UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended:
JUNE 30, 1996
Commission file number: 1-10853
SOUTHERN NATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
North Carolina 56-0939887
(State of Incorporation) (I.R.S. Employer Identification No.)
200 West Second Street
Winston-Salem, North Carolina 27101
(Address of Principal Executive Offices) (Zip Code)
(910) 733-2000
(Registrant's Telephone Number, Including Area Code)
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This Form 10-Q has 25 pages. The Exhibit Index is included on page 23.
SOUTHERN NATIONAL CORPORATION
FORM 10-Q
June 30, 1996
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 1
Consolidated Financial Statements 1
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Analysis of Financial Condition 8
Asset/Liability Management 10
Capital Adequacy and Resources 13
Analysis of Results of Operations 15
Part II. OTHER INFORMATION 23
Item 1. Legal Proceedings 23
Item 4. Submission of Matters to a Vote
of Security Holders 23
Item 6. Exhibits and Reports on Form 8-K 23
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SIGNATURES
EXHIBIT 4.1 Senior Indenture (including form of
Senior Debt Security), between Southern National
Corporation and State Street Bank and Trust Company,
as Trustee, dated as of May 24, 1996.
EXHIBIT 4.2 Subordinated Indenture (including form of
Subordinated Debt Security), between Southern National
Corporation and State Street Bank and Trust Company,
as Trustee, dated as of May 24, 1996.
EXHIBIT 11 Computation of Earnings Per Share
EXHIBIT 27 Financial Data Schedule - Included with
electronically-filed document only.
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Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
SOUTHERN NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per share data)
June 30, December 31,
1996 1995
------------ --------------
Assets
Cash and due from banks $ 571,872 $ 582,612
Interest-bearing deposits with banks 599 1,172
Federal funds sold and securities purchased under resale agreements or
similiar arrangements 21,610 118,977
Securities available for sale 5,127,899 5,201,344
Securities held to maturity (market value: $137,087 at June 30, 1996,
and $159,886 at December 31, 1995) 133,953 153,969
Loans held for sale 293,814 245,280
Loans and leases, net of unearned income 13,687,664 13,567,205
Allowance for loan and lease losses (177,195) (172,158)
------------ --------------
Loans and leases, net 13,510,469 13,395,047
------------ --------------
Premises and equipment, net 321,151 312,002
Other assets 574,770 482,526
------------ --------------
Total assets $ 20,556,137 $ 20,492,929
============ ==============
Liabilities and Shareholders' Equity
Noninterest-bearing demand deposits $ 1,946,849 $ 1,885,725
Savings and interest checking 1,476,271 1,591,488
Money rate savings 3,046,621 3,049,810
Other time deposits 8,520,943 8,157,033
------------ --------------
Total deposits 14,990,684 14,684,056
Short-term borrowed funds 1,785,553 2,491,285
Long-term debt 1,955,559 1,383,935
Accounts payable and other liabilities 247,090 259,590
------------ --------------
Total liabilities 18,978,886 18,818,866
------------ --------------
Shareholders' equity:
Preferred stock, $5 par, 5,000,000 shares authorized, none issued and
outstanding at June 30, 1996, 733,869 issued and outstanding at December 31, 1995 -- 3,669
Common stock, $5 par, 300,000,000 shares authorized, 103,430,150
issued and outstanding at June 30, 1996, and 103,357,440 at
December 31, 1995 517,151 516,787
Paid-in capital 158,572 279,204
Retained earnings 938,708 847,550
Loan to employee stock ownership plan and unvested restricted stock (3,566) (4,314)
Net unrealized (depreciation) appreciation on securities available for sale (33,614) 31,167
------------ --------------
Total shareholders' equity 1,577,251 1,674,063
------------ --------------
Total liabilities and shareholders' equity $ 20,556,137 $ 20,492,929
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See accompanying notes to consolidated financial statements.
SOUTHERN NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share data)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
---------------------------------- --------------------------------
1996 1995 1996 1995
-------------- -------------- -------------- --------------
Interest Income
Interest and fees on loans and leases $ 312,355 $ 309,680 $ 620,964 $ 603,059
Interest and dividends on securities 76,380 79,684 151,321 154,286
Interest on short-term investments 144 733 376 1,389
-------------- -------------- -------------- --------------
Total interest income 388,879 390,097 772,661 758,734
-------------- -------------- -------------- --------------
Interest Expense
Interest on deposits 136,870 142,180 277,358 272,314
Interest on short-term borrowed funds 25,409 48,194 52,986 89,253
Interest on long-term debt 25,762 14,761 47,836 29,384
-------------- -------------- -------------- --------------
Total interest expense 188,041 205,135 378,180 390,951
-------------- -------------- -------------- --------------
Net Interest Income 200,838 184,962 394,481 367,783
Provision for loan and lease losses 12,000 7,000 22,500 14,000
-------------- -------------- -------------- --------------
Net Interest Income After Provision
for Loan and Lease Losses 188,838 177,962 371,981 353,783
-------------- -------------- -------------- --------------
Noninterest Income
Service charges on deposit accounts 26,804 22,511 52,018 43,781
Mortgage banking activities 8,542 4,367 17,842 9,957
Trust income 6,166 4,715 10,840 8,995
General insurance commissions 4,577 4,163 10,766 8,278
Other nondeposit fees and commissions 18,779 14,632 35,689 30,419
Securities losses, net (154) -- (162) (19,845)
Other noninterest income 7,089 16,989 12,477 22,769
-------------- -------------- -------------- --------------
Total noninterest income 71,803 67,377 139,470 104,354
-------------- -------------- -------------- --------------
Noninterest Expense
Personnel expense 74,542 75,343 148,208 199,576
Occupancy and equipment expense 24,870 27,729 49,833 57,284
Foreclosed property expense 348 1,034 1,092 1,734
Federal deposit insurance expense 3,172 7,975 6,527 15,980
Other noninterest expense 47,532 47,822 91,750 114,680
-------------- -------------- -------------- --------------
Total noninterest expense 150,464 159,903 297,410 389,254
-------------- -------------- -------------- --------------
Earnings
Income before income taxes 110,177 85,436 214,041 68,883
Income tax expense 36,260 27,528 70,514 23,320
-------------- -------------- -------------- --------------
Net income 73,917 57,908 143,527 45,563
Preferred dividend requirements -- 1,289 610 2,588
-------------- -------------- -------------- --------------
Income applicable to common shares $ 73,917 $ 56,619 $ 142,917 $ 42,975
============== ============== ============== ==============
Per Common Share
Net income:
Primary $ .70 $ .55 $ 1.38 $ .42
============== ============== ============== ==============
Fully diluted $ .70 $ .53 $ 1.35 $ .42
============== ============== ============== ==============
Cash dividends declared $ .23 $ .20 $ .46 $ .40
============== ============== ============== ==============
Average Shares Outstanding
Primary 105,150,050 103,523,801 103,840,916 103,342,418
============== ============== ============== ==============
Fully diluted 105,436,287 108,774,906 106,038,145 108,665,929
============== ============== ============== ==============
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See accompanying notes to consolidated financial statements.
SOUTHERN NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
(Dollars in thousands)
Shares of
Common Preferred Common Paid-In
Stock Stock Stock Capital
-------------- ----------- --------- -----------
Balance, December 31, 1994 102,215,032 $ 3,850 $ 511,075 $ 285,599
Add (Deduct)
Net income -- -- -- --
Common stock issued 1,154,024 -- 5,770 13,319
Redemption of common stock (659,750) -- (3,299) (10,561)
Net appreciation on securities available for sale -- -- -- --
Preferred stock cancellations and conversions -- (91) -- (2,267)
Cash dividends declared:
Common stock -- -- -- --
Preferred stock -- -- -- --
Amortization of unearned stock compensation -- -- -- --
-------------- ----------- --------- -----------
Balance, June 30, 1995 102,709,306 $ 3,759 $ 513,546 $ 286,090
============== =========== ========= ===========
Balance, December 31, 1995 103,357,440 $ 3,669 $ 516,787 $ 279,204
Add (Deduct)
Net income -- -- -- --
Common stock issued 1,189,018 -- 5,945 22,679
Redemption of common stock (5,451,000) -- (27,255) (125,306)
Net depreciation on securities available for sale -- -- -- --
Preferred stock cancellations and conversions 4,334,692 (3,669) 21,674 (18,005)
Cash dividends declared:
Common stock -- -- -- --
Preferred stock -- -- -- --
Amortization of unearned stock compensation -- -- -- --
-------------- ----------- --------- -----------
Balance, June 30, 1996 103,430,150 $ -- $ 517,151 $ 158,572
============== =========== ========= ===========
Retained
Earnings
and Other* Total
------------ ------------
Balance, December 31, 1994 $ 695,953 $ 1,496,477
Add (Deduct)
Net income 45,563 45,563
Common stock issued -- 19,089
Redemption of common stock -- (13,860)
Net appreciation on securities available for sale 81,639 81,639
Preferred stock cancellations and conversions -- (2,358)
Cash dividends declared:
Common stock (53,948) (53,948)
Preferred stock (2,552) (2,552)
Amortization of unearned stock compensation 919 919
------------ ------------
Balance, June 30, 1995 $ 767,574 $ 1,570,969
============ ============
Balance, December 31, 1995 $ 874,403 $ 1,674,063
Add (Deduct)
Net income 143,527 143,527
Common stock issued -- 28,624
Redemption of common stock -- (152,561)
Net depreciation on securities available for sale (64,781) (64,781)
Preferred stock cancellations and conversions -- --
Cash dividends declared:
Common stock (51,759) (51,759)
Preferred stock (610) (610)
Amortization of unearned stock compensation 748 748
------------ ------------
Balance, June 30, 1996 $ 901,528 $ 1,577,251
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See accompanying notes to consolidated financial statements.
SOUTHERN NATIONAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
(Dollars in thousands)
1996 1995
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Cash Flows From Operating Activities:
Net income ........................................................................ $ 143,527 $ 45,563
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan and lease losses........................................... 22,500 14,000
Depreciation of premises and equipment........................................ 18,135 15,357
Amortization of intangibles................................................... 6,022 4,801
Accretion of negative goodwill................................................ (3,119) (3,191)
Amortization of unearned stock compensation................................... 748 919
Discount accretion and premium amortization on securities, net................ 1,520 2,038
Loss (gain) on sales of trading account securities, net....................... 5 (38)
Loss (gain) on sales of securities, net....................................... 162 19,845
Loss (gain) on sales of loans and mortgage loan servicing rights, net......... 1,175 470
Loss (gain) on disposals of premises and equipment, net....................... (279) (8,516)
Loss (gain) on foreclosed property and other real estate, net................. 493 927
Proceeds from sales of trading account securities, net of purchases........... (5) 38
Proceeds from sales of loans held for sale.................................... 738,369 186,924
Purchases of loans held for sale.............................................. (233,994) (76,390)
Origination of loans held for sale, net of principal collected................ (554,084) (177,976)
Decrease (increase) in:
Accrued interest receivable................................................ 13,028 (38,967)
Other assets............................................................... (102,059) 102,979
Increase (decrease) in:
Accrued interest payable................................................... 3,405 11,512
Accounts payable and other liabilities..................................... 19,269 64,719
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Net cash provided by operating activities................................ 74,818 165,014
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Cash Flows From Investing Activities:
Proceeds from sales of securities available for sale .............................. 265,477 977,827
Proceeds from maturities of securities available for sale.......................... 1,116,494 529,885
Purchases of securities available for sale......................................... (907,827) (1,591,094)
Proceeds from maturities of securities held to maturity............................ 21,279 125,469
Purchases of securities held to maturity........................................... (1,350) (42,550)
Leases made to customers........................................................... (24,475) (22,219)
Principal collected on leases...................................................... 10,499 23,378
Loan originations, net of principal collected...................................... (586,565) (631,652)
Purchases of loans................................................................. (52,609) (94,686)
Proceeds from disposals of premises and equipment.................................. 1,298 7,632
Purchases of premises and equipment................................................ (28,303) (35,552)
Proceeds from sales of foreclosed property......................................... 6,519 5,439
Proceeds from sales of other real estate held for development or sale.............. 3,123 2,947
Other, net......................................................................... (6,836) (8,216)
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Net cash used in investing activities.................................... (183,276) (753,392)
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Cash Flows From Financing Activities:
Net increase in deposits........................................................... 306,628 22,402
Net (decrease) increase in short-term borrowed funds............................... (705,732) 244,685
Proceeds from long-term debt....................................................... 960,059 521,181
Repayments of long-term debt....................................................... (388,435) (119,472)
Net proceeds from common stock issued.............................................. 28,624 19,089
Redemption of common stock......................................................... (152,561) (13,860)
Preferred stock cancellations and conversions...................................... - (2,358)
Cash dividends paid on common and preferred stock.................................. (48,805) (44,681)
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Net cash (used in) provided by financing activities...................... (222) 626,986
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Net (Decrease) Increase in Cash and Cash Equivalents................................. (108,680) 38,608
Cash and Cash Equivalents at Beginning of Period..................................... 702,761 671,777
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Cash and Cash Equivalents at End of Period........................................... $ 594,081 $ 710,385
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See accompanying notes to consolidated financial statements.
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest $ 374,775 $ 379,439
Income taxes 64,656 70,121
Noncash financing and investing activities:
Transfer of loans to foreclosed property 5,068 4,101
Common stock issued upon conversion of debentures - 35
Restricted stock issued 85 -
Securitization of mortgage loans 510,160 53,540
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SOUTHERN NATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
A. Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the consolidated balance sheets of Southern National Corporation and subsidiaries ("Southern National" or "SNC") as of June 30, 1996 and December 31, 1995; the consolidated statements of income for the three months and six months ended June 30, 1996 and 1995; the consolidated statements of changes in shareholders' equity for the six months ended June 30, 1996 and 1995; and the consolidated statements of cash flows for the six months ended June 30, 1996 and 1995.
The consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q. The information contained in the footnotes included in Southern National's latest annual report on Form 10-K should be referred to in connection with the reading of these unaudited interim consolidated financial statements.
Certain 1995 amounts have been reclassified to conform with statement presentations for 1996. The reclassifications have no effect on shareholders' equity or net income as previously reported. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
B. Nature of Operations
Southern National is a multi-bank holding company headquartered in Winston- Salem, North Carolina. Southern National conducts its operations in North Carolina, South Carolina and Virginia primarily through its commercial banking subsidiaries and, to a lesser extent, through its other subsidiaries. The commercial banking subsidiaries provide a wide range of traditional banking services for retail and commercial customers, including small and mid-size businesses, public agencies and local governments, trust companies and individuals. Substantially all of Southern National's loans are to businesses and individuals in the Carolinas and Virginia. Subsidiaries of the commercial banks offer lease financing to commercial businesses and municipal governments; investment alternatives, including discount brokerage services, annuities, mutual funds and government and municipal bonds; life and property and casualty insurance on an agency basis; and insurance premium financing.
C. New Accounting Pronouncements
During 1995, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of." This statement establishes accounting standards for long-lived assets, certain identifiable intangibles and goodwill related to those assets to be held and to be disposed of. The statement requires such assets to be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Any resulting impairment loss is required to be reported in the period in which the recognition criteria are first applied and met. Southern National adopted the provisions of the statement on January 1, 1996. The implementation did not have a material impact on the consolidated financial position or consolidated results of operations.
In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage Servicing Rights," which amends SFAS No. 65, "Accounting for Certain Mortgage Banking Activities." SFAS No. 122 requires that mortgage banking enterprises recognize, as separate assets, rights to service mortgage loans for others, however those servicing rights are acquired. The statement further requires mortgage banking enterprises to assess their capitalized mortgage servicing rights for impairment based on the fair value of those rights. Southern National elected, in the third quarter of 1995, to adopt this statement effective as of January 1, 1995. The impact of the adoption of this statement resulted in additional mortgage banking income of $1.8 million, before taxes, or $.01 per fully diluted share, after taxes, during 1995. SFAS No. 122 prohibits retroactive application to prior years.
In October of 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based Compensation," which establishes financial accounting and reporting standards for stock-based compensation plans. The statement defines a fair value based method of accounting for an employee stock option or similar equity instrument and encourages the adoption of that method of accounting. However, the statement also allows entities to continue to account for such plans under Accounting Principles Board ("APB") Opinion No. 25. Entities electing to account for such plans in accordance with APB Opinion No. 25 must make pro forma disclosures of net income and earnings per share as if the fair value based method of accounting defined in the statement had been applied. Southern National adopted the statement effective January 1, 1996 and elected to continue to account for stock-based compensation plans under the provisions of Opinion No. 25. Therefore, the implementation of the statement did not have an impact on Southern National's consolidated financial position or consolidated results of operations. Southern National will make the required pro forma disclosures of net income and earnings per share using accounting methods prescribed by SFAS No. 123 in the Form 10-K for the year ending December 31, 1996.
In June of 1996, the FASB issued SFAS No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." The statement, which becomes effective for transactions occurring after December 31, 1996, provides accounting and
reporting standards for transfers and servicing of financial assets and extinguishments of liabilities based on the financial components approach that focuses on control. Under this approach, after a transfer of financial assets, an entity recognizes the financial and servicing assets it controls and the liabilities it has incurred, derecognizes all assets it does not control and derecognizes liabilities when extinguished. The statement also provides consistent standards for distinguishing transfers of financial assets that are sales from transfers that are secured borrowings. Management does not anticipate that the implementation of the statement will have a material impact on the consolidated financial position or consolidated results of operations of Southern National.
D. Mergers and Acquisitions
On March 29, 1996, Southern National announced plans to acquire Regional Acceptance Corporation of Greenville, N.C., ("Regional") in a stock transaction to be accounted for under the pooling-of-interests method of accounting. Regional's shareholders will receive .3929 shares of Southern National stock for each share of Regional stock held. The exchange ratio is fixed between Southern National stock prices of $26 and $30, with an adjustment provision within an outer collar of $24 and $32. Pursuant to the acquisition, Southern National will issue approximately 6.0 million shares of common stock. Regional, which specializes in indirect financing for consumer purchases of mid-model and late-model used automobiles, operates 28 branch offices in North Carolina, South Carolina, Tennessee and Virginia.
E. Supplemental Cash Flow Information
During the first quarter of 1996, Southern National redeemed all outstanding shares of Convertible Preferred Stock. This transaction, a noncash financing activity, resulted in the conversion of 733,869 shares of preferred stock into 4,334,692 shares of common stock.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
ANALYSIS OF FINANCIAL CONDITION
Southern National's total assets at June 30, 1996 were $20.6 billion, a $63.2 million increase from the balance at December 31, 1995. The primary component of the increase was loans and leases, which grew $169.0 million, or 2.5% on an annualized basis. This increase was offset by declines in securities holdings of $93.5 million, or 3.5% on an annualized basis.
Growth in loans was affected by a securitization program Southern National implemented during 1995. During the second quarter of 1996, Southern National securitized $510.2 million of loans. This program is designed to provide Southern National with additional liquidity and flexibility in managing mortgage loan assets. The resulting mortgage-backed securities are being used to replace lower-yielding U.S. Treasuries in the securities portfolio as they mature. Annualized loan growth, excluding the impact of this securitization program, was 9.6% comparing end of period loans at June 30, 1996 and December 31, 1995. Average loans, excluding the impact of $503.2 million of securitized loans, increased at an annualized rate of 7.5% comparing the quarters ended June 30, 1996 and 1995, respectively. This loan growth has primarily resulted from a 14.1% increase in average mortgage loans excluding the impact of the loan securitizations. However, Southern National has also seen growth in average commercial loans of 4.6% and average consumer loans of 5.1%. The strong increase in mortgage loans resulted from a special incentive program which began during the first quarter of 1996.
At June 30, 1996, securities available for sale had unrealized depreciation, after tax, of $33.6 million compared to unrealized appreciation, after tax, of $31.2 million at December 31, 1995. The taxable equivalent yield on the securities portfolio during the second quarter was 6.59%, up from 6.32% for the fourth quarter of 1995 and up from 6.28% for the second quarter of the prior year. During the fourth quarter of 1995, Southern National began to reshape the balance sheet by changing the mix of investments held. The change in mix was undertaken to improve the overall interest yield of the securities portfolio. As previously discussed, this effort continued into the second quarter of 1996 and has contributed to significantly improved margins.
On the liability side of the balance sheet, long-term debt rose $571.6 million compared to December 31, 1995, primarily as a result of the issuance of $225.0 million of senior bank notes and $250.0 million of subordinated notes of Southern National during 1996. This growth was more than offset by a $705.7 million reduction in short-term borrowed funds compared to the year end 1995.
Total deposits increased by $306.6 million from the balance at December 31, 1995. Southern National, as well as many other financial institutions, has been experiencing a trend of slower deposit growth because of competition for deposits from various non-financial institution sources.
However, through an increased emphasis on demand deposits, Southern National has experienced stronger growth during 1996. Noninterest-bearing demand deposits increased $61.1 million, or 3.2% during the first six months of 1996. Slower deposit growth during 1995 caused management to rely more heavily on nondeposit funding sources, such as Federal Home Loan Bank advances and Federal funds purchased. The improved deposit growth during 1996 also contributed to the reduction in short-term borrowed funds. Less reliance on short-term borrowed funds should provide more stability for the net interest margin.
Asset Quality
Nonperforming assets were $70.7 million at June 30, 1996, compared to $71.2 million at December 31, 1995. The allowance for losses as a percentage of loans and leases was 1.27% compared to 1.25% six months earlier, and nonperforming assets as a percentage of loan-related assets were .51% at both June 30, 1996 and December 31, 1995. Certain asset quality measures deteriorated somewhat during the third quarter of 1995 and have remained steady through the second quarter of 1996. This deterioration reflected a reorganization of the collections function which resulted from the merger of Southern National and BB&T Financial Corporation ("BB&T"). Also, for a number of quarters, Southern National's asset quality ratios were unusually strong compared to historic norms. Increases in net charge-offs to a more normalized level have been expected by management as segments of the overall economy softened during 1995. Management does not anticipate a material change in asset quality levels during the remainder of 1996.
Loans 90 days or more past due and still accruing interest totaled $18.0 million compared to a prior year-end balance of $29.1 million. This reduction occurred principally in mortgage loans, as the mortgage banking function focused a great deal of attention on past due situations during the second quarter.
The provision for loan and lease losses for the first six months of 1996 was $22.5 million compared to $14.0 million in the first six months of 1995. The increase in the provision reflects higher net charge-offs during 1996. Asset quality statistics relevant to the last five calendar quarters are presented in the accompanying table.
ASSET QUALITY ANALYSIS
(Dollars in thousands)
-------------------------------------------------------------------
6/30/96 3/31/96 12/31/95 9/30/95 6/30/95
----------- ----------- ----------- ----------- -----------
Allowance For Loan & Lease Losses
Beginning balance $ 175,104 $ 172,158 $ 174,069 $ 176,175 $ 174,189
Provision for loan and lease losses 12,000 10,500 10,400 7,000 7,000
Net charge-offs (9,909) (7,554) (12,311) (9,106) (5,014)
----------- ----------- ----------- ----------- -----------
Ending balance $ 177,195 $ 175,104 $ 172,158 $ 174,069 $ 176,175
=========== =========== =========== =========== ===========
Risk Assets
Nonaccrual loans and leases $ 62,670 $ 64,796 $ 61,489 $ 62,763 $ 48,927
Foreclosed real estate 4,926 4,938 6,868 6,981 8,759
Other foreclosed property 3,115 2,662 2,817 2,717 1,518
----------- ----------- ----------- ----------- -----------
Nonperforming assets $ 70,711 $ 72,396 $ 71,174 $ 72,461 $ 59,204
=========== =========== =========== =========== ===========
Loans 90 days or more past due
and still accruing $ 18,025 $ 28,249 $ 29,094 $ 26,909 $ 30,335
=========== =========== =========== =========== ===========
Asset Quality Ratios
Nonaccrual loans and leases as a
percentage of total loans and leases .45 % .46 % .45 % .45 % .36 %
Nonperforming assets as a percentage of:
Total assets .34 .36 .35 .35 .29
Loans and leases plus
foreclosed property .51 .51 .51 .52 .43
Net charge-offs as a percentage of
average loans and leases .28 .22 .35 .26 .15
Allowance for loan and lease losses as a
percentage of loans and leases 1.27 1.25 1.25 1.24 1.28
Ratio of allowance for loan and lease losses to:
Net charge-offs 4.45 x 5.76 x 3.52 x 4.82 x 8.76 x
Nonaccrual loans and leases 2.83 2.70 2.80 2.77 3.60
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ASSET/LIABILITY MANAGEMENT
Asset/liability management activities are designed to assure liquidity and,
through the management of Southern National's interest sensitivity position, to
manage the impact of interest rate fluctuations on net interest income. It is
the responsibility of the Asset/Liability Management Committee ("ALCO") to set
policy guidelines and to establish long-term strategies with respect to interest
rate exposure and liquidity. The ALCO meets regularly to review Southern
National's interest rate and liquidity risk exposures in relation to present and
prospective market and business conditions, and adopts funding and balance sheet
management strategies that are
intended to assure that the potential impact on earnings and liquidity is within established parameters.
A prime objective in interest rate risk management is the avoidance of wide fluctuations in net interest income through balancing the impact of changes in interest rates on interest-sensitive assets and interest-sensitive liabilities. Management uses Interest Sensitivity Simulation Analysis to measure the interest rate sensitivity of earnings.
Balance sheet repositioning is the most efficient and cost-effective means of managing interest rate risk and is accomplished through strategic pricing of asset and liability accounts. The expected result of strategic pricing is the development of appropriate maturity and repricing streams in those accounts to produce consistent net income during adverse interest rate environments. The ALCO monitors loan, investment and liability portfolios to ensure comprehensive management of interest rate risk on the balance sheet. These portfolios are analyzed for proper fixed-rate and variable-rate "mixes" given a specific interest rate outlook.
Management has established parameters for asset/liability management which prescribe a maximum impact on net interest income of 3% for a 150 basis point change over six months, for the most likely interest rate scenario, and a maximum of 6% for a 300 basis point change over 12 months. It is management's ongoing objective to effectively manage the impact of changes in interest rates and minimize the resulting effect on earnings. At June 30, 1996, changes in interest rates would not have a significant impact on Southern National's earnings.
Derivatives and Off-Balance Sheet Financial Instruments
Interest rate volatility often increases to the point that balance sheet repositioning through the use of account repricing and other on-balance sheet strategies cannot occur rapidly enough to avoid adverse net income effects. At those times, off-balance sheet or synthetic hedges are utilized. Management uses interest rate swaps, caps and floors to supplement balance sheet repositioning. Such products are designed to move the interest sensitivity of Southern National toward a neutral position.
Interest rate swaps are contractual agreements between two parties to exchange a series of cash flows representing interest payments. A swap allows both parties to transform the repricing characteristics of an asset or liability from a fixed to a floating rate, a floating rate to a fixed rate, or one floating rate to another floating rate. The underlying principal positions are not affected. Swap terms generally range from one year to ten years depending on need. At June 30, 1996, interest rate swaps and floors with a total notional value of $973.6 million, and terms of up to seven years, were outstanding.
The following tables set forth certain information concerning Southern National's interest rate swaps at June 30, 1996:
Interest Rate Swaps and Floors June 30, 1996
(Dollars in thousands)
Notional Receive Pay Unrealized
Type Amount Rate Rate Gains (Losses)
- ---- --------------- --------------- --------------- ---------------
Receive fixed swaps $ 310,000 6.92 % 5.57 % $ 1,654
Pay fixed swaps 308,564 5.47 5.46 92
Basis swaps 250,000 5.53 5.51 (2,311)
Floors 105,000 -- -- 289
--------------- --------------- --------------- ---------------
Total $ 973,564 6.00 % 5.51 % $ (276)
=============== =============== =============== ===============
Receive Pay Fixed Basis Swaps
Year-to-date Activity Fixed Swaps Swaps and Floors Total
- --------------------- --------------- --------------- --------------- ---------------
Balance, December 31, 1995 $ 140,000 $ 353,413 $ 250,000 $ 743,413
Additions 250,000 -- 105,000 355,000
Maturities/amortizations (80,000) (44,849) -- (124,849)
Terminations -- -- -- --
--------------- --------------- --------------- ---------------
Balance, June 30, 1996 $ 310,000 $ 308,564 $ 355,000 $ 973,564
=============== =============== =============== ===============
One Year One to Five After Five
Maturity Schedule* or Less Years Years Total
- ------------------ --------------- --------------- --------------- ---------------
Receive fixed swaps $ 10,000 $ 50,000 $ 250,000 $ 310,000
Pay fixed swaps 14,965 289,118 4,481 308,564
Basis swaps -- 250,000 -- 250,000
Floors -- 105,000 -- 105,000
--------------- --------------- --------------- ---------------
Total $ 24,965 $ 694,118 $ 254,481 $ 973,564
=============== =============== =============== ===============
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* Maturities are based on full contract extensions.
As of June 30, 1996, there was no unearned income or deferred premiums from new swap transactions. Deferred losses from terminated swap transactions were $363,000. The deferred losses will be recognized in the next year. The combination of active and terminated transactions resulted in income of $745,000 during the first six months of 1996.
In addition to interest rate swaps, Southern National utilizes written covered over-the-counter call options on specific securities in the available- for-sale portfolio in order to enhance returns. Option fee income was $670,000 for the first six months of 1996. Unexercised options on securities with total par values of $25.0 million were outstanding at June 30, 1996.
Southern National also utilizes purchased over-the-counter put options in its mortgage banking activities to hedge the mortgage pipeline. During 1996, options with a par value of $30.0 million were purchased and remained outstanding at June 30, 1996.
CAPITAL ADEQUACY AND RESOURCES
The maintenance of appropriate levels of capital is a management priority. Capital adequacy is monitored on an ongoing basis by management. Southern National's principal capital planning goals are to provide an adequate return to shareholders while retaining a sufficient base from which to provide future growth and compliance with all regulatory standards.
Total shareholders' equity was $1.6 billion at June 30, 1996 and $1.7 billion at December 31, 1995. As a percentage of total assets, total shareholders' equity was 7.7% at June 30, 1996, down from 8.2% at December 31, 1995. Southern National's book value per common share at June 30, 1996 was $15.25, versus $15.52 at December 31, 1995. Average shareholders' equity as a percentage of average assets was 7.9% for the quarter ended June 30, 1996 and 8.0% for the three months ended December 31, 1995.
Tier 1 and total risk-based capital ratios at June 30, 1996 were 11.7% and 14.9%, respectively. The leverage ratio was 7.8% at the end of the second quarter. The comparable ratios at the end of 1995 were 13.0%, 14.3% and 7.8%, respectively. These capital ratios measure the capital to risk-weighted assets and off-balance sheet items as defined by Federal Reserve Board ("FRB") guidelines. An 8.00% minimum of total capital to risk-weighted assets is required. One-half of the 8.00% minimum must consist of tangible common shareholders' equity (Tier 1 capital) under regulatory guidelines. The leverage ratio, established by the FRB, measures Tier 1 capital to average total assets less goodwill and must be maintained in conjunction with the risk-based capital standards. The regulatory minimum for the leverage ratio is 3.00%.
The declines in certain capital ratios reflect the impact of a common stock repurchase plan which was undertaken to facilitate the conversion of all of Southern National's preferred stock outstanding. On January 11, 1996, Southern National announced that these shares would be used in the anticipated conversion of the preferred stock which was redeemed on March 29, 1996, at the price of $104.05 per share. Each share of preferred stock was convertible into 5.9068 shares of common stock.
CAPITAL ADEQUACY RATIOS
1996 1995
------------------------ ----------------------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
-------- -------- -------- -------- --------
Average equity to average assets 7.86 % 8.07 % 8.05 % 7.71 % 7.61 %
Equity to assets at period end 7.67 7.75 8.17 7.77 7.60
Risk-based capital ratios:
Tier 1 capital 11.7 12.1 13.0 12.0 11.3
Total capital 14.9 13.4 14.3 13.3 12.6
Leverage ratio 7.8 7.6 7.8 7.5 7.4
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ANALYSIS OF RESULTS OF OPERATIONS
Southern National had net income for the first six months of 1996 totaling $143.5 million, compared to $45.6 million during the first six months of 1995. On a fully diluted per share basis, earnings for the six months ended June 30, 1996 were $1.35, compared to $.42 for the same period in 1995. The significant increase from the prior year earnings results from $72.7 million in after-tax nonrecurring charges and securities losses related to the merger between Southern National and BB&T which were recorded in the first six months of 1995. Excluding nonrecurring items from the prior year, Southern National's net income would have increased 21.4%, or $25.3 million. For the second quarter, net income totaled $73.9 million compared to $57.9 million recorded for the second quarter of 1995, an increase of $16.0 million, or 27.6%. On a fully diluted per share basis, net income for the quarter was $.70, a 32.1% increase over the $.53 earned in the second quarter of 1995. Southern National's significant growth in recurring earnings results from three factors. First, net interest margin improved from 4.10% for the first six months of 1995 to 4.34% for the first half of 1996. Second, following the merger of Southern National and BB&T, management targeted a growth rate in noninterest income of 20%. The 23.7% growth in recurring noninterest income for the six months ended June 30, 1996 compared to the same period in 1995 demonstrates progress in achieving the revenue enhancements which were expected to be a strength of the combined bank. Third, Southern National has controlled expenses following the merger, as shown by the improvement in the efficiency ratio to 53.8% from 58.3% for the six months ended June 30, 1996 and 1995, respectively.
Net Interest Income
Net interest income on a fully taxable equivalent ("FTE") basis was $394.5 million for the first six months of 1996 compared to $367.8 million for the same period in 1995, a 7.3% increase. For the six months ended June 30, 1996 and 1995, average interest-earning assets increased $130.8 million, or .7%, to $19.0 billion, while average interest-bearing liabilities decreased by $115.2 million. As discussed previously, Southern National also experienced substantial positive development in the net interest margin. The 24 basis point increase in margin was caused primarily by a 39 basis point increase in yields from securities, combined with a 74 basis point decrease in rates paid on short-term borrowed funds and a 68 basis point decrease in rates paid on long-term debt. These fluctuations reflect the restructuring of the securities portfolio, as well as other categories of the balance sheet, which has slowed growth in total assets, thus reducing Southern National's dependence on costly nondeposit funding sources. The improvement in margin also reflects a change in management focus from pricing strategies to quality strategies. Loans and deposits were very competitively priced following the merger of Southern National and BB&T to protect current market positions and retain customer relationships.
Net Interest Income and Rate/Volume Analysis For the Six Months Ended June 30, 1996 and 1995
Average Balances Yield / Rate
- ------------------------------------------------- ---------------------------- ----------------------------
Fully Taxable Equivalent - (Dollars in thousands) 1996 1995 1996 1995
- ------------------------------------------------- ------------- ------------- ------------- -------------
Assets
Securities (1):
U.S. Treasury, government and other (5) $ 4,809,201 $ 5,248,737 6.46 % 6.02 %
States and political subdivisions 157,386 175,898 9.11 8.93
- ------------------------------------------------- ------------- ------------- ------------- -------------
Total securities (5) 4,966,587 5,424,635 6.55 6.16
Other earning assets (2) 14,170 47,188 5.65 5.92
Loans and leases, net
of unearned income (1)(3)(4)(5) 13,996,301 13,374,454 8.98 9.15
- ------------------------------------------------- ------------- ------------- ------------- -------------
Total earning assets 18,977,058 18,846,277 8.34 8.28
- ------------------------------------------------- ------------- ------------- ------------- -------------
Non-earning assets 1,146,869 1,171,269
- ------------------------------------------------- ------------- -------------
Total assets $ 20,123,927 $ 20,017,546
================================================= ============= =============
Liabilities and Shareholders' Equity
Interest-bearing deposits
Savings and interest checking deposits $ 3,159,031 $ 3,212,847 1.81 2.32
Money market deposits 1,379,319 1,695,203 3.51 3.58
Time deposits 8,185,337 7,684,996 5.52 5.39
- ------------------------------------------------- ------------- ------------- ------------- -------------
Total interest-bearing deposits 12,723,687 12,593,046 4.38 4.36
Short-term borrowed funds 2,060,851 3,044,118 5.17 5.91
Long-term debt 1,645,608 908,230 5.84 6.52
- ------------------------------------------------- ------------- ------------- ------------- -------------
Total interest-bearing liabilities 16,430,146 16,545,394 4.63 4.76
- ------------------------------------------------- ------------- ------------- ------------- -------------
Demand deposits 1,823,309 1,693,399
Other liabilities 267,203 256,619
Shareholders' equity 1,603,269 1,522,134
- ------------------------------------------------- ------------- -------------
Total Liabilities and
shareholders' equity $ 20,123,927 $ 20,017,546
================================================= ============= =============
Average interest rate spread 3.71 3.52
Net yield on earning assets 4.34% 4.10%
================================================= ============= =============
Taxable equivalent adjustment
=================================================
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Income / Expenses Changes due to
- ------------------------------------------------- ---------------------------- Increase ----------------------------
Fully Taxable Equivalent - (Dollars in thousands) 1996 1995 (Decrease) Rate Volume
- ------------------------------------------------- ------------- ------------- ------------- ------------- -------------
Assets
Securities (1):
U.S. Treasury, government and other (5) $ 155,395 $ 158,050 $ (2,655) $ 11,022 $ (13,677)
States and political subdivisions 7,167 7,787 (620) 213 (833)
- ------------------------------------------------- ------------- ------------- ------------- ------------- -------------
Total securities (5) 162,562 165,837 (3,275) 11,235 (14,510)
Other earning assets (2) 398 1,389 (991) (61) (930)
Loans and leases, net
of unearned income (1)(3)(4)(5) 626,215 606,918 19,297 (10,337) 29,634
- ------------------------------------------------- ------------- ------------- ------------- ------------- -------------
Total earning assets 789,175 774,144 15,031 837 14,194
- ------------------------------------------------- ------------- ------------- ------------- ------------- -------------
Non-earning assets
- -------------------------------------------------
Total assets
=================================================
Liabilities and Shareholders' Equity
Interest-bearing deposits
Savings and interest checking deposits 28,415 36,886 (8,471) (7,964) (507)
Money market deposits 24,079 30,136 (6,057) (531) (5,526)
Time deposits 224,864 205,292 19,572 5,353 14,219
- ------------------------------------------------- ------------- ------------- ------------- ------------- -------------
Total interest-bearing deposits 277,358 272,314 5,044 (3,142) 8,186
Short-term borrowed funds 52,986 89,253 (36,267) (9,971) (26,296)
Long-term debt 47,836 29,384 18,452 (3,347) 21,799
- ------------------------------------------------- ------------- ------------- ------------- ------------- -------------
Total interest-bearing liabilities 378,180 390,951 (12,771) (16,460) 3,689
- ------------------------------------------------- ------------- ------------- ------------- ------------- -------------
Demand deposits
Other liabilities
Shareholders' equity
- -------------------------------------------------
Total Liabilities and
shareholders' equity
=================================================
Average interest rate spread
Net yield on earning assets $ 410,995 $ 383,193 $ 27,802 $ 17,297 $ 10,505
================================================= ============= ============= ============= ============= =============
Taxable equivalent adjustment $ 16,514 $ 15,410
================================================= ============= =============
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Net interest income FTE for the second quarter of 1996 was $200.8 million, up from $185.0 million for the second quarter of 1995. The higher level of net interest income reflects a significant
increase in the net interest margin, from 4.06% to 4.39% comparing the second quarters. The average yield earned on earning assets decreased 3 basis points. However, the rates paid on interest-bearing liabilities declined by 35 basis points, with reductions in rates paid on deposits, short-term borrowed funds and long-term debt.
Net Interest Income and Rate/Volume Analysis For the Three Months Ended June 30, 1996 and 1995
Average Balances Yield/Rate
- --------------------------------------------------- ------------------------------ ------------------------------
Fully Taxable Equivalent - (Dollars in thousands) 1996 1995 1996 1995
- --------------------------------------------------- -------------- -------------- -------------- --------------
Assets
Securities (1):
U.S. Treasury, government and other (5) $ 4,821,477 $ 5,295,064 6.51 % 6.20 %
States and political subdivisions 153,754 171,520 9.01 8.85
- --------------------------------------------------- -------------- -------------- -------------- --------------
Total Securities (5) 4,975,231 5,466,584 6.59 6.28
Other earning assets (2) 10,780 47,557 5.75 6.18
Loans and leases, net
of unearned income (1)(3)(4)(5) 14,114,524 13,543,229 8.97 9.23
- --------------------------------------------------- -------------- -------------- -------------- --------------
Total earning assets 19,100,535 19,057,370 8.35 8.38
- --------------------------------------------------- -------------- -------------- -------------- --------------
Non-earning assets 1,141,222 1,192,916
- --------------------------------------------------- -------------- --------------
Total assets $ 20,241,757 $ 20,250,286
=================================================== ============== ==============
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Savings deposits $ 3,129,090 $ 3,252,568 1.69 2.31
Money market deposits 1,410,414 1,580,537 3.49 3.79
Time deposits 8,201,556 7,772,237 5.47 5.60
- --------------------------------------------------- -------------- -------------- -------------- --------------
Total interest-bearing deposits 12,741,060 12,605,342 4.32 4.52
Short-term borrowed funds 2,012,842 3,219,920 5.08 6.00
Long-term debt 1,779,639 910,946 5.82 6.50
- --------------------------------------------------- -------------- -------------- -------------- --------------
Total interest-bearing liabilities 16,533,541 16,736,208 4.57 4.92
- --------------------------------------------------- -------------- -------------- -------------- --------------
Demand deposits 1,848,295 1,700,458
Other liabilities 268,494 273,191
Shareholders' equity 1,591,427 1,540,429
- --------------------------------------------------- -------------- --------------
Total liabilities and
shareholders' equity $ 20,241,757 $ 20,250,286
=================================================== ============== ==============
Average interest rate spread 3.78 3.46
Net yield on earning assets 4.39 % 4.06 %
=================================================== ============== =============
Taxable equivalent adjustment
===================================================
Income/Expense Change due to
- --------------------------------------------------- ------------------------------ Increase ------------------------------
Fully Taxable Equivalent - (Dollars in thousands) 1996 1995 (Decrease) Rate Volume
- --------------------------------------------------- -------------- -------------- ------------ -------------- --------------
Assets
Securities (1):
U.S. Treasury, government and other (5) $ 78,509 $ 81,813 $ (3,304) $ 4,239 $ (7,543)
States and political subdivisions 3,462 3,788 (326) 72 (398)
- --------------------------------------------------- -------------- -------------- ------------ -------------- --------------
Total Securities (5) 81,971 85,601 (3,630) 4,311 (7,941)
Other earning assets (2) 155 733 (578) (45) (533)
Loans and leases, net
of unearned income (1)(3)(4)(5) 315,199 311,721 3,478 (8,591) 12,069
- --------------------------------------------------- -------------- -------------- ------------ -------------- --------------
Total earning assets 397,325 398,055 (730) (4,325) 3,595
- --------------------------------------------------- -------------- -------------- ------------ -------------- --------------
Non-earning assets
- ---------------------------------------------------
Total assets
===================================================
Liabilities and Shareholders' Equity
Interest-bearing deposits:
Savings deposits 13,146 18,733 (5,587) (4,863) (724)
Money market deposits 12,250 14,932 (2,682) (1,148) (1,534)
Time deposits 111,474 108,515 2,959 (2,630) 5,589
- --------------------------------------------------- -------------- -------------- ------------ -------------- --------------
Total interest-bearing deposits 136,870 142,180 (5,310) (8,641) 3,331
Short-term borrowed funds 25,409 48,194 (22,785) (6,693) (16,092)
Long-term debt 25,762 14,761 11,001 (1,683) 12,684
- --------------------------------------------------- -------------- -------------- ------------ -------------- --------------
Total interest-bearing liabilities 188,041 205,135 (17,094) (17,017) (77)
- --------------------------------------------------- -------------- -------------- ------------ -------------- --------------
Demand deposits
Other liabilities
Shareholders' equity
- ---------------------------------------------------
Total liabilities and
shareholders' equity
===================================================
Average interest rate spread
Net yield on earning assets $ 209,284 $ 192,920 $ 16,364 $ 12,692 $ 3,672
=================================================== ============== ============== ============ ============== ==============
Taxable equivalent adjustment $ 8,446 $ 7,958
=================================================== ============== ==============
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Hedging strategies have been used in the past and will be utilized in the future to reduce sensitivity to interest rate movements. See "ASSET/LIABILITY MANAGEMENT" for additional discussion of hedging strategies.
Noninterest Income
Noninterest income for the six months ended June 30, 1996 was $139.5 million, compared to $104.4 million for the same period in 1995. Securities losses of $19.8 million recorded in the first quarter of 1995 were a major contributing factor to the increase in noninterest income. These securities losses resulted from a restructuring of the securities portfolio done in connection with the merger. However, Southern National also experienced positive development in service charges on deposits, mortgage banking activities, general insurance commissions and trust income. The percentage of total revenues, calculated as net interest income plus noninterest income excluding securities gains or losses, derived from noninterest (fee-based) income for the six months ended June 30, 1996 was 26.1%, up from 25.2% for the first six months of 1995. Management anticipates continued growth in noninterest income, with a target ratio of noninterest income to total revenues of 30%.
Service charges on deposits grew for the first six months in 1996 compared to 1995, increasing by $8.2 million, or 18.8%. The primary factor contributing to the significant growth in service charges on deposits was increased fees during 1996. For the second quarter, service charges increased $4.3 million, or 19.1%, over the same quarter last year. The greatest increases involved commercial account analysis income and overdraft charges. Additionally, rising interest rates during 1995 negatively affected service charges on deposit accounts by increasing the earnings credit used in service charge computations. Looking forward, management anticipates new fees on automated teller machines ("ATMs"), to provide an additional $6.0 million in fee income on an annual basis with no additional expenses. As a component of Southern National's emphasis on alternative delivery systems, management anticipates the addition of 75 new ATMs in existing branches and an additional 200 ATMs in non-branch locations.
Trust income grew $1.8 million, or 20.5%, for the six months ended June 30,1996 compared to the same period in 1995. For the second quarter of 1996, trust services income totaled $6.2 million, an increase of $1.5 million over the second quarter of 1995. The significant second quarter growth results from fees collected during the second quarter which are only collected annually, principally administration fees for corporate benefit plans. The rate of growth is expected to return to a more normalized level for the remainder of the year.
Southern National also realized substantial growth in general insurance commissions, up $2.5 million, or 30.1%, compared to the first six months of 1995. The growth in general insurance commissions resulted from unusually large contingency commissions and earnings from sales of life insurance contracts. Comparing the second quarters of 1996 and 1995, general insurance commissions grew at a rate of 9.9%.
Mortgage banking activities increased 79.2%, or $7.9 million, for the six months ended June 30, 1996 compared to the same period in 1995. For the second quarter of 1996, mortgage banking activities increased $4.2 million, or 95.6%. These increases resulted from significant gains on higher volumes of sales of mortgage loans during the first six months of 1996.
Other nondeposit fees and commissions increased by $5.3 million to a level of $35.7 million in 1996 compared with $30.4 million for the first six months of 1995. The primary component generating the increase in nondeposit fees and commissions was investment services, which increased $4.9 million. For the second quarter of 1996, other nondeposit fees and commissions increased $4.1 million compared to the prior year, also driven by investment services.
Other income decreased $10.3 million for the first six months of 1996 because of a premium totaling $11.9 million relating to a divestiture of deposits in 1995. This divestiture was necessary in order to comply with anti- trust laws following the merger of Southern National and BB&T.
Noninterest Expense
Noninterest expense was $297.4 million for the first six months of 1996 compared to $389.3 million for the same period a year ago. Merger-related accruals and expenses led to an elevated level of noninterest expense in the first six months of 1995. These items included $98.2 million of pretax nonrecurring charges which primarily affected personnel expense, occupancy and equipment expense and other noninterest expense.
Excluding nonrecurring charges, personnel expense, the largest component of noninterest expense, increased from $144.3 million for the first six months of 1995 to $148.2 million for the same period in 1996. This relatively steady level of personnel expense reflects efficiencies of scale accomplished as a result of the Southern National / BB&T merger. The only component of personnel expense currently increasing is the incentive compensation program because of increased sales in many areas. The nonrecurring charges discussed above contributed $55.3 million to total personnel costs during the first six months of 1995 in the form of severance pay, termination of employment contracts, early retirement packages and related benefits. For the second quarter of 1996, personnel expense totaled $74.5 million, a increase of $3.9 million from the $70.7 million recorded in the second quarter of 1995 on recurring basis. This increase reflects additional incentive compensation, as discussed above.
Occupancy and equipment expense, excluding nonrecurring charges, for the six months ended June 30, 1996 increased $2.6 million, or 5.5%, compared to 1995. On-going depreciation of property and equipment purchased in connection with implementing the merger is a major
component of the increase. The $10.1 million in nonrecurring charges relating to branch closings and the consolidation of bank operations and systems associated with the merger had a significant impact on the total occupancy and equipment expense in the prior year. For the second quarter of 1996, occupancy and equipment expense totaled $24.9 million, up slightly from the $24.5 million incurred on a recurring basis in the prior year.
Federal deposit insurance expense decreased $9.5 million, or 59.2%, for the six months ended June 30, 1996, compared to the same period in the prior year, as a result of a reduction in insurance premiums charged by the FDIC for deposit insurance. Because of the recapitalization of the Bank Insurance Fund ("BIF"), the FDIC eliminated the insurance premium on FDIC-insured deposits. For the first six months of last year, this premium was calculated as $.23 per $100 of insured deposits. Southern National incurred Federal deposit insurance expense of $3.2 million during the second quarter of 1996, down from $8.0 million recorded in the prior year. Southern National continues to incur insurance expense, despite the actions of the FDIC because of Southern National's acquisitions of thrift institutions in prior years. Thrift deposits are insured by the Savings Association Insurance Fund ("SAIF"), which still assesses a premium of $.23 per $100 for deposits held by Southern National.
In late 1995, proposed legislation was passed in Congress that contained provisions to recapitalize the SAIF. However, the President vetoed the proposed legislation on December 6, 1995, for reasons unrelated to the SAIF recapitalization issue. The legislation included provisions for a one-time special assessment, as determined by the FDIC, on SAIF-assessable deposits of insured depository institutions in an amount adequate to cause the SAIF to achieve its specific designated reserve ratio of 1.25%, which would have called for a special assessment in the range of $.80 per $100 of insured deposits for SAIF institutions.
Under the vetoed legislation, the special assessment would have been applied to the amount of SAIF-assessable deposits held as of March 31, 1995. The SAIF- assessable deposits of BB&T-NC and BB&T-SC as of March 31, 1995 totaled approximately $4.3 billion and $1.5 billion, respectively. Under the vetoed legislation, BB&T-NC would have received a 20% discount on the assessment, because the bank's SAIF-assessable deposits were less than 50% of its total assessable deposits as of June 30, 1995. The pretax impact on Southern National of a one-time assessment of the type included in the vetoed legislation would not have exceeded $41.0 million. The vetoed legislation contained additional provisions that, among other things, would have required BIF member institutions to share pro rata in the obligations of SAIF members for certain government bonds.
Although the SAIF-recapitalization provisions discussed in the preceding paragraphs were included in legislation that was vetoed and therefore have not been enacted into law, similar provisions have already been considered in 1996, and may be considered again and included in other legislation later in 1996. The final form of the legislation, including whether the legislation will contain some or all of the provisions discussed above, cannot be determined with certainty at this time. Similarly, the date of passage of the final form of any such legislation cannot be determined with certainty at this time. In the event that the SAIF is recapitalized pursuant to any
such legislation, it is expected that future assessment rates applicable to SAIF-assessable deposits would be reduced.
Excluding $32.9 million in nonrecurring charges which were recorded in the first six months of last year, other noninterest expenses increased $10.0 million, or 12.2%. This increase was driven by increases in advertising, up $2.2 million, loan and lease expenses, up $4.5 million and other charge-offs, up $2.8 million. The increased advertising costs are related to a marketing program to increase BB&T brand identity. Additional loan and lease expenses result from a home equity incentive program. For the second quarter, other expenses totaled $47.5 million, up from the $40.8 million recorded in the second quarter of 1995 on a recurring basis. This increase reflects higher levels of advertising and promotional expenditures made during the second quarter of 1996.
Southern National's efficiency ratio improved to 53.8% for the first six months of 1996 compared to 58.3%, excluding nonrecurring charges, for the same period in 1995.
Provision for Income Taxes
The provision for income taxes increased to $70.5 million for the first six months of 1996 compared to $23.3 million recorded in the first six months of 1995. Excluding the impact of the nonrecurring charges recorded in 1995, the income tax provision for the prior year totaled $57.3 million. Comparing the recurring balances, the provision for income taxes increased $13.2 million, or 23.0%, because of higher pretax income. Effective tax rates were 32.9% and 32.6% for the six months ended June 30, 1996 and 1995, respectively. For the second quarter of 1996, the provision for income taxes totaled $36.3 million, up $8.7 million, or 31.7%, compared to the second quarter 1995 balance.
PROFITABILITY MEASURES
1996 1995
------------------- -----------------------------
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
-------- -------- -------- -------- --------
Return on average assets 1.47 % 1.40 % 1.36 % 1.20 % 1.15 %
Return on average common equity 18.68 17.86 17.35 16.00 15.48
Net interest margin 4.39 4.28 4.07 3.95 4.06
Efficiency ratio (taxable equivalent)* 53.4 54.3 53.2 54.5 57.9
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PART II. OTHER INFORMATION
The nature of the business of Southern National's banking subsidiaries ordinarily results in a certain amount of litigation. The subsidiaries of Southern National are involved in various legal proceedings, all of which are considered incidental to the normal conduct of business. Management believes that the liabilities arising from these proceedings will not have a materially adverse effect on the consolidated financial position or consolidated results of operations of Southern National.
Southern National Corporation held its annual meeting of the shareholders on April 23, 1996 to consider and vote upon the following matters:
(1) To elect eight Directors for three-year terms expiring in 1999. Of shares represented by proxy, votes in favor were 71,565,720 and votes opposed were 538,760.
(2) To approve amendments to the Corporation's 1995 Omnibus Stock Incentive Plan. Of shares represented by proxy, votes in favor were 63,737,006; votes against were 7,103,930 and abstentions were 1,329,590.
(3) To approve the Corporation's Amended and Restated Short-Term Incentive Plan. Of shares represented by proxy, votes in favor were 66,499,687; votes against were 4,214,526 and abstentions were 1,466,343.
(4) To ratify the reappointment of Arthur Andersen LLP as the Corporation's auditors for 1996. Of shares represented by proxy, votes in favor were 71,271,714; votes against were 383,279 and abstentions were 505,489.
(a) Exhibit 4.1 - Senior Indenture (including form of Senior Debt Security), between Southern National Corporation and State Street Bank and Trust Company, as Trustee, dated as of May 24, 1996 is included herein.
Exhibit 4.2 - Subordinated Indenture (including form of Subordinated Debt Security), between Southern National Corporation and State Street Bank and Trust Company, as Trustee, dated as of May 24, 1996 is included herein.
Exhibit 11 - "Computation of Earnings Per Share" is included herein.
Exhibit 27 - "Financial Data Schedule" is included in the electronically- filed document as required.
(b) Southern National filed a Form 8-K under Item 5 on April 15, 1996 to report the results of operations and financial condition as of March 31, 1996. Southern National filed a Form 8-K under Item 5 on May 3, 1996 to report the plans to acquire Regional Acceptance Corporation. Southern National filed a Form 8-K under Item 5 on July 12, 1996 to report the results of operations and financial condition as of June 30, 1996.
SIGNATURES
Pursuant to the requirements 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.
SOUTHERN NATIONAL CORPORATION
(Registrant)
Date: August 14, 1996 By: /s/ Scott E. Reed
--------------- --------------------------------
Scott E. Reed, Senior Executive Vice President
and Chief Financial Officer
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EXHIBIT 4.1
SOUTHERN NATIONAL CORPORATION
TO
STATE STREET BANK AND TRUST COMPANY
TRUSTEE
INDENTURE
REGARDING SENIOR SECURITIES
DATED AS OF MAY 24, 1996
Reconciliation and Tie Sheet*
between
Provisions of the Trust Indenture Act of 1939
and
Indenture, dated as of May 24, 1996
between
SOUTHERN NATIONAL CORPORATION
and
STATE STREET BANK AND TRUST COMPANY, Trustee
Section of Act Section of Indenture - -------------- -------------------- 310(a)(1), (2)............................ 5.08 310(a)(3), (4)............................ Inapplicable 310(a)(5)................................. 5.08 310(b).................................... ** 310(c).................................... Inapplicable 311(a), (b)............................... ** 311(c).................................... Inapplicable 312....................................... ** 313(a).................................... ** 313(b)(1)................................. Inapplicable 313(b)(2)................................. ** 313(c), (d)............................... ** 314(a).................................... ** 314(b).................................... Inapplicable 314(c)(1) and (2)......................... 15.05 314(c)(3)................................. Inapplicable 314(d).................................... Inapplicable 314(e).................................... 15.05 314(f).................................... Inapplicable 315(a)(c) and (d)......................... 5.01 315(b).................................... 4.08 315(e).................................... 4.09 316(a)(1)................................. 4.01 and 4.07 316(a)(2)................................. Omitted 316(a) last sentence...................... 6.04 316(b).................................... 4.04 316(c).................................... 6.05 317(a).................................... 4.02 317(b).................................... 3.04(a) 318(a).................................... 15.07 _____________________ |
* This Reconciliation and Tie-sheet is not a part of the Indenture.
** Included pursuant to Section 318(c) of the Trust Indenture Act of 1939.
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PARTIES............................................................. 1
RECITALS............................................................ 1
ARTICLE ONE
DEFINITIONS
SECTION 1.01. Definitions........................................ 1
ARTICLE TWO
THE SECURITIES AND SECURITY FORMS
SECTION 2.01. Amount Unlimited; Issuable in Series............... 8
SECTION 2.02. Form of Securities and of Trustee's Certificate
of Authentication.................................. 11
SECTION 2.03. Securities in Global Form.......................... 12
SECTION 2.04. Denomination, Authentication and Dating of
Securities......................................... 12
SECTION 2.05. Execution of Securities............................ 16
SECTION 2.06. Exchange and Registration of Transfer of
Securities......................................... 17
SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Securities.....21
SECTION 2.08. Temporary Securities............................... 22
SECTION 2.09. Payment of Interest; Interest Rights................24
SECTION 2.10. Cancellation of Securities Paid, etc................26
ARTICLE THREE
PARTICULAR COVENANTS OF THE COMPANY
SECTION 3.01. Payment of Principal and Interest.................. 26
SECTION 3.02. Offices for Notices and Payments, etc...............26
SECTION 3.03. Provisions as to Paying Agent...................... 28
SECTION 3.04. Statement as to Compliance......................... 29
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* This table of contents is not part of the Indenture.
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SECTION 3.05. Notice of Defaults................................. 30
SECTION 3.06. Limitation on Certain Dispositions and on Merger
and Sale of Assets................................. 30
SECTION 3.07. Limitation on Creation of Liens.................... 31
SECTION 3.08. Corporate Existence................................ 31
ARTICLE FOUR
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 4.01. Events of Default.................................. 31
SECTION 4.02. Payment of Securities on Default; Suit Therefor.... 35
SECTION 4.03. Application of Money Collected by Trustee.......... 37
SECTION 4.04. Proceedings by Securityholders..................... 38
SECTION 4.05. Proceedings by Trustee............................. 38
SECTION 4.06. Remedies Cumulative and Continuing; Delay or
Omission Not Waiver................................ 39
SECTION 4.07. Direction of Proceedings and Waiver of Defaults by
Majority of Securityholders........................ 39
SECTION 4.08. Notice of Defaults................................. 40
SECTION 4.09. Undertaking to Pay Costs........................... 40
ARTICLE FIVE
CONCERNING THE TRUSTEE
SECTION 5.01. Duties and Responsibilities of Trustee............. 41
SECTION 5.02. Reliance on Documents, Opinions, etc............... 42
SECTION 5.03. No Responsibility for Recitals, etc................ 44
SECTION 5.04. Trustee, Paying Agents or Registrar May Own
Securities......................................... 44
SECTION 5.05. Money to Be Held in Trust.......................... 44
SECTION 5.06. Compensation and Expenses of Trustee............... 44
SECTION 5.07. Officers' Certificate as Evidence.................. 45
SECTION 5.08. Eligibility of Trustee............................. 45
SECTION 5.09. Resignation or Removal of Trustee.................. 45
SECTION 5.10. Acceptance by Successor Trustee.................... 47
SECTION 5.11. Succession by Merger, etc.......................... 48
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ARTICLE SIX
CONCERNING THE SECURITYHOLDERS
SECTION 6.01. Action by Securityholders.......................... 49
SECTION 6.02. Proof of Execution by Securityholders.............. 50
SECTION 6.03. Who Are Deemed Absolute Owners..................... 50
SECTION 6.04. Company-Owned Securities Disregarded............... 51
SECTION 6.05. Revocation of Consents; Future Holders Bound....... 52
ARTICLE SEVEN
SECURITYHOLDERS' MEETINGS
SECTION 7.01. Purposes of Meetings............................... 52
SECTION 7.02. Call of Meetings by Trustee........................ 53
SECTION 7.03. Call of Meetings by Company or Securityholders..... 53
SECTION 7.04. Qualifications for Voting.......................... 54
SECTION 7.05. Regulations........................................ 54
SECTION 7.06. Quorum............................................. 55
SECTION 7.07. Voting............................................. 55
SECTION 7.08. No Delay of Rights by Meeting...................... 56
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.01. Supplemental Indentures Without Consent of
Securityholders.................................... 56
SECTION 8.02. Supplemental Indentures with Consent of
Securityholders of a Series........................ 58
SECTION 8.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures............................ 59
SECTION 8.04. Notation on Securities............................. 59
SECTION 8.05. Evidence of Compliance of Supplemental Indenture
to Be Furnished Trustee............................ 60
ARTICLE NINE
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 9.01. Company May Consolidate, etc., on Certain Terms.... 60
SECTION 9.02. Successor Corporation Substituted.................. 61
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ARTICLE TEN
REDEMPTION OF SECURITIES
SECTION 10.01. Applicability of Article........................... 61
SECTION 10.02. Election to Redeem; Notice to Trustee.............. 62
SECTION 10.03. Selection by Trustee of Securities to Be Redeemed.. 62
SECTION 10.04. Notice of Redemption............................... 62
SECTION 10.05. Deposit of Redemption Price........................ 63
SECTION 10.06. Securities Payable on Redemption Date.............. 63
SECTION 10.07. Registered Securities Redeemed in Part............. 64
ARTICLE ELEVEN
SINKING FUNDS
SECTION 11.01. Applicability of Article........................... 65
SECTION 11.02. Satisfaction of Sinking Fund Payments with
Securities......................................... 65
SECTION 11.03. Redemption of Securities for Sinking Fund...........66
ARTICLE TWELVE
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 12.01. Terms Set Forth in the Securities.................. 66
ARTICLE THIRTEEN
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 13.01. Discharge of Indenture..............................66
SECTION 13.02. Deposited Money to Be Held in Trust by Trustee......68
SECTION 13.03. Paying Agent to Repay Money Held....................68
SECTION 13.04. Return of Unclaimed Money...........................68
SECTION 13.05. Discharge of Indenture as to Certain Series of
Securities..........................................69
SECTION 13.06. Repayment to Company of Deposits Made Pursuant
to Section 13.05....................................71
SECTION 13.07. Deposits Irrevocable................................71
SECTION 13.08. Reinstatement.......................................71
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ARTICLE FOURTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 14.01. Indenture and Securities Solely Corporate
Obligations.........................................72
ARTICLE FIFTEEN
MISCELLANEOUS PROVISIONS
SECTION 15.01. Provisions Binding on Company's Successors......... 72
SECTION 15.02. Official Acts by Successor Corporation............. 72
SECTION 15.03. Addresses for Notices, etc......................... 73
SECTION 15.04. Governing Law...................................... 73
SECTION 15.05. Evidence of Compliance with Conditions Precedent... 73
SECTION 15.06. Legal Holidays..................................... 74
SECTION 15.07. Trust Indenture Act to Control..................... 74
SECTION 15.08. No Security Interest Created....................... 74
SECTION 15.09. Benefits of Indenture.............................. 74
SECTION 15.10. Payments to Be Made in U.S. Dollars................ 74
SECTION 15.11. Table of Contents, Headings, etc................... 74
SECTION 15.12. Execution in Counterparts.......................... 75
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THIS INDENTURE, dated as of May 24, 1996, is executed and delivered from SOUTHERN NATIONAL CORPORATION, a North Carolina corporation (such corporation or, subject to Article Nine, its successors and assigns, the "Company"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company (such corporation or, subject to Article Five, its successors and assigns as Trustee under this Indenture, the "Trustee").
RECITAL OF THE COMPANY
The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured senior debentures, notes or other evidences of indebtedness or warrants therefor to be issued in one or more series (the "Securities"), as provided herein.
For and in consideration of the premises and the purchase of the Securities by the holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS
"Bank" means (i) any institution organized under the laws of the United States, any State, the District of Columbia, Puerto Rico or any territory of the United States that (a) accepts deposits that the depositor has a legal right to withdraw on demand and (b) engages in the business
of making commercial loans and (ii) any trust company organized under any of the foregoing laws. Unless otherwise provided, for purposes of this Indenture a Bank also will be considered a "corporation".
"BB&T-NC" shall mean Branch Banking and Trust Company, a North Carolina Corporation, and any successor or successors thereto.
"Bearer Security" means any Security established pursuant to Section 2.02 that is payable to bearer.
"Bearer Security Tax Certificate" or "Certificate of non-U.S. Ownership", when used with respect to a Bearer Security, means a certificate satisfying the requirements of Treasury Regulation (S) 1.163-5(c)(2)(i)(D)(3), as that provision may be amended or redesignated from time to time, which certificate shall be in a form approved by the Company.
"Board of Directors" means the Board of Directors of the Company or, with respect to any matter, any committee of the Board of Directors duly authorized to act for the Board of Directors with respect to such matter.
"Business Day", with respect to each series of Securities, means any day other than a Saturday or Sunday that is neither a legal holiday nor a day on which banking institutions are authorized or obligated by law or regulation to close in either The City of New York or, with respect to Registered Notes that will bear interest based on a specified percentage of London interbank offered quotations ("LIBOR"), in London, England, or, in the case of Bearer Securities, in any Place of Payment.
"CEDEL, S.A." means Centrale de Livraison de Valeurs Mobilieres S.A.
"Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or, if at any time after the execution of this Indenture the Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date.
"Company" means the corporation identified as the Company in the first paragraph of this Indenture until a successor corporation shall succeed to and be substituted for the Company pursuant to the provisions of Article Nine, and thereafter shall mean such successor corporation.
"Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, any Vice Chairman, its Chief Executive Officer, its President, any Executive Vice President or any Senior Vice President and its Treasurer, any Assistant Treasurer, its Secretary or any Assistant Secretary, and delivered to the Trustee.
"Consolidated Net Banking Assets" means all net assets owned directly or indirectly by each Subsidiary that is a Bank as such net assets would be reflected on a consolidated balance sheet of the Company prepared in accordance with generally accepted accounting principles at the time.
"Constituent Bank" means any Subsidiary that is a Bank.
"Controlled Subsidiary" means any Subsidiary of which more than 80% of the aggregate voting power of the outstanding shares of the Voting Stock at the time is owned directly or indirectly by the Company or by one or more Controlled Subsidiaries or by the Company and one or more Controlled Subsidiaries, after giving effect to the issuance to any Person other than the Company or any Controlled Subsidiary of Voting Stock of the Subsidiary issuable on exercise of options, warrants or rights to subscribe for such Voting Stock or on conversion of securities convertible into such Voting Stock.
"coupon" means any interest coupon appertaining to a Bearer Security.
"Defaulted Interest" has the meaning specified in Section 2.09.
"Depositary", with respect to the Securities of any series issuable or issued in the form of one or more Global Securities, means The Depository Trust Company, New York, New York, or such other Person designated as Depositary by the Company in the manner provided in Section 2.01, until a successor Depositary shall have been appointed pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" means or includes each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the Global Securities of any such series means the Depositary with respect to the Securities of that series.
"Euro-clear" means Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euro-clear System.
"Event of Default" means any event specified in Section 4.01, continued for the period of time, if any, and after the giving of the notice, if any, designated in Section 4.01.
"Global Security" means a Security issued to evidence all or part of a series of Securities in accordance with Section 2.03.
"Indenture" means this instrument as originally executed or, if amended or supplemented as provided in this Indenture, as so amended or supplemented.
"interest", when used with respect to an Original Issue Discount Security that by its terms bears interest only after Maturity, means interest payable after Maturity.
"Interest Payment Date", when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security.
"Maturity", when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by the declaration of acceleration, call for redemption, repayment at the option of the holder or otherwise.
"Officers' Certificate", when used with respect to the Company, means
a certificate signed by the Chairman of the Board, any Vice Chairman, the Chief
Executive Officer, the President, any Executive Vice President or any Senior
Vice President and by the Treasurer, any Assistant Treasurer, the Secretary or
any Assistant Secretary of the Company. Except as otherwise provided in this
Indenture, each such certificate shall include the statements provided for in
Section 15.05.
"Opinion of Counsel" means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company, and who shall be acceptable to the Trustee. Except as otherwise provided in this Indenture, each such opinion shall include the statements provided for in Section 15.05.
"Original Issue Discount Security" means any Security that provides for an amount less than the principal amount thereof to be due and payable upon a declaration of
acceleration of the Maturity thereof pursuant to Section 4.01. The term
"principal amount" or "aggregate principal amount", when used with respect to
Original Issue Discount Securities, has the meaning (or meanings) specified in
the manner contemplated by Section 2.01 for purposes of: determining the amount
due and payable in the event of an acceleration of Maturity as provided in
Section 4.01; the redemption provisions in Article Ten; determining whether the
holders of the requisite principal amount of Outstanding Securities of any
series have given any request, demand, authorization, direction, notice, consent
or waiver under this Indenture; and determining whether a quorum is present at a
meeting of Securityholders.
"Outstanding", when used with reference to Securities of any series or the related coupons, subject to the provisions of Section 6.04, means, as of any particular time, all Securities of such series or any related coupons authenticated and delivered by the Trustee pursuant to this Indenture, except:
(a) such Securities and coupons theretofore canceled by the Trustee or delivered to the Trustee for cancellation;
(b) such Securities and coupons, or portions thereof, for the payment or redemption of which money in the necessary amount shall have been deposited in trust with the Trustee or with any Paying Agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent), provided that if such Securities are to be redeemed prior to the Maturity thereof, notice of such redemption shall have been provided as specified in Article Eleven, or provision satisfactory to the Trustee shall have been made for mailing such notice; and
(c) such Securities or coupons in lieu of or in substitution for which other Securities or coupons shall have been authenticated and delivered pursuant to the terms of Section 2.07, except to the extent that a bona fide holder in due course of any such Securities shall have presented proof satisfactory to the Trustee that such holder is a bona fide holder in due course of any such Securities or coupons.
"Paying Agent", when used with respect to Securities of any series, means any Person authorized by the Company to pay the principal of and any premium or interest on any Securities of that series on behalf of the Company.
"Person" means a corporation, an association, a partnership, an organization, a trust, an individual, a government or a political subdivision thereof or a governmental agency.
"Place of Payment" has the meaning stated in Section 2.01(5).
"Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt that was evidenced by such particular Security. For the purposes of this definition, any Security authenticated and delivered under Section 2.07 in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Principal Constituent Bank" means BB&T-NC and, at any time, any other Constituent Bank the total assets of which (as set forth in the most recent statement of condition of such Constituent Bank) equal more than 30% of the total assets of all Constituent Banks as determined from the most recent statements of condition of the Constituent Banks.
"principal office of the Trustee" or any other similar term means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office, at the date of this Indenture, is located at Two International Place, 4th Floor, Boston, Massachusetts 02110.
"Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.
"Registered Security" means any Security, in the form of registered securities established pursuant to Section 2.02, that is registered in the Security Register.
"Regular Record Date", with respect to the interest payable on any Interest Payment Date on the Securities of any series, means the date specified for that purpose as contemplated by Section 2.01.
"Responsible Officer", when used with respect to the Trustee, means any officer of the principal office of the Trustee, the Chairman or Vice Chairman of its board of directors, the Chairman or Vice Chairman of the executive committee of the board of directors,
or any other officer of the Trustee to whom any corporate trust matter is referred because of such officer's knowledge of and familiarity with the particular subject.
"Security" or "Securities" has the meaning stated in the recitals of this Indenture and means any Security or Securities, as the case may be, authenticated and delivered pursuant to this Indenture. Whenever this Indenture refers to any interest on or with respect to any Security that is represented by a coupon, such reference to the Security also shall include reference to a coupon.
"Security Register", when used with respect to a Registered Security, has the meaning specified in Section 2.06(b).
"Securityholder", "holder of Securities", "holder" or other similar term, when used with respect to a Registered Security, means any Person in whose name at the time a particular Registered Security is registered on the Security Register and, when used with respect to a Bearer Security or coupon, the bearer thereof.
"Special Record Date" has the meaning specified in Section 2.09.
"Stated Maturity", when used with respect to any Security or any payment of premium or any installment of interest thereon, means the date specified in such Security or a coupon representing such installment of interest as the fixed date on which the principal of such Security or such payment of premium or such installment of interest is due and payable.
"Subsidiary" means any corporation of which a majority of the aggregate voting power of the outstanding Voting Stock at the time shall be owned by the Company or by the Company and one or more Subsidiaries or by one or more Subsidiaries.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as it was
in force at the date of execution of this Indenture, except as provided in
Section 8.03.
"Trustee" means the Person identified as the Trustee in the first paragraph of this Indenture until a successor shall succeed to the trusts created by this
Indenture pursuant to the provisions of Article Five, and thereafter shall mean such successor.
"United States" means the United States of America (including the District of Columbia) and its possessions.
"U.S. Government Obligations" has the meaning specified in Section 13.05(b).
"Vice President", when used with respect to the Company or the Trustee, means any such officer whether or not designated by a number or a word or words added before or after such title.
"Voting Stock" of a corporation or other entity means stock of the class or classes having general voting power in an election of the board of directors, managers or trustees of such corporation or other entity (irrespective of whether, at the time, stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).
ARTICLE TWO
THE SECURITIES AND SECURITY FORMS
The terms and conditions listed below, as applicable, of any series of Securities shall be established either in an indenture supplemental hereto or in or pursuant to a resolution of the Board of Directors:
(1) the title of the Securities of the series (which shall distinguish the Securities of the series from Securities of all other series);
(2) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, other Securities of the series pursuant to Section 2.05, 2.06, 2.07, 8.04 or 10.07);
(3) the date or dates on which the principal of the Securities of the series is payable;
(4) the rate or rates (which may be fixed or variable) at which the Securities of the series shall bear interest, if any, or the formula by which interest shall be calculated by the Company or an agent designated for such purpose, the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest shall be payable and the Regular Record Date for the interest payable on any Registered Security on any Interest Payment Date;
(5) the place or places, if any, in addition to those specified herein, where the principal of and any premium or interest on Securities of the series shall be payable (the "Place of Payment"), any Registered Securities of the series may be surrendered for registration of transfer, Securities of the series may be surrendered for exchange and notices and demands to or upon the Company in respect of the Securities of the series and this Indenture may be served and where notices to holders pursuant to this Indenture will be published;
(6) the price or prices at which, the period or periods within which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company, pursuant to any sinking fund or otherwise;
(7) the obligation, if any, of the Company to redeem, purchase or repay Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a holder thereof and the price or prices at which, the period or periods within which and the other terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation, which in the case of Securities of any series that are repayable at the option of a holder thereof shall be set forth in the form of such Security;
(8) whether Securities of the series are to be issuable as Registered Securities, Bearer Securities or both, whether Securities of the series are to be issuable with or without coupons or both and, in the case of Bearer Securities, the date as of which such Bearer Securities shall be dated if other than the date of original issuance of the first Security of such series of like tenor and term to be issued;
(9) whether the Securities of the series shall be issued in whole or in part in the form of a Global Security or Securities and, in such case, the
Depositary (if other than The Depository Trust Company) for such Global Security or Securities and whether such global form shall be permanent or temporary;
(10) if Securities of the series are to be issuable initially in the form of one or more temporary Global Securities, the circumstances under and the manner in which such temporary Global Securities can be exchanged for definitive Securities of the series and whether such definitive Securities will be Registered Securities, Bearer Securities or both and will be in global form;
(11) the denominations in which Registered Securities of the series shall be issuable, if other than denominations of $1,000 and any integral multiple thereof, and the denominations in which Bearer Securities of such series, if any, shall be issuable if other than the denomination of $5,000;
(12) any Event of Default with respect to the Securities of such series, if not set forth herein or if different from those set forth herein;
(13) the form of Securities of such series;
(14) the Person or Persons who shall be Security registrar for the Securities of such series if other than as provided for in this Indenture, and the place or places where the Security Register for such series shall be maintained and the Person or Persons who will be the initial Paying Agent or Agents, if other than as provided for in this Indenture;
(15) if warrants for Securities of any series are to be issued, the form in which the warrants shall be issued, the circumstances under and the manner in which the warrants may be exercised, any obligation of the Company concerning any Securities underlying the warrants and any other terms or conditions regarding the warrants and any Securities underlying the warrants; and
(16) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture).
All Securities of any series and the coupons appertaining to Bearer Securities of such series, if any, issued under this Indenture in all respects shall be equally and ratably entitled to the benefits hereof with respect to such series without preference, priority or distinction on
account of actual time or times of authentication and delivery or Maturity of the Securities of such series. All Securities of the same series and the coupons appertaining to Bearer Securities of such series, if any, shall be substantially identical except as to denomination and except as may otherwise be provided either in an indenture supplemental hereto or a resolution of the Board of Directors.
The definitive Securities and coupons, if any, shall be printed, lithographed or engraved or produced by any combination of these methods on steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange, all as determined by the officers executing such Securities or coupons, as evidenced by their execution of such Securities or coupons.
The form of Trustee's certificate of authentication for all Securities shall be as follows:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities issued under the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By___________________________________
Authorized Signatory
(b) The provisions of the last sentence of Section 2.05(b) shall apply to any Securities represented by a Global Security if such Securities were never issued and sold by the Company (whether because of failure of settlement or otherwise) and the Company delivers to the Trustee the Global Security together with written instructions with regard to the reduction in the principal amount of Securities represented thereby, together with the written statement contemplated by the last sentence of Section 2.05(b), notwithstanding the absence of delivery of such Securities as contemplated thereby.
(c) Global Securities may be issued in either registered or bearer form and in either temporary or permanent form.
denomination of $5,000. Each Registered Security shall be dated as of the date of its authentication. Each Bearer Security shall be dated as of the date specified in the manner contemplated by Section 2.01.
(b) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication. Except as otherwise provided in this Article Two, the Trustee thereupon shall authenticate and deliver such Securities in accordance with a Company Order; provided, however, that in connection with its original issuance a Bearer Security may be delivered only outside the United States and, except in the case of a temporary Global Security, only if the Company or its agent shall have received from the Person entitled to receive the Bearer Security a Bearer Security Tax Certificate and only if the Company and the Trustee have no reason to know that such certificate is false.
(c) To the extent authorized in or pursuant to a resolution of the Board of Directors or established in an indenture supplemental hereto, such Company Order may be electronically transmitted and may provide instructions as to registration of holders, principal amounts, rates of interest, Stated Maturities and other matters contemplated by such resolution of the Board of Directors or supplemental indenture to be so instructed in respect thereof.
(d) In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and, subject to Section 5.01, shall be fully protected in relying upon:
(i) a copy of the resolution or resolutions of the Board of Directors in or pursuant to which the terms and form of the Securities were established, 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 as of the date of such certificate;
(ii) an executed supplemental indenture, if any;
(iii) an Officers' Certificate delivered in accordance with
Section 15.05; and
(iv) an Opinion of Counsel which shall state:
(A) that the form of such Securities and coupons, if any, has been established by a supplemental indenture or by or pursuant to a resolution of the Board of Directors in accordance with Sections 2.01 and 2.02 and in conformity with the provisions of this Indenture;
(B) that the terms of such Securities and coupons, if any, have been established in accordance with Section 2.01 and in conformity with the other provisions of this Indenture;
(C) that such Securities, when authenticated and delivered by the Trustee and issued (with coupons attached, if applicable) by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization and moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles;
(D) that all conditions precedent, if any, provided for in this Indenture have been complied with; and
(E) that the execution and delivery by the Company of such Securities and coupons, if any, do not conflict with any law, administrative regulation or court decree known by legal counsel furnishing the Opinion of Counsel to be applicable to the Company.
(e) If the Company shall establish pursuant to Section 2.01 that the
Securities of a series are to be issued in whole or in part in the form of one
or more Global Securities, then the Company shall execute and the Trustee, in
accordance with this Section 2.04 and the Company Order with respect to such
series, shall authenticate and deliver one or more Global Securities in
permanent or temporary form that (i) shall represent and shall be denominated in
an aggregate amount equal to the aggregate principal amount of the Outstanding
Securities of such series to be represented by one or more Global Securities,
(ii) shall be registered in the name of the Depositary for such Global Security
or Securities or the nominee of such Depositary and (iii) shall be delivered by
the Trustee to such Depositary or pursuant to such Depositary's instruction.
(f) The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section 2.04 if the Trustee, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee in good faith by its board of directors or trustees, executive committee or a trust committee of directors or trustees or vice presidents shall determine that such action would expose the Trustee to personal liability to existing holders.
(g) Notwithstanding any contrary provision herein, if all Securities of a series are not to be originally issued at one time, it shall not be necessary for the Company to deliver to the Trustee a Company Order, Officers' Certificate, resolution of the Board of Directors, supplemental indenture or Opinion of Counsel otherwise required pursuant to Section 2.04(b) or Section 2.04(d) at or prior to the time of authentication of each Security of such series if such documents are delivered to the Trustee or its agent at or prior to the authentication upon original issuance of the first Security of such series to be issued. In such event, any subsequent request by the Company to the Trustee to authenticate Securities of such series upon original issuance shall constitute a representation and warranty by the Company that, as of the date of such request, the statements made in the Officers' Certificate or other certificates delivered pursuant to Section 2.04(d) shall be true and correct as if made on such date. A Company Order, Officers' Certificate, resolution of the Board of Directors or supplemental indenture delivered by the Company to the Trustee in the circumstances set forth in this Section 2.04(g) may provide that Securities that are the subject thereof will be authenticated and delivered by the Trustee or its agent on original issue from time to time in the aggregate principal amount established for such series pursuant to such procedures acceptable to the Trustee as may be specified from time to time by Company Order upon the telephonic, electronic or written order of persons designated in such Company Order, supplemental indenture or resolution of the Board of Directors (any such telephonic or electronic instructions to be promptly confirmed in writing by such persons) and that such persons are authorized to determine, consistent with such Company Order, supplemental indenture or resolution of the Board of Directors, such terms and conditions of said Securities as are specified in such Company Order, supplemental indenture or resolution of the Board of Directors.
(h) Each Depositary designated pursuant to clause (9) of Section 2.01 for a Global Security in registered form, at the time of its designation and at all times while it serves as Depositary, shall be a clearing
agency registered under the Securities Exchange Act of 1934 and any other applicable statute or regulation.
(b) No Security or appurtenant coupon shall be entitled to the
benefits of this Indenture or be valid or obligatory for any purpose unless such
security bears thereon a certificate of authentication substantially in the form
set forth in Section 2.02, manually executed by an authorized signatory of the
Trustee. Such certificate by the Trustee upon any Security executed by the
Company shall be conclusive evidence that the Security so authenticated has been
duly authenticated and delivered under this Indenture. Except as permitted by
Section 2.07, the Trustee shall not authenticate and deliver any Bearer Security
unless all appurtenant coupons for interest then matured have been detached and
canceled. Notwithstanding the foregoing, if any Security or portions thereof
shall have been duly authenticated and delivered hereunder but never issued and
sold by the Company (whether because of failure of settlement or otherwise), and
the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 2.10 together with a written statement stating that such
Security or portion thereof has never been issued and sold by the Company, for
all purposes of this Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall not be entitled to the benefits
of this Indenture.
(c) In case any officer of the Company whose manual or facsimile signature appears on any of the Securities or coupons shall cease to be such officer before the Securities or coupons so signed shall have been authenticated and delivered by the Trustee, or disposed of by the Company, such Securities or coupons nevertheless may be authenticated and delivered or disposed of as though the person whose manual or facsimile signature appears on such Securities or coupons had not ceased to be such officer of the Company; and any Security or coupon may bear the manual or facsimile signature on behalf of the Company by such
persons as, at the actual date of the execution of such Security or coupon, 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.
(b) For each series of Registered Securities, the Company shall cause to be kept in at least one such office or agency a Security register (the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for registration of Registered Securities and registration of transfer of Registered Securities as provided in this Article Two. Each such Security Register shall be in written form or in any other form capable of being converted into written form within a reasonable time. At all reasonable times such Security Registers shall be open for inspection by the Trustee. Upon due presentment for registration of transfer of any Registered Security of any series at any such office or agency, the Company shall execute and register and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Registered Security or Securities of the same series and of like tenor and terms for an equal aggregate principal amount. Unless otherwise provided (pursuant to Section 2.01 or otherwise), the Company initially appoints BB&T-NC, at the office of BB&T-NC, 223 West Nash Street, Wilson, North Carolina, as a Security registrar for each series of Registered Securities.
(c) All Registered Securities presented for registration of transfer or for exchange or payment, if so required by the Company or the Trustee, shall be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee duly executed by, the holder or his attorney duly authorized in writing.
(d) To the extent specified in the manner provided by Section 2.01, Registered Securities or Bearer
Securities of any series may be issued in exchange for Bearer Securities (except as otherwise specified in the manner contemplated by Section 2.01 with respect to a Bearer Security in global form) of the same series, of any authorized denomination and of like tenor and terms and aggregate principal amount, upon surrender of the Bearer Securities to be exchanged at any office or agency specified in the manner provided by Section 2.01, with all unmatured coupons and all unpaid matured coupons thereto appertaining. If the holder of a Bearer Security is unable to produce any such unmatured coupon or coupons or unpaid matured coupon or coupons, such exchange may be effected if the Bearer Securities are accompanied by payment in funds acceptable to the Company and the Trustee in an amount equal to the amount represented by such missing coupon or coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there is furnished to them such security or indemnity as they may require to hold harmless each of them and any Paying Agent. If thereafter the holder of such Security shall surrender to any Paying Agent any such missing coupon in respect of which such a payment shall have been made, such holder shall be entitled to receive the amount of such payment; provided, however, that, except as otherwise provided in Section 3.02, interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside the United States. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the holder making the exchange is entitled to receive.
(e) If at any time the Depositary for the Global Securities of a series notifies the Company that it is unwilling or unable to continue as Depositary for the Global Securities of such series or if at any time the Depositary for the Registered Securities of such series shall no longer be eligible under Section 2.03 because it no longer is a clearing agency registered under the Securities Exchange Act of 1934 and any other applicable statute or regulation, the Company shall appoint a successor Depositary with respect to the Global Securities of such series. If a successor Depositary for the Global Securities of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company's election pursuant to Section 2.01(9) shall no longer be effective with respect to the Securities of such series and the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver Securities of such series in definitive form in an aggregate principal amount equal to
the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities.
(f) The Company at any time and in its sole discretion may determine that the Securities of any series issued in the form of one or more Global Securities shall no longer be represented by such Global Security or Securities. In such event the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver, Securities of such series in definitive form and in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities.
(g) If specified by the Company pursuant to Section 2.01 with respect to a series of Securities, the Depositary for such series of Securities may surrender a Global Security for such series of Securities in exchange in whole or in part for Securities of such series of like tenor and terms and in definitive form on such terms as are acceptable to the Company and such Depositary. Thereupon the Company shall execute, and the Trustee shall authenticate and deliver:
(i) to each Person specified by such Depositary a new Security or new Securities of the same series, of like tenor and terms and of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Global Security; and
(ii) to such Depositary a new Global Security of like tenor and terms and in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Securities delivered to holders thereof.
(h) In any exchange provided for in Section 2.06(e), Section 2.06(f) or Section 2.06(g), the Company will execute and the Trustee will authenticate and deliver Securities (i) in definitive registered form in authorized denominations, if the Securities of such series are issuable as Registered Securities, (ii) in definitive bearer form in authorized denominations, with unmatured coupons attached, if the Securities of such series are issuable as Bearer Securities or (iii) as either Registered or Bearer Securities, if the Securities of such series are issuable in either form; provided, however, that (A) no definitive Bearer Security shall be delivered in exchange
for a temporary Global Security unless the Company or its agent shall have received from the person entitled to receive the definitive Bearer Security a Bearer Security Tax Certificate, (B) delivery of a Bearer Security shall occur only outside the United States and (C) no definitive Bearer Security will be issued if the Company or the Trustee has reason to know that such certificate is false.
(i) Upon the exchange of all of a Global Security for Securities in certificated form, such Global Security shall be canceled by the Trustee. The exchange of any portion of a Global Security for Securities in certificated form shall be subject to Section 2.03(a). Registered Securities issued in exchange for all or part of a Global Security shall be registered in such names and in such authorized denominations as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Registered Securities to the persons in whose names such Securities are so registered. The Trustee shall deliver Bearer Securities issued in exchange for all or part of a Global Security to the persons, and in such authorized denominations, as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee; provided, however, that (A) no definitive Bearer Security shall be delivered in exchange for all or part of a temporary Global Security unless the Company or its agent shall have received from the person entitled to receive the definitive Bearer Security a Bearer Security Tax Certificate, (B) delivery of a Bearer Security shall occur only outside the United States and (C) no definitive Bearer Security will be issued if the Company or the Trustee has reason to know that any such certificate is false.
(j) No service charge shall be made to a holder for any exchange or registration of transfer of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such exchange or registration of transfer.
(k) The Company shall not be required (i) to issue, register the
transfer of or exchange Securities of any particular series during a period
beginning at the opening of business 15 days before the day of the mailing of a
notice of redemption of Securities of such series selected for redemption under
Section 10.03 and ending at the close of business on the day of such mailing,
(ii) to register the transfer of or exchange any Registered Security so selected
for redemption in whole or in part, except the unredeemed
portion of any Registered Security being redeemed in part or (iii) to exchange any Bearer Security so selected for redemption except that such a Bearer Security may be exchanged for a Registered Security of that series, provided that such Registered Security shall be surrendered immediately for redemption with written instruction for payment consistent with the provisions of this Indenture.
(l) Notwithstanding anything herein to the contrary: the exchange of Bearer Securities for Registered Securities shall be subject to applicable laws and regulations in effect at the time of exchange; and neither the Company nor the Trustee or any Security registrar shall exchange any Bearer Securities into Registered Securities if it has received an Opinion of Counsel that as a result of such exchanges the Company could suffer adverse consequences under the United States Federal income tax laws and regulations then in effect and the Company has delivered to the Trustee a Company Order directing the Trustee not to make such exchanges thereafter unless and until the Trustee receives a subsequent Company Order to the contrary. The Company shall deliver copies of such Company Order to the Security registrar.
(b) The Trustee may authenticate any such substitute Security and deliver the same upon the written request or authorization of any officer of the Company. Upon the issuance of any substitute Security or coupon, 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 reasonable expenses (including the fees and expenses of the Trustee) connected therewith. In case any Security or coupon which has matured or is about to mature shall become mutilated or be destroyed, lost or stolen, the Company, instead of issuing a substitute Security or coupon, may pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Security or coupon) if the applicant for such payment shall furnish to the Company and to the Trustee such security or indemnity as may be required by them to hold each of them harmless and, in case of destruction, loss or theft, evidence satisfactory to the Company and the Trustee of the destruction, loss or theft of such Security or coupon and of the ownership of such Security or coupon.
(c) Every substitute Security or coupon issued pursuant to the provisions of this Section 2.07 by virtue of the fact that any Security or coupon is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security or coupon 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 Securities or coupons of the relevant series duly issued under this Indenture. All Securities or coupons shall be held and owned by the holders upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or coupons 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.
(d) Notwithstanding the foregoing, the payment of principal of and
any premium and interest on Bearer Securities, except as otherwise provided in
Section 3.02, shall be payable only at an office or an agency located outside of
the United States, and, with respect to any coupons, interest represented
thereby shall be payable only upon presentation and surrender of such coupons.
or without coupons, but with such omissions, insertions and variations as may be appropriate for temporary Securities, all as may be determined by the Company. In the case of Securities of any series issuable as Bearer Securities, such temporary Securities may be in global form, representing all or any part of the Outstanding Securities of such series.
(b) Unless otherwise provided pursuant to Section 2.01:
(i) Except in the case of temporary Securities in global form, every such temporary Security shall be authenticated by the Trustee in substantially the same manner, and with the same effect, as the definitive Securities. Without unreasonable delay the Company will execute and deliver to the Trustee definitive Securities of such series and thereupon any or all temporary Securities of such series (accompanied, if applicable, by all unmatured coupons and all unpaid matured coupons appertaining thereto) may be surrendered in exchange therefor at the principal office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Securities an equal aggregate principal amount of definitive Securities of such series of authorized denominations. Such exchange shall be made at the Company's expense and without any charge to the holder. Until so exchanged, the temporary Securities of any series in all respects shall be entitled to the same benefits under this Indenture as definitive Securities of such series authenticated and delivered under this Indenture. Notwithstanding the foregoing, no Bearer Security shall be delivered in exchange for a Registered Security, and a Bearer Security shall be delivered in exchange for a Bearer Security only in compliance with the conditions set forth in Section 2.06.
(ii) If Securities of any series are issued in temporary global form, any such temporary Global Security, unless otherwise provided pursuant to Section 2.01, shall be delivered to the Depositary for the benefit of Euro-clear and CEDEL S.A. for credit to the respective accounts of the beneficial owners of such Securities or to such other accounts as they may direct.
(iii) Any such temporary Global Security shall be exchangeable, on the terms and in the manner set forth therein, in whole or in part, for an equal aggregate principal amount of definitive Securities of the same series of authorized denominations and of like tenor
and terms as the portions of such temporary Global Security to be exchanged. Any definitive Bearer Security shall be delivered in exchange for a portion of a temporary Global Security only upon receipt by the Trustee from the Person entitled to receive such definitive Bearer Security of a Bearer Security Tax Certificate.
(iv) Until exchanged in full as hereinabove provided, the temporary Securities of any series shall be entitled in all respects to the same benefits under this Indenture as definitive Securities of the same series and of like tenor and terms authenticated and delivered hereunder, except that any interest payable with respect to a temporary Global Security will be paid as specified therein.
Any interest on any Security that is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date ("Defaulted Interest")
forthwith shall cease to be payable to the holder on the relevant Regular Record
Date by virtue of having been such holder; and such Defaulted Interest may be
paid by the Company, at its election in each case, as provided in clause (i) or
(ii) below:
(i) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names
such Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in this clause (i). Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor fewer than ten days prior to the date of the proposed payment and not fewer than ten days after the receipt by the Trustee of the notice of the proposed payment. The Trustee promptly shall 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 holder at his address as it appears in the Security Register, not fewer than ten days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been given as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered on such Special Record Date and shall no longer be payable pursuant to the following clause (ii).
(ii) The Company may make payment of any Defaulted Interest on any such Security in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of that series may be listed, and upon such notice as may be required by any such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause (ii), such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.09, each Security of any series delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security of such series
shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.
Subject to the limitations set forth in Section 3.02, the holder of any coupon appertaining to a Bearer Security shall be entitled to receive the interest payable on such coupon upon presentation and surrender of such coupon on or after the Interest Payment Date of such coupon at an office or agency maintained for such purpose pursuant to Section 3.02.
ARTICLE THREE
PARTICULAR COVENANTS OF THE COMPANY
No payment of principal of or any premium or interest on Bearer
Securities shall be made at any office or agency of the Company in the United
States or by check mailed to any address in the United States or by transfer to
an account maintained with a bank located in the United States; provided,
however, that payment of principal of and any premium and interest on any Bearer
Security may be made at an office or agency of, and designated by, the Company
located in the United States if (but only if) payment of the full amount of such
principal, premium or interest at all offices outside the United States
maintained for the purpose by the Company in accordance with this Indenture is
illegal or effectively precluded by exchange controls or other similar
restrictions and the Trustee receives an Opinion of Counsel that such payment
within the United States is legal. Unless otherwise provided as contemplated by
Section 2.01
with respect to any series of Securities, at the option of the holder of any Bearer Security or related coupon payment may be made by mailing a check to an address outside the United States or by transfer to an account maintained by the payee with a bank located outside the United States.
The Company also from time to time may designate one or more offices or agencies (in or outside of such Place of Payment) where the Securities of one or more series and any appurtenant coupons (subject to the preceding paragraph) may be presented or surrendered for any and all such purposes, and from time to time may rescind such designations. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such office or agency.
(1) that it will hold all sums held by it as such agent for the payment of the principal of or any premium or interest on such Securities (whether such sums have been paid to it by the Company or by any other obligor on such Securities) in trust for the benefit of the Persons entitled thereto;
(2) that it will give the Trustee notice of any failure by the Company (or by any other obligor on such Securities) to make any payment of the principal of or any premium or interest on such Securities when the same shall be due and payable; and
(3) that it forthwith will pay to the Trustee, at any time during the continuance of an Event of Default, upon the written request of the Trustee, all sums so held by it as such agent.
(b) If the Company shall act as its own Paying Agent with respect to the Securities of any series, on or
before each due date of the principal of or any premium or interest on the Securities of such series, it will set aside, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay such principal, premium or interest so becoming due and will notify the Trustee of any failure to take such action and of any failure by the Company (or by any other obligor under such Securities) to make any payment of the principal of or any premium or interest on such Securities when the same shall become due and payable.
(c) Notwithstanding anything in this Section 3.03 to the contrary, the Company, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture or for any other reason, may pay or by Company Order direct any Paying Agent to pay to the Trustee all sums held in trust by the Company or any Paying Agent under this Indenture, such sums to be held by the Trustee upon the trusts contained in this Indenture.
(d) Notwithstanding anything in this Section 3.03 to the contrary, the agreement to hold sums in trust as provided in this Section 3.03 is subject to Section 13.03 and Section 13.04.
(1) a review of the activities of the Company during the year and of performance under this Indenture has been made under his supervision;
(2) to the best of his knowledge, based on such review, the Company has fulfilled all its conditions and covenants under this Indenture throughout such year, or, if there has been a default in the fulfillment of any such condition or covenant, specifying each such default known to him and the nature and status of such default; and
(3) such certificate sets forth as of the end of such year a list of all Principal Constituent Banks.
(a) sell, assign, transfer or otherwise dispose of any shares of, or securities convertible into or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of a Principal Constituent Bank, and will not permit a Principal Constituent Bank to issue any shares of, or securities convertible into or options, warrants or rights to subscribe for or purchase shares of, such Voting Stock if, in each case, after giving effect to any such transaction, the Principal Constituent Bank would cease to be a Controlled Subsidiary; or
(b) permit a Principal Constituent Bank to:
(i) merge or consolidate with any other corporation, unless the surviving corporation is, or upon consummation of the merger or consolidation will become, the Company or a Controlled Subsidiary; or
(ii) lease, sell or transfer all or substantially all its properties and assets to any corporation or other Person, except to the Company or a Controlled Subsidiary or a Person that, upon such lease, sale or transfer, will become the Company or a Controlled Subsidiary.
Notwithstanding the foregoing, any such sale, assignment, transfer or other disposition of securities, any such merger or consolidation or any such lease, sale or transfer of properties and assets shall not be prohibited if required (i) by any law or any rule, regulation or order of any governmental agency or authority or (ii) as a condition imposed by any law or any rule, regulation or order of any governmental agency or authority with respect to the acquisition by the Company or any Controlled Subsidiary, directly or indirectly, through purchase of securities or assets, or a merger, consolidation or otherwise, of any
Person, provided that after giving effect to such acquisition (A) such Person will be a Controlled Subsidiary, (B) the Consolidated Net Banking Assets of the Company will be at least equal to the Consolidated Net Banking Assets of the Company prior thereto and (C) BB&T-NC will be a Controlled Subsidiary.
ARTICLE FOUR
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
(a) default in the payment of any installment of interest upon any of the Securities of that series as
and when the same shall become due and payable, and continuance of such default for a period of 30 days;
(b) default in the payment of the principal of or any premium on any of the Securities of that series as and when the same shall become due and payable at their Stated Maturity, upon redemption, by declaration or otherwise;
(c) default in the payment of any sinking fund installment or analogous obligation as and when the same shall become due and payable by the terms of the Securities of that series;
(d) a default or event of default as defined or designated in any mortgage, indenture, loan agreement or instrument under which there may be issued or borrowed, or by which there is secured or evidenced, any indebtedness of the Company (other than Securities of such series or indebtedness owed by the Company to any Subsidiary) or any Subsidiary (other than indebtedness of any Subsidiary owing to the Company or to another Subsidiary), whether such indebtedness now exists or shall be created hereafter, shall happen and (i) not less than $1,000,000 of such indebtedness shall be past due under such mortgage, indenture, loan agreement or instrument or such default or event of default shall result in not less than $1,000,000 of such indebtedness becoming or being declared due and payable and (ii) such indebtedness or such declaration, as the case may be, shall not have been discharged or rescinded or annulled within 15 days after the date on which written notice thereof is given 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 Securities of that series then Outstanding;
(e) a final judgment or judgments or order or orders for the payment of money in excess of $1,000,000 shall be entered against the Company or one or more Principal Constituent Banks and within 90 days after entry thereof such judgment or judgments or order or orders shall not have been discharged or the execution thereof stayed pending appeal or within 90 days after the expiration of any such stay such judgment or judgments or order or orders shall not have been discharged;
(f) failure on the part of the Company duly to observe or perform any other of the covenants or agreements on the part of the Company in the Securities of such series or in this Indenture (other than a
covenant or agreement a default in the performance of which or the breach of which specifically is provided for elsewhere in this Section 4.01 or which expressly has been included in this Indenture solely for the benefit of one or more series of Securities other than such series), and continuance of such failure for a period of 90 days after the date on which written notice of such failure, requiring the Company to remedy the same, shall have been given 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 Securities of such series at the time Outstanding;
(g) a court or governmental authority having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company or a Principal Constituent Bank 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 the Company or a Principal Constituent Bank 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 60 consecutive days; or
(h) the Company or a Principal Constituent Bank shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or 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 similar official) of the Company or a Principal Constituent Bank or for substantially all 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 shall take any corporate action in furtherance of any of the foregoing.
If an Event of Default with respect to the Securities of any series at the time Outstanding occurs and is continuing, then and in each such case, unless the principal of all the Securities of such series already shall have become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Securities of such series then Outstanding, by notice in writing to the Company (and to the Trustee if given by Securityholders), may declare the principal amount of all
the Securities of that series to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable. This provision, however, is subject to the condition that, at any time after such a declaration of acceleration, and before any judgment or decree for the payment of the money due shall have been obtained or entered as hereinafter provided, the holders of a majority in aggregate principal amount of the Securities of such series 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, if:
(1) the Company shall pay or shall deposit with the Trustee a sum sufficient to pay:
(A) all matured installments of interest on all the Securities of that series and the principal of and any premium on any and all Securities of that series that shall have become due otherwise than by acceleration (with interest on overdue installments of interest (to the extent that payment of such interest is enforceable under applicable law) and on such principal and premium at the rate borne by the Securities of that series, to the date of such payment or deposit); and
(B) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and
(2) any and all defaults with respect to Securities of that series under this Indenture, other than the nonpayment of principal of and any premium and accrued interest on Securities that shall have become due by acceleration, shall have been cured or waived as provided in Section 4.07.
No such waiver or rescission and annulment shall extend or shall affect any subsequent default or shall impair any right consequent thereon.
In case the Trustee or any Securityholder 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 or any Securityholder, then and in every such case the Company, the Trustee and such Securityholders, subject to any determination in such proceeding, shall be restored
respectively to their several positions and rights under this Indenture, and all rights, remedies and powers of the Company, the Trustee and such Securityholders shall continue as though no such proceeding had been taken.
(b) 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 the Securities and coupons and collect in the manner provided by law out of the property of the Company or any other obligor on the Securities and coupons, wherever situated, the money adjudged or decreed to be payable.
(c) In case there shall be pending proceedings for the bankruptcy or for the reorganization of the Company or any other obligor on the Securities and coupons under Title 11 of the United States Code or any other applicable 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 on the Securities and coupons, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the principal of the Securities shall then be due
and payable as expressed in the Securities or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand pursuant to the
provisions of this Section 4.02, shall be entitled and empowered, by
intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal and any premium and interest owing and
unpaid in respect of the Securities, and, in case of any judicial proceedings,
(i) 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 the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Securityholders allowed in such
judicial proceedings relative to the Company or any other obligor on the
Securities and coupons, its or their creditors, or its or their property, and
(ii) to collect and receive any money or other property payable or deliverable
on any such claims, and to distribute the same after the deduction of its
charges and expenses; and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of the Securityholders to make such
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of such payments directly to the Securityholders, to pay to the Trustee
any amount due it for reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and its counsel and any other amounts due
the Trustee under Section 5.06. To the extent that such payment of reasonable
compensation, expenses and counsel fees out of the trust estate in any such
proceedings shall be denied for any reason, payment of the same shall be secured
by a lien on, and shall be paid out of, any and all distributions, dividends,
money, securities and other property which the holders of the Securities and
coupons may be entitled to receive in such proceedings, whether in liquidation
or under any plan of reorganization or arrangement or otherwise.
(d) Nothing contained in this Section 4.02 shall be deemed to authorize the Trustee to authorize or consent to or adopt on behalf of any Securityholder any plan of reorganization or arrangement affecting the Securities or related coupons or the rights of any Securityholder, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding.
(e) All rights of action and of asserting claims under this Indenture, or under any of the Securities or related coupons, may be enforced by the Trustee without the possession of any of the Securities or coupons, or the production thereof in 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, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, shall be for the ratable benefit of the holders of the Securities and related coupons.
FIRST: To the payment of all amounts then due the Trustee under
Section 5.06;
SECOND: In case the principal of the Outstanding Securities of that series shall not have become due and be unpaid, to the payment of interest on the Securities of that series in the order of the Maturity of the installments of such interest, with interest (to the extent enforceable under applicable law) upon the overdue installments of interest at the rate borne by the Securities of that series, such payments to be made ratably to the persons entitled thereto; and
THIRD: In case the principal of the Outstanding Securities of that series shall have become due, by declaration or otherwise, to the payment of the whole amount then owing and unpaid upon the Securities of that series for principal and any premium and interest, with interest on the overdue principal and any premium and (to the extent enforceable under applicable law) upon overdue installments of interest at the rate borne by the Securities of that series; and in case such money shall be insufficient to pay in full the whole amounts so due and unpaid upon the Securities of that series, then to the payment of such principal and any premium and interest without preference or priority of principal over interest, or of interest over principal, or of any premium over principal or interest, or of principal or interest over any premium or of any installment of interest over any other installment of interest, or of any Security of that series over any other Security of that series, or of any coupon related to a Security of a series over any other coupon related to a Security of the same series, ratably to the
aggregate of such principal and any premium and accrued and unpaid interest.
Notwithstanding any other provision of this Indenture, however, the right of any holder of any Security to receive payment of the principal of and any premium and interest on such Security on or after the respective Stated Maturities, or to institute suit for the enforcement of any such payment on or after such respective dates against the Company, shall not be impaired or affected without the consent of such holder.
judicial proceedings as the Trustee shall deem most effectual to protect and enforce any 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 proper remedy or legal or equitable right vested in the Trustee by this Indenture or by law.
(b) Prior to any declaration that the principal of the Outstanding Securities of any series is due and payable, the holders of a majority in aggregate principal
amount of the Securities of that series at the time Outstanding on behalf of the holders of all of the Securities of that series may waive any past default or Event of Default under this Indenture and its consequences except a default under a covenant in this Indenture that, pursuant to Section 8.02, cannot be modified without the consent of each holder of a Security of the series affected thereby. Upon any such waiver, the Company, the Trustee and the holders of the Securities of that series and the related coupons shall be restored to their former positions and rights under this Indenture, 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 under this Indenture shall have been waived as permitted by this Section 4.07, such default or Event of Default, for all purposes of the Securities, the related coupons and this Indenture, shall be deemed to have been cured and to be not continuing.
litigant; provided, however, that the provisions of this Section 4.09 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding in the aggregate more than 10% in principal amount of the Outstanding Securities of that series, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or any premium or interest on any Security on or after the respective Stated Maturities (or, in the case of redemption or repayment, on or after the redemption date or repayment date).
ARTICLE FIVE
CONCERNING THE TRUSTEE
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, its own willful misconduct or any action or failure to act taken or omitted by it in bad faith, except that:
(a) except during the continuance of an Event of Default:
(1) the duties and obligations of the Trustee 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 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 conclusively may rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such certificates or opinions that by any provisions of this Indenture specifically are 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 holders of not less than a majority in principal amount of the
Securities of any series at the time Outstanding (determined as provided in
Section 6.04) 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 it shall have reasonable grounds for believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
Whether or not expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 5.01.
The provisions of this Section 5.01 are in furtherance of and subject to Sections 315 and 316 of the Trust Indenture Act.
(a) the Trustee may rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, 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 resolution of the Board of Directors 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 and any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it under this Indenture in good faith and in accordance with such 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 that 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;
(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, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books and records of the Company to the extent reasonably necessary to verify such facts or matters; and
(g) the Trustee may execute any of the trusts or powers under this Indenture or perform any duties under this Indenture either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it with due care under this Indenture.
exercise or performance of any of its powers under this Indenture. The obligations of the Company under this Section 5.06 shall constitute additional indebtedness under this Indenture.
publishing notice of such resignation in a newspaper of general circulation, in each place of payment for such Bearer Securities, customarily published at least once a day for at least five days in each calendar week.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of
Section 310(b) of the Trust Indenture Act after written request therefor by
the Company or by any Securityholder who has been a bona fide holder of a
Security or Securities for at least six months, or
(2) the Trustee shall cease to be eligible in accordance with the provisions of Section 5.08 and shall fail to resign after written request therefor by the Company or by any such Securityholder, or
(3) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed or a 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 by written
instrument, executed by Company Order authorized by the Board of Directors, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor Trustee (with written notice of such removal mailed to the
holders of Registered Securities at their address as they shall appear on the
Security Register, and, if any Bearer Securities are Outstanding, by publishing
notice of such resignation in a newspaper of general circulation, in each place
of payment for such Bearer Securities, customarily published at least once a day
for at least five days in each calendar week), or, subject to the provisions of
Section 4.09, any Securityholder who has been a bona fide holder of a Security
or Securities for at least six months, on behalf of himself and all others
similarly situated, may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(c) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company promptly shall appoint a successor Trustee by a Company Order authorized by the Board of Directors, one copy of which instrument shall be delivered to the retiring Trustee and
one copy to the successor Trustee. If, within one year after such resignation,
removal or incapability or the occurrence of such vacancy, a successor Trustee
shall be appointed by the holders of a majority in principal amount of the
Securities (voting as a single class) at the time Outstanding by instrument or
instruments delivered to the Company and the retiring Trustee, the successor
Trustee so appointed, forthwith upon its acceptance of such appointment, shall
become the successor Trustee and supersede the successor Trustee appointed by
the Company. If no successor Trustee shall have been so appointed by the Company
or the Securityholders and accepted appointment in the manner provided in
Section 5.10 within 60 days after notice of the resignation or removal of the
Trustee is mailed to the 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 Security or Securities
for at least six months, subject to the provisions of Section 4.09, on behalf of
himself and all others similarly situated, may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(d) The holders of a majority in aggregate principal amount of the Securities (voting as a single class) at the time Outstanding at any time, upon notice to the Trustee, may remove the Trustee.
(e) Any removal of the Trustee and appointment of a successor Trustee
pursuant to any of the provisions of this Section 5.09 shall become effective
upon acceptance of appointment by the successor Trustee as provided in Section
5.10. Any resignation of the Trustee shall become effective only upon the
appointment of a successor Trustee and upon the acceptance of appointment by the
successor Trustee as provided in Section 5.10.
instrument transferring to such successor Trustee all the rights and powers of the Trustee so ceasing to act and shall transfer, assign and deliver to such successor all property and money held by such predecessor Trustee under this Indenture. 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, nevertheless shall 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 5.06.
No successor Trustee shall accept appointment as provided in this
Section 5.10 unless at the time of such acceptance such successor Trustee shall
be qualified under the provisions of Section 310(b) of the Trust Indenture Act
and eligible under the provisions of Section 5.08.
Upon acceptance of appointment by a successor Trustee as provided in this Section 5.10, the Company shall mail notice of the succession of such Trustee under this Indenture to the holders of Registered Securities at their addresses as they shall appear on the Security Register, and, if any Bearer Securities are Outstanding, by publishing notice of such resignation in a newspaper of general circulation, in each place of payment for such Bearer Securities, customarily published at least once a day for at least five days in each calendar week. If the Company fails to mail such notice within ten days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed and, if necessary, published at the expense of the Company.
In case at the time such successor Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor Trustee may adopt the certificate of
authentication of any predecessor Trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor Trustee may authenticate such Securities either in the name of any predecessor Trustee under this Indenture 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 Securities or in this Indenture provided that the certificate of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.
ARTICLE SIX
CONCERNING THE SECURITYHOLDERS
vote occurs or such consent is obtained more than 120 days after such record date.
(b) The ownership of Registered Securities of any series shall be proved by the Security Register or by a certificate of the Security registrar of such series.
(c) The principal amount and serial numbers of Bearer Securities held by any Person, and the date of holding the same, may be proved by the production of such Bearer Securities or by a certificate executed, as depositary, by any trust company, bank, banker or other depositary, wherever situated, if such certificate shall be deemed by the Trustee to be satisfactory, showing that at the date therein mentioned such Person had on deposit with such depositary, or exhibited to it, the Bearer Securities in the amount and with the serial numbers therein described; or such facts may be proved by the certificate or affidavit of the Person holding such Bearer Securities, if such certificate or affidavit is deemed by the Trustee to be satisfactory. The Trustee and the Company may assume that such ownership of any Bearer Security continues until (i) another certificate or affidavit bearing a later date issued in respect of the same Bearer Security is produced, (ii) such Bearer Security is produced to the Trustee by some other Person, (iii) such Bearer Security is surrendered in exchange for a Registered Security or (iv) such Bearer Security is no longer Outstanding. The fact and date of execution of any such instrument or writing, the authority of the Person executing the same and the principal amount and serial numbers of Bearer Securities held by the Person so executing such instrument or writing and the date of holding the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section 6.02(c).
(d) The record of any Securityholders' meeting shall be proved in the manner provided in Section 7.07.
in whose name such Registered Security is registered as owner of such Registered Security for the purpose of receiving payment of principal of and any premium and (subject to Section 2.09) interest on such Registered Security and for all other purposes whatsoever, whether or not such Registered Security is overdue and notwithstanding any notation of ownership or other writing on such Registered Security made by anyone other than the Company or any Security registrar, and neither the Company, the Trustee, any Paying Agent nor any Security registrar shall be affected by any notice to the contrary. All such payments so made to any such holder as shown in the Security Register, 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 money payable upon any such Registered Security.
The Company, the Trustee, any Paying Agent and any Security registrar may treat the bearer of any Bearer Security and the bearer of any coupon as the absolute owner of such Bearer Security or coupon for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not such Bearer Security or coupon is overdue, and neither the Company, the Trustee, any Paying Agent nor any Security registrar shall be affected by any notice to the contrary. All such payments so made to any such bearer shall be valid and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for money payable upon any such Bearer Security.
None of the Company, the Trustee, any Paying Agent or the Security registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
action, only Securities that the Trustee knows are so owned shall be so disregarded.
ARTICLE SEVEN
SECURITYHOLDERS' MEETINGS
(1) 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 under this Indenture and its consequences, or to take any other action authorized to be taken by Securityholders pursuant to any of the provisions of Article Four;
(2) to remove the Trustee and nominate a successor Trustee pursuant to the provisions of Article Five;
(3) to consent to the execution of an indenture or indentures supplemental to this Indenture pursuant to the provisions of Section 8.02; or
(4) to take any other action authorized to be taken by or on behalf of the holders of any specified aggregate principal amount of the Securities
under any other provision of this Indenture or under applicable law.
Any meeting of Securityholders shall be valid without notice if the holders of all Securities then Outstanding of each series affected are present in person or by proxy or if notice is waived before or after the meeting by the holders of all Outstanding Securities of each series affected, and if the Company and the Trustee are either present by duly authorized representatives or, before or after the meeting, have waived notice.
case may be, for such meeting and may call such meeting to take any action authorized in Section 7.01, by mailing or publishing notice of such meeting as provided in Section 7.02.
(b) The Trustee, by an instrument in writing, shall appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Securityholders as provided in Section 7.03, in which case the Company or the Securityholders calling the meeting, as the case may be, in like manner shall appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the holders of a majority in principal amount of the Securities represented at the meeting and entitled to vote.
(c) Subject to the provisions of Section 6.04, at any meeting each Securityholder or proxy shall be entitled to one vote for each $1,000 principal amount of Securities.
(d) No vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Securities held by him or instruments in writing 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 7.02 or
Section 7.03 may be adjourned from time to time by a majority of those present
and the meeting may be held as so adjourned without further notice.
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.
Any record so signed and verified shall be conclusive evidence of the matters stated in such record.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
(a) to evidence the succession of another corporation to the Company, or successive successions, and the assumptions by the successor corporation of the covenants, agreements and obligations of the Company pursuant to Article Nine;
(b) to add to the covenants of the Company such further covenants, restrictions or conditions for the protection of the holders of any series of the Securities or coupons as the Board of Directors and the Trustee shall consider to be for the protection of the holders of such Securities or coupons, and to make the occurrence, or the occurrence and continuance, of a default in any such additional covenants, restrictions or conditions a default or an Event of Default permitting the enforcement of all or any of the several remedies set forth in this Indenture; provided, however, that in respect of any such additional covenant, restriction or condition such supplemental indenture may provide for notice or 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 in this Indenture or in any supplemental indenture that may be defective or inconsistent with any other provision contained in this Indenture or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under this Indenture that shall not adversely affect the interests of the holders of Outstanding Securities of any series or any related coupons;
(d) to establish the form or terms of Securities of any series as permitted by Section 2.01;
(e) to add to, change or eliminate any of the provisions of this Indenture to provide that Bearer Securities may be registrable as to principal, to change or eliminate any restrictions on the payment of principal or any premium on Registered Securities or of principal or any premium or interest on Bearer Securities, to permit Bearer Securities to be issued in exchange for Registered Securities or to permit or facilitate the issuance of Securities in uncertificated form, provided any such action shall not adversely affect the interests of the holders of Outstanding Securities of any series or any related coupons;
(f) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture; provided, however, that such action shall not adversely affect the interests of the holders of Outstanding Securities of any series;
(g) to provide for the documentation necessary for the issuance of Securities outside the United States of America;
(h) to provide for the documentation necessary for the issuance of Securities at an issue price lower than the principal amount thereof, including to provide that upon the redemption or acceleration of the Maturity thereof an amount less than the principal amount thereof shall become due and payable and that such amount shall be used to determine the relative voting rights of the holders thereof; or
(i) to conform the Indenture to the provisions of the Trust Indenture Act as then in effect.
The Trustee hereby is authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations that may be contained in such supplemental indenture and to accept the conveyance, transfer and assignment of any property under such supplemental indenture, but the Trustee shall not be obligated to, but in its discretion may, enter into any such supplemental indenture that affects the Trustee's own rights, duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section 8.01 may be executed by the Company and the Trustee without the consent
of the holders of any of the Securities at the time Outstanding, notwithstanding
any provisions of Section 8.02.
this Section 8.02 or Section 4.07(b), except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived.
Upon the request of the Company, accompanied by a copy of the resolutions of the Board of Directors certified by its Secretary or Assistant Secretary authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders of such series 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 in its discretion may, but shall not be obliged to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Securityholders under this Section 8.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.
exchange, as provided in Section 2.06, for the Outstanding Securities of such series and any related coupons, upon surrender of such Outstanding Securities of such series and any related coupons.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
(1) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer or which leases the properties and assets of the Company substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and expressly shall assume, by a supplemental indenture executed and delivered to the Trustee in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest on the Securities, according to their terms, and the performance of every covenant of this Indenture and in such series on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and
(3) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and supplemental indenture comply with this Article Nine and that all
conditions precedent provided for in this Indenture relating to such transaction have been complied with.
Such successor corporation may cause to be signed, and may issue either in its own name or in the name of the Company prior to such succession, any of or all the Securities of each series issuable under this Indenture which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor corporation instead of upon the Company Order, and subject to all the terms, conditions and limitations in this Indenture, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication and any Securities which such successor corporation thereafter shall cause to be signed and delivered to the Trustee on its behalf for that purpose. All the Securities so issued shall have in all respects the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all such Securities had been issued at the date of the execution of this Indenture.
ARTICLE TEN
REDEMPTION OF SECURITIES
The Trustee promptly shall notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed.
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed;
(4) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after such date;
(5) the Place or Places of Payment where such Securities, together in the case of Bearer Securities with all coupons, if any, appertaining thereto maturing after the Redemption Date, are to be surrendered for payment of the Redemption Price;
(6) that Bearer Securities may be surrendered for payment only at such place or places that are outside the United States, except as provided in Section 3.02; and
(7) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company.
therein specified, and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued interest) such Securities shall cease to bear interest and the coupons for such interest appertaining to any Bearer Securities so to be redeemed, except to the extent provided below, shall be void. Upon surrender of any such Security for redemption in accordance with said notice, such Security shall be paid by the Company at the Redemption Price, together with accrued interest to the Redemption Date; provided, however, that: (i) installments of interest on Bearer Securities whose Stated Maturity is on or prior to the Redemption Date shall be payable only upon presentation and surrender of coupons for such interest (at an office or agency located outside the United States except as otherwise provided in Section 3.02); and (ii) installments of interest whose Stated Maturity is on or prior to the Redemption Date shall be payable to the holders of such Securities, or one or more Predecessor Securities, registered as such at the close of business on the relevant record date for the payment of such interest according to the terms of such Securities.
If any Bearer Security surrendered for redemption shall not be accompanied by all appurtenant coupons maturing after the Redemption Date, such Bearer Security may be paid after deducting from the Redemption Price an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there is furnished to them such security or indemnity as they may require to hold each of them and any Paying Agent harmless. If thereafter the holder of such Bearer Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a deduction shall have been made from the Redemption Price, such holder shall be entitled to receive the amount so deducted on account of such coupon without interest thereon; provided, however, that interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside of the United States except as otherwise provided in Section 3.02.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium, until paid, shall bear interest from the Redemption Date at the rate prescribed therefor in the Security or related coupon.
endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the holder thereof or his attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the holder of such Security without service charge, a new Registered Security or new Registered Securities of the same series and of like tenor and terms, of any authorized denomination as requested by such holder, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Security so surrendered.
ARTICLE ELEVEN
SINKING FUNDS
The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 11.02. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of the Securities of such series.
(1) may deliver Outstanding Securities of a series (other than any previously called for redemption) and
(2) may apply as a credit Securities of a series that have been repurchased at the option of a holder or redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities,
in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such
series required to be made pursuant to the terms of such Securities as provided for by the terms of such series, provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund, and the amount of such sinking fund payment shall be reduced accordingly.
ARTICLE TWELVE
REPAYMENT AT THE OPTION OF HOLDERS
ARTICLE THIRTEEN
SATISFACTION AND DISCHARGE OF INDENTURE
substitution for which other Securities or coupons shall have been authenticated and delivered) and not theretofore canceled, or (b) all the Securities of any series and any related coupons not theretofore canceled or delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit with the Trustee, in trust, funds sufficient to pay upon Stated Maturity, redemption or repayment at the option of a holder all the Securities of such series and related coupons (other than any Securities of such series and related coupons that shall have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.06) not theretofore canceled or delivered to the Trustee for cancellation, including principal and any premium and interest due or to become due prior to such Stated Maturity, Redemption Date or date of repayment, as the case may be, but excluding, however, the amount of any money for the payment of principal of or any premium or interest on the Securities
(1) theretofore deposited with the Trustee and repaid by the Trustee to the Company in accordance with the provisions of Section 13.04, or
(2) paid to any State or the District of Columbia pursuant to its unclaimed property or similar laws, and if in either case the Company also shall pay or cause to be paid all other sums payable under this Indenture by the Company
then this Indenture shall cease to be of further effect with respect to Securities of such series and any related coupons, and the Trustee, on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel as required by Section 15.05 and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture with respect to Securities of such series and any related coupons. The obligations of the Company to the Trustee under Section 5.06 shall survive the termination of this Indenture.
The Trustee shall notify the Securityholders of such series, at the expense of the Company, of the immediate availability of the amount referred to in clause (b) of this Section 13.01 by mailing a notice, first class postage prepaid, to the holders of Registered Securities of such series at their addresses as they shall appear on the Security Register, and, if any Bearer Securities are
Outstanding, by publishing notice of such resignation in a newspaper of general circulation, in each place of payment for such Bearer Securities, customarily published at least once a day for at least five days in each calendar week.
of Registered Securities to be mailed and published, notice that such money remains unclaimed and that, after a date specified in such notice, which shall not be fewer than 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company.
(1) either:
(A) with respect to all Securities of such series at the time Outstanding, the Company shall have deposited or caused to be deposited irrevocably with the Trustee for such series as trust funds in trust, U.S. dollars, U.S. Government Obligations or a combination thereof, in an amount that through the payment of interest and principal and premium in respect thereof in accordance with their terms will provide (without any reinvestment of such interest or principal), not later than one Business Day before the due date of any payment in respect of the Securities for such series, money in an amount sufficient (in the case of a deposit including any U.S. Government Obligations, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee at or prior to the time of such deposit) to pay and discharge each installment of principal of (including any mandatory sinking fund payments), and any premium and interest on, the Outstanding Securities of such series on the dates such installments of principal and any premium and interest are due or upon the Stated Maturity, Redemption Date or repayment at the option of a holder of such series, as applicable; or
(B) the Company properly has fulfilled such other means of satisfaction and discharge as is specified, in the manner contemplated by
Section 2.01, to be applicable to the Securities of such series;
(2) no Event of Default or event (including such deposit) which, with notice or lapse of time, or both, would become an Event of Default with respect to the Securities of such series shall have occurred and be continuing on the date of such deposit as evidenced to the Trustee in an Officers' Certificate delivered concurrently with such deposit to the Trustee;
(3) the Company shall have paid or caused to be paid all other sums payable with respect to the Securities of such series at the time Outstanding;
(4) such deposit will not result in a breach or violation of, or constitute a default under, this Indenture or any other agreement or instrument to which the Company is a party or by which it is bound, or the Company has obtained a waiver of any such breach, violation or default;
(5) unless otherwise specified in the manner contemplated by
Section 2.01, the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that holders of the Securities of such series will
not recognize income, gain or loss for Federal income tax purposes as a
result of the Company's exercise of its option under this Section 13.05 and
will be subject to Federal income tax on the same amount and in the manner
and at the same times as would have been the case if such option had not
been exercised and, in the case of the Securities of such series being
discharged, accompanied by a ruling to that effect received from or
published by the Internal Revenue Service; and
(6) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction, discharge and defeasance of the entire indebtedness on all Securities of any such series at the time Outstanding have been complied with.
(b) "U.S. Government Obligations" means securities that are (i) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (ii) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America which in either case under clauses (i) or (ii) are not callable or redeemable at the option of the issuer thereof.
(c) Upon the satisfaction of the conditions set forth in this Section 13.05 with respect to all the Securities of any series at the time Outstanding, the terms and conditions of such series, including the terms and conditions with respect thereto set forth in this Indenture, shall no longer be binding upon, or applicable to, the Company (except as to any surviving rights of conversion or registration of transfer or exchange and rights relating to mutilated, destroyed, lost and stolen Securities pursuant to Section 2.07 of Securities of such series expressly provided for herein or in the form of Security of such series); provided, however, that the Company shall not be discharged from any payment obligations in respect of Securities of such series which are deemed not to be Outstanding under clause (c) of the definition thereof if such obligations continue to be valid obligations of the Company under applicable law.
Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to Section 13.01 or
Section 13.05 until such time as the Trustee is permitted to apply all such
money or U.S. Government Obligations in accordance with Section 13.01 or Section
13.05.
ARTICLE FOURTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
ARTICLE FIFTEEN
MISCELLANEOUS PROVISIONS
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 (other than certificates provided pursuant to
Section 4.04, which certificates shall comply with the requirements of Section
4.04) shall include: (i) a statement that the person making such certificate or
opinion has read such covenant or condition; (ii) a brief statement as to the
nature and scope of the examination or investigation upon which the statements
or opinion contained in such certificate or opinion are based; (iii) 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 (iv) a
statement as to whether or not, in the opinion of such person, such condition or
covenant has been complied with.
The provisions of this Section 15.05 are in furtherance of and subject to Sections 314(c)(1), 314(c)(2) and 314(e) of the Trust Indenture Act.
State Street Bank and Trust Company hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions set forth above in this Indenture.
IN WITNESS WHEREOF, SOUTHERN NATIONAL CORPORATION has caused this Indenture to be signed and acknowledged by its [Vice] President, and its corporate seal to be affixed hereunto, and the same to be attested by its Secretary, and STATE STREET BANK AND TRUST COMPANY has caused this Indenture to be signed and acknowledged by the person whose name is set forth below, and has caused its corporate seal to be affixed hereunto and the same to be attested by the person whose name is set forth below, as of the day and year first written above.
SOUTHERN NATIONAL CORPORATION
By: /s/ Scott E. Reed
---------------------------------
Scott E. Reed
Senior Executive Vice President
and Chief Financial Officer
[SEAL]
Attest:
/s/ Jerone C. Herring
- ----------------------------------
Secretary
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STATE STREET BANK AND TRUST COMPANY
By: /s/ Ruth A. Smith
---------------------------------
Ruth A. Smith
Vice President
[SEAL]
Attest:
/s/ Traci Hopkins
- ----------------------------------
Assistant Secretary
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STATE OF NORTH CAROLINA )
) ss.:
COUNTY OF FORSYTH )
|
On the 22nd day of May, 1996, before me personally came Scott E. Reed, to me known, who, being by me duly sworn did depose and say that he resides at Forsyth County, North Carolina; that he is the Senior Executive Vice President and Chief Financial Officer of SOUTHERN NATIONAL CORPORATION, one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by the authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.
/s/ Dawn L. Carter
-------------------------------------
Notary Public
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[NOTARIAL SEAL]
COMMONWEALTH OF MASSACHUSETTS )
) ss.:
COUNTY OF SUFFOLK )
|
On the 23rd day of May, 1996, before me personally came Ruth Smith, to me known, who, being by me duly sworn did depose and say that he resides at _____________________________________________; that he is a Vice President of State Street Bank and Trust Company, one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by the authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.
/s/ Laura L. Morse
----------------------------
Notary Public
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[NOTARIAL SEAL]
EXHIBIT 4.2
SOUTHERN NATIONAL CORPORATION
TO
STATE STREET BANK AND TRUST COMPANY
TRUSTEE
INDENTURE
REGARDING SUBORDINATED SECURITIES
DATED AS OF MAY 24, 1996
Reconciliation and Tie Sheet*
between
Provisions of the Trust Indenture Act of 1939
and
Indenture, dated as of May 24, 1996
between
SOUTHERN NATIONAL CORPORATION
to
STATE STREET BANK AND TRUST COMPANY, Trustee
Section of Act Section of Indenture - -------------- -------------------- 310(a)(1), (2).......................... 6.08 310(a)(3), (4).......................... Not applicable 310(a)(5)............................... 6.08 310(b).................................. ** 310(c).................................. Not applicable 311(c).................................. Not appliable 312..................................... ** 313(a).................................. ** 313(b)(1)............................... Not applicable 313(b)(2)............................... ** 313(c), (d)............................. ** 314(a).................................. ** 314(b).................................. Not applicable 314(c)(1) and (2)....................... 16.05 314(c)(3)............................... Not applicable 314(d).................................. Not applicable 314(e).................................. 16.05 314(f).................................. Not applicable 315(a)(c) and (d)....................... 6.01 315(b).................................. 5.08 315(e).................................. 5.09 316(a)(1)............................... 5.01 and 5.07 316(a)(2)............................... Omitted 316(a) last sentence.................... 7.04 316(b).................................. 5.04 316(c).................................. 7.05 317(a).................................. 5.02 317(b).................................. 4.04(a) 318(a).................................. 16.07 _________________ |
* This Reconciliation and Tie Sheet is not a part of the Indenture.
** Included pursuant to Section 318(c) of the Trust Indenture Act of 1939.
Page
----
Parties .......................................................... 1
Recitals .......................................................... 1
ARTICLE ONE
DEFINITIONS
SECTION 1.01. Definitions........................................ 1
ARTICLE TWO
THE SECURITIES AND SECURITY FORMS
SECTION 2.01. Amount Unlimited; Issuable in Series............... 8
SECTION 2.02. Form of Securities and of Trustee's Certificate
of Authentication.................................. 11
SECTION 2.03. Securities in Global Form.......................... 12
SECTION 2.04. Denomination, Authentication and Dating of
Securities......................................... 13
SECTION 2.05. Execution of Securities............................ 16
SECTION 2.06. Exchange and Registration of Transfer of
Securities......................................... 17
SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Securities.... 21
SECTION 2.08. Temporary Securities............................... 23
SECTION 2.09. Payment of Interest; Interest Rights............... 24
SECTION 2.10. Cancellation of Securities Paid, etc............... 26
ARTICLE THREE
SUBORDINATION OF SECURITIES
SECTION 3.01. Agreement of Securityholders That Securities
Subordinated to Extent Provided.................... 26
SECTION 3.02. Company Not to Make Payments with Respect to
Securities in Certain Circumstances................ 27
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SECTION 3.03. Securities Subordinated to Prior Payment of All
Senior Indebtedness on Dissolution, Liquidation or
Reorganization of Company.......................... 28
SECTION 3.04. Securityholders to Be Subrogated to Rights of
Holders of Senior Indebtedness..................... 30
SECTION 3.05. Obligation of the Company Unconditional, etc....... 30
SECTION 3.06. Trustee Entitled to Assume Payments Not Prohibited
in Absence of Notice............................... 31
SECTION 3.07. Application by Trustee of Money Deposited with It.. 31
SECTION 3.08. Article Applicable to Paying Agents................ 32
SECTION 3.09. Subordination Rights Not Impaired by Acts or
Omissions of Company or Holders of Senior
Indebtedness....................................... 32
SECTION 3.10. Securityholders Authorize Trustee to Effectuate
Subordination of Securities........................ 32
SECTION 3.11. Right of Trustee to Holder Senior Indebtedness..... 32
SECTION 3.12. Article Three Not to Prevent Events of Default..... 33
SECTION 3.13. Trustee Not Fiduciary for Holders of Senior
Indebtedness....................................... 33
ARTICLE FOUR
PARTICULAR COVENANTS OF THE COMPANY
SECTION 4.01. Payment of Principal and Interest.................. 33
SECTION 4.02. Offices for Notices and Payments, etc.............. 33
SECTION 4.03. Provisions as to Paying Agent...................... 35
SECTION 4.04. Statement as to Compliance......................... 36
SECTION 4.05. Notice of Defaults................................. 36
SECTION 4.06. Limitation on Certain Dispositions and on Merger
and Sale of Assets................................. 37
SECTION 4.07. Limitation on Creation of Liens.................... 38
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SECTION 4.08. Corporate Existence................................ 38
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON
EVENT OF DEFAULT OR ACCELERATION EVENT
SECTION 5.01. Events of Default.................................. 38
SECTION 5.02. Payment of Securities on Default; Suit Therefor.... 41
SECTION 5.03. Application of Money Collected by Trustee.......... 43
SECTION 5.04. Proceedings by Securityholders..................... 44
SECTION 5.05. Proceedings by Trustee............................. 45
SECTION 5.06. Remedies Cumulative and Continuing; Delay or
Omission Not Waiver................................ 45
SECTION 5.07. Direction of Proceedings and Waiver of
Defaults by Majority of Securityholders............ 46
SECTION 5.08. Notices of Defaults.................................47
SECTION 5.09. Undertaking to Pay Costs............................47
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.01. Duties and Responsibilities of Trustee............. 48
SECTION 6.02. Reliance on Documents, Opinions, etc............... 49
SECTION 6.03. No Responsibility for Recitals, etc................ 50
SECTION 6.04. Trustee, Paying Agents or Registrar May Own
Securities......................................... 50
SECTION 6.05. Money to Be Held in Trust.......................... 51
SECTION 6.06. Compensation and Expenses of Trustee............... 51
SECTION 6.07. Officers' Certificate as Evidence.................. 51
SECTION 6.08. Eligibility of Trustee............................. 52
SECTION 6.09. Resignation or Removal of Trustee.................. 52
SECTION 6.10. Acceptance by Successor Trustee.................... 54
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SECTION 6.11. Succession by Merger............................... 55
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.01. Action by Securityholders.......................... 55
SECTION 7.02. Proof of Execution by Securityholders.............. 56
SECTION 7.03. Who Are Deemed Absolute Owners..................... 57
SECTION 7.04. Company-Owned Securities Disregarded............... 58
SECTION 7.05. Revocation of Consents; Future Holders Bound....... 58
ARTICLE EIGHT
SECURITYHOLDERS' MEETINGS
SECTION 8.01. Purposes of Meetings............................... 58
SECTION 8.02. Call of Meetings by Trustee........................ 59
SECTION 8.03. Call of Meetings by Company or Securityholders..... 60
SECTION 8.04. Qualifications for Voting.......................... 60
SECTION 8.05. Regulations........................................ 60
SECTION 8.06. Quorum............................................. 61
SECTION 8.07. Voting............................................. 61
SECTION 8.08. No Delay of Rights by Meeting...................... 62
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of
Securityholders.................................... 62
SECTION 9.02. Supplemental Indentures of Securityholders of a
Series............................................. 64
SECTION 9.03. Compliance with Trust Indenture Act; Effect of
Supplemental Indentures............................ 65
SECTION 9.04. Notation on Securities............................. 66
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SECTION 9.05. Evidence of Compliance of Supplemental Indenture
to Be Furnished Trustee............................ 66
ARTICLE TEN
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
SECTION 10.01. Company May Consolidate, etc., on Certain Terms.... 66
SECTION 10.02. Successor Corporation Substituted.................. 67
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 11.01. Applicability of Article........................... 68
SECTION 11.02. Election to Redeem; Notice to Trustee.............. 68
SECTION 11.03. Selection by Trustee of Securities to Be
Redeemed........................................... 68
SECTION 11.04. Notice of Redemption............................... 69
SECTION 11.05. Deposit of Redemption Price........................ 69
SECTION 11.06. Securities Payable on Redemption Date.............. 70
SECTION 11.07. Registered Securities Redeemed in Part............. 71
ARTICLE TWELVE
SINKING FUNDS
SECTION 12.01. Applicability of Article........................... 71
SECTION 12.02. Satisfaction of Sinking Fund Payments with
Securities......................................... 71
SECTION 12.03. Redemption of Securities for Sinking Fund.......... 72
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
SECTION 13.01. Terms Set Forth in the Securities.................. 72
ARTICLE FOURTEEN
SATISFACTION AND DISCHARGE OF INDENTURE
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SECTION 14.01. Discharge of Indenture............................. 73
SECTION 14.02. Deposited Money to Be Held in Trust by Trustee..... 74
SECTION 14.03. Paying Agent to Repay Money Held................... 74
SECTION 14.04. Return of Unclaimed Money.......................... 74
SECTION 14.05. Deposits Irrevocable............................... 75
SECTION 14.06. Reinstatement...................................... 75
ARTICLE FIFTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS
SECTION 15.01. Indenture and Securities Solely Corporate
Obligations........................................ 75
ARTICLE SIXTEEN
MISCELLANEOUS PROVISIONS
SECTION 16.01. Provisions Binding on Company's Successors......... 76
SECTION 16.02. Official Acts by Successor Corporation............. 76
SECTION 16.03. Addresses for Notices, etc......................... 76
SECTION 16.04. Governing Law...................................... 76
SECTION 16.05. Evidence of Compliance with Conditions Precedent... 76
SECTION 16.06. Legal Holidays..................................... 77
SECTION 16.07. Trust Indenture Act to Control..................... 77
SECTION 16.08. No Security Interest Created....................... 77
SECTION 16.09. Benefits of Indenture.............................. 78
SECTION 16.10. Payments to Be Made in U.S. Dollars................ 78
SECTION 16.11. Table of Contents, Headings, etc................... 78
SECTION 16.12. Execution in Counterparts.......................... 78
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THIS INDENTURE, dated as of May 24, 1996, is executed and delivered from SOUTHERN NATIONAL CORPORATION, a North Carolina corporation (such corporation or, subject to Article Ten, its successors and assigns, the "Company"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company (such corporation or, subject to Article Six, its successors and assigns as Trustee under this Indenture, the "Trustee").
RECITAL OF THE COMPANY
The Company has duly authorized the execution and delivery of this Indenture to provide for the issuance from time to time of its unsecured subordinated debentures, notes or other evidences of indebtedness or warrants therefor to be issued in one or more series (the "Securities"), as provided herein.
For and in consideration of the premises and the purchase of the Securities by the holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS
"Acceleration Event", with respect to Securities of any series, means
the occurrence with respect to the Company of any of the events described in
Section 5.01(g) or (h) (other than the appointment of a conservator with respect
to any Constituent Bank insured by the Federal Deposit Insurance Corporation or
any successor agency), continued for the period of time, if any,
and after the giving of notice, if any, designated in Section 5.01(g) or (h), or shall have the meaning otherwise specified in the Securities of such series.
"Bank" means (i) any institution organized under the laws of the United States, any State, the District of Columbia, Puerto Rico or any territory of the United States that (a) accepts deposits that the depositor has a legal right to withdraw on demand and (b) engages in the business of making commercial loans and (ii) any trust company organized under any of the foregoing laws. Unless otherwise provided, for purposes of this Indenture a Bank also will be considered a "corporation".
"BB&T-NC" shall mean Branch Banking and Trust Company, a North Carolina corporation, and any successor or successors thereto.
"Bearer Security" means any Security established pursuant to Section 2.02 that is payable to bearer.
"Bearer Security Tax Certificate" or "Certificate of non-U.S. Ownership", when used with respect to a Bearer Security, means a certificate satisfying the requirements of Treasury Regulation (S) 1.163-5(c)(2)(i)(D)(3), as that provision may be amended or redesignated from time to time, which certificate shall be in a form approved by the Company.
"Board of Directors" means the Board of Directors of the Company or, with respect to any matter, any committee of the Board of Directors duly authorized to act for the Board of Directors with respect to such matter.
"Business Day", with respect to each series of Securities, means any day other than a Saturday or Sunday that is neither a legal holiday nor a day on which banking institutions are authorized or obligated by law or regulation to close in either The City of New York or, with respect to Registered Notes that will bear interest based on a specified percentage of London interbank offered quotations ("LIBOR"), in London, England, or, in the case of Bearer Securities, in any Place of Payment.
"CEDEL, S.A." means Centrale de Livraison de Valeurs Mobilieres S.A.
"Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or, if at any time after the execution of this Indenture the Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date.
"Company" means the corporation identified as the Company in the first paragraph of this Indenture until a successor corporation shall succeed to and be substituted for the Company pursuant to the provisions of Article Ten, and thereafter shall mean such successor corporation.
"Company Order" means a written request or order signed in the name of the Company by its Chairman of the Board, any Vice Chairman, its Chief Executive Officer, its President, any Executive Vice President or any Senior Vice President and its Treasurer, any Assistant Treasurer, its Secretary or any Assistant Secretary, and delivered to the Trustee.
"Consolidated Net Banking Assets" means all net assets owned directly or indirectly by each Subsidiary that is a Bank as such net assets would be reflected on a consolidated balance sheet of the Company prepared in accordance with generally accepted accounting principles at the time.
"Constituent Bank" means any Subsidiary that is a Bank.
"Controlled Subsidiary" means any Subsidiary of which more than 80% of the aggregate voting power of the outstanding shares of the Voting Stock at the time is owned directly or indirectly by the Company or by one or more Controlled Subsidiaries or by the Company and one or more Controlled Subsidiaries, after giving effect to the issuance to any Person other than the Company or any Controlled Subsidiary of Voting Stock of the Subsidiary issuable on exercise of options, warrants or rights to subscribe for such Voting Stock or on conversion of securities convertible into such Voting Stock.
"coupon" means any interest coupon appertaining to a Bearer Security.
"Defaulted Interest" has the meaning specified in Section 2.09.
"Depositary", with respect to the Securities of any series issuable or issued in the form of one or more Global Securities, means The Depository Trust Company, New York, New York, or such other Person designated as Depositary by the Company in the manner provided in Section 2.01, until a successor Depositary shall have been appointed pursuant to the applicable provisions of this Indenture, and thereafter "Depositary" means or includes each Person who is then a Depositary hereunder, and if at any time there is more than one such Person, "Depositary" as used with respect to the
Global Securities of any such series means the Depositary with respect to the Securities of that series.
"Euro-clear" means Morgan Guaranty Trust Company of New York, Brussels Office, as operator of the Euro-clear System.
"Event of Default" means any event specified in Section 5.01, continued for the period of time, if any, and after the giving of the notice, if any, designated in Section 5.01.
"Global Security" means a Security issued to evidence all or part of a series of Securities in accordance with Section 2.03.
"Indenture" means this instrument as originally executed or, if amended or supplemented as provided in this Indenture, as so amended or supplemented.
"interest", when used with respect to an Original Issue Discount Security that by its terms bears interest only after Maturity, means interest payable after Maturity.
"Interest Payment Date", when used with respect to any Security, means the Stated Maturity of an installment of interest on such Security.
"Maturity", when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by the declaration of acceleration, call for redemption, repayment at the option of the holder or otherwise.
"Officers' Certificate", when used with respect to the Company, means
a certificate signed by the Chairman of the Board, any Vice Chairman, the Chief
Executive Officer, the President, any Executive Vice President or any Senior
Vice President and by the Treasurer, any Assistant Treasurer, the Secretary or
any Assistant Secretary of the Company. Except as otherwise provided in this
Indenture, each such certificate shall include the statements provided for in
Section 16.05.
"Opinion of Counsel" means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company, and who shall be acceptable to the Trustee. Except as otherwise provided in this Indenture, each such opinion shall include the statements provided for in Section 16.05.
"Original Issue Discount Security" means any Security that provides
for an amount less than the principal amount thereof to be due and payable upon
a declaration of acceleration of the Maturity thereof pursuant to Section 5.01.
The term "principal amount" or "aggregate principal amount", when used with
respect to Original Issue Discount Securities, has the meaning (or meanings)
specified in the manner contemplated by Section 2.01 for purposes of:
determining the amount due and payable in the event of an acceleration of
Maturity as provided in Section 5.01; the redemption provisions in Article
Eleven; determining whether the holders of the requisite principal amount of
Outstanding Securities of any series have given any request, demand,
authorization, direction, notice, consent or waiver under this Indenture; and
determining whether a quorum is present at a meeting of Securityholders.
"Outstanding", when used with reference to Securities of any series or the related coupons, subject to the provisions of Section 7.04, means, as of any particular time, all Securities of such series or any related coupons authenticated and delivered by the Trustee pursuant to this Indenture, except:
(a) such Securities and coupons theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;
(b) such Securities and coupons, or portions thereof, for the payment or redemption of which money in the necessary amount shall have been deposited in trust with the Trustee or with any Paying Agent (other than the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent), provided that if such Securities are to be redeemed prior to the Maturity thereof, notice of such redemption shall have been provided as specified in Article Eleven, or provision satisfactory to the Trustee shall have been made for mailing such notice; and
(c) such Securities or coupons in lieu of or in substitution for which other Securities or coupons shall have been authenticated and delivered pursuant to the terms of Section 2.07, except to the extent that a bona fide holder in due course of any such Securities shall have presented proof satisfactory to the Trustee that such holder is a bona fide holder in due course of any such Securities or coupons.
"Paying Agent", when used with respect to Securities of any series, means any Person authorized by the Company to
pay the principal of and any premium or interest on any Securities of that series on behalf of the Company.
"Person" means a corporation, an association, a partnership, an organization, a trust, an individual, a government or a political subdivision thereof or a governmental agency.
"Place of Payment" has the meaning stated in Section 2.01(5).
"Predecessor Security" of any particular Security means every previous Security evidencing all or a portion of the same debt that was evidenced by such particular Security. For the purposes of this definition, any Security authenticated and delivered under Section 2.07 in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Principal Constituent Bank" means BB&T-NC and, at any time, any other Constituent Bank the total assets of which (as set forth in the most recent statement of condition of such Constituent Bank) equal more than 30% of the total assets of all Constituent Banks as determined from the most recent statements of condition of the Constituent Banks.
"principal office of the Trustee" or any other similar term means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office, at the date of this Indenture, is located at Two International Place, 4th Floor, Boston, Massachusetts 02110.
"Redemption Date", when used with respect to any Security to be redeemed, means the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture.
"Registered Security" means any Security in the form of registered securities established pursuant to Section 2.02, that is registered in the Security Register.
"Regular Record Date", with respect to the interest payable on any Interest Payment Date on the Securities of any series, means the date specified for that purpose as contemplated by Section 2.01.
"Responsible Officer", when used with respect to the Trustee, means any officer of the principal office of the Trustee, the Chairman or Vice Chairman of its board of
directors, the Chairman or Vice Chairman of the executive committee of the board of directors, or any other officer of the Trustee to whom any corporate trust matter is referred because of such officer's knowledge of and familiarity with the particular subject.
"Security" or "Securities" has the meaning stated in the recitals of this Indenture and means any Security or Securities, as the case may be, authenticated and delivered pursuant to this Indenture. Whenever this Indenture refers to any interest on or with respect to any Security that is represented by a coupon, such reference to the Security also shall include reference to a coupon.
"Security Register", when used with respect to a Registered Security, has the meaning specified in Section 2.06(b).
"Securityholder", "holder of Securities", "holder" or other similar term, when used with respect to a Registered Security, means any Person in whose name at the time a particular Registered Security is registered on the Security Register and, when used with respect to a Bearer Security or coupon, the bearer thereof.
"Senior Indebtedness" means: (a) the principal of, premium, if any, and interest on all indebtedness of the Company for money borrowed, whether outstanding on the date of execution of this Indenture or thereafter created, assumed or incurred; (b) all obligations to make payment pursuant to the terms of financial instruments, such as (i) securities contracts and foreign currency exchange contracts, (ii) derivative instruments, such as swap agreements (including interest rate and foreign exchange rate swap agreements), cap agreements, floor agreements, collar agreements, interest rate agreements, foreign exchange agreements, options, commodity futures contracts and commodity options contracts and (iii) similar financial instruments; (c) indebtedness and obligations of others of the kind described in clauses (a) and (b) for the payment of which the Company is responsible or liable as guarantor or otherwise; and (d) any deferral, renewal or extension of any Senior Indebtedness; provided, however, that, in the case of both clauses (a) and (b), such indebtedness and obligations that are expressly stated to rank junior in right of payment to, or pari passu in right of payment with, the Securities shall not be Senior Indebtedness for purposes of this Indenture.
"Special Record Date" has the meaning specified in Section 2.09.
"Stated Maturity", when used with respect to any Security or any payment of premium or any installment of interest thereon, means the date specified in such Security or a coupon representing such installment of interest as the fixed date on which the principal of such Security or such payment of premium or such installment of interest is due and payable.
"Subsidiary" means any corporation of which a majority of the aggregate voting power of the outstanding Voting Stock at the time shall be owned by the Company or by the Company and one or more Subsidiaries or by one or more Subsidiaries.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as it was
in force at the date of execution of this Indenture, except as provided in
Section 9.03.
"Trustee" means the Person identified as the Trustee in the first paragraph of this Indenture until a successor shall succeed to the trusts created by this Indenture pursuant to the provisions of Article Six, and thereafter shall mean such successor.
"United States" means the United States of America (including the District of Columbia) and its possessions.
"Vice President", when used with respect to the Company or the Trustee, means any such officer whether or not designated by a number or a word or words added before or after such title.
"Voting Stock" of a corporation or other entity means stock of the class or classes having general voting power in an election of the board of directors, managers or trustees of such corporation or other entity (irrespective of whether, at the time, stock of any other class or classes shall have or might have voting power by reason of the happening of any contingency).
ARTICLE TWO
THE SECURITIES AND SECURITY FORMS
The terms and conditions listed below, as applicable, of any series of Securities shall be established either in an indenture supplemental hereto or in or pursuant to a resolution of the Board of Directors:
(1) the title of the Securities of the series (which shall distinguish the Securities of the series from Securities of all other series);
(2) any limit upon the aggregate principal amount of the Securities of the series that may be authenticated and delivered under this Indenture (except for Securities authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, other Securities of the series pursuant to Section 2.05, 2.06, 2.07, 9.04 or 11.07);
(3) the date or dates on which the principal of the Securities of the series is payable;
(4) the rate or rates (which may be fixed or variable) at which the Securities of the series shall bear interest, if any, or the formula by which interest shall be calculated by the Company or an agent designated for such purpose, the date or dates from which such interest shall accrue, the Interest Payment Dates on which such interest shall be payable and the Regular Record Date for the interest payable on any Registered Security on any Interest Payment Date;
(5) the place or places, if any, in addition to those specified herein, where the principal of and any premium or interest on Securities of the series shall be payable (the "Place of Payment"), any Registered Securities of the series may be surrendered for registration of transfer, Securities of the series may be surrendered for exchange and notices and demands to or upon the Company in respect of the Securities of the series and this Indenture may be served and where notices to holders pursuant to this Indenture will be published;
(6) the price or prices at which, the period or periods within which and the terms and conditions upon which Securities of the series may be redeemed, in whole or in part, at the option of the Company, pursuant to any sinking fund or otherwise;
(7) the obligation, if any, of the Company to redeem, purchase or repay Securities of the series pursuant to any sinking fund or analogous provisions or at the option of a holder thereof and the price or prices at which, the period or periods within which and the
other terms and conditions upon which Securities of the series shall be redeemed, purchased or repaid, in whole or in part, pursuant to such obligation, which in the case of Securities of any series that are repayable at the option of a holder thereof shall be set forth in the form of such Security;
(8) whether Securities of the series are to be issuable as Registered Securities, Bearer Securities or both, whether Securities of the series are to be issuable with or without coupons or both and, in the case of Bearer Securities, the date as of which such Bearer Securities shall be dated if other than the date of original issuance of the first Security of such series of like tenor and term to be issued;
(9) whether the Securities of the series shall be issued in whole or in part in the form of a Global Security or Securities and, in such case, the Depositary (if other than The Depository Trust Company) for such Global Security or Securities and whether such global form shall be permanent or temporary;
(10) if Securities of the series are to be issuable initially in the form of one or more temporary Global Securities, the circumstances under and the manner in which such temporary Global Securities can be exchanged for definitive Securities of the series and whether such definitive Securities will be Registered Securities, Bearer Securities or both and will be in global form;
(11) the denominations in which Registered Securities of the series shall be issuable, if other than denominations of $1,000 and any integral multiple thereof, and the denominations in which Bearer Securities of such series, if any, shall be issuable if other than the denomination of $5,000;
(12) any Event of Default or Acceleration Event with respect to the Securities of such series, if not set forth herein or if different from those set forth herein;
(13) the form of Securities of such series;
(14) the Person or Persons who shall be Security registrar for the Securities of such series if other than as provided for in this Indenture, and the place or places where the Security Register for such series shall be maintained and the Person or Persons who will be the initial Paying Agent or Agents, if other than as provided for in this Indenture;
(15) if warrants for Securities of any series are to be issued, the form in which the warrants shall be issued, the circumstances under and the manner in which the warrants may be exercised, any obligation of the Company concerning any Securities underlying the warrants and any other terms or conditions regarding the warrants and any Securities underlying the warrants; and
(16) any other terms of the series (which terms shall not be inconsistent with the provisions of this Indenture).
All Securities of any series and the coupons appertaining to Bearer Securities of such series, if any, issued under this Indenture in all respects shall be equally and ratably entitled to the benefits hereof with respect to such series without preference, priority or distinction on account of actual time or times of authentication and delivery or Maturity of the Securities of such series. All Securities of the same series and the coupons appertaining to Bearer Securities of such series, if any, shall be substantially identical except as to denomination and except as may otherwise be provided either in an indenture supplemental hereto or a resolution of the Board of Directors.
The definitive Securities and coupons, if any, shall be printed, lithographed or engraved or produced by any combination of these methods on steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange, all as determined by the officers executing such Securities or coupons, as evidenced by their execution of such Securities or coupons.
The form of Trustee's certificate of authentication for all Securities shall be as follows:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities issued under the within-mentioned Indenture.
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By __________________________________
Authorized Signatory
(b) The provisions of the last sentence of Section 2.05(b) shall apply to any Securities represented by a Global Security if such Securities were never issued and sold by the Company (whether because of failure of settlement or otherwise) and the Company delivers to the Trustee the Global Security together with written instructions with regard to the reduction in the principal amount of Securities represented thereby, together with the written statement contemplated by the last sentence of Section 2.05(b), notwithstanding the
absence of delivery of such Securities as contemplated thereby.
(c) Global Securities may be issued in either registered or bearer form and in either temporary or permanent form.
(b) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities of any series executed by the Company to the Trustee for authentication. Except as otherwise provided in this Article Two, the Trustee thereupon shall authenticate and deliver such Securities in accordance with a Company Order; provided, however, that in connection with its original issuance a Bearer Security may be delivered only outside the United States and, except in the case of a temporary Global Security, only if the Company or its agent shall have received from the Person entitled to receive the Bearer Security a Bearer Security Tax Certificate and only if the Company and the Trustee have no reason to know that such certificate is false.
(c) To the extent authorized in or pursuant to a resolution of the Board of Directors or established in an indenture supplemental hereto, such Company Order may be electronically transmitted and may provide instructions as to registration of holders, principal amounts, rates of interest, Stated Maturities and other matters contemplated by such resolution of the Board of Directors or supplemental indenture to be so instructed in respect thereof.
(d) In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and, subject to Section 6.01, shall be fully protected in relying upon:
(i) a copy of the resolution or resolutions of the Board of Directors in or pursuant to which the terms and form of the Securities were established, 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 as of the date of such certificate;
(ii) an executed supplemental indenture, if any;
(iii) an Officers' Certificate delivered in accordance with
Section 16.05; and
(iv) an Opinion of Counsel which shall state:
(A) that the form of such Securities and coupons, if any, has been established by a supplemental indenture or by or pursuant to a resolution of the Board of Directors in accordance with Sections 2.01 and 2.02 and in conformity with the provisions of this Indenture;
(B) that the terms of such Securities and coupons, if any, have been established in accordance with Section 2.01 and in conformity with the other provisions of this Indenture;
(C) that such Securities, when authenticated and delivered by the Trustee and issued (with coupons attached, if applicable) by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, enforceable in accordance with their terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization and moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles;
(D) that all conditions precedent, if any, provided for in this Indenture have been complied with; and
(E) that the execution and delivery by the Company of such Securities and coupons, if any, do not conflict with any law, administrative regulation or court decree known by legal counsel furnishing the Opinion of Counsel to be applicable to the Company.
(e) If the Company shall establish pursuant to Section 2.01 that the
Securities of a series are to be issued in whole or in part in the form of one
or more Global Securities, then the Company shall execute and the Trustee, in
accordance with this Section 2.04 and the Company Order with respect to such
series, shall authenticate and deliver one or more Global Securities in
permanent or temporary form that (i) shall represent and shall be denominated in
an aggregate amount equal to the aggregate principal amount of the Outstanding
Securities of such series to be represented by one or more Global Securities,
(ii) shall be registered in the name of the Depositary for such Global Security
or Securities or the nominee of such Depositary and (iii) shall be delivered by
the Trustee to such Depositary or pursuant to such Depositary's instruction.
(f) The Trustee shall have the right to decline to authenticate and deliver any Securities under this Section 2.04 if the Trustee, being advised by counsel, determines that such action may not lawfully be taken or if the Trustee in good faith by its board of directors or trustees, executive committee or a trust committee of directors or trustees or vice presidents shall determine that such action would expose the Trustee to personal liability to existing holders.
(g) Notwithstanding any contrary provision herein, if all Securities of a series are not to be originally issued at one time, it shall not be necessary for the Company to deliver to the Trustee a Company Order, Officers' Certificate, resolution of the Board of Directors, supplemental indenture or Opinion of Counsel otherwise required pursuant to Section 2.04(b) or Section 2.04(d) at or prior to the time of authentication of each Security of such series if such documents are delivered to the Trustee or its agent at or prior to the authentication upon original issuance of the first Security of such series to be issued. In such event, any subsequent request by the Company to the Trustee to authenticate Securities of such series upon original issuance shall constitute a representation and warranty by the Company that, as of the date of such request, the statements made in the Officers' Certificate or other certificates delivered pursuant to Section 2.04(d) shall be true and correct as if made on such date. A Company Order, Officers' Certificate, resolution of the Board of Directors or supplemental indenture delivered by the Company to the Trustee in the circumstances set forth in this Section 2.04(g) may provide that Securities that are the subject thereof will be authenticated and delivered by the Trustee or its agent on original issue from time to time in the aggregate principal amount established for such series pursuant to such procedures acceptable to the Trustee as may be specified from time to time by Company Order
upon the telephonic, electronic or written order of persons designated in such Company Order, supplemental indenture or resolution of the Board of Directors (any such telephonic or electronic instructions to be promptly confirmed in writing by such persons) and that such persons are authorized to determine, consistent with such Company Order, supplemental indenture or resolution of the Board of Directors, such terms and conditions of said Securities as are specified in such Company Order, supplemental indenture or resolution of the Board of Directors.
(h) Each Depositary designated pursuant to clause (9) of Section 2.01 for a Global Security in registered form, at the time of its designation and at all times while it serves as Depositary, shall be a clearing agency registered under the Securities Exchange Act of 1934 and any other applicable statute or regulation.
(b) No Security or appurtenant coupon shall be entitled to the
benefits of this Indenture or be valid or obligatory for any purpose unless such
security bears thereon a certificate of authentication substantially in the form
set forth in Section 2.02, manually executed by an authorized signatory of the
Trustee. Such certificate by the Trustee upon any Security executed by the
Company shall be conclusive evidence that the Security so authenticated has been
duly authenticated and delivered under this Indenture. Except as permitted by
Section 2.07, the Trustee shall not authenticate and deliver any Bearer Security
unless all appurtenant coupons for interest then matured have been detached and
cancelled. Notwithstanding the foregoing, if any Security or portions thereof
shall have been duly authenticated and delivered hereunder but never issued and
sold by the Company (whether because of failure of settlement or otherwise), and
the Company shall deliver such Security to the Trustee for cancellation as
provided in Section 2.10 together with a written statement stating that such
Security or portion thereof has never been issued and sold by the Company, for
all purposes of this Indenture such Security shall be deemed never
to have been authenticated and delivered hereunder and shall not be entitled to the benefits of this Indenture.
(c) In case any officer of the Company whose manual or facsimile signature appears on any of the Securities or coupons shall cease to be such officer before the Securities or coupons so signed shall have been authenticated and delivered by the Trustee, or disposed of by the Company, such Securities or coupons nevertheless may be authenticated and delivered or disposed of as though the person whose manual or facsimile signature appears on such Securities or coupons had not ceased to be such officer of the Company; and any Security or coupon may bear the manual or facsimile signature on behalf of the Company by such persons as, at the actual date of the execution of such Security or coupon, 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.
(b) For each series of Registered Securities, the Company shall cause to be kept in at least one such office or agency a Security register (the "Security Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for registration of Registered Securities and registration of transfer of Registered Securities as provided in this Article Two. Each such Security Register shall be in written form or in any other form capable of being converted into written form within a reasonable time. At all reasonable times such Security Registers shall be open for inspection by the Trustee. Upon due presentment for registration of transfer of any Registered Security of any series at any such office or agency, the Company shall execute and register and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Registered Security or Securities of the same series and of like tenor and terms for an equal aggregate principal amount. Unless otherwise provided (pursuant to Section 2.01 or otherwise), the Company initially appoints BB&T-NC, at the office of BB&T-NC, 223 West Nash Street, Wilson, North Carolina,
as a Security registrar for each series of Registered Securities.
(c) All Registered Securities presented for registration of transfer or for exchange or payment, if so required by the Company or the Trustee, shall be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee duly executed by, the holder or his attorney duly authorized in writing.
(d) To the extent specified in the manner provided by Section 2.01, Registered Securities or Bearer Securities of any series may be issued in exchange for Bearer Securities (except as otherwise specified in the manner contemplated by Section 2.01 with respect to a Bearer Security in global form) of the same series, of any authorized denomination and of like tenor and terms and aggregate principal amount, upon surrender of the Bearer Securities to be exchanged at any office or agency specified in the manner provided by Section 2.01, with all unmatured coupons and all unpaid matured coupons thereto appertaining. If the holder of a Bearer Security is unable to produce any such unmatured coupon or coupons or unpaid matured coupon or coupons, such exchange may be effected if the Bearer Securities are accompanied by payment in funds acceptable to the Company and the Trustee in an amount equal to the amount represented by such missing coupon or coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there is furnished to them such security or indemnity as they may require to hold harmless each of them and any Paying Agent. If thereafter the holder of such Security shall surrender to any Paying Agent any such missing coupon in respect of which such payment shall have been made, such holder shall be entitled to receive the amount of such payment; provided, however, that, except as otherwise provided in Section 4.02, interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside the United States. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee shall authenticate and deliver, the Securities which the holder making the exchange is entitled to receive.
(e) If at any time the Depositary for the Global Securities of a series notifies the Company that it is unwilling or unable to continue as Depositary for the Global Securities of such series or if at any time the Depositary for the Registered Securities of such series shall no longer be eligible under Section 2.03 because it no longer is a clearing agency registered under the Securities Exchange Act of 1934 and any other applicable statute or regulation, the Company shall appoint a successor Depositary with respect to the
Global Securities of such series. If a successor Depositary for the Global Securities of such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such ineligibility, the Company's election pursuant to Section 2.01(9) shall no longer be effective with respect to the Securities of such series and the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver Securities of such series in definitive form in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities.
(f) The Company at any time and in its sole discretion may determine that the Securities of any series issued in the form of one or more Global Securities shall no longer be represented by such Global Security or Securities. In such event the Company will execute, and the Trustee, upon receipt of a Company Order for the authentication and delivery of definitive Securities of such series, will authenticate and deliver, Securities of such series in definitive form and in an aggregate principal amount equal to the principal amount of the Global Security or Securities representing such series in exchange for such Global Security or Securities.
(g) If specified by the Company pursuant to Section 2.01 with respect to a series of Securities, the Depositary for such series of Securities may surrender a Global Security for such series of Securities in exchange in whole or in part for Securities of such series of like tenor and terms and in definitive form on such terms as are acceptable to the Company and such Depositary. Thereupon the Company shall execute, and the Trustee shall authenticate and deliver:
(i) to each Person specified by such Depositary a new Security or new Securities of the same series, of like tenor and terms and of any authorized denomination as requested by such Person in aggregate principal amount equal to and in exchange for such Person's beneficial interest in the Global Security; and
(ii) to such Depositary a new Global Security of like tenor and terms and in a denomination equal to the difference, if any, between the principal amount of the surrendered Global Security and the aggregate principal amount of Securities delivered to holders thereof.
(h) In any exchange provided for in Section 2.06(e), Section 2.06(f) or Section 2.06(g), the
Company will execute and the Trustee will authenticate and deliver Securities
(i) in definitive registered form in authorized denominations, if the Securities
of such series are issuable as Registered Securities, (ii) in definitive bearer
form in authorized denominations, with unmatured coupons attached, if the
Securities of such series are issuable as Bearer Securities or (iii) as either
Registered or Bearer Securities, if the Securities of such series are issuable
in either form; provided, however, that (A) no definitive Bearer Security shall
be delivered in exchange for a temporary Global Security unless the Company or
its agent shall have received from the person entitled to receive the definitive
Bearer Security a Bearer Security Tax Certificate, (B) delivery of a Bearer
Security shall occur only outside the United States and (C) no definitive Bearer
Security will be issued if the Company or the Trustee has reason to know that
such certificate is false.
(i) Upon the exchange of all of a Global Security for Securities in certificated form, such Global Security shall be cancelled by the Trustee. The exchange of any portion of a Global Security for Securities in certificated form shall be subject to Section 2.03(a). Registered Securities issued in exchange for all or part of a Global Security shall be registered in such names and in such authorized denominations as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Registered Securities to the persons in whose names such Securities are so registered. The Trustee shall deliver Bearer Securities issued in exchange for all or part of a Global Security to the persons, and in such authorized denominations, as the Depositary for such Global Security, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee; provided, however, that (A) no definitive Bearer Security shall be delivered in exchange for all or part of a temporary Global Security unless the Company or its agent shall have received from the person entitled to receive the definitive Bearer Security a Bearer Security Tax Certificate, (B) delivery of a Bearer Security shall occur only outside the United States and (C) no definitive Bearer Security will be issued if the Company or the Trustee has reason to know that any such certificate is false.
(j) No service charge shall be made to a holder for any exchange or registration of transfer of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such exchange or registration of transfer.
(k) The Company shall not be required (i) to issue, register the
transfer of or exchange Securities of any particular series during a period
beginning at the opening of business 15 days before the day of the mailing of a
notice of redemption of Securities of such series selected for redemption under
Section 11.03 and ending at the close of business on the day of such mailing,
(ii) to register the transfer of or exchange any Registered Security so selected
for redemption in whole or in part, except the unredeemed portion of any
Registered Security being redeemed in part or (iii) to exchange any Bearer
Security so selected for redemption except that such a Bearer Security may be
exchanged for a Registered Security of that series, provided that such
Registered Security shall be surrendered immediately for redemption with written
instruction for payment consistent with the provisions of this Indenture.
(l) Notwithstanding anything herein to the contrary: the exchange of Bearer Securities for Registered Securities shall be subject to applicable laws and regulations in effect at the time of exchange; and neither the Company nor the Trustee or any Security registrar shall exchange any Bearer Securities into Registered Securities if it has received an Opinion of Counsel that as a result of such exchanges the Company could suffer adverse consequences under the United States Federal income tax laws and regulations then in effect and the Company has delivered to the Trustee a Company Order directing the Trustee not to make such exchanges thereafter unless and until the Trustee receives a subsequent Company Order to the contrary. The Company shall deliver copies of such Company Order to the Security registrar.
loss or theft of such security or coupon and of the ownership of such Security or coupon.
(b) The Trustee may authenticate any such substitute Security and deliver the same upon the written request or authorization of any officer of the Company. Upon the issuance of any substitute Security or coupon, 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 reasonable expenses (including the fees and expenses of the Trustee) connected therewith. In case any Security or coupon which has matured or is about to mature shall become mutilated or be destroyed, lost or stolen, the Company, instead of issuing a substitute Security or coupon, may pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Security or coupon) if the applicant for such payment shall furnish to the Company and to the Trustee such security or indemnity as may be required by them to hold each of them harmless and, in the case of destruction, loss or theft, evidence satisfactory to the Company and the Trustee of the destruction, loss or theft of such Security or coupon and of the ownership of such Security or coupon.
(c) Every substitute Security or coupon issued pursuant to the provisions of this Section 2.07 by virtue of the fact that any Security or coupon is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security or coupon 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 Securities or coupons of the relevant series duly issued under this Indenture. All Securities or coupons shall be held and owned by the holders upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities or coupons 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.
(d) Notwithstanding the foregoing, the payment of principal of and
any premium and interest on Bearer Securities, except as otherwise provided in
Section 4.02, shall be payable only at an office or an agency located outside of
the United States, and, with respect to any coupons, interest represented
thereby shall be payable only upon presentation and surrender of such coupons.
(b) Unless otherwise provided pursuant to Section 2.01:
(i) Except in the case of temporary Securities in global form, every such temporary Security shall be authenticated by the Trustee in substantially the same manner, and with the same effect, as the definitive Securities. Without unreasonable delay the Company will execute and deliver to the Trustee definitive Securities of such series and thereupon any or all temporary Securities of such series (accompanied, if applicable, by all unmatured coupons and all unpaid matured coupons appertaining thereto) may be surrendered in exchange therefor at the principal office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Securities an equal aggregate principal amount of definitive Securities of such series of authorized denominations. Such exchange shall be made at the Company's expense and without any charge to the holder. Until so exchanged, the temporary Securities of any series in all respects shall be entitled to the same benefits under this Indenture as definitive Securities of such series authenticated and delivered under this Indenture. Notwithstanding the foregoing, no Bearer Security shall be delivered in exchange for a Registered Security, and a Bearer Security shall be delivered in exchange for a Bearer Security only in compliance with the conditions set forth in Section 2.06.
(ii) If Securities of any series are issued in temporary global form, any such temporary Global Security, unless otherwise provided pursuant to Section 2.01, shall be delivered to the Depositary for the benefit of Euro-clear and CEDEL S.A. for credit to
the respective accounts of the beneficial owners of such Securities or to such other accounts as they may direct.
(iii) Any such temporary Global Security shall be exchangeable, on the terms and in the manner set forth therein, in whole or in part, for an equal aggregate principal amount of definitive Securities of the same series of authorized denominations and of like tenor and terms as the portions of such temporary Global Security to be exchanged. Any definitive Bearer Security shall be delivered in exchange for a portion of a temporary Global Security only upon receipt by the Trustee from the Person entitled to receive such definitive Bearer Security of a Bearer Security Tax Certificate.
(iv) Until exchanged in full as hereinabove provided, the temporary Securities of any series shall be entitled in all respects to the same benefits under this Indenture as definitive Securities of the same series and of like tenor and terms authenticated and delivered hereunder, except that any interest payable with respect to a temporary Global Security will be paid as specified therein.
Any interest on any Security that is payable, but is not punctually paid or duly provided for, on any Interest Payment Date ("Defaulted Interest") forthwith shall cease to be payable to the holder on the relevant Regular Record Date
by virtue of having been such holder; and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in clause (i) or (ii) below:
(i) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names such Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as provided in this clause (i). Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 nor fewer than ten days prior to the date of the proposed payment and not fewer than ten days after the receipt by the Trustee of the notice of the proposed payment. The Trustee promptly shall 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 holder at his address as it appears in the Security Register, not fewer than ten days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been given as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered on such Special Record Date and shall no longer be payable pursuant to the following clause (ii).
(ii) The Company may make payment of any Defaulted Interest on any such Security in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities of that series may be listed, and upon such notice as may be required by any such exchange, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause (ii), such manner of payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.09, each Security of any series delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security of such series shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.
Subject to the limitations set forth in Section 4.02, the holder of any coupon appertaining to a Bearer Security shall be entitled to receive the interest payable on such coupon upon presentation and surrender of such coupon on or after the Interest Payment Date of such coupon at an office or agency maintained for such purpose pursuant to Section 4.02.
ARTICLE THREE
SUBORDINATION OF SECURITIES
(b) The Company may not pay principal of or any premium or interest on the Securities and may not acquire any Securities for cash or property other than capital stock of the Company if:
(1) a default on Senior Indebtedness occurs and is continuing that permits holders of such Senior Indebtedness to accelerate its maturity; and
(2) such default is the subject of judicial proceedings or the Company receives written notice of such default from a representative of the holders of such Senior Indebtedness. If the Company receives any such notice, a similar notice received within 360 days thereafter relating to the same default on the same issue of Senior Indebtedness shall not be effective for purposes of this Section 3.02(b).
The Company may resume payments on the Securities and may acquire them when:
(i) such default is cured or waived or shall have ceased to exist or the Senior Indebtedness to which such default relates shall have been paid in full in cash or cash equivalent; or
(ii) if such default is not the subject of judicial proceedings, 120 days pass after such written notice is received by the Company, but only if this Article Three does not otherwise prohibit such payment or acquisition at that time.
(c) In the event that notwithstanding the provisions of this Section
3.02 the Company shall make any payment to the Trustee on account of the
principal of or any premium or interest on the Securities prohibited by Section
3.02(b), then, unless and until such payment is thereafter permitted under
Section 3.02(b), such payment shall be held by the Trustee in trust for the
benefit of, and shall be paid forthwith over and delivered to, the holders of
Senior Indebtedness (pro rata as to each of such holders on the basis of the
respective amounts of Senior Indebtedness held by them) or their representative
or the trustee under the indenture or other agreement (if any) pursuant to which
any instruments evidencing any Senior Indebtedness may have been issued, as
their respective interests may appear, for application to the
payment of all Senior Indebtedness remaining unpaid to the extent necessary to pay all Senior Indebtedness in full in accordance with the terms of such Senior Indebtedness, after giving effect to any concurrent payment or distribution to or for the holders of Senior Indebtedness.
(d) The provisions of this Section 3.02 shall not apply to any payment with respect to which Section 3.03 shall apply.
(a) The holders of all Senior Indebtedness first shall be entitled to receive payment in full of the principal of and any premium and interest due on Senior Indebtedness before the holders of the Securities are entitled to receive any payment on account of the principal of or any premium or interest on the Securities (other than payment in 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, which stock and securities are subordinated to the payment of all Senior Indebtedness and securities received in lieu thereof that at the time may be outstanding, except to the extent that such stock and securities received in lieu of Senior Indebtedness by their terms are expressly not superior in right of payment to the Securities).
(b) Any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities (other than 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, which stock and securities are subordinated to the payment of all Senior Indebtedness and securities received in lieu thereof which may at the time be outstanding except to the extent that such stock and securities received in lieu of Senior Indebtedness by their terms are expressly not superior in right of payment to the Securities), to which the holders of the Securities and any related coupons would be entitled except for the provisions of this Section 3.03, shall be paid by the liquidating
trustee or agent or other person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or other trustee or agent, directly to the holders of Senior Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture under which any instruments evidencing any of such Senior Indebtedness may have been issued, to the extent necessary to make payment in full of all Senior Indebtedness remaining unpaid, after giving effect to any concurrent payment or distribution or provision for such Senior Indebtedness to the holders of such Senior Indebtedness.
(c) In the event that notwithstanding the foregoing provisions of
this Section 3.03, any payment or distribution of assets of the Company of
any kind or character, whether in cash, property or securities (other than
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, which stock and securities are subordinated
to the payment of all Senior Indebtedness and securities received in lieu
thereof that at the time may be outstanding, except to the extent that such
stock and securities received in lieu of Senior Indebtedness by their terms
are expressly not superior in right of payment of the Securities), shall be
received by the Trustee or the holders of the Securities on account of
principal or any premium or interest on the Securities before all Senior
Indebtedness is paid in full, or effective provision made for its payment,
such payment or distribution (subject to the provisions of Section 3.06 and
Section 3.07) shall be received and held in trust for and shall be paid
over to the holders of the Senior Indebtedness remaining unpaid or
unprovided for or their representative or representatives, or to the
trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued, for
application to the payment of such Senior Indebtedness until all such
Senior Indebtedness shall have been paid in full, after giving effect to
any concurrent payment or distribution or provision for such Senior
Indebtedness to the holders of such Senior Indebtedness.
(d) The consolidation of the Company with, or the merger of the Company into, another Person or the dissolution, winding up, liquidation or reorganization of the Company following the conveyance, transfer or lease of its properties and assets substantially as an entirety to another Person upon the terms and conditions set forth in Article Ten shall not be deemed a dissolution, winding up, liquidation or reorganization of the Company for the purposes of this Section 3.03 if the Person formed by
such consolidation or into which the Company is merged or the Person that acquires by conveyance, transfer or lease such properties and assets substantially as an entirety, as the case may be, as a part of such consolidation, merger, conveyance, transfer or lease, shall comply with the conditions set forth in Article Ten.
the Company referred to in this Article Three, the Trustee, subject to the provisions of Section 6.01, and the holders of the Securities and any related coupons shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any dissolution, winding up, liquidation or reorganization proceedings are pending, or a certificate of the liquidating trustee or agent or other person making any distribution to the Trustee or to the holders of the Securities and coupons, for the purpose of ascertaining the persons entitled to participate in such distribution, the holders of, the amounts of, the amounts payable on, the amount or amounts paid or distributed on and all other facts pertinent to the Senior Indebtedness and other indebtedness of the Company and all other facts pertinent to this Article Three.
shall have full power and authority to receive such money and to apply the same to the purpose for which it was received, and shall not be affected by any notice to the contrary that may be received by it during such three Business Day period.
Indebtedness at any time held by it to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall be construed to deprive the Trustee of any of its rights as such holder.
ARTICLE FOUR
PARTICULAR COVENANTS OF THE COMPANY
series and the related coupons may be presented for payment. The Company will
give to the Trustee prompt written notice of the location of each such office or
agency and of any change of location thereof. In case the Company shall fail to
maintain any such office or agency 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, and
the Company hereby initially appoints the Trustee its agent to receive all such
presentations and demands, except that Bearer Securities of that series and the
related coupons may be presented for payment at the place specified for that
purpose pursuant to Section 2.01(5). Unless otherwise provided pursuant to
Section 2.01, the Company hereby initially designates as the Place of Payment
for each series of Securities (other than Bearer Securities of that series and
the related coupons) Wilson, North Carolina and appoints BB&T-NC, at the office
of BB&T-NC, 223 West Nash Street, Wilson, North Carolina, as Paying Agent in
such city. Notwithstanding any other provisions to the contrary, the Company at
its option may make payment of principal and any premium and interest with
respect to any Registered Security by check mailed to the Person entitled
thereto, as such address appears on the Security Register, except that a holder
of $10,000,000 or more in aggregate principal amount of Securities of such
series and of like tenor and terms will be entitled to receive payments by wire
transfer of immediately available funds if appropriate wire transfer
instructions shall have been received in writing by the Trustee not later than
ten Business Days prior to the applicable payment date.
No payment of principal of or any premium or interest on Bearer
Securities shall be made at any office or agency of the Company in the United
States or by check mailed to any address in the United States or by transfer to
an account maintained with a bank located in the United States; provided,
however, that payment of principal of and any premium and interest on any Bearer
Security may be made at an office or agency of, and designated by, the Company
located in the United States if (but only if) payment of the full amount of such
principal, premium or interest at all offices outside the United States
maintained for the purpose by the Company in accordance with this Indenture is
illegal or effectively precluded by exchange controls or other similar
restrictions and the Trustee receives an Opinion of Counsel that such payment
within the United States is legal. Unless otherwise provided as contemplated by
Section 2.01 with respect to any series of Securities, at the option of the
holder of any Bearer Security or related coupon payment may be made by mailing a
check to an address outside the United States or by transfer to an account
maintained by the payee with a bank located outside the United States.
The Company also from time to time may designate one more offices or agencies (in or outside of such Place of Payment) where the Securities of one or more series and any appurtenant coupons (subject to the preceding paragraph) may be presented or surrendered for any and all such purposes, and from time to time may rescind such designations. The Company will give prompt written notice to the Trustee of any such designation and any change in the location of any such office or agency.
(1) that it will hold all sums held by it as such agent for the payment of the principal of or any premium or interest on such Securities (whether such sums have been paid to it by the Company or by any other obligor on such Securities) in trust for the benefit of the Persons entitled thereto;
(2) that it will give the Trustee notice of any failure by the Company (or by any other obligor on such Securities) to make any payment of the principal of or any premium or interest on such Securities when the same shall be due and payable; and
(3) that it forthwith will pay to the Trustee, at any time during the continuance of an Event of Default, upon the written request of the Trustee, all sums so held by it as such agent.
(b) If the Company shall act as its own Paying Agent with respect to the Securities of any series, on or before each due date of the principal of or any premium or interest on the Securities of such series, it will set aside, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay such principal, premium or interest so becoming due and will notify the Trustee of any failure to take such action and of any failure
by the Company (or by any other obligor under such Securities) to make any payment of the principal of or any premium or interest on such Securities when the same shall become due and payable.
(c) Notwithstanding anything in this Section 4.03 to the contrary, the Company, at any time, for the purpose of obtaining a satisfaction and discharge of this Indenture or for any other reason, may pay or by Company Order direct any Paying Agent to pay to the Trustee all sums held in trust by the Company or any Paying Agent under this Indenture, such sums to be held by the Trustee upon the trusts contained in this Indenture.
(d) Notwithstanding anything in this Section 4.03 to the contrary, the agreement to hold sums in trust as provided in this Section 4.03 is subject to Section 14.03 and Section 14.04.
(1) a review of the activities of the Company during the year and of performance under this Indenture has been made under his supervision;
(2) to the best of his knowledge, based on such review, the Company has fulfilled all its conditions and covenants under this Indenture throughout such year, or, if there has been a default in the fulfillment of any such condition or covenant, specifying each such default known to him and the nature and status of such default; and
(3) such certificate sets forth as of the end of such year a list of all Principal Constituent Banks.
notice or the lapse of time or both would be an Event of Default under Section 5.01.
(a) sell, assign, transfer or otherwise dispose of any shares of, or securities convertible into or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of a Principal Constituent Bank, and will not permit a Principal Constituent Bank to issue any shares of, or securities convertible into or options, warrants or rights to subscribe for or purchase shares of, such Voting Stock if, in each case, after giving effect to any such transaction, the Principal Constituent Bank would cease to be a Controlled Subsidiary; or
(b) permit a Principal Constituent Bank to:
(i) merge or consolidate with any other corporation, unless the surviving corporation is, or upon consummation of the merger or consolidation will become, the Company or a Controlled Subsidiary; or
(ii) lease, sell or transfer all or substantially all its properties and assets to any corporation or other Person, except to the Company or a Controlled Subsidiary or a Person that, upon such lease, sale or transfer, will become the Company or a Controlled Subsidiary.
Notwithstanding the foregoing, any such sale, assignment, transfer or other disposition of securities, any such merger or consolidation or any such lease, sale or transfer of properties and assets shall not be prohibited if required (i) by any law or any rule, regulation or order of any governmental agency or authority or (ii) as a condition imposed by any law or any rule, regulation or order of any governmental agency or authority with respect to the acquisition by the Company or any Controlled Subsidiary, directly or indirectly, through purchase of securities or assets, or a merger, consolidation or otherwise, of any Person, provided that after giving effect to such acquisition (A) such Person will be a Controlled Subsidiary, (B) the Consolidated Net Banking Assets of the Company will be at least equal to the Consolidated Net Banking Assets of the Company prior thereto and (C) BB&T-NC will be a Controlled Subsidiary.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT OR ACCELERATION EVENT
(a) default in the payment of any installment of interest upon any of the Securities of that series as and when the same shall become due and payable, and continuance of such default for a period of 30 days;
(b) default in the payment of the principal of or any premium on any of the Securities of that series as and when the same shall become due and payable at their Stated Maturity, upon redemption, by declaration or otherwise;
(c) default in the payment of any sinking fund installment or analogous obligation as and when the same shall become due and payable by the terms of the Securities of that series;
(d) a default or event of default as defined or designated in any mortgage, indenture, loan agreement or instrument under which there may be issued or borrowed, or by which there is secured or evidenced, any indebtedness of the Company (other than Securities of such series or indebtedness owed by the Company to any Subsidiary) or any Subsidiary (other than indebtedness of any Subsidiary owing to the Company or to another Subsidiary), whether such indebtedness now exists or shall be created hereafter, shall happen and (i) not less than $1,000,000 of such indebtedness shall be past due under such mortgage, indenture, loan agreement or instrument or such default or event of default shall result in not less than $1,000,000 of such indebtedness becoming or being declared due and payable and (ii) such indebtedness or such declaration, as the case may be, shall not have been discharged or rescinded or annulled within 15 days after the date on which written notice thereof is given 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 Securities of that series then Outstanding;
(e) a final judgment or judgments or order or orders for the payment of money in excess of $1,000,000 shall be entered against the Company or one or more Principal Constituent Banks and within 90 days after entry thereof such judgment or judgments or order or orders shall not have been discharged or the execution thereof stayed pending appeal or within 90 days after the expiration of any such stay such judgment or judgments or order or orders shall not have been discharged;
(f) failure on the part of the Company duly to observe or perform any other of the covenants or agreements on the part of the Company in the Securities of such series or in this Indenture (other than a covenant or agreement a default in the performance of which or the breach of which specifically is provided for elsewhere in this Section 5.01 or which expressly has been included in this Indenture solely for the benefit of one or more series of Securities other than such series), and continuance of such failure for a period of 90 days after the date on which written notice of such failure, requiring the Company to remedy the same, shall have been given 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 Securities of such series at the time Outstanding;
(g) a court or governmental authority having jurisdiction in the premises shall enter a decree or order for relief in respect of the Company or a Principal Constituent Bank 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 the Company or a Principal Constituent Bank 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 60 consecutive days; or
(h) the Company or a Principal Constituent Bank shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or 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 similar official) of the Company or a Principal Constituent Bank or for substantially all of its property (other than the appointment of a conservator with repect to any Constituent Bank insured by the Federal Deposit Insurance Corporation or any successor agency), or shall make any general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due or shall take any corporate action in furtherance of any of the foregoing.
If an Acceleration Event with respect to the Securities of any series at the time Outstanding occurs and is continuing, then and in each such case, unless the principal of all the Securities of such series already shall have become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Securities of such series then Outstanding, by notice in writing to the Company (and to the Trustee if given by Securityholders), may declare the principal amount of all the Securities of that series to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable. This provision, however, is subject to the condition that, at any time after such a declaration of acceleration, and before any judgment or decree for the payment of the money due shall have been obtained or entered as hereinafter provided, the holders of a majority in aggregate principal amount of the Securities of such series
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, if:
(1) the Company shall pay or shall deposit with the Trustee a sum sufficient to pay:
(A) all matured installments of interest on all the Securities of that series and the principal of and any premium on any and all Securities of that series that shall have become due otherwise than by acceleration (with interest on overdue installments of interest (to the extent that payment of such interest is enforceable under applicable law) and on such principal and premium at the rate borne by the Securities of that series, to the date of such payment or deposit); and
(B) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and
(2) any and all defaults with respect to Securities of that series under this Indenture, other than the nonpayment of principal of and any premium and accrued interest on Securities that shall have become due by acceleration, shall have been cured or waived as provided in Section 5.07.
No such waiver or rescission and annulment shall extend or shall affect any subsequent default or shall impair any right consequent thereon.
In case the Trustee or any Securityholder 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 or any Securityholder, then and in every such case the Company, the Trustee and such Securityholders, subject to any determination in such proceeding, shall be restored respectively to their several positions and rights under this Indenture, and all rights, remedies and powers of the Company, the Trustee and such Securityholders shall continue as though no such proceeding had been taken.
have continued for a period of 30 days, or (ii) the principal of or any premium on any of the Securities as and when the same shall have become due and payable whether at Maturity of the Securities, by declaration or otherwise, then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the holders of the Securities, the whole amount that then shall have become due and payable on all such Securities for principal, premium or interest, or any combination thereof, as the case may be, with interest upon the overdue principal and premium and (to the extent that payment of such interest is enforceable under applicable law) upon the overdue installments of interest, at the rate borne by the Securities; and, in addition, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable compensation, expenses, disbursements and advances of the Trustee, its agents, attorneys and counsel.
(b) 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 the Securities and coupons and collect in the manner provided by law out of the property of the Company or any other obligor on the Securities and coupons, wherever situated, the money adjudged or decreed to be payable.
(c) In case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the Securities and
coupons under Title 11 of the United States Code or any other applicable 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 on the Securities and
coupons, or to the creditors or property of the Company or such other obligor,
the Trustee, irrespective of whether the principal of the Securities shall then
be due and payable as expressed in the Securities or by declaration or otherwise
and irrespective of whether the Trustee shall have made any demand pursuant to
the provisions of this Section 5.02, shall be entitled and empowered, by
intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal and any premium and interest owing and
unpaid in respect of the Securities, and, in case of any judicial proceedings,
(i) 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 the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel) and of the Securityholders allowed in such judicial
proceedings relative to the Company or any other obligor on the Securities and
coupons, its or their creditors, or its or their property, and (ii) to collect
and receive any money or other property payable or deliverable on any such
claims, and to distribute the same after the deduction of its charges and
expenses; and any receiver, assignee or trustee in bankruptcy or reorganization
is hereby authorized by each of the Securityholders to make such payments to the
Trustee, and, in the event that the Trustee shall consent to the making of such
payments directly to the Securityholders, to pay to the Trustee any amount due
it for reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and its counsel and any other amounts due the Trustee under
Section 6.06. To the extent that such payment of reasonable compensation,
expenses and counsel fees out of the trust estate in any such proceedings shall
be denied for any reason, payment of the same shall be secured by a lien on, and
shall be paid out of, any and all distributions, dividends, money, securities
and other property which the holders of the Securities and coupons may be
entitled to receive in such proceedings, whether in liquidation or under any
plan of reorganization or arrangement or otherwise.
(d) Nothing contained in this Section 5.02 shall be deemed to authorize the Trustee to authorize or consent to or adopt on behalf of any Securityholder any plan of reorganization or arrangement affecting the Securities or related coupons or the rights of any Securityholder, or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding.
(e) All rights of action and of asserting claims under this Indenture, or under any of the Securities or related coupons, may be enforced by the Trustee without the possession of any of the Securities or coupons, or the production thereof in 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, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, shall be for the ratable benefit of the holders of the Securities and related coupons.
fixed by the Trustee for the distribution of such money, upon presentation of the several Securities of such series or coupons, or both, as the case may be, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts then due the Trustee under
Section 6.06;
SECOND: In case the principal of the Outstanding Securities of that series shall not have become due and be unpaid, to the payment of interest on the Securities of that series in the order of the Maturity of the installments of such interest, with interest (to the extent enforceable under applicable law) upon the overdue installments of interest at the rate borne by the Securities of that series, such payments to be made ratably to the persons entitled thereto; and
THIRD: In case the principal of the Outstanding Securities of that series shall have become due, by declaration or otherwise, to the payment of the whole amount then owing and unpaid upon the Securities of that series for principal and any premium and interest, with interest on the overdue principal and any premium and (to the extent enforceable under applicable law) upon overdue installments of interest at the rate borne by the Securities of that series; and in case such money shall be insufficient to pay in full the whole amounts so due and unpaid upon the Securities of that series, then to the payment of such principal and any premium and interest without preference or priority of principal over interest, or of interest over principal or of any premium over principal or interest, or of principal or interest over any premium or of any installment of interest over any other installment of interest, or of any Security of that series over any other Security of that series, or of any coupon related to a Security of a series over any other coupon related to a Security of the same series, ratably to the aggregate of such principal and any premium and accrued and unpaid interest.
that series then Outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as Trustee under this Indenture and shall have offered to the Trustee such reasonable indemnity as the Trustee may require against the costs, expenses and liabilities to be incurred in compliance with such request, (ii) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity, shall have neglected or refused to institute any such action, suit or proceeding and (iii) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the holders of a majority in principal amount of the Outstanding Securities of that series; it being understood and intended, and being expressly covenanted by each Person who acquires and holds a Security or related coupon with every other such Person, that no one or more holders of Securities shall have any right in any manner whatever by virtue of or by availing of any provision of this Indenture to affect, disturb or prejudice the rights of any other holder of such Securities or coupons, 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 provided in this Section 5.04 and for the equal, ratable and common benefit of all holders of Securities and coupons.
Notwithstanding any other provision of this Indenture, however, the right of any holder of any Security to receive payment of the principal of and any premium and interest on such Security on or after the respective Stated Maturities, or to institute suit for the enforcement of any such payment on or after such respective dates against the Company, shall not be impaired or affected without the consent of such holder.
other rights, powers and remedies available to the Trustee or the holders of the Securities and related coupons, now or hereafter existing, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture; and no delay or omission of the Trustee or of any holder of any of the Securities or related coupons to exercise any such right, power or remedy shall impair any such right, power or remedy, or shall be construed to be a waiver of any default or an acquiescence in such default; and, subject to the provisions of Section 5.04, every power and remedy conferred upon or reserved to the Trustee or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders. The assertion of any right, power or remedy shall not prevent the concurrent assertion of any other right, power or remedy.
(b) Prior to any declaration that the principal of the Outstanding Securities of any series is due and payable, the holders of a majority in aggregate principal amount of the Securities of that series at the time Outstanding on behalf of the holders of all of the Securities of that series may waive any past default or Event of Default or Acceleration Event under this Indenture and its consequences except a default under a covenant in this Indenture that, pursuant to Section 9.02, cannot be modified without the consent of each holder of a Security of the series affected thereby. Upon any such waiver, the Company, the Trustee and the holders of the Securities of that series and the related coupons shall be restored to their former positions and rights under this Indenture, respectively; but no such waiver shall extend to any subsequent or other default or Event of Default or Acceleration Event or impair any right consequent thereon. Whenever any default or Event of Default or Acceleration Event under this Indenture shall have been waived as permitted by this Section 5.07, such default or Event of Default or
Acceleration Event, for all purposes of the Securities, the related coupons and this Indenture, shall be deemed to have been cured and to be not continuing.
ARTICLE SIX
CONCERNING THE TRUSTEE
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, its own willful misconduct or any action or failure to act taken or omitted by it in bad faith, except that:
(a) except during the continuance of an Event of Default:
(1) the duties and obligations of the Trustee 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 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 conclusively may rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but, in the case of any such certificates or opinions that by any provisions of this Indenture specifically are 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 holders of
not less than a majority in principal amount of the Securities of any series at the time Outstanding (determined as provided in Section 7.04) 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 it shall have reasonable grounds for believing that the repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.
Whether or not expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.01.
The provisions of this Section 6.01 are in furtherance of and subject to Sections 315 and 316 of the Trust Indenture Act.
(a) the Trustee may rely and shall be protected in acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, 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 resolution of the Board of Directors 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 and any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or omitted by it under this Indenture in good faith and in accordance with such 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 that 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;
(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, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books and records of the Company to the extent reasonably necessary to verify such facts or matters; and
(g) the Trustee may execute any of the trusts or powers under this Indenture or perform any duties under this Indenture either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed by it with due care under this Indenture.
rights it would have if it were not Trustee, Paying Agent or Security registrar.
taken or omitted by it under the provisions of this Indenture upon the faith of such Officers' Certificate.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of
Section 310(b) of the Trust Indenture Act after written request therefor by
the Company or by any Securityholder who has been a bona fide holder of a
Security or Securities for at least six months, or
(2) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.08 and shall fail to resign after written request therefor by the Company or by any such Securityholder, or
(3) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed or a 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 by written
instrument, executed by Company Order authorized by the Board of Directors, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor Trustee (with written notice of such removal mailed to the
holders of Registered Securities at their address as they shall appear on the
Security Register, and, if any Bearer Securities are Outstanding, by publishing
notice of such resignation in a newspaper of general circulation, in each place
of payment for such Bearer Securities, customarily published at least once a day
for at least five days in each calendar week), or, subject to the provisions of
Section 5.09, any Securityholder who has been a bona fide holder of a Security
or Securities for at least six months, on behalf of himself and all others
similarly situated, may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(c) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company promptly shall appoint a successor Trustee by a Company Order authorized by the Board of Directors, one copy of which instrument shall be delivered to the retiring Trustee and one copy to the successor Trustee. If, within one year after such resignation, removal or incapability or the occurrence of such vacancy, a successor Trustee shall be appointed by the holders of a majority in principal amount of the Securities (voting as a single class) at the time Outstanding by instrument or instruments delivered to the Company and the retiring Trustee, the successor Trustee so appointed, forthwith upon its acceptance of such appointment, shall become the successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Securityholders and accepted appointment in the manner provided in Section 6.10 within 60 days after notice of the resignation or removal of the Trustee is mailed to the 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 Security or Securities for at least six months, subject to the provisions of Section 5.09, on behalf of himself and all others similarly situated, may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
(d) The holders of a majority in aggregate principal amount of the Securities (voting as a single class) at the time Outstanding at any time, upon notice to the Trustee, may remove the Trustee.
(e) Any removal of the Trustee and appointment of a successor Trustee
pursuant to any of the provisions of this Section 6.09 shall become effective
upon acceptance of appointment by the successor Trustee as provided in Section
6.10. Any resignation of the Trustee shall become effective only upon the
appointment of a successor Trustee and upon the acceptance of appointment by the
successor Trustee as provided in Section 6.10.
No successor Trustee shall accept appointment as provided in this
Section 6.10 unless at the time of such acceptance such successor Trustee shall
be qualified under the provisions of Section 310(b) of the Trust Indenture Act
and eligible under the provisions of Section 6.08.
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 under this Indenture to the holders of Registered Securities at their addresses as they shall appear on the Security Register, and, if any Bearer Securities are Outstanding, by publishing notice of such resignation in a newspaper of general circulation, in each place of payment for such Bearer Securities, customarily published at least once a day for at least five days in each calendar week. If the Company fails to mail such notice within ten days after acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed and, if necessary, published at the expense of the Company.
In case at the time such successor Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor Trustee may adopt the certificate of authentication of any predecessor Trustee, and deliver such Securities so authenticated; and in case at that time any of the Securities shall not have been authenticated, any successor Trustee may authenticate such Securities either in the name of any predecessor Trustee under this Indenture 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 Securities or in this Indenture provided that the certificate of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
the making of any demand or request, the giving of any notice, consent or waiver or the taking of any such other action), the fact that at the time of taking any such action the holders of such specified percentage have joined in such action may be evidenced (i) by any instrument or any number of instruments of similar tenor executed by Securityholders in person or by agent or proxy appointed in writing, (ii) by the record of the holders of Securities voting in favor of such action at any meeting of Securityholders duly called and held in accordance with the provisions of this Article Seven or (iii) by a combination of such instrument or instruments and any such record of such a meeting of Securityholders. The Company may set a record date for purposes of determining the identity of holders entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture, which record date shall be the later of ten days prior to the first solicitation of such consent or the date of the most recent list of holders furnished to the Trustee pursuant to the provisions of Section 312(a) of the Trust Indenture Act prior to such solicitation. If a record date is fixed, those persons who were holders of Securities at such record date (or their duly designated proxies), and only those persons, shall be entitled to take such action by vote or consents or to revoke any vote or consent previously given, whether or not such persons continue to be holders after such record date. No such vote or consent shall be valid or effective if such vote occurs or such consent is obtained more than 120 days after such record date.
(b) The ownership of Registered Securities of any series shall be proved by the Security Register or by a certificate of the Security registrar of such series.
(c) The principal amount and serial numbers of Bearer Securities held by any Person, and the date of holding the same, may be proved by the production of such Bearer Securities or by a certificate executed, as depositary, by any trust company, bank, banker or other depositary, wherever situated, if such certificate shall be deemed by the Trustee to be satisfactory, showing that at the date therein mentioned such Person had on deposit with such depositary, or exhibited to it, the Bearer Securities in the amount and with the serial numbers therein described; or such facts may be proved by the certificate or affidavit of the Person holding such Bearer
Securities, if such certificate or affidavit is deemed by the Trustee to be satisfactory. The Trustee and the Company may assume that such ownership of any Bearer Security continues until (i) another certificate or affidavit bearing a later date issued in respect of the same Bearer Security is produced, (ii) such Bearer Security is produced to the Trustee by some other Person, (iii) such Bearer Security is surrendered in exchange for a Registered Security or (iv) such Bearer Security is no longer Outstanding. The fact and date of execution of any such instrument or writing, the authority of the Person executing the same and the principal amount and serial numbers of Bearer Securities held by the Person so executing such instrument or writing and the date of holding the same may also be proved in any other manner which the Trustee deems sufficient; and the Trustee may in any instance require further proof with respect to any of the matters referred to in this Section 7.02(c).
(d) The record of any Securityholders' meeting shall be proved in the manner provided in Section 8.07.
The Company, the Trustee, any Paying Agent and any Security registrar may treat the bearer of any Bearer Security and the bearer of any coupon as the absolute owner of such Bearer Security or coupon for the purpose of receiving payment thereof or on account thereof and for all other purposes whatsoever, whether or not such Bearer Security or coupon is overdue, and neither the Company, the Trustee, any Paying Agent nor any Security registrar shall be affected by any notice to the contrary. All such payments so made to any such bearer shall be valid and, to the extent of the sum or sums so
paid, effectual to satisfy and discharge the liability for money payable upon any such Bearer Security.
None of the Company, the Trustee, any Paying Agent or the Security registrar will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests.
ARTICLE EIGHT
SECURITYHOLDERS' MEETINGS
(1) 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 under this Indenture and its consequences, or to take any other action authorized to be taken by Securityholders pursuant to any of the provisions of Article Five;
(2) to remove the Trustee and nominate a successor Trustee pursuant to the provisions of Article Six;
(3) to consent to the execution of an indenture or indentures supplemental to this Indenture pursuant to the provisions of Section 9.02; or
(4) to take any other action authorized to be taken by or on behalf of the holders of any specified aggregate principal amount of the Securities under any other provision of this Indenture or under applicable law.
Any meeting of Securityholders shall be valid without notice if the holders of all Securities then Outstanding of each series affected are present in person or by proxy or if notice is waived before or after the meeting by the holders of all Outstanding Securities of each series affected, and if the Company and the Trustee are either
present by duly authorized representatives or, before or after the meeting, have waived notice.
(b) The Trustee, by an instrument in writing, shall appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Securityholders as provided in Section 8.03, in which case the Company or the Securityholders calling the meeting, as the case may be, in like manner shall appoint a temporary chairman. A permanent chairman and a permanent secretary of
the meeting shall be elected by vote of the holders of a majority in principal amount of the Securities represented at the meeting and entitled to vote.
(c) Subject to the provisions of Section 7.04, at any meeting each Securityholder or proxy shall be entitled to one vote for each $1,000 principal amount of Securities.
(d) No vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Securities held by him or instruments in writing 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 8.02 or Section 8.03 may be adjourned from time to time by a majority of those present and the meeting may be held as so adjourned without further notice.
file with the secretary of the meeting their verified written reports in duplicate 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 such record the original reports of the inspectors of votes on any vote by ballot taken at such meeting 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 such notice was mailed or published as provided in Section 8.02 or Section 8.03. The record shall show the principal amount of the Securities voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee.
Any record so signed and verified shall be conclusive evidence of the matters stated in such record.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
(a) to evidence the succession of another corporation to the Company, or successive successions, and the assumptions by the successor corporation of the covenants, agreements and obligations of the Company pursuant to Article Ten;
(b) to add to the covenants of the Company such further covenants, restrictions or conditions for the protection of the holders of any series of the Securities or coupons as the Board of Directors and the Trustee shall consider to be for the protection of the holders of such Securities or coupons, and to make the occurrence,
or the occurrence and continuance, of a default in any such additional covenants, restrictions or conditions a default or an Event of Default permitting, subject to Article Three, the enforcement of all or any of the several remedies set forth in this Indenture; provided, however, that in respect of any such additional covenant, restriction or condition such supplemental indenture may provide for notice or a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or, subject to Article Three, 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 in this Indenture or in any supplemental indenture that may be defective or inconsistent with any other provision contained in this Indenture or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under this Indenture that shall not adversely affect the interests of the holders of Outstanding Securities of any series or any related coupons;
(d) to establish the form or terms of Securities of any series as permitted by Section 2.01;
(e) to add to, change or eliminate any of the provisions of this Indenture to provide that Bearer Securities may be registrable as to principal, to change or eliminate any restrictions on the payment of principal or any premium on Registered Securities or of principal or any premium or interest on Bearer Securities, to permit Bearer Securities to be issued in exchange for Registered Securities or to permit or facilitate the issuance of Securities in uncertificated form, provided any such action shall not adversely affect the interests of the holders of Outstanding Securities of any series or any related coupons;
(f) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Securities of one or more series and to add to or change any of the provisions of this Indenture; provided, however, that such action shall not adversely affect the interests of the holders of Outstanding Securities of any series;
(g) to provide for the documentation necessary for the issuance of Securities outside the United States of America;
(h) to provide for the documentation necessary for the issuance of Securities at an issue price lower than the principal amount thereof, including to provide that upon the redemption or acceleration of the Maturity thereof an amount less than the principal amount thereof shall become due and payable and that such amount shall be used to determine the relative voting rights of the holders thereof; or
(i) to conform the Indenture to the provisions of the Trust Indenture Act as then in effect.
The Trustee hereby is authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations that may be contained in such supplemental indenture and to accept the conveyance, transfer and assignment of any property under such supplemental indenture, but the Trustee shall not be obligated to, but in its discretion may, enter into any such supplemental indenture that affects the Trustee's own rights, duties or immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section 9.01 may be executed by the Company and the Trustee without the consent
of the holders of any of the Securities at the time Outstanding, notwithstanding
the provisions of Section 9.02.
institute suit for the enforcement of any such payment on or after its Stated
Maturity, or make any change in Article Three that adversely affects the rights
of any Securityholder; (b) reduce the percentage in principal amount of
Securities of any Series the consent of whose holders is required for any such
supplemental indenture or the consent of whose holders is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults under this Indenture and their consequences provided for in this
Indenture; or (c) modify the provisions of Section 5.01 providing for the
rescinding and annulment of a declaration accelerating the Maturity of the
Securities of any series, or any of the provisions of this Section 9.02 or
Section 5.07(b), except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived.
Upon request of the Company, accompanied by a copy of the resolutions of the Board of Directors certified by its Secretary or Assistant Secretary authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders of such series 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 in its discretion may, but shall not be obliged to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Securityholders under this Section 9.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.
ARTICLE TEN
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
(1) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer or which leases the properties and assets of the Company substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and expressly shall assume, by a supplemental indenture executed and delivered to the Trustee in form satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest on the Securities, according to their terms, and the performance of every covenant of this Indenture and in such series on the part of the Company to be performed or observed;
(2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an
Event of Default, shall have happened and be continuing; and
(3) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and supplemental indenture comply with this Article Ten and that all conditions precedent provided for in this Indenture relating to such transaction have been complied with.
Such successor corporation may cause to be signed, and may issue either in its own name or in the name of the Company prior to such succession, any of or all the Securities of each series issuable under this Indenture which theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor corporation instead of upon the Company Order, and subject to all the terms, conditions and limitations in this Indenture, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication and any Securities which such successor corporation thereafter shall cause to be signed and delivered to the Trustee on its behalf for that purpose. All the Securities so issued shall have in all respects the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all such Securities had been issued at the date of the execution of this Indenture.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
The Trustee promptly shall notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any
Securities redeemed or to be redeemed only in part, to the portion of the principal amount of such Securities which has been or is to be redeemed.
(1) the Redemption Date;
(2) the Redemption Price;
(3) if less than all the Outstanding Securities of any series are to be redeemed, the identification (and, in the case of partial redemption, the principal amounts) of the particular Securities to be redeemed;
(4) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security to be redeemed and, if applicable, that interest thereon will cease to accrue on and after such date;
(5) the Place or Places of Payment where such Securities, together in the case of Bearer Securities with all coupons, if any, appertaining thereto maturing after the Redemption Date, are to be surrendered for payment of the Redemption Price;
(6) that Bearer Securities may be surrendered for payment only at such place or places that are outside the United States, except as provided in Section 4.02; and
(7) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the Company shall be given by the Company or, at the Company's request, by the Trustee in the name and at the expense of the Company.
Securities that are to be redeemed on that date; provided, however, that
deposits with respect to Bearer Securities shall be made with a Paying Agent or
Paying Agents located outside the United States except as otherwise provided in
Section 4.02, unless otherwise specified as contemplated by Section 2.01.
If any Bearer Security surrendered for redemption shall not be accompanied by all appurtenant coupons maturing after the Redemption Date, such Bearer Security may be paid after deducting from the Redemption Price an amount equal to the face amount of all such missing coupons, or the surrender of such missing coupon or coupons may be waived by the Company and the Trustee if there is furnished to them such security or indemnity as they may require to hold each of them and any Paying Agent harmless. If thereafter the holder of such Bearer Security shall surrender to the Trustee or any Paying Agent any such missing coupon in respect of which a deduction shall have been made from the Redemption Price, such holder shall be entitled to receive the amount so deducted on account of such coupon without interest thereon; provided, however, that interest represented by coupons shall be payable only upon presentation and surrender of those coupons at an office or agency located outside of the United States except as otherwise provided in Section 4.02.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal and any premium, until paid, shall bear interest from the Redemption Date at the rate prescribed therefor in the Security or related coupon.
ARTICLE TWELVE
SINKING FUNDS
The minimum amount of any sinking fund payment provided for by the terms of Securities of any series is herein referred to as a "mandatory sinking fund payment", and any payment in excess of such minimum amount provided for by the terms of Securities of any series is herein referred to as an "optional sinking fund payment". If provided for by the terms of Securities of any series, the cash amount of any sinking fund payment may be subject to reduction as provided in Section 12.02. Each sinking fund payment shall be applied to the redemption of Securities of any series as provided for by the terms of the Securities of such series.
(1) may deliver Outstanding Securities of a series (other than any previously called for redemption) and
(2) may apply as a credit Securities of a series that have been repurchased at the option of a holder or redeemed either at the election of the Company pursuant to the terms of such Securities or through the application of permitted optional sinking fund payments pursuant to the terms of such Securities,
in each case in satisfaction of all or any part of any sinking fund payment with respect to the Securities of such series required to be made pursuant to the terms of such Securities as provided for by the terms of such series, provided that such Securities have not been previously so credited. Such Securities shall be received and credited for such purpose by the Trustee at the Redemption Price specified in such Securities for redemption through operation of the sinking fund, and the amount of such sinking fund payment shall be reduced accordingly.
ARTICLE THIRTEEN
REPAYMENT AT THE OPTION OF HOLDERS
ARTICLE FOURTEEN
SATISFACTION AND DISCHARGE OF INDENTURE
(1) theretofore deposited with the Trustee and repaid by the Trustee to the Company in accordance with the provisions of Section 14.04 or
(2) paid to any State or the District of Columbia pursuant to its unclaimed property or similar laws, and if in either case the Company also shall pay or cause to be paid all other sums payable under this Indenture by the Company,
then this Indenture shall cease to be of further effect with respect to Securities of such series and any related coupons, and the Trustee, on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel as required by Section 16.05 and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture with respect to Securities of such series and any related coupons. The obligations of the
Company to the Trustee under Section 6.06 shall survive the termination of this Indenture.
The Trustee shall notify the Securityholders of such series, at the expense of the Company, of the immediate availability of the amount referred to in clause (b) of this Section 14.01 by mailing a notice, first class postage prepaid, to the holders of Registered Securities of such series at their addresses as they shall appear on the Security Register, and, if any Bearer Securities are Outstanding, by publishing notice of such resignation in a newspaper of general circulation, in each place of payment for such Bearer Securities, customarily published at least once a day for at least five days in each calendar week.
liability of the Company as trustee thereof, thereupon shall cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, at the expense of the Company, in the case of Registered Securities or Bearer Securities, may cause to be published once, in a newspaper of general circulation in each Place of Payment for such series customarily published on each Business Day (whether or not published on Saturdays, Sundays or holidays) or, in the case of Registered Securities, to be mailed to each such holder, or in the case of Registered Securities to be mailed and published, notice that such money remains unclaimed and that, after a date specified in such notice, which shall not be fewer than 30 days from the date of such publication or mailing, any unclaimed balance of such money then remaining will be repaid to the Company.
ARTICLE FIFTEEN
IMMUNITY OF INCORPORATORS,
STOCKHOLDERS, OFFICERS AND DIRECTORS
shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor corporation, either directly or through the Company or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that 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 Securities and coupons.
ARTICLE SIXTEEN
MISCELLANEOUS PROVISIONS
provisions of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent 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 (other than certificates provided pursuant to
Section 4.04, which certificates shall comply with the requirements of Section
4.04) shall include: (i) a statement that the person making such certificate or
opinion has read such covenant or condition; (ii) a brief statement as to the
nature and scope of the examination or investigation upon which the statements
or opinion contained in such certificate or opinion are based; (iii) 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 (iv) a
statement as to whether or not, in the opinion of such person, such condition or
covenant has been complied with.
The provisions of this Section 16.05 are in furtherance of and subject to Sections 314(c)(1), 314(c)(2) and 314(e) of the Trust Indenture Act.
legislation, as now or hereafter enacted and in effect, in any jurisdiction where property of the Company or its Subsidiaries is located.
STATE STREET BANK AND TRUST COMPANY hereby accepts the trusts in this Indenture declared and provided, upon the terms and conditions set forth above in this Indenture.
IN WITNESS WHEREOF, SOUTHERN NATIONAL CORPORATION has caused this Indenture to be signed and acknowledged by its [Vice] President, and its corporate seal to be affixed hereunto, and the same to be attested by its Secretary, and STATE STREET BANK AND TRUST COMPANY has caused this Indenture to be signed and acknowledged by the person whose name is set forth below, and has caused its corporate seal to be affixed hereunto and the same to be attested by the person whose name is set forth below, as of the day and year first written above.
SOUTHERN NATIONAL CORPORATION
By /s/ Scott E. Reed
--------------------------
Scott E. Reed
Senior Executive Vice President
and Chief Financial Officer
[SEAL]
Attest:
/s/ Jerone C. Herring
- -------------------------
Secretary
|
STATE STREET BANK AND TRUST COMPANY
By /s/ Ruth A. Smith
--------------------------
Ruth A. Smith
Vice President
[SEAL]
Attest:
/s/ Traci Hopkins
- -------------------------
Assistant Secretary
|
STATE OF NORTH CAROLINA )
)ss.:
COUNTY OF FORSYTH )
|
On the 22nd day of May, 1996, before me personally came Scott E. Reed, to me known, who, being by me duly sworn did depose and say that he resides at Forsyth County, North Carolina; that he is the Senior Executive Vice President and Chief Financial Officer of Southern National Corporation, one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by the authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.
/s/ Dawn L. Carter
-------------------------------
Notary Public
|
[NOTARIAL SEAL]
COMMONWEALTH OF MASSACHUSETTS )
)ss.:
COUNTY OF SUFFOLK )
On the 23rd day of May, 1996, before me personally came Ruth Smith, to me known, who, being by me duly sworn did depose and say that he resides at ______________________________; that he is a Vice President of State Street Bank and Trust Company, one of the corporations described in and which executed the above instrument; that he knows the corporate seal of said corporation; that the seal affixed to the said instrument is such corporate seal; that it was so affixed by the authority of the Board of Directors of said corporation, and that he signed his name thereto by like authority.
/s/ Laura L. Morse
-------------------------------
Notary Public
|
[NOTARIAL SEAL]
Exhibit 11
SOUTHERN NATIONAL CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
For the Periods as Indicated
For the Three Months For the Six Months
Ended June 30, Ended June 30,
-------------------------------------- ------------------------------------
1996 1995 1996 1995
---------------- ---------------- --------------- --------------
(Dollars in thousands, except per share data)
Primary Earnings Per Share:
Weighted average number of common shares
outstanding during the period 103,472,102 102,498,387 102,188,289 102,350,232
Add-
Dilutive effect of outstanding options
(as determined by application of treasury
stock method) 1,521,628 1,025,414 1,510,049 992,186
Issuance of additional shares under share
repurchase agreement, contingent upon
market price 156,320 -- 142,578 --
---------------- ---------------- --------------- --------------
Weighted average number of common shares,
as adjusted 105,150,050 103,523,801 103,840,916 103,342,418
================ ================ =============== ==============
Net income $ 73,917 $ 57,908 $ 143,527 $ 45,563
Less - Preferred dividend requirement -- 1,289 610 2,588
---------------- ---------------- --------------- --------------
Income available for common shares $ 73,917 $ 56,619 $ 142,917 $ 42,975
================ ================ =============== ==============
Primary earnings per share $ .70 $ .55 $ 1.38 $ .42
================ ================ =============== ==============
Fully Diluted Earnings Per Share:
Weighted average number of common shares
outstanding during the period 103,472,102 102,498,387 102,188,289 102,350,232
Add-
Shares issuable assuming conversion of
convertible preferred stock -- 4,525,723 1,887,620 4,536,917
Dilutive effect of outstanding options
(as determined by application of
treasury stock method) 1,807,865 1,261,944 1,819,658 1,286,528
Issuance of additional shares under
share repurchase agreement, contingent
upon market price 156,320 -- 142,578 --
Shares issuable assuming conversion of
convertible debentures -- 488,852 -- 492,252
---------------- ---------------- --------------- --------------
Weighted average number of common shares,
as adjusted 105,436,287 108,774,906 106,038,145 108,665,929
================ ================ =============== ==============
Net income $ 73,917 $ 57,908 $ 143,527 $ 45,563
Add - After tax interest expense and
amortization of issue costs applicable -- 81 -- 162
to convertible debentures --------------- ---------------- --------------- --------------
Net income, as adjusted $ 73,197 $ 57,989 $ 143,527 $ 45,725
=============== ================ =============== ==============
Fully diluted earnings per share $ .70 $ .53 $ 1.35 $ .42
=============== ================ =============== ==============
- -------------------
|
| ARTICLE 9 |
| MULTIPLIER: 1,000 |
| PERIOD TYPE | 6 MOS |
| FISCAL YEAR END | DEC 31 1996 |
| PERIOD START | JAN 01 1996 |
| PERIOD END | JUN 30 1996 |
| CASH | 571,872 |
| INT BEARING DEPOSITS | 599 |
| FED FUNDS SOLD | 21,610 |
| TRADING ASSETS | 0 |
| INVESTMENTS HELD FOR SALE | 5,127,899 |
| INVESTMENTS CARRYING | 133,953 |
| INVESTMENTS MARKET | 137,087 |
| LOANS | 13,687,664 |
| ALLOWANCE | 177,195 |
| TOTAL ASSETS | 20,556,137 |
| DEPOSITS | 14,990,684 |
| SHORT TERM | 1,785,553 |
| LIABILITIES OTHER | 247,090 |
| LONG TERM | 1,955,559 |
| PREFERRED MANDATORY | 0 |
| PREFERRED | 0 |
| COMMON | 517,151 |
| OTHER SE | 1,060,100 |
| TOTAL LIABILITIES AND EQUITY | 20,556,137 |
| INTEREST LOAN | 620,964 |
| INTEREST INVEST | 151,321 |
| INTEREST OTHER | 376 |
| INTEREST TOTAL | 772,661 |
| INTEREST DEPOSIT | 277,358 |
| INTEREST EXPENSE | 378,180 |
| INTEREST INCOME NET | 394,481 |
| LOAN LOSSES | 22,500 |
| SECURITIES GAINS | (162) |
| EXPENSE OTHER | 297,410 |
| INCOME PRETAX | 214,041 |
| INCOME PRE EXTRAORDINARY | 214,041 |
| EXTRAORDINARY | 0 |
| CHANGES | 0 |
| NET INCOME | 143,527 |
| EPS PRIMARY | 1.38 |
| EPS DILUTED | 1.35 |
| YIELD ACTUAL | 4.34 |
| LOANS NON | 62,670 |
| LOANS PAST | 18,025 |
| LOANS TROUBLED | 0 |
| LOANS PROBLEM | 0 |
| ALLOWANCE OPEN | 172,158 |
| CHARGE OFFS | 23,728 |
| RECOVERIES | 6,265 |
| ALLOWANCE CLOSE | 177,195 |
| ALLOWANCE DOMESTIC | 177,195 |
| ALLOWANCE FOREIGN | 0 |
| ALLOWANCE UNALLOCATED | 28,351 |