwill was $25.4 million, and the customer list intangibles,
which are being amortized over 16 years utilizing the straight-line method, were
$19.3 million. KIF, Inc. was merged with and into UPAC on June 30, 2006. UPAC of
California, Inc. operates as a wholly owned subsidiary of UPAC, which operates
as a wholly owned subsidiary of First Bank.
On August 15, 2006, First Banks completed its acquisition of San Diego
Community Bank (SDCB) for $25.5 million in cash. SDCB was headquartered in Chula
Vista, California, which is located approximately ten miles south of downtown
San Diego, and operated two other banking offices in Kearney Mesa and Otay Mesa.
The acquisition served to expand First Banks' banking franchise in southern
California. The transaction was funded through internally generated funds and
the issuance of subordinated debentures associated with the private placement of
$20.0 million of trust preferred securities through a newly formed affiliated
statutory trust, as further described in Note 12 to the Consolidated Financial
Statements. At the time of the acquisition, SDCB had assets of $91.7 million,
loans, net of unearned discount, of $78.6 million, deposits of $76.1 million and
stockholders' equity of $12.3 million. Goodwill was $7.5 million, and the core
deposit intangibles, which are being amortized over five years utilizing the
straight-line method, were $4.3 million. SDCB was merged with and into First
Bank at the time of the acquisition.
On August 31, 2006, First Banks completed its acquisition of TeamCo,
Inc. and its wholly owned banking subsidiary, Oak Lawn Bank (collectively, Oak
Lawn) for $13.9 million in cash. Oak Lawn was headquartered in Oak Lawn,
Illinois, which is located approximately 15 miles southwest of the Chicago Loop
in Chicago Southland, and operated a second banking office in Orland Park,
Illinois, which is located approximately 39 miles southwest of downtown Chicago.
The acquisition served to expand First Banks' banking franchise in Chicago,
Illinois. The transaction was funded through internally generated funds and the
issuance of subordinated debentures associated with the private placement of
$25.0 million of trust preferred securities through a newly formed affiliated
statutory trust, as further described in Note 12 to the Consolidated Financial
Statements. At the time of the acquisition, Oak Lawn had assets of $67.9
million, loans, net of unearned discount, of $43.1 million, deposits of $60.1
million and stockholders' equity of $5.5 million. Goodwill was $7.3 million, and
the core deposit intangibles, which are being amortized over five years
utilizing the straight-line method, were $2.3 million. Oak Lawn was merged with
and into First Bank at the time of the acquisition.
On November 3, 2006, First Bank completed its acquisition of the First
Bank of Beverly Hills' banking office located in Beverly Hills, California
(Beverly Drive Office). At the time of the acquisition, the Beverly Drive Office
had assets of $157.5 million and deposits of $156.1 million. Total assets
consisted primarily of cash received upon assumption of deposit liabilities and
certain assets. The core deposit intangibles, which are being amortized over
five years utilizing the straight-line method, were $8.7 million.
On November 10, 2006, First Bank completed its acquisition of
MidAmerica National Bank's three banking offices located in Peoria and
Bloomington, Illinois (collectively, MidAmerica Offices). At the time of the
acquisition, the MidAmerica Offices had, on a combined basis, assets of $158.3
million including loans, net of unearned discount, of $154.1 million, and
deposits of $48.2 million. The core deposit intangibles, which are being
amortized over five years utilizing the straight-line method, were $2.4 million.
Pending Acquisitions. On November 7, 2006, First Banks entered into an
Agreement and Plan of Reorganization providing for the acquisition of Royal Oaks
Bancshares, Inc. and its wholly owned banking subsidiary, Royal Oaks Bank, ssb
(collectively, Royal Oaks). Royal Oaks was headquartered in Houston, Texas and
operated five banking offices in the Houston area. In addition, at the time of
the acquisition, Royal Oaks was in the process of opening a de novo branch
banking office located in the Heights, near downtown Houston, which is expected
to be completed in the second quarter of 2007. As further described in Note 25
to the Consolidated Financial Statements, First Banks completed its acquisition
of Royal Oaks on February 28, 2007.
Acquisition and Integration Costs. First Banks accrues certain costs
associated with its acquisitions as of the respective consummation dates. The
accrued costs relate 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 First Banks incurs 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
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 First Banks' existing operations are normally paid to the
recipients within 90 days of the respective consummation date and are expensed
in the consolidated statements of income as incurred. The accrued severance
balance of $386,000 as of December 31, 2006, as summarized in the following
table, is comprised of contractual obligations under salary continuation
agreements to seven individuals with remaining terms ranging from approximately
two months to nine years. As the obligation to make payments under these
agreements is accrued at the consummation date, such payments do not have any
impact on the consolidated statements of income. First Banks also incurs
integration costs associated with acquisitions that are expensed in the
consolidated statements of income. These costs relate principally to additional
costs incurred in conjunction with the information technology conversions of the
respective entities. The following table summarizes the cumulative acquisition
and integration costs attributable to the Company's acquisitions, which were
accrued as of the consummation dates of the respective acquisition and are
reflected in accrued and other liabilities in the consolidated balance sheets:
Information
Severance Technology Fees Total
--------- --------------- -----
(dollars expressed in thousands)
Balance at December 31, 2003......................... $ 1,412 -- 1,412
Year Ended December 31, 2004:
Amounts accrued at acquisition date................ 180 496 676
Payments........................................... (831) (496) (1,327)
------- ------- -------
Balance at December 31, 2004......................... 761 -- 761
------- ------- -------
Year Ended December 31, 2005:
Amounts accrued at acquisition date................ 785 1,265 2,050
Payments........................................... (1,004) (1,131) (2,135)
------- ------- -------
Balance at December 31, 2005......................... 542 134 676
------- ------- -------
Year Ended December 31, 2006:
Amounts accrued at acquisition date................ 1,702 1,949 3,651
Payments........................................... (1,858) (2,083) (3,941)
------- ------- -------
Balance at December 31, 2006......................... $ 386 -- 386
======= ======= =======
(3) INVESTMENTS IN DEBT AND EQUITY SECURITIES
Securities Available for Sale. The amortized cost, contractual
maturity, gross unrealized gains and losses and fair value of investment
securities available for sale at December 31, 2006 and 2005 were as follows:
Maturity
---------------------------------- Total Gross
After Amor- Unrealized Weighted
1 Year 1-5 5-10 10 tized ------------------ Fair Average
or Less Years Years Years Cost Gains Losses Value Yield
------- ----- ----- ----- ---- ----- ------ ----- -----
(dollars expressed in thousands)
December 31, 2006:
Carrying value:
U.S. Government sponsored
agencies..................... $344,636 29,737 4,032 966 379,371 81 (742) 378,710 4.99%
Mortgage-backed securities..... 438 11,477 50,670 839,172 901,757 610 (19,514) 882,853 4.76
State and political
subdivisions................. 4,102 16,294 11,493 2,122 34,011 260 (56) 34,215 3.90
Equity investments ............ -- -- -- 26,608 26,608 1,527 (234) 27,901 4.06
Federal Home Loan Bank and
Federal Reserve Bank stock
(no stated maturity)......... 36,050 -- -- -- 36,050 -- -- 36,050 5.49
-------- ------- ------ ------- --------- ------ ------- ---------
Total..................... $385,226 57,508 66,195 868,868 1,377,797 2,478 (20,546) 1,359,729 4.81
======== ======= ====== ======= ========= ====== ======= ========= ====
Fair value:
Debt securities................ $348,448 57,480 65,580 824,270
Equity securities.............. 36,050 -- -- 27,901
-------- ------- ------ -------
Total..................... $384,498 57,480 65,580 852,171
======== ======= ====== =======
Weighted average yield........... 5.01% 4.69% 4.57% 4.75%
======== ======= ====== =======
December 31, 2005:
Carrying value:
U.S. Government sponsored
agencies..................... $212,869 181,800 4,400 -- 399,069 -- (4,725) 394,344 3.32%
Mortgage-backed securities..... 281 9,899 52,121 783,831 846,132 149 (22,156) 824,125 4.60
State and political
subdivisions................. 5,574 17,242 8,864 710 32,390 293 (109) 32,574 3.79
Corporate debt securities...... 7,721 -- -- -- 7,721 -- (15) 7,706 4.58
Equity investments............. 156 -- -- 16,995 17,151 961 -- 18,112 4.64
Federal Home Loan Bank and
Federal Reserve Bank stock
(no stated maturity)......... 34,428 -- -- -- 34,428 -- -- 34,428 4.87
-------- ------- ------ ------- --------- ------ ------- ---------
Total..................... $261,029 208,941 65,385 801,536 1,336,891 1,403 (27,005) 1,311,289 4.21
======== ======= ====== ======= ========= ====== ======= ========= ====
Fair value:
Debt securities................ $224,429 206,076 64,207 764,037
Equity securities.............. 34,584 -- -- 17,956
-------- ------- ------ -------
Total........................ $259,013 206,076 64,207 781,993
======== ======= ====== =======
Weighted average yield........... 3.27% 3.72% 4.33% 4.62%
======== ======= ====== =======
Securities Held to Maturity. The amortized cost, contractual maturity,
gross unrealized gains and losses and fair value of investment securities held
to maturity at December 31, 2006 and 2005 were as follows:
Maturity
------------------------------------ Total Gross
After Amor- Unrealized Weighted
1 Year 1-5 5-10 10 tized -------------------- Fair Average
or Less Years Years Years Cost Gains Losses Value Yield
------- ----- ----- ----- ---- ----- ------ ----- -----
(dollars expressed in thousands)
December 31, 2006:
Carrying value:
Mortgage-backed securities..... $ -- -- 6,875 7,213 14,088 7 (132) 13,963 5.13%
State and political
subdivisions................. 1,482 6,861 1,355 263 9,961 97 (50) 10,008 4.18
-------- ------ ------ ------ ------ ---- ---- ------
Total..................... $ 1,482 6,861 8,230 7,476 24,049 104 (182) 23,971 4.74
======== ====== ====== ====== ====== ==== ==== ====== ====
Fair value:
Debt securities................ $ 1,479 6,848 8,278 7,366
======== ====== ====== ======
Weighted average yield........... 3.84% 4.21% 5.02% 5.07%
======== ====== ====== ======
December 31, 2005:
Carrying value:
Mortgage-backed securities..... $ -- -- 6,970 8,495 15,465 9 (321) 15,153 5.09%
State and political
subdivisions................. 1,350 8,331 695 264 10,640 67 (69) 10,638 4.20
-------- ------ ------ ------ ------ ---- ---- ------
Total..................... $ 1,350 8,331 7,665 8,759 26,105 76 (390) 25,791 4.73
======== ====== ====== ====== ====== ==== ==== ====== ====
Fair value:
Debt securities................ $ 1,355 8,328 7,509 8,599
======== ====== ====== ======
Weighted average yield........... 4.40% 4.20% 5.03% 5.02%
======== ====== ====== ======
Proceeds from sales of available-for-sale investment securities were
$198.0 million, $147.1 million and $26.3 million for the years ended December
31, 2006, 2005 and 2004, respectively. Gross gains of $389,300 and $257,100 were
realized on sales of available-for-sale investment securities for the years
ended December 31, 2006 and 2004, respectively. There were no gross gains on the
sale of these securities during the year ended December 31, 2005. Gross losses
of $2.7 million and $2.9 million were realized on sales of available-for-sale
investment securities during the years ended December 31, 2006 and 2005,
respectively. The gross losses for the year ended December 31, 2006 include a
loss of $2.7 million that resulted from the sale of $197.0 million of
available-for-sale investment securities for liquidity purposes, including the
related termination of $200.0 million in aggregate of term repurchase
agreements, as further described in Note 5 and Note 10 to the Consolidated
Financial Statements. The gross loss of $2.9 million for the year ended December
31, 2005 resulted from the sale of $150.0 million of available-for-sale
investment securities for liquidity purposes, including the related termination
of a $50.0 million term repurchase agreement, as further described in Note 5 to
the Consolidated Financial Statements. There were no gross losses realized on
sales of available-for-sale investment securities in 2004.
Proceeds from calls of investment securities were $27.5 million, $16.6
million and $63.1 million for the years ended December 31, 2006, 2005 and 2004,
respectively. There were no gross gains realized on called securities in 2006,
2005 and 2004. Gross losses of $2,100 and $3,800 were realized on these called
securities during the years ended December 31, 2006 and 2005, respectively.
There were no gross losses realized on called securities in 2004. Net gains on
trading securities for the year ended December 31, 2006 were $97,000.
First Bank is a member of the Federal Home Loan Bank (FHLB) system and
the Federal Reserve Bank (FRB) system and maintains investments in FHLB and FRB
stock. These investments are recorded at cost, which represents redemption
value. The investment in FRB stock is maintained at a minimum of 6% of First
Bank's capital stock and capital surplus. The investment in FHLB of Des Moines
stock is maintained at an amount equal to 0.12% of First Bank's total assets as
of December 31, 2004, up to a maximum of $10.0 million, plus 4.45% of advances
and 0.15% of outstanding standby letters of credit. First Bank also holds an
investment in stock of the FHLB of Dallas and the FHLB of San Francisco, as a
nonmember, to collateralize certain FHLB advances assumed in conjunction with
certain acquisition transactions. The investment in FHLB of Dallas stock is
maintained at a minimum of 4.10% of advances. The investment in FHLB of San
Francisco stock is maintained at a minimum of 4.70% of advances.
Investment securities with a carrying value of approximately $586.4
million and $619.4 million at December 31, 2006 and 2005, respectively, were
pledged in connection with deposits of public and trust funds, securities sold
under agreements to repurchase and for other purposes as required by law.
Gross unrealized losses on investment securities and the fair value of
the related securities, aggregated by investment category and length of time
that individual securities have been in a continuous unrealized loss position,
at December 31, 2006 and 2005, were as follows:
December 31, 2006
---------------------------------------------------------------------------
Less than 12 months 12 months or more Total
----------------------- ----------------------- -----------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
--------- ---------- --------- ---------- --------- ----------
(dollars expressed in thousands)
Available for sale:
U.S. Government sponsored
agencies....................... $ 202,459 (304) 64,799 (438) 267,258 (742)
Mortgage-backed securities....... 197,214 (3,912) 597,394 (15,602) 794,608 (19,514)
State and political subdivisions. 3,088 (7) 5,656 (49) 8,744 (56)
Equity investments............... 5,602 (234) -- -- 5,602 (234)
--------- ------- -------- -------- --------- --------
Total....................... $ 408,363 (4,457) 667,849 (16,089) 1,076,212 (20,546)
========= ======= ======== ======== ========= ========
Held to maturity:
Mortgage-backed securities....... $ -- -- 13,682 (132) 13,682 (132)
State and political subdivisions. 199 (1) 4,630 (49) 4,829 (50)
--------- ------- -------- -------- --------- --------
Total....................... $ 199 (1) 18,312 (181) 18,511 (182)
========= ======= ======== ======== ========= ========
December 31, 2005
---------------------------------------------------------------------------
Less than 12 months 12 months or more Total
----------------------- ----------------------- -----------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
--------- ---------- --------- ---------- --------- ----------
(dollars expressed in thousands)
Available for sale:
U.S. Government sponsored
agencies....................... $ 206,641 (2,374) 187,702 (2,351) 394,343 (4,725)
Mortgage-backed securities....... 375,462 (8,368) 411,640 (13,788) 787,102 (22,156)
State and political subdivisions. 11,653 (97) 833 (12) 12,486 (109)
Corporate debt securities........ 7,706 (15) -- -- 7,706 (15)
--------- ------- -------- -------- --------- --------
Total....................... $ 601,462 (10,854) 600,175 (16,151) 1,201,637 (27,005)
========= ======= ======== ======== ========= ========
Held to maturity:
Mortgage-backed securities....... $ 14,828 (321) -- -- 14,828 (321)
State and political subdivisions. 4,462 (58) 365 (11) 4,827 (69)
--------- ------- -------- -------- --------- --------
Total....................... $ 19,290 (379) 365 (11) 19,655 (390)
========= ======= ======== ======== ========= ========
U.S. Government sponsored agencies and mortgage-backed securities - The
unrealized losses on investments in mortgage-backed securities and other agency
securities were caused by fluctuations in interest rates. The contractual terms
of these securities are guaranteed by government-sponsored enterprises. It is
expected that the securities would not be settled at a price less than the
amortized cost. Because First Banks has the ability and intent to hold these
investments until a market price recovery or maturity, these investments are not
considered other-than-temporarily impaired. At December 31, 2006, the unrealized
losses for U.S. government sponsored agencies for 12 months or more included 19
securities, and the unrealized losses for mortgage-backed securities for 12
months or more included 138 securities. At December 31, 2005, the unrealized
losses for U.S. government sponsored agencies for 12 months or more included 14
securities, and the unrealized losses for mortgage-backed securities for 12
months or more included 62 securities.
State and political subdivisions and corporate debt securities - The
unrealized losses on investments in state and political subdivisions and
corporate debt securities were caused by fluctuations in interest rates. It is
expected that the securities would not be settled at a price less than the
amortized cost. Because the decline in fair value is attributable to changes in
interest rates and not credit quality, and because First Banks has the ability
and intent to hold these investments until a market price recovery or maturity,
these investments are not considered other-than-temporarily impaired. At
December 31, 2006, the unrealized losses for state and political subdivisions
for 12 months or more included 53 securities. At December 31, 2005, the
unrealized losses for state and political subdivisions for 12 months or more
included seven securities.
(4) LOANS AND ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses for the years ended December
31, 2006, 2005 and 2004 were as follows:
2006 2005 2004
---- ---- ----
(dollars expressed in thousands)
Balance, beginning of year...................................... $ 135,330 150,707 116,451
Acquired allowances for loan losses............................. 5,208 1,989 33,752
Other adjustments (1)........................................... -- -- (479)
--------- -------- --------
140,538 152,696 149,724
--------- -------- --------
Loans charged-off............................................... (22,203) (33,123) (50,643)
Recoveries of loans previously charged-off...................... 15,394 19,757 25,876
--------- -------- --------
Net loans charged-off...................................... (6,809) (13,366) (24,767)
--------- -------- --------
Provision for loan losses....................................... 12,000 (4,000) 25,750
--------- -------- --------
Balance, end of year............................................ $ 145,729 135,330 150,707
========= ======== ========
---------------
(1) In December 2003, First Bank established a $1.0 million specific reserve for estimated losses
on a $5.3 million letter of credit that was recorded in accrued and other liabilities in the
consolidated balance sheets. In January 2004, the letter of credit was fully funded as a loan
and the related $1.0 million specific reserve was reclassified from accrued and other
liabilities to the allowance for loan losses. Additionally, in June 2004, First Bank
reclassified $1.5 million from the allowance for loan losses to accrued and other liabilities
to establish a specific reserve associated with the commercial leasing portfolio sale and
related recourse obligations for certain leases sold. This liability has been reduced to
$410,000 at December 31, 2006.
At December 31, 2006 and 2005, First Banks had $48.7 million and $97.2
million of impaired loans, consisting of loans on nonaccrual status. Interest on
nonaccrual loans that would have been recorded under the original terms of the
loans was $3.7 million, $9.9 million and $4.4 million for the years ended
December 31, 2006, 2005 and 2004, respectively. Of these amounts, $1.3 million,
$3.4 million and $716,000 was recorded as interest income on such loans in 2006,
2005 and 2004, respectively. The allowance for loan losses includes an
allocation for each impaired loan. The aggregate allocation of the allowance for
loan losses related to impaired loans was approximately $9.7 million and $20.1
million at December 31, 2006 and 2005, respectively. The average recorded
investment in impaired loans was $73.6 million, $79.9 million and $77.3 million
for the years ended December 31, 2006, 2005 and 2004, respectively. The amount
of interest income recognized using a cash basis method of accounting during the
time these loans were impaired was $3.7 million, $3.6 million and $717,000 in
2006, 2005 and 2004, respectively. At December 31, 2006 and 2005, First Banks
had $5.7 million and $5.6 million, respectively, of loans past due 90 days or
more and still accruing interest.
First Banks' primary market areas are the states of Missouri, Illinois,
Texas and California. At December 31, 2006 and 2005, approximately 90% and 91%
of the total loan portfolio, respectively, and 77% and 83% of the commercial,
financial and agricultural loan portfolio, respectively, were made to borrowers
within these states.
Real estate lending constituted the only significant concentration of
credit risk. Real estate loans comprised approximately 74% and 76% of the loan
portfolio at December 31, 2006 and 2005, respectively, of which 26% and 27%,
respectively, were made to consumers in the form of residential real estate
mortgages and home equity lines of credit. First Bank also offers residential
real estate mortgage loans with terms that require interest only payments. At
December 31, 2006, the balance of such loans was $332.6 million, of which $276.5
million were held for portfolio and $56.1 million were held for sale. At
December 31, 2005, the balance of such loans was $332.3 million, of which $194.6
million were held for portfolio and $137.7 million were held for sale.
In general, First Banks is a secured lender. At December 31, 2006 and
2005, 99% of the loan portfolio was collateralized. Collateral is required in
accordance with the normal credit evaluation process based upon the
creditworthiness of the customer and the credit risk associated with the
particular transaction.
Loans to directors, their affiliates and executive officers of First
Banks, Inc. were approximately $55.9 million and $37.9 million at December 31,
2006 and 2005, respectively, as further described in Note 19 to the Consolidated
Financial Statements.
(5) DERIVATIVE INSTRUMENTS
First Banks utilizes derivative financial instruments to assist in the
management of interest rate sensitivity by modifying the repricing, maturity and
option characteristics of certain assets and liabilities. Derivative financial
instruments held by First Banks at December 31, 2006 and 2005 are summarized as
follows:
The notional amounts of derivative financial instruments do not
represent amounts exchanged by the parties and, therefore, are not a measure of
First Banks' credit exposure through its use of these instruments. The credit
exposure represents the loss First Banks 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.
For the year ended December 31, 2006, First Banks realized net interest
expense of $5.0 million on its derivative financial instruments, whereas for the
years ended December 31, 2005 and 2004, First Banks realized net interest income
of $2.2 million and $50.1 million, respectively, on its derivative financial
instruments. First Banks recorded net losses on derivative instruments, which
are included in noninterest income in the consolidated statements of income, of
$390,000, $1.1 million and $1.5 million for the years ended December 31, 2006,
2005 and 2004, respectively.
Cash Flow Hedges. First Banks entered into the following interest rate
swap agreements, which have been designated as cash flow hedges, 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:
>> During September 2000, March 2001, April 2001, March 2002 and
July 2003, First Banks entered into interest rate swap agreements
of $600.0 million, $200.0 million, $175.0 million, $150.0 million
and $200.0 million notional amount, respectively. The underlying
hedged assets are certain loans within First Banks' commercial
loan portfolio. The swap agreements provide for First Banks 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%, 2.80% and 2.85%, respectively. The
terms of the swap agreements provide for First Banks to pay and
receive interest on a quarterly basis. In November 2001, First
Banks terminated $75.0 million notional amount of the swap
agreements originally entered into in April 2001 in order to
appropriately modify its overall hedge position in accordance
with its interest rate risk management program, and on April 2,
2006, the remaining $100.0 million notional amount of these swap
agreements matured. In addition, the $150.0 million notional swap
agreement that was entered into in March 2002 matured in March
2004, the $600.0 million notional swap agreements that were
entered into in September 2000 matured in September 2004, and the
$200.0 million notional swap agreement that was entered into in
March 2001 matured in March 2005.
>> On September 14, 2006, First Banks entered into a $200.0 million
notional amount three-year interest rate swap agreement and a
$200.0 million notional amount four-year interest rate swap
agreement. The underlying hedged assets are certain loans within
First Banks' commercial loan portfolio. The swap agreements
provide for First Banks to receive a fixed rate of interest and
pay an adjustable rate of interest equivalent to the weighted
average prime lending rate minus 2.86%. The terms of the swap
agreements provide for First Banks to pay and receive interest on
a quarterly basis.
The amount receivable by First Banks under the swap agreements was $7.0
million and $2.4 million at December 31, 2006 and 2005, respectively, and the
amount payable by First Banks under the swap agreements was $2.7 million and
$2.5 million at December 31, 2006 and 2005, respectively.
The maturity dates, notional amounts, interest rates paid and received
and fair value of First Banks' interest rate swap agreements designated as cash
flow hedges as of December 31, 2006 and 2005 were as follows:
Notional Interest Rate Interest Rate Fair
Maturity Date Amount Paid Received Value
------------- ------ ---- -------- -----
(dollars expressed in thousands)
December 31, 2006:
July 31, 2007........................... $ 200,000 5.40% 3.08% $ (2,705)
September 18, 2009...................... 200,000 5.39 5.20 98
September 20, 2010...................... 200,000 5.39 5.20 449
--------- --------
$ 600,000 5.39 4.49 $ (2,158)
========= ===== ===== ========
December 31, 2005:
April 2, 2006........................... $ 100,000 4.43% 5.45% $ 205
July 31, 2007........................... 200,000 4.40 3.08 (5,296)
--------- --------
$ 300,000 4.41 3.87 $ (5,091)
========= ===== ===== ========
Fair Value Hedges. First Banks entered into the following interest rate
swap agreements, which have been 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, First Banks entered into $150.0 million
notional amount of five-year interest rate swap agreements that
provided for First Banks to receive a fixed rate of interest and
pay an adjustable rate of interest equivalent to the three-month
London Interbank Offering Rate (LIBOR). The underlying hedged
liabilities were a portion of First Banks' other time deposits.
The terms of the swap agreements provided for First Banks to pay
interest on a quarterly basis and receive interest on a
semiannual basis. In February 2005, First Banks terminated the
swap agreements. The termination of the swap agreements resulted
from an increasing level of ineffectiveness associated with the
correlation of the hedge positions between the swap agreements
and the underlying hedged liabilities that had been anticipated
as the swap agreements neared their originally scheduled maturity
dates in January 2006. The resulting $3.1 million basis
adjustment of the underlying hedged liabilities was recorded as
interest expense over the remaining weighted average maturity of
the underlying hedged liabilities of approximately ten months. At
December 31, 2005, the basis adjustments associated with these
swap agreements were fully amortized.
>> During May 2002, March 2003 and April 2003, First Banks entered
into $55.2 million, $25.0 million and $46.0 million notional
amount, respectively, of interest rate swap agreements that
provided for First Banks to receive a fixed rate of interest and
pay an adjustable rate of interest equivalent to the three-month
LIBOR plus 2.30%, 2.55% and 2.58%, respectively. The underlying
hedged liabilities were a portion of First Banks' subordinated
debentures. The terms of the swap agreements provided for First
Banks to pay and receive interest on a quarterly basis. The
amounts receivable and payable by First Banks under the swap
agreements at December 31, 2005 were $506,000 and $420,000,
respectively. In May 2005, First Banks terminated the $55.2
million and $46.0 million notional swap agreements in order to
appropriately modify future hedge positions in accordance with
First Banks' interest rate risk management program. The resulting
$854,000 basis adjustment of the underlying hedged liabilities,
in aggregate, was being recorded as a reduction of interest
expense over the remaining maturities of the underlying hedged
liabilities, which ranged from 26 to 28 years at the time of the
termination. Effective February 16, 2006, First Banks terminated
the remaining $25.0 million notional swap agreement. In
conjunction with this transaction, First Banks recorded the
resulting $1.7 million basis adjustment of the underlying hedged
liabilities and the remaining balance of the basis adjustments
associated with the swap agreements that were terminated in May
2005, totaling $834,000, in the consolidated statements of
income. The recognition of the net basis adjustments on all of
the terminated fair value interest rate swap agreements resulted
in a pre-tax loss of $849,000 that was recorded in February 2006.
The maturity date, notional amount, interest rate paid and received and
fair value of First Banks' interest rate swap agreement designated as a fair
value hedge as of December 31, 2005 was as follows:
Notional Interest Rate Interest Rate Fair
Maturity Date Amount Paid Received Value
------------- ------ ---- -------- -----
(dollars expressed in thousands)
December 31, 2005:
March 20, 2033......................... $ 25,000 6.57% 8.10% $ (1,460)
======== ===== ===== ========
Interest Rate Floor Agreements. In September 2005, First Bank entered
into a $100.0 million notional amount three-year interest rate floor agreement
in conjunction with its interest rate risk management program. The interest rate
floor agreement provides for First Bank to receive a quarterly fixed rate of
interest of 5.00% should the three-month LIBOR equal or fall below the strike
price of 2.00%. On August 24, 2006, First Bank entered into a $200.0 million
notional amount three-year interest rate floor agreement in conjunction with the
restructuring of a term repurchase agreement, as further described in Note 10 to
the Consolidated Financial Statements, to further stabilize net interest income
in the event of a declining rate scenario. The interest rate floor agreement
provides for First Bank to receive a quarterly adjustable rate of interest
equivalent to the differential between the strike price of 4.00% and the
three-month LIBOR should the three-month LIBOR equal or fall below the strike
price. The carrying value of the interest rate floor agreements, which is
included in other assets in the consolidated balance sheets, was $376,000 and
$70,000 at December 31, 2006 and 2005, respectively.
Interest Rate Floor Agreements Embedded in Term Repurchase Agreements.
First Bank has term repurchase agreements under master repurchase agreements
with unaffiliated third parties, as further described in Note 10 to the
Consolidated Financial Statements. The underlying securities associated with the
term repurchase agreements are mortgage-backed securities and callable U.S.
Government agency securities and are held by other financial institutions under
safekeeping agreements. The term repurchase agreements were entered into with
the objective of stabilizing net interest income over time, further protecting
net interest margin against changes in interest rates and providing funding for
security purchases. The interest rate floor agreements included within the term
repurchase agreements (and the interest rate cap agreements previously included
within the term repurchase agreements) represent embedded derivative instruments
which, in accordance with existing accounting literature governing derivative
instruments, are not required to be separated from the term repurchase
agreements and accounted for separately as a derivative financial instrument. As
such, the term repurchase agreements are reflected in other borrowings in the
consolidated balance sheets and the related interest expense is reflected as
interest expense on other borrowings in the consolidated statements of income.
As further described in Note 10 to the Consolidated Financial Statements, in
March 2005, in accordance with the Company's interest rate risk management
program, First Bank modified its term repurchase agreements under master
repurchase agreements with unaffiliated third parties to terminate the interest
rate cap agreements previously embedded within the agreements and simultaneously
enter into interest rate floor agreements, also embedded within the agreements.
These modifications resulted in adjustments to the existing interest rate spread
to LIBOR for the underlying agreements. The modified terms of the term
repurchase agreements became effective during the second quarter of 2005. First
Bank did not incur any costs associated with the modifications of the agreements
nor did the modifications result in a change to the accounting treatment of the
embedded derivative instruments.
As further described in Note 3 and Note 10 to the Consolidated
Financial Statements, in November 2005, First Bank terminated its $50.0 million
term repurchase agreement with a maturity date of August 15, 2006, and
simultaneously recognized a loss of $2.9 million on the sale of
available-for-sale investment securities associated with the termination of the
term repurchase agreement. In addition, on February 14, 2006, First Bank
terminated its two $50.0 million term repurchase agreements with maturity dates
of June 14, 2007, and recognized a $1.6 million loss on the sale of $100.0
million of available-for-sale investment securities associated with the
termination of the term repurchase agreements; on March 28, 2006, First Bank
terminated the $50.0 million term repurchase agreement with a maturity date of
August 1, 2007, and recognized a $746,000 loss on the sale of $50.0 million of
available-for-sale investment securities associated with the termination of the
term repurchase agreement; and on April 28, 2006, First Bank terminated $50.0
million of the $150.0 million term repurchase agreement with a maturity date of
January 12, 2007, and recognized a $310,000 loss on the sale of $50.0 million of
available-for-sale investment securities associated with the termination of the
term repurchase agreement. The Company's termination transactions entered into
in 2006 resulted in a reduction of $200.0 million of its term repurchase
agreements, the recognition of a $2.7 million loss on the sale of $200.0 million
of investment securities held in its available-for-sale investment portfolio,
and prepayment penalties of $306,000 incurred in conjunction with the early
termination of the term repurchase agreements. Additionally, on August 24, 2006,
First Bank restructured the remaining $100.0 million term repurchase agreement
to extend the maturity date to October 12, 2010 and to modify the pricing
structure, including the interest rate floor strike price, as further described
in Note 10 to the Consolidated Financial Statements. First Bank did not incur
any costs associated with the restructuring of the agreement.
On July 14, 2006, First Bank entered into a $100.0 million four-year
term repurchase agreement under a master repurchase agreement with an
unaffiliated third party, as further described in Note 10 to the Consolidated
Financial Statements. The underlying securities associated with the term
repurchase agreement are U.S. Government agency collateralized mortgage
obligation securities and are held by other financial institutions under a
safekeeping agreement.
Interest Rate Cap Agreements. On September 14, 2006, First Bank entered
into a $200.0 million notional amount three-year interest rate cap agreement and
a $200.0 million notional amount four-year interest rate cap agreement in
conjunction with the interest rate swap agreements designated as cash flow
hedges that First Banks entered into on September 14, 2006, as previously
described, to limit the net interest expense associated with First Banks'
interest rate swap agreements in the event of a rising rate scenario. The $200.0
million notional amount three-year interest rate cap agreement provides for
First Bank to receive a quarterly adjustable rate of interest equivalent to the
differential between the three-month LIBOR and the strike price of 7.00% should
the three-month LIBOR exceed the strike price. The $200.0 million notional
amount four-year interest rate cap agreement provides for First Bank to receive
a quarterly adjustable rate of interest equivalent to the differential between
the three-month LIBOR and the strike price of 7.50% should the three-month LIBOR
exceed the strike price. The carrying value of the interest rate cap agreements,
which is included in other assets in the consolidated balance sheets, was
$139,000 at December 31, 2006.
Pledged Collateral. At December 31, 2006, First Banks had accepted cash
of $4.2 million as collateral in connection with its interest rate swap
agreements. At December 31, 2005, First Banks had a $2.0 million letter of
credit issued on its behalf to the counterparty and had pledged investment
securities available for sale with a fair value of $5.1 million and cash of $1.8
million as collateral in connection with its interest rate swap agreements.
Interest Rate Lock Commitments / Forward Commitments to Sell
Mortgage-Backed Securities. Derivative financial instruments issued by First
Banks consist of interest rate lock commitments to originate fixed-rate loans to
be sold. 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. The
carrying value of these interest rate lock commitments included in other assets
in the consolidated balance sheets was ($17,000) and ($49,000) at December 31,
2006 and 2005, respectively.
(6) SERVICING RIGHTS
Mortgage Banking Activities. At December 31, 2006 and 2005, First Banks
serviced mortgage loans for others totaling $1.04 billion and $1.01 billion,
respectively. Borrowers' escrow balances held by First Banks on such loans were
$5.7 million and $5.0 million at December 31, 2006 and 2005, respectively.
Changes in mortgage servicing rights, net of amortization, for the years ended
December 31, 2006 and 2005 were as follows:
2006 2005
---- ----
(dollars expressed in thousands)
Balance, beginning of year............................................. $ 6,623 10,242
Mortgage servicing rights acquired..................................... -- 435
Originated mortgage servicing rights (1)............................... 3,298 904
Amortization........................................................... (4,054) (4,958)
-------- -------
Balance, end of year................................................... $ 5,867 6,623
======== =======
------------------------
(1) In March 2006, First Banks capitalized mortgage servicing rights of $1.2 million associated with the
securitization of $77.1 million of certain residential mortgage loans held in the Company's loan
portfolio, resulting in the recognition of $1.2 million in loan servicing income related to the
future servicing of the underlying loans. Additionally, in April 2006, First Banks capitalized
mortgage servicing rights of $927,000 associated with the securitization of $61.8 million of certain
residential mortgage loans held in the Company's loan portfolio, resulting in the recognition of
$927,000 in loan servicing income related to
the future servicing of the underlying loans.
First Banks did not incur any impairment of mortgage servicing rights
during the years ended December 31, 2006, 2005 and 2004.
Amortization of mortgage servicing rights at December 31, 2006 has been
estimated in the following table:
(dollars expressed in thousands)
Year ending December 31:
2007.................................................................... $ 2,250
2008.................................................................... 1,226
2009.................................................................... 761
2010.................................................................... 567
2011.................................................................... 446
Thereafter.............................................................. 617
-------
Total............................................................... $ 5,867
=======
Other Servicing Activities. At December 31, 2006 and 2005, First Banks
serviced SBA loans for others totaling $143.4 million and $163.4 million,
respectively. Changes in SBA servicing rights, net of amortization and
impairment, for the years ended December 31, 2006 and 2005 were as follows:
2006 2005
---- ----
(dollars expressed in thousands)
Balance, beginning of year............................................. $ 9,489 13,013
Originated SBA servicing rights........................................ 1,630 1,065
Amortization........................................................... (1,662) (2,230)
Impairment............................................................. (1,393) (2,359)
-------- -------
Balance, end of year................................................... $ 8,064 9,489
======== =======
First Banks recognized impairment of $1.4 million, $2.4 million and
$459,000 for the years ended December 31, 2006, 2005 and 2004, respectively. The
impairment of $1.4 million recorded for the year ended December 31, 2006
primarily resulted from a decline in the fair value of the SBA servicing assets
below the carrying value attributable to the placement of certain loans on
nonaccrual status and payoffs received on certain existing loans. The impairment
of $2.4 million recorded for the year ended December 31, 2005 resulted from a
decline in the fair value of the SBA servicing assets below the carrying value
following substantial damage to several shrimping vessels within the servicing
portfolio caused by the effects of Hurricane Katrina, as well as continued
distress affecting the U.S. shrimping industry and the ability of these
borrowers to repay their loans.
Amortization of SBA servicing rights at December 31, 2006 has been
estimated in the following table:
(dollars expressed in thousands)
Year ending December 31:
2007.................................................................... $ 1,498
2008.................................................................... 1,243
2009.................................................................... 1,030
2010.................................................................... 850
2011.................................................................... 701
Thereafter.............................................................. 2,742
-------
Total............................................................... $ 8,064
=======
(7) BANK PREMISES AND EQUIPMENT, NET
Bank premises and equipment, net of accumulated depreciation and
amortization, were comprised of the following at December 31, 2006 and 2005:
2006 2005
---- ----
(dollars expressed in thousands)
Land................................................................. $ 42,386 33,191
Buildings and improvements........................................... 126,903 118,426
Furniture, fixtures and equipment.................................... 124,980 111,238
Leasehold improvements............................................... 25,250 25,494
Construction in progress............................................. 18,066 2,269
--------- --------
Total........................................................... 337,585 290,618
Less accumulated depreciation and amortization....................... 159,168 145,677
--------- --------
Bank premises and equipment, net................................ $ 178,417 144,941
========= ========
Depreciation and amortization expense for the years ended December 31,
2006, 2005 and 2004 was $18.9 million, $17.4 million and $18.6 million,
respectively.
First Banks leases land, office properties and equipment under
operating leases. Certain of the leases contain renewal options and escalation
clauses. Total rent expense was $18.0 million, $15.5 million and $13.2 million
for the years ended December 31, 2006, 2005 and 2004, respectively. Future
minimum lease payments under noncancellable operating leases extend through 2084
as follows:
(dollars expressed in thousands)
Year ending December 31:
2007................................................................... $ 14,175
2008................................................................... 13,716
2009................................................................... 12,012
2010................................................................... 9,914
2011................................................................... 6,192
Thereafter............................................................. 36,984
--------
Total future minimum lease payments................................ $ 92,993
========
First Banks also leases to unrelated parties a portion of its banking
facilities. Rental income associated with these leases was $5.9 million, $6.4
million and $5.8 million for the years ended December 31, 2006, 2005 and 2004,
respectively.
(8) GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets, net of amortization, were
comprised of the following at December 31, 2006 and 2005:
Amortization of intangible assets was $8.2 million, $4.9 million and
$2.9 million for the years ended December 31, 2006, 2005 and 2004, respectively.
As of December 31, 2006, the remaining estimated life of the amortization period
for core deposit intangibles, customer list intangibles and goodwill associated
with P&A Transactions was six years, 16 years and eight years, respectively.
Amortization of intangible assets, including amortization of core deposit
intangibles, customer list intangibles and goodwill associated with P&A
Transactions, has been estimated in the following table, and does not take into
consideration any potential future acquisitions or branch office purchases.
(dollars expressed in thousands)
Year ending December 31:
2007..................................................................... $11,706
2008..................................................................... 11,706
2009..................................................................... 9,803
2010..................................................................... 9,342
2011..................................................................... 7,041
Thereafter............................................................... 15,748
-------
Total................................................................ $65,346
=======
Changes in the carrying amount of goodwill for the years ended December
31, 2006 and 2005 were as follows:
2006 2005
---- ----
(dollars expressed in thousands)
Balance, beginning of year............................................. $ 167,056 156,849
Goodwill acquired during the year...................................... 63,378 18,579
Acquisition-related adjustments (1).................................... 666 (8,229)
Amortization - P&A Transactions........................................ (142) (143)
--------- --------
Balance, end of year................................................... $ 230,958 167,056
========= ========
--------------------
(1) Acquisition-related adjustments recorded in 2006, as further described in Note 2 to the
Consolidated Financial Statements, included $646,000 recorded in the third quarter of 2006
pertaining to the acquisition of Northway State Bank in October 2005. Acquisition-related
adjustments recorded in 2005 included $4.3 million recorded in the first quarter of 2005
pertaining to the acquisition of CIB Bank in November 2004, $1.4 million recorded in the third
quarter of 2005 pertaining to the acquisition of CMC in July 2004, and $2.5 million recorded in
the fourth quarter of 2005 pertaining to the acquisition of Bank of Ste. Genevieve in March
2003. Acquisition-related adjustments included additional purchase accounting adjustments
necessary to appropriately adjust preliminary goodwill recorded at the time of the acquisition,
which was based upon current estimates available at that time, to reflect the receipt of
additional valuation data.
(9) MATURITIES OF TIME DEPOSITS
A summary of maturities of time deposits of $100,000 or more and other
time deposits as of December 31, 2006 is as follows:
Time deposits of Other time
$100,000 or more deposits Total
---------------- -------- -----
(dollars expressed in thousands)
Year ending December 31:
2007............................................ $ 1,240,922 1,944,304 3,185,226
2008............................................ 112,728 322,275 435,003
2009............................................ 18,611 60,179 78,790
2010............................................ 19,299 56,515 75,814
2011............................................ 17,734 23,196 40,930
Thereafter...................................... 10,285 1,416 11,701
----------- ---------- ----------
Total....................................... $ 1,419,579 2,407,885 3,827,464
=========== ========== ==========
(10) OTHER BORROWINGS
Other borrowings were comprised of the following at December 31, 2006
and 2005:
2006 2005
---- ----
(dollars expressed in thousands)
Securities sold under agreements to repurchase:
Daily............................................................... $ 169,874 199,874
Term................................................................ 200,000 300,000
FHLB advances (1)........................................................ 4,025 39,300
--------- --------
Total........................................................... $ 373,899 539,174
========= ========
----------------------
(1) On March 17, 2006 and May 10, 2006, First Bank prepaid $20.5 million and $14.8 million,
respectively, of FHLB advances that were assumed in conjunction with previous acquisitions.
First Bank did not incur any losses associated with the prepayment of the FHLB advances.
The average balance of other borrowings was $380.5 million and $571.7
million, respectively, and the maximum month-end balance of other borrowings was
$535.7 million and $604.3 million, respectively, for the years ended December
31, 2006 and 2005. The average rates paid on other borrowings during the years
ended December 31, 2006, 2005 and 2004 were 4.42%, 3.19% and 1.26%,
respectively. Interest expense on securities sold under agreements to repurchase
was $16.1 million, $16.5 million and $5.4 million for the years ended December
31, 2006, 2005 and 2004, respectively. Interest expense on FHLB advances was
$689,000, $1.6 million and $716,000 for the years ended December 31, 2006, 2005
and 2004, respectively. The assets underlying the daily securities sold under
agreements to repurchase and the FHLB advances are held by First Banks. The
underlying securities associated with the term repurchase agreements are
mortgage-backed securities and callable U.S. Government agency securities and
are held by other financial institutions under safekeeping agreements. As
further described in Note 5 to the Consolidated Financial Statements, the
interest rate floor agreements included within the term repurchase agreements
(and the interest rate cap agreements previously included within the term
repurchase agreements) represent embedded derivative instruments. In accordance
with the Company's interest rate risk management program, First Bank modified
its term repurchase agreements under master repurchase agreements with
unaffiliated third parties in March 2005 to terminate the interest rate cap
agreements previously embedded within the agreements and simultaneously enter
into interest rate floor agreements, also embedded within the agreements. These
modifications resulted in adjustments to the existing interest rate spread to
LIBOR for the underlying agreements, as set forth in the following table. The
modified terms of the agreements became effective during the second quarter of
2005. First Bank did not incur any costs associated with the modifications of
the agreements nor did the modifications result in a change to the accounting
treatment of the embedded derivative instruments.
The maturity dates, par amounts, interest rate spreads and interest
rate floor strike prices on First Bank's term repurchase agreements as of
December 31, 2006 and 2005 were as follows:
Par Interest Rate Interest Rate Floor
Maturity Date Amount Spread Strike Price
------------- ------ ------ ------------
(dollars expressed
in thousands)
December 31, 2006:
July 19, 2010 (1)................. $ 100,000 LIBOR + 0.5475% (3) 5.00% (3)
October 12, 2010 (2).............. 100,000 LIBOR + 0.5100% (3) 4.50% (3)
---------
$ 200,000
=========
December 31, 2005:
January 12, 2007 (2).............. $ 150,000 LIBOR + 0.0050% (4) 3.00% (4)
June 14, 2007 (5)................. 50,000 LIBOR - 0.3300% (4) 3.00% (4)
June 14, 2007 (5)................. 50,000 LIBOR - 0.3400% (4) 3.00% (4)
August 1, 2007 (6)................ 50,000 LIBOR + 0.0800% (4) 3.00% (4)
---------
$ 300,000
=========
-----------------------
(1) First Bank entered into this $100.0 million four-year term repurchase agreement under a master
repurchase agreement on July 14, 2006. Interest is paid quarterly, beginning on October 18, 2006.
(2) First Bank terminated $50.0 million of this term repurchase agreement on April 28, 2006, resulting
in an $83,000 prepayment penalty and the recognition of a $310,000 loss on the sale of
$50.0 million of available-for-sale investment securities associated with the termination of the
term repurchase agreement, as further described in Note 3 and Note 5 to the Consolidated Financial
Statements. On August 24, 2006, First Bank restructured the remaining $100.0 million term
repurchase agreement to extend the maturity date to October 12, 2010 and to modify the pricing
structure, including the interest rate floor strike price, which was effective immediately
following the next quarterly scheduled interest payment date of October 12, 2006. First Bank did
not incur any costs in conjunction with the restructure of this term repurchase agreement.
(3) The interest rate paid on these term repurchase agreements is based on the three-month LIBOR plus
the spread amount shown minus a floating rate, subject to a 0% floor, equal to two times the
differential between the three-month LIBOR and the strike price shown, if the three-month LIBOR
falls below the strike price associated with the interest rate floor agreements.
(4) The interest rate paid on these term repurchase agreements is based on the LIBOR reset in arrears
plus or minus the spread amount shown minus a floating amount equal to the differential between
the three-month LIBOR reset in arrears and the strike price shown, if the three-month LIBOR reset
in arrears falls below the strike price associated with the interest rate floor agreements.
(5) First Bank terminated these term repurchase agreements on February 14, 2006, and recognized a $1.6
million loss on the sale of $100.0 million of available-for-sale investment securities associated
with the termination of the term repurchase agreements, as further described in Note 3 and Note 5
to the Consolidated Financial Statements.
(6) First Bank terminated this term repurchase agreement on March 28, 2006, resulting in a prepayment
penalty of $223,000, and the recognition of a $746,000 loss on the sale of $50.0 million of
available-for-sale investment securities associated with the termination of the term repurchase
agreement, as further described in Note 3 and Note 5 to the Consolidated Financial Statements.
(11) NOTES PAYABLE
On August 10, 2006, First Banks entered into a First Amendment to its
Amended and Restated Secured Credit Agreement with a group of unaffiliated
financial institutions (Amended Credit Agreement). The Amended Credit Agreement,
in the amount of $96.0 million, amended the previous Amended and Restated
Secured Credit Agreement dated August 11, 2005 in the amount of $122.5 million
that provided a $15.0 million senior secured revolving credit facility, a $7.5
million senior secured standby letter of credit facility and a $100.0 million
senior secured term loan facility (Term Loan) (collectively, the Credit
Agreements). The primary changes to the structure of the financing arrangement
relate to a reduction of certain components of the secured credit facilities, a
reduction in the overall pricing structure of the secured credit facilities, and
the renewal of the revolving credit and letter of credit facilities. The Amended
Credit Agreement provides a $10.0 million senior secured revolving credit
facility (Revolving Credit) that matures on August 9, 2007 and a $1.0 million
senior secured standby letter of credit facility (LC Facility) that matures on
August 9, 2007, in addition to the existing Term Loan that matures on August 10,
2008 and had a balance of $85.0 million at the time of the amendment. The
Amended Credit Agreement also provides First Banks an option to increase the
Revolving Credit, which is limited to two increase requests from August 10, 2006
until its maturity date, by an amount of up to $40.0 million provided such
increase will not cause the Revolving Credit to exceed $50.0 million. Interest
is payable on the outstanding principal loan balances under the Revolving Credit
at a floating rate equal to either the lender's prime rate or, at First Banks'
option, LIBOR 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 are accruing at the prime rate,
interest is payable quarterly in arrears. If the loan balances outstanding under
the Revolving Credit are accruing at LIBOR, interest is payable based on the
one, two, three or six-month LIBOR, as selected by First Banks. First Banks is
also subject to a quarterly commitment fee on the unused portion of the
Revolving Credit. First Banks had not drawn any advances on the Revolving Credit
as of December 31, 2006. First Banks borrowed $80.0 million on the Term Loan in
August 2005 and borrowed the remaining $20.0 million in November 2005. Interest
is payable on the outstanding principal loan balance of the Term Loan at a
floating rate equal to LIBOR plus a margin determined by the outstanding loan
balance and First Banks' net income for the preceding four calendar quarters.
The outstanding principal balance of the Term Loan is payable in quarterly
installments of $5.0 million, at a minimum, with the remainder of the Term Loan
balance to be repaid in full, including any unpaid interest, upon its maturity
date. As of December 31, 2006, First Banks had made payments of $35.0 million on
the outstanding principal balance of the Term Loan, reducing the balance from
$100.0 million at December 31, 2005 to $65.0 million at December 31, 2006. The
interest rate for outstanding borrowings under the Credit Agreements at December
31, 2006 and 2005 was 6.25% and 5.38%, respectively. Letters of credit issued to
unaffiliated third parties on behalf of First Banks under the Credit Agreements
were $450,000 and $2.9 million at December 31, 2006 and 2005, respectively, and
had not been drawn on by the counterparties.
The Amended Credit Agreement requires maintenance of certain minimum
capital ratios for First Banks and First Bank, certain maximum nonperforming
assets ratios for First Bank and a minimum return on assets ratio for First
Banks. In addition, it contains additional covenants, including a limitation on
the amount of dividends on First Banks' common stock that may be paid to
stockholders. The Amended Credit Agreement is secured by First Banks' ownership
interest in the capital stock of SFC and First Bank. First Banks and First Bank
were in compliance with all restrictions and requirements of the Credit
Agreements at December 31, 2006 and 2005.
The average balance and maximum month-end balance of borrowings
outstanding under the Credit Agreements during the years ended December 31, 2006
and 2005 were as follows:
2006 2005
---- ----
(dollars expressed in thousands)
Average balance.......................................................... $ 88,843 36,849
Maximum month-end balance................................................ 100,000 100,000
======== ========
The average rates paid on the outstanding borrowings during the years
ended December 31, 2006, 2005 and 2004 were 6.22%, 6.26% and 13.84%,
respectively. Interest expense recognized on borrowings under the Amended Credit
Agreement includes commitment, arrangement and renewal fees. During 2004, the
average rate paid on the outstanding borrowings reflects a marginal increased
level of commitment, arrangement and renewal fees on a much smaller base of
borrowings outstanding during the year, thereby causing the average rate paid to
be significantly higher than in 2006 and 2005.
(12) SUBORDINATED DEBENTURES
First Banks has formed various affiliated Delaware or Connecticut
statutory and business trusts (collectively, the Trusts) that were created for
the sole purpose of issuing trust preferred securities. The trust preferred
securities were issued in private placements, with the exception of First
Preferred Capital Trust II, First Preferred Capital Trust III and First
Preferred Capital Trust IV, which were issued in underwritten public offerings.
First Banks owns all of the common securities of the Trusts. The gross proceeds
of the offerings were used by the Trusts to purchase fixed rate or variable rate
subordinated debentures from First Banks. The subordinated debentures are the
sole asset of the Trusts.
A summary of the subordinated debentures issued to the Trusts in
conjunction with the trust preferred securities offerings at December 31, 2006
and 2005 were as follows:
Subordinated
Trust Debentures
Maturity Call Interest Preferred ---------------
Name of Trust Issuance Date Date Date Rate (1) Securities 2006 2005
------------- ------------- ---- ---- ---- ---------- ---- ----
Variable Rate
-------------
First Bank Capital Trust April 2002 April 22, 2032 April 22, 2007 + 387.5 bp $25,000 25,774 25,774
First Bank Statutory Trust II September 2004 September 20, 2034 September 20, 2009 + 205.0 bp 20,000 20,619 20,619
First Bank Statutory Trust III November 2004 December 15, 2034 December 15, 2009 + 218.0 bp 40,000 41,238 41,238
First Bank Statutory Trust IV March 2006 March 15, 2036 March 15, 2011 + 142.0 bp 40,000 41,238 --
First Bank Statutory Trust V April 2006 June 15, 2036 June 15, 2011 + 145.0 bp 20,000 20,619 --
First Bank Statutory Trust VI June 2006 July 7, 2036 July 7, 2011 + 165.0 bp 25,000 25,774 --
First Bank Statutory Trust VII December 2006 December 15, 2036 December 15, 2011 + 185.0 bp 50,000 51,547 --
Fixed Rate
----------
First Preferred Capital
Trust II (2) October 2000 September 30, 2030 September 30, 2005 10.24% 57,500 -- --
First Preferred Capital
Trust III (3) November 2001 December 31, 2031 December 31, 2006 9.00% 55,200 -- 56,907
First Bank Statutory Trust March 2003 March 20, 2033 March 20, 2008 8.10% 25,000 25,774 25,774
First Preferred Capital
Trust IV April 2003 June 30, 2033 June 30, 2008 8.15% 46,000 47,423 47,423
----------------------------
(1) The interest rates paid on the trust preferred securities were based on either a fixed rate or a variable rate. The variable
rate was based on the three-month LIBOR plus the basis point spread as shown above, with the exception of First Bank Capital
Trust, which was based on the six-month LIBOR plus the basis point spread shown above.
(2) On September 30, 2005, First Banks redeemed the cumulative fixed rate trust preferred securities at the liquidation value of
$25 per preferred security, together with distributions accumulated and unpaid to the redemption date. In conjunction with this
transaction, First Banks paid in full its outstanding $59.3 million of subordinated debentures that were issued by First Banks
to First Preferred Capital Trust II. The funds necessary for the redemption of the subordinated debentures were provided from a
portion of the proceeds of First Banks' Term Loan.
(3) On December 31, 2006, First Banks redeemed the cumulative fixed rate trust preferred securities at the liquidation value of $25
per preferred security, together with distributions accumulated and unpaid to the redemption date. In conjunction with this
transaction, First Banks paid in full its outstanding $56.9 million of subordinated debentures that were issued by First Banks
to First Preferred Capital Trust III. The net proceeds associated with these transactions were paid on January 2, 2007. The
funds necessary for the redemption of the subordinated debentures were provided by internally generated funds and the net
proceeds from the issuance of additional subordinated debentures to First Bank Statutory VII on December 14, 2006.
In connection with the issuance of the trust 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 the Trusts under the trust preferred securities. First Banks' distributions
accrued on the subordinated debentures were $22.4 million, $20.9 million and
$19.0 million for the years ended December 31, 2006, 2005 and 2004,
respectively. The distributions payable on all of First Banks' subordinated
debentures are included in interest expense in the consolidated statements of
income. Deferred issuance costs associated with First Banks' subordinated
debentures are included as a reduction of subordinated debentures in the
consolidated balance sheets and are amortized on a straight-line basis.
Subsequent to December 31, 2006, First Banks, through a newly formed
statutory trust affiliate, issued $25.8 million of subordinated debentures, as
more fully described in Note 25 to the Consolidated Financial Statements. The
structure of the trust preferred securities currently satisfies the regulatory
requirements for inclusion, subject to certain limitations, in First Banks'
capital base.
(13) INCOME TAXES
Provision for income taxes attributable to income from continuing
operations for the years ended December 31, 2006, 2005 and 2004 consists of:
The effective rates of federal income taxes for the years ended
December 31, 2006, 2005 and 2004 differ from the federal statutory rates of
taxation as follows:
Years Ended December 31,
-----------------------------------------------------------
2006 2005 2004
------------------- ------------------ -------------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
(dollars expressed in thousands)
Income before provision for income taxes
and minority interest in loss of
subsidiary................................ $ 166,169 $148,128 $ 128,246
========= ======== =========
Provision for income taxes calculated
at federal statutory income tax rates..... $ 58,159 35.0% $ 51,845 35.0% $ 44,886 35.0%
Effects of differences in tax reporting:
Tax-exempt interest income, net of
tax preference adjustment............. (908) (0.5) (814) (0.5) (791) (0.6)
State income taxes........................ 3,487 2.0 4,773 3.2 5,541 4.3
Reduction in prior year contingency
reserve............................... (4,154) (2.5) (2,116) (1.4) (2,825) (2.2)
Bank owned life insurance, net of
premium............................... (1,039) (0.6) (1,602) (1.1) (1,670) (1.3)
Other, net................................ (483) (0.3) 423 0.3 197 0.2
--------- ---- -------- ---- --------- ----
Provision for income taxes.......... $ 55,062 33.1% $ 52,509 35.5% $ 45,338 35.4%
========= ==== ======== ==== ========= ====
The $4.2 million, $2.1 million and $2.8 million reductions in the prior
year contingency reserve, reflected in 2006, 2005 and 2004, respectively,
resulted from reversals of federal and state tax reserves no longer deemed
necessary.
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December 31,
2006 and 2005 were as follows:
December 31,
------------
2006 2005
---- ----
(dollars expressed in thousands)
Deferred tax assets:
Net operating loss carryforwards................................ $ 26,267 35,513
Deferred built-in loss carryforward............................. 3,345 3,824
Allowance for loan losses....................................... 60,052 57,137
Loans held for sale............................................. 572 5,562
Alternative minimum and general business tax credits............ 3,510 2,770
Interest on nonaccrual loans.................................... 2,286 3,582
Servicing rights................................................ -- 10,081
Deferred compensation........................................... 7,732 6,462
Net fair value adjustment for available-for-sale
investment securities........................................ 6,312 8,954
Net fair value adjustment for derivative instruments............ 755 1,782
Partnership investments......................................... 7,079 4,161
State taxes..................................................... -- 515
Other........................................................... 3,666 6,349
--------- --------
Gross deferred tax assets................................... 121,576 146,692
--------- --------
Valuation allowance............................................. (21,401) (17,754)
--------- --------
Deferred tax assets, net of valuation allowance............. 100,175 128,938
--------- --------
Deferred tax liabilities:
Depreciation on bank premises and equipment..................... 8,445 8,407
Servicing rights................................................ 919 --
Unrealized gains on investment securities....................... -- 144
Core deposit intangibles........................................ 8,887 6,491
Customer list intangibles....................................... 9,307 --
Discount on loans............................................... 5,446 4,878
Equity investments.............................................. 6,103 6,331
State taxes..................................................... 2,594 --
Other........................................................... 1,125 853
--------- --------
Deferred tax liabilities.................................... 42,826 27,104
--------- --------
Net deferred tax assets..................................... $ 57,349 101,834
========= ========
The realization of First Banks' net deferred tax assets is based on the
availability of carrybacks to prior taxable periods, the expectation of future
taxable income and the utilization of tax planning strategies. Based on these
factors, management believes it is more likely than not that First Banks will
realize the recognized net deferred tax assets of $57.5 million at December 31,
2006.
Changes in the deferred tax asset valuation allowance for the years
ended December 31, 2006, 2005 and 2004 were as follows:
2006 2005 2004
---- ---- ----
(dollars expressed in thousands)
Balance, beginning of year........................................... $17,754 17,767 --
Purchase acquisitions................................................ -- -- 17,767
Adjustment to purchase acquisitions completed in prior periods....... 3,647 (13) --
------- ------- -------
Balance, end of year................................................. $21,401 17,754 17,767
======= ======= =======
Upon completion of the acquisition of CIB Bank, the net deferred tax
assets associated with the acquisition were evaluated to determine whether it is
more likely than not that the net deferred tax assets will be recognized in the
future. The ability to utilize the net deferred tax assets recorded in
connection with the acquisition is subject to a number of limitations. Among
these limitations is the restriction that any built-in loss (the fair value was
less than the tax basis) that existed at the date of acquisition, if realized
within the first five years subsequent to the date of acquisition, will be
deferred and must be carried forward and subjected to rules similar to the rules
for carrying forward net operating losses. Based upon these factors, management
determined that a valuation allowance should be established for CIB Bank in the
amount of $21.4 million. Subsequent reductions in the valuation allowance will
be credited to goodwill.
At December 31, 2006 and 2005, the accumulation of prior years'
earnings representing tax bad debt deductions was approximately $29.8 million.
If these tax bad debt reserves were charged for losses other than bad debt
losses, First Banks would be required to recognize taxable income in the amount
of the charge. It is not contemplated that such tax-restricted retained earnings
will be used in a manner that would create federal income tax liabilities.
At December 31, 2006 and 2005, for federal income taxes purposes, First
Banks had net operating loss carryforwards relating to pre-acquisition tax
losses of acquired entities of approximately $75.0 million and $101.5 million,
respectively. At December 31, 2006, the net operating loss carryforwards for
First Banks expire as follows:
(dollars expressed in thousands)
Year ending December 31:
2007.................................................................. $ 1,718
2008.................................................................. 11,924
2009.................................................................. 6,114
2010.................................................................. 7
2011 - 2025........................................................... 55,287
---------
Total............................................................. $ 75,050
=========
During 2004, First Banks recognized built-in losses associated with the
acquisition of CIB Bank. A portion of the realized built-in losses was deferred
for 2004 and is required to be carried forward subject to rules similar to the
rules for carrying forward net operating losses. Utilization of the realized
built-in losses is allowed subsequent to the utilization of any net operating
loss carryforwards associated with the acquisition of CIB Bank. Consequently, at
December 31, 2006, First Banks had deferred built-in loss carryforwards of
approximately $8.0 million. Utilization of the deferred built-in loss
carryforwards is allowed beginning in the year 2020, and such losses will expire
in the year 2024.
(14) EARNINGS PER COMMON SHARE
The following is a reconciliation of basic and diluted EPS for the
years ended December 31, 2006, 2005 and 2004:
Per Share
Income Shares Amount
------ ------ ------
(dollars in thousands, except share and per share data)
Year ended December 31, 2006:
Basic EPS - income available to common stockholders......... $ 110,908 23,661 $4,687.38
Effect of dilutive securities:
Class A convertible preferred stock...................... 769 456 (56.66)
--------- -------- ---------
Diluted EPS - income available to common stockholders....... $ 111,677 24,117 $4,630.72
========= ======== =========
Year ended December 31, 2005:
Basic EPS - income available to common stockholders......... $ 96,120 23,661 $4,062.36
Effect of dilutive securities:
Class A convertible preferred stock...................... 769 516 (54.90)
--------- -------- ---------
Diluted EPS - income available to common stockholders....... $ 96,889 24,177 $4,007.46
========= ======== =========
Year ended December 31, 2004:
Basic EPS - income available to common stockholders......... $ 82,123 23,661 $3,470.80
Effect of dilutive securities:
Class A convertible preferred stock...................... 769 565 (49.22)
--------- -------- ---------
Diluted EPS - income available to common stockholders....... $ 82,892 24,226 $3,421.58
========= ======== =========
(15) CREDIT COMMITMENTS
First Banks is a party to commitments to extend credit and commercial
and standby letters of credit in the normal course of business to meet the
financing needs of its customers. These instruments involve, in varying degrees,
elements of credit risk and interest rate risk in excess of the amount
recognized in the consolidated balance sheets. The interest rate risk associated
with these credit commitments relates primarily to the commitments to originate
fixed-rate loans. As more fully described in Note 5 to the Consolidated
Financial Statements, the interest rate risk of the commitments to originate
fixed-rate loans has been hedged with forward commitments to sell
mortgage-backed securities. The credit risk amounts are equal to the contractual
amounts, assuming the amounts are fully advanced and the collateral or other
security is of no value. First Banks uses the same credit policies in granting
commitments and conditional obligations as it does for on-balance sheet items.
Commitments to extend fixed and variable rate credit, and commercial
and standby letters of credit at December 31, 2006 and 2005 were as follows:
December 31,
--------------------------------
2006 2005
---- ----
(dollars expressed in thousands)
Commitments to extend credit............................................. $ 3,092,804 2,785,028
Commercial and standby letters of credit................................. 171,097 191,634
----------- ----------
$ 3,263,901 2,976,662
=========== ==========
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. Each customer's creditworthiness is
evaluated on a case-by-case basis. The amount of collateral obtained, if deemed
necessary upon extension of credit, is based on management's credit evaluation
of the counterparty. Collateral held varies but may include accounts receivable,
inventory, property, plant, equipment, income-producing commercial properties or
single family residential properties. In the event of nonperformance, First
Banks may obtain and liquidate the collateral to recover amounts paid under its
guarantees on these financial instruments.
Commercial and standby letters of credit are conditional commitments
issued to guarantee the performance of a customer to a third party. The letters
of credit are primarily issued to support public and private borrowing
arrangements, including commercial paper, bond financing and similar
transactions. Most letters of credit extend for less than one year. The credit
risk involved in issuing letters of credit is essentially the same as that
involved in extending loan facilities to customers. Upon issuance of the
commitments, First Banks typically holds marketable securities, certificates of
deposit, inventory, real property or other assets as collateral supporting those
commitments for which collateral is deemed necessary. The standby letters of
credit at December 31, 2006 expire, at various dates, within 10 years.
(16) FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of financial instruments is management's estimate of the
values at which the instruments could be exchanged in a transaction between
willing parties. These estimates are subjective and may vary significantly from
amounts that would be realized in actual transactions. In addition, other
significant assets are not considered financial assets including servicing
assets, deferred income tax assets, bank premises and equipment and goodwill and
other intangible assets. Furthermore, the income taxes that would be incurred if
First Banks were to realize any of the unrealized gains or unrealized losses
indicated between the estimated fair values and corresponding carrying values
could have a significant effect on the fair value estimates and have not been
considered in any of the estimates.
The estimated fair value of First Banks' financial instruments at
December 31, 2006 and 2005 were as follows:
The following methods and assumptions were used in estimating the fair
value of financial instruments:
Cash and cash equivalents and accrued interest receivable: The carrying
values reported in the consolidated balance sheets approximate fair value.
Investment securities: The fair value of trading and available-for-sale
investment securities is the amount reported in the consolidated balance sheets.
The fair value of held-to-maturity investment securities is based on quoted
market prices where available. If quoted market prices were not available, the
fair value was based on quoted market prices of comparable instruments.
Net loans: The fair value of most loans held for portfolio was
estimated utilizing discounted cash flow calculations that applied interest
rates currently being offered for similar loans to borrowers with similar risk
profiles. The fair value of loans held for sale, which is the amount reported in
the consolidated balance sheets, is based on quoted market prices where
available. If quoted market prices were not available, the fair value was based
on quoted market prices of comparable instruments. The carrying value of loans
is net of the allowance for loan losses and unearned discount.
Derivative instruments and bank-owned life insurance: The fair value of
derivative instruments, including cash flow hedges, fair value hedges, interest
rate floor and cap agreements, and interest rate lock commitments, and
bank-owned life insurance is based on quoted market prices where available. If
quoted market prices were not available, the fair value was based on quoted
market prices of comparable instruments.
Forward commitments to sell mortgage-backed securities: The fair value
of forward commitments to sell mortgage-backed securities is based on quoted
market prices. The fair value of these commitments has been reflected in the
consolidated balance sheets in the carrying value of the loans held for sale
portfolio.
Deposits: The fair value of deposits generally payable on demand (i.e.,
noninterest-bearing and interest-bearing demand and savings accounts) is
considered equal to their respective carrying amounts as reported in the
consolidated balance sheets. The fair value of demand deposits does not include
the benefit that results from the low-cost funding provided by deposit
liabilities compared to the cost of borrowing funds in the market. The fair
value disclosed for time deposits was estimated utilizing a discounted cash flow
calculation that applied interest rates currently being offered on similar
deposits to a schedule of aggregated monthly maturities of time deposits. If the
estimated fair value is lower than the carrying value, the carrying value is
reported as the fair value of time deposits.
Other borrowings, notes payable and accrued interest payable: The
carrying values reported in the consolidated balance sheets approximate fair
value.
Subordinated debentures: The fair value is based on quoted market
prices.
Off-Balance Sheet Financial Instruments: The fair value of commitments
to extend credit, standby letters of credit and financial guarantees is
estimated using the fees currently charged to enter into similar agreements,
taking into account the remaining terms of the agreements, the likelihood of the
counterparties drawing on such financial instruments and the credit worthiness
of the counterparties. These fees in aggregate are not considered material, and
as such, were not assigned a value for purposes of this disclosure.
(17) EMPLOYEE BENEFITS
First Banks' 401(k) plan is a self-administered savings and incentive
plan covering substantially all employees. Employer match contributions are
determined annually under the plan by First Banks' Board of Directors. Employee
contributions were limited to $15,000 of gross compensation for 2006. Total
employer contributions under the plan were $3.9 million, $2.4 million and $2.1
million for the years ended December 31, 2006, 2005 and 2004, respectively. The
plan assets are held and managed under a trust agreement with First Bank's trust
department.
First Banks' nonqualified deferred compensation plan, which covers a
select group of employees, is administered by an independent third party. The
plan is exempt from the participation, vesting, funding and fiduciary
requirements of the Employee Retirement Income Security Act of 1974.
Participants may contribute from 1% to 25% of their salary and up to 100% of
their bonuses on a pre-tax basis. Balances outstanding under the plan, which are
reflected in accrued and other liabilities in the consolidated balance sheets,
were $8.1 million and $6.2 million at December 31, 2006 and 2005, respectively.
Plan expense recorded under the plan, which is reflected in salaries and
employee benefits expense in the consolidated statements of income, was
$845,000, $592,000 and $450,000 for the years ended December 31, 2006, 2005 and
2004, respectively.
(18) STOCKHOLDERS' EQUITY
First Banks has two classes of preferred stock outstanding. The Class A
preferred stock is convertible into shares of common stock at a rate based on
the ratio of the par value of the preferred stock to the current market value of
the common stock at the date of conversion, to be determined by independent
appraisal at the time of conversion. Shares of Class A preferred stock may be
redeemed by First Banks at any time at 105.0% of par value. The Class B
preferred stock may not be redeemed or converted. The redemption of any issue of
preferred stock requires the prior approval of the Board of Governors of the
Federal Reserve System (Federal Reserve). The holders of the Class A and Class B
preferred stock have full voting rights. Dividends on the Class A and Class B
preferred stock are adjustable quarterly based on the highest of the Treasury
Bill Rate or the Ten Year Constant Maturity Rate for the two-week period
immediately preceding the beginning of the quarter. This rate shall not be less
than 6.0% nor more than 12.0% on the Class A preferred stock, or less than 7.0%
nor more than 15.0% on the Class B preferred stock. The annual dividend rates
for the Class A and Class B preferred stock were 6.0% and 7.0%, respectively,
for the years ended December 31, 2006, 2005 and 2004.
Other comprehensive income (loss) of $6.8 million, ($18.1) million and
($31.0) million, as presented in the accompanying Consolidated Statements of
Changes in Stockholders' Equity and Comprehensive Income, is reflected net of
income tax expense (benefit) of $3.7 million, ($9.7) million and ($16.7) million
at December 31, 2006, 2005 and 2004, respectively.
In December 2006, First Banks recorded an increase in additional
paid-in capital of $3.8 million which related to the utilization of net
operating losses that were acquired with the acquisition of First Banks America,
Inc. (FBA) and its wholly-owned subsidiary BankTEXAS N.A., in 1994. Effective
December 1994, the FBA Board of Directors approved the implementation of a
quasi-reorganization. In accordance with the provisions of SFAS No. 109 and
under the requirements for completing the quasi-reorganization, tax benefits for
deductible temporary differences and net operating loss carryforwards that
existed at the date of the quasi-reorganization and are subsequently recognized
are generally reported as a direct addition to contributed capital.
(19) TRANSACTIONS WITH RELATED PARTIES
Outside of normal customer relationships, no directors or officers of
First Banks, no shareholders holding over 5% of First Banks' voting securities
and no corporations or firms with which such persons or entities are associated
currently maintain or have maintained, since the beginning of the last full
fiscal year, any significant business or personal relationships with First Banks
or its subsidiaries, other than that which arises by virtue of such position or
ownership interest in First Banks or its subsidiaries, except as described in
the following paragraphs.
First Services, L.P., a limited partnership indirectly owned by First
Banks' Chairman and members of his immediate family, provides information
technology, item processing and various related services to First Banks, Inc.
and its subsidiaries. Fees paid under agreements with First Services, L.P. were
$30.6 million, $29.6 million and $26.6 million for the years ended December 31,
2006, 2005 and 2004, respectively. First Services, L.P. leases information
technology and other equipment from First Bank. During 2006, 2005 and 2004,
First Services, L.P. paid First Bank $4.2 million, $4.3 million and $4.3
million, respectively, in rental fees for the use of that equipment.
First Brokerage America, L.L.C., a limited liability company indirectly
owned by First Banks' Chairman and members of his immediate family, received
approximately $3.0 million, $2.6 million and $3.3 million for the years ended
December 31, 2006, 2005 and 2004, respectively, in gross 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 Title Guaranty LLC D/B/A First Banc Insurors (First Title), a
limited liability company owned by First Banks' Chairman and members of his
immediate family, received approximately $221,000, $379,000 and $514,000 for the
years ended December 31, 2006, 2005 and 2004, respectively, in commissions for
insurance policies purchased by First Banks or customers of First Bank from
unaffiliated third-party insurers. The insurance premiums on which these
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.
On May 31, 2006, Adrian Baker, a newly acquired subsidiary of First
Bank, purchased the personal and commercial insurance book of business from
First Title. First Bank engaged an independent third party to perform a business
valuation of the personal and commercial insurance book of business of First
Title, which was determined to be approximately $270,000 and is being amortized
over seven years utilizing the straight-line method.
During 2006, First Bank contributed $5.0 million in cash to the
Dierberg Operating Foundation, Inc., a charitable foundation established by
First Banks' Chairman and members of his immediate family. In addition, on
November 15, 2006, First Banks contributed 26,962 shares of common stock held in
its available-for-sale investment securities portfolio with a fair value of $1.0
million to the Dierberg Operating Foundation, Inc. In conjunction with this
transaction, First Banks recorded charitable contribution expense of $1.0
million, which was partially offset by a gain on the contribution of these
available-for-sale investment securities of $121,000, representing the
difference between the cost basis and the fair value of the common stock on the
date of the contribution. In addition, First Banks recognized a tax benefit of
$522,000 associated with this transaction. During 2005, First Bank contributed
$2.5 million in cash to The Dierberg Foundation, a charitable foundation
established by First Banks' Chairman and members of his immediate family, and
$1.5 million in cash to the Dierberg Operating Foundation, Inc. First Banks did
not make any charitable contributions to these organizations during 2004.
First Banks periodically purchases various products from Hermannhof,
Inc. and Dierberg Star Lane Vineyards, entities that are controlled by First
Banks' Chairman and members of his immediate family. First Banks utilizes these
products primarily for customer and employee events and promotions, and business
development functions. During the years ended December 31, 2006, 2005 and 2004,
First Banks purchased products aggregating approximately $376,000, $320,000 and
$189,000, respectively, from these entities.
First Bank leases certain of its in-store branch offices and ATM sites
from Dierbergs Markets, Inc., a grocery store chain headquartered in St. Louis,
Missouri that is owned and operated by the brother of First Banks' Chairman and
members of his immediate family. Total rent expense incurred by First Bank under
the lease obligation contracts was $385,000, $335,000 and $297,000 for the years
ended December 31, 2006, 2005 and 2004, respectively.
In August 2004, First Bank granted to FCA, a corporation owned by First
Banks' Chairman and members of his immediate family, a written option to
purchase 735 Membership Interests of SBLS LLC, a wholly owned limited liability
company of First Bank, at a price of $10,000 per Membership Interest, or $7.4
million in aggregate. The option could have been exercised by FCA at any time
prior to its expiration, which was extended to June 30, 2005. On June 30, 2005,
FCA exercised this option and paid $7.4 million in cash. Consequently, SBLS LLC
became 51.0% owned by First Bank and 49.0% owned by FCA as of June 30, 2005.
In June 2005, SBLS LLC executed a Multi-Party Agreement by and among
SBLS LLC, First Bank, Colson Services Corp., fiscal transfer agent for the SBA,
and the SBA, in addition to a Loan and Security Agreement by and among First
Bank and the SBA (collectively, the Agreement) that provides a $50.0 million
warehouse line of credit for loan funding purposes. The Agreement provided for
an initial maturity date of June 30, 2008, which was extended on June 15, 2006
by First Bank to June 30, 2009. Interest is payable monthly, in arrears, on the
outstanding loan balances at a rate equal to First Bank's prime lending rate
minus 50 basis points. Advances under the Agreement are secured by the
assignment of the majority of the assets of SBLS LLC. The balance of advances
outstanding under this line of credit was $47.5 million and $31.4 million at
December 31, 2006 and 2005, respectively. Interest expense recorded under the
Agreement by SBLS LLC was $3.0 million and $1.9 million for the years ended
December 31, 2006 and 2005, respectively. The balance of the advances under the
Agreement and the related interest expense recognized by SBLS LLC are fully
eliminated for purposes of the Consolidated Financial Statements.
First Bank has had in the past, and may have in the future, loan
transactions in the ordinary course of business with its directors and/or their
affiliates. These loan transactions have been made 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 $55.9 million and $37.9 million at December 31, 2006 and 2005,
respectively. First Bank does not extend credit to its officers or to officers
of First Banks, Inc., except extensions of credit secured by mortgages on
personal residences, loans to purchase automobiles, personal credit card
accounts and deposit account overdraft protection under a plan whereby a credit
limit has been established in accordance with First Bank's standard credit
criteria.
In August 2005, First Bank entered into a contract with World Wide
Technology, Inc. (WWT), a wholly owned subsidiary of World Wide Technology
Holding Co., Inc. (WWTHC). WWTHC is an electronic procurement and logistics
company in the information technology industry headquartered in St. Louis,
Missouri. The contract provided for WWT to provide information technology
services associated with the initial phase of the upgrade of personal computers
to First Bank employees in an ongoing effort to further standardize the
technological infrastructure throughout the First Bank branch banking network.
Mr. David L. Steward, a director of First Banks and a member of the Audit
Committee of First Banks, serves as the Chairman of the Board of Directors of
WWTHC. Prior to entering into this contract, the Audit Committee of First Banks
reviewed and approved the utilization of WWT for information technology services
for this phase of the project with fees not to exceed $500,000. First Bank made
payments of $7,000 and $471,000 under the contract for the first phase of the
project for the years ended December 31, 2006 and 2005, respectively. During
2006, First Bank evaluated the second phase of its corporate-wide personal
computer upgrade project and entered into a contract with WWT on August 21, 2006
for additional information technology services. Prior to entering into this
contract, the Audit Committee of First Banks reviewed and approved the
utilization of WWT for this phase of the project with fees not to exceed
$500,000. First Bank made payments of $367,000 under the contract for the second
phase of the project for the year ended December 31, 2006.
(20) BUSINESS SEGMENT RESULTS
First Banks' business segment is First Bank. The reportable business
segment is consistent with the management structure of First Banks, First Bank
and the internal reporting system that monitors performance. First Bank provides
similar products and services in its defined geographic areas through its branch
network. 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, trade financing and insurance premium
financing. Other financial services include mortgage banking, debit cards,
brokerage services, employee benefit and commercial and personal insurance
services, 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 and its subsidiaries consist
primarily of interest income, generated from the loan and investment security
portfolios, service charges and fees generated from the deposit products and
services, and fees generated by our mortgage banking, insurance services, and
trust, private banking and institutional money management services businesses.
The geographic areas include eastern Missouri, Illinois, including Chicago,
southern and northern California, and Houston and Dallas, Texas. The products
and services are offered to customers primarily within First Banks' respective
geographic areas.
The business segment results are consistent with First Banks' internal
reporting system and, in all material respects, with U.S. generally accepted
accounting principles and practices predominant in the banking industry. Such
principles and practices are summarized in Note 1 to the Consolidated Financial
Statements. The business segment results are summarized as follows:
Corporate, Other
and Intercompany
First Bank Reclassifications (1) Consolidated Totals
--------------------------------- ----------------------------- ----------------------------------
2006 2005 2004 2006 2005 2004 2006 2005 2004
---- ---- ---- ---- ---- ---- ---- ---- ----
(dollars expressed in thousands)
Balance sheet information:
Investment securities......... $ 1,439,118 1,324,219 1,803,454 25,828 16,564 9,895 1,464,946 1,340,783 1,813,349
Loans, net of unearned
discount................... 7,666,481 7,020,771 6,137,968 -- -- -- 7,666,481 7,020,771 6,137,968
Goodwill and other
intangible assets.......... 295,382 191,901 182,669 -- -- -- 295,382 191,901 182,669
Total assets.................. 10,116,246 9,148,931 8,720,331 42,468 21,402 12,510 10,158,714 9,170,333 8,732,841
Deposits...................... 8,550,062 7,601,162 7,161,636 (106,976) (59,331) (9,666) 8,443,086 7,541,831 7,151,970
Notes payable................. -- -- -- 65,000 100,000 15,000 65,000 100,000 15,000
Subordinated debentures....... -- -- -- 297,966 215,461 273,300 297,966 215,461 273,300
Stockholders' equity.......... 1,086,876 931,192 877,473 (286,441) (252,254) (276,580) 800,435 678,938 600,893
=========== ========= ========= ======== ======== ======== ========== ========= =========
Income statement information:
Interest income............... $ 645,100 493,182 394,196 1,204 758 586 646,304 493,940 394,782
Interest expense.............. 233,982 145,608 79,260 27,880 22,651 15,507 261,862 168,259 94,767
----------- --------- --------- -------- -------- -------- ---------- --------- ---------
Net interest income..... 411,118 347,574 314,936 (26,676) (21,893) (14,921) 384,442 325,681 300,015
Provision for loan losses..... 12,000 (4,000) 25,750 -- -- -- 12,000 (4,000) 25,750
----------- --------- --------- -------- -------- -------- ---------- --------- ---------
Net interest income
after provision
for loan losses.... 399,118 351,574 289,186 (26,676) (21,893) (14,921) 372,442 329,681 274,265
Noninterest income............ 112,549 96,871 87,790 394 (786) (591) 112,943 96,085 87,199
Noninterest expense........... 315,663 274,484 229,896 3,553 3,154 3,322 319,216 277,638 233,218
----------- --------- --------- -------- -------- -------- ---------- --------- ---------
Income before provision
for income taxes and
minority interest in
loss of subsidiary.... 196,004 173,961 147,080 (29,835) (25,833) (18,834) 166,169 148,128 128,246
Provision for income taxes.... 65,752 61,517 54,682 (10,690) (9,008) (9,344) 55,062 52,509 45,338
----------- --------- --------- -------- -------- -------- ---------- --------- ---------
Income before minority
interest in loss
of subsidiary........ 130,252 112,444 92,398 (19,145) (16,825) (9,490) 111,107 95,619 82,908
Minority interest in loss
of subsidiary.............. (587) (1,287) -- -- -- -- (587) (1,287) --
----------- --------- --------- -------- -------- -------- ---------- --------- ---------
Net income.............. $ 130,839 113,731 92,398 (19,145) (16,825) (9,490) 111,694 96,906 82,908
=========== ========= ========= ======== ======== ======== ========== ========= =========
------------------------
(1) Corporate and other includes $14.8 million, $13.4 million and $9.8 million of interest expense on subordinated debentures,
after applicable income tax benefit of $8.0 million, $7.2 million and $5.3 million for the years ended December 31, 2006,
2005 and 2004, respectively.
(21) REGULATORY CAPITAL
First Banks and First 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 First 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 First Bank to maintain minimum amounts and
ratios of total and Tier 1 capital (as defined in the regulations) to
risk-weighted assets, and of Tier 1 capital to average assets. Management
believes, as of December 31, 2006 and 2005, First Banks and First Bank were each
well capitalized. As of December 31, 2006, the most recent notification from
First Banks' primary regulator categorized First Banks and First Bank as well
capitalized under the regulatory framework for prompt corrective action. To be
categorized as well capitalized, First Banks and First Bank must maintain
minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set
forth in the following table.
At December 31, 2006 and 2005, First Banks' and First Bank's required
and actual capital ratios were as follows:
Actual
------------------------------------------ For To be Well
2006 2005 Capital Capitalized Under
-------------------- -------------------- Adequacy Prompt Corrective
Amount Ratio Amount Ratio Purposes Action Provisions
------ ----- ------ ----- -------- -----------------
(dollars expressed in thousands)
Total capital (to risk-weighted assets):
First Banks......................... $ 929,688 10.25% $ 826,893 10.14% 8.0% 10.0%
First Bank.......................... 925,013 10.23 868,393 10.66 8.0 10.0
Tier 1 capital (to risk-weighted assets):
First Banks......................... 789,967 8.71 724,501 8.88 4.0 6.0
First Bank.......................... 811,530 8.97 766,148 9.41 4.0 6.0
Tier 1 capital (to average assets):
First Banks......................... 789,967 8.13 724,501 8.13 3.0 5.0
First Bank.......................... 811,530 8.38 766,148 8.61 3.0 5.0
In March 2005, the Federal Reserve adopted a final rule, Risk-Based
Capital Standards: Trust Preferred Securities and the Definition of Capital,
which allows for the continued limited inclusion of trust preferred securities
in Tier 1 capital. The Federal Reserve's final rule limits restricted core
capital elements to 25% of the sum of all core capital elements, including
restricted core capital elements, net of goodwill less any associated deferred
tax liability. Amounts of restricted core capital elements in excess of these
limits may generally be included in Tier 2 capital. Specifically, amounts of
qualifying trust preferred securities and cumulative perpetual preferred stock
in excess of the 25% limit may be included in Tier 2 capital, but will be
limited, together with subordinated debt and limited-life preferred stock, to
50% of Tier 1 capital. In addition, the final rule provides that in the last
five years before the maturity of the underlying subordinated note, the
outstanding amount of the associated trust preferred securities is to be
excluded from Tier 1 capital and included in Tier 2 capital, subject to
one-fifth amortization per year. The final rule provides for a five-year
transition period, ending March 31, 2009, for the application of the
quantitative limits. Until March 31, 2009, the aggregate amount of qualifying
cumulative perpetual preferred stock and qualifying trust preferred securities
that may be included in Tier 1 capital is limited to 25% of the sum of the
following core capital elements: qualifying common stockholders' equity,
qualifying noncumulative and cumulative perpetual preferred stock, qualifying
minority interest in the equity accounts of consolidated subsidiaries and
qualifying trust preferred securities. First Banks has evaluated the impact of
the final rule on the Company's financial condition and results of operations,
and determined the implementation of the Federal Reserve's final rules that will
be effective in March 2009 would reduce First Banks' Tier 1 capital (to
risk-weighted assets) and Tier 1 capital (to average assets) to 7.86% and 7.34%,
respectively, and would not have an impact on total capital (to risk-weighted
assets), as of December 31, 2006.
(22) DISTRIBUTION OF EARNINGS OF FIRST BANK
First Bank is restricted by various state and federal regulations as to
the amount of dividends that are available for payment to First Banks, Inc.
Under the most restrictive of these requirements, the future payment of
dividends from First Bank is limited to approximately $135.0 million at December
31, 2006, unless prior permission of the regulatory authorities is obtained.
(23) PARENT COMPANY ONLY FINANCIAL INFORMATION
Following are condensed balance sheets of First Banks, Inc. as of
December 31, 2006 and 2005, and condensed statements of income and cash flows
for the years ended December 31, 2006, 2005 and 2004:
CONDENSED BALANCE SHEETS
December 31,
----------------------
2006 2005
---- ----
(dollars expressed in thousands)
Assets
------
Cash deposited in First Bank............................................ $ 16,688 59,036
Cash deposited in unaffiliated financial institutions................... 26 1,789
---------- ---------
Total cash......................................................... 16,714 60,825
Investment securities................................................... 25,828 16,564
Investment in subsidiaries.............................................. 1,087,356 931,690
Advances due from subsidiary bank holding company....................... 90,000 --
Other assets............................................................ 17,014 3,425
---------- ---------
Total assets....................................................... $1,236,912 1,012,504
========== =========
Liabilities and Stockholders' Equity
Notes payable........................................................... $ 65,000 100,000
Subordinated debentures................................................. 297,966 215,461
Accrued expenses and other liabilities.................................. 73,511 18,105
---------- ---------
Total liabilities.................................................. 436,477 333,566
Stockholders' equity.................................................... 800,435 678,938
---------- ---------
Total liabilities and stockholders' equity......................... $1,236,912 1,012,504
========== =========
CONDENSED STATEMENTS OF INCOME
Years Ended December 31,
----------------------------------
2006 2005 2004
---- ---- ----
(dollars expressed in thousands)
Income:
Dividends from subsidiaries................................... $ 70,000 94,050 40,000
Management fees from subsidiaries............................. 35,525 31,975 27,853
Gain on sale of available-for-sale investment securities...... 767 -- --
Other......................................................... 2,284 1,049 710
--------- -------- --------
Total income............................................... 108,576 127,074 68,563
--------- -------- --------
Expense:
Interest...................................................... 28,356 22,860 15,597
Salaries and employee benefits................................ 25,530 23,238 20,699
Legal, examination and professional fees...................... 3,796 3,959 2,943
Charitable contributions...................................... 1,068 100 43
Other......................................................... 9,660 8,687 8,114
--------- -------- --------
Total expense.............................................. 68,410 58,844 47,396
--------- -------- --------
Income before benefit for income taxes and equity
in undistributed earnings of subsidiaries................ 40,166 68,230 21,167
Benefit for income taxes........................................ (10,690) (9,004) (9,344)
--------- -------- --------
Income before equity in undistributed earnings
of subsidiaries.......................................... 50,856 77,234 30,511
Equity in undistributed earnings of subsidiaries................ 60,838 19,672 52,397
--------- -------- --------
Net income................................................. $ 111,694 96,906 82,908
========= ======== ========
CONDENSED STATEMENTS OF CASH FLOWS
Years Ended December 31,
----------------------------------
2006 2005 2004
---- ---- ----
(dollars expressed in thousands)
Cash flows from operating activities:
Net income.................................................... $ 111,694 96,906 82,908
Adjustments to reconcile net income to net cash provided by
operating activities:
Net income of subsidiaries............................... (130,838) (113,722) (92,397)
Dividends from subsidiaries.............................. 70,000 94,050 40,000
Other, net............................................... (100,610) 4,882 (3,262)
--------- -------- --------
Net cash (used in) provided by operating activities.... (49,754) 82,116 27,249
--------- -------- --------
Cash flows from investing activities:
Increase in investment securities............................. (6,375) (5,304) (915)
Investment in common securities of affiliated business
and statutory trusts....................................... (4,178) -- (1,857)
Payments from redemption of investment in common securities
of affiliated business and statutory trusts................ -- 1,778 --
Acquisitions of subsidiaries.................................. (85,514) (52,400) (76,067)
Capital contributions to subsidiaries......................... -- -- (15,000)
Other, net.................................................... (1,682) 1,340 (39)
--------- -------- --------
Net cash used in investing activities.................. (97,749) (54,586) (93,878)
--------- -------- --------
Cash flows from financing activities:
Advances drawn on notes payable............................... -- 100,000 15,000
Repayments of notes payable................................... (35,000) (15,000) (17,000)
Proceeds from issuance of subordinated debentures............. 139,178 -- 61,857
Repayments of subordinated debentures......................... -- (59,278) --
Payment of preferred stock dividends.......................... (786) (786) (786)
--------- -------- --------
Net cash provided by financing activities.............. 103,392 24,936 59,071
--------- -------- --------
Net (decrease) increase in cash........................ (44,111) 52,466 (7,558)
Cash, beginning of year......................................... 60,825 8,359 15,917
--------- -------- --------
Cash, end of year............................................... $ 16,714 60,825 8,359
========= ======== ========
Noncash investing activities:
Cash paid for interest........................................ $ 28,843 18,690 13,527
========= ======== ========
(24) 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 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 $5.0 million 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 coexistent 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 December 31, 2006, 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.
In August 2004, SBLS LLC acquired substantially all of the assets and
assumed certain liabilities of SBLS, as further described in Note 2 to the
Consolidated Financial Statements. The Amended and Restated Asset Purchase
Agreement (Asset Purchase Agreement) governing this transaction provided for
certain payments to the seller contingent on future valuations of specifically
identified assets, including servicing assets and retained interests in
securitizations. SBLS LLC was not required to make any payments to the seller as
of September 30, 2006 and September 30, 2005, the first and second measurement
dates under the terms of the Asset Purchase Agreement. However, in October 2006,
SBLS LLC made a payment of $375,000, as settlement in full of all obligations
associated with these contingent payments pursuant to a mutual agreement amongst
the parties. As of December 31, 2005, SBLS LLC had not recorded a liability for
the obligations associated with these contingent payments, as the likelihood
that SBLS LLC would be required to make payments under the Asset Purchase
Agreement was not ascertainable at that time.
In the ordinary course of business, First Banks and its subsidiaries
become involved in legal proceedings. Management, in consultation with legal
counsel, believes the ultimate resolution of these proceedings will not have a
material adverse effect on the financial condition or results of operations of
First Banks and/or its subsidiaries.
(25) SUBSEQUENT EVENTS (UNAUDITED)
On February 23, 2007, First Bank Statutory Trust VIII (FBST VIII), a
newly formed Delaware statutory trust, issued 25,000 variable rate trust
preferred securities at $1,000 per security in a private placement, and issued
774 common securities to First Banks at $1,000 per security. First Banks owns
all of the common securities of FBST VIII. The gross proceeds of the offering
were used by FBST VIII to purchase $25.8 million of variable rate subordinated
debentures from First Banks, maturing on March 30, 2037. The maturity date of
the subordinated debentures may be shortened, at the option of First Banks, to a
date not earlier than March 30, 2012, if certain conditions are met. The
subordinated debentures are the sole asset of FBST VIII. In connection with the
issuance of the FBST VIII 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 VIII under the
FBST VIII preferred securities. Proceeds from the issuance of the subordinated
debentures to FBST VIII, net of offering expenses, were $25.8 million. The
distribution rate on the FBST VIII preferred securities is equivalent to the
three-month LIBOR plus 161.0 basis points, and is payable quarterly in arrears
beginning March 30, 2007.
On February 28, 2007, First Banks completed its acquisition of Royal
Oaks, located in Houston, Texas, for $38.6 million in cash. The acquisition
served to expand First Banks' banking franchise in Houston, Texas. The
transaction was funded through internally generated funds and the issuance of
the FBST VIII trust preferred securities. At the time of the acquisition, Royal
Oaks had assets of $206.9 million, loans, net of unearned discount, of $175.5
million, deposits of $159.1 million and stockholders' equity of $9.6 million.
The assets acquired and liabilities assumed were recorded at their estimated
fair value on the acquisition date. The fair value adjustments represent current
estimates and are subject to further adjustment as the valuation data is
finalized. Preliminary goodwill, which is not deductible for tax purposes, was
approximately $29.0 million. Royal Oaks was merged with and into First Bank at
the time of the acquisition.
FIRST BANKS, INC.
QUARTERLY CONDENSED FINANCIAL DATA -- UNAUDITED
---------------------------------------------------------------------------------------------------------------------
2006 Quarter Ended
------------------------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
(dollars expressed in thousands, except per share data)
Interest income............................................ $ 147,234 157,731 168,293 173,046
Interest expense........................................... 56,368 62,051 69,109 74,334
--------- -------- -------- --------
Net interest income..................................... 90,866 95,680 99,184 98,712
Provision for loan losses.................................. 1,000 5,000 2,000 4,000
--------- -------- -------- --------
Net interest income after provision for loan losses..... 89,866 90,680 97,184 94,712
Noninterest income......................................... 25,497 25,879 29,994 31,573
Noninterest expense........................................ 74,815 81,051 80,473 82,877
--------- -------- -------- --------
Income before provision for income taxes and minority
interest in loss of subsidiary........................ 40,548 35,508 46,705 43,408
Provision for income taxes................................. 11,703 13,500 17,249 12,610
--------- -------- -------- --------
Income before minority interest in loss of subsidiary... 28,845 22,008 29,456 30,798
Minority interest in loss of subsidiary.................... (158) (78) (204) (147)
--------- -------- -------- --------
Net income.............................................. $ 29,003 22,086 29,660 30,945
========= ======== ======== ========
Earnings per common share:
Basic................................................... $1,217.49 927.86 1,245.28 1,296.75
========= ======== ======== ========
Diluted................................................. $1,202.46 916.31 1,231.06 1,285.63
========= ======== ======== ========
2005 Quarter Ended
------------------------------------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
(dollars expressed in thousands, except per share data)
Interest income............................................ $ 112,228 117,188 127,801 136,723
Interest expense........................................... 34,149 39,367 45,155 49,588
--------- -------- -------- --------
Net interest income..................................... 78,079 77,821 82,646 87,135
Provision for loan losses.................................. -- (8,000) -- 4,000
--------- -------- -------- --------
Net interest income after provision for loan losses..... 78,079 85,821 82,646 83,135
Noninterest income......................................... 21,215 26,191 24,948 23,731
Noninterest expense........................................ 63,869 70,161 67,852 75,756
--------- -------- -------- --------
Income before provision for income taxes and minority
interest in loss of subsidiary........................ 35,425 41,851 39,742 31,110
Provision for income taxes................................. 13,298 15,005 13,265 10,941
--------- -------- -------- --------
Income before minority interest in loss of subsidiary... 22,127 26,846 26,477 20,169
Minority interest in loss of subsidiary.................... -- -- (1,036) (251)
--------- -------- -------- --------
Net income.............................................. $ 22,127 26,846 27,513 20,420
========= ======== ======== ========
Earnings per common share:
Basic................................................... $ 926.87 1,129.05 1,154.52 851.91
========= ======== ======== ========
Diluted................................................. $ 915.04 1,110.42 1,139.46 846.12
========= ======== ======== ========
FIRST BANKS, INC.
INVESTOR INFORMATION
FIRST BANKS, INC. PREFERRED SECURITIES
The preferred securities of First Preferred Capital Trust IV are traded
on the New York Stock Exchange with the ticker symbol "FBSPrA." The preferred
securities of First Preferred Capital Trust IV are represented by a global
security that has been deposited with and registered in the name of The
Depository Trust Company, New York, New York (DTC). The beneficial ownership
interests of these preferred securities are recorded through the DTC book-entry
system. The high and low preferred securities prices and the dividends declared
for 2006 and 2005 are summarized as follows:
FIRST PREFERRED CAPITAL TRUST IV (ISSUE DATE - APRIL 2003) - FBSPrA
2006 2005
------------------ ------------------- Dividend
High Low High Low Declared
---- --- ---- --- --------
First quarter...................................... $28.00 25.76 27.80 26.00 $ 0.509375
Second quarter..................................... 27.65 26.38 27.55 25.75 0.509375
Third quarter...................................... 28.05 26.70 27.40 26.28 0.509375
Fourth quarter..................................... 29.20 26.75 27.61 25.97 0.509375
----------
$ 2.037500
==========
FOR INFORMATION CONCERNING FIRST BANKS, PLEASE CONTACT:
-------------------------------------------------------
Allen H. Blake Terrance M. McCarthy Steven F. Schepman
President and Senior Executive Vice President Senior Vice President
Chief Executive Officer and Chief Operating Officer and Chief Financial Officer
600 James S. McDonnell Blvd. 600 James S. McDonnell Blvd. 600 James S. McDonnell Blvd.
Mail Code - M1-199-014 Mail Code - M1-199-071 Mail Code - M1-199-014
Hazelwood, Missouri 63042 Hazelwood, Missouri 63042 Hazelwood, Missouri 63042
Telephone - (314) 592-5000 Telephone - (314) 592-5000 Telephone - (314) 592-5000
www.firstbanks.com www.firstbanks.com www.firstbanks.com
------------------ ------------------ ------------------
TRANSFER AGENT:
--------------
Computershare Investor Services, LLC
2 North LaSalle Street
Chicago, Illinois 60602
Telephone - (312) 588-4990
www.computershare.com
---------------------
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.
By: /s/ Allen H. Blake
-----------------------------------------
Allen H. Blake
President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Steven F. Schepman
----------------------------------------
Steven F. Schepman
Senior Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Date: March 28, 2007
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the date indicated.
Signatures Title Date
-------------------------------------------------------------------------------------------------------------------
/s/ James F. Dierberg Director March 28, 2007
-----------------------------------------
James F. Dierberg
/s/ Allen H. Blake Director March 28, 2007
-----------------------------------------
Allen H. Blake
/s/ Terrance M. McCarthy Director March 28, 2007
-----------------------------------------
Terrance M. McCarthy
/s/ Steven F. Schepman Director March 28, 2007
-----------------------------------------
Steven F. Schepman
/s/ Gordon A. Gundaker Director March 28, 2007
-----------------------------------------
Gordon A. Gundaker
/s/ David L. Steward Director March 28, 2007
-----------------------------------------
David L. Steward
/s/ Douglas H. Yaeger Director March 28, 2007
-----------------------------------------
Douglas H. Yaeger
INDEX TO EXHIBITS
Exhibit
Number Description
------ -----------
2.1 Stock Purchase Agreement by and among First Banks, Inc., The San
Francisco Company, CIB Marine Bancshares, Inc., Hillside
Investors, Ltd., and CIB Bank, dated August 12, 2004 (incorporated
herein by reference to Exhibit 10.6 to the Company's Current
Report on Form 8-K dated August 12, 2004).
3.1 Restated Articles of Incorporation of the Company, as amended
(incorporated herein by reference to Exhibit 3(i) to the Company's
Annual Report on Form 10-K for the year ended December 31, 1993).
3.2 By-Laws of the Company (incorporated herein by reference to
Exhibit 3.2 to Amendment No. 2 to the Company's Registration
Statement on Form S-1, File No. 33-50576, dated September 15,
1992).
4.1 Agreement as to Expenses and Liabilities between First Banks, Inc.
and First Preferred Capital Trust IV, dated April 1, 2003
(relating to First Preferred Capital Trust IV ("First Preferred
IV")) (incorporated herein by reference to Exhibit 10.20 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 2003).
4.2 Preferred Securities Guarantee Agreement by and between First
Banks, Inc. and Fifth Third Bank, dated April 1, 2003 (relating to
First Preferred IV) (incorporated herein by reference to Exhibit
10.21 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003).
4.3 Indenture between First Banks, Inc. and Fifth Third Bank, as
Trustee, dated April 1, 2003 (relating to First Preferred IV)
(incorporated herein by reference to Exhibit 10.22 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 2003).
4.4 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) (incorporated
herein by reference to Exhibit 10.23 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2003).
4.5 Indenture between First Banks, Inc., as Issuer, and Wilmington
Trust Company, as Trustee, dated as of April 10, 2002
(incorporated herein by reference to Exhibit 4.15 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2002).
4.6 Guarantee Agreement for First Bank Capital Trust, dated as of
April 10, 2002 (incorporated herein by reference to Exhibit 4.16
to the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2002).
4.7 Amended and Restated Declaration of Trust of First Bank Capital
Trust, dated as of April 10, 2002 (incorporated herein by
reference to Exhibit 4.17 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2002).
4.8 Floating Rate Junior Subordinated Debt Security Certificate of
First Banks, Inc., dated April 10, 2002 (incorporated herein by
reference to Exhibit 4.18 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2002).
4.9 Capital Security Certificate of First Bank Capital Trust, dated as
of April 10, 2002 (incorporated herein by reference to Exhibit
4.19 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2002).
4.10 Indenture between First Banks, Inc., as Issuer, and U.S. Bank
National Association, as Trustee, dated as of March 20, 2003
(incorporated herein by reference to Exhibit 10.6 to Amendment No.
4 to the Company's Registration Statement on Form S-2, File No.
333-102549, dated March 24, 2003).
4.11 Amended and Restated Declaration of Trust by and among U.S. Bank
National Association, as Institutional Trustee, First Banks, Inc.,
as Sponsor, and Allen H. Blake, Terrance M. McCarthy and Lisa K.
Vansickle, as Administrators, dated as of March 20, 2003
(incorporated herein by reference to Exhibit 10.7 to Amendment No.
4 to the Company's Registration Statement on Form S-2, File No.
333-102549, dated March 24, 2003).
4.12 Guarantee Agreement by and between First Banks, Inc. and U.S. Bank
National Association, dated as of March 20, 2003 (incorporated
herein by reference to Exhibit 10.8 to Amendment No. 4 to the
Company's Registration Statement on Form S-2, File No. 333-102549,
dated March 24, 2003).
4.13 Placement Agreement by and among First Banks, Inc., First Bank
Statutory Trust and SunTrust Capital Markets, Inc., dated as of
March 20, 2003 (incorporated herein by reference to Exhibit 10.9
to Amendment No. 4 to the Company's Registration Statement on Form
S-2, File No. 333-102549, dated March 24, 2003).
4.14 Junior Subordinated Debenture of First Banks, Inc., dated as of
March 20, 2003 (incorporated herein by reference to Exhibit 10.10
to Amendment No. 4 to the Company's Registration Statement on Form
S-2, File No. 333-102549, dated March 24, 2003).
4.15 Capital Securities Subscription Agreement by and among First Bank
Statutory Trust, First Banks, Inc. and STI Investment Management,
Inc., dated as of March 20, 2003 (incorporated herein by reference
to Exhibit 10.11 to Amendment No. 4 to the Company's Registration
Statement on Form S-2, File No. 333-102549, dated March 24, 2003).
4.16 Common Securities Subscription Agreement by and between First Bank
Statutory Trust and First Banks, Inc., dated as of March 20, 2003
(incorporated herein by reference to Exhibit 10.12 to Amendment
No. 4 to the Company's Registration Statement on Form S-2, File
No. 333-102549, dated March 24, 2003).
4.17 Debenture Subscription Agreement by and between First Banks, Inc.
and First Bank Statutory Trust, dated as of March 20, 2003
(incorporated herein by reference to Exhibit 10.13 to Amendment
No. 4 to the Company's Registration Statement on Form S-2, File
No. 333-102549, dated March 24, 2003).
4.18 Indenture between First Banks, Inc., as Issuer, and Wilmington
Trust Company, as Trustee, dated as of September 20, 2004
(incorporated herein by reference to Exhibit 4.26 to the Company's
Annual Report on Form 10-K for the year ended December 31, 2004).
4.19 Amended and Restated Declaration of Trust by and among Wilmington
Trust Company, as Delaware Trustee and the Institutional Trustee,
First Banks, Inc., as Sponsor, and Allen H. Blake, Terrance M.
McCarthy and Lisa K. Vansickle, as Administrators, dated as of
September 20, 2004 (incorporated herein by reference to Exhibit
4.27 to the Company's Annual Report on Form 10-K for the year
ended December 31, 2004).
4.20 Guarantee Agreement by and between First Banks, Inc. and
Wilmington Trust Company, dated as of September 20, 2004
(incorporated herein by reference to Exhibit 4.28 to the Company's
Annual Report on Form 10-K for the year ended December 31, 2004).
4.21 Placement Agreement by and among First Banks, Inc., First Bank
Statutory Trust II and FTN Financial Capital Markets and Keefe,
Bruyette & Woods, as Placement Agents, dated as of September 10,
2004 (incorporated herein by reference to Exhibit 4.29 to the
Company's Annual Report on Form 10-K for the year ended December
31, 2004).
4.22 Floating Rate Junior Subordinated Deferrable Interest Debenture of
First Banks, Inc., dated as of September 20, 2004 (incorporated
herein by reference to Exhibit 4.30 to the Company's Annual Report
on Form 10-K for the year ended December 31, 2004).
4.23 Capital Securities Subscription Agreement by and among First Bank
Statutory Trust II, First Banks, Inc. and First Tennessee Bank
National Association, dated as of September 20, 2004 (incorporated
herein by reference to Exhibit 4.31 to the Company's Annual Report
on Form 10-K for the year ended December 31, 2004).
4.24 Capital Securities Subscription Agreement by and between First
Bank Statutory Trust II, First Banks, Inc. and Preferred Term
Securities XV, Ltd., dated as of September 20, 2004 (incorporated
herein by reference to Exhibit 4.32 to the Company's Annual Report
on Form 10-K for the year ended December 31, 2004).
4.25 Capital Securities Certificate P-1 of First Bank Statutory Trust
II, dated September 20, 2004 (incorporated herein by reference to
Exhibit 4.33 to the Company's Annual Report on Form 10-K for the
year ended December 31, 2004).
4.26 Capital Securities Certificate P-2 of First Bank Statutory Trust
II, dated September 20, 2004 (incorporated herein by reference to
Exhibit 4.34 to the Company's Annual Report on Form 10-K for the
year ended December 31, 2004).
4.27 Indenture between First Banks, Inc., as Issuer, and Wilmington
Trust Company, as Trustee, dated as of November 23, 2004
(incorporated herein by reference to Exhibit 4.35 to the Company's
Annual Report on Form 10-K for the year ended December 31, 2004).
4.28 Amended and Restated Declaration of Trust by and among Wilmington
Trust Company, as Delaware Trustee and the Institutional Trustee,
First Banks, Inc., as Sponsor, and Terrance M. McCarthy, Peter D.
Wimmer and Lisa K. Vansickle, as Administrators, dated as of
November 23, 2004 (incorporated herein by reference to Exhibit
4.36 to the Company's Annual Report on Form 10-K for the year
ended December 31, 2004).
4.29 Guarantee Agreement by and between First Banks, Inc. and
Wilmington Trust Company, dated as of November 23, 2004
(incorporated herein by reference to Exhibit 4.37 to the Company's
Annual Report on Form 10-K for the year ended December 31, 2004).
4.30 Placement Agreement by and among First Banks, Inc., First Bank
Statutory Trust III and FTN Financial Capital Markets and Keefe,
Bruyette & Woods, as Placement Agents, dated as of November 22,
2004 (incorporated herein by reference to Exhibit 4.38 to the
Company's Annual Report on Form 10-K for the year ended December
31, 2004).
4.31 Floating Rate Junior Subordinated Deferrable Interest Debenture of
First Banks, Inc., dated as of November 23, 2004 (incorporated
herein by reference to Exhibit 4.39 to the Company's Annual Report
on Form 10-K for the year ended December 31, 2004).
4.32 Capital Securities Subscription Agreement by and among First Bank
Statutory Trust III, First Banks, Inc. and First Tennessee Bank
National Association, dated as of November 23, 2004 (incorporated
herein by reference to Exhibit 4.40 to the Company's Annual Report
on Form 10-K for the year ended December 31, 2004).
4.33 Capital Securities Certificate P-1 of First Bank Statutory Trust
III, dated November 23, 2004 (incorporated herein by reference to
Exhibit 4.41 to the Company's Annual Report on Form 10-K for the
year ended December 31, 2004).
4.34 Indenture between First Banks, Inc., as Issuer, and Wilmington
Trust Company, as Trustee, dated as of March 1, 2006 (incorporated
herein by reference to Exhibit 4.1 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2006).
4.35 Amended and Restated Declaration of Trust by and among Wilmington
Trust Company, as Delaware Trustee and the Institutional Trustee,
First Banks, Inc., as Sponsor, and Allen H. Blake, Peter D. Wimmer
and Lisa K. Vansickle, as Administrators, dated as of March 1,
2006 (incorporated herein by reference to Exhibit 4.2 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2006).
4.36 Guarantee Agreement by and between First Banks, Inc. and
Wilmington Trust Company, dated as of March 1, 2006 (incorporated
herein by reference to Exhibit 4.3 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2006).
4.37 Placement Agreement by and among First Banks, Inc., First Bank
Statutory Trust IV and FTN Financial Capital Markets and Keefe,
Bruyette & Woods, as Placement Agents, dated as of February 16,
2006 (incorporated herein by reference to Exhibit 4.4 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2006).
4.38 Floating Rate Junior Subordinated Deferrable Interest Debenture of
First Banks, Inc., dated as of March 1, 2006 (incorporated herein
by reference to Exhibit 4.5 to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2006).
4.39 Capital Securities Subscription Agreement by and among First Bank
Statutory Trust IV, First Banks, Inc. and First Tennessee Bank
National Association, dated as of March 1, 2006 (incorporated
herein by reference to Exhibit 4.6 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2006).
4.40 Capital Securities Subscription Agreement by and among First Bank
Statutory Trust IV, First Banks, Inc. and Preferred Term
Securities XXI, Ltd., dated as of March 1, 2006 (incorporated
herein by reference to Exhibit 4.7 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31, 2006).
4.41 Capital Securities Certificate P-1 of First Bank Statutory Trust
IV, dated March 1, 2006 (incorporated herein by reference to
Exhibit 4.8 to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2006).
4.42 Capital Securities Certificate P-2 of First Bank Statutory Trust
IV, dated March 1, 2006 (incorporated herein by reference to
Exhibit 4.9 to the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 2006).
4.43 Indenture between First Banks, Inc., as Issuer, and Wilmington
Trust Company, as Trustee, dated as of April 28, 2006
(incorporated herein by reference to Exhibit 4.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2006).
4.44 Amended and Restated Declaration of Trust of First Bank Statutory
Trust V by and among Wilmington Trust Company, as Delaware Trustee
and the Institutional Trustee, First Banks, Inc., as Sponsor, and
Allen H. Blake, Peter D. Wimmer and Lisa K. Vansickle, as
Administrators, dated as of April 28, 2006 (incorporated herein by
reference to Exhibit 4.2 to the Company's Quarterly Report on Form
10-Q for the quarter ended June 30, 2006).
4.45 Guarantee Agreement by and between First Banks, Inc. and
Wilmington Trust Company, dated as of April 28, 2006 (incorporated
herein by reference to Exhibit 4.3 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2006).
4.46 Placement Agreement by and among First Banks, Inc., First Bank
Statutory Trust V and FTN Financial Capital Markets and Keefe,
Bruyette & Woods, as Placement Agents, dated as of April 27, 2006
(incorporated herein by reference to Exhibit 4.4 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2006).
4.47 Floating Rate Junior Subordinated Deferrable Interest Debenture of
First Banks, Inc., dated as of April 28, 2006 (incorporated herein
by reference to Exhibit 4.5 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2006).
4.48 Capital Securities Subscription Agreement by and among First Bank
Statutory Trust V, First Banks, Inc. and First Tennessee Bank
National Association, dated as of April 28, 2006 (incorporated
herein by reference to Exhibit 4.6 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2006).
4.49 Capital Securities Certificate P-1 of First Bank Statutory Trust
V, dated as of April 28, 2006 (incorporated herein by reference to
Exhibit 4.7 to the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2006).
4.50 Indenture between First Banks, Inc., as Issuer, and Wells Fargo
Bank, National Association, as Trustee, dated as of June 16, 2006
(incorporated herein by reference to Exhibit 4.8 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2006).
4.51 Amended and Restated Declaration of Trust of First Bank Statutory
Trust VI by and among Wells Fargo Delaware Trust Company, as
Delaware Trustee, Wells Fargo Bank, National Association, as
Institutional Trustee, First Banks, Inc., as Sponsor, and Allen H.
Blake and Lisa K. Vansickle, as Administrators, dated as of June
16, 2006 (incorporated herein by reference to Exhibit 4.9 to the
Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 2006).
4.52 Guarantee Agreement by and between First Banks, Inc. and Wells
Fargo Bank, National Association, dated as of June 16, 2006
(incorporated herein by reference to Exhibit 4.10 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2006).
4.53 Purchase Agreement among First Bank Statutory Trust VI, Issuer,
First Banks, Inc., Sponsor, and Bear, Stearns & Co. Inc., Initial
Purchaser, dated as of June 14, 2006 (incorporated herein by
reference to Exhibit 4.11 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2006).
4.54 Junior Subordinated Debt Security due 2036 of First Banks, Inc.,
dated as of June 16, 2006 (incorporated herein by reference to
Exhibit 4.12 to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 2006).
4.55 Debenture Subscription Agreement by and between First Banks, Inc.
and First Bank Statutory Trust VI, dated as of June 16, 2006
(incorporated herein by reference to Exhibit 4.13 to the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
2006).
4.56 Capital Securities Certificate P-001 of First Bank Statutory Trust
VI, dated as of June 16, 2006 (incorporated herein by reference to
Exhibit 4.14 to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 2006).
4.57 Indenture between First Banks, Inc., as Issuer, and Wilmington
Trust Company, as Trustee, dated as of December 14, 2006 - filed
herewith.
4.58 Amended and Restated Declaration of Trust of First Bank Statutory
Trust VII by and among Wilmington Trust Company, as Delaware
Trustee and the Institutional Trustee, First Banks, Inc., as
Sponsor, and Terrance M. McCarthy, Peter D. Wimmer and Lisa K.
Vansickle, as Administrators, dated as of December 14, 2006 -
filed herewith.
4.59 Guarantee Agreement by and between First Banks, Inc. and
Wilmington Trust Company, dated as of December 14, 2006 - filed
herewith.
4.60 Placement Agreement by and among First Banks, Inc., First Bank
Statutory Trust VII and FTN Financial Capital Markets and Keefe,
Bruyette & Woods, as Placement Agents, dated as of December 6,
2006 - filed herewith.
4.61 Floating Rate Junior Subordinated Deferrable Interest Debenture of
First Banks, Inc., dated as of December 14, 2006 - filed herewith.
4.62 Capital Securities Subscription Agreement by and among First Bank
Statutory Trust VII, First Banks, Inc. and First Tennessee Bank
National Association, dated as of December 14, 2006 - filed
herewith.
4.63 Capital Securities Subscription Agreement by and among First Bank
Statutory Trust VII, First Banks, Inc. and Preferred Term
Securities XXIV, Ltd., dated as of December 14, 2006 - filed
herewith.
4.64 Capital Securities Certificate P-1 of First Bank Statutory Trust
VII, dated as of December 14, 2006 - filed herewith.
4.65 Capital Securities Certificate P-2 of First Bank Statutory Trust
VII, dated as of December 14, 2006 - filed herewith.
10.1 Shareholders' Agreement by and among James F. Dierberg II and Mary
W. Dierberg, Trustees under the Living Trust of James F. Dierberg
II, dated July 24, 1989, Michael James Dierberg and Mary W.
Dierberg, Trustees under the Living Trust of Michael James
Dierberg, dated July 24, 1989; Ellen C. Dierberg and Mary W.
Dierberg, Trustees under the Living Trust of Ellen C. Dierberg
dated July 17, 1992, and First Banks, Inc. (incorporated herein by
reference to Exhibit 10.3 to the Company's Registration Statement
on Form S-1, File No 33-50576, dated August 6, 1992).
10.2 Comprehensive Banking System License and Service Agreement dated
as of July 24, 1991, by and between the Company and FiServ CIR,
Inc. (incorporated herein by reference to Exhibit 10.4 to the
Company's Registration Statement on Form S-1, File No. 33-50576,
dated August 6, 1992).
10.3 AFS Customer Agreement by and between First Banks, Inc. and
Advanced Financial Solutions, Inc., dated January 29, 2004
(incorporated herein by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31,
2004).
10.4 Management Services Agreement by and between First Banks, Inc. and
First Bank, dated February 28, 2004 (incorporated herein by
reference to Exhibit 10.2 to the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 2004).
10.5 Service Agreement by and between First Services, L.P. and First
Banks, Inc., dated May 1, 2004 (incorporated herein by reference
to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 2004).
10.6 Service Agreement by and between First Services, L.P. and First
Bank, dated May 1, 2004 (incorporated herein by reference to
Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 2004).
10.7 Service Agreement by and between First Banks, Inc. and First
Services, L.P., dated May 1, 2004 (incorporated herein by
reference to Exhibit 10.5 to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 2004).
10.8* First Banks, Inc. Executive Incentive Compensation Plan
(incorporated herein by reference to Exhibit 10.10 to the
Company's Annual Report on Form 10-K for the year ended December
31, 2004).
10.9* First Banks, Inc. Nonqualified Deferred Compensation Plan
(incorporated herein by reference to Exhibit 10.11 to the
Company's Annual Report on Form 10-K for the year ended December
31, 2004).
10.10* First Amendment to First Banks, Inc. Nonqualified Deferred
Compensation Plan (incorporated herein by reference to Exhibit
10.12 to the Company's Annual Report on Form 10-K for the year
ended December 31, 2004).
10.11 Amended and Restated Secured Credit Agreement ($100.0 million Term
Loan Facility, $15.0 million Revolving Credit Facility and $7.5
million Letter of Credit Facility), dated as of August 11, 2005,
by and among First Banks, Inc. and Wells Fargo Bank, National
Association, as Agent, JP Morgan Chase Bank, N.A., LaSalle Bank
National Association, The Northern Trust Company, Union Bank of
California, N.A., Fifth Third Bank (Chicago) and U.S. Bank
National Association (incorporated herein by reference to Exhibit
10 to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2005).
10.12 First Amendment to the Amended and Restated Secured Credit
Agreement ($85.0 million Term Loan Facility, $10.0 million
Revolving Credit Facility and $1.0 million Letter of Credit
Facility), dated as of August 10, 2006, by and among First Banks,
Inc. and Wells Fargo Bank, National Association, as Agent, JP
Morgan Chase Bank, N.A., LaSalle Bank National Association, The
Northern Trust Company, Union Bank of California, N.A., Fifth
Third Bank (Chicago) and U.S. Bank National Association
(incorporated herein by reference to Exhibit 10 to the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
2006).
14.1 Code of Ethics for Principal Executive Officer and Financial
Professionals (incorporated herein by reference to Exhibit 14 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 2003).
21.1 Subsidiaries of the Company - filed herewith.
TABLE OF CONTENTS
-----------------
Page
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ARTICLE I. DEFINITIONS............................................................................................1
Section 1.1. Definitions................................................................................1
ARTICLE II. DEBENTURES............................................................................................8
Section 2.1. Authentication and Dating..................................................................8
Section 2.2. Form of Trustee's Certificate of Authentication............................................9
Section 2.3. Form and Denomination of Debentures........................................................9
Section 2.4. Execution of Debentures....................................................................9
Section 2.5. Exchange and Registration of Transfer of Debentures.......................................10
Section 2.6. Mutilated, Destroyed, Lost or Stolen Debentures...........................................12
Section 2.7. Temporary Debentures......................................................................12
Section 2.8. Payment of Interest and Additional Interest...............................................13
Section 2.9. Cancellation of Debentures Paid, etc......................................................14
Section 2.10. Computation of Interest...................................................................14
Section 2.11. Extension of Interest Payment Period......................................................15
Section 2.12. CUSIP Numbers.............................................................................16
Section 2.13. Global Debentures.........................................................................17
ARTICLE III. PARTICULAR COVENANTS OF THE COMPANY.................................................................18
Section 3.1. Payment of Principal, Premium and Interest; Agreed Treatment of the Debentures............18
Section 3.2. Offices for Notices and Payments, etc.....................................................19
Section 3.3. Appointments to Fill Vacancies in Trustee's Office........................................19
Section 3.4. Provision as to Paying Agent..............................................................20
Section 3.5. Certificate to Trustee....................................................................20
Section 3.6. Additional Sums...........................................................................21
Section 3.7. Compliance with Consolidation Provisions..................................................21
Section 3.8. Limitation on Dividends...................................................................21
Section 3.9. Covenants as to the Trust.................................................................22
Section 3.10. Additional Junior Indebtedness............................................................22
ARTICLE IV. SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE....................................22
Section 4.1. Securityholders' Lists....................................................................22
Section 4.2. Preservation and Disclosure of Lists......................................................22
ARTICLE V. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT..................................23
Section 5.1. Events of Default.........................................................................23
Section 5.2. Payment of Debentures on Default; Suit Therefor...........................................25
Section 5.3. Application of Moneys Collected by Trustee................................................26
Section 5.4. Proceedings by Securityholders............................................................27
Section 5.5. Proceedings by Trustee....................................................................27
Section 5.6. Remedies Cumulative and Continuing; Delay or Omission Not a Waiver........................27
Section 5.7. Direction of Proceedings and Waiver of Defaults by Majority of Securityholders............28
Section 5.8. Notice of Defaults........................................................................28
Section 5.9. Undertaking to Pay Costs..................................................................28
ARTICLE VI. CONCERNING THE TRUSTEE...............................................................................29
Section 6.1. Duties and Responsibilities of Trustee....................................................29
Section 6.2. Reliance on Documents, Opinions, etc......................................................30
Section 6.3. No Responsibility for Recitals, etc.......................................................30
Section 6.4. Trustee, Authenticating Agent, Paying Agents, Transfer Agents or
Registrar May Own Debentures..............................................................31
Section 6.5. Moneys to be Held in Trust................................................................31
Section 6.6. Compensation and Expenses of Trustee......................................................31
Section 6.7. Officers' Certificate as Evidence.........................................................32
Section 6.8. Eligibility of Trustee....................................................................32
Section 6.9. Resignation or Removal of Trustee.........................................................32
Section 6.10. Acceptance by Successor Trustee...........................................................33
Section 6.11. Succession by Merger, etc.................................................................34
Section 6.12. Authenticating Agents.....................................................................34
ARTICLE VII. CONCERNING THE SECURITYHOLDERS......................................................................35
Section 7.1. Action by Securityholders.................................................................35
Section 7.2. Proof of Execution by Securityholders.....................................................36
Section 7.3. Who Are Deemed Absolute Owners............................................................36
Section 7.4. Debentures Owned by Company Deemed Not Outstanding........................................36
Section 7.5. Revocation of Consents; Future Holders Bound..............................................36
ARTICLE VIII. SECURITYHOLDERS' MEETINGS..........................................................................37
Section 8.1. Purposes of Meetings......................................................................37
Section 8.2. Call of Meetings by Trustee...............................................................37
Section 8.3. Call of Meetings by Company or Securityholders............................................37
Section 8.4. Qualifications for Voting.................................................................37
Section 8.5. Regulations...............................................................................38
Section 8.6. Voting....................................................................................38
Section 8.7. Quorum; Actions...........................................................................38
ARTICLE IX. SUPPLEMENTAL INDENTURES..............................................................................39
Section 9.1. Supplemental Indentures without Consent of Securityholders................................39
Section 9.2. Supplemental Indentures with Consent of Securityholders...................................40
Section 9.3. Effect of Supplemental Indentures.........................................................41
Section 9.4. Notation on Debentures....................................................................41
Section 9.5. Evidence of Compliance of Supplemental Indenture to be Furnished to Trustee...............41
ARTICLE X. REDEMPTION OF SECURITIES..............................................................................41
Section 10.1. Optional Redemption.......................................................................41
Section 10.2. Special Event Redemption..................................................................42
Section 10.3. Notice of Redemption; Selection of Debentures.............................................42
Section 10.4. Payment of Debentures Called for Redemption...............................................42
ARTICLE XI. CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE....................................................43
Section 11.1. Company May Consolidate, etc., on Certain Terms...........................................43
Section 11.2. Successor Entity to be Substituted........................................................43
Section 11.3. Opinion of Counsel to be Given to Trustee.................................................44
ARTICLE XII. SATISFACTION AND DISCHARGE OF INDENTURE.............................................................44
Section 12.1. Discharge of Indenture....................................................................44
Section 12.2. Deposited Moneys to be Held in Trust by Trustee...........................................44
Section 12.3. Paying Agent to Repay Moneys Held.........................................................44
Section 12.4. Return of Unclaimed Moneys................................................................45
ARTICLE XIII. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS....................................45
Section 13.1. Indenture and Debentures Solely Corporate Obligations.....................................45
ARTICLE XIV. MISCELLANEOUS PROVISIONS............................................................................45
Section 14.1. Successors................................................................................45
Section 14.2. Official Acts by Successor Entity.........................................................45
Section 14.3. Surrender of Company Powers...............................................................45
Section 14.4. Addresses for Notices, etc................................................................45
Section 14.5. Governing Law.............................................................................46
Section 14.6. Evidence of Compliance with Conditions Precedent..........................................46
Section 14.7. Table of Contents, Headings, etc..........................................................46
Section 14.8. Execution in Counterparts.................................................................46
Section 14.9. Separability..............................................................................46
Section 14.10. Assignment................................................................................46
Section 14.11. Acknowledgment of Rights..................................................................47
ARTICLE XV. SUBORDINATION OF DEBENTURES..........................................................................47
Section 15.1. Agreement to Subordinate..................................................................47
Section 15.2. Default on Senior Indebtedness............................................................47
Section 15.3. Liquidation, Dissolution, Bankruptcy......................................................48
Section 15.4. Subrogation...............................................................................49
Section 15.5. Trustee to Effectuate Subordination.......................................................49
Section 15.6. Notice by the Company.....................................................................49
Section 15.7. Rights of the Trustee; Holders of Senior Indebtedness.....................................50
Section 15.8. Subordination May Not Be Impaired.........................................................50
Exhibit A Form of Floating Rate Junior Subordinated Deferrable Interest Debenture
Exhibit B Form of Certificate to Trustee
THIS INDENTURE, dated as of December 14, 2006, between First Banks,
Inc., a Missouri corporation (the "Company"), and Wilmington Trust Company, a
Delaware banking corporation, as debenture trustee (the "Trustee").
WITNESSETH:
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issuance of its Floating Rate Junior Subordinated Deferrable
Interest Debentures due 2036 (the "Debentures") under this Indenture to provide,
among other things, for the execution and authentication, delivery and
administration thereof, and the Company has duly authorized the execution of
this Indenture; and
WHEREAS, all acts and things necessary to make this Indenture a valid
agreement according to its terms, have been done and performed;
NOW, THEREFORE, This Indenture Witnesseth:
In consideration of the premises, and the purchase of the Debentures by
the holders thereof, the Company covenants and agrees with the Trustee for the
equal and proportionate benefit of the respective holders from time to time of
the Debentures as follows:
ARTICLE I.
DEFINITIONS
Section 1.1. Definitions. The terms defined in this Section 1.1
(except as herein otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section 1.1. All
accounting terms used herein and not expressly defined shall have the meanings
assigned to such terms in accordance with generally accepted accounting
principles and the term "generally accepted accounting principles" means such
accounting principles as are generally accepted in the United States at the time
of any computation. The words "herein," "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Acceleration Event of Default" means an Event of Default under Section
5.1(a), (d), (e) or (f), whatever the reason for such Acceleration 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.
"Additional Interest" has the meaning set forth in Section 2.11.
"Additional Junior Indebtedness" means, without duplication and other
than the Debentures, 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 after the date of this Indenture
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 of 1940) 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 eligible to qualify for Tier 1 capital treatment (or its then
equivalent) for purposes of the capital adequacy guidelines of the Federal
Reserve, as then in effect and applicable to the Company (or, if the Company is
not a bank holding company, such guidelines applied to the Company as if the
Company were subject to such guidelines); 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 which the Federal Reserve now 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.
"Additional Sums" has the meaning set forth in Section 3.6.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Applicable Depositary Procedures" means, with respect to any transfer
or transaction involving a Global Debenture or beneficial interest therein, the
rules and procedures of the Depositary for such Debenture, in each case to the
extent applicable to such transaction and as in effect from time to time.
"Authenticating Agent" means any agent or agents of the Trustee which
at the time shall be appointed and acting pursuant to Section 6.12.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or
state law for the relief of debtors.
"Board of Directors" means the board of directors or the executive
committee or any other duly authorized designated officers of the Company.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee.
"Business Day" means any day other than a Saturday, Sunday or any other
day on which banking institutions in New York City or Wilmington, Delaware are
permitted or required by any applicable law or executive order to close.
"Capital Securities" means 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 continuance of an Event of
Default (as defined in the Declaration), the rights of holders of such Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights of holders of such
Capital Securities.
"Capital Securities Guarantee" means the guarantee agreement that the
Company enters into with Wilmington Trust Company, as guarantee trustee, or
other Persons that operates directly or indirectly for the benefit of holders of
Capital Securities of the Trust.
"Capital Treatment Event" means the receipt by the Company and the
Trust of an opinion of counsel experienced in such matters to the effect that,
as a result of the occurrence of any amendment to, or change (including any
announced prospective change) in, the laws, rules or regulations of the United
States or any political subdivision thereof or therein, or as the result of any
official or administrative pronouncement or action or decision interpreting or
applying such laws, rules or regulations, which amendment or change is effective
or which pronouncement, action or decision is announced on or after the date of
original issuance of the Debentures, there is more than an insubstantial risk
that the Company will not, within 90 days of the date of such opinion, be
entitled to treat an amount equal to the aggregate liquidation amount of the
Capital Securities as "Tier 1 Capital" (or its then equivalent) for purposes of
the capital adequacy guidelines of the Federal Reserve, as then in effect and
applicable to the Company (or if the Company is not a bank holding company or
otherwise is not subject to the Federal Reserve's risk-based capital adequacy
guidelines, such guidelines applied to the Company as if the Company were
subject to such guidelines); provided, however, that the inability of the
Company to treat all or any portion of the liquidation amount of the Capital
Securities as Tier l Capital shall not constitute the basis for a Capital
Treatment Event, if such inability results from the Company having cumulative
preferred stock, minority interests in consolidated subsidiaries, or any other
class of security or interest which the Federal Reserve or OTS, as applicable,
may now or hereafter accord Tier 1 Capital treatment in excess of the amount
which may now or hereafter qualify for treatment as Tier 1 Capital under
applicable capital adequacy guidelines; provided further, however, that the
distribution of Debentures in connection with the liquidation of the Trust shall
not in and of itself constitute a Capital Treatment Event unless such
liquidation shall have occurred in connection with a Tax Event or an Investment
Company Event.
"Certificate" means a certificate signed by any one of the principal
executive officer, the principal financial officer or the principal accounting
officer of the Company.
"Common Securities" means undivided beneficial interests in the assets
of the Trust which rank pari passu with Capital Securities issued by the Trust;
provided, however, that upon the occurrence and continuance of an Event of
Default (as defined in the Declaration), the rights of holders of such Common
Securities to payment in respect of distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights of holders of such
Capital Securities.
"Company" means First Banks, Inc., a Missouri corporation, and, subject
to the provisions of Article XI, shall include its successors and assigns.
"Coupon Rate" has the meaning set forth in Section 2.8.
"Debenture" or "Debentures" has the meaning stated in the first recital
of this Indenture.
"Debenture Register" has the meaning specified in Section 2.5.
"Declaration" means the Amended and Restated Declaration of Trust of
the Trust, as amended or supplemented from time to time.
"Default" means any event, act or condition that with notice or lapse
of time, or both, would constitute an Event of Default.
"Defaulted Interest" has the meaning set forth in Section 2.8.
"Depositary" means an organization registered as a clearing agency
under the Exchange Act that is designated as Depositary by the Company or any
successor thereto. The initial Depositary will be DTC.
"Depositary Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Depositary effects
book-entry transfers and pledges of securities deposited with the Depositary.
"Distribution Period" means (i) with respect to interest paid on the
first Interest Payment Date, the period beginning on (and including) the date of
original issuance and ending on (but excluding) the Interest Payment Date in
March 2007 and (ii) thereafter, with respect to interest paid on each successive
Interest Payment Date, the period beginning on (and including) the preceding
Interest Payment Date and ending on (but excluding) such current Interest
Payment Date.
"Determination Date" has the meaning set forth in Section 2.10.
"DTC" means the Depository Trust Company, a New York corporation.
"Event of Default" means any event specified in Section 5.1, 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
from time to time, or any successor legislation.
"Extension Period" has the meaning set forth in Section 2.11.
"Federal Reserve" means the Board of Governors of the Federal Reserve
System, or its designated district bank, as applicable, and any successor
federal agency that is primarily responsible for regulating the activities of
bank holding companies.
"Global Debenture" means a security that evidences all or part of the
Debentures, the ownership and transfers of which shall be made through book
entries by a Depositary.
"Indenture" means this instrument as originally executed or, if amended
or supplemented as herein provided, as so amended or supplemented, or both.
"Institutional Trustee" has the meaning set forth in the Declaration.
"Interest Payment Date" means March 15, June 15, September 15 and
December 15 of each year during the term of this Indenture, or if such day is
not a Business Day, then the next succeeding Business Day (it being understood
that interest accrues for any such non-Business Day), commencing in March 2007.
"Interest Rate" means for the Distribution Period beginning on (and
including) the date of original issuance and ending on (but excluding) the
Interest Payment Date in March 2007 the rate per annum of 7.20%, and for each
Distribution Period beginning on or after the Interest Payment Date in March
2007, the Coupon Rate for such Distribution Period.
"Investment Company Event" means the receipt by the Company and the
Trust of an opinion of counsel experienced in such matters to the effect that,
as a result of the occurrence of a change in law or regulation or written change
(including any announced prospective change) in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority, there is more than an insubstantial risk that the Trust is
or, within 90 days of the date of such opinion will be considered an "investment
company" that is required to be registered under the Investment Company Act of
1940, as amended which change or prospective change becomes effective or would
become effective, as the case may be, on or after the date of the issuance of
the Debentures.
"Liquidation Amount" means the stated amount of $1,000.00 per Trust
Security.
"Maturity Date" means December 15, 2036.
"Officers' Certificate" means a certificate signed by the Chairman of
the Board, the Chief Executive Officer, the Vice Chairman, the President, any
Managing Director or any Vice President, and by the Treasurer, an Assistant
Treasurer, the Comptroller, an Assistant Comptroller, the Secretary or an
Assistant Secretary of the Company, and delivered to the Trustee. Each such
certificate shall include the statements provided for in Section 14.6 if and to
the extent required by the provisions of such Section.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company, or may be other
counsel reasonably satisfactory to the Trustee. Each such opinion shall include
the statements provided for in Section 14.6 if and to the extent required by the
provisions of such Section.
"OTS" means the Office of Thrift Supervision and any successor federal
agency that is primarily responsible for regulating the activities of savings
and loan holding companies.
The term "outstanding," when used with reference to Debentures, means,
subject to the provisions of Section 7.4, as of any particular time, all
Debentures authenticated and delivered by the Trustee or the Authenticating
Agent under this Indenture, except:
(a) Debentures theretofore canceled by the Trustee or the
Authenticating Agent or delivered to the Trustee for cancellation;
(b) Debentures, or portions thereof, for the payment or redemption of
which moneys in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or shall have been set
aside and segregated in trust by the Company (if the Company shall act as its
own paying agent); provided, however, that, if such Debentures, or portions
thereof, are to be redeemed prior to maturity thereof, notice of such redemption
shall have been given as provided in Section 10.3 or provision satisfactory to
the Trustee shall have been made for giving such notice; and
(c) Debentures paid pursuant to Section 2.6 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 unless proof satisfactory to the
Company and the Trustee is presented that any such Debentures are held by bona
fide holders in due course.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Security" of any particular Debenture means every previous
Debenture evidencing all or a portion of the same debt as that evidenced by such
particular Debenture; and, for purposes of this definition, any Debenture
authenticated and delivered under Section 2.6 in lieu of a lost, destroyed or
stolen Debenture shall be deemed to evidence the same debt as the lost,
destroyed or stolen Debenture.
"Principal Office of the Trustee," or other similar term, means the
office of the Trustee, at which at any particular time its corporate trust
business shall be principally administered, which at the time of the execution
of this Indenture shall be Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-1600, Attention: Corporate Trust Administration.
"Redemption Date" has the meaning set forth in Section 10.1.
"Redemption Price" means 100% of the principal amount of the Debentures
being redeemed, plus accrued and unpaid interest (including any Additional
Interest) on such Debentures to the Redemption Date.
"Responsible Officer" means, with respect to the Trustee, any officer
within the Principal Office of the Trustee, including any vice-president, any
assistant vice-president, any secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or other officer of the Principal
Trust Office of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Securities Act" means the Securities Act of 1933, as amended from time
to time or any successor legislation.
"Securityholder," "holder of Debentures," or other similar terms, means
any Person in whose name at the time a particular Debenture is registered on the
register kept by the Company or the Trustee for that purpose in accordance with
the terms hereof.
"Senior Indebtedness" means, with respect to the Company, (i) the
principal, premium, if any, and interest in respect of (A) indebtedness of the
Company for all borrowed and purchased money and (B) indebtedness evidenced by
securities, debentures, notes, bonds or other similar instruments issued by the
Company; (ii) all capital lease obligations of the Company; (iii) all
obligations of the Company issued or assumed as the deferred purchase price of
property, all conditional sale obligations of the Company and all obligations of
the Company under any title retention agreement; (iv) all obligations of the
Company for the reimbursement of any letter of credit, any banker's acceptance,
any security purchase facility, any repurchase agreement or similar arrangement,
any interest rate swap, any other hedging arrangement, any obligation under
options or any similar credit or other transaction; (v) all obligations of the
Company associated with derivative products such as interest and foreign
exchange rate contracts, commodity contracts, and similar arrangements; (vi) all
obligations of the type referred to in clauses (i) through (v) above of other
Persons for the payment of which the Company is responsible or liable as
obligor, guarantor or otherwise including, without limitation, similar
obligations arising from off-balance sheet guarantees and direct credit
substitutes; and (vii) all obligations of the type referred to in clauses (i)
through (vi) above of other Persons secured by any lien on any property or asset
of the Company (whether or not such obligation is assumed by the Company),
whether incurred on or prior to the date of this Indenture or thereafter
incurred. Notwithstanding the foregoing, "Senior Indebtedness" shall not include
(1) any Additional Junior Indebtedness, (2) Debentures issued pursuant to this
Indenture and guarantees in respect of such Debentures, (3) trade accounts
payable of the Company arising in the ordinary course of business (such trade
accounts payable being pari passu in right of payment to the Debentures), or (4)
obligations with respect to which (a) in the instrument creating or evidencing
the same or pursuant to which the same is outstanding, it is provided that such
obligations are pari passu, junior or otherwise not superior in right of payment
to the Debentures and (b) the Company, prior to the issuance thereof, has
notified (and, if then required under the applicable guidelines of the
regulating entity, has received approval from) the Federal Reserve (if the
Company is a bank holding company) or the OTS (if the Company is a savings and
loan holding company). Senior Indebtedness shall continue to be Senior
Indebtedness and be entitled to the subordination provisions irrespective of any
amendment, modification or waiver of any term of such Senior Indebtedness.
"Special Event" means any of a Capital Treatment Event, an Investment
Company Event or a Tax Event.
"Special Redemption Date" has the meaning set forth in Section 10.2.
"Special Redemption Price" means the price set forth in the following
table for any Special Redemption Date that occurs on the date indicated below
(or if such day is not a Business Day, then the next succeeding Business Day),
expressed as the percentage of the principal amount of the Debentures being
redeemed:
---------------------------------- ----------------------------
Month in which Special Special Redemption Price
---------------------- ------------------------
Redemption Date Occurs
----------------------
---------------------------------- ----------------------------
March 2007 104.625%
---------------------------------- ----------------------------
June 2007 104.300%
---------------------------------- ----------------------------
September 2007 104.000%
---------------------------------- ----------------------------
December 2007 103.650%
---------------------------------- ----------------------------
March 2008 103.350%
---------------------------------- ----------------------------
June 2008 103.000%
---------------------------------- ----------------------------
September 2008 102.700%
---------------------------------- ----------------------------
December 2008 102.350%
---------------------------------- ----------------------------
March 2009 102.050%
---------------------------------- ----------------------------
June 2009 101.700%
---------------------------------- ----------------------------
September 2009 101.400%
---------------------------------- ----------------------------
December 2009 101.050%
---------------------------------- ----------------------------
March 2010 100.750%
---------------------------------- ----------------------------
June 2010 100.450%
---------------------------------- ----------------------------
September 2010 100.200%
---------------------------------- ----------------------------
December 2010 and thereafter 100.000%
---------------------------------- ----------------------------
plus, in each case, accrued and unpaid interest (including any Additional
Interest) on such Debentures to the Special Redemption Date.
"Subsidiary" means with respect to any Person, (i) any corporation at
least a majority of the outstanding voting stock of which is owned, directly or
indirectly, by such Person or by one or more of its Subsidiaries, or by such
Person and one or more of its Subsidiaries, (ii) any general partnership, joint
venture or similar entity, at least a majority of the outstanding partnership or
similar interests of which shall at the time be owned by such Person, or by one
or more of its Subsidiaries, or by such Person and one or more of its
Subsidiaries and (iii) any limited partnership of which such Person or any of
its Subsidiaries is a general partner. For the purposes of this definition,
"voting stock" means shares, interests, participations or other equivalents in
the equity interest (however designated) in such Person having ordinary voting
power for the election of a majority of the directors (or the equivalent) of
such Person, other than shares, interests, participations or other equivalents
having such power only by reason of the occurrence of a contingency.
"Tax Event" means the receipt by the Company and the Trust of an
opinion of counsel experienced in such matters to the effect that, as a result
of any amendment to or change (including any announced prospective change) in
the laws or any regulations thereunder of the United States or any political
subdivision or taxing authority thereof or therein, or as a result of any
official administrative pronouncement (including any private letter ruling,
technical advice memorandum, field service advice, regulatory procedure, notice
or announcement, including any notice or announcement of intent to adopt such
procedures or regulations) (an "Administrative Action") or judicial decision
interpreting or applying such laws or regulations, regardless of whether such
Administrative Action or judicial decision is issued to or in connection with a
proceeding involving the Company or the Trust and whether or not subject to
review or appeal, which amendment, clarification, change, Administrative Action
or decision is enacted, promulgated or announced, in each case on or after the
date of original issuance of the Debentures, there is more than an insubstantial
risk that: (i) the Trust is, or will be within 90 days of the date of such
opinion, subject to United States federal income tax with respect to income
received or accrued on the Debentures; (ii) interest payable by the Company on
the Debentures is not, or within 90 days of the date of such opinion, will not
be, deductible by the Company, in whole or in part, for United States federal
income tax purposes; or (iii) the Trust is, or will be within 90 days of the
date of such opinion, subject to more than a de minimis amount of other taxes,
duties or other governmental charges.
"3-Month LIBOR" has the meaning set forth in Section 2.10.
"Telerate Page 3750" has the meaning set forth in Section 2.10.
"Trust" shall mean First Bank Statutory Trust VII, a Delaware statutory
trust, or any other similar trust created for the purpose of issuing Capital
Securities in connection with the issuance of Debentures under this Indenture,
of which the Company is the sponsor.
"Trust Securities" means Common Securities and Capital Securities of
the Trust.
"Trustee" means Wilmington Trust Company, and, subject to the
provisions of Article VI hereof, shall also include its successors and assigns
as Trustee hereunder.
ARTICLE II.
DEBENTURES
Section 2.1. Authentication and Dating. Upon the execution and
delivery of this Indenture, or from time to time thereafter, Debentures in an
aggregate principal amount not in excess of $51,547,000.00 may be executed and
delivered by the Company to the Trustee for authentication, and the Trustee,
upon receipt of a written authentication order from the Company, shall thereupon
authenticate and make available for delivery said Debentures to or upon the
written order of the Company, signed by its Chairman of the Board of Directors,
Chief Executive Officer, Vice Chairman, the President, one of its Managing
Directors or one of its Vice Presidents without any further action by the
Company hereunder. Notwithstanding anything to the contrary contained herein,
the Trustee shall be fully protected in relying upon the aforementioned
authentication order and written order in authenticating and delivering said
Debentures. 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 6.1) shall be
fully protected in relying upon:
(a) a copy of any Board Resolution or Board Resolutions relating
thereto and, if applicable, an appropriate record of any action taken pursuant
to such resolution, in each case certified by the Secretary or an Assistant
Secretary of the Company, as the case may be; and
(b) an Opinion of Counsel prepared in accordance with Section 14.6
which shall also state:
(1) that such Debentures, when authenticated and delivered
by the Trustee and issued by the Company in each case in the
manner and subject to any conditions specified in such Opinion of
Counsel, will constitute valid and legally binding obligations of
the Company, subject to or limited by applicable bankruptcy,
insolvency, reorganization, conservatorship, receivership,
moratorium and other statutory or decisional laws relating to or
affecting creditors' rights or the reorganization of financial
institutions (including, without limitation, preference and
fraudulent conveyance or transfer laws), heretofore or hereafter
enacted or in effect, affecting the rights of creditors
generally; and
(2) that all laws and requirements in respect of the
execution and delivery by the Company of the Debentures have been
complied with and that authentication and delivery of the
Debentures by the Trustee will not violate the terms of this
Indenture.
The Trustee shall have the right to decline to authenticate and deliver
any Debentures under this Section if the Trustee, being advised in writing by
counsel, determines that such action may not lawfully be taken or if a
Responsible Officer of the Trustee in good faith shall determine that such
action would expose the Trustee to personal liability to existing holders.
The definitive Debentures shall be typed, printed, lithographed or
engraved on steel engraved borders or may be produced in any other manner, all
as determined by the officers executing such Debentures, as evidenced by their
execution of such Debentures.
Section 2.2. Form of Trustee's Certificate of Authentication. The
Trustee's certificate of authentication on all Debentures shall be in
substantially the following form:
This is one of the Debentures referred to in the within-mentioned
Indenture.
WILMINGTON TRUST COMPANY, as Trustee
By
Authorized Signer
Section 2.3. Form and Denomination of Debentures. The Debentures
shall be substantially in the form of Exhibit A attached hereto. The Debentures
shall be in registered, certificated form without coupons and in minimum
denominations of $100,000.00 and any multiple of $1,000.00 in excess thereof.
Any attempted transfer of the Debentures in a block having an aggregate
principal amount of less than $100,000.00 shall be deemed to be void and of no
legal effect whatsoever. Any such purported transferee shall be deemed not to be
a holder of such Debentures for any purpose, including, but not limited to the
receipt of payments on such Debentures, and such purported transferee shall be
deemed to have no interest whatsoever in such Debentures. The Debentures shall
be numbered, lettered, or otherwise distinguished in such manner or in
accordance with such plans as the officers executing the same may determine with
the approval of the Trustee as evidenced by the execution and authentication
thereof.
Section 2.4. Execution of Debentures. The Debentures shall be signed
in the name and on behalf of the Company by the manual or facsimile signature of
its Chairman of the Board of Directors, Chief Executive Officer, Vice Chairman,
President, one of its Managing Directors or one of its Executive Vice
Presidents, Senior Vice Presidents or Vice Presidents. Only such Debentures as
shall bear thereon a certificate of authentication substantially in the form
herein before recited, executed by the Trustee or the Authenticating Agent by
the manual signature of an authorized signer, shall be entitled to the benefits
of this Indenture or be valid or obligatory for any purpose. Such certificate by
the Trustee or the Authenticating Agent upon any Debenture executed by the
Company 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.
In case any officer of the Company who shall have signed any of the
Debentures shall cease to be such officer before the Debentures so signed shall
have been authenticated and delivered by the Trustee or the Authenticating
Agent, or disposed of by the Company, such Debentures nevertheless may be
authenticated and delivered or disposed of as though the Person who signed such
Debentures had not ceased to be such officer of the Company; and any Debenture
may be signed on behalf of the Company by such Persons as, at the actual date of
the execution of such Debenture, shall be the proper officers of the Company,
although at the date of the execution of this Indenture any such person was not
such an officer.
Every Debenture shall be dated the date of its authentication.
Section 2.5. Exchange and Registration of Transfer of Debentures. The
Company shall cause to be kept, at the office or agency maintained for the
purpose of registration of transfer and for exchange as provided in Section 3.2,
a register (the "Debenture Register") for the Debentures issued hereunder in
which, subject to such reasonable regulations as it may prescribe, the Company
shall provide for the registration and transfer of all Debentures as in this
Article II provided. The Debenture Register shall be in written form or in any
other form capable of being converted into written form within a reasonable
time.
Debentures to be exchanged may be surrendered at the Principal Office
of the Trustee or at any office or agency to be maintained by the Company for
such purpose as provided in Section 3.2, and the Company shall execute, the
Company or the Trustee shall register and the Trustee or the Authenticating
Agent shall authenticate and make available for delivery in exchange therefor
the Debenture or Debentures which the Securityholder making the exchange shall
be entitled to receive. Upon due presentment for registration of transfer of any
Debenture at the Principal Office of the Trustee or at any office or agency of
the Company maintained for such purpose as provided in Section 3.2, the Company
shall execute, the Company or the Trustee shall register and the Trustee or the
Authenticating Agent shall authenticate and make available for delivery in the
name of the transferee or transferees a new Debenture for a like aggregate
principal amount. Registration or registration of transfer of any Debenture by
the Trustee or by any agent of the Company appointed pursuant to Section 3.2,
and delivery of such Debenture, shall be deemed to complete the registration or
registration of transfer of such Debenture.
All Debentures presented for registration of transfer or for exchange
or payment shall (if so required by the Company or the Trustee or the
Authenticating Agent) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company and
the Trustee or the Authenticating Agent duly executed by the holder or his
attorney duly authorized in writing.
No service charge shall be made for any exchange or registration of
transfer of Debentures, but the Company or the Trustee may require payment of a
sum sufficient to cover any tax, fee or other governmental charge that may be
imposed in connection therewith.
The Company or the Trustee shall not be required to exchange or
register a transfer of any Debenture for a period of 15 days next preceding the
date of selection of Debentures for redemption.
Notwithstanding anything herein to the contrary, Debentures may not be
transferred except in compliance with the restricted securities legend set forth
below, unless otherwise determined by the Company, upon the advice of counsel
expert in securities law, in accordance with applicable law:
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE
FEDERAL DEPOSIT INSURANCE CORPORATION.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE
WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN
ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF
THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE
SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA
OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR
ADMINISTRATIVE EXEMPTION.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.00 AND MULTIPLES
OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A
BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000.00 SHALL BE
DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.
THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.
Section 2.6. Mutilated, Destroyed, Lost or Stolen Debentures. In case
any Debenture shall become mutilated or be destroyed, lost or stolen, the
Company shall execute, and upon its written request the Trustee shall
authenticate and deliver, a new 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 or stolen. 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 such Debenture and of
the ownership thereof.
The Trustee may authenticate any such substituted Debenture and deliver
the same upon the written request or authorization of any officer 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 connected
therewith. In case any Debenture which has matured or is about to mature or has
been called for redemption in full shall become mutilated or be destroyed, lost
or stolen, the Company may, instead of issuing a substitute 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 may be required by them to
save each of them harmless and, in case of destruction, loss or theft, evidence
satisfactory to the Company and to the Trustee of the destruction, loss or theft
of such Debenture and of the ownership thereof.
Every substituted Debenture issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any such Debenture is destroyed, lost or
stolen shall constitute an additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Debenture shall be found at any
time, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Debentures duly issued hereunder. All
Debentures shall be held and owned upon the express condition that, to the
extent permitted by applicable law, the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Debentures and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the replacement or payment of negotiable instruments or other
securities without their surrender.
Section 2.7. Temporary Debentures. Pending the preparation of
definitive Debentures, the Company may execute and the Trustee shall
authenticate and make available for delivery temporary Debentures that are
typed, printed or lithographed. Temporary Debentures shall be issuable in any
authorized denomination, and 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 such 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 the same effect, as the definitive
Debentures. Without unreasonable delay the Company will execute and deliver to
the Trustee or the Authenticating Agent definitive Debentures and thereupon any
or all temporary Debentures may be surrendered in exchange therefor, at the
principal corporate trust office of the Trustee or at any office or agency
maintained by the Company for such purpose as provided in Section 3.2, and the
Trustee or the Authenticating Agent shall authenticate and make available for
delivery in exchange for such temporary Debentures a like aggregate principal
amount of such definitive Debentures. Such exchange shall be made by the Company
at its own expense and without any charge therefor except that in case of any
such exchange involving a registration of transfer the Company may require
payment of a sum sufficient to cover any tax, fee or other governmental charge
that may be imposed in relation thereto. Until so exchanged, the temporary
Debentures shall in all respects be entitled to the same benefits under this
Indenture as definitive Debentures authenticated and delivered hereunder.
Section 2.8. Payment of Interest and Additional Interest. Interest at
the Interest Rate and any Additional Interest on any Debenture that is payable,
and is punctually paid or duly provided for, on any Interest Payment Date for
Debentures shall be paid to the Person in whose name said Debenture (or one or
more Predecessor Securities) is registered at the close of business on the
regular record date for such interest installment except that interest and any
Additional Interest payable on the Maturity Date shall be paid to the Person to
whom principal is paid.
Each Debenture shall bear interest for the period beginning on (and
including) the date of original issuance and ending on (but excluding) the
Interest Payment Date in March 2007 at a rate per annum of 7.20%, and shall bear
interest for each successive Distribution Period beginning on or after the
Interest Payment Date in March 2007 at a rate per annum equal to the 3-Month
LIBOR, determined as described in Section 2.10, plus 1.85% (the "Coupon Rate"),
applied to the principal amount thereof, 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 (without duplication) on any
overdue installment of interest (including Additional Interest) at the Interest
Rate in effect for each applicable period compounded quarterly. Interest shall
be payable (subject to any relevant Extension Period) quarterly in arrears on
each Interest Payment Date with the first installment of interest to be paid on
the Interest Payment Date in March 2007.
Any interest on any Debenture, including Additional Interest, that is
payable, but is not punctually paid or duly provided for, on any Interest
Payment Date (herein called "Defaulted Interest") shall forthwith cease to be
payable to the registered holder on the relevant regular record date by virtue
of having been such holder; and such Defaulted Interest shall be paid by the
Company to the Persons in whose names such Debentures (or their respective
Predecessor Securities) are registered at the close of business on a special
record date for the payment of such Defaulted Interest, which shall be fixed in
the following manner: the Company shall notify the Trustee in writing at least
25 days prior to the date of the proposed payment of the amount of Defaulted
Interest proposed to be paid on each such Debenture and the date of the proposed
payment, and at the same time the Company shall deposit with the Trustee an
amount of money equal to the aggregate amount proposed to be paid in respect of
such Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a
special record date for the payment of such Defaulted Interest which shall not
be more than 15 nor less than 10 days prior to the date of the proposed payment
and not less than 10 days after the receipt by the Trustee of the notice of the
proposed payment. The Trustee shall promptly notify the Company of such special
record date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the special record
date therefor to be mailed, first class postage prepaid, to each Securityholder
at its address as it appears in the Debenture Register, not less than 10 days
prior to such special record date. Notice of the proposed payment of such
Defaulted Interest and the special record date therefor having been mailed as
aforesaid, such Defaulted Interest shall be paid to the Persons in whose names
such Debentures (or their respective Predecessor Securities) are registered on
such special record date and shall be no longer payable.
The Company may make payment of any Defaulted Interest on any
Debentures in any other lawful manner after notice given by the Company to the
Trustee of the proposed payment method; provided, however, the Trustee in its
sole discretion deems such payment method to be practical.
Any interest (including Additional Interest) scheduled to become
payable on an Interest Payment Date occurring during an Extension Period shall
not be Defaulted Interest and shall be payable on such other date as may be
specified in the terms of such Debentures.
The term "regular record date" as used in this Section shall mean the
close of business on the 15th Business Day preceding the applicable Interest
Payment Date.
Subject to the foregoing provisions of this Section, each Debenture
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Debenture shall carry the rights to interest accrued
and unpaid, and to accrue, that were carried by such other Debenture.
Section 2.9. Cancellation of Debentures Paid, etc. 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
surrendered to the Trustee and promptly canceled by it, or, if surrendered to
the Trustee or any Authenticating Agent, shall be promptly canceled by it, and
no Debentures shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Indenture. All Debentures canceled by any
Authenticating Agent shall be delivered to the Trustee. The Trustee shall
destroy all canceled Debentures unless the Company otherwise directs the Trustee
in writing. If the Company shall 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
surrendered to the Trustee for cancellation.
Section 2.10. Computation of Interest. The amount of interest payable
for each Distribution Period will be calculated by applying the Interest Rate to
the principal amount outstanding at the commencement of the Distribution Period
on the basis of the actual number of days in the Distribution Period concerned
divided by 360. All percentages resulting from any calculations on the
Debentures will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all dollar amounts used in or resulting from such calculation will be
rounded to the nearest cent (with one-half cent being rounded upward)).
(a) "3-Month LIBOR" means the London interbank offered interest rate
for three-month, U.S. dollar deposits determined by the Trustee in the following
order of priority:
(1) the rate (expressed as a percentage per annum) for U.S.
dollar deposits having a three-month maturity that appears on Telerate
Page 3750 as of 11:00 a.m. (London time) on the related Determination
Date (as defined below). "Telerate Page 3750" means the display
designated as "Page 3750" on the Moneyline Telerate Service or such
other page as may replace Page 3750 on that service or such other
service or services as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollar deposits;
(2) if such rate cannot be identified on the related
Determination Date, the Trustee will request the principal London
offices of four leading banks in the London interbank market to
provide such banks' offered quotations (expressed as percentages per
annum) to prime banks in the London interbank market for U.S. dollar
deposits having a three-month maturity as of 11:00 a.m. (London time)
on such Determination Date. If at least two quotations are provided,
3-Month LIBOR will be the arithmetic mean of such quotations;
(3) if fewer than two such quotations are provided as
requested in clause (2) above, the Trustee will request four major New
York City banks to provide such banks' offered quotations (expressed
as percentages per annum) to leading European banks for loans in U.S.
dollars as of 11:00 a.m. (London time) on such Determination Date. If
at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and
(4) if fewer than two such quotations are provided as
requested in clause (3) above, 3-Month LIBOR will be a 3-Month LIBOR
determined with respect to the Distribution Period immediately
preceding such current Distribution Period.
If the rate for U.S. dollar deposits having a three-month maturity that
initially appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the
related Determination Date is superseded on the Telerate Page 3750 by a
corrected rate by 12:00 noon (London time) on such Determination Date, then the
corrected rate as so substituted on the applicable page will be the applicable
3-Month LIBOR for such Determination Date.
(b) The Interest Rate for any Distribution Period will at no time be
higher than the maximum rate then permitted by New York law as the same may be
modified by United States law.
(c) "Determination Date" means the date that is two London Banking
Days (i.e., a business day in which dealings in deposits in U.S. dollars are
transacted in the London interbank market) preceding the particular Distribution
Period for which a Coupon Rate is being determined.
(d) The Trustee shall notify the Company, the Institutional Trustee
and any securities exchange or interdealer quotation system on which the Capital
Securities are listed, of the Coupon Rate and the Determination Date for each
Distribution Period, in each case as soon as practicable after the determination
thereof but in no event later than the thirtieth (30th) day of the relevant
Distribution Period. Failure to notify the Company, the Institutional Trustee or
any securities exchange or interdealer quotation system, or any defect in said
notice, shall not affect the obligation of the Company to make payment on the
Debentures at the applicable Coupon Rate. Any error in the calculation of the
Coupon Rate by the Trustee may be corrected at any time by notice delivered as
above provided. Upon the request of a holder of a Debenture, the Trustee shall
provide the Coupon Rate then in effect and, if determined, the Coupon Rate for
the next Distribution Period.
(e) Subject to the corrective rights set forth above, all
certificates, communications, opinions, determinations, calculations, quotations
and decisions given, expressed, made or obtained for the purposes of the
provisions relating to the payment and calculation of interest on the Debentures
and distributions on the Capital Securities by the Trustee or the Institutional
Trustee will (in the absence of willful default, bad faith and manifest error)
be final, conclusive and binding on the Trust, the Company and all of the
holders of the Debentures and the Capital Securities, and no liability shall (in
the absence of willful default, bad faith or manifest error) attach to the
Trustee or the Institutional Trustee in connection with the exercise or non-
exercise by either of them or their respective powers, duties and discretion.
Section 2.11. Extension of Interest Payment Period. So long as no
Acceleration Event of Default has occurred and is continuing, the Company shall
have the right, from time to time, and without causing an Event of Default, to
defer payments of interest on the Debentures by extending the interest payment
period on the Debentures at any time and from time to time during the term of
the Debentures, for up to 20 consecutive quarterly periods (each such extended
interest payment period, an "Extension Period"), during which Extension Period
no interest (including Additional Interest) shall be due and payable (except any
Additional Sums that may be due and payable). No Extension Period may end on a
date other than an Interest Payment Date. During an Extension Period, interest
will continue to accrue on the Debentures, and interest on such accrued interest
will accrue at an annual rate equal to the Interest Rate in effect for such
Extension Period, compounded quarterly from the date such interest would have
been payable were it not for the Extension Period, to the extent permitted by
law (such interest referred to herein as "Additional Interest"). At the end of
any such Extension Period the Company shall pay all interest then accrued and
unpaid on the Debentures (together with Additional Interest thereon); provided,
however, that no Extension Period may extend beyond the Maturity Date; provided
further, however, that during any such Extension Period, the Company shall not
and shall not permit any Affiliate to (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's or such Affiliate's capital stock (other
than payments of dividends or distributions to the Company) or make any
guarantee payments with respect to the foregoing or (ii) make any payment of
principal of or interest or premium, if any, on or repay, repurchase or redeem
any debt securities of the Company or any Affiliate that rank pari passu in all
respects with or junior in interest to the Debentures (other than, with respect
to clauses (i) or (ii) above, (a) repurchases, redemptions or other acquisitions
of shares of capital stock of the Company in connection with any employment
contract, benefit plan or other similar arrangement with or for the benefit of
one or more employees, officers, directors or consultants, in connection with a
dividend reinvestment or stockholder stock purchase plan or in connection with
the issuance of capital stock of the Company (or securities convertible into or
exercisable for such capital stock) as consideration in an acquisition
transaction entered into prior to the applicable Extension Period, (b) as a
result of any exchange or conversion of any class or series of the Company's
capital stock (or any capital stock of a subsidiary of the Company) for any
class or series of the Company's capital stock or of any class or series of the
Company's indebtedness for any class or series of the Company's capital stock,
(c) the purchase of fractional interests in shares of the Company's capital
stock pursuant to the conversion or exchange provisions of such capital stock or
the security being converted or exchanged, (d) any declaration of a dividend in
connection with any stockholders' rights plan, or the issuance of rights, stock
or other property under any stockholders' rights plan, or the redemption or
repurchase of rights pursuant thereto, (e) any dividend in the form of stock,
warrants, options or other rights where the dividend stock or the stock issuable
upon exercise of such warrants, options or other rights is the same stock as
that on which the dividend is being paid or ranks pari passu with or junior to
such stock and any cash payments in lieu of fractional shares issued in
connection therewith, or (f) payments under the Capital Securities Guarantee).
Prior to the termination of any Extension Period, the Company may further extend
such period, provided that such period together with all such previous and
further consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all accrued and unpaid interest and
Additional Interest, the Company may commence a new Extension Period, subject to
the foregoing requirements. No interest or Additional Interest shall be due and
payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Additional Interest to the extent permitted by
applicable law. The Company must give the Trustee notice of its election to
begin or extend an Extension Period by the close of business at least 15
Business Days prior to the Interest Payment Date with respect to which interest
on the Debentures would have been payable except for the election to begin or
extend such Extension Period. The Trustee shall give notice of the Company's
election to begin a new Extension Period to the Securityholders.
Section 2.12. CUSIP Numbers. The Company in issuing the Debentures may
use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall
use CUSIP numbers in notices of redemption as a convenience to Securityholders;
provided, however, that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Debentures or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Debentures, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Company will promptly notify the Trustee in writing of any change in the
CUSIP numbers.
Section 2.13. Global Debentures.
(a) Upon the election of the holder of outstanding Debentures, which
election need not be in writing, the Debentures owned by such holder shall be
issued in the form of one or more Global Debentures registered in the name of
the Depositary or its nominee. Each Global Debenture issued under this Indenture
shall be registered in the name of the Depositary designated by the Company for
such Global Debenture or a nominee thereof, delivered to such Depositary or a
nominee thereof or custodian therefor and shall contain such legends as may be
required by the Depositary and each such Global Debenture shall constitute a
single Debenture for all purposes of this Indenture.
(b) Notwithstanding any other provision in this Indenture, no Global
Debenture may be exchanged in whole or in part for Debentures registered, and no
transfer of a Global Debenture in whole or in part may be registered, in the
name of any Person other than the Depositary for such Global Debenture or a
nominee thereof unless (i) such Depositary advises the Trustee and the Company
in writing that such Depositary is no longer willing or able to properly
discharge its responsibilities as Depositary with respect to such Global
Debenture, and no qualified successor is appointed by the Company within ninety
(90) days of receipt by the Company of such notice, (ii) such Depositary ceases
to be a clearing agency registered under the Exchange Act and no successor is
appointed by the Company within ninety (90) days after obtaining knowledge of
such event, (iii) the Company executes and delivers to the Trustee a Company
order stating that the Company elects to terminate the book-entry system through
the Depositary or (iv) an Event of Default shall have occurred and be
continuing. Upon the occurrence of any event specified in clause (i), (ii),
(iii) or (iv) above, the Trustee shall notify the Depositary and instruct the
Depositary to notify all owners of beneficial interests in such Global Debenture
of the occurrence of such event and of the availability of Debentures to such
owners of beneficial interests requesting the same. Upon the issuance of such
Debentures and the registration in the Debenture Register of such Debentures in
the names of the holders of the beneficial interests therein, the Trustee shall
recognize such holders of beneficial interests as holders.
(c) If any Global Debenture is to be exchanged for other Debentures
or canceled in part, or if another Debenture is to be exchanged in whole or in
part for a beneficial interest in any Global Debenture, then either (i) such
Global Debenture shall be so surrendered for exchange or cancellation as
provided in this Article II or (ii) the principal 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 principal amount of such other Debentures
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 Debenture
registrar, whereupon the Trustee, in accordance with the Applicable Depositary
Procedures, shall instruct the Depositary or its authorized representative to
make a corresponding adjustment to its records. Upon any such surrender or
adjustment of a Global Debenture by the Depositary, accompanied by registration
instructions, the Company shall execute and the Trustee shall authenticate and
deliver any Debentures issuable in exchange for such Global Debenture (or any
portion thereof) in accordance with the instructions of the Depositary. The
Trustee shall not be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be fully protected in relying on, such
instructions.
(d) Every Debenture authenticated and delivered upon registration of
transfer of, or in exchange for or in lieu of, a Global Debenture or any portion
thereof shall be authenticated and delivered in the form of, and shall be, a
Global Debenture, unless such Debenture is registered in the name of a Person
other than the Depositary for such Global Debenture or a nominee thereof.
(e) Debentures distributed to holders of Book-Entry Capital
Securities (as defined in the Declaration) upon the dissolution of the Trust
shall be distributed in the form of one or more Global Debentures registered in
the name of a Depositary or its nominee, and deposited with the Debentures
registrar, as custodian for such Depositary, or with such Depositary, for credit
by the Depositary to the respective accounts of the beneficial owners of the
Debentures represented thereby (or such other accounts as they may direct).
Debentures distributed to holders of Capital Securities other than Book-Entry
Capital Securities upon the dissolution of the Trust shall not be issued in the
form of a Global Debenture or any other form intended to facilitate book-entry
trading in beneficial interests in such Debentures.
(f) The Depositary or its nominee, as the registered owner of a
Global Debenture, shall be the holder of such Global Debenture for all purposes
under this Indenture and the Debentures, and owners of beneficial interests in a
Global Debenture shall hold such interests pursuant to the Applicable Depositary
Procedures. Accordingly, any such owner's beneficial interest in a Global
Debenture shall be shown only on, and the transfer of such interest shall be
effected only through, records maintained by the Depositary or its nominee or
its Depositary Participants. The Debentures registrar and the Trustee shall be
entitled to deal with the Depositary for all purposes under this Indenture
relating to a Global Debenture (including the payment of principal and interest
thereon and the giving of instructions or directions by owners of beneficial
interests therein and the giving of notices) as the sole holder of the Debenture
and shall have no obligations to the owners of beneficial interests therein.
Neither the Trustee nor the Debentures registrar shall have any liability in
respect of any transfers effected by the Depositary.
(g) The rights of owners of beneficial interests in a Global
Debenture shall be exercised only through the Depositary and shall be limited to
those established by law and agreements between such owners and the Depositary
and/or its Depositary Participants.
(h) No holder of any beneficial interest in any Global Debenture held
on its behalf by a Depositary shall have any rights under this Indenture with
respect to such Global Debenture, and such Depositary may be treated by the
Company, the Trustee and any agent of the Company or the Trustee as the owner of
such Global Debenture for all purposes whatsoever. None of the Company, the
Trustee nor any agent of the Company or the Trustee will have any responsibility
or liability for any aspect of the records relating to or payments made on
account of beneficial ownership interests of a Global Debenture or maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by a
Depositary or impair, as between a Depositary and such holders of beneficial
interests, the operation of customary practices governing the exercise of the
rights of the Depositary (or its nominee) as holder of any Debenture.
ARTICLE III.
PARTICULAR COVENANTS OF THE COMPANY
Section 3.1. Payment of Principal, Premium and Interest; Agreed
Treatment of the Debentures.
(a) The Company covenants and agrees that it will duly and
punctually pay or cause to be paid the principal of and premium, if any, and
interest and any Additional Interest and other payments on the Debentures at the
place, at the respective times and in the manner provided in this Indenture and
the Debentures. Each installment of interest on the Debentures may be paid (i)
by mailing checks for such interest payable to the order of the holders of
Debentures entitled thereto as they appear on the registry books of the Company
if a request for a wire transfer has not been received by the Company or (ii) by
wire transfer to any account with a banking institution located in the United
States designated in writing by such Person to the paying agent no later than
the related record date. Notwithstanding the foregoing, so long as the holder of
this Debenture is the Institutional Trustee, the payment of the principal of and
interest on this Debenture will be made in immediately available funds at such
place and to such account as may be designated by the Institutional Trustee.
(b) The Company will treat the Debentures as indebtedness, and the
amounts payable in respect of the principal amount of such Debentures as
interest, for all United States federal income tax purposes. All payments in
respect of such Debentures will be made free and clear of United States
withholding tax to any beneficial owner thereof that has provided an Internal
Revenue Service Form W8 BEN (or any substitute or successor form) establishing
its non-United States status for United States federal income tax purposes.
(c) As of the date of this Indenture, the Company has no present
intention to exercise its right under Section 2.11 to defer payments of interest
on the Debentures by commencing an Extension Period.
(d) As of the date of this Indenture, the Company believes that the
likelihood that it would exercise its right under Section 2.11 to defer payments
of interest on the Debentures by commencing an Extension Period at any time
during which the Debentures are outstanding is remote because of the
restrictions that would be imposed on the Company's ability to declare or pay
dividends or distributions on, or to redeem, purchase or make a liquidation
payment with respect to, any of its outstanding equity and on the Company's
ability to make any payments of principal of or interest on, or repurchase or
redeem, any of its debt securities that rank pari passu in all respects with (or
junior in interest to) the Debentures.
Section 3.2. Offices for Notices and Payments, etc. So long as any of
the Debentures remain outstanding, the Company will maintain in Wilmington,
Delaware, an office or agency where the Debentures may be presented for payment,
an office or agency where the Debentures may be presented for registration of
transfer and for exchange as in this Indenture provided and an office or agency
where notices and demands to or upon the Company in respect of the Debentures or
of this Indenture may be served. The Company will give to the Trustee written
notice of the location of any such office or agency and of any change of
location thereof. Until otherwise designated from time to time by the Company in
a notice to the Trustee, or specified as contemplated by Section 2.5, such
office or agency for all of the above purposes shall be the office or agency of
the Trustee. In case the Company shall fail to maintain any such office or
agency in Wilmington, Delaware, or shall fail to give such notice of the
location or of any change in the location thereof, presentations and demands may
be made and notices may be served at the Principal Office of the Trustee.
In addition to any such office or agency, the Company may from time to
time designate one or more offices or agencies outside Wilmington, Delaware,
where the Debentures may be presented for registration of transfer and for
exchange in the manner provided in this Indenture, and the Company may from time
to time rescind such designation, as the Company may deem desirable or
expedient; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain any such office or
agency in Wilmington, Delaware, for the purposes above mentioned. The Company
will give to the Trustee prompt written notice of any such designation or
rescission thereof.
Section 3.3. Appointments to Fill Vacancies in Trustee's Office. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 6.9, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 3.4. Provision as to Paying Agent.
(a) If the Company shall appoint a paying agent other than the
Trustee, it will cause such paying agent to execute and deliver to the Trustee
an instrument in which such agent shall agree with the Trustee, subject to the
provision of this Section 3.4,
(1) that it will hold all sums held by it as such agent for
the payment of the principal of and premium, if any, or interest, if
any, on the Debentures (whether such sums have been paid to it by the
Company or by any other obligor on the Debentures) in trust for the
benefit of the holders of the Debentures;
(2) that it will give the Trustee prompt written notice of
any failure by the Company (or by any other obligor on the Debentures)
to make any payment of the principal of and premium, if any, or
interest, if any, on the Debentures when the same shall be due and
payable; and
(3) that it will, at any time during the continuance of any
Event of Default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such paying agent.
(b) If the Company shall act as its own paying agent, it will, on or
before each due date of the principal of and premium, if any, or interest or
other payments, if any, on the Debentures, set aside, segregate and hold in
trust for the benefit of the holders of the Debentures a sum sufficient to pay
such principal, premium, interest or other payments so becoming due and will
notify the Trustee in writing of any failure to take such action and of any
failure by the Company (or by any other obligor under the Debentures) to make
any payment of the principal of and premium, if any, or interest or other
payments, if any, on the Debentures when the same shall become due and payable.
Whenever the Company shall have one or more paying agents for the
Debentures, it will, on or prior to each due date of the principal of and
premium, if any, or interest, if any, on the Debentures, deposit with a paying
agent a sum sufficient to pay the principal, premium, interest or other payments
so becoming due, such sum to be held in trust for the benefit of the Persons
entitled thereto and (unless such paying agent is the Trustee) the Company shall
promptly notify the Trustee in writing of its action or failure to act.
(c) Anything in this Section 3.4 to the contrary notwithstanding, the
Company may, at any time, for the purpose of obtaining a satisfaction and
discharge with respect to the Debentures, or for any other reason, pay, or
direct any paying agent to pay to the Trustee all sums held in trust by the
Company or any such paying agent, such sums to be held by the Trustee upon the
trusts herein contained.
(d) Anything in this Section 3.4 to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section 3.4 is subject to
Sections 12.3 and 12.4.
Section 3.5. Certificate to Trustee. The Company will deliver to the
Trustee on or before 120 days after the end of each fiscal year, so long as
Debentures are outstanding hereunder, a Certificate stating that in the course
of the performance by the signers of their duties as officers of the Company
they would normally have knowledge of any default during such fiscal year by the
Company in the performance of any covenants contained herein, stating whether or
not they have knowledge of any such default and, if so, specifying each such
default of which the signers have knowledge and the nature and status thereof. A
form of this Certificate is attached hereto as Exhibit B.
Section 3.6. Additional Sums. If and for so long as the Trust is the
holder of all Debentures and the Trust is required to pay any additional taxes
(including withholding taxes), duties, assessments or other governmental charges
as a result of a Tax Event, the Company will pay such additional amounts
("Additional Sums") on the Debentures as shall be required so that the net
amounts received and retained by the Trust after paying taxes (including
withholding taxes), duties, assessments or other governmental charges will be
equal to the amounts the Trust would have received if no such taxes, duties,
assessments or other governmental charges had been imposed. Whenever in this
Indenture or the Debentures there is a reference in any context to the payment
of principal of or interest on the Debentures, such mention shall be deemed to
include mention of payments of the Additional Sums provided for in this
paragraph to the extent that, in such context, Additional Sums are, were or
would be payable in respect thereof pursuant to the provisions of this paragraph
and express mention of the payment of Additional Sums (if applicable) in any
provisions hereof shall not be construed as excluding Additional Sums in those
provisions hereof where such express mention is not made; provided, however,
that the deferral of the payment of interest during an Extension Period pursuant
to Section 2.11 shall not defer the payment of any Additional Sums that may be
due and payable.
Section 3.7. Compliance with Consolidation Provisions. The Company
will 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 Person unless the provisions of Article XI hereof are
complied with.
Section 3.8. Limitation on Dividends. If Debentures are initially
issued to the Trust or a trustee of such Trust in connection with the issuance
of Trust Securities by the Trust (regardless of whether Debentures continue to
be held by such Trust) and (i) there shall have occurred and be continuing an
Event of Default, (ii) the Company shall be in default with respect to its
payment of any obligations under the Capital Securities Guarantee, or (iii) the
Company shall have given notice of its election to defer payments of interest on
the Debentures by extending the interest payment period as provided herein and
such period, or any extension thereof, shall be continuing, then the Company
shall not, and shall not allow any Affiliate of the Company to, (x) declare or
pay any dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of the Company's capital stock or its
Affiliates' capital stock (other than payments of dividends or distributions to
the Company) or make any guarantee payments with respect to the foregoing or (y)
make any payment of principal of or interest or premium, if any, on or repay,
repurchase or redeem any debt securities of the Company or any Affiliate that
rank pari passu in all respects with or junior in interest to the Debentures
(other than, with respect to clauses (x) and (y) above, (1) repurchases,
redemptions or other acquisitions of shares of capital stock of the Company in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, if any, (2) as a result of any exchange or
conversion of any class or series of the Company's capital stock (or any capital
stock of a subsidiary of the Company) for any class or series of the Company's
capital stock or of any class or series of the Company's indebtedness for any
class or series of the Company's capital stock, (3) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (4) any declaration of a dividend in connection with any
stockholders' rights plan, or the issuance of rights, stock or other property
under any stockholders' rights plan, or the redemption or repurchase of rights
pursuant thereto, (5) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional shares issued in connection therewith, or
(6) payments under the Capital Securities Guarantee).
Section 3.9. Covenants as to the Trust. For so long as the Trust
Securities remain outstanding, the Company shall maintain 100% ownership of the
Common Securities; provided, however, that any permitted successor of the
Company under this Indenture may succeed to the Company's ownership of such
Common Securities. The Company, as owner of the Common Securities, shall, except
in connection with a distribution of Debentures to the holders of Trust
Securities in liquidation of the Trust, the redemption of all of the Trust
Securities or certain mergers, consolidations or amalgamations, each as
permitted by the Declaration, cause the Trust (a) to remain a statutory trust,
(b) to otherwise continue to be classified as a grantor trust for United States
federal income tax purposes, and (c) to cause each holder of Trust Securities to
be treated as owning an undivided beneficial interest in the Debentures.
Section 3.10. 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 Additional
Junior Indebtedness (i) that, by its terms, is expressly stated to be either
junior and subordinate or pari passu in all respects to the Debentures, and (ii)
of which the Company has notified (and, if then required under the applicable
guidelines of the regulating entity, has received approval from) the Federal
Reserve, if the Company is a bank holding company, or the OTS, if the Company is
a savings and loan holding company.
ARTICLE IV.
SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
Section 4.1. Securityholders' Lists. The Company covenants and agrees
that it will furnish or cause to be furnished to the Trustee:
(a) on each regular record date for the Debentures, a list, in such
form as the Trustee may reasonably require, of the names and addresses of the
Securityholders of the Debentures as of such record date; and
(b) at such other times as the Trustee may request in writing, within
30 days after the receipt by the Company of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished;
except that no such lists need be furnished under this Section 4.1 so long as
the Trustee is in possession thereof by reason of its acting as Debenture
registrar.
Section 4.2. Preservation and Disclosure of Lists.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, all information as to the names and addresses of the holders of
Debentures (1) contained in the most recent list furnished to it as provided in
Section 4.1 or (2) received by it in the capacity of Debentures registrar (if so
acting) hereunder. The Trustee may destroy any list furnished to it as provided
in Section 4.1 upon receipt of a new list so furnished.
(b) In case three or more holders of Debentures (hereinafter referred
to as "applicants") apply in writing to the Trustee and furnish to the Trustee
reasonable proof that each such applicant has owned a Debenture for a period of
at least 6 months preceding the date of such application, and such application
states that the applicants desire to communicate with other holders of
Debentures with respect to their rights under this Indenture or under such
Debentures and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Trustee shall
within 5 Business Days after the receipt of such application, at its election,
either:
(1) afford such applicants access to the information
preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.2, or
(2) inform such applicants as to the approximate number of
holders of Debentures whose names and addresses appear in the
information preserved at the time by the Trustee in accordance
with the provisions of subsection (a) of this Section 4.2, and
as to the approximate cost of mailing to such Securityholders the
form of proxy or other communication, if any, specified in such
application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to each Securityholder whose name and address appear in the information
preserved at the time by the Trustee in accordance with the provisions of
subsection (a) of this Section 4.2 a copy of the form of proxy or other
communication which is specified in such request with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing, unless within
five days after such tender, the Trustee shall mail to such applicants and file
with the Securities and Exchange Commission, if permitted or required by
applicable law, together with a copy of the material to be mailed, a written
statement to the effect that, in the opinion of the Trustee, such mailing would
be contrary to the best interests of the holders of all Debentures, as the case
may be, or would be in violation of applicable law. Such written statement shall
specify the basis of such opinion. If said Commission, as permitted or required
by applicable law, after opportunity for a hearing upon the objections specified
in the written statement so filed, shall enter an order refusing to sustain any
of such objections or if, after the entry of an order sustaining one or more of
such objections, said Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter an
order so declaring, the Trustee shall mail copies of such material to all such
Securityholders with reasonable promptness after the entry of such order and the
renewal of such tender; otherwise the Trustee shall be relieved of any
obligation or duty to such applicants respecting their application.
(c) Each and every holder of Debentures, by receiving and holding the
same, agrees with the Company and the Trustee that neither the Company nor the
Trustee nor any paying agent shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the holders
of Debentures in accordance with the provisions of subsection (b) of this
Section 4.2, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under said subsection (b).
ARTICLE V.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
UPON AN EVENT OF DEFAULT
Section 5.1. Events of Default. "Event of Default," wherever used
herein, 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 Company defaults in the payment of any interest upon any
Debenture, including any Additional Interest in respect thereof, following the
nonpayment of any such interest for twenty or more consecutive Distribution
Periods; or
(b) the Company defaults in the payment of all or any part of the
principal of (or premium, if any, on) any Debentures as and when the same shall
become due and payable either at maturity, upon redemption, by declaration of
acceleration or otherwise; or
(c) the Company defaults in the performance of, or breaches, any of
its covenants or agreements in this Indenture or in the terms of the Debentures
established as contemplated in this Indenture (other than a covenant or
agreement a default in whose performance or whose breach is elsewhere in this
Section specifically dealt with), and continuance of such default or breach for
a period of 60 days after there has been given, by registered or certified mail,
to the Company by the Trustee or to the Company and the Trustee by the holders
of at least 25% in aggregate principal amount of the outstanding Debentures, a
written notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
(d) a court of competent jurisdiction shall enter a decree or order
for relief in respect of the Company in an involuntary case under any applicable
bankruptcy, insolvency, reorganization or other similar law now or hereafter in
effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Company or for any substantial part of
its property, or ordering the winding-up or liquidation of its affairs and such
decree or order shall remain unstayed and in effect for a period of 90
consecutive days; or
(e) the Company shall commence a voluntary case under any applicable
bankruptcy, insolvency, reorganization or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Company or of any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due; or
(f) the Trust shall have voluntarily or involuntarily liquidated,
dissolved, wound-up its business or otherwise terminated its existence except in
connection with (i) the distribution of the Debentures to holders of such Trust
Securities in liquidation of their interests in the Trust, (ii) the redemption
of all of the outstanding Trust Securities or (iii) certain mergers,
consolidations or amalgamations, each as permitted by the Declaration.
If an Acceleration Event of Default occurs and is continuing with
respect to the Debentures, then, and in each and every such case, unless the
principal of the Debentures shall have already become due and payable, either
the Trustee or the holders of not less than 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 Securityholders), may declare the entire
principal of the Debentures and the interest accrued thereon, if any, to be due
and payable immediately, and upon any such declaration the same shall become
immediately due and payable. If an Event of Default under Section 5.1(b) or (c)
occurs and is continuing with respect to the Debentures, then, and in each and
every such case, unless the principal of the Debentures shall have already
become due and payable, either the Trustee or the holders of not less than 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
Securityholders), may proceed to remedy the default or breach thereunder by such
appropriate judicial proceedings as the Trustee or such holders shall deem most
effectual to remedy the defaulted covenant or enforce the provisions of this
Indenture so breached, either by suit in equity or by action at law, for damages
or otherwise.
The foregoing provisions, however, are subject to the condition that
if, 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 moneys due shall have been obtained or entered as hereinafter provided, (i)
the Company shall pay or shall deposit with the Trustee a sum sufficient to pay
all matured installments of interest upon all the Debentures and the principal
of and premium, if any, on the Debentures which shall have become due otherwise
than by acceleration (with interest upon such principal and premium, if any, and
Additional Interest) and such amount as shall be sufficient to cover reasonable
compensation to the Trustee and each predecessor Trustee, their respective
agents, attorneys and counsel, and all other amounts due to the Trustee pursuant
to Section 6.6, if any, and (ii) all Events of Default under this Indenture,
other than the non-payment of the principal of or premium, if any, on Debentures
which shall have become due by acceleration, shall have been cured, waived or
otherwise remedied as provided herein -- then and in every such case the holders
of a majority in aggregate principal amount of the Debentures then outstanding,
by written notice to the Company and to the Trustee, may waive all defaults and
rescind and annul such declaration and its consequences, but no such waiver or
rescission and annulment shall extend to or shall affect any subsequent default
or shall impair any right consequent thereon.
In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or abandoned
because of such rescission or annulment or for any other reason or shall have
been determined adversely to the Trustee, then and in every such case the
Company, the Trustee and the holders of the Debentures shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the Trustee and the holders of the
Debentures shall continue as though no such proceeding had been taken.
Section 5.2. Payment of Debentures on Default; Suit Therefor. The
Company covenants that upon the occurrence of an Event of Default pursuant to
Section 5.1(a) or (b) then, upon demand of the Trustee, the Company will 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 Debentures for principal and
premium, if any, or interest, or both, as the case may be, with Additional
Interest accrued on the Debentures (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 such Trust, without duplication of any other amounts paid by the
Trust or a trustee in respect thereof); and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including a reasonable compensation to the Trustee, its agents, attorneys and
counsel, and any other amounts due to the Trustee under Section 6.6. In case the
Company shall fail forthwith to pay such amounts upon such demand, the Trustee,
in its own name and as trustee of an express trust, shall be entitled and
empowered to institute any actions or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any such action or
proceeding to judgment or final decree, and may enforce any such judgment or
final decree against the Company or any other obligor on such Debentures and
collect in the manner provided by law out of the property of the Company or any
other obligor on such Debentures wherever situated the moneys adjudged or
decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor on the Debentures under
Bankruptcy Law, or in case a receiver or trustee shall have been appointed for
the property of the Company or such other obligor, or in the case of any other
similar judicial proceedings relative to the Company or other obligor upon the
Debentures, or to the creditors or property of the Company or such other
obligor, the Trustee, irrespective of whether the principal of the Debentures
shall then be due and payable as therein expressed or by declaration of
acceleration or otherwise and irrespective of whether the Trustee shall have
made any demand pursuant to the provisions of this Section 5.2, shall be
entitled and empowered, by intervention in such proceedings or otherwise,
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the
Debentures,
(ii) in case of any judicial proceedings, to file such proofs of claim
and other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor
Trustee, and their respective agents, attorneys and counsel, and
for reimbursement of all other amounts due to the Trustee under
Section 6.6), and of the Securityholders allowed in such judicial
proceedings relative to the Company or any other obligor on the
Debentures, or to the creditors or property of the Company or
such other obligor, unless prohibited by applicable law and
regulations, to vote on behalf of the holders of the Debentures
in any election of a trustee or a standby trustee in arrangement,
reorganization, liquidation or other bankruptcy or insolvency
proceedings or Person performing similar functions in comparable
proceedings,
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims, and
(iv) to distribute the same after the deduction of its charges and
expenses.
Any receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized by each of the Securityholders to make such payments to the Trustee,
and, in the event that the Trustee shall consent to the making of such payments
directly to the Securityholders, to pay to the Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Trustee, each predecessor
Trustee and their respective agents, attorneys and counsel, and all other
amounts due to the Trustee under Section 6.6.
Nothing herein contained shall be construed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Securityholder any
plan of reorganization, arrangement, adjustment or composition affecting the
Debentures or the rights of any holder thereof or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such proceeding.
All rights of action and of asserting claims under this Indenture, or
under any of the Debentures, may be enforced by the Trustee without the
possession of any of the 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 be for the ratable benefit of the holders of the
Debentures.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party), the Trustee shall be held to represent all the
holders of the Debentures, and it shall not be necessary to make any holders of
the Debentures parties to any such proceedings.
Section 5.3. Application of Moneys Collected by Trustee. Any moneys
collected by the Trustee pursuant to this Article V shall be applied in the
following order, at the date or dates fixed by the Trustee for the distribution
of such moneys, upon presentation of the several Debentures in respect of which
moneys have been collected, and stamping thereon the payment, if only partially
paid, and upon surrender thereof if fully paid:
First: To the payment of costs and expenses incurred by, and reasonable
fees of, the Trustee, its agents, attorneys and counsel, and of all other
amounts due to the Trustee under Section 6.6;
Second: To the payment of all Senior Indebtedness of the Company if and
to the extent required by Article XV;
Third: To the payment of the amounts then due and unpaid upon
Debentures for principal (and premium, if any), and interest on the Debentures,
in respect of which or for the benefit of which money has been collected,
ratably, without preference or priority of any kind, according to the amounts
due on such Debentures (including Additional Interest); and
Fourth: The balance, if any, to the Company.
Section 5.4. Proceedings by Securityholders. No holder of any
Debenture shall have any right to institute any suit, action or proceeding for
any remedy hereunder, unless such holder previously shall have given to the
Trustee written notice of an Event of Default with respect to the Debentures and
unless the holders of not less than 25% in aggregate principal amount of the
Debentures then outstanding shall have given the Trustee a written request to
institute such action, suit or proceeding and shall have offered to the Trustee
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred thereby, and the Trustee for 60 days after its
receipt of such notice, request and offer of indemnity shall have failed to
institute any such action, suit or proceeding.
Notwithstanding any other provisions in this Indenture, however, the
right of any holder of any Debenture to receive payment of the principal of,
premium, if any, and interest, on such Debenture when due, or to institute suit
for the enforcement of any such payment, shall not be impaired or affected
without the consent of such holder 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 Debentures shall have any right in any manner whatsoever by
virtue or by availing itself of any provision of this Indenture to affect,
disturb or prejudice the rights of the holders of any other 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
Debentures. For the protection and enforcement of the provisions of this
Section, each and every Securityholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.
Section 5.5. Proceedings by Trustee. In case of an Event of Default
hereunder the Trustee may in its discretion proceed to protect and enforce the
rights vested in it by this Indenture by such appropriate judicial proceedings
as the Trustee shall deem most effectual to protect and enforce any of such
rights, either by suit in equity or by action at law or by proceeding in
bankruptcy or otherwise, whether for the specific enforcement of any covenant or
agreement contained in this Indenture or in aid of the exercise of any power
granted in this Indenture, or to enforce any other legal or equitable right
vested in the Trustee by this Indenture or by law.
Section 5.6. Remedies Cumulative and Continuing; Delay or Omission
Not a Waiver. Except as otherwise provided in Section 2.6, all powers and
remedies given by this Article V to the Trustee or to the Securityholders shall,
to the extent permitted by law, be deemed cumulative and not exclusive of any
other powers and remedies available to the Trustee or the holders of the
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 the Debentures, and no delay or omission
of the Trustee or of any holder of any of the Debentures to exercise any right,
remedy or power accruing upon any Event of Default occurring and continuing as
aforesaid shall impair any such right, remedy or power, or shall be construed to
be a waiver of any such default or an acquiescence therein; and, subject to the
provisions of Section 5.4, every power and remedy given by this Article V or by
law to the Trustee or to the Securityholders may be exercised from time to time,
and as often as shall be deemed expedient, by the Trustee (in accordance with
its duties under Section 6.1) or by the Securityholders.
Section 5.7. Direction of Proceedings and Waiver of Defaults by
Majority of Securityholders. The holders of a majority in aggregate principal
amount of the Debentures affected (voting as one class) at the time outstanding
shall have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee with respect to such Debentures; provided,
however, that (subject to the provisions of Section 6.1) the Trustee shall have
the right to decline to follow any such direction if the Trustee shall determine
that the action so directed would be unjustly prejudicial to the holders not
taking part in such direction or if the Trustee being advised by counsel
determines that the action or proceeding so directed may not lawfully be taken
or if a Responsible Officer of the Trustee shall determine that the action or
proceedings so directed would involve the Trustee in personal liability.
The holders of a majority in aggregate principal amount of the
Debentures at the time outstanding may on behalf of the holders of all of the
Debentures waive (or modify any previously granted waiver of) any past default
or Event of Default, and its consequences, except a default (a) in the payment
of principal of, premium, if any, or interest on any of the Debentures, (b) in
respect of covenants or provisions hereof which cannot be modified or amended
without the consent of the holder of each Debenture affected, or (c) in respect
of the covenants contained in Section 3.9; provided, however, that if the
Debentures are held by the Trust or a trustee of such trust, such waiver or
modification to such waiver shall not be effective until the holders of a
majority in Liquidation Amount of Trust Securities of the Trust shall have
consented to such waiver or modification to such waiver, provided, further, that
if the consent of the holder of each outstanding 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 Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as permitted by this Section, said default or Event of
Default shall for all purposes of the Debentures and this Indenture be deemed to
have been cured and to be not continuing.
Section 5.8. Notice of Defaults. The Trustee shall, within 90 days
after the actual knowledge by a Responsible Officer of the Trustee of the
occurrence of a default with respect to the Debentures, mail to all
Securityholders, as the names and addresses of such holders appear upon the
Debenture Register, notice of all defaults with respect to the Debentures known
to the Trustee, unless such defaults shall have been cured before the giving of
such notice (the term "defaults" for the purpose of this Section 5.8 being
hereby defined to be the events specified in clauses (a), (b), (c), (d), (e) and
(f) of Section 5.1, not including periods of grace, if any, provided for
therein); provided, however, that, except in the case of default in the payment
of the principal of, premium, if any, or interest on any of the Debentures, the
Trustee shall be protected in withholding such notice if and so long as a
Responsible Officer of the Trustee in good faith determines that the withholding
of such notice is in the interests of the Securityholders.
Section 5.9. Undertaking to Pay Costs. All parties to this Indenture
agree, and each holder of any Debenture by his acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken or omitted by it as Trustee, the filing
by any party litigant in such suit of an undertaking to pay the costs of such
suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; provided, however, that the provisions of
this Section 5.9 shall not apply to any suit instituted by the Trustee, to any
suit instituted by any Securityholder, or group of Securityholders, holding in
the aggregate more than 10% in principal amount of the Debentures outstanding,
or to any suit instituted by any Securityholder for the enforcement of the
payment of the principal of (or premium, if any) or interest on any Debenture
against the Company on or after the same shall have become due and payable.
ARTICLE VI.
CONCERNING THE TRUSTEE
Section 6.1. Duties and Responsibilities of Trustee. With respect to
the holders of Debentures issued hereunder, the Trustee, prior to the occurrence
of an Event of Default with respect to the Debentures and after the curing or
waiving of all Events of Default which may have occurred, with respect to the
Debentures, undertakes to perform 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 with
respect to the Debentures has occurred (which has not been cured or waived), the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default with respect to
Debentures and after the curing or waiving of all Events of Default which may
have occurred
(1) the duties and obligations of the Trustee with respect
to Debentures shall be determined solely by the express
provisions of this Indenture, and the Trustee shall not be liable
except for the performance of such duties and obligations with
respect to the Debentures as are specifically set forth in this
Indenture, and no implied covenants or obligations shall be read
into this Indenture against the Trustee, and
(2) in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture; but, in the
case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee,
the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Indenture;
(b) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer or Officers of the Trustee, unless it shall
be proved that the Trustee was negligent in ascertaining the pertinent facts;
and
(c) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith, in accordance with the direction of
the Securityholders pursuant to Section 5.7, 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.
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 ground for believing that the repayment of
such funds or liability is not assured to it under the terms of this Indenture
or indemnity satisfactory to the Trustee against such risk is not reasonably
assured to it.
Section 6.2. Reliance on Documents, Opinions, etc. Except as
otherwise provided in Section 6.1:
(a) the Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, note,
debenture or other paper or document believed by it to be genuine and to have
been signed or presented by the proper party or parties;
(b) any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officers' Certificate (unless other
evidence in respect thereof be herein specifically prescribed); and any Board
Resolution may be evidenced to the Trustee by a copy thereof certified by the
Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel of its selection and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the discretion
or rights or powers conferred upon it by this Indenture; nothing contained
herein shall, however, relieve the Trustee of the obligation, upon the
occurrence of an Event of Default with respect to the Debentures (that has not
been cured or waived) to exercise with respect to Debentures such of the rights
and powers vested in it by this Indenture, and to use the same degree of care
and skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, debenture,
coupon or other paper or document, unless requested in writing to do so by the
holders of not less than a majority in aggregate principal amount of the
outstanding Debentures affected thereby; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Indenture, the Trustee may require
reasonable indemnity against such expense or liability as a condition to so
proceeding;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents (including
any Authenticating Agent) or attorneys, and the Trustee shall not be responsible
for any misconduct or negligence on the part of any such agent or attorney
appointed by it with due care; and
(h) with the exceptions of defaults under Sections 5.1(a) or (b), the
Trustee shall not be charged with knowledge of any Default or Event of Default
with respect to the Debentures unless a written notice of such Default or Event
of Default shall have been given to the Trustee by the Company or any other
obligor on the Debentures or by any holder of the Debentures.
Section 6.3. No Responsibility for Recitals, etc. The recitals
contained herein and in the Debentures (except in the certificate of
authentication of the Trustee or the Authenticating Agent) shall be taken as the
statements of the Company, and the Trustee and the Authenticating Agent assume
no responsibility for the correctness of the same. The Trustee and the
Authenticating Agent make no representations as to the validity or sufficiency
of this Indenture or of the Debentures. The Trustee and the Authenticating Agent
shall not be accountable for the use or application by the Company of any
Debentures or the proceeds of any Debentures authenticated and delivered by the
Trustee or the Authenticating Agent in conformity with the provisions of this
Indenture.
Section 6.4. Trustee, Authenticating Agent, Paying Agents, Transfer
Agents or Registrar May Own Debentures. The Trustee or any Authenticating Agent
or any paying agent or any transfer agent or any Debenture registrar, in its
individual or any other capacity, may become the owner or pledgee of Debentures
with the same rights it would have if it were not Trustee, Authenticating Agent,
paying agent, transfer agent or Debenture registrar.
Section 6.5. Moneys to be Held in Trust. Subject to the provisions of
Section 12.4, all moneys received by the Trustee or any paying agent shall,
until used or applied as herein provided, be held in trust for the purpose for
which they were received, but need not be segregated from other funds except to
the extent required by law. The Trustee and any paying agent shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Company. So long as no Event of Default shall have
occurred and be continuing, all interest allowed on any such moneys shall be
paid from time to time upon the written order of the Company, signed by the
Chairman of the Board of Directors, the Chief Executive Officer, the President,
a Managing Director, a Vice President, the Treasurer or an Assistant Treasurer
of the Company.
Section 6.6. Compensation and Expenses of Trustee. The Company
covenants and agrees to 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 willful misconduct. For purposes
of clarification, this Section 6.6 does not contemplate the payment by the
Company of acceptance or annual administration fees owing to the Trustee
pursuant to the services to be provided by the Trustee under this Indenture or
the fees and expenses of the Trustee's counsel in connection with the closing of
the transactions contemplated by this Indenture. The Company also covenants to
indemnify each of the Trustee or any predecessor Trustee (and its officers,
agents, directors and employees) for, and to hold it harmless against, any and
all loss, damage, claim, liability or expense including taxes (other than taxes
based on the income of the Trustee) incurred without negligence or willful
misconduct on the part of the Trustee and arising out of or in connection with
the acceptance or administration of this trust, including the costs and expenses
of defending itself against any claim of liability. The obligations of the
Company under this Section 6.6 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.
Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.1(d), (e) or (f), the
expenses (including the reasonable charges and expenses of its counsel) and the
compensation for the services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section shall survive the resignation or removal
of the Trustee and the defeasance or other termination of this Indenture.
Notwithstanding anything in this Indenture or any Debenture to the
contrary, the Trustee shall have no obligation whatsoever to advance funds to
pay any principal of or interest on or other amounts with respect to the
Debentures or otherwise advance funds to or on behalf of the Company.
Section 6.7. Officers' Certificate as Evidence. Except as otherwise
provided in Sections 6.1 and 6.2, whenever in the administration of the
provisions of this Indenture the Trustee shall deem it necessary or desirable
that a matter be proved or established prior to taking or omitting any action
hereunder, such matter (unless other evidence in respect thereof be herein
specifically prescribed) may, in the absence of negligence or willful misconduct
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 willful misconduct on the part of the Trustee,
shall be full warrant to the Trustee for any action taken or omitted by it under
the provisions of this Indenture upon the faith thereof.
Section 6.8. Eligibility of Trustee. The Trustee hereunder shall at
all times be a corporation organized and doing business under the laws of the
United States of America or any state or territory thereof or of the District of
Columbia or a corporation or other Person authorized under such laws to exercise
corporate trust powers, having (or whose obligations under this Indenture are
guaranteed by an affiliate having) a combined capital and surplus of at least 50
million U.S. dollars ($50,000,000.00) and subject to supervision or examination
by federal, state, territorial, or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section 6.8 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent records of condition so published.
The Company may not, nor may any Person directly or indirectly
controlling, controlled by, or under common control with the Company, serve as
Trustee.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 6.8, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.9.
If the Trustee has or shall acquire any "conflicting interest" within
the meaning of ss. 310(b) of the Trust Indenture Act of 1939, the Trustee shall
either eliminate such interest or resign, to the extent and in the manner
described by this Indenture.
Section 6.9. Resignation or Removal of Trustee
(a) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign by giving written notice of such resignation to the Company
and by mailing notice thereof, at the Company's expense, to the holders of the
Debentures at their addresses as they shall appear on the Debenture Register.
Upon receiving such notice of resignation, the Company shall promptly appoint a
successor trustee or trustees by written instrument, in duplicate, executed by
order of its Board of Directors, one copy of which instrument shall be delivered
to the resigning Trustee and one copy to the successor Trustee. If no successor
Trustee shall have been so appointed and have accepted appointment within 30
days after the mailing of such notice of resignation to the affected
Securityholders, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee, or any Securityholder
who has been a bona fide holder of a Debenture or Debentures for at least six
months may, subject to the provisions of Section 5.9, on behalf of himself and
all others similarly situated, petition any such court for the appointment of a
successor Trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, appoint a successor Trustee.
(b) In case at any time any of the following shall occur --
(1) the Trustee shall fail to comply with the provisions
of Section 6.8 after written request therefor by the Company or
by any Securityholder who has been a bona fide holder of a
Debenture or Debentures for at least 6 months, or
(2) the Trustee shall cease to be eligible in accordance
with the provisions of Section 6.8 and shall fail to resign after
written request therefor by the Company or by any such
Securityholder, or
(3) the Trustee shall become incapable of acting, or shall
be adjudged as bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, the Company may remove the Trustee and appoint a
successor Trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor Trustee, or, subject to the
provisions of Section 5.9, any Securityholder who has been a bona fide holder of
a Debenture or Debentures for at least 6 months may, on behalf of himself 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 successor Trustee.
(c) Upon prior written notice to the Company and the Trustee, the
holders of a majority in aggregate principal amount of the Debentures at the
time outstanding may at any time remove the Trustee and nominate a successor
Trustee, which shall be deemed appointed as successor Trustee unless within 10
Business Days after such nomination the Company objects thereto, in which case,
or in the case of a failure by such holders to nominate a successor Trustee, the
Trustee so removed or any Securityholder, upon the terms and conditions and
otherwise as in subsection (a) of this Section 6.9 provided, may petition any
court of competent jurisdiction for an appointment of a successor.
(d) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance of appointment by the successor Trustee as provided in
Section 6.10.
Section 6.10. Acceptance by Successor Trustee. Any successor Trustee
appointed as provided in Section 6.9 shall execute, acknowledge and deliver to
the Company and to its predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the retiring
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, duties
and obligations with respect to the Debentures of its predecessor hereunder,
with like effect as if originally named as Trustee herein; but, nevertheless, on
the written request of the Company or of the successor Trustee, the Trustee
ceasing to act shall, upon payment of any amounts then due it pursuant to the
provisions of Section 6.6, execute and deliver an instrument transferring to
such successor Trustee all the rights and powers of the Trustee so ceasing to
act and shall duly assign, transfer and deliver to such successor Trustee all
property and money held by such retiring Trustee thereunder. Upon request of any
such successor Trustee, the Company shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor
Trustee all such rights and powers. Any Trustee ceasing to act shall,
nevertheless, retain a lien upon all property or funds held or collected by such
Trustee to secure any amounts then due it pursuant to the provisions of Section
6.6.
If a successor Trustee is appointed, the Company, the retiring Trustee
and the successor Trustee shall execute and deliver an indenture supplemental
hereto which shall contain such provisions as shall be deemed necessary or
desirable to confirm that all the rights, powers, trusts and duties of the
retiring Trustee with respect to the Debentures as to which the predecessor
Trustee is not retiring shall continue to be vested in the predecessor Trustee,
and shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the Trust hereunder
by more than one Trustee, it being understood that nothing herein or in such
supplemental indenture shall constitute such Trustees co-trustees of the same
trust and that each such Trustee shall be Trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Trustee.
No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 6.8.
In no event shall a retiring Trustee be liable for the acts or
omissions of any successor Trustee hereunder.
Upon acceptance of appointment by a successor Trustee as provided in
this Section 6.10, the Company shall mail notice of the succession of such
Trustee hereunder to the holders of Debentures at their addresses as they shall
appear on the Debenture Register. If the Company fails to mail such notice
within 10 Business Days after the acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be mailed at the
expense of the Company.
Section 6.11. Succession by Merger, etc. Any corporation into which
the Trustee may be merged or converted or with which it may be consolidated, or
any corporation resulting from any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder without the execution or filing of any paper
or any further act on the part of any of the parties hereto; provided such
corporation shall be otherwise eligible and qualified under this Article.
In case at the time such successor to the Trustee shall succeed to the
trusts created by this Indenture any of the Debentures shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor Trustee, and deliver such
Debentures so authenticated; and in case at that time any of the Debentures
shall not have been authenticated, any successor to the Trustee may authenticate
such Debentures either in the name of any predecessor hereunder or in the name
of the successor Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Debentures or in this Indenture provided
that the certificate of the Trustee shall have; provided, however, that the
right to adopt the certificate of authentication of any predecessor Trustee or
authenticate Debentures in the name of any predecessor Trustee shall apply only
to its successor or successors by merger, conversion or consolidation.
Section 6.12. Authenticating Agents. There may be one or more
Authenticating Agents appointed by the Trustee upon the request of the Company
with power to act on its behalf and subject to its direction in the
authentication and delivery of Debentures issued upon exchange or registration
of transfer thereof as fully to all intents and purposes as though any such
Authenticating Agent had been expressly authorized to authenticate and deliver
Debentures; provided, however, that the Trustee shall have no liability to the
Company for any acts or omissions of the Authenticating Agent with respect to
the authentication and delivery of Debentures. Any such Authenticating Agent
shall at all times be a corporation organized and doing business under the laws
of the United States or of any state or territory thereof or of the District of
Columbia authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of at least $50,000,000.00 and being subject to
supervision or examination by federal, state, territorial or District of
Columbia authority. If such corporation publishes reports of condition at least
annually pursuant to law or the requirements of such authority, then for the
purposes of this Section 6.12 the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect herein specified in this Section.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of any Authenticating Agent, shall be the successor
of such Authenticating Agent hereunder, if such successor corporation is
otherwise eligible under this Section 6.12 without the execution or filing of
any paper or any further act on the part of the parties hereto or such
Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any Authenticating Agent with respect to the
Debentures by giving written notice of termination to such Authenticating Agent
and to the Company. Upon receiving such a notice of resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible under this Section 6.12, the Trustee may, and upon the request of the
Company shall, promptly appoint a successor Authenticating Agent eligible under
this Section 6.12, shall give written notice of such appointment to the Company
and shall mail notice of such appointment to all holders of Debentures as the
names and addresses of such holders appear on the Debenture Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all rights, powers, duties and responsibilities with
respect to the Debentures of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent herein.
The Company agrees to pay to any Authenticating Agent from time to time
reasonable compensation for its services. Any Authenticating Agent shall have no
responsibility or liability for any action taken by it as such in accordance
with the directions of the Trustee.
ARTICLE VII.
CONCERNING THE SECURITYHOLDERS
Section 7.1. Action by Securityholders. Whenever in this Indenture it
is provided that the holders of a specified percentage in aggregate 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 specified percentage have joined therein may be evidenced (a) by any
instrument or any number of instruments of similar tenor executed by such
Securityholders in person or by agent or proxy appointed in writing, or (b) by
the record of such holders of Debentures voting in favor thereof at any meeting
of such Securityholders duly called and held in accordance with the provisions
of Article VIII, or (c) by a combination of such instrument or instruments and
any such record of such a meeting of such Securityholders or (d) by any other
method the Trustee deems satisfactory.
If the Company shall solicit from the Securityholders any request,
demand, authorization, direction, notice, consent, waiver or other action or
revocation of the same, the Company may, at its option, as evidenced by an
Officers' Certificate, fix in advance a record date for such Debentures for the
determination of Securityholders entitled to give such request, demand,
authorization, direction, notice, consent, waiver or other action or revocation
of the same, but the Company shall have no obligation to do so. If such a record
date is fixed, such request, demand, authorization, direction, notice, consent,
waiver or other action or revocation of the same may be given before or after
the record date, but only the Securityholders of record at the close of business
on the record date shall be deemed to be Securityholders for the purposes of
determining whether Securityholders of the requisite proportion of outstanding
Debentures have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other action or revocation
of the same, and for that purpose the outstanding Debentures shall be computed
as of the record date; provided, however, that no such authorization, agreement
or consent by such Securityholders on the record date shall be deemed effective
unless it shall become effective pursuant to the provisions of this Indenture
not later than 6 months after the record date.
Section 7.2. Proof of Execution by Securityholders. Subject to the
provisions of Section 6.1, 6.2 and 8.5, proof of the execution of any instrument
by a Securityholder or his agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
ownership of Debentures shall be proved by the Debenture Register or by a
certificate of the Debenture registrar. The Trustee may require such additional
proof of any matter referred to in this Section as it shall deem necessary.
The record of any Securityholders' meeting shall be proved in the
manner provided in Section 8.6.
Section 7.3. Who Are Deemed Absolute Owners. Prior to due presentment
for registration of transfer of any Debenture, the Company, the Trustee, any
Authenticating Agent, any paying agent, any transfer agent and any Debenture
registrar may deem the Person in whose name such Debenture shall be registered
upon the Debenture Register to be, and may treat him as, the absolute owner of
such Debenture (whether or not such Debenture shall be overdue) for the purpose
of receiving payment of or on account of the principal of, premium, if any, and
interest on such Debenture and for all other purposes; and neither the Company
nor the Trustee nor any Authenticating Agent nor any paying agent nor any
transfer agent nor any Debenture registrar shall be affected by any notice to
the contrary. All such payments so made to any holder for the time being or upon
his order shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Debenture.
Section 7.4. Debentures Owned by Company Deemed Not Outstanding. In
determining whether the holders of the requisite aggregate principal amount of
Debentures have concurred in any direction, consent or waiver under this
Indenture, Debentures which 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 direct or indirect 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; provided, however, that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, consent or waiver, only Debentures which a Responsible Officer of the
Trustee actually knows are so owned shall be so disregarded. Debentures so owned
which have been pledged in good faith may be regarded as outstanding for the
purposes of this Section 7.4 if the pledgee shall establish to the satisfaction
of the Trustee the pledgee's right to vote such Debentures and that the pledgee
is not the Company or any such other obligor or Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any such other obligor. In the case of a dispute as to such right,
any decision by the Trustee taken upon the advice of counsel shall be full
protection to the Trustee.
Section 7.5. Revocation of Consents; Future Holders Bound. At any
time prior to (but not after) the evidencing to the Trustee, as provided in
Section 7.1, of the taking of any action by the holders of the percentage in
aggregate principal amount of the Debentures specified in this Indenture in
connection with such action, any holder (in cases where no record date has been
set pursuant to Section 7.1) or any holder as of an applicable record date (in
cases where a record date has been set pursuant to Section 7.1) of a Debenture
(or any Debenture issued in whole or in part in exchange or substitution
therefor) the serial number of which is shown by the evidence to be included in
the Debentures the holders of which have consented to such action may, by filing
written notice with the Trustee at the Principal Office of the Trustee and upon
proof of holding as provided in Section 7.2, revoke such action so far as
concerns such Debenture (or so far as concerns the principal amount represented
by any exchanged or substituted 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 or substitution therefor or on registration of
transfer thereof, irrespective of whether or not any notation in regard thereto
is made upon such Debenture or any Debenture issued in exchange or substitution
therefor.
ARTICLE VIII.
SECURITYHOLDERS' MEETINGS
Section 8.1. Purposes of Meetings. A meeting of Securityholders may
be called at any time and from time to time pursuant to the provisions of this
Article VIII for any of the following purposes:
(a) to give any notice to the Company or to the Trustee, or to give
any directions to the Trustee, or to consent to the waiving of any default
hereunder and its consequences, or to take any other action authorized to be
taken by Securityholders pursuant to any of the provisions of Article V;
(b) to remove the Trustee and nominate a successor trustee pursuant
to the provisions of Article VI;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.2; or
(d) to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of such Debentures
under any other provision of this Indenture or under applicable law.
Section 8.2. Call of Meetings by Trustee. The Trustee may at any time
call a meeting of Securityholders to take any action specified in Section 8.1,
to be held at such time and at such place as the Trustee shall determine. Notice
of every meeting of the Securityholders, setting forth the time and the place of
such meeting and in general terms the action proposed to be taken at such
meeting, shall be mailed to holders of Debentures affected at their addresses as
they shall appear on the Debentures Register and, if the Company is not a holder
of Debentures, to the Company. Such notice shall be mailed not less than 20 nor
more than 180 days prior to the date fixed for the meeting.
Section 8.3. Call of Meetings by Company or Securityholders. In case
at any time the Company pursuant to a Board Resolution, or the holders of at
least 10% in aggregate principal amount of the Debentures, as the case may be,
then outstanding, shall have requested the Trustee to call a meeting of
Securityholders, by written request setting forth in reasonable detail the
action proposed to be taken at the meeting, and the Trustee shall not have
mailed the notice of such meeting within 20 days after receipt of such request,
then the Company or such Securityholders may determine the time and the place
for such meeting and may call such meeting to take any action authorized in
Section 8.1, by mailing notice thereof as provided in Section 8.2.
Section 8.4. Qualifications for Voting. To be entitled to vote at any
meeting of Securityholders a Person shall (a) be a holder of one or more
Debentures with respect to which the meeting is being held or (b) a Person
appointed by an instrument in writing as proxy by a holder of one or more such
Debentures. The only Persons who shall be entitled to be present or to speak at
any meeting of Securityholders shall be the Persons entitled to vote at such
meeting and their counsel and any representatives of the Trustee and its counsel
and any representatives of the Company and its counsel.
Section 8.5. Regulations. Notwithstanding any other provisions of
this Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Securityholders, in regard to proof of the holding
of Debentures and of the appointment of proxies, and in regard to the
appointment and duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote, and such other
matters concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 8.3, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by majority vote of the meeting.
Subject to the provisions of Section 7.4, at any meeting each holder of
Debentures with respect to which such meeting is being held or proxy therefor
shall be entitled to one vote for each $1,000.00 principal amount of Debentures
held or represented by him; provided, however, that no vote shall be cast or
counted at any meeting in respect of any Debenture challenged as not outstanding
and ruled by the chairman of the meeting to be not outstanding. The chairman of
the meeting shall have no right to vote other than by virtue of Debentures held
by him or instruments in writing as aforesaid duly designating him as the Person
to vote on behalf of other Securityholders. Any meeting of Securityholders duly
called pursuant to the provisions of Section 8.2 or 8.3 may be adjourned from
time to time by a majority of those present, whether or not constituting a
quorum, and the meeting may be held as so adjourned without further notice.
Section 8.6. Voting. The vote upon any resolution submitted to any
meeting of holders of Debentures with respect to which such meeting is being
held shall be by written ballots on which shall be subscribed the signatures of
such holders or of their representatives by proxy and the serial number or
numbers of the Debentures held or represented by them. The permanent chairman of
the meeting shall appoint two inspectors of votes who shall count all votes cast
at the meeting for or against any resolution and who shall make and file with
the secretary of the meeting their verified written reports in triplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
meeting of Securityholders shall be prepared by the secretary of the meeting and
there shall be attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more Persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that said notice was mailed as provided in Section 8.2. The record
shall show the serial numbers of the Debentures voting in favor of or against
any resolution. The record shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one of the duplicates shall
be delivered to the Company and the other to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
Section 8.7. Quorum; Actions. The Persons entitled to vote a majority
in principal amount of the Debentures then outstanding shall constitute a quorum
for a meeting of Securityholders; provided, however, that if any action is to be
taken at such meeting with respect to a consent, waiver, request, demand,
notice, authorization, direction or other action which may be given by the
holders of not less than a specified percentage in principal amount of the
Debentures then outstanding, the Persons holding or representing such specified
percentage in principal amount of the Debentures then outstanding will
constitute a quorum. In the absence of a quorum within 30 minutes of the time
appointed for any such meeting, the meeting shall, if convened at the request of
Securityholders, be dissolved. In any other case the meeting may be adjourned
for a period of not less than 10 days as determined by the permanent chairman of
the meeting prior to the adjournment of such meeting. In the absence of a quorum
at any such adjourned meeting, such adjourned meeting may be further adjourned
for a period of not less than 10 days as determined by the permanent chairman of
the meeting prior to the adjournment of such adjourned meeting. Notice of the
reconvening of any adjourned meeting shall be given as provided in Section 8.2,
except that such notice need be given only once not less than 5 days prior to
the date on which the meeting is scheduled to be reconvened. Notice of the
reconvening of an adjourned meeting shall state expressly the percentage, as
provided above, of the principal amount of the Debentures then outstanding which
shall constitute a quorum.
Except as limited by the provisos in the first paragraph of Section
9.2, any resolution presented to a meeting or adjourned meeting duly reconvened
at which a quorum is present as aforesaid may be adopted by the affirmative vote
of the holders of a majority in principal amount of the Debentures then
outstanding; provided, however, that, except as limited by the provisos in the
first paragraph of Section 9.2, any resolution with respect to any consent,
waiver, request, demand, notice, authorization, direction or other action which
this Indenture expressly provides may be given by the holders of not less than a
specified percentage in principal amount of the Debentures then outstanding may
be adopted at a meeting or an adjourned meeting duly reconvened and at which a
quorum is present as aforesaid only by the affirmative vote of the holders of a
not less than such specified percentage in principal amount of the Debentures
then outstanding.
Any resolution passed or decision taken at any meeting of holders of
Debentures duly held in accordance with this Section shall be binding on all the
Securityholders, whether or not present or represented at the meeting.
ARTICLE IX.
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures without Consent of
Securityholders. The Company, when authorized by a Board Resolution, and the
Trustee may from time to time and at any time enter into an indenture or
indentures supplemental hereto, without the consent of the Securityholders, for
one or more of the following purposes:
(a) to evidence the succession of another Person to the Company, or
successive successions, and the assumption by the successor Person of the
covenants, agreements and obligations of the Company, pursuant to Article XI
hereof;
(b) to add to the covenants of the Company such further covenants,
restrictions or conditions for the protection of the holders of Debentures as
the Board of Directors shall consider to be for the protection of the holders of
such Debentures, and to make the occurrence, or the occurrence and continuance,
of a default in any of such additional covenants, restrictions or conditions a
default or an Event of Default permitting the enforcement of all or any of the
several remedies provided in this Indenture as herein set forth; provided,
however, that in respect of any such additional covenant restriction or
condition such supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an immediate enforcement upon
such default or may limit the remedies available to the Trustee upon such
default;
(c) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under this Indenture; provided that any such action shall not materially
adversely affect the interests of the holders of the Debentures;
(d) to add to, delete from, or revise the terms of Debentures,
including, without limitation, any terms relating to the issuance, exchange,
registration or transfer of Debentures, including to provide for transfer
procedures and restrictions substantially similar to those applicable to the
Capital Securities as required by Section 2.5 (for purposes of assuring that no
registration of Debentures is required under the Securities Act); provided,
however, that any such action shall not adversely affect the interests of the
holders of the Debentures then outstanding (it being understood, for purposes of
this proviso, that transfer restrictions on Debentures substantially similar to
those that were applicable to Capital Securities shall not be deemed to
materially adversely affect the holders of the Debentures);
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Debentures and to add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Trustee;
(f) to make any change (other than as elsewhere provided in this
paragraph) that does not adversely affect the rights of any Securityholder in
any material respect; or
(g) to provide for the issuance of and establish the form and terms
and conditions of the Debentures, to establish the form of any certifications
required to be furnished pursuant to the terms of this Indenture or the
Debentures, or to add to the rights of the holders of Debentures.
The Trustee is hereby authorized to join with the Company in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer and assignment of any property thereunder, but the Trustee
shall not be obligated to, but may in its discretion, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this Section
9.1 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 9.2.
Section 9.2. Supplemental Indentures with Consent of Securityholders.
With the consent (evidenced as provided in Section 7.1) of the holders of not
less than a majority in aggregate principal amount of the Debentures at the time
outstanding affected by such supplemental indenture (voting as a class), the
Company, when authorized by a Board Resolution, and the Trustee may from time to
time and at any time enter into an indenture or indentures supplemental hereto
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner the rights of the holders of the
Debentures; provided, however, that no such supplemental indenture shall without
the consent of the holders of each Debenture then outstanding and affected
thereby (i) change the fixed maturity of any Debenture, or reduce the principal
amount thereof or any premium thereon, or reduce the rate or extend the time of
payment of interest thereon, or reduce any amount payable on redemption thereof
or make the principal thereof or any interest or premium thereon payable in any
coin or currency other than that provided in the Debentures, or impair or affect
the right of any Securityholder to institute suit for payment thereof or impair
the right of repayment, if any, at the option of the holder, or (ii) reduce the
aforesaid percentage of Debentures the holders of which are required to consent
to any such supplemental indenture; provided further, however, that if the
Debentures are held by a trust or a trustee of such trust, such supplemental
indenture shall not be effective until the holders of a majority in Liquidation
Amount of Trust Securities shall have consented to such supplemental indenture;
provided further, however, that if the consent of the Securityholder of each
outstanding Debenture is required, such supplemental indenture shall not be
effective until each holder of the Trust Securities shall have consented to such
supplemental indenture.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such supplemental indenture, and upon the
filing with the Trustee of evidence of the consent of Securityholders as
aforesaid, the Trustee shall join with the Company in the execution of such
supplemental indenture unless such supplemental indenture affects the Trustee's
own rights, duties or immunities under this Indenture or otherwise, in which
case the Trustee may in its discretion, but shall not be obligated to, enter
into such supplemental indenture.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the Trustee
shall transmit by mail, first class postage prepaid, a notice, prepared by the
Company, setting forth in general terms the substance of such supplemental
indenture, to the Securityholders as their names and addresses appear upon the
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.
It shall not be necessary for the consent of the Securityholders under
this Section 9.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Section 9.3. Effect of Supplemental Indentures. Upon the execution of
any supplemental indenture pursuant to the provisions of this Article IX, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith and the respective rights, limitations of rights, obligations, duties
and immunities under this Indenture of the Trustee, the Company and the holders
of 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 9.4. Notation on Debentures. Debentures authenticated and
delivered after the execution of any supplemental indenture pursuant to the
provisions of this Article IX may bear a notation as to any matter provided for
in such supplemental indenture. If the Company or the Trustee shall so
determine, new 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 and executed by the Company,
authenticated by the Trustee or the Authenticating Agent and delivered in
exchange for the Debentures then outstanding.
Section 9.5. Evidence of Compliance of Supplemental Indenture to be
Furnished to Trustee. The Trustee, subject to the provisions of Sections 6.1 and
6.2, shall, in addition to the documents required by Section 14.6, receive an
Officers' Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant hereto complies with the requirements
of this Article IX. The Trustee shall receive an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant to this
Article IX is authorized or permitted by, and conforms to, the terms of this
Article IX and that it is proper for the Trustee under the provisions of this
Article IX to join in the execution thereof.
ARTICLE X.
REDEMPTION OF SECURITIES
Section 10.1. Optional Redemption. The Company shall have the right
(subject to the receipt by the Company of prior approval (i) if the Company is a
bank holding company, from the Federal Reserve, if then required under
applicable capital guidelines or policies of the Federal Reserve or (ii) if the
Company is a savings and loan holding company, from the OTS, if then required
under applicable capital guidelines or policies of the OTS) to redeem the
Debentures, in whole or in part, but in all cases in a principal amount with
integral multiples of $1,000.00, on any Interest Payment Date on or after the
Interest Payment Date in December 2011 (the "Redemption Date"), at the
Redemption Price.
Section 10.2. Special Event Redemption. If a Special Event shall occur
and be continuing, the Company shall have the right (subject to the receipt by
the Company of prior approval (i) if the Company is a bank holding company, from
the Federal Reserve, if then required under applicable capital guidelines or
policies of the Federal Reserve or (ii) if the Company is a savings and loan
holding company, from the OTS, if then required under applicable capital
guidelines or policies of the OTS) to redeem the Debentures in whole, but not in
part, at any Interest Payment Date, within 120 days following the occurrence of
such Special Event (the "Special Redemption Date") at the Special Redemption
Price.
Section 10.3. Notice of Redemption; Selection of Debentures. In case
the Company shall desire to exercise the right to redeem all, or, as the case
may be, any part of the Debentures, it shall cause to be mailed a notice of such
redemption at least 30 and not more than 60 days prior to the Redemption Date or
the Special Redemption Date to the holders of Debentures so to be redeemed as a
whole or in part at their last addresses as the same appear on the Debenture
Register. Such mailing shall be by first class mail. The notice if mailed in the
manner herein provided shall be conclusively presumed to have been duly given,
whether or not the holder receives such notice. In any case, failure to give
such notice by mail or any defect in the notice to the holder of any Debenture
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Debenture.
Each such notice of redemption shall specify the CUSIP number, if any,
of the Debentures to be redeemed, the Redemption Date or the Special Redemption
Date, as applicable, the Redemption Price or the Special Redemption Price, as
applicable, at which Debentures are to be redeemed, the place or places of
payment, that payment will be made upon presentation and surrender of such
Debentures, that interest accrued to the date fixed for redemption will be paid
as specified in said notice, and that on and after said date interest thereon or
on the portions thereof to be redeemed will cease to accrue. If less than all
the Debentures are to be redeemed the notice of redemption shall specify the
numbers of the Debentures to be redeemed. In case the Debentures are to be
redeemed in part only, the notice of redemption shall state the portion of the
principal amount thereof to be redeemed and shall state that on and after the
date fixed for redemption, upon surrender of such Debenture, a new Debenture or
Debentures in principal amount equal to the unredeemed portion thereof will be
issued.
Prior to 10:00 a.m. New York City time on the Redemption Date or
Special Redemption Date, as applicable, the Company will deposit with the
Trustee or with one or more paying agents an amount of money sufficient to
redeem on the Redemption Date or the Special Redemption Date, as applicable, all
the Debentures so called for redemption at the appropriate Redemption Price or
Special Redemption Price.
If all, or less than all, the Debentures are to be redeemed, the
Company will give the Trustee notice not less than 45 nor more than 60 days,
respectively, prior to the Redemption Date or Special Redemption Date, as
applicable, as to the aggregate principal amount of Debentures to be redeemed
and the Trustee shall select, in such manner as in its sole discretion it shall
deem appropriate and fair, the Debentures or portions thereof (in integral
multiples of $1,000.00) to be redeemed.
Section 10.4. Payment of Debentures Called for Redemption. If notice
of redemption has been given as provided in Section 10.3, the Debentures or
portions of Debentures with respect to which such notice has been given shall
become due and payable on the Redemption Date or Special Redemption Date, as
applicable, and at the place or places stated in such notice at the applicable
Redemption Price or Special Redemption Price and on and after said date (unless
the Company shall default in the payment of such Debentures at the Redemption
Price or Special Redemption Price, as applicable) interest on the Debentures or
portions of Debentures so called for redemption shall cease to accrue. On
presentation and surrender of such Debentures at a place of payment specified in
said notice, such Debentures or the specified portions thereof shall be paid and
redeemed by the Company at the applicable Redemption Price or Special Redemption
Price.
Upon presentation of any Debenture redeemed in part only, the Company
shall execute and the Trustee shall authenticate and make available for delivery
to the holder thereof, at the expense of the Company, a new Debenture or
Debentures of authorized denominations, in principal amount equal to the
unredeemed portion of the Debenture so presented.
ARTICLE XI.
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 11.1. Company May Consolidate, etc., on Certain Terms. Nothing
contained in this Indenture or in the Debentures shall prevent any consolidation
or merger of the Company with or into any other Person (whether or not
affiliated with the Company) or successive consolidations or mergers in which
the Company or its successor or successors shall be a party or parties, or shall
prevent any sale, conveyance, transfer or other disposition of the property of
the Company or its successor or successors as an entirety, or substantially as
an entirety, to any other Person (whether or not affiliated with the Company, or
its successor or successors) authorized to acquire and operate the same;
provided, however, that the Company hereby covenants and agrees that, upon any
such consolidation, merger (where the Company is not the surviving corporation),
sale, conveyance, transfer or other disposition, the due and punctual payment of
the principal of (and premium, if any) and interest on all of the Debentures in
accordance with their terms, according to their tenor, and the due and punctual
performance and observance of all the covenants and conditions of this Indenture
to be kept or performed by the Company, shall be expressly assumed by
supplemental indenture satisfactory in form to the Trustee executed and
delivered to the Trustee by the entity formed by such consolidation, or into
which the Company shall have been merged, or by the entity which shall have
acquired such property.
Section 11.2. Successor Entity to be Substituted. In case of any such
consolidation, merger, sale, conveyance, transfer or other disposition and upon
the assumption by the successor entity, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the due and
punctual payment of the principal of and premium, if any, and interest on all of
the Debentures and the due and punctual performance and observance of all of the
covenants and conditions of this Indenture to be performed or observed by the
Company, such successor entity shall succeed to and be substituted for the
Company, with the same effect as if it had been named herein as the Company, and
thereupon the predecessor entity shall be relieved of any further liability or
obligation hereunder or upon the Debentures. Such successor entity thereupon may
cause to be signed, and may issue in its own name, any or all of the Debentures
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee or the Authenticating Agent; and, upon the order of
such successor entity instead of the Company and subject to all the terms,
conditions and limitations in this Indenture prescribed, the Trustee or the
Authenticating Agent shall authenticate and deliver any Debentures which
previously shall have been signed and delivered by the officers of the Company,
to the Trustee or the Authenticating Agent for authentication, and any
Debentures which such successor entity thereafter shall cause to be signed and
delivered to the Trustee or the Authenticating Agent for that purpose. All the
Debentures so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Debentures theretofore or thereafter issued in
accordance with the terms of this Indenture as though all of such Debentures had
been issued at the date of the execution hereof.
Section 11.3. Opinion of Counsel to be Given to Trustee. The Trustee,
subject to the provisions of Sections 6.1 and 6.2, shall receive, in addition to
the Opinion of Counsel required by Section 9.5, an Opinion of Counsel as
conclusive evidence that any consolidation, merger, sale, conveyance, transfer
or other disposition, and any assumption, permitted or required by the terms of
this Article XI complies with the provisions of this Article XI.
ARTICLE XII.
SATISFACTION AND DISCHARGE OF INDENTURE
Section 12.1. Discharge of Indenture. When
(a) the Company shall deliver to the Trustee for cancellation all
Debentures theretofore authenticated (other than any Debentures
which shall have been destroyed, lost or stolen and which shall
have been replaced or paid as provided in Section 2.6) and not
theretofore canceled, or
(b) all the Debentures not theretofore canceled or delivered to the
Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within 1 year or are
to be called for redemption within 1 year under arrangements
satisfactory to the Trustee for the giving of notice of
redemption, and the Company shall deposit with the Trustee, in
trust, funds, which shall be immediately due and payable,
sufficient to pay at maturity or upon redemption all of the
Debentures (other than any Debentures which shall have been
destroyed, lost or stolen and which shall have been replaced or
paid as provided in Section 2.6) not theretofore canceled or
delivered to the Trustee for cancellation, including principal
and premium, if any, and interest due or to become due to such
date of maturity or redemption date, as the case may be, but
excluding, however, the amount of any moneys for the payment of
principal of, and premium, if any, or interest on the Debentures
(1) theretofore repaid to the Company in accordance with the
provisions of Section 12.4, or (2) paid to any state or to the
District of Columbia pursuant to its unclaimed property or
similar laws,
and if in the case of either clause (a) or clause (b) the Company shall also pay
or cause to be paid all other sums payable hereunder by the Company, then this
Indenture shall cease to be of further effect except for the provisions of
Sections 2.5, 2.6, 2.8, 3.1, 3.2, 3.4, 6.6, 6.8, 6.9 and 12.4 hereof shall
survive until such Debentures shall mature and be paid. Thereafter, Sections 6.6
and 12.4 shall survive, and the Trustee, on demand of the Company accompanied by
an Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with, and at the cost and expense
of the Company, shall execute proper instruments acknowledging satisfaction of
and discharging this Indenture. The Company agrees to reimburse the Trustee for
any costs or expenses thereafter reasonably and properly incurred by the Trustee
in connection with this Indenture or the Debentures.
Section 12.2. Deposited Moneys to be Held in Trust by Trustee. Subject
to the provisions of Section 12.4, all moneys deposited with the Trustee
pursuant to Section 12.1 shall be held in trust in a non-interest bearing
account and applied by it to the payment, either directly or through any paying
agent (including the Company if acting as its own paying agent), to the holders
of the particular Debentures for the payment of which such moneys have been
deposited with the Trustee, of all sums due and to become due thereon for
principal, and premium, if any, and interest.
Section 12.3. Paying Agent to Repay Moneys Held. Upon the satisfaction
and discharge of this Indenture all moneys then held by any paying agent of the
Debentures (other than the Trustee) shall, upon demand of the Company, be repaid
to it or paid to the Trustee, and thereupon such paying agent shall be released
from all further liability with respect to such moneys.
Section 12.4. Return of Unclaimed Moneys. Any moneys deposited with or
paid to the Trustee or any paying agent for payment of the principal of, and
premium, if any, or interest on Debentures and not applied but remaining
unclaimed by the holders of Debentures for 2 years after the date upon which the
principal of, and premium, if any, or interest on such Debentures, as the case
may be, shall have become due and payable, shall, subject to applicable
escheatment laws, be repaid to the Company by the Trustee or such paying agent
on written demand; and the holder of any of the Debentures shall thereafter look
only to the Company for any payment which such holder may be entitled to
collect, and all liability of the Trustee or such paying agent with respect to
such moneys shall thereupon cease.
ARTICLE XIII.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
Section 13.1. Indenture and Debentures Solely Corporate Obligations.
No recourse for the payment of the principal of or premium, if any, or interest
on any Debenture, or for any claim based thereon or otherwise in respect
thereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in this Indenture or in any supplemental indenture, or in any such
Debenture, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, employee, officer or
director, as such, past, present or future, of the Company or of any successor
Person of the Company, either directly or through the Company or any successor
Person of the Company, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise, it being
expressly understood that all such liability is hereby expressly waived and
released as a condition of, and as a consideration for, the execution of this
Indenture and the issue of the Debentures.
ARTICLE XIV.
MISCELLANEOUS PROVISIONS
Section 14.1. Successors. All the covenants, stipulations, promises
and agreements of the Company in this Indenture shall bind its successors and
assigns whether so expressed or not.
Section 14.2. Official Acts by Successor Entity. Any act or proceeding
by any provision of this Indenture authorized or required to be done or
performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee,
officer or other authorized Person of any entity that shall at the time be the
lawful successor of the Company.
Section 14.3. Surrender of Company Powers. The Company by instrument
in writing executed by authority of at least 2/3 (two-thirds) of its Board of
Directors and delivered to the Trustee may surrender any of the powers reserved
to the Company and thereupon such power so surrendered shall terminate both as
to the Company, and as to any permitted successor.
Section 14.4. Addresses for Notices, etc. Any notice, consent,
direction, request, authorization, waiver or demand which by any provision of
this Indenture is required or permitted to be given, made, furnished or served
by the Trustee or by the Securityholders on or to the Company may be given or
served in writing by being deposited postage prepaid by registered or certified
mail in a post office letter box addressed (until another address is filed by
the Company, with the Trustee for the purpose) to the Company, 600 James S.
McDonnell Boulevard, Mail Stop M1 199 014, Hazelwood, Missouri 63042, Attention:
Lisa K. Vansickle. Any notice, consent, direction, request, authorization,
waiver or demand by any Securityholder or the Company to or upon the Trustee
shall be deemed to have been sufficiently given or made, for all purposes, if
given or made in writing at the office of the Trustee, addressed to the Trustee,
Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-1600,
Attention: Corporate Trust Administration. Any notice, consent, direction,
request, authorization, waiver or demand on or to any Securityholder shall be
deemed to have been sufficiently given or made, for all purposes, if given or
made in writing at the address set forth in the Debenture Register.
Section 14.5. Governing Law. This Indenture and each Debenture shall
be deemed to be a contract made under the law of the State of New York, and for
all purposes shall be governed by and construed in accordance with the law of
said State, without regard to conflict of laws principles thereof.
Section 14.6. Evidence of Compliance with Conditions Precedent. Upon
any application or demand by the Company to the Trustee to take any action under
any of the provisions of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that in the opinion of the signers all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include (1) a statement that the person
making such certificate or opinion has read such covenant or condition; (2) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not in the opinion of such
person, such condition or covenant has been complied with.
Section 14.7. Table of Contents, Headings, etc. The table of contents
and the titles and headings of the articles and sections of this Indenture have
been inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 14.8. Execution in Counterparts. This Indenture may be
executed in any number of counterparts, each of which shall be an original, but
such counterparts shall together constitute but one and the same instrument.
Section 14.9. 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 such Debentures, but this Indenture and such Debentures shall be construed as
if such invalid or illegal or unenforceable provision had never been contained
herein or therein.
Section 14.10. Assignment. The Company will have the right at all times
to assign any of its rights or obligations under this Indenture to a direct or
indirect wholly owned Subsidiary of the Company, provided that, in the event of
any such assignment, the Company will remain liable for all such obligations.
Subject to the foregoing, this Indenture is binding upon and inures to the
benefit of the parties hereto and their respective successors and assigns. This
Indenture may not otherwise be assigned by the parties hereto.
Section 14.11. Acknowledgment of Rights. The Company agrees that, with
respect to any Debentures held by the Trust or the Institutional Trustee of the
Trust, if the Institutional Trustee of the Trust fails to enforce its rights
under this Indenture as the holder of Debentures held as the assets of such
Trust after the holders of a majority in Liquidation Amount of the Capital
Securities of such Trust have so directed such Institutional Trustee, a holder
of record of such Capital Securities may, to the fullest extent permitted by
law, institute legal proceedings directly against the Company to enforce such
Institutional Trustee's rights under this Indenture without first instituting
any legal proceedings against such trustee or any other Person. Notwithstanding
the foregoing, if an Event of Default has occurred and is continuing and such
event is attributable to the failure of the Company to pay interest (or premium,
if any) or principal on the Debentures on the date such interest (or premium, if
any) or principal is otherwise payable (or in the case of redemption, on the
redemption date), the Company agrees that a holder of record of Capital
Securities of the Trust may directly institute a proceeding against the Company
for enforcement of payment to such holder directly of the principal of (or
premium, if any) or interest on the Debentures having an aggregate principal
amount equal to the aggregate Liquidation Amount of the Capital Securities of
such holder on or after the respective due date specified in the Debentures.
ARTICLE XV.
SUBORDINATION OF DEBENTURES
Section 15.1. Agreement to Subordinate. The Company covenants and
agrees, and each holder of Debentures by such Securityholder's acceptance
thereof likewise covenants and agrees, that all Debentures shall be issued
subject to the provisions of this Article XV; 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 premium, if any,
and interest on all Debentures 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 Indebtedness of the Company, whether
outstanding at the date of this Indenture or thereafter incurred; provided,
however, that the Debentures shall rank pari passu in all material respects with
any current indebtedness, liabilities or obligations of the Company, or any
Subsidiary of the Company, under debt securities (or guarantees in respect of
debt securities) 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 of 1940) 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 eligible to qualify for Tier 1 capital
treatment (or its then equivalent) for purposes of the capital adequacy
guidelines of the Federal Reserve, as then in effect and applicable to the
Company.
No provision of this Article XV shall prevent the occurrence of any
default or Event of Default hereunder.
Section 15.2. Default on Senior Indebtedness. In the event and during
the continuation of any default by the Company in the payment of principal,
premium, interest or any other payment due on any Senior Indebtedness of the
Company following any grace period, or in the event that the maturity of any
Senior Indebtedness of the Company has been accelerated because of a default and
such acceleration has not been rescinded or canceled and such Senior
Indebtedness has not been paid in full, then, in either case, no payment shall
be made by the Company with respect to the principal (including redemption) of,
or premium, if any, 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
paragraph of this Section 15.2, such payment shall, subject to Section 15.7, be
held in trust for the benefit of, and shall be paid over or delivered to, the
holders of Senior Indebtedness or their respective representatives, or to the
trustee or trustees under any indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear, but
only to the extent that the holders of the Senior Indebtedness (or their
representative or representatives or a trustee) notify the Trustee in writing
within 90 days of such payment of the amounts then due and owing on the Senior
Indebtedness and only the amounts specified in such notice to the Trustee shall
be paid to the holders of Senior Indebtedness.
Section 15.3. Liquidation, Dissolution, Bankruptcy. Upon any payment
by the Company or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, to creditors upon any
dissolution or winding-up or liquidation or reorganization of the Company,
whether voluntary or involuntary or in bankruptcy, insolvency, receivership or
other proceedings, all amounts due upon all Senior Indebtedness of the Company
shall first be paid in full, or payment thereof provided for in money in
accordance with its terms, before any payment is made by the Company, on account
of the principal (and premium, if any) or interest on the Debentures. Upon any
such dissolution or winding-up or liquidation or reorganization, any payment by
the Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the Securityholders or the
Trustee would be entitled to receive from the Company, except for the provisions
of this Article XV, shall be paid by the Company, or by any receiver, trustee in
bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the Securityholders or by the Trustee under this Indenture
if received by them or it, directly to the holders of Senior Indebtedness (pro
rata to such holders on the basis of the respective amounts of Senior
Indebtedness held by such holders, as calculated by the Company) or their
representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing such Senior Indebtedness
may have been issued, as their respective interests may appear, to the extent
necessary to pay such Senior Indebtedness in full, in money or money's worth,
after giving effect to any concurrent payment or distribution to or for the
holders of such Senior Indebtedness, before any payment or distribution is made
to the Securityholders or to the Trustee.
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, remaining unpaid to the
extent necessary to pay such Senior Indebtedness in full in money in accordance
with its terms, after giving effect to any concurrent payment or distribution to
or for the benefit of the holders of such Senior Indebtedness.
For purposes of this Article XV, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article XV with respect
to the Debentures to the payment of all Senior Indebtedness, 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 XI of this Indenture shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section if such other corporation shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated in Article XI
of this Indenture. Nothing in Section 15.2 or in this Section shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 6.6 of this
Indenture.
Section 15.4. Subrogation. Subject to the payment in full of all
Senior Indebtedness, the Securityholders shall be subrogated to the rights of
the holders of such Senior Indebtedness to receive payments or distributions of
cash, property or securities of the Company, applicable to such Senior
Indebtedness until the principal of (and premium, if any) and interest on the
Debentures shall be paid in full. For the purposes of such subrogation, no
payments or distributions to the holders of such Senior Indebtedness of any
cash, property or securities to which the Securityholders or the Trustee would
be entitled except for the provisions of this Article XV, and no payment over
pursuant to the provisions of this Article XV to or for the benefit of the
holders of such Senior Indebtedness by Securityholders or the Trustee, shall, as
between the Company, its creditors other than holders of Senior Indebtedness of
the Company, and the holders of the Debentures be deemed to be a payment or
distribution by the Company to or on account of such Senior Indebtedness. It is
understood that the provisions of this Article XV are and are intended solely
for the purposes of defining the relative rights of the holders of the
Securities, on the one hand, and the holders of such Senior Indebtedness, on the
other hand.
Nothing contained in this Article XV or elsewhere in this Indenture 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 premium, if any)
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, other than
the holders of Senior Indebtedness, 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 XV of the holders of such Senior
Indebtedness in respect of cash, property or securities of the Company, received
upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company referred to
in this Article XV, the Trustee, subject to the provisions of Article VI of this
Indenture, and the Securityholders shall be entitled to conclusively rely upon
any order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation or reorganization proceedings are pending,
or a certificate of the receiver, trustee in bankruptcy, liquidation trustee,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Securityholders, for the purposes of ascertaining the Persons
entitled to participate in such distribution, the holders of Senior Indebtedness
and other indebtedness of the Company, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article XV.
Section 15.5. Trustee to Effectuate Subordination. Each Securityholder
by such Securityholder's acceptance thereof authorizes and directs the Trustee
on such Securityholder's behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article XV and
appoints the Trustee such Securityholder's attorney-in-fact for any and all such
purposes.
Section 15.6. Notice by the Company. The Company shall give prompt
written notice to a Responsible Officer of the Trustee at the Principal Office
of the Trustee of any fact known to the Company that would prohibit the making
of any payment of monies to or by the Trustee in respect of the Debentures
pursuant to the provisions of this Article XV. Notwithstanding the provisions of
this Article XV 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 monies to or by the Trustee in respect of the
Debentures pursuant to the provisions of this Article XV, unless and until a
Responsible Officer of the Trustee at the Principal Office of the Trustee shall
have received written notice thereof from the Company or a holder or holders of
Senior Indebtedness or from any trustee therefor; and before the receipt of any
such written notice, the Trustee, subject to the provisions of Article VI of
this Indenture, shall be entitled in all respects to assume that no such facts
exist; provided, however, that if the Trustee shall not have received the notice
provided for in this Section at least 2 Business Days prior to the date upon
which by the terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of (or premium, if
any) or interest on any 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 2 Business Days prior to such date.
The Trustee, subject to the provisions of Article VI of this Indenture,
shall be entitled to conclusively rely on the delivery to it of a written notice
by a Person representing himself to be a holder of Senior Indebtedness (or a
trustee or representative on behalf of such holder), to establish that such
notice has been given by a holder of such Senior Indebtedness or a trustee or
representative on behalf of any such holder or holders. In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of such Senior Indebtedness to
participate in any payment or distribution pursuant to this Article XV, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of such Senior Indebtedness held by
such Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article XV, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial determination as
to the right of such Person to receive such payment.
Section 15.7. Rights of the Trustee; Holders of Senior Indebtedness.
The Trustee in its individual capacity shall be entitled to all the rights set
forth in this Article XV in respect of any Senior Indebtedness at any time held
by it, to the same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its rights as such
holder.
With respect to the holders of 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 XV, 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 Article VI of this Indenture, the Trustee shall not be
liable to any holder of such Senior Indebtedness if it shall pay over or deliver
to Securityholders, the Company or any other Person money or assets to which any
holder of such Senior Indebtedness shall be entitled by virtue of this Article
XV or otherwise.
Nothing in this Article XV shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 6.6.
Section 15.8. Subordination May Not Be Impaired. 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.
Without in any way limiting the generality of the foregoing paragraph,
the holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Securityholders, without
incurring responsibility to the Securityholders and without impairing or
releasing the subordination provided in this Article XV or the obligations
hereunder of the holders of the 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.
Signatures appear on the following page
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed by their respective officers thereunto duly authorized, as of the
day and year first above written.
FIRST BANKS, INC.
By /s/ Lisa K. Vansickle
---------------------------------------
Name: Lisa K. Vansickle
Title: Senior Vice President
WILMINGTON TRUST COMPANY, as Trustee
By /s/ Christopher J. Monigle
---------------------------------------
Name: Christopher J. Monigle
Title: Vice President
EXHIBIT A
FORM OF FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
[FORM OF FACE OF SECURITY]
THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED
BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE
FEDERAL DEPOSIT INSURANCE CORPORATION.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE
WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS
SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR
OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT
PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN
ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF
THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE
SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA
OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR
ADMINISTRATIVE EXEMPTION.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.00 AND MULTIPLES
OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A
BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000.00 SHALL BE
DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.
THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE
REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.
First Banks, Inc., a Missouri corporation (the "Company" which term
includes any successor Person under the Indenture hereinafter referred to), for
value received promises to pay to Wilmington Trust Company, not in its
individual capacity but solely as Institutional Trustee for First Bank Statutory
Trust VII (the "Holder") or registered assigns, the principal sum of fifty-one
million five hundred forty-seven thousand dollars ($51,547,000.00) on December
15, 2036, and to pay interest on said principal sum from December 14, 2006, or
from the most recent Interest Payment Date (as defined below) to which interest
has been paid or duly provided for, quarterly (subject to deferral as set forth
herein) in arrears on March 15, June 15, September 15 and December 15 of each
year or if such day is not a Business Day, then the next succeeding Business Day
(each such date, an "Interest Payment Date") (it being understood that interest
accrues for any such non-Business Day), commencing on the Interest Payment Date
in March 2007, at an annual rate equal to 7.20% beginning on (and including) the
date of original issuance and ending on (but excluding) the Interest Payment
Date in March 2007 and at an annual rate for each successive period beginning on
(and including) the Interest Payment Date in March 2007, and each succeeding
Interest Payment Date, and ending on (but excluding) the next succeeding
Interest Payment Date (each a "Distribution Period"), equal to 3-Month LIBOR,
determined as described below, plus 1.85% (the "Coupon Rate"), applied to the
principal amount hereof, until the principal hereof is paid or duly provided for
or made available for payment, 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 (including Additional
Interest) at the Interest Rate in effect for each applicable period, compounded
quarterly, from the dates such amounts are due until they are paid or made
available for payment. The amount of interest payable for any period will be
computed on the basis of the actual number of days in the Distribution Period
concerned divided by 360. The interest installment so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the Person in whose name this Debenture (or one or more
Predecessor Securities) is registered at the close of business on the regular
record date for such interest installment, which shall be fifteen Business Days
prior to the day on which the relevant Interest Payment Date occurs. Any such
interest installment not so punctually paid or duly provided for shall forthwith
cease to be payable to the Holder on such regular record date and may be paid to
the Person in whose name this Debenture (or one or more Predecessor Securities)
is registered at the close of business on a special record date.
"3-Month LIBOR" as used herein, means the London interbank offered
interest rate for three-month U.S. dollar deposits determined by the Trustee in
the following order of priority: (i) the rate (expressed as a percentage per
annum) for U.S. dollar deposits having a three-month maturity that appears on
Telerate Page 3750 as of 11:00 a.m. (London time) on the related Determination
Date ("Telerate Page 3750" means the display designated as "Page 3750" on the
Moneyline Telerate Service or such other page as may replace Page 3750 on that
service or such other service or services as may be nominated by the British
Bankers' Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollar deposits); (ii) if such rate
cannot be identified on the related Determination Date, the Trustee will request
the principal London offices of four leading banks in the London interbank
market to provide such banks' offered quotations (expressed as percentages per
annum) to prime banks in the London interbank market for U.S. dollar deposits
having a three-month maturity as of 11:00 a.m. (London time) on such
Determination Date. If at least two quotations are provided, 3-Month LIBOR will
be the arithmetic mean of such quotations; (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Trustee will
request four major New York City banks to provide such banks' offered quotations
(expressed as percentages per annum) to leading European banks for loans in U.S.
dollars as of 11:00 a.m. (London time) on such Determination Date. If at least
two such quotations are provided, 3-Month LIBOR will be the arithmetic mean of
such quotations; and (iv) if fewer than two such quotations are provided as
requested in clause (iii) above, 3-Month LIBOR will be a 3-Month LIBOR
determined with respect to the Distribution Period immediately preceding such
current Distribution Period. If the rate for U.S. dollar deposits having a
three-month maturity that initially appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the
Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such
Determination Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date. As used
herein, "Determination Date" means the date that is two London Banking Days
(i.e., a business day in which dealings in deposits in U.S. dollars are
transacted in the London interbank market) preceding the commencement of the
relevant Distribution Period.
The Interest Rate for any Distribution Period will at no time be higher
than the maximum rate then permitted by New York law as the same may be modified
by United States law.
All percentages resulting from any calculations on the Debentures will
be rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all dollar
amounts used in or resulting from such calculation will be rounded to the
nearest cent (with one-half cent being rounded upward)).
The principal of and interest on this Debenture shall be payable at the
office or agency of the Trustee (or other paying agent appointed by the Company)
maintained for that purpose in any coin or currency of the United States of
America that at the time of payment is legal tender for payment of public and
private debts; provided, however, that payment of interest may be made by check
mailed to the registered holder at such address as shall appear in the Debenture
Register if a request for a wire transfer by such holder has not been received
by the Company or by wire transfer to an account appropriately designated by the
holder hereof. Notwithstanding the foregoing, so long as the holder of this
Debenture is the Institutional Trustee, the payment of the principal of and
interest on this Debenture will be made in immediately available funds at such
place and to such account as may be designated by the Trustee.
So long as no Acceleration Event of Default has occurred and is
continuing, the Company shall have the right, from time to time, and without
causing an Event of Default, to defer payments of interest on the Debentures by
extending the interest payment period on the Debentures at any time and from
time to time during the term of the Debentures, for up to 20 consecutive
quarterly periods (each such extended interest payment period, an "Extension
Period"), during which Extension Period no interest (including Additional
Interest) shall be due and payable (except any Additional Sums that may be due
and payable). No Extension Period may end on a date other than an Interest
Payment Date. During an Extension Period, interest will continue to accrue on
the Debentures, and interest on such accrued interest will accrue at an annual
rate equal to the Interest Rate in effect for such Extension Period, compounded
quarterly from the date such interest would have been payable were it not for
the Extension Period, to the extent permitted by law (such interest referred to
herein as "Additional Interest"). At the end of any such Extension Period the
Company shall pay all interest then accrued and unpaid on the Debentures
(together with Additional Interest thereon); provided, however, that no
Extension Period may extend beyond the Maturity Date; provided further, however,
that during any such Extension Period, the Company shall not and shall not
permit any Affiliate to engage in any of the activities or transactions
described on the reverse side hereof and in the Indenture. Prior to the
termination of any Extension Period, the Company may further extend such period,
provided that such period together with all such previous and further
consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all accrued and unpaid interest and
Additional Interest, the Company may commence a new Extension Period, subject to
the foregoing requirements. No interest or Additional Interest shall be due and
payable during an Extension Period, except at the end thereof, but each
installment of interest that would otherwise have been due and payable during
such Extension Period shall bear Additional Interest. The Company must give the
Trustee notice of its election to begin or extend an Extension Period by the
close of business at least 15 Business Days prior to the Interest Payment Date
with respect to which interest on the Debentures would have been payable except
for the election to begin or extend such Extension Period.
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, and 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 provisions shall for all purposes have the same effect as though
fully set forth at this place.
IN WITNESS WHEREOF, the Company has duly executed this certificate.
FIRST BANKS, INC.
By
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures referred to in the within-mentioned
Indenture.
WILMINGTON TRUST COMPANY, as Trustee
By:
Authorized Officer
[FORM OF REVERSE OF DEBENTURE]
This Debenture is one of the floating rate junior subordinated
deferrable interest debentures of the Company, all issued or to be issued under
and pursuant to the Indenture dated as of December 14, 2006 (the "Indenture"),
duly executed and delivered between the Company and 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.
Upon the occurrence and continuation of a Special Event prior to the
Interest Payment Date in December 2011, the Company shall have the right to
redeem the Debentures in whole, but not in part, at any Interest Payment Date,
within 120 days following the occurrence of such Special Event, at the Special
Redemption Price.
In addition, the Company shall have the right to redeem the Debentures,
in whole or in part, but in all cases in a principal amount with integral
multiples of $1,000.00, on any Interest Payment Date on or after the Interest
Payment Date in December 2011, at the Redemption Price.
Prior to 10:00 a.m. New York City time on the Redemption Date or
Special Redemption Date, as applicable, the Company will deposit with the
Trustee or with one or more paying agents an amount of money sufficient to
redeem on the Redemption Date or the Special Redemption Date, as applicable, all
the Debentures so called for redemption at the appropriate Redemption Price or
Special Redemption Price.
If all, or less than all, the Debentures are to be redeemed, the
Company will give the Trustee notice not less than 45 nor more than 60 days,
respectively, prior to the Redemption Date or Special Redemption Date, as
applicable, as to the aggregate principal amount of Debentures to be redeemed
and the Trustee shall select, in such manner as in its sole discretion it shall
deem appropriate and fair, the Debentures or portions thereof (in integral
multiples of $1,000.00) to be redeemed.
Notwithstanding the foregoing, any redemption of Debentures by the
Company shall be subject to the receipt of any and all required regulatory
approvals.
In case an Acceleration Event of Default shall have occurred and be
continuing, upon demand of the Trustee, the principal of all of the Debentures
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, to execute
supplemental indentures for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the holders
of the Debentures; provided, however, that no such supplemental indenture shall
without the consent of the holders of each Debenture then outstanding and
affected thereby (i) change the fixed maturity of any Debenture, or reduce the
principal amount thereof or any premium thereon, or reduce the rate or extend
the time of payment of interest thereon, or reduce any amount payable on
redemption thereof or make the principal thereof or any interest or premium
thereon payable in any coin or currency other than that provided in the
Debentures, or impair or affect the right of any Securityholder to institute
suit for payment thereof or impair the right of repayment, if any, at the option
of the holder, or (ii) reduce the aforesaid percentage of Debentures the holders
of which are required to consent to any such supplemental indenture.
The Indenture also contains provisions permitting the holders of a
majority in aggregate principal amount of the Debentures at the time outstanding
on behalf of the holders of all of the Debentures to waive (or modify any
previously granted waiver of) any past default or Event of Default, and its
consequences, except a default (a) in the payment of principal of, premium, if
any, or interest on any of the Debentures, (b) in respect of covenants or
provisions hereof or of the Indenture which cannot be modified or amended
without the consent of the holder of each Debenture affected, or (c) in respect
of the covenants contained in Section 3.9 of the Indenture; provided, however,
that if the Debentures are held by the Trust or a trustee of such trust, such
waiver or modification to such waiver shall not be effective until the holders
of a majority in Liquidation Amount of Trust Securities of the Trust shall have
consented to such waiver or modification to such waiver, provided, further, that
if the consent of the holder of each outstanding 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 the 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 Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as permitted by the Indenture, said default or Event of
Default shall for all purposes of the Debentures and the Indenture be deemed to
have been cured and to be not continuing.
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 of and premium, if any, and
interest, including Additional Interest, on this Debenture at the time and place
and at the rate and in the money herein prescribed.
The Company has agreed that if Debentures are initially issued to the
Trust or a trustee of such Trust in connection with the issuance of Trust
Securities by the Trust (regardless of whether Debentures continue to be held by
such Trust) and (i) there shall have occurred and be continuing an Event of
Default, (ii) the Company shall be in default with respect to its payment of any
obligations under the Capital Securities Guarantee, or (iii) the Company shall
have given notice of its election to defer payments of interest on the
Debentures by extending the interest payment period as provided herein and such
Extension Period, or any extension thereof, shall be continuing, then the
Company shall not, and shall not allow any Affiliate of the Company to, (x)
declare or pay any dividends or distributions on, or redeem, purchase, acquire,
or make a liquidation payment with respect to, any of the Company's capital
stock or its Affiliates' capital stock (other than payments of dividends or
distributions to the Company) or make any guarantee payments with respect to the
foregoing or (y) make any payment of principal of or interest or premium, if
any, on or repay, repurchase or redeem any debt securities of the Company or any
Affiliate that rank pari passu in all respects with or junior in interest to the
Debentures (other than, with respect to clauses (x) and (y) above, (1)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the applicable Extension Period, if any, (2) as a result of any exchange or
conversion of any class or series of the Company's capital stock (or any capital
stock of a subsidiary of the Company) for any class or series of the Company's
capital stock or of any class or series of the Company's indebtedness for any
class or series of the Company's capital stock, (3) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion or
exchange provisions of such capital stock or the security being converted or
exchanged, (4) any declaration of a dividend in connection with any
stockholders' rights plan, or the issuance of rights, stock or other property
under any stockholders' rights plan, or the redemption or repurchase of rights
pursuant thereto, (5) any dividend in the form of stock, warrants, options or
other rights where the dividend stock or the stock issuable upon exercise of
such warrants, options or other rights is the same stock as that on which the
dividend is being paid or ranks pari passu with or junior to such stock and any
cash payments in lieu of fractional shares issued in connection therewith, or
(6) payments under the Capital Securities Guarantee).
The Debentures are issuable only in registered, certificated form
without coupons and in minimum denominations of $100,000.00 and any multiple of
$1,000.00 in excess thereof. As provided in the Indenture and subject to the
transfer restrictions and limitations as may be contained herein and therein
from time to time, this Debenture is transferable by the holder hereof on the
Debenture Register of the Company. Upon due presentment for registration of
transfer of any Debenture at the Principal Office of the Trustee or at any
office or agency of the Company maintained for such purpose as provided in
Section 3.2 of the Indenture, the Company shall execute, the Company or the
Trustee shall register and the Trustee or the Authenticating Agent shall
authenticate and make available for delivery in the name of the transferee or
transferees a new Debenture for a like aggregate principal amount. All
Debentures presented for registration of transfer or for exchange or payment
shall (if so required by the Company or the Trustee or the Authenticating Agent)
be duly endorsed by, or be accompanied by a written instrument or instruments of
transfer in form satisfactory to, the Company and the Trustee or the
Authenticating Agent duly executed by the holder or his attorney duly authorized
in writing. No service charge shall be made for any exchange or registration of
transfer of Debentures, but the Company or the Trustee may require payment of a
sum sufficient to cover any tax, fee or other governmental charge that may be
imposed in connection therewith.
Prior to due presentment for registration of transfer of any Debenture,
the Company, the Trustee, any Authenticating Agent, any paying agent, any
transfer agent and any Debenture registrar may deem the Person in whose name
such Debenture shall be registered upon the Debenture Register to be, and may
treat him as, the absolute owner of such Debenture (whether or not such
Debenture shall be overdue) for the purpose of receiving payment of or on
account of the principal of, premium, if any, and interest on such Debenture and
for all other purposes; and neither the Company nor the Trustee nor any
Authenticating Agent nor any paying agent nor any transfer agent nor any
Debenture registrar shall be affected by any notice to the contrary. All such
payments so made to any holder for the time being or upon his order shall be
valid, and, to the extent of the sum or sums so paid, effectual to satisfy and
discharge the liability for moneys payable upon any such Debenture.
No recourse for the payment of the principal of or premium, if any, or
interest on any Debenture, or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in the Indenture or in any supplemental indenture, or
in any such Debenture, or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder,
employee, officer or director, as such, past, present or future, of the Company
or of any successor Person of the Company, either directly or through the
Company or any successor Person of the Company, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise, it being expressly understood that all such liability is
hereby expressly waived and released as a condition of, and as a consideration
for, the execution of the Indenture and the issue of the Debentures.
Capitalized terms used and not defined in this Debenture shall have the
meanings assigned in the Indenture dated as of the date of original issuance of
this Debenture between the Trustee and the Company.
THE INDENTURE AND THE DEBENTURES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF
LAW PRINCIPLES THEREOF.
EXHIBIT B
FORM OF CERTIFICATE TO TRUSTEE
Pursuant to Section 3.5 of the Indenture between First Banks, Inc., as
the Company (the "Company"), and Wilmington Trust Company, as Trustee, dated as
of December 14, 2006 (the "Indenture"), the undersigned hereby certifies as
follows:
1. In my capacity as an officer of the Company, I would normally
have knowledge of any default by the Company during the last
fiscal year in the performance of any covenants of the Company
contained in the Indenture.
2. [To my knowledge, the Company is not in default in the
performance of any covenants contained in the Indenture.
or, alternatively:
I am aware of the default(s) in the performance of covenants in
the Indentures, as specified below.]
Capitalized terms used herein, and not otherwise defined herein, have
the respective meanings ascribed thereto in the Indenture.
IN WITNESS WHEREOF, the undersigned has executed this Certificate.
Date:
Name:
Title:
Exhiit 4.58
AMENDED AND RESTATED DECLARATION
OF TRUST
by and among
WILMINGTON TRUST COMPANY,
as Delaware Trustee,
WILMINGTON TRUST COMPANY,
as Institutional Trustee,
FIRST BANKS, INC.,
as Sponsor,
and
TERRANCE M. MCCARTHY, PETER D. WIMMER and
LISA K. VANSICKLE,
as Administrators,
Dated as of December 14, 2006
TABLE OF CONTENTS
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Page
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ARTICLE I INTERPRETATION AND DEFINITIONS..........................................................................1
Section 1.1. Definitions............................................................................1
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ARTICLE II ORGANIZATION...........................................................................................8
Section 2.1. Name...................................................................................8
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Section 2.2. Office.................................................................................8
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Section 2.3. Purpose................................................................................8
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Section 2.4. Authority..............................................................................8
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Section 2.5. Title to Property of the Trust.........................................................8
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Section 2.6. Powers and Duties of the Trustees and the Administrators...............................9
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Section 2.7. Prohibition of Actions by the Trust and the Institutional Trustee.....................12
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Section 2.8. Powers and Duties of the Institutional Trustee........................................13
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Section 2.9. Certain Duties and Responsibilities of the Trustees and Administrators................14
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Section 2.10. Certain Rights of Institutional Trustee...............................................15
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Section 2.11. Delaware Trustee......................................................................17
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Section 2.12. Execution of Documents................................................................17
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Section 2.13. Not Responsible for Recitals or Issuance of Securities................................17
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Section 2.14. Duration of Trust.....................................................................17
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Section 2.15. Mergers...............................................................................18
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ARTICLE III SPONSOR..............................................................................................19
Section 3.1. Sponsor's Purchase of Common Securities...............................................19
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Section 3.2. Responsibilities of the Sponsor.......................................................19
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Section 3.3. Expenses..............................................................................19
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Section 3.4. Right to Proceed......................................................................20
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ARTICLE IV INSTITUTIONAL TRUSTEE AND ADMINISTRATORS..............................................................20
Section 4.1. Number of Trustees....................................................................20
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Section 4.2. Delaware Trustee; Eligibility.........................................................20
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Section 4.3. Institutional Trustee; Eligibility....................................................21
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Section 4.4. Administrators........................................................................21
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Section 4.5. Appointment, Removal and Resignation of Trustees and Administrators...................21
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Section 4.6. Vacancies Among Trustees..............................................................23
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Section 4.7. Effect of Vacancies...................................................................23
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Section 4.8. Meetings of the Trustees and the Administrators.......................................23
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Section 4.9. Delegation of Power...................................................................24
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Section 4.10. Conversion, Consolidation or Succession to Business...................................24
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ARTICLE V DISTRIBUTIONS..........................................................................................24
Section 5.1. Distributions.........................................................................24
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ARTICLE VI ISSUANCE OF SECURITIES................................................................................24
Section 6.1. General Provisions Regarding Securities...............................................24
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Section 6.2. Paying Agent, Transfer Agent and Registrar............................................25
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Section 6.3. Form and Dating.......................................................................25
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Section 6.4. Book-Entry Capital Securities.........................................................26
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Section 6.5. Mutilated, Destroyed, Lost or Stolen Certificates.....................................27
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Section 6.6. Temporary Securities..................................................................28
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Section 6.7. Cancellation..........................................................................28
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Section 6.8. CUSIP Numbers.........................................................................28
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Section 6.9. Rights of Holders; Waivers of Past Defaults...........................................28
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ARTICLE VII DISSOLUTION AND TERMINATION OF TRUST.................................................................30
Section 7.1. Dissolution and Termination of Trust..................................................30
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ARTICLE VIII TRANSFER OF INTERESTS...............................................................................31
Section 8.1. General...............................................................................31
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Section 8.2. Transfer Procedures and Restrictions..................................................32
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Section 8.3. Deemed Security Holders...............................................................34
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ARTICLE IX LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS.....................34
Section 9.1. Liability.............................................................................34
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Section 9.2. Exculpation...........................................................................35
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Section 9.3. Fiduciary Duty........................................................................35
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Section 9.4. Indemnification.......................................................................35
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Section 9.5. Outside Businesses....................................................................37
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Section 9.6. Compensation; Fee.....................................................................38
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ARTICLE X ACCOUNTING.............................................................................................38
Section 10.1. Fiscal Year...........................................................................38
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Section 10.2. Certain Accounting Matters............................................................38
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Section 10.3. Banking...............................................................................39
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Section 10.4. Withholding...........................................................................39
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ARTICLE XI AMENDMENTS AND MEETINGS...............................................................................39
Section 11.1. Amendments............................................................................39
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Section 11.2. Meetings of the Holders of Securities; Action by Written Consent......................41
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ARTICLE XII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND THE DELAWARE TRUSTEE....................................42
Section 12.1. Representations and Warranties of Institutional Trustee...............................42
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Section 12.2. Representations of the Delaware Trustee...............................................42
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ARTICLE XIII MISCELLANEOUS.......................................................................................43
Section 13.1. Notices...............................................................................43
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Section 13.2. Governing Law.........................................................................44
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Section 13.3. Intention of the Parties..............................................................44
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Section 13.4. Headings..............................................................................44
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Section 13.5. Successors and Assigns................................................................45
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Section 13.6. Partial Enforceability................................................................45
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Section 13.7. Counterparts..........................................................................45
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Annex I....................Terms of Securities
Exhibit A-1................Form of Capital Security Certificate
Exhibit A-2................Form of Capital Security Certificate
Exhibit A-3................Form of Common Security Certificate
Exhibit B..................Specimen of Initial Debenture
Exhibit C..................Placement Agreement
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
FIRST BANK STATUTORY TRUST VII
December 14, 2006
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of December 14, 2006, by the Trustees (as defined herein), the
Administrators (as defined herein), the Sponsor (as defined herein) and by the
holders, from time to time, of undivided beneficial interests in the Trust (as
defined herein) to be issued pursuant to this Declaration;
WHEREAS, the Trustees, the Administrators and the Sponsor established
First Bank Statutory Trust VII (the "Trust"), a statutory trust under the
Statutory Trust Act (as defined herein) pursuant to a Declaration of Trust dated
as of November 16, 2006 (the "Original Declaration"), and a Certificate of Trust
filed with the Secretary of State of the State of Delaware on November 16, 2006,
for the sole purpose of issuing and selling certain securities representing
undivided beneficial interests in the assets of the Trust and investing the
proceeds thereof in certain debentures of the Debenture Issuer (as defined
herein);
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, the Trustees, the Administrators and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the Original
Declaration;
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a statutory trust under the Statutory Trust Act and that
this Declaration constitutes the governing instrument of such statutory trust,
the Trustees declare that all assets contributed to the Trust will be held in
trust for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration. The parties hereto
hereby agree as follows:
ARTICLE I
INTERPRETATION AND DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration"
are to this Declaration as modified, supplemented or amended from time to time;
(d) all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections of and Annexes and
Exhibits to this Declaration unless otherwise specified; and
(e) a reference to the singular includes the plural and vice
versa.
"Acceleration Event of Default" has the meaning set forth in the
Indenture.
"Additional Interest" has the meaning set forth in the Indenture.
"Administrative Action" has the meaning set forth in paragraph 4(a) of
Annex I.
"Administrators" means each of Terrance M. McCarthy, Peter D. Wimmer
and Lisa K. Vansickle, solely in such Person's capacity as Administrator of the
Trust created and continued hereunder and not in such Person's individual
capacity, or such Administrator's successor in interest in such capacity, or any
successor appointed as herein provided.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act or any successor rule thereunder.
"Applicable Depositary Procedures" means, with respect to any transfer
or transaction involving a Book-Entry Capital Security, the rules and procedures
of the Depositary for such Book-Entry Capital Security, in each case to the
extent applicable to such transaction and as in effect from time to time.
"Authorized Officer" of a Person means any Person that is authorized to
bind such Person.
"Bankruptcy Event" means, with respect to any Person:
(a) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of such Person in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or similar official) of such Person or for any
substantial part of its property, or ordering the winding-up or liquidation of
its affairs and such decree or order shall remain unstayed and in effect for a
period of 90 consecutive days; or
(b) such Person shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary case
under any such law, or shall consent to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of such Person of any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
generally to pay its debts as they become due.
"Book-Entry Capital Securities" means a Capital Security, the ownership
and transfer of which shall be made through book entries by a Depositary.
"Business Day" means any day other than Saturday, Sunday or any other
day on which banking institutions in New York City or Wilmington, Delaware are
permitted or required by any applicable law or executive order to close.
"Capital Securities" has the meaning set forth in paragraph 1(a) of
Annex I.
"Capital Security Certificate" means a definitive Certificate in fully
registered form representing a Capital Security substantially in the form of
Exhibits A-1 and A-2.
"Capital Treatment Event" has the meaning set forth in paragraph 4(a)
of Annex I.
"Certificate" means any certificate evidencing Securities.
"Closing Date" has the meaning set forth in the Placement Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Common Securities" has the meaning set forth in paragraph 1(b) of
Annex I.
"Common Security Certificate" means a definitive Certificate in fully
registered form representing a Common Security substantially in the form of
Exhibit A-3.
"Company Indemnified Person" means (a) any Administrator; (b) any
Affiliate of any Administrator; (c) any officers, directors, shareholders,
members, partners, employees, representatives or agents of any Administrator; or
(d) any officer, employee or agent of the Trust or its Affiliates.
"Corporate Trust Office" means the office of the Institutional Trustee
at which the corporate trust business of the Institutional Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Declaration is located at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-1600, Attn: Corporate Trust
Administration.
"Coupon Rate" has the meaning set forth in paragraph 2(a) of Annex I.
"Covered Person" means: (a) any Administrator, officer, director,
shareholder, partner, member, representative, employee or agent of (i) the Trust
or (ii) any of the Trust's Affiliates; and (b) any Holder of Securities.
"Creditor" has the meaning set forth in Section 3.3.
"Debenture Issuer" means First Banks, Inc., a Missouri corporation, in
its capacity as issuer of the Debentures under the
Indenture.
"Debenture Trustee" means Wilmington Trust Company, as trustee under
the Indenture until a successor is appointed thereunder, and thereafter means
such successor trustee.
"Debentures" means the Floating Rate Junior Subordinated Deferrable
Interest Debentures due 2036 to be issued by the Debenture Issuer under the
Indenture.
"Defaulted Interest" has the meaning set forth in the Indenture.
"Definitive Capital Securities Certificates" means Capital Securities
issued in certificated, fully registered form that are not Global Capital
Securities.
"Delaware Trustee" has the meaning set forth in Section 4.2.
"Depositary" means an organization registered as a clearing agency
under the Exchange Act that is designated as Depositary by the Administrators or
any successor thereto. DTC will be the initial Depositary.
"Depositary Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Depositary effects
book-entry transfers and pledges of securities deposited with the Depositary.
"Determination Date" has the meaning set forth in paragraph 4(a) of
Annex I.
"Direct Action" has the meaning set forth in Section 2.8(d).
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 5.1.
"Distribution Payment Date" has the meaning set forth in paragraph 2(b)
of Annex I.
"Distribution Period" means (i) with respect to the Distribution paid
on the first Distribution Payment Date, the period beginning on (and including)
the date of original issuance and ending on (but excluding) the Distribution
Payment Date in March 2007 and (ii) thereafter, with respect to a Distribution
paid on each successive Distribution Payment Date, the period beginning on (and
including) the preceding Distribution Payment Date and ending on (but excluding)
such current Distribution Payment Date.
"Distribution Rate" means, for the Distribution Period beginning on
(and including) the date of original issuance and ending on (but excluding) the
Distribution Payment Date in March 2007, the rate per annum of 7.20%, and for
each Distribution Period beginning on or after the Distribution Payment Date in
March 2007, the Coupon Rate for such Distribution Period.
"DTC" means The Depository Trust Company or any successor thereto.
"Event of Default" means any one of the following events (whatever the
reason for such event 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 an Indenture Event of Default; or
(b) default by the Trust in the payment of any Redemption price or
Special Redemption Price of any Security when it becomes due and payable; or
(c) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Institutional Trustee in this
Declaration (other than those specified in clause (a) or (b) above) and
continuation of such default or breach for a period of 60 days after there has
been given, by registered or certified mail to the Institutional Trustee and to
the Sponsor by the Holders of at least 25% in aggregate liquidation amount of
the outstanding Capital Securities, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a "Notice
of Default" hereunder; or
(d) the occurrence of a Bankruptcy Event with respect to the
Institutional Trustee if a successor Institutional Trustee has not been
appointed within 90 days thereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.
"Extension Period" has the meaning set forth in paragraph 2(b) of Annex
I.
"Federal Reserve" has the meaning set forth in paragraph 3 of Annex I.
"Fiduciary Indemnified Person" shall mean each of the Institutional
Trustee (including in its individual capacity), the Delaware Trustee (including
in its individual capacity), any Affiliate of the Institutional Trustee or
Delaware Trustee and any officers, directors, shareholders, members, partners,
employees, representatives, custodians, nominees or agents of the Institutional
Trustee or Delaware Trustee.
"Fiscal Year" has the meaning set forth in Section 10.1.
"Global Capital Security" means a Capital Securities Certificate
evidencing ownership of Book-Entry Capital Securities.
"Guarantee" means the guarantee agreement to be dated as of the Closing
Date, of the Sponsor in respect of the Capital Securities.
"Holder" means a Person in whose name a Certificate representing a
Security is registered, such Person being a beneficial owner within the meaning
of the Statutory Trust Act.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Indenture dated as of the Closing Date, between
the Debenture Issuer and the Debenture Trustee, and any indenture supplemental
thereto pursuant to which the Debentures are to be issued, as such Indenture and
any supplemental indenture may be amended, supplemented or otherwise modified
from time to time.
"Indenture Event of Default" means an "Event of Default" as defined in
the Indenture.
"Institutional Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 4.3.
"Interest" means any interest due on the Debentures including any
Additional Interest and Defaulted Interest.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in paragraph 4(a)
of Annex I.
"Liquidation" has the meaning set forth in paragraph 3 of Annex I.
"Liquidation Distribution" has the meaning set forth in paragraph 3 of
Annex I.
"Majority in liquidation amount of the Securities" means Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of
more than 50% of the aggregate liquidation amount (including the stated amount
that would be paid on redemption, liquidation or otherwise, plus accrued and
unpaid Distributions to the date upon which the voting percentages are
determined) of all outstanding Securities of the relevant class.
"Maturity Date" has the meaning set forth in paragraph 4(a) of Annex I.
"Officers' Certificates" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
providing for it in this Declaration shall include:
(a) a statement that each officer signing the Certificate has read
the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"OTS" has the meaning set forth in paragraph 3 of Annex I.
"Owner" means each Person who is the beneficial owner of Book-Entry
Capital Securities as reflected in the records of the Depositary or, if a
Depositary Participant is not the beneficial owner, then the beneficial owner as
reflected in the records of the Depositary Participant.
"Paying Agent" has the meaning specified in Section 6.2.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Placement Agreement" means the Placement Agreement relating to the
offering and sale of Capital Securities in the form of Exhibit C.
"Property Account" has the meaning set forth in Section 2.8(c).
"Pro Rata" has the meaning set forth in paragraph 8 of Annex I.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A
under the Securities Act.
"Quorum" means a majority of the Administrators or, if there are only
two Administrators, both of them.
"Redemption Date" has the meaning set forth in paragraph 4(a) of Annex
I.
"Redemption/Distribution Notice" has the meaning set forth in paragraph
4(e) of Annex I.
"Redemption Price" has the meaning set forth in paragraph 4(a) of Annex
I.
"Registrar" has the meaning set forth in Section 6.2.
"Relevant Trustee" has the meaning set forth in Section 4.5(a).
"Responsible Officer" means, with respect to the Institutional Trustee,
any officer within the Corporate Trust Office of the Institutional Trustee,
including any vice-president, any assistant vice-president, any assistant
secretary, the treasurer, any assistant treasurer, any trust officer or other
officer of the Corporate Trust Office of the Institutional Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of that officer's
knowledge of and familiarity with the particular subject.
"Restricted Securities Legend" has the meaning set forth in Section
8.2(b).
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.
"Securities" means the Common Securities and the Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.
"Special Event" has the meaning set forth in paragraph 4(a) of Annex I.
"Special Redemption Date" has the meaning set forth in paragraph 4(a)
of Annex I.
"Special Redemption Price" has the meaning set forth in paragraph 4(a)
of Annex I.
"Sponsor" means First Banks, Inc., a Missouri corporation, or any
successor entity in a merger, consolidation or amalgamation, in its capacity as
sponsor of the Trust.
"Statutory Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. ss.ss. 3801, et seq. as may be amended from
time to time.
"Successor Entity" has the meaning set forth in Section 2.15(b).
"Successor Delaware Trustee" has the meaning set forth in Section
4.5(e).
"Successor Institutional Trustee" has the meaning set forth in Section
4.5(b).
"Successor Securities" has the meaning set forth in Section 2.15(b).
"Super Majority" has the meaning set forth in paragraph 5(b) of Annex
I.
"Tax Event" has the meaning set forth in paragraph 4(a) of Annex I.
"10% in liquidation amount of the Securities" means Holder(s) of
outstanding Securities voting together as a single class or, as the context may
require, Holders of outstanding Capital Securities or Holders of outstanding
Common Securities voting separately as a class, who are the record owners of 10%
or more of the aggregate liquidation amount (including the stated amount that
would be paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined) of
all outstanding Securities of the relevant class.
"3-Month LIBOR" has the meaning set forth in paragraph 4(a) of Annex I.
"Transfer Agent" has the meaning set forth in Section 6.2.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the United
States Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust Property" means (a) the Debentures, (b) any cash on deposit in,
or owing to, the Property Account and (c) all proceeds and rights in respect of
the foregoing and any other property and assets for the time being held or
deemed to be held by the Institutional Trustee pursuant to the trusts of this
Declaration.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"U.S. Person" means a United States Person as defined in Section
7701(a)(30) of the Code.
ARTICLE II
ORGANIZATION
Section 2.1. Name. The Trust is named "First Bank Statutory Trust
VII," as such name may be modified from time to time by the Administrators
following written notice to the Holders of the Securities. The Trust's
activities may be conducted under the name of the Trust or any other name deemed
advisable by the Administrators.
Section 2.2. Office. The address of the principal office of the
Trust is c/o Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-1600. On at least 10 Business Days written
notice to the Holders of the Securities, the Administrators may designate
another principal office, which shall be in a state of the United States or in
the District of Columbia.
Section 2.3. Purpose. The exclusive purposes and functions of the
Trust are (a) to issue and sell the Securities representing undivided beneficial
interests in the assets of the Trust, (b) to invest the gross proceeds from such
sale to acquire the Debentures, (c) to facilitate direct investment in the
assets of the Trust through issuance of the Common Securities and the Capital
Securities and (d) except as otherwise limited herein, to engage in only those
other activities necessary or incidental thereto. The Trust shall not borrow
money, issue debt or reinvest proceeds derived from investments, pledge any of
its assets, or otherwise undertake (or permit to be undertaken) any activity
that would cause the Trust not to be classified for United States federal income
tax purposes as a grantor trust.
Section 2.4. Authority. Except as specifically provided in this
Declaration, the Institutional Trustee shall have exclusive and complete
authority to carry out the purposes of the Trust. An action taken by a Trustee
in accordance with its powers shall constitute the act of and serve to bind the
Trust. In dealing with the Trustees acting on behalf of the Trust, no Person
shall be required to inquire into the authority of the Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Trustees as set forth in this Declaration. The
Administrators shall have only those ministerial duties set forth herein with
respect to accomplishing the purposes of the Trust and are not intended to be
trustees or fiduciaries with respect to the Trust or the Holders. The
Institutional Trustee shall have the right, but shall not be obligated except as
provided in Section 2.6, to perform those duties assigned to the Administrators.
Section 2.5. Title to Property of the Trust. Except as provided in
Section 2.8 with respect to the Debentures and the Property Account or as
otherwise provided in this Declaration, legal title to all assets of the Trust
shall be vested in the Trust. The Holders shall not have legal title to any part
of the assets of the Trust, but shall have an undivided beneficial interest in
the assets of the Trust.
Section 2.6. Powers and Duties of the Trustees and the
Administrators. -------------------------------------------------------
(a) The Trustees and the Administrators shall conduct the affairs
of the Trust in accordance with the terms of this Declaration. Subject to the
limitations set forth in paragraph (b) of this Section, and in accordance with
the following provisions (i) and (ii), the Trustees and the Administrators shall
have the authority to enter into all transactions and agreements determined by
the Institutional Trustee to be appropriate in exercising the authority, express
or implied, otherwise granted to the Trustees or the Administrators, as the case
may be, under this Declaration, and to perform all acts in furtherance thereof,
including without limitation, the following:
(i) Each Administrator shall have the power and authority
to act on behalf of the Trust with respect to the following matters:
(A) the issuance and sale of the Securities;
(B) to cause the Trust to enter into, and to execute
and deliver on behalf of the Trust, such agreements as may
be necessary or desirable in connection with the purposes
and function of the Trust, including agreements with the
Paying Agent;
(C) ensuring compliance with the Securities Act,
applicable state securities or blue sky laws;
(D) the sending of notices (other than notices of
default), and other information regarding the Securities and
the Debentures to the Holders in accordance with this
Declaration;
(E) the consent to the appointment of a Paying Agent,
Transfer Agent and Registrar in accordance with this
Declaration, which consent shall not be unreasonably
withheld or delayed;
(F) execution and delivery of the Securities in
accordance with this Declaration;
(G) execution and delivery of closing certificates
pursuant to the Placement Agreement and the application for
a taxpayer identification number;
(H) unless otherwise determined by the Holders of a
Majority in liquidation amount of the Securities or as
otherwise required by the Statutory Trust Act, to execute on
behalf of the Trust (either acting alone or together with
any or all of the Administrators) any documents that the
Administrators have the power to execute pursuant to this
Declaration;
(I) the taking of any action incidental to the
foregoing as the Institutional Trustee may from time to time
determine is necessary or advisable to give effect to the
terms of this Declaration for the benefit of the Holders
(without consideration of the effect of any such action on
any particular Holder);
(J) to establish a record date with respect to all
actions to be taken hereunder that require a record date be
established, including Distributions, voting rights,
redemptions and exchanges, and to issue relevant notices to
the Holders of Capital Securities and Holders of Common
Securities as to such actions and applicable record dates;
and
(K) to duly prepare and file all applicable tax returns
and tax information reports that are required to be filed
with respect to the Trust on behalf of the Trust.
(ii) As among the Trustees and the Administrators, the
Institutional 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 Property Account;
(B) the receipt of the Debentures;
(C) the collection of interest, principal and any other
payments made in respect of the Debentures in the Property
Account;
(D) the distribution through the Paying Agent of
amounts owed to the Holders in respect of the Securities;
(E) the exercise of all of the rights, powers and
privileges of a holder of the Debentures;
(F) he sending of notices of default and other
information regarding the Securities and the Debentures to
the Holders in accordance with this Declaration;
(G) the distribution of the Trust Property in
accordance with the terms of this Declaration;
(H) to the extent provided in this Declaration, the
winding up of the affairs of and liquidation of the Trust
and the preparation, execution and filing of the certificate
of cancellation with the Secretary of State of the State of
Delaware;
(I) after any Event of Default (provided that such
Event of Default is not by or with respect to the
Institutional Trustee) the taking of any action incidental
to the foregoing as the Institutional Trustee may from time
to time determine is necessary or advisable to give effect
to the terms of this Declaration and protect and conserve
the Trust Property for the benefit of the Holders (without
consideration of the effect of any such action on any
particular Holder); and
(J) to take all action that may be necessary for the
preservation and the continuation of the Trust's valid
existence, rights, franchises and privileges as a statutory
trust under the laws of the State of Delaware.
(iii) The Institutional Trustee shall have the power and
authority to act on behalf of the Trust with respect to any of the
duties, liabilities, powers or the authority of the Administrators set
forth in Section 2.6(a)(i)(D), (E) and (F) herein but shall not have a
duty to do any such act unless specifically requested to do so in
writing by the Sponsor, and shall then be fully protected in acting
pursuant to such written request; and in the event of a conflict
between the action of the Administrators and the action of the
Institutional Trustee, the action of the Institutional Trustee shall
prevail.
(b) So long as this Declaration remains in effect, the Trust
(or the Trustees or Administrators acting on behalf of the Trust) shall not
undertake any business, activities or transaction except as expressly provided
herein or contemplated hereby. In particular, neither the Trustees nor the
Administrators may cause the Trust to (i) acquire any investments or engage in
any activities not authorized by this Declaration, (ii) sell, assign, transfer,
exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust
Property or interests therein, including to Holders, except as expressly
provided herein, (iii) take any action that would reasonably be expected (x) to
cause the Trust to fail or cease to qualify as a "grantor trust" for United
States federal income tax purposes or (y) to require the trust to register as an
Investment Company under the Investment Company Act, (iv) incur any indebtedness
for borrowed money or issue any other debt or (v) take or consent to any action
that would result in the placement of a lien on any of the Trust Property. The
Institutional Trustee shall, at the sole cost and expense of the Trust, defend
all claims and demands of all Persons at any time claiming any lien on any of
the Trust Property adverse to the interest of the Trust or the Holders in their
capacity as Holders.
(c) In connection with the issuance and sale of the Capital
Securities, the Sponsor shall have the right and responsibility to assist the
Trust with respect to, or effect on behalf of the Trust, the following (and any
actions taken by the Sponsor in furtherance of the following prior to the date
of this Declaration are hereby ratified and confirmed in all respects):
(i) the taking of any action necessary to obtain an
exemption from the Securities Act;
(ii) the determination of the States in which to take
appropriate action to qualify or register for sale all or part of the
Capital Securities and the determination of any and all such acts,
other than actions which must be taken by or on behalf of the Trust,
and the advice to the Administrators of actions they must take on
behalf of the Trust, and the preparation for execution and filing of
any documents to be executed and filed by the Trust or on behalf of the
Trust, as the Sponsor deems necessary or advisable in order to comply
with the applicable laws of any such States in connection with the
sale of the Capital Securities;
(iii) the negotiation of the terms of, and the execution and
delivery of, the Placement Agreement providing for the sale of the
Capital Securities; and
(iv) the taking of any other actions necessary or desirable
to carry out any of the foregoing activities.
(d) Notwithstanding anything herein to the contrary, the
Administrators and the Holders of a Majority in liquidation amount of the Common
Securities are authorized and directed to conduct the affairs of the Trust and
to operate the Trust so that the Trust will not (i) be deemed to be an
Investment Company required to be registered under the Investment Company Act,
and (ii) fail to be classified as a "grantor trust" for United States federal
income tax purposes. The Administrators and the Holders of a Majority in
liquidation amount of the Common Securities shall not take any action
inconsistent with the treatment of the Debentures as indebtedness of the
Debenture Issuer for United States federal income tax purposes. In this
connection, the Administrators and the Holders of a Majority in liquidation
amount of the Common Securities are authorized to take any action, not
inconsistent with applicable laws, the Certificate of Trust or this Declaration,
as amended from time to time, that each of the Administrators and the Holders of
a Majority in liquidation amount of the Common Securities determines in their
discretion to be necessary or desirable for such purposes.
(e) All expenses incurred by the Administrators or the Trustees
pursuant to this Section 2.6 shall be reimbursed by the Sponsor, and the
Trustees and the Administrators shall have no obligations with respect to such
expenses (for purposes of clarification, this Section 2.6(e) does not
contemplate the payment by the Sponsor of acceptance or annual administration
fees owing to the Trustees under this Declaration or the fees and expenses of
the Trustees' counsel in connection with the closing of the transactions
contemplated by this Declaration).
(f) The assets of the Trust shall consist of the Trust Property.
(g) Legal title to all Trust Property shall be vested at all
times in the Institutional Trustee (in its capacity as such) and shall be held
and administered by the Institutional Trustee and the Administrators for the
benefit of the Trust in accordance with this Declaration.
(h) If the Institutional Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Declaration and such
proceeding has been discontinued or abandoned for any reason, or has been
determined adversely to the Institutional Trustee or to such Holder, then and in
every such case the Sponsor, the Institutional Trustee and the Holders shall,
subject to any determination in such proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Institutional Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 2.7. Prohibition of Actions by the Trust and the
Institutional Trustee.
(a) The Trust shall not, and the Institutional Trustee shall cause
the Trust not to, engage in any activity other than as required or authorized by
this Declaration. In particular, the Trust shall not and the Institutional
Trustee shall cause the Trust not to:
(i) invest any proceeds received by the Trust from holding
the Debentures, but shall distribute all such proceeds to Holders of
the Securities pursuant to the terms of this Declaration and of the
Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust Property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than
loans represented by the Debentures;
(v) possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities in any way
whatsoever other than as expressly provided herein;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities;
(vii) carry on any "trade or business" as that phrase is used
in the Code; or
(viii) other than as provided in this Declaration (including
Annex I), (A) direct the time, method and place of exercising any
trust or power conferred upon the Debenture Trustee with respect to
the Debentures, (B) waive any past default that is waivable under the
Indenture, (C) exercise any right to rescind or annul any declaration
that the principal of all the Debentures shall be due and payable, or
(D) consent to any amendment, modification or termination of the
Indenture or the Debentures where such consent shall be required
unless the Trust shall have received a written opinion of counsel to
the effect that such modification will not cause the Trust to cease to
be classified as a "grantor trust" for United States federal income
tax purposes.
Section 2.8. Powers and Duties of the Institutional Trustee.
(a) The legal title to the Debenture shall be owned by and held
of record in the name of the Institutional Trustee in trust for the benefit of
the Trust and the Holders of the Securities. The right, title and interest of
the Institutional Trustee to the Debentures shall vest automatically in each
Person who may hereafter be appointed as Institutional Trustee in accordance
with Section 4.5. Such vesting and cessation of title shall be effective whether
or not conveyancing documents with regard to the Debentures have been executed
and delivered.
(b) The Institutional Trustee shall not transfer its right, title
and interest in the Debentures to the Administrators or to the Delaware Trustee.
(c) The Institutional Trustee shall:
(i) establish and maintain a segregated non-interest
bearing trust account (the "Property Account") in the name of and
under the exclusive control of the Institutional Trustee, and
maintained in the Institutional Trustee's trust department, on behalf
of the Holders of the Securities and, upon the receipt of payments
of funds made in respect of the Debentures held by the Institutional
Trustee, deposit such funds into the Property Account and make
payments, or cause the Paying Agent to make payments, to the Holders
of the Capital Securities and Holders of the Common Securities from
the Property Account in accordance with Section 5.1. Funds in the
Property Account shall be held uninvested until disbursed in
accordance with this Declaration;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Capital
Securities and the Common Securities to the extent the Debentures are
redeemed or mature; and
(iii) upon written notice of distribution issued by the
Administrators in accordance with the terms of the Securities, engage
in such ministerial activities as shall be necessary or appropriate to
effect the distribution of the Debentures to Holders of Securities
upon the occurrence of certain circumstances pursuant to the terms of
the Securities.
(d) The Institutional Trustee may bring or defend, pay, collect,
compromise, arbitrate, resort to legal action with respect to, or otherwise
adjust claims or demands of or against, the Trust which arises out of or in
connection with an Event of Default of which a Responsible Officer of the
Institutional Trustee has actual knowledge or arises out of the Institutional
Trustee's duties and obligations under this Declaration; provided, however, that
if an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay interest or principal
on the Debentures on the date such interest or principal is otherwise payable
(or in the case of redemption, on the redemption date), then a Holder of the
Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or interest on the Debentures having
a principal amount equal to the aggregate liquidation amount of the Capital
Securities of such Holder (a "Direct Action") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Holders of the Common Securities will be subrogated to the rights
of such Holder of the Capital Securities to the extent of any payment made by
the Debenture Issuer to such Holder of the Capital Securities in such Direct
Action; provided, however, that no Holder of the Common Securities may exercise
such right of subrogation so long as an Event of Default with respect to the
Capital Securities has occurred and is continuing.
(e) The Institutional Trustee shall continue to serve as a Trustee
until either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of the
Securities pursuant to the terms of the Securities and this
Declaration; or
(ii) a Successor Institutional Trustee has been appointed
and has accepted that appointment in accordance with Section 4.5.
(f) The Institutional Trustee shall have the legal power to
exercise all of the rights, powers and privileges of a Holder of the Debentures
under the Indenture and, if an Event of Default occurs and is continuing, the
Institutional Trustee may, for the benefit of Holders of the Securities, enforce
its rights as holder of the Debentures subject to the rights of the Holders
pursuant to this Declaration (including Annex I) and the terms of the
Securities.
The Institutional Trustee must exercise the powers set forth in this
Section 2.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 2.3, and the Institutional Trustee shall not take
any action that is inconsistent with the purposes and functions of the Trust set
out in Section 2.3.
Section 2.9. Certain Duties and Responsibilities of the Trustees and
Administrators.
(a) The Institutional Trustee, before the occurrence of any Event
of Default and after the curing or waiving of all such Events of Default that
may have occurred, shall undertake to perform only such duties as are
specifically set forth in this Declaration and no implied covenants shall be
read into this Declaration against the Institutional Trustee. In case an Event
of Default has occurred (that has not been cured or waived pursuant to Section
6.9), the Institutional Trustee shall exercise such of the rights and powers
vested in it by this Declaration, and use the same degree of care and skill in
their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) The duties and responsibilities of the Trustees and the
Administrators shall be as provided by this Declaration. Notwithstanding the
foregoing, no provision of this Declaration shall require any Trustee or
Administrator 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 it shall have reasonable grounds to
believe that repayment of such funds or adequate protection against such risk of
liability is not reasonably assured to it. Whether or not therein expressly so
provided, every provision of this Declaration relating to the conduct or
affecting the liability of or affording protection to the Trustees or
Administrators shall be subject to the provisions of this Article. Nothing in
this Declaration shall be construed to relieve an Administrator or a Trustee
from liability for its own negligent act, its own negligent failure to act, or
its own willful misconduct. To the extent that, at law or in equity, a Trustee
or an Administrator has duties and liabilities relating to the Trust or to the
Holders, such Trustee or such Administrator shall not be liable to the Trust or
to any Holder for such Trustee's or such Administrator's good faith reliance on
the provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of the Administrators or
the Trustee otherwise existing at law or in equity, are agreed by the Sponsor
and the Holders to replace such other duties and liabilities of the
Administrators or the Trustees.
(c) All payments made by the Institutional Trustee or a Paying
Agent in respect of the Securities shall be made only from the revenue and
proceeds from the Trust Property and only to the extent that there shall be
sufficient revenue or proceeds from the Trust Property to enable the
Institutional Trustee or a Paying Agent to make payments in accordance with the
terms hereof. Each Holder, by its acceptance of a Security, agrees that it will
look solely to the revenue and proceeds from the Trust Property to the extent
legally available for distribution to it as herein provided and that the
Trustees and the Administrators are not personally liable to it for any amount
distributable in respect of any Security or for any other liability in respect
of any Security. This Section 2.9(c) does not limit the liability of the
Trustees expressly set forth elsewhere in this Declaration.
(d) The Institutional Trustee shall not be liable for its own acts
or omissions hereunder except as a result of its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) the Institutional Trustee shall not be liable for any
error of judgment made in good faith by an Authorized Officer of the
Institutional Trustee, unless it shall be proved that the
Institutional Trustee was negligent in ascertaining the pertinent
facts;
(ii) the Institutional Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good
faith in accordance with the direction of the Holders of not less
than a Majority in liquidation amount of the Capital Securities or the
Common Securities, as applicable, relating to the time, method and
place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred upon
the Institutional Trustee under this Declaration;
(iii) the Institutional Trustee's sole duty with respect
to the custody, safekeeping and physical preservation of the
Debentures and the Property Account shall be to deal with such property
in a similar manner as the Institutional Trustee deals with similar
property for its fiduciary accounts generally, subject to the
protections and limitations on liability afforded to the Institutional
Trustee under this Declaration;
(iv) the Institutional Trustee shall not be liable for any
interes t on any money received by it except as it may otherwise agree
in writing with t he Sponsor; and money held by the Institutional
Trustee need not be segregated from other funds held by it except in
relation to the Property Account maintained by the Institutional
Trustee pursuant to Section 2.8(c)(i) and except to the extent
otherwise required by law; and
(v) the Institutional Trustee shall not be responsible for
monitoring the compliance by the Administrators or the Sponsor with
their respective duties under this Declaration, nor shall the
Institutional Trustee be liable for any default or misconduct of the
Administrators or the Sponsor.
Section 2.10. Certain Rights of Institutional Trustee. Subject to the
provisions of Section 2.9:
(a) the Institutional Trustee may conclusively rely and shall
fully be protected in acting or refraining from acting in good faith upon any
resolution, opinion of counsel, certificate, written representation of a Holder
or transferee, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
appraisal, bond, debenture, note, other evidence of indebtedness or other paper
or document believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;
(b) if (i) in performing its duties under this Declaration, the
Institutional Trustee is required to decide between alternative courses of
action, (ii) in construing any of the provisions of this Declaration, the
Institutional Trustee finds the same ambiguous or inconsistent with any other
provisions contained herein, or (iii) the Institutional Trustee is unsure of the
application of any provision of this Declaration, then, except as to any matter
as to which the Holders of Capital Securities are entitled to vote under the
terms of this Declaration, the Institutional Trustee may deliver a notice to the
Sponsor requesting the Sponsor's written instructions as to the course of action
to be taken and the Institutional Trustee shall take such action, or refrain
from taking such action, as the Institutional Trustee shall be instructed in
writing, in which event the Institutional Trustee shall have no liability except
for its own negligence or willful misconduct;
(c) any direction or act of the Sponsor or the Administrators
contemplated by this Declaration shall be sufficiently evidenced by an Officers'
Certificate;
(d) whenever in the administration of this Declaration, the
Institutional Trustee shall deem it desirable that a matter be proved or
established before undertaking, suffering or omitting any action hereunder, the
Institutional Trustee (unless other evidence is herein specifically prescribed)
may request and conclusively rely upon an Officers' Certificate as to factual
matters which, upon receipt of such request, shall be promptly delivered by the
Sponsor or the Administrators;
(e) the Institutional Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing or
continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or reregistration thereof;
(f) the Institutional Trustee may consult with counsel of its
selection (which counsel may be counsel to the Sponsor or any of its Affiliates)
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon and in accordance with such advice; the
Institutional Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of competent
jurisdiction;
(g) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at the
request or direction of any of the Holders pursuant to this Declaration, unless
such Holders shall have offered to the Institutional Trustee security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction; provided, that nothing contained in this Section 2.10(g) shall be
taken to relieve the Institutional Trustee, subject to Section 2.9(b), upon the
occurrence of an Event of Default (that has not been cured or waived pursuant to
Section 6.9), to exercise such of the rights and powers vested in it by this
Declaration, and use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs;
(h) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, unless requested in writing to do so by one or more Holders, but
the Institutional Trustee may make such further inquiry or investigation into
such facts or matters as it may see fit;
(i) the Institutional Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys and the Institutional Trustee shall not be
responsible for any misconduct or negligence on the part of or for the
supervision of, any such agent or attorney appointed with due care by it
hereunder;
(j) whenever in the administration of this Declaration the
Institutional Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action hereunder
the Institutional Trustee (i) may request instructions from the Holders of the
Capital Securities which instructions may only be given by the Holders of the
same proportion in liquidation amount of the Capital Securities as would be
entitled to direct the Institutional Trustee under the terms of the Capital
Securities in respect of such remedy, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be fully protected in acting in
accordance with such instructions;
(k) except as otherwise expressly provided in this Declaration,
the Institutional Trustee shall not be under any obligation to take any action
that is discretionary under the provisions of this Declaration;
(l) when the Institutional Trustee incurs expenses or renders
services in connection with a Bankruptcy Event, such expenses (including the
fees and expenses of its counsel) and the compensation for such services are
intended to constitute expenses of administration under any bankruptcy law or
law relating to creditors rights generally;
(m) the Institutional Trustee shall not be charged with knowledge
of an Event of Default unless a Responsible Officer of the Institutional Trustee
obtains actual knowledge of such event or the Institutional Trustee receives
written notice of such event from any Holder, the Sponsor or the Debenture
Trustee;
(n) any action taken by the Institutional Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and the
signature of the Institutional Trustee or its agents alone shall be sufficient
and effective to perform any such action and no third party shall be required to
inquire as to the authority of the Institutional Trustee to so act or as to its
compliance with any of the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Institutional Trustee's or its
agent's taking such action; and
(o) no provision of this Declaration shall be deemed to impose any
duty or obligation on the Institutional Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Institutional Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts, or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Institutional
Trustee shall be construed to be a duty.
Section 2.11. Delaware Trustee. Notwithstanding any other provision
of this Declaration other than Section 4.1, the Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities of any of the Trustees or the Administrators
described in this Declaration (except as may be required under the Statutory
Trust Act). Except as set forth in Section 4.1, the Delaware Trustee shall be a
Trustee for the sole and limited purpose of fulfilling the requirements of ss.
3807 of the Statutory Trust Act.
Section 2.12. Execution of Documents. Unless otherwise determined in
writing by the Institutional Trustee, and except as otherwise required by the
Statutory Trust Act, the Institutional Trustee, or any one or more of the
Administrators, as the case may be, is authorized to execute on behalf of the
Trust any documents that the Trustees or the Administrators, as the case may be,
have the power and authority to execute pursuant to Section 2.6.
Section 2.13. Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be taken as
the statements of the Sponsor, and the Trustees do not assume any responsibility
for their correctness. The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration, the
Debentures or the Securities.
Section 2.14. Duration of Trust. The Trust, unless earlier dissolved
pursuant to the provisions of Article VII hereof, shall be in existence for 35
years from the Closing Date.
Section 2.15. Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 2.15(b) and (c) and except in connection with the
liquidation of the Trust and the distribution of the Debentures to Holders of
Securities pursuant to Section 7.1(a)(iv) of the Declaration or Section 4 of
Annex I.
(b) The Trust may, with the consent of the Institutional Trustee
and without the consent of the Holders of the Capital Securities, consolidate,
amalgamate, merge with or into, or be replaced by a trust organized as such
under the laws of any state; provided that:
(i) if the Trust is not the surviving entity, such
successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the
Trust under the Securities; or
(B) substitutes for the Securities other securities
having substantially the same terms as the Securities (the
"Successor Securities") so that the Successor Securities rank
the same as the Securities rank with respect to Distributions
and payments upon Liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of the
Successor Entity that possesses substantially the same powers and
duties as the Institutional Trustee as the Holder of the Debentures;
(iii) such merger, consolidation, amalgamation or replacement
does not adversely affect the rights, preferences and privileges of
the Holders of the Securities (including any Successor Securities) in
any material respect;
(iv) the Institutional Trustee receives written confirmation
from Moody' s Investor Services, Inc. and any other nationally
recognized statistical rating organization that rates securities issued
by the initial purchaser of the Capital Securities that it will not
reduce or withdraw the rating of any such securities because of such
merger, conversion, consolidation, amalgamation or replacement;
(v) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vi) prior to such merger, consolidation, amalgamation or
replacement, the Trust has received an opinion of a nationally
recognized independent counsel to the Trust experienced in such
matters to the effect that:
(A) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights,
preferences and privileges of the Holders of the Securities
(including any Successor Securities) in any material
respect;
(B) following such merger, consolidation, amalgamation
or replacement, neither the Trust nor the Successor Entity
will be required to register as an Investment Company; and
(C) following such merger, consolidation, amalgamation
or replacement, the Trust (or the Successor Entity) will
continue to be classified as a "grantor trust" for United
States federal income tax purposes;
(vii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities at least to the extent
provided by the Guarantee;
(viii) the Sponsor owns 100% of the common securities of any
Successor Entity; and
(ix) prior to such merger, consolidation, amalgamation or
replacement, the Institutional Trustee shall have received an
Officers' Certificate of the Administrators and an opinion of counsel,
each to the effect that all conditions precedent under this Section
2.15(b) to such transaction have been satisfied.
(c) Notwithstanding Section 2.15(b), the Trust shall not, except
with the consent of Holders of 100% in aggregate liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as other
than a grantor trust for United States federal income tax purposes.
ARTICLE III
SPONSOR
Section 3.1. Sponsor's Purchase of Common Securities. On the Closing
Date, the Sponsor will purchase all of the Common Securities issued by the Trust
in an amount at least equal to 3% of the capital of the Trust, at the same time
as the Capital Securities are sold.
Section 3.2. Responsibilities of the Sponsor. In connection with the
issue and sale of the Capital Securities, the Sponsor shall have the exclusive
right and responsibility to engage in, or direct the Administrators to engage
in, the following activities:
(a) to determine the States in which to take appropriate action to
qualify the Trust or to qualify or register for sale all or part of the Capital
Securities and to do any and all such acts, other than actions which must be
taken by the Trust, and advise the Trust of actions it must take, and prepare
for execution and filing any documents to be executed and filed by the Trust, as
the Sponsor deems necessary or advisable in order to comply with the applicable
laws of any such States, to protect the limited liability of the Holders of the
Capital Securities or to enable the Trust to effect the purposes for which it
was created; and
(b) to negotiate the terms of and/or execute on behalf of the
Trust, the Placement Agreement and other related agreements providing for the
sale of the Capital Securities.
Section 3.3. Expenses. In connection with the offering, sale and
issuance of the Debentures to the Trust and in connection with the sale of the
Securities by the Trust, the Sponsor, in its capacity as Debenture Issuer,
shall:
(a) pay all reasonable costs and expenses owing to the Debenture
Trustee pursuant to Section 6.6 of the Indenture;
(b) be responsible for and shall pay all debts and obligations
(other than with respect to the Securities) and all costs and expenses of the
Trust, the offering, sale and issuance of the Securities (including fees to the
placement agents in connection therewith), the costs and expenses (including
reasonable counsel fees and expenses) of the Institutional Trustee and the
Administrators, the costs and expenses relating to the operation of the Trust,
including, without limitation, costs and expenses of accountants, attorneys,
statistical or bookkeeping services, expenses for printing and engraving and
computing or accounting equipment, Paying Agents, Registrars, Transfer Agents,
duplicating, travel and telephone and other telecommunications expenses and
costs and expenses incurred in connection with the acquisition, financing, and
disposition of Trust assets and the enforcement by the Institutional Trustee of
the rights of the Holders (for purposes of clarification, this Section 3.3(b)
does not contemplate the payment by the Sponsor of acceptance or annual
administration fees owing to the Trustees pursuant to the services to be
provided by the Trustees under this Declaration or the fees and expenses of the
Trustees' counsel in connection with the closing of the transactions
contemplated by this Declaration); and
(c) pay any and all taxes (other than United States withholding
taxes attributable to the Trust or its assets) and all liabilities, costs and
expenses with respect to such taxes of the Trust.
The Sponsor's obligations under this Section 3.3 shall be for the
benefit of, and shall be enforceable by, any Person to whom such debts,
obligations, costs, expenses and taxes are owed (a "Creditor") whether or not
such Creditor has received notice hereof. Any such Creditor may enforce the
Sponsor's obligations under this Section 3.3 directly against the Sponsor and
the Sponsor irrevocably waives any right or remedy to require that any such
Creditor take any action against the Trust or any other Person before proceeding
against the Sponsor. The Sponsor agrees to execute such additional agreements as
may be necessary or desirable in order to give full effect to the provisions of
this Section 3.3.
Section 3.4. Right to Proceed. The Sponsor acknowledges the rights
of Holders to institute a Direct Action as set forth in Section 2.8(d) hereto.
ARTICLE IV
INSTITUTIONAL TRUSTEE AND ADMINISTRATORS
Section 4.1. Number of Trustees. The number of Trustees shall
initially be two, and;
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees; and
(b) after the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holder of a Majority in liquidation
amount of the Common Securities voting as a class at a meeting of the Holder of
the Common Securities; provided, however, that there shall be a Delaware Trustee
if required by Section 4.2; and there shall always be one Trustee who shall be
the Institutional Trustee, and such Trustee may also serve as Delaware Trustee
if it meets the applicable requirements, in which case Section 2.11 shall have
no application to such entity in its capacity as Institutional Trustee.
Section 4.2. Delaware Trustee; Eligibility.
(a) If required by the Statutory Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(i) a natural person at least 21 years of age who is a
resident of the State of Delaware; or
(ii) if not a natural person, an entity which is organized
under the laws of the United States or any state thereof or the
District of Columbia, has its principal place of business in the
State of Delaware, and otherwise meets the requirements of applicable
law, including ss. 3807 of the Statutory Trust Act.
(b) The initial Delaware Trustee shall be Wilmington Trust
Company.
Section 4.3. Institutional Trustee; Eligibility.
(a) There shall at all times be one Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) not offer or provide credit or credit enhancement to
the Trust; and
(iii) be a banking corporation or trust company organized
and doing business under the laws of the United States of America or
any state thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000.00), and
subject to supervision or examination by Federal, state, or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of
the supervising or examining authority referred to above, then for the
purposes of this Section 4.3(a)(iii), the combined capital and surplus
of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Institutional Trustee shall cease to be
eligible to so act under Section 4.3(a), the Institutional Trustee shall
immediately resign in the manner and with the effect set forth in Section 4.5.
(c) If the Institutional Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act of 1939, as amended, the Institutional Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to this Declaration.
(d) The initial Institutional Trustee shall be Wilmington Trust
Company.
Section 4.4. Administrators. Each Administrator shall be a U.S.
Person, 21 years of age or older and authorized to bind the Sponsor. The initial
Administrators shall be Terrance M. McCarthy, Peter D. Wimmer and Lisa K.
Vansickle. There shall at all times be at least one Administrator. Except where
a requirement for action by a specific number of Administrators is expressly set
forth in this Declaration and except with respect to any action the taking of
which is the subject of a meeting of the Administrators, any action required or
permitted to be taken by the Administrators may be taken by, and any power of
the Administrators may be exercised by, or with the consent of, any one such
Administrator.
Section 4.5. Appointment, Removal and Resignation of Trustees and
Administrators.
(a) No resignation or removal of any Trustee (the "Relevant
Trustee") and no appointment of a successor Trustee pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Trustee in accordance with the applicable requirements of this Section 4.5.
(b) Subject to Section 4.5(a), a Relevant Trustee may resign
at any time by giving written notice thereof to the Holders of the Securities
and by appointing a successor Relevant Trustee. Upon the resignation of the
Institutional Trustee, the Institutional Trustee shall appoint a successor by
requesting from at least three Persons meeting the eligibility requirements
their expenses and charges to serve as the successor Institutional Trustee on a
form provided by the Administrators, and selecting the Person who agrees to the
lowest expense and charges (the "Successor Institutional Trustee"). If the
instrument of acceptance by the successor Relevant Trustee required by this
Section 4.5 shall not have been delivered to the Relevant Trustee within 60 days
after the giving of such notice of resignation or delivery of the instrument of
removal, the Relevant Trustee may petition, at the expense of the Trust, any
federal, state or District of Columbia court of competent jurisdiction for the
appointment of a successor Relevant Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Relevant
Trustee. The Institutional Trustee shall have no liability for the selection of
such successor pursuant to this Section 4.5.
(c) Unless an Event of Default shall have occurred and be
continuing, any Trustee may be removed at any time by an act of the Holders of a
Majority in liquidation amount of the Common Securities. If any Trustee shall be
so removed, the Holders of the Common Securities, by act of the Holders of a
Majority in liquidation amount of the Common Securities delivered to the
Relevant Trustee, shall promptly appoint a successor Relevant Trustee, and such
successor Trustee shall comply with the applicable requirements of this Section
4.5. If an Event of Default shall have occurred and be continuing, the
Institutional Trustee or the Delaware Trustee, or both of them, may be removed
by the act of the Holders of a Majority in liquidation amount of the Capital
Securities, delivered to the Relevant Trustee (in its individual capacity and on
behalf of the Trust). If any Trustee shall be so removed, the Holders of Capital
Securities, by act of the Holders of a Majority in liquidation amount of the
Capital Securities then outstanding delivered to the Relevant Trustee, shall
promptly appoint a successor Relevant Trustee or Trustees, and such successor
Trustee shall comply with the applicable requirements of this Section 4.5. If no
successor Relevant Trustee shall have been so appointed by the Holders of a
Majority in liquidation amount of the Capital Securities and accepted
appointment in the manner required by this Section 4.5 within 30 days after
delivery of an instrument of removal, the Relevant Trustee or any Holder who has
been a Holder of the Securities for at least six months may, on behalf of
himself and all others similarly situated, petition any federal, state or
District of Columbia court of competent jurisdiction for the appointment of a
successor Relevant Trustee. Such court may thereupon, after prescribing such
notice, if any, as it may deem proper, appoint a successor Relevant Trustee or
Trustees.
(d) The Institutional Trustee shall give notice of each
resignation and each removal of a Trustee and each appointment of a successor
Trustee to all Holders and to the Sponsor. Each notice shall include the name of
the successor Relevant Trustee and the address of its Corporate Trust Office if
it is the Institutional Trustee.
(e) Notwithstanding the foregoing or any other provision of this
Declaration, in the event a Delaware Trustee who is a natural person dies or is
adjudged by a court to have become incompetent or incapacitated, the vacancy
created by such death, incompetence or incapacity may be filled by the
Institutional Trustee following the procedures in this Section 4.5 (with the
successor being a Person who satisfies the eligibility requirement for a
Delaware Trustee set forth in this Declaration) (the "Successor Delaware
Trustee").
(f) In case of the appointment hereunder of a successor Relevant
Trustee, the retiring Relevant Trustee and each successor Relevant Trustee with
respect to the Securities shall execute and deliver an amendment hereto wherein
each successor Relevant Trustee shall accept such appointment and which (a)
shall contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Relevant Trustee all the rights,
powers, trusts and duties of the retiring Relevant Trustee with respect to the
Securities and the Trust and (b) shall add to or change any of the provisions of
this Declaration as shall be necessary to provide for or facilitate the
administration of the Trust by more than one Relevant Trustee, it being
understood that nothing herein or in such amendment shall constitute such
Relevant Trustees co-trustees and upon the execution and delivery of such
amendment the resignation or removal of the retiring Relevant Trustee shall
become effective to the extent provided therein and each such successor Relevant
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee; but,
on request of the Trust or any successor Relevant Trustee, such retiring
Relevant Trustee shall duly assign, transfer and deliver to such successor
Relevant Trustee all Trust Property, all proceeds thereof and money held by such
retiring Relevant Trustee hereunder with respect to the Securities and the Trust
subject to the payment of all unpaid fees, expenses and indemnities of such
retiring Relevant Trustee.
(g) No Institutional Trustee or Delaware Trustee shall be liable
for the acts or omissions to act of any Successor Institutional Trustee or
Successor Delaware Trustee, as the case may be.
(h) The Holders of the Capital Securities will have no right to
vote to appoint, remove or replace the Administrators, which voting rights are
vested exclusively in the Holders of the Common Securities.
(i) Any successor Delaware Trustee shall file an amendment to the
Certificate of Trust with the Secretary of State of the State of Delaware
identifying the name and principal place of business of such Delaware Trustee in
the State of Delaware.
Section 4.6. Vacancies Among Trustees. If a Trustee ceases to
hold office for any reason and the number of Trustees is not reduced pursuant to
Section 4.1, a vacancy shall occur. A resolution certifying the existence of
such vacancy by the Trustees or, if there are more than two, a majority of the
Trustees, shall be conclusive evidence of the existence of such vacancy. The
vacancy shall be filled with a Trustee appointed in accordance with Section 4.5.
Section 4.7. Effect of Vacancies. The death, resignation,
retirement, removal, bankruptcy, dissolution, liquidation, incompetence or
incapacity to perform the duties of a Trustee shall not operate to dissolve,
terminate or annul the Trust or terminate this Declaration. Whenever a vacancy
in the number of Trustees shall occur, until such vacancy is filled by the
appointment of a Trustee in accordance with Section 4.5, the Institutional
Trustee shall have all the powers granted to the Trustees and shall discharge
all the duties imposed upon the Trustees by this Declaration.
Section 4.8. Meetings of the Trustees and the Administrators.
Meetings of the Administrators shall be held from time to time upon the call of
an Administrator. Regular meetings of the Administrators may be held in person
in the United States or by telephone, at a place (if applicable) and time fixed
by resolution of the Administrators. Notice of any in-person meetings of the
Trustees with the Administrators or meetings of the Administrators shall be hand
delivered or otherwise delivered in writing (including by facsimile, with a hard
copy by overnight courier) not less than 48 hours before such meeting. Notice of
any telephonic meetings of the Trustees with the Administrators or meetings of
the Administrators or any committee thereof shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 24 hours before a meeting. Notices shall contain a brief
statement of the time, place and anticipated purposes of the meeting. The
presence (whether in person or by telephone) of a Trustee or an Administrator,
as the case may be, at a meeting shall constitute a waiver of notice of such
meeting except where the Trustee or an Administrator, as the case may be,
attends a meeting for the express purpose of objecting to the transaction of any
activity on the grounds that the meeting has not been lawfully called or
convened. Unless provided otherwise in this Declaration, any action of the
Trustees or the Administrators, as the case may be, may be taken at a meeting by
vote of a majority of the Trustees or the Administrators present (whether in
person or by telephone) and eligible to vote with respect to such matter,
provided that a Quorum is present, or without a meeting by the unanimous written
consent of the Trustees or the Administrators. Meetings of the Trustees and the
Administrators together shall be held from time to time upon the call of any
Trustee or an Administrator.
Section 4.9. Delegation of Power.
(a) Any Administrator may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
that is a U.S. Person his or her power for the purpose of executing any
documents contemplated in Section 2.6; and
(b) the Administrators shall have power to delegate from time to
time to such of their number the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Administrators
or otherwise as the Administrators may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary to the provisions of
the Trust, as set forth herein.
Section 4.10. Conversion, Consolidation or Succession to Business.
Any Person into which the Institutional Trustee or the Delaware Trustee may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which the
Institutional Trustee or the Delaware Trustee shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of the
Institutional Trustee or the Delaware Trustee shall be the successor of the
Institutional Trustee or the Delaware Trustee hereunder, provided such Person
shall be otherwise qualified and eligible under this Article and, provided,
further, that such Person shall file an amendment to the Certificate of Trust
with the Secretary of State of the State of Delaware as contemplated in Section
4.5(i).
ARTICLE V
DISTRIBUTIONS
Section 5.1. Distributions. Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Capital Securities and the Common Securities
in accordance with the preferences set forth in their respective terms. If and
to the extent that the Debenture Issuer makes a payment of Interest or any
principal on the Debentures held by the Institutional Trustee, the Institutional
Trustee shall and is directed, to the extent funds are available for that
purpose, to make a distribution (a "Distribution") of such amounts to Holders.
ARTICLE VI
ISSUANCE OF SECURITIES
Section 6.1. General Provisions Regarding Securities.
(a) The Administrators shall, on behalf of the Trust, issue one
series of capital securities substantially in the form of Exhibits A-1 and A-2
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I and one series of common securities
representing undivided beneficial interests in the assets of the Trust having
such terms as are set forth in Annex I. The Trust shall issue no securities or
other interests in the assets of the Trust other than the Capital Securities and
the Common Securities. The Capital Securities rank pari passu to, and payment
thereon shall be made Pro Rata with, the Common Securities except that, where an
Event of Default has occurred and is continuing, the rights of Holders of the
Common Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to payment
of the Holders of the Capital Securities as set forth in Annex I.
(b) The Certificates shall be signed on behalf of the Trust by one
or more Administrators. Such signature shall be the facsimile or manual
signature of any Administrator. In case any Administrator of the Trust who shall
have signed any of the Securities shall cease to be such Administrator before
the Certificates so signed shall be delivered by the Trust, such Certificates
nevertheless may be delivered as though the person who signed such Certificates
had not ceased to be such Administrator, and any Certificate may be signed on
behalf of the Trust by such persons who, at the actual date of execution of such
Security, shall be an Administrator of the Trust, although at the date of the
execution and delivery of the Declaration any such person was not such an
Administrator. A Capital Security shall not be valid until authenticated by the
facsimile or manual signature of an Authorized Officer of the Institutional
Trustee. Such signature shall be conclusive evidence that the Capital Security
has been authenticated under this Declaration. Upon written order of the Trust
signed by one Administrator, the Institutional Trustee shall authenticate the
Capital Securities for original issue. The Institutional Trustee may appoint an
authenticating agent that is a U.S. Person acceptable to the Trust to
authenticate the Capital Securities. A Common Security need not be so
authenticated.
(c) The Capital Securities issued to QIBs shall be, except as
provided in Section 6.4, Book-Entry Capital Securities issued in the form of one
or more Global Capital Securities registered in the name of the Depositary or
its nominee and deposited with the Depositary or a custodian for the Depositary
for credit by the Depositary to the respective accounts of the Depositary
Participants thereof (or such other accounts as they may direct). The Capital
Securities issued to a Person other than a QIB shall be issued in the form of a
Definitive Capital Securities Certificate.
(d) The consideration received by the Trust for the issuance of
the Securities shall constitute a contribution to the capital of the Trust and
shall not constitute a loan to the Trust.
(e) Upon issuance of the Securities as provided in this
Declaration, the Securities so issued shall be deemed to be validly issued,
fully paid and, except as provided in Section 9.1(b) with respect to the Common
Securities, non-assessable.
(f) Every Person, by virtue of having become a Holder in
accordance with the terms of this Declaration, shall be deemed to have expressly
assented and agreed to the terms of, and shall be bound by, this Declaration and
the Guarantee.
Section 6.2. Paying Agent, Transfer Agent and Registrar. The Trust
shall maintain in Wilmington, Delaware, an office or agency where the Capital
Securities may be presented for payment ("Paying Agent"), and an office or
agency where Securities may be presented for registration of transfer or
exchange (the "Transfer Agent"). The Trust shall keep or cause to be kept at
such office or agency a register for the purpose of registering Securities,
transfers and exchanges of Securities, such register to be held by a registrar
(the "Registrar"). The Administrators may appoint the Paying Agent, the
Registrar and the Transfer Agent and may appoint one or more additional Paying
Agents or one or more co-Registrars, or one or more co Transfer Agents in such
other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent, the term "Registrar" includes any additional registrar
or co Registrar and the term "Transfer Agent" includes any additional transfer
agent. The Administrators may change any Paying Agent, Transfer Agent or
Registrar at any time without prior notice to any Holder. The Administrators
shall notify the Institutional Trustee of the name and address of any Paying
Agent, Transfer Agent and Registrar not a party to this Declaration. The
Administrators hereby initially appoint the Institutional Trustee to act as
Paying Agent, Transfer Agent and Registrar for the Capital Securities and the
Common Securities. The Institutional Trustee or any of its Affiliates in the
United States may act as Paying Agent, Transfer Agent or Registrar.
Section 6.3. Form and Dating. The Capital Securities and the
Institutional Trustee's certificate of authentication thereon shall be
substantially in the form of Exhibits A-1 and A-2, and the Common Securities
shall be substantially in the form of Exhibit A-3, each of which is hereby
incorporated in and expressly made a part of this Declaration. Certificates may
be typed, printed, lithographed or engraved or may be produced in any other
manner as is reasonably acceptable to the Administrators, as conclusively
evidenced by their execution thereof. The Securities may have letters, numbers,
notations or other marks of identification or designation and such legends or
endorsements required by law, stock exchange rule, agreements to which the Trust
is subject if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Sponsor). The Trust at the direction
of the Sponsor shall furnish any such legend not contained in Exhibits A-1 and
A-2 to the Institutional Trustee in writing. Each Capital Security shall be
dated on or before the date of its authentication. The terms and provisions of
the Securities set forth in Annex I and the forms of Securities set forth in
Exhibits A-1, A-2 and A-3 are part of the terms of this Declaration and to the
extent applicable, the Institutional Trustee, the Delaware Trustee, the
Administrators and the Sponsor, by their execution and delivery of this
Declaration, expressly agree to such terms and provisions and to be bound
thereby. Capital Securities will be issued only in blocks having a stated
liquidation amount of not less than $100,000.00 and any multiple of $1,000.00 in
excess thereof.
The Capital Securities are being offered and sold by the Trust pursuant
to the Placement Agreement in definitive, registered form without coupons and
with the Restricted Securities Legend.
Section 6.4. Book-Entry Capital Securities.
(a) A Global Capital Security may be exchanged, in whole or in
part, for Definitive Capital Securities Certificates registered in the names of
Owners only if such exchange complies with Article VIII and (i) the Depositary
advises the Administrators and the Institutional Trustee in writing that the
Depositary is no longer willing or able to properly discharge its
responsibilities with respect to the Global Capital Security, and no qualified
successor is appointed by the Administrators within ninety (90) days of receipt
of such notice, (ii) the Depositary ceases to be a clearing agency registered
under the Exchange Act and the Administrators fail to appoint a qualified
successor within ninety (90) days of obtaining knowledge of such event, (iii)
the Administrators at their option advise the Institutional Trustee in writing
that the Trust elects to terminate the book-entry system through the Depositary,
or (iv) an Indenture Event of Default has occurred and is continuing. Upon the
occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the
Administrators shall notify the Depositary and instruct the Depositary to notify
all Owners of Book-Entry Capital Securities and the Institutional Trustee of the
occurrence of such event and of the availability of Definitive Capital
Securities Certificates to Owners of the Capital Securities requesting the same.
Upon the issuance of Definitive Capital Securities Certificates, the
Administrators and the Institutional Trustee shall recognize the Holders of the
Definitive Capital Securities Certificates as Holders. Notwithstanding the
foregoing, if an Owner of a beneficial interest in a Global Capital Security
wishes at any time to transfer an interest in such Global Capital Security to a
Person other than a QIB, such transfer shall be effected, subject to the
Applicable Depositary Procedures, in accordance with the provisions of this
Section 6.4 and Article VIII, and the transferee shall receive a Definitive
Capital Securities Certificate in connection with such transfer. A holder of a
Definitive Capital Securities Certificate that is a QIB may upon request, and in
accordance with the provisions of this Section 6.4 and Article VIII, exchange
such Definitive Capital Securities Certificate for a beneficial interest in a
Global Capital Security.
(b) If any Global Capital Security is to be exchanged for
Definitive Capital Securities Certificates or canceled in part, or if any
Definitive Capital Securities Certificate is to be exchanged in whole or in part
for any Global Capital Security, then either (i) such Global Capital Security
shall be so surrendered for exchange or cancellation as provided in this Section
6.4 and Article VIII or (ii) the aggregate liquidation amount represented by
such Global Capital Security shall be reduced, subject to Section 6.3, or
increased by an amount equal to the liquidation amount represented by that
portion of the Global Capital Security to be so exchanged or canceled, or equal
to the liquidation amount represented by such Definitive Capital Securities
Certificates to be so exchanged for any Global Capital Security, as the case may
be, by means of an appropriate adjustment made on the records of the Registrar,
whereupon the Institutional Trustee, in accordance with the Applicable
Depositary Procedures, shall instruct the Depositary or its authorized
representative to make a corresponding adjustment to its records. Upon any such
surrender to the Administrators or the Registrar of any Global Capital Security
or Securities by the Depositary, accompanied by registration instructions, the
Administrators, or any one of them, shall execute the Definitive Capital
Securities Certificates in accordance with the instructions of the Depositary.
None of the Registrar, Administrators, or the Institutional Trustee shall 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.
(c) Every Definitive Capital Securities Certificate executed and
delivered upon registration or transfer of, or in exchange for or in lieu of, a
Global Capital Security or any portion thereof shall be executed and delivered
in the form of, and shall be, a Global Capital Security, unless such Definitive
Capital Securities Certificate is registered in the name of a Person other than
the Depositary for such Global Capital Security or a nominee thereof.
(d) The Depositary or its nominee, as registered owner of a Global
Capital Security, shall be the Holder of such Global Capital Security for all
purposes under this Declaration and the Global Capital Security, and Owners with
respect to a Global Capital Security shall hold such interests pursuant to the
Applicable Depositary Procedures. The Registrar, the Administrators and the
Institutional Trustee shall be entitled to deal with the Depositary for all
purposes of this Declaration relating to the Global Capital Securities
(including the payment of the liquidation amount of and Distributions on the
Book-Entry Capital Securities represented thereby and the giving of instructions
or directions by Owners of Book-Entry Capital Securities represented thereby and
the giving of notices) as the sole Holder of the Book-Entry Capital Securities
represented thereby and shall have no obligations to the Owners thereof. None of
the Administrators, the Institutional Trustee nor the Registrar shall have any
liability in respect of any transfers effected by the Depositary.
(e) The rights of the Owners of the Book-Entry Capital Securities
shall be exercised only through the Depositary and shall be limited to those
established by law, the Applicable Depositary Procedures and agreements between
such Owners and the Depositary and/or the Depositary Participants; provided,
however, solely for the purpose of determining whether the Holders of the
requisite amount of Capital Securities have voted on any matter provided for in
this Declaration, to the extent that Capital Securities are represented by a
Global Capital Security, the Administrators and the Institutional Trustee may
conclusively rely on, and shall be fully protected in relying on, any written
instrument (including a proxy) delivered to the Institutional Trustee by the
Depositary setting forth the Owners' votes or assigning the right to vote on any
matter to any other Persons either in whole or in part. To the extent that
Capital Securities are represented by a Global Capital Security, the initial
Depositary will make book-entry transfers among the Depositary Participants and
receive and transmit payments on the Capital Securities that are represented by
a Global Capital Security to such Depositary Participants, and none of the
Sponsor, the Administrators or the Institutional Trustee shall have any
responsibility or obligation with respect thereto.
(f) To the extent that a notice or other communication to the
Holders is required under this Declaration, for so long as Capital Securities
are represented by a Global Capital Security, the Administrator and the
Institutional Trustee shall give all such notices and communications to the
Depositary, and shall have no obligations to the Owners.
Section 6.5. Mutilated, Destroyed, Lost or Stolen Certificates.
If:
(a) any mutilated Certificates should be surrendered to the
Registrar, or if the Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Registrar, the Administrators
and the Institutional Trustee such security or indemnity as may be required by
them to keep each of them harmless;
then, in the absence of notice that such Certificate shall have been acquired by
a protected purchaser, an Administrator on behalf of the Trust shall execute
(and in the case of a Capital Security Certificate, the Institutional Trustee
shall authenticate) and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this
Section 6.5, the Registrar or the Administrators may require the payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith. Any duplicate Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership interest in the
relevant Securities, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
Section 6.6. Temporary Securities. Until definitive Securities are
ready for delivery, the Administrators may prepare and, in the case of the
Capital Securities, the Institutional Trustee shall authenticate, temporary
Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Administrators consider
appropriate for temporary Securities. Without unreasonable delay, the
Administrators shall prepare and, in the case of the Capital Securities, the
Institutional Trustee shall authenticate, definitive Securities in exchange for
temporary Securities.
Section 6.7. Cancellation. The Administrators at any time may
deliver Securities to the Institutional Trustee for cancellation. The Registrar
shall forward to the Institutional Trustee any Securities surrendered to it for
registration of transfer, redemption or payment. The Institutional Trustee shall
promptly cancel all Securities surrendered for registration of transfer,
payment, replacement or cancellation and shall dispose of such canceled
Securities as the Administrators direct. The Administrators may not issue new
Securities to replace Securities that have been paid or that have been delivered
to the Institutional Trustee for cancellation.
Section 6.8. CUSIP Numbers. The Trust in issuing the Securities may
use "CUSIP" numbers (if then generally in use), and, if so, the Institutional
Trustee shall use CUSIP numbers in notice of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of redemption and that
identification numbers printed on the Securities and any such redemption shall
not be affected by any defect in or omission of such numbers. The Trust shall
promptly notify the Institutional Trustee in writing of any change in the CUSIP
numbers.
Section 6.9. Rights of Holders; Waivers of Past Defaults.
(a) The legal title to the Trust Property is vested exclusively in
the Institutional Trustee (in its capacity as such) in accordance with Section
2.5, and the Holders shall not have any right or title therein other than the
undivided beneficial interest in the assets of the Trust conferred by their
Securities and they shall have no right to call for any partition or division of
property, profits or rights of the Trust except as described below. The
Securities shall be personal property giving only the rights specifically set
forth therein and in this Declaration. The Securities shall have no preemptive
or similar rights.
(b) For so long as any Capital Securities remain outstanding, if
upon an Acceleration Event of Default, the Debenture Trustee fails or the
holders of not less than 25% in principal amount of the outstanding Debentures
fail to declare the principal of all of the Debentures to be immediately due and
payable, the Holders of a Majority in liquidation amount of the Capital
Securities then outstanding shall have the right to make such declaration by a
notice in writing to the Institutional Trustee, the Sponsor and the Debenture
Trustee.
At any time after a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Debenture Trustee as provided in the
Indenture, if the Institutional Trustee, subject to the provisions hereof, fails
to annul any such declaration and waive such default, the Holders of a Majority
in liquidation amount of the Capital Securities, by written notice to the
Institutional Trustee, the Sponsor and the Debenture Trustee, may rescind and
annul such declaration and its consequences if:
(i) the Debenture Issuer has paid or deposited with the
Debenture Trustee a sum sufficient to pay
(A) all overdue installments of interest on all of the
Debentures,
(B) any accrued Additional Interest on all of the
Debentures,
(C) the principal of (and premium, if any, on) any
Debentures that have become due otherwise than by such
declaration of acceleration and interest and Additional
Interest thereon at the rate borne by the Debentures, and
(D) all sums paid or advanced by the Debenture Trustee
under the Indenture and the reasonable compensation, expenses,
disbursements and advances of the Debenture Trustee and the
Institutional Trustee, their agents and counsel; and
(ii) all Events of Default with respect to the Debentures,
other than the non-payment of the principal of the Debentures that
has become due solely by such acceleration, have been cured or waived
as provided in Section 5.7 of the Indenture.
The Holders of at least a Majority in liquidation amount of the Capital
Securities may, on behalf of the Holders of all the Capital Securities, waive
any past default under the Indenture or any Indenture Event of Default, except a
default or Indenture Event of Default in the payment of principal or interest on
the Debentures (unless such default or Indenture Event of Default has been cured
and a sum sufficient to pay all matured installments of interest and principal
due otherwise than by acceleration has been deposited with the Debenture
Trustee) or a default under the Indenture or an Indenture Event of Default in
respect of a covenant or provision that under the Indenture cannot be modified
or amended without the consent of the holder of each outstanding Debenture. No
such rescission shall affect any subsequent default or impair any right
consequent thereon.
Upon receipt by the Institutional Trustee of written notice declaring
such an acceleration, or rescission and annulment thereof, by Holders of any
part of the Capital Securities, a record date shall be established for
determining Holders of outstanding Capital Securities entitled to join in such
notice, which record date shall be at the close of business on the day the
Institutional Trustee receives such notice. The Holders on such record date, or
their duly designated proxies, and only such Persons, shall be entitled to join
in such notice, whether or not such Holders remain Holders after such record
date; provided, that unless such declaration of acceleration, or rescission and
annulment, as the case may be, shall have become effective by virtue of the
requisite percentage having joined in such notice prior to the day that is 90
days after such record date, such notice of declaration of acceleration, or
rescission and annulment, as the case may be, shall automatically and without
further action by any Holder be canceled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new written notice of declaration of
acceleration, or rescission and annulment thereof, as the case may be, that is
identical to a written notice that has been canceled pursuant to the proviso to
the preceding sentence, in which event a new record date shall be established
pursuant to the provisions of this Section 6.9.
(c) Except as otherwise provided in paragraphs (a) and (b) of this
Section 6.9, the Holders of at least a Majority in liquidation amount of the
Capital Securities may, on behalf of the Holders of all the Capital Securities,
waive any past default or Event of Default and its consequences. Upon such
waiver, any such default or Event of Default shall cease to exist, and any
default or Event of Default arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Event of Default or impair any right
consequent thereon.
ARTICLE VII
DISSOLUTION AND TERMINATION OF TRUST
Section 7.1. Dissolution and Termination of Trust.
(a) The Trust shall dissolve on the first to occur of:
(i) unless earlier dissolved, on December 15, 2041, the
expiration of the term of the Trust;
(ii) upon a Bankruptcy Event with respect to the Sponsor,
the Trust or the Debenture Issuer;
(iii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor (other than in connection with
a merger, consolidation or similar transaction not prohibited by the
Indenture, this Declaration or the Guarantee, as the case may be) or
upon the revocation of the charter of the Sponsor and the expiration
of 90 days after the date of revocation without a reinstatement
thereof;
(iv) upon the distribution of the Debentures to the Holders
of the Securities, upon exercise of the right of the Holder of all of
the outstanding Common Securities to dissolve the Trust as provided
in Annex I hereto;
(v) upon the entry of a decree of judicial dissolution of
the Holder of the Common Securities, the Sponsor, the Trust or the
Debenture Issuer;
(vi) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the
Securities; or
(vii) before the issuance of any Securities, with the consent
of all of the Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 7.1(a), and after satisfaction of liabilities to
creditors of the Trust as required by applicable law, including of the Statutory
Trust Act, and subject to the terms set forth in Annex I, the Institutional
Trustee shall terminate the Trust by filing a certificate of cancellation with
the Secretary of State of the State of Delaware.
(c) The provisions of Section 2.9 and Article IX shall survive
the termination of the Trust.
ARTICLE VIII
TRANSFER OF INTERESTS
Section 8.1. General.
(a) Subject to Section 8.1(c), where Capital Securities are
presented to the Registrar or a co-registrar with a request to register a
transfer or to exchange them for an equal number of Capital Securities
represented by different certificates, the Registrar shall register the transfer
or make the exchange if its requirements for such transactions are met. To
permit registrations of transfer and exchanges, the Trust shall issue and the
Institutional Trustee shall authenticate Capital Securities at the Registrar's
request.
(b) Upon issuance of the Common Securities, the Sponsor shall
acquire and retain beneficial and record ownership of the Common Securities and
for so long as the Securities remain outstanding, and to the fullest extent
permitted by applicable law, the Sponsor shall maintain 100% ownership of the
Common Securities; provided, however, that any permitted successor of the
Sponsor, in its capacity as Debenture Issuer, under the Indenture that is a U.S.
Person may succeed to the Sponsor's ownership of the Common Securities.
(c) Capital Securities may only be transferred, in whole or in
part, in accordance with the terms and conditions set forth in this Declaration
and in the terms of the Securities. To the fullest extent permitted by
applicable law, any transfer or purported transfer of any Security not made in
accordance with this Declaration shall be null and void and will be deemed to be
of no legal effect whatsoever and any such transferee shall be deemed not to be
the holder of such Capital Securities for any purpose, including but not limited
to the receipt of Distributions on such Capital Securities, and such transferee
shall be deemed to have no interest whatsoever in such Capital Securities.
(d) The Registrar shall provide for the registration of Securities
and of transfers of Securities, which will be effected without charge but only
upon payment (with such indemnity as the Registrar may require) in respect of
any tax or other governmental charges that may be imposed in relation to it.
Upon surrender for registration of transfer of any Securities, the Registrar
shall cause one or more new Securities of the same tenor to be issued in the
name of the designated transferee or transferees. Every Security surrendered for
registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by the Holder or
such Holder's attorney duly authorized in writing. Each Security surrendered for
registration of transfer shall be canceled by the Institutional Trustee pursuant
to Section 6.7. A transferee of a Security shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Security. By acceptance of a Security, each transferee shall be
deemed to have agreed to be bound by this Declaration.
(e) The Trust shall not be required (i) to issue, register the
transfer of, or exchange any Securities during a period beginning at the opening
of business fifteen days before the day of any selection of Securities for
redemption and ending at the close of business on the earliest date on which the
relevant notice of redemption is deemed to have been given to all Holders of the
Securities to be redeemed, or (ii) to register the transfer or exchange of any
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part.
Section 8.2. Transfer Procedures and Restrictions.
(a) The Capital Securities shall bear the Restricted Securities
Legend, which shall not be removed unless there is delivered to the Trust such
satisfactory evidence, which may include an opinion of counsel satisfactory to
the Institutional Trustee, as may be reasonably required by the Trust, that
neither the legend nor the restrictions on transfer set forth therein are
required to ensure that transfers thereof comply with the provisions of the
Securities Act. Upon provision of such satisfactory evidence, the Institutional
Trustee, at the written direction of the Trust, shall authenticate and deliver
Capital Securities that do not bear the legend.
(b) Except as permitted by Section 8.2(a), each Capital Security
shall bear a legend (the "Restricted Securities Legend") in substantially the
following form and a Capital Security shall not be transferred except in
compliance with such legend, unless otherwise determined by the Sponsor, upon
the advice of counsel expert in securities law, in accordance with applicable
law:
[If the Capital Security is to be Global Capital Security-
THIS CAPITAL SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF
THE DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC. THIS CAPITAL
SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED IN THE NAME
OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE DECLARATION, AND NO TRANSFER OF THIS
CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A
WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR
ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC TO FIRST BANK STATUTORY TRUST VII OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CAPITAL
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT HEREON 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.]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS
OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF
THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST,
(B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE
WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S
UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE
SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED
INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER
OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE
SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE
SPONSOR'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN
ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH MAY BE
OBTAINED FROM THE SPONSOR OR THE TRUST. HEDGING TRANSACTIONS INVOLVING
THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO
AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT,
INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO
TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE") (EACH A "PLAN"), OR AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S
INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF ANY
PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS
SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE
UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION
96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION
OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH
PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR
ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE
AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION
4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON
BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR
ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO
FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF
THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE
EXEMPTION.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN
BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100
SECURITIES) AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY
ATTEMPTED TRANSFER OF SECURITIES IN A BLOCK HAVING A LIQUIDATION
AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO
LEGAL EFFECT WHATSOEVER.
THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH
THE FOREGOING RESTRICTIONS.
(c) To permit registrations of transfers and exchanges, the Trust
shall execute and the Institutional Trustee shall authenticate Capital
Securities at the Registrar's request.
(d) Registrations of transfers or exchanges will be effected
without charge, but only upon payment (with such indemnity as the Registrar or
the Sponsor may require) in respect of any tax or other governmental charge that
may be imposed in relation to it.
(e) All Capital Securities issued upon any registration of
transfer or exchange pursuant to the terms of this Declaration shall evidence
the same security and shall be entitled to the same benefits under this
Declaration as the Capital Securities surrendered upon such registration of
transfer or exchange.
Section 8.3. Deemed Security Holders. The Trust, the Administrators,
the Trustees, the Paying Agent, the Transfer Agent or the Registrar may treat
the Person in whose name any Certificate shall be registered on the books and
records of the Trust as the sole holder of such Certificate and of the
Securities represented by such Certificate for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such
Certificate or in the Securities represented by such Certificate on the part of
any Person, whether or not the Trust, the Administrators, the Trustees, the
Paying Agent, the Transfer Agent or the Registrar shall have actual or other
notice thereof.
ARTICLE IX
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS
Section 9.1. Liability.
(a) Except as expressly set forth in this Declaration, the
Guarantee and the terms of the Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of
the capital contributions (or any return thereon) of the Holders of the
Securities which shall be made solely from assets of the Trust; or
(ii) required to pay to the Trust or to any Holder of the
Securities any deficit upon dissolution of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable for all of
the debts and obligations of the Trust (other than with respect to the
Securities) to the extent not satisfied out of the Trust's assets.
(c) Pursuant to the Statutory Trust Act, the Holders of the
Capital Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
Section 9.2. Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Trust or any Covered Person for any
loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf of the Trust and in a
manner such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Declaration or by law,
except that an Indemnified Person shall be liable for any such loss, damage or
claim incurred by reason of such Indemnified Person's negligence or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and, if selected by such Indemnified Person,
has been selected by such Indemnified Person with reasonable care by or on
behalf of the Trust, including information, opinions, reports or statements as
to the value and amount of the assets, liabilities, profits, losses, or any
other facts pertinent to the existence and amount of assets from which
Distributions to Holders of Securities might properly be paid.
Section 9.3. Fiduciary Duty.
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions of
this Declaration, to the extent that they restrict the duties and liabilities of
an Indemnified Person otherwise existing at law or in equity, are agreed by the
parties hereto to replace such other duties and liabilities of the Indemnified
Person.
(b) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and
shall have no duty or obligation to give any consideration to any
interest of or factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard,
the Indemnified Person shall act under such express standard and shall
not be subject to any other or different standard imposed by this
Declaration or by applicable law.
Section 9.4. Indemnification.
(a) The Sponsor shall indemnify, to the full extent permitted by
law, any Indemnified Person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the Trust) arising out of or in connection with the
acceptance or administration of this Declaration by reason of the fact that he
is or was an Indemnified Person against expenses (including reasonable
attorneys' fees and expenses), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the Indemnified
Person did not act in good faith and in a manner which he reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(b) The Sponsor shall indemnify, to the full extent permitted by
law, any Indemnified Person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or in the right
of the Trust to procure a judgment in its favor arising out of or in connection
with the acceptance or administration of this Declaration by reason of the fact
that he is or was an Indemnified Person against expenses (including reasonable
attorneys' fees and expenses) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Trust; provided, however, that no such indemnification
shall be made in respect of any claim, issue or matter as to which such
Indemnified Person shall have been adjudged to be liable to the Trust unless and
only to the extent that the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which such court shall deem proper.
(c) To the extent that an Indemnified Person shall be successful
on the merits or otherwise (including dismissal of an action without prejudice
or the settlement of an action without admission of liability) in defense of any
action, suit or proceeding referred to in paragraphs (a) and (b) of this Section
9.4, or in defense of any claim, issue or matter therein, he shall be
indemnified, to the full extent permitted by law, against expenses (including
attorneys' fees and expenses) actually and reasonably incurred by him in
connection therewith.
(d) Any indemnification of an Administrator under paragraphs (a)
and (b) of this Section 9.4 (unless ordered by a court) shall be made by the
Sponsor only as authorized in the specific case upon a determination that
indemnification of the Indemnified Person is proper in the circumstances because
he has met the applicable standard of conduct set forth in paragraphs (a) and
(b). Such determination shall be made (i) by the Administrators by a majority
vote of a Quorum consisting of such Administrators who were not parties to such
action, suit or proceeding, (ii) if such a Quorum is not obtainable, or, even if
obtainable, if a Quorum of disinterested Administrators so directs, by
independent legal counsel in a written opinion, or (iii) by the Common Security
Holder of the Trust.
(e) To the fullest extent permitted by law, expenses (including
reasonable attorneys' fees and expenses) incurred by an Indemnified Person in
defending a civil, criminal, administrative or investigative action, suit or
proceeding referred to in paragraphs (a) and (b) of this Section 9.4 shall be
paid by the Sponsor in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such Indemnified
Person to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Sponsor as authorized in this Section 9.4.
Notwithstanding the foregoing, no advance shall be made by the Sponsor if a
determination is reasonably and promptly made (i) by the Administrators by a
majority vote of a Quorum of disinterested Administrators, (ii) if such a Quorum
is not obtainable, or, even if obtainable, if a quorum of disinterested
Administrators so directs, by independent legal counsel in a written opinion or
(iii) by the Common Security Holder of the Trust, that, based upon the facts
known to the Administrators, counsel or the Common Security Holder at the time
such determination is made, such Indemnified Person acted in bad faith or in a
manner that such Indemnified Person did not believe to be in the best interests
of the Trust, or, with respect to any criminal proceeding, that such Indemnified
Person believed or had reasonable cause to believe his conduct was unlawful. In
no event shall any advance be made in instances where the Administrators,
independent legal counsel or the Common Security Holder reasonably determine
that such Indemnified Person deliberately breached his duty to the Trust or its
Common or Capital Security Holders.
(f) The Trustees, at the sole cost and expense of the Sponsor,
retain the right to representation by counsel of their own choosing in any
action, suit or any other proceeding for which they are indemnified under
paragraphs (a) and (b) of this Section 9.4, without affecting their right to
indemnification hereunder or waiving any rights afforded to it under this
Declaration or applicable law.
(g) The indemnification and advancement of expenses provided by,
or granted pursuant to, the other paragraphs of this Section 9.4 shall not be
deemed exclusive of any other rights to which those seeking indemnification and
advancement of expenses may be entitled under any agreement, vote of
stockholders or disinterested directors of the Sponsor or Capital Security
Holders of the Trust or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office. All rights to
indemnification under this Section 9.4 shall be deemed to be provided by a
contract between the Sponsor and each Indemnified Person who serves in such
capacity at any time while this Section 9.4 is in effect. Any repeal or
modification of this Section 9.4 shall not affect any rights or obligations then
existing.
(h) The Sponsor or the Trust may purchase and maintain insurance
on behalf of any Person who is or was an Indemnified Person against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Sponsor would have the
power to indemnify him against such liability under the provisions of this
Section 9.4.
(i) For purposes of this Section 9.4, references to "the Trust"
shall include, in addition to the resulting or surviving entity, any constituent
entity (including any constituent of a constituent) absorbed in a consolidation
or merger, so that any Person who is or was a director, trustee, officer or
employee of such constituent entity, or is or was serving at the request of such
constituent entity as a director, trustee, officer, employee or agent of another
entity, shall stand in the same position under the provisions of this Section
9.4 with respect to the resulting or surviving entity as he would have with
respect to such constituent entity if its separate existence had continued.
(j) The indemnification and advancement of expenses provided by,
or granted pursuant to, this Section 9.4 shall, unless otherwise provided when
authorized or ratified, (i) continue as to a Person who has ceased to be an
Indemnified Person and shall inure to the benefit of the heirs, executors and
administrators of such a Person; and (ii) survive the termination or expiration
of this Declaration or the earlier removal or resignation of an Indemnified
Person.
Section 9.5. Outside Businesses. Any Covered Person, the Sponsor,
the Delaware Trustee and the Institutional Trustee may engage in or possess an
interest in other business ventures of any nature or description, independently
or with others, similar or dissimilar to the business of the Trust, and the
Trust and the Holders of Securities shall have no rights by virtue of this
Declaration in and to such independent ventures or the income or profits derived
therefrom, and the pursuit of any such venture, even if competitive with the
business of the Trust, shall not be deemed wrongful or improper. None of any
Covered Person, the Sponsor, the Delaware Trustee or the Institutional Trustee
shall be obligated to present any particular investment or other opportunity to
the Trust even if such opportunity is of a character that, if presented to the
Trust, could be taken by the Trust, and any Covered Person, the Sponsor, the
Delaware Trustee and the Institutional Trustee shall have the right to take for
its own account (individually or as a partner or fiduciary) or to recommend to
others any such particular investment or other opportunity. Any Covered Person,
the Delaware Trustee and the Institutional Trustee may engage or be interested
in any financial or other transaction with the Sponsor or any Affiliate of the
Sponsor, or may act as depositary for, trustee or agent for, or act on any
committee or body of holders of, securities or other obligations of the Sponsor
or its Affiliates.
Section 9.6. Compensation; Fee. The Sponsor agrees:
(a) to pay to the Trustees from time to time such compensation for
all services rendered by them hereunder as the parties shall agree from time to
time (which compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust); and
(b) except as otherwise expressly provided herein, to reimburse
the Trustees upon request for all reasonable expenses, disbursements and
advances incurred or made by the Trustees in accordance with any provision of
this Declaration (including the reasonable compensation and the expenses and
disbursements of their respective agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, bad faith or
willful misconduct.
For purposes of clarification, this Section 9.6 does not contemplate
the payment by the Sponsor of acceptance or annual administration fees owing to
the Trustees under this Declaration or the fees and expenses of the Trustees'
counsel in connection with the closing of the transactions contemplated by this
Declaration.
The provisions of this Section 9.6 shall survive the dissolution of the
Trust and the termination of this Declaration and the removal or resignation of
any Trustee.
No Trustee may claim any lien or charge on any property of the Trust as
a result of any amount due pursuant to this Section 9.6.
ARTICLE X
ACCOUNTING
Section 10.1. Fiscal Year. The fiscal year ("Fiscal Year") of the
Trust shall be the calendar year, or such other year as is required by the Code.
Section 10.2. Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Administrators shall keep, or cause to be kept at the principal office of the
Trust in the United States, as defined for purposes of Treasury Regulations
section 301.7701-7, full books of account, records and supporting documents,
which shall reflect in reasonable detail each transaction of the Trust. The
books of account shall be maintained, at the Sponsor's expense, in accordance
with generally accepted accounting principles, consistently applied. The books
of account and the records of the Trust shall be examined by and reported upon
(either separately or as part of the Sponsor's regularly prepared consolidated
financial report) as of the end of each Fiscal Year of the Trust by a firm of
independent certified public accountants selected by the Administrators.
(b) The Administrators shall cause to be duly prepared and
delivered to each of the Holders of Securities Form 1099 or such other annual
United States federal income tax information statement required by the Code,
containing such information with regard to the Securities held by each Holder as
is required by the Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date, the Administrators
shall endeavor to deliver all such statements within 30 days after the end of
each Fiscal Year of the Trust.
(c) The Administrators, at the Sponsor's expense, shall cause to
be duly prepared at the principal office of the Sponsor in the United States, as
`United States' is defined in Section 7701(a)(9) of the Code (or at the
principal office of the Trust if the Sponsor has no such principal office in the
United States), and filed an annual United States federal income tax return on a
Form 1041 or such other form required by United States federal income tax law,
and any other annual income tax returns required to be filed by the
Administrators on behalf of the Trust with any state or local taxing authority.
Section 10.3. Banking. The Trust shall maintain in the United States,
as defined for purposes of Treasury Regulations section 301.7701-7, one or more
bank accounts in the name and for the sole benefit of the Trust; provided,
however, that all payments of funds in respect of the Debentures held by the
Institutional Trustee shall be made directly to the Property Account and no
other funds of the Trust shall be deposited in the Property Account. The sole
signatories for such accounts (including the Property Account) shall be
designated by the Institutional Trustee.
Section 10.4. Withholding. The Institutional Trustee or any Paying
Agent and the Administrators shall comply with all withholding requirements
under United States federal, state and local law. The Institutional Trustee or
any Paying Agent shall request, and each Holder shall provide to the
Institutional Trustee or any Paying Agent, such forms or certificates as are
necessary to establish an exemption from withholding with respect to the Holder,
and any representations and forms as shall reasonably be requested by the
Institutional Trustee or any Paying Agent to assist it in determining the extent
of, and in fulfilling, its withholding obligations. The Administrators shall
file required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Institutional Trustee or any Paying Agent is required to withhold and pay over
any amounts to any authority with respect to distributions or allocations to any
Holder, the amount withheld shall be deemed to be a Distribution in the amount
of the withholding to the Holder. In the event of any claimed overwithholding,
Holders shall be limited to an action against the applicable jurisdiction. If
the amount required to be withheld was not withheld from actual Distributions
made, the Institutional Trustee or any Paying Agent may reduce subsequent
Distributions by the amount of such withholding.
ARTICLE XI
AMENDMENTS AND MEETINGS
Section 11.1. Amendments.
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed (i) by the Institutional Trustee, or
(ii) if the amendment affects the rights, powers, duties, obligations or
immunities of the Delaware Trustee, by the Delaware Trustee.
(b) Notwithstanding any other provision of this Article XI,
an amendment may be made, and any such purported amendment shall be valid and
effective only if:
(i) the Institutional Trustee shall have first received
(A) an Officers' Certificate from each of the Trust and
the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the
terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the
Sponsor or the Trust) that such amendment is permitted by,
and conforms to, the terms of this Declaration (including
the terms of the Securities); and
(ii) the result of such amendment would not be to
(A) cause the Trust to cease to be classified for
purposes of United States federal income taxation as a
grantor trust; or
(B) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment
Company Act.
(c) Except as provided in Section 11.1(d), (e) or (h), no
amendment shall be made, and any such purported amendment shall be void and
ineffective, unless the Holders of a Majority in liquidation amount of the
Capital Securities shall have consented to such amendment.
(d) In addition to and notwithstanding any other provision in this
Declaration, without the consent of each affected Holder, this Declaration may
not be amended to (i) change the amount or timing of any Distribution on the
Securities or otherwise adversely affect the amount of any Distribution required
to be made in respect of the Securities as of a specified date or change any
conversion or exchange provisions or (ii) restrict the right of a Holder to
institute suit for the enforcement of any such payment on or after such date.
(e) Sections 9.1(b) and 9.1(c) and this Section 11.1 shall not be
amended without the consent of all of the Holders of the Securities.
(f) Article III shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities.
(g) The rights of the Holders of the Capital Securities under
Article IV to appoint and remove Trustees shall not be amended without the
consent of the Holders of a Majority in liquidation amount of the Capital
Securities.
(h) This Declaration may be amended by the Institutional Trustee
and the Holders of a Majority in liquidation amount of the Common Securities
without the consent of the Holders of the Capital Securities to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other provision of this
Declaration;
(iii) add to the covenants, restrictions or obligations of
the Sponsor; or
(iv) modify, eliminate or add to any provision of this
Declaration to such extent as may be necessary to ensure that the
Trust will be classified for United States federal income tax purposes
at all times as a grantor trust and will not be required to register
as an Investment Company (including without limitation to conform to
any change in Rule 3a-5, Rule 3a-7 or any other applicable rule under
the Investment Company Act or written change in interpretation or
application thereof by any legislative body, court, government agency
or regulatory authority) which amendment does not have a material
adverse effect on the rights, preferences or privileges of the Holders
of Securities;
provided, however, that no such modification, elimination or addition
referred to in clauses (i), (ii), (iii) or (iv) shall adversely affect in any
material respect the powers, preferences or special rights of Holders of Capital
Securities.
Section 11.2. Meetings of the Holders of Securities; Action by
Written Consent.
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Administrators (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration or the terms
of the Securities. The Administrators shall call a meeting of the Holders of
such class if directed to do so by the Holders of at least 10% in liquidation
amount of such class of Securities. Such direction shall be given by delivering
to the Administrators one or more calls in a writing stating that the signing
Holders of the Securities wish to call a meeting and indicating the general or
specific purpose for which the meeting is to be called. Any Holders of the
Securities calling a meeting shall specify in writing the Certificates held by
the Holders of the Securities exercising the right to call a meeting and only
those Securities represented by such Certificates shall be counted for purposes
of determining whether the required percentage set forth in the second sentence
of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of the
Securities:
(i) notice of any such meeting shall be given to all the
Holders of the Securities having a right to vote thereat at least 7
days and not more than 60 days before the date of such meeting.
Whenever a vote, consent or approval of the Holders of the Securities
is permitted or required under this Declaration, such vote, consent or
approval may be given at a meeting of the Holders of the Securities.
Any action that may be taken at a meeting of the Holders of the
Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of the
Securities owning not less than the minimum amount of Securities in
liquidation amount that would be necessary to authorize or take such
action at a meeting at which all Holders of the Securities having a
right to vote thereon were present and voting. Prompt notice of the
taking of action without a meeting shall be given to the Holders of
the Securities entitled to vote who have not consented in writing. The
Administrators may specify that any written ballot submitted to the
Holders of the Securities for the purpose of taking any action without
a meeting shall be returned to the Trust within the time specified by
the Administrators;
(ii) each Holder of a Security may authorize any Person to
act for it by proxy on all matters in which a Holder of Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after
the expiration of 11 months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure
of the Holder of the Securities executing it. Except as otherwise
provided herein, all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation Law
of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a
Delaware corporation; each meeting of the Holders of the Securities
shall be conducted by the Administrators or by such other Person that
the Administrators may designate; and
(iii) unless the Statutory Trust Act, this Declaration, or
the terms of the Securities otherwise provides, the Administrators,
in their sole discretion, shall establish all other provisions relating
to meetings of Holders of Securities, including notice of the time,
place or purpose of any meeting at which any matter is to be voted on
by any Holders of the Securities, waiver of any such notice, action by
consent without a meeting, the establishment of a record date, quorum
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote; provided, however,
that each meeting shall be conducted in the United States (as that
term is defined in Treasury Regulations section 301.7701-7).
ARTICLE XII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE AND THE DELAWARE TRUSTEE
Section 12.1. Representations and Warranties of Institutional
Trustee. The initial Institutional Trustee represents and warrants to the Trust
and to the Sponsor at the date of this Declaration, and each Successor
Institutional Trustee represents and warrants to the Trust and the Sponsor at
the time of the Successor Institutional Trustee's acceptance of its appointment
as Institutional Trustee, that:
(a) the Institutional Trustee is a Delaware banking corporation
with trust powers, duly organized and validly existing under the laws of the
State of Delaware with trust power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, this Declaration;
(b) the execution, delivery and performance by the Institutional
Trustee of this Declaration has been duly authorized by all necessary corporate
action on the part of the Institutional Trustee. This Declaration has been duly
executed and delivered by the Institutional Trustee, and it constitutes a legal,
valid and binding obligation of the Institutional Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity (regardless of
whether considered in a proceeding in equity or at law);
(c) the execution, delivery and performance of this Declaration by
the Institutional Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Institutional Trustee; and
(d) no consent, approval or authorization of, or registration with
or notice to, any state or federal banking authority is required for the
execution, delivery or performance by the Institutional Trustee of this
Declaration.
Section 12.2. Representations of the Delaware Trustee. The Trustee
that acts as initial Delaware Trustee represents and warrants to the Trust and
to the Sponsor at the date of this Declaration, and each Successor Delaware
Trustee represents and warrants to the Trust and the Sponsor at the time of the
Successor Delaware Trustee's acceptance of its appointment as Delaware Trustee
that:
(a) if it is not a natural person, the Delaware Trustee is duly
organized, validly existing and in good standing under the laws of the State of
Delaware;
(b) if it is not a natural person, the execution, delivery and
performance by the Delaware Trustee of this Declaration has been duly authorized
by all necessary corporate action on the part of the Delaware Trustee. This
Declaration has been duly executed and delivered by the Delaware Trustee, and
under Delaware law (excluding any securities laws) constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether considered in a proceeding in equity or at law);
(c) if it is not a natural person, the execution, delivery and
performance of this Declaration by the Delaware Trustee does not conflict with
or constitute a breach of the charter or by-laws of the Delaware Trustee;
(d) it has trust power and authority to execute and deliver, and
to carry out and perform its obligations under the terms of, this Declaration;
(e) no consent, approval or authorization of, or registration
with or notice to, any state or federal banking authority governing the trust
powers of the Delaware Trustee is required for the execution, delivery or
performance by the Delaware Trustee of this Declaration; and
(f) the Delaware Trustee is a natural person who is a resident of
the State of Delaware or, if not a natural person, it is an entity which has its
principal place of business in the State of Delaware and, in either case, a
Person that satisfies for the Trust the requirements of Section 3807 of the
Statutory Trust Act.
ARTICLE XIII
MISCELLANEOUS
Section 13.1. Notices. All notices provided for in this Declaration
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied (which telecopy shall be followed by notice delivered or
mailed by first class mail) or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrators at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Securities):
First Bank Statutory Trust VII
c/o First Banks, Inc.
600 James S. McDonnell Boulevard
Mail Stop M1 199 014
Hazelwood, Missouri 63042
Attention: Lisa K. Vansickle
Telecopy: 314-592-6621
(b)
if given to the Delaware Trustee, at the Delaware Trustee's mailing
address set forth below (or such other address as the Delaware Trustee may give
notice of to the Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-1600
Attention: Corporate Trust Administration
Telecopy: 302-636-4140
(c) if given to the Institutional Trustee, at the Institutional
Trustee's mailing address set forth below (or such other address as the
Institutional Trustee may give notice of to the Holders of the Securities):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-1600
Attention: Corporate Trust Administration
Telecopy: 302-636-4140
(d) if given to the Holder of the Common Securities, at the
mailing address of the Sponsor set forth below (or such other address as the
Holder of the Common Securities may give notice of to the Trust):
First Banks, Inc.
600 James S. McDonnell Boulevard
Mail Stop M1 199 014
Hazelwood, Missouri 63042
Attention: Lisa K. Vansickle
Telecopy: 314-592-6621
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
Section 13.2. Governing Law. This Declaration and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
law of the State of Delaware and all rights and remedies shall be governed by
such laws without regard to the principles of conflict of laws of the State of
Delaware or any other jurisdiction that would call for the application of the
law of any jurisdiction other than the State of Delaware; provided, however,
that there shall not be applicable to the Trust, the Trustees or this
Declaration any provision of the laws (statutory or common) of the State of
Delaware pertaining to trusts that relate to or regulate, in a manner
inconsistent with the terms hereof (a) the filing with any court or governmental
body or agency of trustee accounts or schedules of trustee fees and charges, (b)
affirmative requirements to post bonds for trustees, officers, agents or
employees of a trust, (c) the necessity for obtaining court or other
governmental approval concerning the acquisition, holding or disposition of real
or personal property, (d) fees or other sums payable to trustees, officers,
agents or employees of a trust, (e) the allocation of receipts and expenditures
to income or principal, or (f) restrictions or limitations on the permissible
nature, amount or concentration of trust investments or requirements relating to
the titling, storage or other manner of holding or investing trust assets.
Section 13.3. Intention of the Parties. It is the intention of the
parties hereto that the Trust be classified for United States federal income tax
purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
Section 13.4. Headings. Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.
Section 13.5. Successors and Assigns. Whenever in this Declaration
any of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements in
this Declaration by the Sponsor and the Trustees shall bind and inure to the
benefit of their respective successors and assigns, whether or not so expressed.
Section 13.6. Partial Enforceability. If any provision of this
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
Section 13.7. Counterparts. This Declaration may contain more than
one counterpart of the signature page and this Declaration may be executed by
the affixing of the signature of each of the Trustees and Administrators to any
of such counterpart signature pages. All of such counterpart signature pages
shall be read as though one, and they shall have the same force and effect as
though all of the signers had signed a single signature page.
Signatures appear on the following page
IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.
WILMINGTON TRUST COMPANY,
as Delaware Trustee
By: /s/ Christopher J. Monigle
------------------------------------------------
Name: Christopher J. Monigle
Title: Vice President
WILMINGTON TRUST COMPANY,
as Institutional Trustee
By: /s/ Christopher J. Monigle
------------------------------------------------
Name: Christopher J. Monigle
Title: Vice President
FIRST BANKS, INC., as Sponsor
By: /s/ Lisa K. Vansickle
------------------------------------------------
Name: Lisa K. Vansickle
Title: Senior Vice President
ADMINISTRATORS OF FIRST BANK STATUTORY TRUST VII
By: /s/ Lisa K. Vansickle
------------------------------------------------
Administrator
By: /s/ Terrance M. McCarthy
------------------------------------------------
Administrator
By: /s/ Peter D. Wimmer
------------------------------------------------
Administrator
ANNEX I
TERMS OF SECURITIES
Pursuant to Section 6.1 of the Amended and Restated Declaration
of Trust, dated as of December 14, 2006 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration):
1. Designation and Number.
(a) 50,000 Floating Rate Capital Securities of First Bank
Statutory Trust VII (the "Trust"), with an aggregate stated liquidation amount
with respect to the assets of the Trust of fifty million dollars
($50,000,000.00) and a stated liquidation amount with respect to the assets of
the Trust of $1,000.00 per Capital Security, are hereby designated for the
purposes of identification only as the "Capital Securities". The Capital
Security Certificates evidencing the Capital Securities shall be substantially
in the form of Exhibits A-1 and A-2 to the Declaration, with such changes and
additions thereto or deletions therefrom as may be required by ordinary usage,
custom or practice.
(b) 1,547 Floating Rate Common Securities of the Trust (the
"Common Securities") will be evidenced by Common Security Certificates
substantially in the form of Exhibit A-3 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be required by ordinary
usage, custom or practice.
2. Distributions.
(a) Distributions will be payable on each Security for the
Distribution Period beginning on (and including) the date of original issuance
and ending on (but excluding) the Distribution Payment Date in March 2007 at a
rate per annum of 7.20% and shall bear interest for each successive Distribution
Period beginning on (and including) the Distribution Payment Date in March 2007,
and each succeeding Distribution Payment Date, and ending on (but excluding) the
next succeeding Distribution Payment Date at a rate per annum equal to the
3-Month LIBOR, determined as described below, plus 1.85% (the "Coupon Rate"),
applied to the stated liquidation amount thereof, such rate being the rate of
interest payable on the Debentures to be held by the Institutional Trustee.
Distributions in arrears will bear interest thereon compounded quarterly at the
applicable Distribution Rate (to the extent permitted by law). Distributions, as
used herein, include cash distributions and any such compounded distributions
unless otherwise noted. A Distribution is payable only to the extent that
payments are made in respect of the Debentures held by the Institutional Trustee
and to the extent the Institutional Trustee has funds available therefor. The
amount of the Distribution payable for any Distribution Period will be
calculated by applying the Distribution Rate to the stated liquidation amount
outstanding at the commencement of the Distribution Period on the basis of the
actual number of days in the Distribution Period concerned divided by 360. All
percentages resulting from any calculations on the Capital Securities will be
rounded, if necessary, to the nearest one hundred-thousandth of a percentage
point, with five one-millionths of a percentage point rounded upward (e.g.,
9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all dollar
amounts used in or resulting from such calculation will be rounded to the
nearest cent (with one-half cent being rounded upward)).
(b) Distributions on the Securities will be cumulative, will
accrue from the date of original issuance, and will be payable, subject to
extension of distribution payment periods as described herein, quarterly in
arrears on March 15, June 15, September 15 and December 15 of each year, or if
such day is not a Business Day, then the next succeeding Business Day (each a
"Distribution Payment Date") (it being understood that interest accrues for any
such non-Business Day), commencing on the Distribution Payment Date in March
2007 when, as and if available for payment. The Debenture Issuer has the right
under the Indenture to defer payments of interest on the Debentures, so long as
no Acceleration Event of Default has occurred and is continuing, by deferring
the payment of interest on the Debentures for up to 20 consecutive quarterly
periods (each an "Extension Period") at any time and from time to time, subject
to the conditions described below, during which Extension Period no interest
shall be due and payable. During any Extension Period, interest will continue to
accrue on the Debentures, and interest on such accrued interest will accrue at
an annual rate equal to the Distribution Rate in effect for each such Extension
Period, compounded quarterly from the date such interest would have been payable
were it not for the Extension Period, to the extent permitted by law (such
interest referred to herein as "Additional Interest"). No Extension Period may
end on a date other than a Distribution Payment Date. At the end of any such
Extension Period, the Debenture Issuer shall pay all interest then accrued and
unpaid on the Debentures (together with Additional Interest thereon); provided,
however, that no Extension Period may extend beyond the Maturity Date and
provided further, however, that during any such Extension Period, the Debenture
Issuer and its Affiliates shall not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Debenture Issuer's or its Affiliates' capital stock
(other than payments of dividends or distributions to the Debenture Issuer) or
make any guarantee payments with respect to the foregoing, or (ii) make any
payment of principal of or interest or premium, if any, on or repay, repurchase
or redeem any debt securities of the Debenture Issuer or any Affiliate that rank
pari passu in all respects with or junior in interest to the Debentures (other
than, with respect to clauses (i) and (ii) above, (a) repurchases, redemptions
or other acquisitions of shares of capital stock of the Debenture Issuer in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Debenture Issuer (or securities convertible into or exercisable for
such capital stock) as consideration in an acquisition transaction entered into
prior to the applicable Extension Period, (b) as a result of any exchange or
conversion of any class or series of the Debenture Issuer's capital stock (or
any capital stock of a subsidiary of the Debenture Issuer) for any class or
series of the Debenture Issuer's capital stock or of any class or series of the
Debenture Issuer's indebtedness for any class or series of the Debenture
Issuer's capital stock, (c) the purchase of fractional interests in shares of
the Debenture Issuer's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged,
(d) any declaration of a dividend in connection with any stockholders' rights
plan, or the issuance of rights, stock or other property under any stockholders'
rights plan, or the redemption or repurchase of rights pursuant thereto, (e) any
dividend in the form of stock, warrants, options or other rights where the
dividend stock or the stock issuable upon exercise of such warrants, options or
other rights is the same stock as that on which the dividend is being paid or
ranks pari passu with or junior to such stock and any cash payments in lieu of
fractional shares issued in connection therewith, or (f) payments under the
Capital Securities Guarantee). Prior to the termination of any Extension Period,
the Debenture Issuer may further extend such period, provided that such period
together with all such previous and further consecutive extensions thereof shall
not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date.
Upon the termination of any Extension Period and upon the payment of all accrued
and unpaid interest and Additional Interest, the Debenture Issuer may commence a
new Extension Period, subject to the foregoing requirements. No interest or
Additional Interest shall be due and payable during an Extension Period, except
at the end thereof, but each installment of interest that would otherwise have
been due and payable during such Extension Period shall bear Additional
Interest. During any Extension Period, Distributions on the Securities shall be
deferred for a period equal to the Extension Period. If Distributions are
deferred, the Distributions due shall be paid on the date that the related
Extension Period terminates to Holders of the Securities as they appear on the
books and records of the Trust on the record date immediately preceding such
date. Distributions on the Securities must be paid on the dates payable (after
giving effect to any Extension Period) to the extent that the Trust has funds
available for the payment of such distributions in the Property Account of the
Trust. The Trust's funds available for Distribution to the Holders of the
Securities will be limited to payments received from the Debenture Issuer. The
payment of Distributions out of moneys held by the Trust is guaranteed by the
Guarantor pursuant to the Guarantee.
(c) Distributions on the Securities will be payable to the
Holders thereof as they appear on the books and records of the Trust on the
relevant record dates. The relevant record dates shall be fifteen days before
the relevant Distribution Payment Date. Distributions payable on any Securities
that are not punctually paid on any Distribution Payment Date, as a result of
the Debenture Issuer having failed to make a payment under the Debentures, as
the case may be, when due (taking into account any Extension Period), will cease
to be payable to the Person in whose name such Securities are registered on the
relevant record date, and such defaulted Distribution will instead be payable to
the Person in whose name such Securities are registered on the special record
date or other specified date determined in accordance with the Indenture.
(d) In the event that there is any money or other property
held by or for the Trust that is not accounted for hereunder, such property
shall be distributed Pro Rata (as defined herein) among the Holders of the
Securities.
3. Liquidation Distribution Upon Dissolution. In the event of the
voluntary or involuntary liquidation, dissolution, winding-up or termination of
the Trust (each a "Liquidation") other than in connection with a redemption of
the Debentures, the Holders of the Securities will be entitled to receive out of
the assets of the Trust available for distribution to Holders of the Securities,
after satisfaction of liabilities to creditors of the Trust (to the extent not
satisfied by the Debenture Issuer), distributions equal to the aggregate of the
stated liquidation amount of $1,000.00 per Security plus accrued and unpaid
Distributions thereon to the date of payment (such amount being the "Liquidation
Distribution"), unless in connection with such Liquidation, the Debentures in an
aggregate stated principal amount equal to the aggregate stated liquidation
amount of such Securities, with an interest rate equal to the Distribution Rate
of, and bearing accrued and unpaid interest in an amount equal to the accrued
and unpaid Distributions on, and having the same record date as, such
Securities, after paying or making reasonable provision to pay all claims and
obligations of the Trust in accordance with the Statutory Trust Act, shall be
distributed on a Pro Rata basis to the Holders of the Securities in exchange for
such Securities.
The Sponsor, as the Holder of all of the Common Securities, has the
right at any time to dissolve the Trust (including, without limitation, upon the
occurrence of a Special Event), subject to the receipt by the Debenture Issuer
of prior approval from the Board of Governors of the Federal Reserve System, or
its designated district bank, as applicable, and any successor federal agency
that is primarily responsible for regulating the activities of the Sponsor (the
"Federal Reserve"), if the Sponsor is a bank holding company, or from the Office
of Thrift Supervision and any successor federal agency that is primarily
responsible for regulating the activities of Sponsor, (the "OTS") if the Sponsor
is a savings and loan holding company, in either case if then required under
applicable capital guidelines or policies of the Federal Reserve or OTS, as
applicable, and, after satisfaction of liabilities to creditors of the Trust,
cause the Debentures to be distributed to the Holders of the Securities on a Pro
Rata basis in accordance with the aggregate stated liquidation amount thereof.
If a Liquidation of the Trust occurs as described in clause (i), (ii),
(iii) or (v) in Section 7.1(a) of the Declaration, the Trust shall be liquidated
by the Institutional Trustee as expeditiously as it determines to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust, to
the Holders of the Securities, the Debentures on a Pro Rata basis to the extent
not satisfied by the Debenture Issuer, unless such distribution is determined by
the Institutional Trustee not to be practical, in which event such Holders will
be entitled to receive out of the assets of the Trust available for distribution
to the Holders, after satisfaction of liabilities of creditors of the Trust to
the extent not satisfied by the Debenture Issuer, an amount equal to the
Liquidation Distribution. An early Liquidation of the Trust pursuant to clause
(iv) of Section 7.1(a) of the Declaration shall occur if the Institutional
Trustee determines that such Liquidation is possible by distributing, after
satisfaction of liabilities to creditors of the Trust, to the Holders of the
Securities on a Pro Rata basis, the Debentures, and such distribution occurs.
If, upon any such Liquidation the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on such Capital Securities shall be paid to the Holders of the Trust
Securities on a Pro Rata basis, except that if an Event of Default has occurred
and is continuing, the Capital Securities shall have a preference over the
Common Securities with regard to such distributions.
After the date for any distribution of the Debentures upon dissolution
of the Trust (i) the Securities of the Trust will be deemed to be no longer
outstanding, (ii) upon surrender of a Holder's Securities certificate, such
Holder of the Securities will receive a certificate representing the Debentures
to be delivered upon such distribution, (iii) any certificates representing the
Securities still outstanding will be deemed to represent undivided beneficial
interests in such of the Debentures as have an aggregate principal amount equal
to the aggregate stated liquidation amount with an interest rate identical to
the Distribution Rate of, and bearing accrued and unpaid interest equal to
accrued and unpaid distributions on, the Securities until such certificates are
presented to the Debenture Issuer or its agent for transfer or reissuance (and
until such certificates are so surrendered, no payments of interest or principal
shall be made to Holders of Securities in respect of any payments due and
payable under the Debentures; provided, however that such failure to pay shall
not be deemed to be an Event of Default and shall not entitle the Holder to the
benefits of the Guarantee), and (iv) all rights of Holders of Securities under
the Declaration shall cease, except the right of such Holders to receive
Debentures upon surrender of certificates representing such Securities.
4. Redemption and Distribution.
(a) The Debentures will mature on December 15, 2036. The
Debentures may be redeemed by the Debenture Issuer, in whole or in part, at any
Distribution Payment Date on or after the Distribution Payment Date in December
2011, at the Redemption Price. In addition, the Debentures may be redeemed by
the Debenture Issuer at the Special Redemption Price, in whole but not in part,
at any Distribution Payment Date, upon the occurrence and continuation of a
Special Event within 120 days following the occurrence of such Special Event at
the Special Redemption Price, upon not less than 30 nor more than 60 days'
notice to holders of such Debentures so long as such Special Event is
continuing. In each case, the right of the Debenture Issuer to redeem the
Debentures is subject to the Debenture Issuer having received prior approval
from the Federal Reserve (if the Debenture Issuer is a bank holding company) or
prior approval from the OTS (if the Debenture Issuer is a savings and loan
holding company), in each case if then required under applicable capital
guidelines or policies of the applicable federal agency.
"3-Month LIBOR" means the London interbank offered interest rate for
three-month, U.S. dollar deposits determined by the Debenture Trustee in the
following order of priority:
(1) the rate (expressed as a percentage per annum) for U.S.
dollar deposits having a three-month maturity that appears on Telerate
Page 3750 as of 11:00 a.m. (London time) on the related Determination
Date (as defined below). "Telerate Page 3750" means the display
designated as "Page 3750" on the Moneyline Telerate Service or such
other page as may replace Page 3750 on that service or such other
service or services as may be nominated by the British Bankers'
Association as the information vendor for the purpose of displaying
London interbank offered rates for U.S. dollar deposits;
(2) if such rate cannot be identified on the related
Determination Date, the Debenture Trustee will request the principal
London offices of four leading banks in the London interbank market to
provide such banks' offered quotations (expressed as percentages per
annum) to prime banks in the London interbank market for U.S. dollar
deposits having a three-month maturity as of 11:00 a.m. (London time)
on such Determination Date. If at least two quotations are provided,
3-Month LIBOR will be the arithmetic mean of such quotations;
(3) if fewer than two such quotations are provided as
requested in clause (2) above, the Debenture Trustee will request four
major New York City banks to provide such banks' offered quotations
(expressed as percentages per annum) to leading European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such
Determination Date. If at least two such quotations are provided,
3-Month LIBOR will be the arithmetic mean of such quotations; and
(4) if fewer than two such quotations are provided as
requested in clause (3) above, 3-Month LIBOR will be a 3-Month LIBOR
determined with respect to the Distribution Period immediately
preceding such current Distribution Period.
If the rate for U.S. dollar deposits having a three-month maturity that
initially appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the
related Determination Date is superseded on the Telerate Page 3750 by a
corrected rate by 12:00 noon (London time) on such Determination Date, then the
corrected rate as so substituted on the applicable page will be the applicable
3-Month LIBOR for such Determination Date.
The Distribution Rate for any Distribution Period will at no time be
higher than the maximum rate then permitted by New York law as the same may be
modified by United States law.
"Capital Treatment Event" means the receipt by the Debenture Issuer and
the Trust of an opinion of counsel experienced in such matters to the effect
that, as a result of the occurrence of any amendment to, or change (including
any announced prospective change) in, the laws, rules or regulations of the
United States or any political subdivision thereof or therein, or as the result
of any official or administrative pronouncement or action or decision
interpreting or applying such laws, rules or regulations, which amendment or
change is effective or which pronouncement, action or decision is announced on
or after the date of original issuance of the Debentures, there is more than an
insubstantial risk that the Sponsor will not, within 90 days of the date of such
opinion, be entitled to treat an amount equal to the aggregate liquidation
amount of the Capital Securities as "Tier 1 Capital" (or its then equivalent)
for purposes of the capital adequacy guidelines of the Federal Reserve, as then
in effect and applicable to the Sponsor (or if the Sponsor is not a bank holding
company or otherwise is not subject to the Federal Reserve's risk-based capital
adequacy guidelines, such guidelines applied to the Sponsor as if the Sponsor
were subject to such guidelines); provided, however, that the inability of the
Sponsor to treat all or any portion of the liquidation amount of the Capital
Securities as Tier l Capital shall not constitute the basis for a Capital
Treatment Event, if such inability results from the Sponsor having cumulative
preferred stock, minority interests in consolidated subsidiaries, or any other
class of security or interest which the Federal Reserve or OTS, as applicable,
may now or hereafter accord Tier 1 Capital treatment in excess of the amount
which may now or hereafter qualify for treatment as Tier 1 Capital under
applicable capital adequacy guidelines; provided further, however, that the
distribution of Debentures in connection with the Liquidation of the Trust shall
not in and of itself constitute a Capital Treatment Event unless such
Liquidation shall have occurred in connection with a Tax Event or an Investment
Company Event.
"Determination Date" means the date that is two London Banking Days
(i.e., a business day in which dealings in deposits in U.S. dollars are
transacted in the London interbank market) preceding the particular Distribution
Period for which a Coupon Rate is being determined.
"Investment Company Event" means the receipt by the Debenture Issuer
and the Trust of an opinion of counsel experienced in such matters to the effect
that, as a result of the occurrence of a change in law or regulation or written
change (including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority, there is more than an insubstantial risk that
the Trust is or, within 90 days of the date of such opinion, will be considered
an Investment Company that is required to be registered under the Investment
Company Act which change or prospective change becomes effective or would become
effective, as the case may be, on or after the date of the issuance of the
Debentures.
"Maturity Date" means December 15, 2036.
"Redemption Date" shall mean the date fixed for the redemption of
Capital Securities, which shall be any Distribution Payment Date on or after the
Distribution Payment Date in December 2011.
"Redemption Price" means 100% of the principal amount of the Debentures
being redeemed, plus accrued and unpaid Interest on such Debentures to the
Redemption Date.
"Special Event" means a Tax Event, an Investment Company Event or a
Capital Treatment Event.
"Special Redemption Date" means a date on which a Special Event
redemption occurs, which shall be a Distribution Payment Date.
"Special Redemption Price" means the price set forth in the following
table for any Special Redemption Date that occurs on the date indicated below
(or if such day is not a Business Day, then the next succeeding Business Day),
expressed as the percentage of the principal amount of the Debentures being
redeemed:
---------------------------------- ----------------------------
Month in which Special Special Redemption Price
---------------------- ------------------------
Redemption Date Occurs
-----------------------
---------------------------------- ----------------------------
March 2007 104.625%
---------------------------------- ----------------------------
June 2007 104.300%
---------------------------------- ----------------------------
September 2007 104.000%
---------------------------------- ----------------------------
December 2007 103.650%
---------------------------------- ----------------------------
March 2008 103.350%
---------------------------------- ----------------------------
June 2008 103.000%
---------------------------------- ----------------------------
September 2008 102.700%
---------------------------------- ----------------------------
December 2008 102.350%
---------------------------------- ----------------------------
March 2009 102.050%
---------------------------------- ----------------------------
June 2009 101.700%
---------------------------------- ----------------------------
September 2009 101.400%
---------------------------------- ----------------------------
December 2009 101.050%
---------------------------------- ----------------------------
March 2010 100.750%
---------------------------------- ----------------------------
June 2010 100.450%
---------------------------------- ----------------------------
September 2010 100.200%
---------------------------------- ----------------------------
December 2010 and thereafter 100.000%
---------------------------------- ----------------------------
plus, in each case, accrued and unpaid Interest on such Debentures to
the Special Redemption Date.
"Tax Event" means the receipt by the Debenture Issuer and the Trust of
an opinion of counsel experienced in such matters to the effect that, as a
result of any amendment to or change (including any announced prospective
change) in the laws or any regulations thereunder of the United States or any
political subdivision or taxing authority thereof or therein, or as a result of
any official administrative pronouncement (including any private letter ruling,
technical advice memorandum, field service advice, regulatory procedure, notice
or announcement including any notice or announcement of intent to adopt such
procedures or regulations) (an "Administrative Action") or judicial decision
interpreting or applying such laws or regulations, regardless of whether such
Administrative Action or judicial decision is issued to or in connection with a
proceeding involving the Debenture Issuer or the Trust and whether or not
subject to review or appeal, which amendment, clarification, change,
Administrative Action or decision is enacted, promulgated or announced, in each
case on or after the date of original issuance of the Debentures, there is more
than an insubstantial risk that: (i) the Trust is, or will be within 90 days of
the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Debentures; (ii) interest payable
by the Debenture Issuer on the Debentures is not, or within 90 days of the date
of such opinion, will not be, deductible by the Debenture Issuer, in whole or in
part, for United States federal income tax purposes; or (iii) the Trust is, or
will be within 90 days of the date of such opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
(b) Upon the repayment in full at maturity or redemption in
whole or in part of the Debentures (other than following the distribution of the
Debentures to the Holders of the Securities), the proceeds from such repayment
or payment shall concurrently be applied to redeem Pro Rata at the applicable
Redemption Price or Special Redemption Price, as applicable, Securities having
an aggregate liquidation amount equal to the aggregate principal amount of the
Debentures so repaid or redeemed; provided, however, that holders of such
Securities shall be given not less than 30 nor more than 60 days' notice of such
redemption (other than at the scheduled maturity of the Debentures).
(c) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Capital Securities will be redeemed Pro
Rata and the Capital Securities to be redeemed will be redeemed Pro Rata from
each Holder of Capital Securities.
(d) The Trust may not redeem fewer than all the outstanding
Capital Securities unless all accrued and unpaid Distributions have been paid on
all Capital Securities for all quarterly Distribution periods terminating on or
before the date of redemption.
(e) Redemption or Distribution Procedures.
(i) Notice of any redemption of, or notice of
distribution of the Debentures in exchange for, the Securities
(a "Redemption/Distribution Notice") will be given by the Trust by
mail to each Holder of Securities to be redeemed or exchanged not
fewer than 30 nor more than 60 days before the date fixed for
redemption or exchange thereof which, in the case of a redemption,
will be the date fixed for redemption of the Debentures. For purposes
of the calculation of the date of redemption or exchange and the dates
on which notices are given pursuant to this paragraph 4(e)(i), a
Redemption/Distribution Notice shall be deemed to be given on the day
such notice is first mailed by first-class mail, postage prepaid,
to Holders of such Securities. Each Redemption/Distribution Notice
shall be addressed to the Holders of such Securities at the address of
each such Holder appearing on the books and records of the Trust.
No defect in the Redemption/Distribution Notice or in the mailing
thereof with respect to any Holder shall affect the validity of the
redemption or exchange proceedings with respect to any other Holder.
(ii) If the Securities are to be redeemed and the Trust
gives a Redemption/ Distribution Notice, which notice may only be
issued if the Debentures are redeemed as set out in this paragraph 4
(which notice will be irrevocable), then, provided that the
Institutional Trustee has a sufficient amount of cash in connection
with the related redemption or maturity of the Debentures, the
Institutional Trustee will pay the relevant Redemption Price or
Special Redemption Price, as applicable, to the Holders of such
Securities by check mailed to the address of each such Holder
appearing on the books and records of the Trust on the Redemption
Date. If a Redemption/Distribution Notice shall have been given and
funds deposited as required then immediately prior to the close of
business on the date of such deposit Distributions will cease to
accrue on the Securities so called for redemption and all rights of
Holders of such Securities so called for redemption will cease, except
the right of the Holders of such Securities to receive the
applicable Redemption Price or Special Redemption Price specified
in paragraph 4(a), but without interest on such Redemption Price or
Special Redemption Price. If payment of the Redemption Price or
Special Redemption Price in respect of any Securities is improperly
withheld or refused and not paid either by the Trust or by the
Debenture Issuer as guarantor pursuant to the Guarantee, Distributions
on such Securities will continue to accrue at the Distribution Rate
from the original Redemption Date to the actual date of payment, in
which case the actual payment date will be considered the date fixed
for redemption for purposes of calculating the Redemption Price or
Special Redemption Price. In the event of any redemption of the
Capital Securities issued by the Trust in part, the Trust shall not
be required to (i) issue, register the transfer of or exchange any
Security during a period beginning at the opening of business fifteen
days before any selection for redemption of the Capital Securities
and ending at the close of business on the earliest date on which the
relevant notice of redemption is deemed to have been given to all
Holders of the Capital Securities to be so redeemed or (ii) register
the transfer of or exchange any Capital Securities so selected for
redemption, in whole or in part, except for the unredeemed portion
of any Capital Securities being redeemed in part.
(iii) Redemption/Distribution Notices shall be sent by
the Administrators on behalf of the Trust to (A) in respect of the
Capital Securities, the Holders thereof and (B) in respect of the
Common Securities, the Holder thereof.
(iv) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities
laws), and provided that the acquiror is not the Holder of the Common
Securities or the obligor nder the Indenture, the Sponsor or any of
its subsidiaries may at any time and from time to time purchase
outstanding Capital Securities by tender, in the open market or by
private agreement.
5. Voting Rights - Capital Securities.
(a) Except as provided under paragraphs 5(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Capital
Securities will have no voting rights. The Administrators are required to call a
meeting of the Holders of the Capital Securities if directed to do so by Holders
of at least 10% in liquidation amount of the Capital Securities.
(b) Subject to the requirements of obtaining a tax opinion
by the Institutional Trustee in certain circumstances set forth in the last
sentence of this paragraph, the Holders of a Majority in liquidation amount of
the Capital Securities, voting separately as a class, have the right to direct
the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including the
right to direct the Institutional Trustee, as holder of the Debentures, to (i)
exercise the remedies available under the Indenture as the holder of the
Debentures, (ii) waive any past default that is waivable under the Indenture,
(iii) exercise any right to rescind or annul a declaration that the principal of
all the Debentures shall be due and payable or (iv) consent on behalf of all the
Holders of the Capital Securities to any amendment, modification or termination
of the Indenture or the Debentures where such consent shall be required;
provided, however, that, where a consent or action under the Indenture would
require the consent or act of the holders of greater than a simple majority in
aggregate principal amount of Debentures (a "Super Majority") affected thereby,
the Institutional Trustee may only give such consent or take such action at the
written direction of the Holders of at least the proportion in liquidation
amount of the Capital Securities outstanding which the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding. If
the Institutional Trustee fails to enforce its rights under the Debentures after
the Holders of a Majority in liquidation amount of such Capital Securities have
so directed the Institutional Trustee, to the fullest extent permitted by law, a
Holder of the Capital Securities may institute a legal proceeding directly
against the Debenture Issuer to enforce the Institutional Trustee's rights under
the Debentures without first instituting any legal proceeding against the
Institutional Trustee or any other person or entity. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Debenture Issuer to pay interest or
principal on the Debentures on the date the interest or principal is payable (or
in the case of redemption, the Redemption Date or the Special Redemption Date,
as applicable), then a Holder of record of the Capital Securities may directly
institute a proceeding for enforcement of payment, on or after the respective
due dates specified in the Debentures, to such Holder directly of the principal
of or interest on the Debentures having an aggregate principal amount equal to
the aggregate liquidation amount of the Capital Securities of such Holder. The
Institutional Trustee shall notify all Holders of the Capital Securities of any
default actually known to the Institutional Trustee with respect to the
Debentures unless (x) such default has been cured prior to the giving of such
notice or (y) the Institutional Trustee determines in good faith that the
withholding of such notice is in the interest of the Holders of such Capital
Securities, except where the default relates to the payment of principal of or
interest on any of the Debentures. Such notice shall state that such Indenture
Event of Default also constitutes an Event of Default hereunder. Except with
respect to directing the time, method and place of conducting a proceeding for a
remedy, the Institutional Trustee shall not take any of the actions described in
clauses (i), (ii) or (iii) above unless the Institutional Trustee has obtained
an opinion of tax counsel to the effect that, as a result of such action, the
Trust will not be classified as other than a grantor trust for United States
federal income tax purposes.
In the event the consent of the Institutional Trustee, as the holder of
the Debentures, is required under the Indenture with respect to any amendment,
modification or termination of the Indenture, the Institutional Trustee shall
request the direction of the Holders of the Securities with respect to such
amendment, modification or termination and shall vote with respect to such
amendment, modification or termination as directed by a Majority in liquidation
amount of the Securities voting together as a single class; provided, however,
that where a consent under the Indenture would require the consent of a
Super-Majority, the Institutional Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of the
Securities outstanding which the relevant Super-Majority represents of the
aggregate principal amount of the Debentures outstanding. The Institutional
Trustee shall not take any such action in accordance with the directions of the
Holders of the Securities unless the Institutional Trustee has obtained an
opinion of tax counsel to the effect that, as a result of such action, the Trust
will not be classified as other than a grantor trust for United States federal
income tax purposes.
A waiver of an Indenture Event of Default will constitute a waiver of
the corresponding Event of Default hereunder. Any required approval or direction
of Holders of the Capital Securities may be given at a separate meeting of
Holders of the Capital Securities convened for such purpose, at a meeting of all
of the Holders of the Securities in the Trust or pursuant to written consent.
The Institutional Trustee will cause a notice of any meeting at which Holders of
the Capital Securities are entitled to vote, or of any matter upon which action
by written consent of such Holders is to be taken, to be mailed to each Holder
of record of the Capital Securities. Each such notice will include a statement
setting forth the following information (i) the date of such meeting or the date
by which such action is to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents. No vote or consent of the Holders of
the Capital Securities will be required for the Trust to redeem and cancel
Capital Securities or to distribute the Debentures in accordance with the
Declaration and the terms of the Securities.
Notwithstanding that Holders of the Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor
shall not entitle the Holder thereof to vote or consent and shall, for purposes
of such vote or consent, be treated as if such Capital Securities were not
outstanding.
In no event will Holders of the Capital Securities have the right to
vote to appoint, remove or replace the Administrators, which voting rights are
vested exclusively in the Sponsor as the Holder of all of the Common Securities
of the Trust. Under certain circumstances as more fully described in the
Declaration, Holders of Capital Securities have the right to vote to appoint,
remove or replace the Institutional Trustee and the Delaware Trustee.
6. Voting Rights - Common Securities.
(a) Except as provided under paragraphs 6(b), 6(c) and 7
and as otherwise required by law and the Declaration, the Common Securities will
have no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article IV of the Declaration, to vote to appoint, remove or
replace any Administrators.
(c) Subject to Section 6.9 of the Declaration and only
after each Event of Default (if any) with respect to the Capital Securities has
been cured, waived, or otherwise eliminated and subject to the requirements of
the second to last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting separately as a class, may
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration, including (i)
directing the time, method, place of conducting any proceeding for any remedy
available to the Debenture Trustee, or exercising any trust or power conferred
on the Debenture Trustee with respect to the Debentures, (ii) waiving any past
default and its consequences that is waivable under the Indenture, or (iii)
exercising any right to rescind or annul a declaration that the principal of all
the Debentures shall be due and payable; provided, however, that, where a
consent or action under the Indenture would require a Super Majority, the
Institutional Trustee may only give such consent or take such action at the
written direction of the Holders of at least the proportion in liquidation
amount of the Common Securities which the relevant Super Majority represents of
the aggregate principal amount of the Debentures outstanding. Notwithstanding
this paragraph 6(c), the Institutional Trustee shall not revoke any action
previously authorized or approved by a vote or consent of the Holders of the
Capital Securities. Other than with respect to directing the time, method and
place of conducting any proceeding for any remedy available to the Institutional
Trustee or the Debenture Trustee as set forth above, the Institutional Trustee
shall not take any action described in (i), (ii) or (iii) above, unless the
Institutional Trustee has obtained an opinion of tax counsel to the effect that
for the purposes of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of such action. If the
Institutional Trustee fails to enforce its rights, to the fullest extent
permitted by law, under the Declaration, any Holder of the Common Securities may
institute a legal proceeding directly against any Person to enforce the
Institutional Trustee's rights under the Declaration, without first instituting
a legal proceeding against the Institutional Trustee or any other Person.
Any approval or direction of Holders of the Common Securities may be
given at a separate meeting of Holders of the Common Securities convened for
such purpose, at a meeting of all of the Holders of the Securities in the Trust
or pursuant to written consent. The Administrators will cause a notice of any
meeting at which Holders of the Common Securities are entitled to vote, or of
any matter upon which action by written consent of such Holders is to be taken,
to be mailed to each Holder of the Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 11.1 of
the Declaration, if any proposed amendment to the Declaration provides for, or
the Trustees, Sponsor or Administrators otherwise propose to effect, (i) any
action that would adversely affect the powers, preferences or special rights of
the Securities, whether by way of amendment to the Declaration or otherwise, or
(ii) the Liquidation of the Trust, other than as described in Section 7.1 of the
Declaration, then the Holders of outstanding Securities, voting together as a
single class, will be entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with the approval of the
Holders of at least a Majority in liquidation amount of the Securities, affected
thereby; provided, however, if any amendment or proposal referred to in clause
(i) above would adversely affect only the Capital Securities or only the Common
Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities.
(b) In the event the consent of the Institutional Trustee as
the holder of the Debentures is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or termination and shall
vote with respect to such amendment, modification, or termination as directed by
a Majority in liquidation amount of the Securities voting together as a single
class; provided, however, that where a consent under the Indenture would require
a Super Majority, the Institutional Trustee may only give such consent at the
direction of the Holders of at least the proportion in liquidation amount of the
Securities which the relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding.
(c) Notwithstanding the foregoing, no amendment or
modification may be made to the Declaration if such amendment or modification
would (i) cause the Trust to be classified for purposes of United States federal
income taxation as other than a grantor trust, (ii) reduce or otherwise
adversely affect the powers of the Institutional Trustee or (iii) cause the
Trust to be deemed an Investment Company which is required to be registered
under the Investment Company Act.
(d) Notwithstanding any provision of the Declaration, the
right of any Holder of the Capital Securities to receive payment of
distributions and other payments upon redemption or otherwise, on or after their
respective due dates, or to institute a suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired or affected
without the consent of such Holder. For the protection and enforcement of the
foregoing provision, each and every Holder of the Capital Securities shall be
entitled to such relief as can be given either at law or equity.
8. Pro Rata. A reference in these terms of the Securities to
any payment, distribution or treatment as being "Pro Rata" shall mean pro rata
to each Holder of the Securities according to the aggregate liquidation amount
of the Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities then outstanding unless, in relation to a
payment, an Event of Default has occurred and is continuing, in which case any
funds available to make such payment shall be paid first to each Holder of the
Capital Securities Pro Rata according to the aggregate liquidation amount of the
Capital Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Capital Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Capital Securities, to
each Holder of the Common Securities Pro Rata according to the aggregate
liquidation amount of the Common Securities held by the relevant Holder relative
to the aggregate liquidation amount of all Common Securities outstanding.
9. Ranking. The Capital Securities rank pari passu with and
payment thereon shall be made Pro Rata with the Common Securities except that,
where an Event of Default has occurred and is continuing, the rights of Holders
of the Common Securities to receive payment of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights of the
Holders of the Capital Securities with the result that no payment of any
Distribution on, or Redemption Price (or Special Redemption Price) of, any
Common Security, and no other payment on account of redemption, liquidation or
other acquisition of Common Securities, shall be made unless payment in full in
cash of all accumulated and unpaid Distributions on all outstanding Capital
Securities for all distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price (or Special Redemption Price) the
full amount of such Redemption Price (or Special Redemption Price) on all
outstanding Capital Securities then called for redemption, shall have been made
or provided for, and all funds immediately available to the Institutional
Trustee shall first be applied to the payment in full in cash of all
Distributions on, or the Redemption Price (or Special Redemption Price) of, the
Capital Securities then due and payable.
10. Acceptance of Guarantee and Indenture. Each Holder of the
Capital Securities and the Common Securities, by the acceptance of such
Securities, agrees to the provisions of the Guarantee, including the
subordination provisions therein and to the provisions of the Indenture.
11. No Preemptive Rights. The Holders of the Securities shall have
no preemptive or similar rights to subscribe for any additional securities.
12. Miscellaneous. These terms constitute a part of the
Declaration. The Sponsor will provide a copy of the Declaration, the Guarantee,
and the Indenture to a Holder without charge on written request to the Sponsor
at its principal place of business.
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE SPONSOR'S AND
THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY
OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST. HEDGING TRANSACTIONS
INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF
THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE
SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA
OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR
ADMINISTRATIVE EXEMPTION.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100 SECURITIES) AND
MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF SECURITIES
IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED
TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.
THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE
REQUIRED BY THE DECLARATION TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.
Certificate Number P-1 20,000 Capital Securities
[CUSIP NO. [_______] **To be inserted at the request of the Holder]
December 14, 2006
Certificate Evidencing Floating Rate Capital Securities
of
First Bank Statutory Trust VII
(liquidation amount $1,000.00 per Capital Security)
First Bank Statutory Trust VII, a statutory trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that Hare & Co.
(the "Holder"), as the nominee of The Bank of New York, indenture trustee under
the Indenture dated as of December 14, 2006 among Preferred Term Securities
XXIV, Ltd., Preferred Term Securities XXIV, Inc. and The Bank of New York, is
the registered owner of capital securities of the Trust representing undivided
beneficial interests in the assets of the Trust, (liquidation amount $1,000.00
per capital security) (the "Capital Securities"). Subject to the Declaration (as
defined below), the Capital Securities are transferable on the books and records
of the Trust in person or by a duly authorized attorney, upon surrender of this
Certificate duly endorsed and in proper form for transfer. The Capital
Securities represented hereby are issued pursuant to, and the designation,
rights, privileges, restrictions, preferences and other terms and provisions of
the Capital Securities shall in all respects be subject to, the provisions of
the Amended and Restated Declaration of Trust of the Trust dated as of December
14, 2006, among Terrance M. McCarthy, Peter D. Wimmer and Lisa K. Vansickle, as
Administrators, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust
Company, as Institutional Trustee, First Banks, Inc., as Sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Trust, including the designation of the terms of the Capital Securities as set
forth in Annex I to such amended and restated declaration as the same may be
amended from time to time (the "Declaration"). Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration. The Holder is
entitled to the benefits of the Guarantee to the extent provided therein. The
Sponsor will provide a copy of the Declaration, the Guarantee, and the Indenture
to the Holder without charge upon written request to the Sponsor at its
principal place of business.
Upon receipt of this Security, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
By acceptance of this Security, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as indebtedness and the
Capital Securities as evidence of beneficial ownership in the Debentures.
This Capital Security is governed by, and construed in accordance with,
the laws of the State of Delaware, without regard to principles of conflict of
laws.
Signatures appear on following page
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
FIRST BANK STATUTORY TRUST VII
By:
Name:
Title: Administrator
CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
WILMINGTON TRUST COMPANY,
as the Institutional Trustee
By:
Authorized Officer
[FORM OF REVERSE OF CAPITAL SECURITY]
Distributions payable on each Capital Security will be payable at an
annual rate equal to 7.20% beginning on (and including) the date of original
issuance and ending on (but excluding) the Distribution Payment Date in March
2007 and at an annual rate for each successive period beginning on (and
including) the Distribution Payment Date in March 2007, and each succeeding
Distribution Payment Date, and ending on (but excluding) the next succeeding
Distribution Payment Date (each a "Distribution Period"), equal to 3-Month
LIBOR, determined as described below, plus 1.85% (the "Coupon Rate"), applied to
the stated liquidation amount of $1,000.00 per Capital Security, such rate being
the rate of interest payable on the Debentures to be held by the Institutional
Trustee. Distributions in arrears will bear interest thereon compounded
quarterly at the Distribution Rate (to the extent permitted by applicable law).
The term "Distributions" as used herein includes cash distributions and any such
compounded distributions unless otherwise noted. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. As used herein, "Determination Date" means the date that is
two London Banking Days (i.e., a business day in which dealings in deposits in
U.S. dollars are transacted in the London interbank market) preceding the
commencement of the relevant Distribution Period. The amount of the Distribution
payable for any Distribution Period will be calculated by applying the
Distribution Rate to the stated liquidation amount outstanding at the
commencement of the Distribution Period on the basis of the actual number of
days in the Distribution Period concerned divided by 360.
"3-Month LIBOR" as used herein, means the London interbank offered
interest rate for three-month U.S. dollar deposits determined by the Debenture
Trustee in the following order of priority: (i) the rate (expressed as a
percentage per annum) for U.S. dollar deposits having a three-month maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date ("Telerate Page 3750" means the display designated as "Page
3750" on the Moneyline Telerate Service or such other page as may replace Page
3750 on that service or such other service or services as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying London interbank offered rates for U.S. dollar deposits); (ii) if
such rate cannot be identified on the related Determination Date, the Debenture
Trustee will request the principal London offices of four leading banks in the
London interbank market to provide such banks' offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will request four major New York City banks to provide such banks' offered
quotations (expressed as percentages per annum) to leading European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution Period immediately preceding
such current Distribution Period. If the rate for U.S. dollar deposits having a
three-month maturity that initially appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the
Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such
Determination Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.
The Distribution Rate for any Distribution Period will at no time be
higher than the maximum rate then permitted by New York law as the same may be
modified by United States law.
All percentages resulting from any calculations on the Capital
Securities will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all dollar amounts used in or resulting from such calculation will be
rounded to the nearest cent (with one-half cent being rounded upward)).
Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year or if any such day is not a Business Day, then the next
succeeding Business Day (each such day, a "Distribution Payment Date") (it being
understood that interest accrues for any such non-Business Day), commencing on
the Distribution Payment Date in March 2007. The Debenture Issuer has the right
under the Indenture to defer payments of interest on the Debentures, so long as
no Acceleration Event of Default has occurred and is continuing, by extending
the interest payment period for up to 20 consecutive quarterly periods (each an
"Extension Period") at any time and from time to time on the Debentures, subject
to the conditions described below, during which Extension Period no interest
shall be due and payable. During any Extension Period, interest will continue to
accrue on the Debentures, and interest on such accrued interest will accrue at
an annual rate equal to the Distribution Rate in effect for each such Extension
Period, compounded quarterly from the date such interest would have been payable
were it not for the Extension Period, to the extent permitted by law (such
interest referred to herein as "Additional Interest"). No Extension Period may
end on a date other than a Distribution Payment Date. At the end of any such
Extension Period, the Debenture Issuer shall pay all interest then accrued and
unpaid on the Debentures (together with Additional Interest thereon); provided,
however, that no Extension Period may extend beyond the Maturity Date. Prior to
the termination of any Extension Period, the Debenture Issuer may further extend
such period, provided that such period together with all such previous and
further consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all accrued and unpaid interest and
Additional Interest, the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements. No interest or Additional Interest shall
be due and payable during an Extension Period, except at the end thereof, but
each installment of interest that would otherwise have been due and payable
during such Extension Period shall bear Additional Interest. During any
Extension Period, Distributions on the Capital Securities shall be deferred for
a period equal to the Extension Period. If Distributions are deferred, the
Distributions due shall be paid on the date that the related Extension Period
terminates, to Holders of the Securities as they appear on the books and records
of the Trust on the record date immediately preceding such date. Distributions
on the Securities must be paid on the dates payable (after giving effect to any
Extension Period) to the extent that the Trust has funds available for the
payment of such distributions in the Property Account of the Trust. The Trust's
funds available for Distribution to the Holders of the Securities will be
limited to payments received from the Debenture Issuer. The payment of
Distributions out of moneys held by the Trust is guaranteed by the Guarantor
pursuant to the Guarantee.
The Capital Securities shall be redeemable as provided in the
Declaration.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee) and irrevocably appoints
agent to transfer this Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side
of this Capital Security Certificate)
Signature Guarantee:1
1 Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Security
registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
EXHIBIT A-2
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
THIS CAPITAL SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY ("DTC") OR A NOMINEE OF DTC. THIS CAPITAL SECURITY IS
EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
DECLARATION, AND NO TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF
THIS CAPITAL SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF
DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC TO FIRST BANK STATUTORY TRUST VII OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CAPITAL SECURITY ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON 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.
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE
HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR
OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST, (B)
PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN
ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION
IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER
THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH
AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE SPONSOR'S AND
THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY
OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST. HEDGING TRANSACTIONS
INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE
SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES,
REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL
RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH
A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON
OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF
ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH
PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE UNDER U.S.
DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38,
90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF
THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE
CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE
SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS
PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN
WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF
THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN
EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF
ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH
PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA
OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR
ADMINISTRATIVE EXEMPTION.
THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100 SECURITIES) AND
MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF SECURITIES
IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED
TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.
THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE
REQUIRED BY THE DECLARATION TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE
FOREGOING RESTRICTIONS.
Certificate Number P-2 30,000 Capital Securities
[CUSIP NO. [_______]]
December 14, 2006
Certificate Evidencing Floating Rate Capital Securities
of
First Bank Statutory Trust VII
(liquidation amount $1,000.00 per Capital Security)
First Bank Statutory Trust VII, a statutory trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of capital securities of the Trust
representing undivided beneficial interests in the assets of the Trust,
(liquidation amount $1,000.00 per capital security) (the "Capital Securities").
Subject to the Declaration (as defined below), the Capital Securities are
transferable on the books and records of the Trust in person or by a duly
authorized attorney, upon surrender of this Certificate duly endorsed and in
proper form for transfer. The Capital Securities represented hereby are issued
pursuant to, and the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Capital Securities shall in all respects
be subject to, the provisions of the Amended and Restated Declaration of Trust
of the Trust dated as of December 14, 2006, among Terrance M. McCarthy, Peter D.
Wimmer and Lisa K. Vansickle, as Administrators, Wilmington Trust Company, as
Delaware Trustee, Wilmington Trust Company, as Institutional Trustee, First
Banks, Inc., as Sponsor, and the holders from time to time of undivided
beneficial interests in the assets of the Trust, including the designation of
the terms of the Capital Securities as set forth in Annex I to such amended and
restated declaration as the same may be amended from time to time (the
"Declaration"). Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration, the Guarantee, and the Indenture to the Holder without charge
upon written request to the Sponsor at its principal place of business.
Upon receipt of this Security, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
By acceptance of this Security, the Holder agrees to treat, for United
States federal income tax purposes, the Debentures as indebtedness and the
Capital Securities as evidence of beneficial ownership in the Debentures.
This Capital Security is governed by, and construed in accordance with,
the laws of the State of Delaware, without regard to principles of conflict of
laws.
Signatures appear on following page
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
FIRST BANK STATUTORY TRUST VII
By:
Name:
Title: Administrator
CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the
within-mentioned Declaration.
WILMINGTON TRUST COMPANY,
as the Institutional Trustee
By:
Authorized Officer
[FORM OF REVERSE OF CAPITAL SECURITY]
Distributions payable on each Capital Security will be payable at an
annual rate equal to 7.20% beginning on (and including) the date of original
issuance and ending on (but excluding) the Distribution Payment Date in March
2007 and at an annual rate for each successive period beginning on (and
including) the Distribution Payment Date in March 2007, and each succeeding
Distribution Payment Date, and ending on (but excluding) the next succeeding
Distribution Payment Date (each a "Distribution Period"), equal to 3-Month
LIBOR, determined as described below, plus 1.85% (the "Coupon Rate"), applied to
the stated liquidation amount of $1,000.00 per Capital Security, such rate being
the rate of interest payable on the Debentures to be held by the Institutional
Trustee. Distributions in arrears will bear interest thereon compounded
quarterly at the Distribution Rate (to the extent permitted by applicable law).
The term "Distributions" as used herein includes cash distributions and any such
compounded distributions unless otherwise noted. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. As used herein, "Determination Date" means the date that is
two London Banking Days (i.e., a business day in which dealings in deposits in
U.S. dollars are transacted in the London interbank market) preceding the
commencement of the relevant Distribution Period. The amount of the Distribution
payable for any Distribution Period will be calculated by applying the
Distribution Rate to the stated liquidation amount outstanding at the
commencement of the Distribution Period on the basis of the actual number of
days in the Distribution Period concerned divided by 360.
"3-Month LIBOR" as used herein, means the London interbank offered
interest rate for three-month U.S. dollar deposits determined by the Debenture
Trustee in the following order of priority: (i) the rate (expressed as a
percentage per annum) for U.S. dollar deposits having a three-month maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date ("Telerate Page 3750" means the display designated as "Page
3750" on the Moneyline Telerate Service or such other page as may replace Page
3750 on that service or such other service or services as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying London interbank offered rates for U.S. dollar deposits); (ii) if
such rate cannot be identified on the related Determination Date, the Debenture
Trustee will request the principal London offices of four leading banks in the
London interbank market to provide such banks' offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will request four major New York City banks to provide such banks' offered
quotations (expressed as percentages per annum) to leading European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution Period immediately preceding
such current Distribution Period. If the rate for U.S. dollar deposits having a
three-month maturity that initially appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the
Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such
Determination Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.
The Distribution Rate for any Distribution Period will at no time be
higher than the maximum rate then permitted by New York law as the same may be
modified by United States law.
All percentages resulting from any calculations on the Capital
Securities will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all dollar amounts used in or resulting from such calculation will be
rounded to the nearest cent (with one-half cent being rounded upward)).
Except as otherwise described below, Distributions on the Capital
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year or if any such day is not a Business Day, then the next
succeeding Business Day (each such day, a "Distribution Payment Date") (it being
understood that interest accrues for any such non-Business Day), commencing on
the Distribution Payment Date in March 2007. The Debenture Issuer has the right
under the Indenture to defer payments of interest on the Debentures, so long as
no Acceleration Event of Default has occurred and is continuing, by extending
the interest payment period for up to 20 consecutive quarterly periods (each an
"Extension Period") at any time and from time to time on the Debentures, subject
to the conditions described below, during which Extension Period no interest
shall be due and payable. During any Extension Period, interest will continue to
accrue on the Debentures, and interest on such accrued interest will accrue at
an annual rate equal to the Distribution Rate in effect for each such Extension
Period, compounded quarterly from the date such interest would have been payable
were it not for the Extension Period, to the extent permitted by law (such
interest referred to herein as "Additional Interest"). No Extension Period may
end on a date other than a Distribution Payment Date. At the end of any such
Extension Period, the Debenture Issuer shall pay all interest then accrued and
unpaid on the Debentures (together with Additional Interest thereon); provided,
however, that no Extension Period may extend beyond the Maturity Date. Prior to
the termination of any Extension Period, the Debenture Issuer may further extend
such period, provided that such period together with all such previous and
further consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all accrued and unpaid interest and
Additional Interest, the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements. No interest or Additional Interest shall
be due and payable during an Extension Period, except at the end thereof, but
each installment of interest that would otherwise have been due and payable
during such Extension Period shall bear Additional Interest. During any
Extension Period, Distributions on the Capital Securities shall be deferred for
a period equal to the Extension Period. If Distributions are deferred, the
Distributions due shall be paid on the date that the related Extension Period
terminates, to Holders of the Securities as they appear on the books and records
of the Trust on the record date immediately preceding such date. Distributions
on the Securities must be paid on the dates payable (after giving effect to any
Extension Period) to the extent that the Trust has funds available for the
payment of such distributions in the Property Account of the Trust. The Trust's
funds available for Distribution to the Holders of the Securities will be
limited to payments received from the Debenture Issuer. The payment of
Distributions out of moneys held by the Trust is guaranteed by the Guarantor
pursuant to the Guarantee.
The Capital Securities shall be redeemable as provided in the
Declaration.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee) and irrevocably appoints
agent to transfer this Capital Security Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side of this
Capital Security Certificate)
Signature Guarantee:2
2 Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Security
registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
EXHIBIT A-3
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN COMPLIANCE WITH SECTION
8.1 OF THE DECLARATION.
Certificate Number C-1 1,547 Common Securities
December 14, 2006
Certificate Evidencing Floating Rate Common Securities
of
First Bank Statutory Trust VII
First Bank Statutory Trust VII, 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 (the
"Common Securities"). The Common Securities represented hereby are issued
pursuant to, and the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Common Securities shall in all respects be
subject to, the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of December 14, 2006, among Terrance M. McCarthy, Peter D.
Wimmer and Lisa K. Vansickle, as Administrators, Wilmington Trust Company, as
Delaware Trustee, Wilmington Trust Company, as Institutional Trustee, First
Banks, Inc., as Sponsor, and the holders from time to time of undivided
beneficial interest in the assets of the Trust including the designation of the
terms of the Common Securities as set forth in Annex I to such amended and
restated declaration, as the same may be amended from time to time (the
"Declaration"). Capitalized terms used herein but not defined shall have the
meaning given them in the Declaration. The Holder is entitled to the benefits of
the Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration, the Guarantee and the Indenture to the Holder without charge
upon written request to the Sponsor at its principal place of business.
As set forth in the Declaration, when an Event of Default has occurred
and is continuing, the rights of Holders of Common Securities to payment in
respect of Distributions and payments upon Liquidation, redemption or otherwise
are subordinated to the rights of payment of Holders of the Capital Securities.
Upon receipt of this Certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
By acceptance of this Certificate, the Holder agrees to treat, for
United States federal income tax purposes, the Debentures as indebtedness and
the Common Securities as evidence of undivided beneficial ownership in the
Debentures.
This Common Security is governed by, and construed in accordance with,
the laws of the State of Delaware, without regard to principles of conflict of
laws.
IN WITNESS WHEREOF, the Trust has duly executed this certificate.
FIRST BANK STATUTORY TRUST VII
By:
Name:
Title: Administrator
[FORM OF REVERSE OF COMMON SECURITY]
Distributions payable on each Common Security will be payable at an
annual rate equal to 7.20% beginning on (and including) the date of original
issuance and ending on (but excluding) the Distribution Payment Date in March
2007 and at an annual rate for each successive period beginning on (and
including) the Distribution Payment Date in March 2007, and each succeeding
Distribution Payment Date, and ending on (but excluding) the next succeeding
Distribution Payment Date (each a "Distribution Period"), equal to 3-Month
LIBOR, determined as described below, plus 1.85% (the "Coupon Rate"), applied to
the stated liquidation amount of $1,000.00 per Common Security, such rate being
the rate of interest payable on the Debentures to be held by the Institutional
Trustee. Distributions in arrears will bear interest thereon compounded
quarterly at the Distribution Rate (to the extent permitted by applicable law).
The term "Distributions" as used herein includes cash distributions and any such
compounded distributions unless otherwise noted. A Distribution is payable only
to the extent that payments are made in respect of the Debentures held by the
Institutional Trustee and to the extent the Institutional Trustee has funds
available therefor. As used herein, "Determination Date" means the date that is
two London Banking Days (i.e., a business day in which dealings in deposits in
U.S. dollars are transacted in the London interbank market) preceding the
commencement of the relevant Distribution Period. The amount of the Distribution
payable for any Distribution Period will be calculated by applying the
Distribution Rate to the stated liquidation amount outstanding at the
commencement of the Distribution Period on the basis of the actual number of
days in the Distribution Period concerned divided by 360.
"3-Month LIBOR" as used herein, means the London interbank offered
interest rate for three-month U.S. dollar deposits determined by the Debenture
Trustee in the following order of priority: (i) the rate (expressed as a
percentage per annum) for U.S. dollar deposits having a three-month maturity
that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related
Determination Date ("Telerate Page 3750" means the display designated as "Page
3750" on the Moneyline Telerate Service or such other page as may replace Page
3750 on that service or such other service or services as may be nominated by
the British Bankers' Association as the information vendor for the purpose of
displaying London interbank offered rates for U.S. dollar deposits); (ii) if
such rate cannot be identified on the related Determination Date, the Debenture
Trustee will request the principal London offices of four leading banks in the
London interbank market to provide such banks' offered quotations (expressed as
percentages per annum) to prime banks in the London interbank market for U.S.
dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on
such Determination Date. If at least two quotations are provided, 3-Month LIBOR
will be the arithmetic mean of such quotations; (iii) if fewer than two such
quotations are provided as requested in clause (ii) above, the Debenture Trustee
will request four major New York City banks to provide such banks' offered
quotations (expressed as percentages per annum) to leading European banks for
loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date.
If at least two such quotations are provided, 3-Month LIBOR will be the
arithmetic mean of such quotations; and (iv) if fewer than two such quotations
are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month
LIBOR determined with respect to the Distribution Period immediately preceding
such current Distribution Period. If the rate for U.S. dollar deposits having a
three-month maturity that initially appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the
Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such
Determination Date, then the corrected rate as so substituted on the applicable
page will be the applicable 3-Month LIBOR for such Determination Date.
The Distribution Rate for any Distribution Period will at no time be
higher than the maximum rate then permitted by New York law as the same may be
modified by United States law.
All percentages resulting from any calculations on the Common
Securities will be rounded, if necessary, to the nearest one hundred-thousandth
of a percentage point, with five one-millionths of a percentage point rounded
upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655),
and all dollar amounts used in or resulting from such calculation will be
rounded to the nearest cent (with one-half cent being rounded upward)).
Except as otherwise described below, Distributions on the Common
Securities will be cumulative, will accrue from the date of original issuance
and will be payable quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year or if any such day is not a Business Day, then the next
succeeding Business Day (each such day, a "Distribution Payment Date") (it being
understood that interest accrues for any such non-Business Day), commencing on
the Distribution Payment Date in March 2007. The Debenture Issuer has the right
under the Indenture to defer payments of interest on the Debentures, so long as
no Acceleration Event of Default has occurred and is continuing, by extending
the interest payment period for up to 20 consecutive quarterly periods (each an
"Extension Period") at any time and from time to time on the Debentures, subject
to the conditions described below, during which Extension Period no interest
shall be due and payable. During any Extension Period, interest will continue to
accrue on the Debentures, and interest on such accrued interest will accrue at
an annual rate equal to the Distribution Rate in effect for each such Extension
Period, compounded quarterly from the date such interest would have been payable
were it not for the Extension Period, to the extent permitted by law (such
interest referred to herein as "Additional Interest"). No Extension Period may
end on a date other than a Distribution Payment Date. At the end of any such
Extension Period, the Debenture Issuer shall pay all interest then accrued and
unpaid on the Debentures (together with Additional Interest thereon); provided,
however, that no Extension Period may extend beyond the Maturity Date. Prior to
the termination of any Extension Period, the Debenture Issuer may further extend
such period, provided that such period together with all such previous and
further consecutive extensions thereof shall not exceed 20 consecutive quarterly
periods, or extend beyond the Maturity Date. Upon the termination of any
Extension Period and upon the payment of all accrued and unpaid interest and
Additional Interest, the Debenture Issuer may commence a new Extension Period,
subject to the foregoing requirements. No interest or Additional Interest shall
be due and payable during an Extension Period, except at the end thereof, but
each installment of interest that would otherwise have been due and payable
during such Extension Period shall bear Additional Interest. During any
Extension Period, Distributions on the Common Securities shall be deferred for a
period equal to the Extension Period. If Distributions are deferred, the
Distributions due shall be paid on the date that the related Extension Period
terminates, to Holders of the Securities as they appear on the books and records
of the Trust on the record date immediately preceding such date. Distributions
on the Securities must be paid on the dates payable (after giving effect to any
Extension Period) to the extent that the Trust has funds available for the
payment of such distributions in the Property Account of the Trust. The Trust's
funds available for Distribution to the Holders of the Securities will be
limited to payments received from the Debenture Issuer.
The Common Securities shall be redeemable as provided in the
Declaration.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee) and irrevocably appoints
agent
to transfer this Common Securit Certificate on the
books of the Trust. The agent may substitute another
to act for him or her.
Date:
Signature:
(Sign exactly as your name appears on the other side
of this Common Security Certificate)
Signature:
(Sign exactly as your name appears on the other side
of this Common Security Certificate)
Signature Guarantee3
3 Signature must be guaranteed by an "eligible guarantor institution" that is a
bank, stockbroker, savings and loan association or credit union, meeting the
requirements of the Security registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Security
registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934, as amended.
EXHIBIT B
SPECIMEN OF INITIAL DEBENTURE
(See Document No. 16)
EXHIBIT C
PLACEMENT AGREEMENT
(See Document No. 1)
Exhibit 4.59
GUARANTEE AGREEMENT
by and between
FIRST BANKS, INC.
and
WILMINGTON TRUST COMPANY
Dated as of December 14, 2006
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (this "Guarantee"), dated as of December 14,
2006, is executed and delivered by First Banks, Inc., a Missouri corporation
(the "Guarantor"), and Wilmington Trust Company, a Delaware banking corporation,
as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Capital Securities (as defined herein) of First
Bank Statutory Trust VII, a Delaware statutory trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of the date hereof among Wilmington Trust Company, not
in its individual capacity but solely as institutional trustee, the
administrators of the Issuer named therein, the Guarantor, as sponsor, and the
holders from time to time of undivided beneficial interests in the assets of the
Issuer, the Issuer is issuing on the date hereof those undivided beneficial
interests, having an aggregate liquidation amount of $50,000,000.00 (the
"Capital Securities"); and
WHEREAS, as incentive for the Holders to purchase the Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Guarantee, to pay to the Holders of Capital
Securities the Guarantee Payments (as defined herein) and to make certain other
payments on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the purchase by each Holder of the
Capital Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of
the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions and Interpretation. In this Guarantee,
unless the context otherwise requires:
(a) capitalized terms used in this Guarantee but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Guarantee has the same meaning
throughout;
(c) all references to "the Guarantee" or "this Guarantee" are to
this Guarantee as modified, supplemented or amended from time to time;
(d) all references in this Guarantee to "Articles" or "Sections" are
to Articles or Sections of this Guarantee, unless otherwise specified;
(e) terms defined in the Declaration as at the date of execution
of this Guarantee have the same meanings when used in this Guarantee, unless
otherwise defined in this Guarantee or unless the context otherwise requires;
and
(f) a reference to the singular includes the plural and vice versa.
"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.
"Beneficiaries" means any Person to whom the Issuer is or hereafter
becomes indebted or liable.
"Capital Securities" has the meaning set forth in the recitals to this
Guarantee.
"Common Securities" means the common securities issued by the Issuer to
the Guarantor pursuant to the Declaration.
"Corporate Trust Office" means the office of the Guarantee Trustee at
which the corporate trust business of the Guarantee Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Guarantee is located at Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-1600, Attention: Corporate Trust
Administration.
"Covered Person" means any Holder of Capital Securities.
"Debentures" means the debt securities of the Guarantor designated the
Floating Rate Junior Subordinated Deferrable Interest Debentures due 2036 held
by the Institutional Trustee (as defined in the Declaration) of the Issuer.
"Declaration Event of Default" means an "Event of Default" as defined
in the Declaration.
"Event of Default" has the meaning set forth in Section 2.4(a).
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Capital Securities, to the extent not
paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined
in the Declaration) which are required to be paid on such Capital Securities to
the extent the Issuer shall have funds available therefor, (ii) the Redemption
Price to the extent the Issuer has funds available therefor, with respect to any
Capital Securities called for redemption by the Issuer, (iii) the Special
Redemption Price to the extent the Issuer has funds available therefor, with
respect to Capital Securities redeemed upon the occurrence of a Special Event,
and (iv) upon a voluntary or involuntary liquidation, dissolution, winding-up or
termination of the Issuer (other than in connection with the distribution of
Debentures to the Holders of the Capital Securities in exchange therefor as
provided in the Declaration), the lesser of (a) the aggregate of the liquidation
amount and all accrued and unpaid Distributions on the Capital Securities to the
date of payment, to the extent the Issuer shall have funds available therefor,
and (b) the amount of assets of the Issuer remaining available for distribution
to Holders in liquidation of the Issuer (in either case, the "Liquidation
Distribution").
"Guarantee Trustee" means Wilmington Trust Company, until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.
"Guarantor" means First Banks, Inc. and each of its successors and
assigns.
"Holder" means any holder, as registered on the books and records of
the Issuer, of any Capital Securities; provided, however, that, in determining
whether the Holders of the requisite percentage of Capital Securities have given
any request, notice, consent or waiver hereunder, "Holder" shall not include the
Guarantor or any Affiliate of the Guarantor.
"Indemnified Person" means the Guarantee Trustee, 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 the date hereof between the
Guarantor and Wilmington Trust Company, not in its individual capacity but
solely as trustee, and any indenture supplemental thereto pursuant to which the
Debentures are to be issued to the institutional trustee of the Issuer.
"Issuer" has the meaning set forth in the opening paragraph to this
Guarantee.
"Liquidation Distribution" has the meaning set forth in the definition
of "Guarantee Payments" herein.
"Majority in liquidation amount of the Capital Securities" means
Holder(s) of outstanding Capital Securities, voting together as a class, but
separately from the holders of Common Securities, of more than 50% of the
aggregate liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions to
the date upon which the voting percentages are determined) of all Capital
Securities then outstanding.
"Obligations" means any costs, expenses or liabilities (but not
including liabilities related to taxes) of the Issuer other than obligations of
the Issuer to pay to holders of any Trust Securities the amounts due such
holders pursuant to the terms of the Trust Securities.
"Officer's Certificate" means, with respect to any Person, a
certificate signed by one Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee shall include:
(a) a statement that the officer signing the Officer's
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by the officer in rendering the Officer's
Certificate;
(c) a statement that the 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 the officer,
such condition or covenant has been complied with.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"Redemption Price" has the meaning set forth in the Indenture.
"Responsible Officer" means, with respect to the Guarantee Trustee, any
officer within the Corporate Trust Office of the Guarantee Trustee including any
Vice President, Assistant Vice President, Secretary, Assistant Secretary or any
other officer of the Guarantee Trustee customarily performing functions similar
to those performed by any of the above designated officers and also, 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.
"Special Event" has the meaning set forth in the Indenture.
"Special Redemption Price" has the meaning set forth in the Indenture.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 3.1.
"Trust Securities" means the Common Securities and the Capital
Securities.
ARTICLE II
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
Section 2.1. Powers and Duties of the Guarantee Trustee.
(a) This Guarantee shall be held by the Guarantee Trustee for the
benefit of the Holders of the Capital Securities, and the Guarantee Trustee
shall not transfer this Guarantee to any Person except a Holder of Capital
Securities exercising his or her rights pursuant to Section 4.4(b) or to a
Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of
its appointment to act as Successor Guarantee Trustee. The right, title and
interest of the Guarantee Trustee shall automatically vest in any Successor
Guarantee Trustee, and such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to the appointment of such Successor Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer
of the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee
shall enforce this Guarantee for the benefit of the Holders of the Capital
Securities.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after curing all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically set forth in this
Guarantee, and no implied covenants shall be read into this Guarantee against
the Guarantee Trustee. In case an Event of Default has occurred (that has not
been waived pursuant to Section 2.4) and is actually known to a Responsible
Officer of the Guarantee Trustee, the Guarantee Trustee shall exercise such of
the rights and powers vested in it by this Guarantee, and use the same degree of
care and skill in its exercise thereof, as a prudent person would exercise or
use under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee shall be construed to relieve the
Guarantee Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions
of this Guarantee, and the Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Guarantee, and no implied
covenants or obligations shall be read into this Guarantee
against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the
requirements of this Guarantee; but in the case of any such
certificates or opinions 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 Guarantee;
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the
Guarantee Trustee, unless it shall be proved that such Responsible
Officer of the Guarantee Trustee or the Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the written direction of the Holders of not less than
a Majority in liquidation amount of the Capital Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Guarantee Trustee, or relating to the exercise of any
trust or power conferred upon the Guarantee Trustee under this
Guarantee; and
(iv) no provision of this Guarantee shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if the Guarantee
Trustee shall have reasonable grounds for believing that the repayment
of such funds is not reasonably assured to it under the terms of
this Guarantee or security and indemnity, reasonably satisfactory to
the Guarantee Trustee, against such risk or liability is not reasonably
assured to it.
Section 2.2. Certain Rights of Guarantee Trustee.
(a) Subject to the provisions of Section 2.1:
(i) The Guarantee Trustee may conclusively rely, and shall be
fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Guarantee shall be sufficiently evidenced by an Officer's
Certificate.
(iii) Whenever, in the administration of this Guarantee, the
Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officer's Certificate of the Guarantor
which, upon receipt of such request, shall be promptly delivered by
the Guarantor.
(iv) The Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any
re-recording, refiling or re-registration thereof).
(v) The Guarantee Trustee may consult with counsel of its
selection, and the advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and protection
in respect of any action taken, suffered or omitted by it hereunder in
good faith and in accordance with such advice or opinion. Such counsel
may be counsel to the Guarantor or any of its Affiliates and may
include any of its employees. The Guarantee Trustee shall have the
right at any time to seek instructions concerning the administration
of this Guarantee from any court of competent jurisdiction.
(vi) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee at
the request or direction of any Holder, unless such Holder shall have
provided to the Guarantee Trustee such security and indemnity,
reasonably satisfactory to the Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses and the expenses of
the Guarantee Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such
request or direction, including such reasonable advances as may be
requested by the Guarantee Trustee; provided, however, that nothing
contained in this Section 2.2(a)(vi) shall relieve the Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation
to exercise the rights and powers vested in it by this Guarantee.
(vii) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit.
(viii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, nominees, custodians or attorneys, and the
Guarantee Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due
care by it hereunder.
(ix) Any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders of the Capital Securities, and the
signature of the Guarantee Trustee or its agents alone shall be
sufficient and effective to perform any such action. No third party
shall be required to inquire as to the authority of the Guarantee
Trustee to so act or as to its compliance with any of the terms and
provisions of this Guarantee, both of which shall be conclusively
evidenced by the Guarantee Trustee's or its agent's taking such
action.
(x) Whenever in the administration of this Guarantee the
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (i) may request instructions from the
Holders of a Majority in liquidation amount of the Capital Securities,
(ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in accordance with such
instructions.
(xi) The Guarantee Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith, without
negligence, and reasonably believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this
Guarantee.
(b) No provision of this Guarantee shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law to perform
any such act or acts or to exercise any such right, power, duty or obligation.
No permissive power or authority available to the Guarantee Trustee shall be
construed to be a duty.
Section 2.3. Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Guarantee shall be taken as the statements of the
Guarantor, and the Guarantee Trustee does not assume any responsibility for
their correctness. The Guarantee Trustee makes no representation as to the
validity or sufficiency of this Guarantee.
Section 2.4. Events of Default; Waiver.
(a) An Event of Default under this Guarantee will occur upon the
failure of the Guarantor to perform any of its payment or other obligations
hereunder.
(b) The Holders of a Majority in liquidation amount of the Capital
Securities may, voting or consenting as a class, on behalf of the Holders of all
of the Capital Securities, waive any past Event of Default and its consequences.
Upon such waiver, any such Event of Default shall cease to exist, and shall be
deemed to have been cured, for every purpose of this Guarantee, but no such
waiver shall extend to any subsequent or other default or Event of Default or
impair any right consequent thereon.
Section 2.5. Events of Default; Notice.
(a) The Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders of the Capital Securities and the Guarantor, notices of all Events of
Default actually known to a Responsible Officer of the Guarantee Trustee, unless
such defaults have been cured before the giving of such notice, provided,
however, that the Guarantee Trustee shall be protected in withholding such
notice if and so long as a Responsible Officer of the Guarantee Trustee in good
faith determines that the withholding of such notice is in the interests of the
Holders of the Capital Securities.
(b) The Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default unless the Guarantee Trustee shall have received written
notice from the Guarantor or a Holder of the Capital Securities (except in the
case of a payment default), or a Responsible Officer of the Guarantee Trustee
charged with the administration of this Guarantee shall have obtained actual
knowledge thereof.
ARTICLE III
GUARANTEE TRUSTEE
Section 3.1. 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 of America or any State or Territory thereof
or of the District of Columbia, or Person authorized under such laws
to exercise corporate trust powers, having a combined capital and
surplus of at least 50 million U.S. dollars ($50,000,000), and subject
to supervision or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation publishes reports
of condition at least annually, pursuant to law or to the requirements
of the supervising or examining authority referred to above, then, for
the purposes of this Section 3.1(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be eligible
to so act under Section 3.1(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 3.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee shall either eliminate such interest or resign to the extent
and in the manner provided by, and subject to this Guarantee.
Section 3.2. Appointment, Removal and Resignation of Guarantee
Trustee.
(a) Subject to Section 3.2(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor except during an
Event of Default.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 3.2(a) until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which resignation shall
not take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by an instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 3.2 within 60 days after
delivery of an instrument of removal or resignation, the Guarantee Trustee
resigning or being removed may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or omissions
to act of any Successor Guarantee Trustee.
(f) Upon termination of this Guarantee or removal or resignation of
the Guarantee Trustee pursuant to this Section 3.2, the Guarantor shall pay to
the Guarantee Trustee all amounts owing to the Guarantee Trustee under Sections
7.2 and 7.3 accrued to the date of such termination, removal or resignation.
ARTICLE IV
GUARANTEE
Section 4.1 Guarantee.
(a) The Guarantor irrevocably and unconditionally agrees to pay in
full to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer), as and when due, regardless of any defense
(except the defense of payment by the Issuer), right of set-off or counterclaim
that the Issuer may have or assert. The Guarantor's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Issuer to pay such amounts to the
Holders.
(b) The Guarantor hereby also agrees to assume any and all Obligations
of the Issuer and in the event any such Obligation is not so assumed, subject to
the terms and conditions hereof, the Guarantor hereby irrevocably and
unconditionally guarantees to each Beneficiary the full payment, when and as
due, of any and all Obligations to such Beneficiaries. This Guarantee is
intended to be for the benefit of, and to be enforceable by, all such
Beneficiaries, whether or not such Beneficiaries have received notice hereof.
Section 4.2. Waiver of Notice and Demand. The Guarantor hereby waives
notice of acceptance of this Guarantee and of any liability to which it applies
or may apply, presentment, demand for payment, any right to require a proceeding
first against the Issuer or any other Person before proceeding against the
Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
Section 4.3. Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Capital Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, Redemption Price, Special Redemption Price,
Liquidation Distribution or any other sums payable under the terms of the
Capital Securities or the extension of time for the performance of any other
obligation under, arising out of or in connection with, the Capital Securities
(other than an extension of time for payment of Distributions, Redemption Price,
Special 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 Capital Securities, or any
action on the part of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in, the Capital
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 4.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
Section 4.4. Rights of Holders.
(a) The Holders of a Majority in liquidation amount of the Capital
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of this
Guarantee or to direct the exercise of any trust or power conferred upon the
Guarantee Trustee under this Guarantee; provided, however, that (subject to
Section 2.1) the Guarantee Trustee shall have the right to decline to follow any
such direction if the Guarantee Trustee being advised by counsel determines that
the action or proceeding so directed may not lawfully be taken or if the
Guarantee Trustee in good faith by its board of directors or trustees, executive
committees or a trust committee of directors or trustees and/or Responsible
Officers shall determine that the action or proceedings so directed would
involve the Guarantee Trustee in personal liability.
(b) Any Holder of Capital Securities may institute a legal
proceeding directly against the Guarantor to enforce the Guarantee Trustee's
rights under this Guarantee, without first instituting a legal proceeding
against the Issuer, the Guarantee Trustee or any other Person. The Guarantor
waives any right or remedy to require that any such action be brought first
against the Issuer, the Guarantee Trustee or any other Person before so
proceeding directly against the Guarantor.
Section 4.5. Guarantee of Payment. This Guarantee creates a guarantee
of payment and not of collection.
Section 4.6. Subrogation. The Guarantor shall be subrogated to all (if
any) rights of the Holders of Capital Securities against the Issuer in respect
of any amounts paid to such Holders by the Guarantor under this Guarantee;
provided, however, that the Guarantor shall not (except to the extent required
by 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 Guarantee, if,
after giving effect to any such payment, any amounts are due and unpaid under
this Guarantee. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.
Section 4.7. Independent Obligations. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of the Issuer with
respect to the Capital Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee notwithstanding the occurrence of any event referred to
in subsections (a) through (g), inclusive, of Section 4.3 hereof.
Section 4.8. Enforcement by a Beneficiary. A Beneficiary may enforce
the obligations of the Guarantor contained in Section 4.1(b) directly against
the Guarantor and the Guarantor waives any right or remedy to require that any
action be brought against the Issuer or any other person or entity before
proceeding against the Guarantor. The Guarantor shall be subrogated to all
rights (if any) of any Beneficiary against the Issuer in respect of any amounts
paid to the Beneficiaries by the Guarantor under this Guarantee; provided,
however, that the Guarantor shall not (except to the extent required by
mandatory provisions of law) be entitled to enforce or exercise any rights that
it may acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee, if at the
time of any such payment, and after giving effect to such payment, any amounts
are due and unpaid under this Guarantee.
ARTICLE V
LIMITATION OF TRANSACTIONS; SUBORDINATION
Section 5.1. Limitation of Transactions. So long as any Capital
Securities remain outstanding, if (a) there shall have occurred and be
continuing an Event of Default or a Declaration Event of Default or (b) the
Guarantor shall have selected an Extension Period as provided in the Declaration
and such period, or any extension thereof, shall have commenced and be
continuing, then the Guarantor shall not and shall not permit any Affiliate to
(x) declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of the Guarantor's
or such Affiliate's capital stock (other than payments of dividends or
distributions to the Guarantor) or make any guarantee payments with respect to
the foregoing or (y) make any payment of principal of or interest or premium, if
any, on or repay, repurchase or redeem any debt securities of the Guarantor or
any Affiliate that rank pari passu in all respects with or junior in interest to
the Debentures (other than, with respect to clauses (x) and (y) above, (i)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Guarantor in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of one or more employees, officers,
directors or consultants, in connection with a dividend reinvestment or
stockholder stock purchase plan or in connection with the issuance of capital
stock of the Guarantor (or securities convertible into or exercisable for such
capital stock) as consideration in an acquisition transaction entered into prior
to the occurrence of the Event of Default, Declaration Event of Default or
Extension Period, as applicable, (ii) as a result of any exchange or conversion
of any class or series of the Guarantor's capital stock (or any capital stock of
a subsidiary of the Guarantor) for any class or series of the Guarantor's
capital stock or of any class or series of the Guarantor's indebtedness for any
class or series of the Guarantor's capital stock, (iii) the purchase of
fractional interests in shares of the Guarantor's capital stock pursuant to the
conversion or exchange provisions of such capital stock or the security being
converted or exchanged, (iv) any declaration of a dividend in connection with
any stockholders' rights plan, or the issuance of rights, stock or other
property under any stockholders' rights plan, or the redemption or repurchase of
rights pursuant thereto, (v) any dividend in the form of stock, warrants,
options or other rights where the dividend stock or the stock issuable upon
exercise of such warrants, options or other rights is the same stock as that on
which the dividend is being paid or ranks pari passu with or junior to such
stock and any cash payments in lieu of fractional shares issued in connection
therewith, or (vi) payments under this Guarantee).
Section 5.2. Ranking. This Guarantee will constitute an unsecured
obligation of the Guarantor and will rank subordinate and junior in right of
payment to all present and future Senior Indebtedness (as defined in the
Indenture) of the Guarantor. By their acceptance thereof, each Holder of Capital
Securities agrees to the foregoing provisions of this Guarantee and the other
terms set forth herein.
The right of the Guarantor to participate in any distribution of assets
of any of its subsidiaries upon any such subsidiary's liquidation or
reorganization or otherwise is subject to the prior claims of creditors of that
subsidiary, except to the extent the Guarantor may itself be recognized as a
creditor of that subsidiary. Accordingly, the Guarantor's obligations under this
Guarantee will be effectively subordinated to all existing and future
liabilities of the Guarantor's subsidiaries, and claimants should look only to
the assets of the Guarantor for payments hereunder. This Guarantee does not
limit the incurrence or issuance of other secured or unsecured debt of the
Guarantor, including Senior Indebtedness of the Guarantor, under any indenture
that the Guarantor may enter into in the future or otherwise.
ARTICLE VI
TERMINATION
Section 6.1. Termination. This Guarantee shall terminate as to the
Capital Securities (i) upon full payment of the Redemption Price or Special
Redemption Price of all Capital Securities then outstanding, (ii) upon the
distribution of all of the Debentures to the Holders of all of the Capital
Securities or (iii) upon full payment of the amounts payable in accordance with
the Declaration upon dissolution of the Issuer. This Guarantee will continue to
be effective or will be reinstated, as the case may be, if at any time any
Holder of Capital Securities must restore payment of any sums paid under the
Capital Securities or under this Guarantee.
ARTICLE VII
INDEMNIFICATION
Section 7.1. Exculpation.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Guarantee or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Issuer or the Guarantor and upon such
information, opinions, reports or statements presented to the Issuer or the
Guarantor by any Person as to matters the Indemnified Person reasonably believes
are within such other Person's professional or expert competence and who, if
selected by such Indemnified Person, has been selected with reasonable care by
such Indemnified Person, including information, opinions, reports or statements
as to the value and amount of the assets, liabilities, profits, losses, or any
other facts pertinent to the existence and amount of assets from which
Distributions to Holders of Capital Securities might properly be paid.
Section 7.2. Indemnification.
(a) The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any and all loss,
liability, damage, claim or expense incurred without negligence or willful
misconduct on the part of the Indemnified Person, arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including, but not limited to, the costs and expenses (including
reasonable legal fees and expenses) of the Indemnified Person defending itself
against, or investigating, any claim or liability in connection with the
exercise or performance of any of the Indemnified Person's powers or duties
hereunder. The obligation to indemnify as set forth in this Section 7.2 shall
survive the resignation or removal of the Guarantee Trustee and the termination
of this Guarantee.
(b) Promptly after receipt by an Indemnified Person under this
Section 7.2 of notice of the commencement of any action, such Indemnified Person
will, if a claim in respect thereof is to be made against the Guarantor under
this Section 7.2, notify the Guarantor in writing of the commencement thereof;
but the failure so to notify the Guarantor (i) will not relieve the Guarantor
from liability under paragraph (a) above unless and to the extent that the
Guarantor did not otherwise learn of such action and such failure results in the
forfeiture by the Guarantor of substantial rights and defenses and (ii) will
not, in any event, relieve the Guarantor from any obligations to any Indemnified
Person other than the indemnification obligation provided in paragraph (a)
above. The Guarantor shall be entitled to appoint counsel of the Guarantor's
choice at the Guarantor's expense to represent the Indemnified Person in any
action for which indemnification is sought (in which case the Guarantor shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the Indemnified Person or Persons except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
Indemnified Person. Notwithstanding the Guarantor's election to appoint counsel
to represent the Guarantor in an action, the Indemnified Person shall have the
right to employ separate counsel (including local counsel), and the Guarantor
shall bear the reasonable fees, costs and expenses of such separate counsel if
(i) the use of counsel chosen by the Guarantor to represent the Indemnified
Person would present such counsel with a conflict of interest, (ii) the actual
or potential defendants in, or targets of, any such action include both the
Indemnified Person and the Guarantor and the Indemnified Person shall have
reasonably concluded that there may be legal defenses available to it and/or
other Indemnified Person(s) which are different from or additional to those
available to the Guarantor, (iii) the Guarantor shall not have employed counsel
satisfactory to the Indemnified Person to represent the Indemnified Person
within a reasonable time after notice of the institution of such action or (iv)
the Guarantor shall authorize the Indemnified Person to employ separate counsel
at the expense of the Guarantor. The Guarantor will not, without the prior
written consent of the Indemnified Persons, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the Indemnified Persons are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each Indemnified Person from all
liability arising out of such claim, action, suit or proceeding.
Section 7.3. Compensation; Reimbursement of Expenses. The Guarantor
agrees:
(a) to pay to the Guarantee Trustee from time to time such
compensation for all services rendered by it hereunder as the parties shall
agree to from time to time (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust); and
(b) except as otherwise expressly provided herein, to reimburse the
Guarantee Trustee upon request for all reasonable expenses, disbursements and
advances incurred or made by it in accordance with any provision of this
Guarantee (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or willful misconduct.
For purposes of clarification, this Section 7.3 does not contemplate
the payment by the Guarantor of acceptance or annual administration fees owing
to the Guarantee Trustee for services to be provided by the Guarantee Trustee
under this Guarantee or the fees and expenses of the Guarantee Trustee's counsel
in connection with the closing of the transactions contemplated by this
Guarantee. The provisions of this Section 7.3 shall survive the resignation or
removal of the Guarantee Trustee and the termination of this Guarantee.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Successors and Assigns. All guarantees and agreements
contained in this Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Guarantor and shall inure to the benefit of
the Holders of the Capital Securities then outstanding. Except in connection
with any merger or consolidation of the Guarantor with or into another entity or
any sale, transfer or lease of the Guarantor's assets to another entity, in each
case, to the extent permitted under the Indenture, the Guarantor may not assign
its rights or delegate its obligations under this Guarantee without the prior
approval of the Holders of at least a Majority in liquidation amount of the
Capital Securities.
Section 8.2. Amendments. Except with respect to any changes that do
not adversely affect the rights of Holders of the Capital Securities in any
material respect (in which case no consent of Holders will be required), this
Guarantee may be amended only with the prior approval of the Holders of not less
than a Majority in liquidation amount of the Capital Securities. The provisions
of the Declaration with respect to amendments thereof apply to the giving of
such approval.
Section 8.3. Notices. All notices provided for in this Guarantee shall
be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) If given to the Guarantee Trustee, at the Guarantee Trustee's
mailing address set forth below (or such other address as the Guarantee Trustee
may give notice of to the Holders of the Capital Securities and the Guarantor):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-1600
Attention Corporate Trust Administration
Telecopy: 302-636-4140
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Capital Securities and to the Guarantee Trustee):
First Banks, Inc.
600 James S. McDonnell Boulevard
Mail Stop M1 199 014
Hazelwood, Missouri 63042
Attention: Lisa K. Vansickle
Telecopy: 314-592-6621
(c) If given to any Holder of the Capital Securities, at the address
set forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
Section 8.4. Benefit. This Guarantee is solely for the benefit of the
Beneficiaries and, subject to Section 2.1(a), is not separately transferable
from the Capital Securities.
Section 8.5. Governing Law. THIS GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401
OF THE NEW YORK GENERAL OBLIGATIONS LAW).
Section 8.6. Counterparts. This Guarantee may be executed in one or
more counterparts, each of which shall be an original, but all of which taken
together shall constitute one and the same instrument.
Section 8.7 Separability. In case one or more of the provisions
contained in this Guarantee 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 Guarantee, but this Guarantee
shall be construed as if such invalid or illegal or unenforceable provision had
never been contained herein.
Signatures appear on the following page
THIS GUARANTEE is executed as of the day and year first above written.
FIRST BANKS, INC., as Guarantor
By: /s/ Lisa K. Vansickle
-----------------------------------
Name: Lisa K. Vansickle
Title: Senior Vice President
WILMINGTON TRUST COMPANY, as Guarantee
Trustee
By: /s/ Christopher J. Monigle
-----------------------------------
Name: Christopher J. Monigle
Title: Vice President
Exhibit 4.60
FIRST BANKS, INC.
50,000 Capital Securities
Floating Rate Capital Securities
(Liquidation Amount $1,000.00 per Capital Security)
PLACEMENT AGREEMENT
December 6, 2006
FTN Financial Capital Markets
845 Crossover Lane, Suite 150
Memphis, Tennessee 38117
Keefe, Bruyette & Woods, Inc.
787 7th Avenue
4th Floor
New York, New York 10019
Ladies and Gentlemen:
First Banks, Inc., a Missouri corporation (the "Company"), and its
financing subsidiary, First Bank Statutory Trust VII, a Delaware statutory trust
(the "Trust," and hereinafter together with the Company, the "Offerors"), hereby
confirm their agreement (this "Agreement") with you as placement agents (the
"Placement Agents"), as follows:
Section 1. Issuance and Sale of Securities.
1.1. Introduction. The Offerors propose to issue and sell at the
Closing (as defined in Section 2.3.1 hereof) 50,000 of the Trust's Floating Rate
Capital Securities, with a liquidation amount of $1,000.00 per capital security
(the "Capital Securities"), to First Tennessee Bank National Association, a
national banking association organized under the laws of the United States of
America and Preferred Term Securities XXIV, Ltd., a company with limited
liability established under the laws of the Cayman Islands (the "Purchasers")
pursuant to the terms of Subscription Agreements entered into, or to be entered
into on or prior to the Closing Date (as defined in Section 2.3.1 hereof),
between the Offerors and the Purchasers (the "Subscription Agreements"), the
forms of which are attached hereto as Exhibit A-1 and Exhibit A-2 and
------------ ------------
incorporated herein by this reference.
1.2. Operative Agreements. The Capital Securities shall be fully and
unconditionally guaranteed on a subordinated basis by the Company with respect
to distributions and amounts payable upon liquidation, redemption or repayment
(the "Guarantee") pursuant and subject to the Guarantee Agreement (the
"Guarantee Agreement"), to be dated as of the Closing Date and executed and
delivered by the Company and Wilmington Trust Company ("WTC"), as trustee (the
"Guarantee Trustee"), for the benefit from time to time of the holders of the
Capital Securities. The entire proceeds from the sale by the Trust to the
holders of the Capital Securities shall be combined with the entire proceeds
from the sale by the Trust to the Company of its common securities (the "Common
Securities"), and shall be used by the Trust to purchase $51,547,000.00 in
principal amount of the Floating Rate Junior Subordinated Deferrable Interest
Debentures (the "Debentures") of the Company. The Capital Securities and the
Common Securities for the Trust shall be issued pursuant to an Amended and
Restated Declaration of Trust among WTC, as Delaware trustee (the "Delaware
Trustee"), WTC, as institutional trustee (the "Institutional Trustee"), the
Administrators named therein, and the Company, to be dated as of the Closing
Date and in substantially the form heretofore delivered to the Placement Agents
(the "Trust Agreement"). The Debentures shall be issued pursuant to an Indenture
(the "Indenture"), to be dated as of the Closing Date, between the Company and
WTC, as indenture trustee (the "Indenture Trustee"). The documents identified in
this Section 1.2 and in Section 1.1 are referred to herein as the "Operative
Documents."
1.3. Rights of Purchasers. The Capital Securities shall be offered
and sold by the Trust directly to the Purchasers without registration of any of
the Capital Securities, the Debentures or the Guarantee under the Securities Act
of 1933, as amended (the "Securities Act"), or any other applicable securities
laws in reliance upon exemptions from the registration requirements of the
Securities Act and other applicable securities laws. The Offerors agree that
this Agreement shall be incorporated by reference into the Subscription
Agreements and the Purchasers shall be entitled to each of the benefits of the
Placement Agents and the Purchasers under this Agreement and shall be entitled
to enforce obligations of the Offerors under this Agreement as fully as if the
Purchasers were parties to this Agreement. The Offerors and the Placement Agents
have entered into this Agreement to set forth their understanding as to their
relationship and their respective rights, duties and obligations.
1.4. Legends. Upon original issuance thereof, and until such time as
the same is no longer required under the applicable requirements of the
Securities Act, the Capital Securities and Debentures certificates shall each
contain a legend as required pursuant to any of the Operative Documents.
Section 2. Purchase of Capital Securities.
2.1. Exclusive Rights; Purchase Price. From the date hereof until
the Closing Date (which date may be extended by mutual agreement of the Offerors
and the Placement Agents), the Offerors hereby grant to the Placement Agents the
exclusive right to arrange for the sale of the Capital Securities to the
Purchasers at a purchase price of $1,000.00 per Capital Security.
2.2. Subscription Agreements. The Offerors hereby agree to evidence
their acceptance of the subscription by countersigning a copy of each of the
Subscription Agreements and returning the same to the Placement Agents.
2.3. Closing and Delivery of Payment.
2.3.1. Closing; Closing Date. The sale and purchase of the
Capital Securities by the Offerors to the Purchasers shall take place at a
closing (the "Closing") at the offices of Lewis, Rice & Fingersh, L.C., at 10:00
a.m. (St. Louis time) on December 14, 2006, or such other business day as may be
agreed upon by the Offerors and the Placement Agents (the "Closing Date");
provided, however, that in no event shall the Closing Date occur later than
December 29, 2006 unless consented to by the Purchasers. Payment by the
Purchasers shall be payable in the manner set forth in the Subscription
Agreements and shall be made prior to or on the Closing Date.
2.3.2. Delivery. The certificates for the Capital Securities
shall be in definitive form, each registered in the name of the applicable
Purchaser, or Purchaser designee, and in the aggregate amount of the Capital
Securities purchased by the Purchaser.
2.3.3. Transfer Agent. Not less than two full business days
prior to the Closing Date, a global Capital Securities certificate in definitive
form shall be made available by or on behalf of the Offerors to the Placement
Agents and the Institutional Trustee for inspection and delivery to the
Depository Trust Company ("DTC") or its custodian.
2.4. Costs and Expenses. Whether or not this Agreement is terminated
or the sale of the Capital Securities is consummated, the Company hereby
covenants and agrees that it shall pay or cause to be paid (dire
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