As filed
with the Office of the Securities and Exchange Commission on June 25,
2010
Registration
No. 333-______
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
___________________________
FORM
S-3
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
___________________________
SHORE
BANCSHARES, INC.
(Exact
Name of Registrant as Specified in Its Charter)
Maryland
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52-1974638
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(State
or Other Jurisdiction of Incorporation or Organization
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(I.R.S.
Employer Identification
Number)
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18
East Dover Street, Easton, Maryland 21601
(Address
of Principal Executive Offices)
___________________________
W.
Moorhead Vermilye
President
and Chief Executive Officer
Shore
Bancshares, Inc.
18
East Dover Street, Easton, Maryland 21601(410) 822-1400
(Name,
Address and Telephone Number of Agent for Service)
___________________________
Copies
to:
Andrew
D. Bulgin, Esquire
Gordon,
Feinblatt, Rothman, Hoffberger & Hollander, LLC
The
Garrett Building
233
East Redwood Street
Baltimore,
Maryland 21202
(410)
576-4280
___________________________
Approximate date of commencement of
proposed sale to the public: From time to time after the effective
date of this Registration Statement.
If the only securities being registered
on this Form are being offered pursuant to dividend or interest reinvestment
plans, please check the following box.
o
If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment plans, check
the following box.
R
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the
Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
o
_________
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
o
_________
If this Form is a registration
statement pursuant to General Instruction I.D. or a post-effective amendment
thereto that shall become effective upon filing with the Commission pursuant to
Rule 462(e) under the Securities Act, check the following box.
o
If this Form is a post-effective
amendment to a registration statement filed pursuant to General Instruction I.D.
filed to register additional securities or additional classes of securities
pursuant to Rule 413(b) under the Securities Act, check the following box.
o
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer or a smaller reporting company. See definition of “large accelerated
filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act. (Check one):
Large
accelerated filer
o
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Accelerated
filer
R
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Non-accelerated
filer
o
(Do
not check if a smaller reporting company)
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Smaller
reporting company
o
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CALCULATION
OF REGISTRATION FEE
Title of each class of
securities to be registered
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Amount
to be
registered (1)
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Proposed maximum
offering price
per share (2)
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Proposed maximum
aggregate offering
price
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Amount of
registration fee (3)
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Common
Stock, par value $.01 per share
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Preferred
Stock, par value $.01 per share
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Debt
Securities
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Warrants
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Units
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Total
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$
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75,000,000
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$
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75,000,000
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$
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5,347.50
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(1)
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There
are being registered hereunder such indeterminate numbers of shares of
common stock and preferred stock, such indeterminate principal amount of
debt securities, such indeterminable number of warrants to purchase common
stock, preferred stock or debt securities, and such indeterminate number
of units as shall have an aggregate initial offering price not to exceed
$75,000,000. If any debt securities are issued at an original
issue discount, then the offering price of such debt securities shall be
in such greater principal amount as shall result in an aggregate initial
offering price not to exceed $75,000,000, less the aggregate dollar amount
of all securities previously issued hereunder. Any securities
registered hereunder may be sold separately or as units with other
securities registered hereunder. Units will be issued under
unit agreements and will represent an interest in two or more other
securities, which may or may not be separable from one
another. The proposed maximum initial offering price per unit
will be determined, from time to time, by the Registrant in connection
with the issuance by the Registrant of the securities registered
hereunder. The securities registered also include such
indeterminate number of shares of common stock and preferred stock and
amount of debt securities as may be issued upon conversion of or exchange
for preferred stock or debt securities that provide for conversion or
exchange, upon exercise of warrants or pursuant to the anti-dilution
provisions of any such securities. In addition, pursuant to
Rule 416 under the Securities Act, the shares being registered hereunder
include such indeterminate number of shares of common stock and preferred
stock as may be issuable with respect to the shares being registered
hereunder as a result of stock splits, stock dividends or similar
transactions.
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(2)
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The
proposed maximum aggregate offering price per class of security will be
determined from time to time by the Registrant in connection with the
issuance by the Registrant of the securities registered hereunder and is
not specified as to each class of security pursuant to General Instruction
II.D. of Form S-3 under the Securities
Act.
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(3)
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Estimated
solely for purposes of calculating the registration fee in accordance with
Rule 457(o) under the Securities Act of 1933 and exclusive of accrued
interest and dividends, if any.
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The Registrant hereby amends this
Registration Statement on such date or dates as may be necessary to delay its
effective date until the Registrant shall file a further amendment that
specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933, as
amended, or until this Registration Statement shall become effective on such
date as the Commission, acting pursuant to Section 8(a), may
determine.
The
information contained in this Prospectus is not complete and may be changed. Our
selling security holders may not sell these securities until the Registration
Statement filed with the Securities and Exchange Commission becomes effective.
This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
Subject
to completion, dated June 25, 2010
Prospectus
$75,000,000
Common
Stock
Preferred
Stock
Debt
Securities
Warrants
Units
We may offer and sell from time to time
in one or more offerings shares of our common stock, shares of our preferred
stock, debt securities, and warrants to purchase shares of our common stock,
shares of our preferred stock and/or debt securities, and units comprised of one
or more shares of common stock, shares of preferred stock and warrants in any
combination, up to a total public offering price of $75,000,000. This
prospectus provides you with a general description of these securities and the
general manner in which we will offer these securities. Each time we
sell securities, we will provide a prospectus supplement that will contain
specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. You should read both this prospectus and any prospectus
supplement, together with additional information described under the headings
“INCORPORATION OF CERTAIN INFORMATION BY REFERENCE” beginning on page 1of this
prospectus and “WHERE YOU CAN FIND MORE INFORMATION” beginning on page 2 of this
prospectus, before you make your investment decision.
Our common stock is listed on the
NASDAQ Global Select Market under the symbol “SHBI”. On June 23,
2010, the closing price of our common stock on the NASDAQ Global Select Market
was $13.59 per share.
Investing in our securities involves
certain risks. See “RISK FACTORS” beginning on page 3 of this
prospectus.
________________
NEITHER THE SECURITIES AND EXCHANGE
COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF
THESE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE SECURITIES OFFERED HEREBY ARE NOT
DEPOSIT OR SAVINGS ACCOUNTS OR OTHER OBLIGATIONS OF ANY BANK OR NON-BANK
SUBSIDIARY OF SHORE BANCSHARES, INC., AND THEY ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY OR
INSTRUMENTALITY.
________________
Our principal executive office is
located at 18 East Dover Street, Easton, Maryland 21601 and our telephone number
is (410) 822-1400.
This prospectus may not be used to sell
securities unless it is accompanied by a prospectus supplement.
The
date of this Prospectus is ______________, 2010
IMPORTANT
NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS
AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We may
provide information to you about the securities we are offering in three
separate documents that progressively provide more detail:
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this
prospectus, which provides general information, some of which may not
apply to your securities;
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·
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the
accompanying prospectus supplement, which describes the terms of the
securities, some of which may not apply to your securities;
and
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·
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if
necessary, a pricing supplement, which describes the specific terms of
your securities.
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If the terms of your securities vary
among the pricing supplement, the prospectus supplement and the accompanying
prospectus, you should rely on the information in the following order of
priority:
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the
pricing supplement, if any;
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·
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the
prospectus supplement; and
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We include cross-references in this
prospectus and the accompanying prospectus supplement to captions in these
materials where you can find further related discussions. The
following Table of Contents and the Table of Contents included in the
accompanying prospectus supplement provide the pages on which these captions are
located.
___________
Unless indicated in the applicable
prospectus supplement, we have not taken any action that would permit us to
publicly sell these securities in any jurisdiction outside the United
States. If you are an investor outside the United States, you should
inform yourself about, and comply with, any restrictions as to the offering of
the securities and the distribution of this prospectus.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
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1
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INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
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1
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WHERE
YOU CAN FIND MORE INFORMATION
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2
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A
WARNING ABOUT FORWARD-LOOKING STATEMENTS
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2
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RISK
FACTORS
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3
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ABOUT
SHORE BANCSHARES, INC.
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4
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SUPERVISION
AND REGULATION
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4
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USE
OF PROCEEDS
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4
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RATIOS
WITH RESPECT TO EARNINGS
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5
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DESCRIPTION
OF OUR SECURITIES AND THE SECURITIES TO BE REGISTERED
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5
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Capital
Stock
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5
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Common
Stock
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6
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Preferred
Stock
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9
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Debt
Securities
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10
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Warrants
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17
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Units
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19
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Treasury
Warrant
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PLAN
OF DISTRIBUTION
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INDEMNIFICATION
OF OUR DIRECTORS AND OFFICERS
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LEGAL
MATTERS
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EXPERTS
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ABOUT
THIS PROSPECTUS
This prospectus is part of a
registration statement that we filed with the Securities and Exchange
Commission, or SEC, using a “shelf” registration process. Under this
shelf registration process, we may from time to time offer and sell any
combination of the securities described in the registration statement in one or
more offerings. This prospectus provides you with a general
description of the securities we may offer and sell. Each time we
offer securities under this prospectus, we will provide a prospectus supplement
that will contain more specific information about the terms of that particular
offering. A prospectus supplement may also add, update or change
information contained in this prospectus. You should carefully read
both this prospectus, especially the section entitled “RISK FACTORS” beginning
on page 3, and any prospectus supplement before making a decision to invest in
any of the securities. You should also carefully read the additional
information described below under the headings “INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE” and “WHERE YOU CAN FIND MORE INFORMATION” before
making a decision to invest in any of the securities.
We have not authorized anyone to
provide you with different information. No dealer, salesperson or
other person is authorized to give any information or to represent anything not
contained or incorporated by reference in this prospectus. You must
not rely on any unauthorized information or representation. This
prospectus is an offer to sell only the securities offered hereby, but only
under circumstances and in jurisdictions where it is lawful to do
so. You should assume that the information in this prospectus and in
any prospectus supplement is accurate only as of the date on the front of the
document and that any information we have incorporated by reference is accurate
only as of the date of the document incorporated by reference, regardless of the
time of delivery of this prospectus, any prospectus supplement or any sale of a
security.
Unless otherwise mentioned or unless
the context requires otherwise, all references in this prospectus to “Shore
Bancshares”, “the Company”, “we”, “us”, “our” and similar terms refer to Shore
Bancshares, Inc.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The SEC’s rules allow us to incorporate
by reference information into this prospectus. This means that we can
disclose important information to you by referring you to another
document. Any information referred to in this way is considered part
of this prospectus from the date we file the document. Any reports
filed by us with the SEC after the date of this prospectus and before the date
that the offering of the securities by means of this prospectus is terminated
will automatically update and, where applicable, supersede any information
contained in this prospectus or incorporated by reference in this
prospectus.
We incorporate by reference into this
prospectus the following documents and information filed with the SEC (other
than, in each case, documents or information deemed to have been furnished and
not filed in accordance with SEC rules):
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Annual
Report on Form 10-K for the year ended December 31,
2009;
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Quarterly
Report on Form 10-Q for the three-month period ended March 31,
2010;
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·
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Current
Reports on Form 8-K filed on January 4, 2010, March 3, 2010, March 30,
2010, April 21, 2010 and May 3, 2010;
and
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·
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Description
of our common stock which appears in our Registration Statement on Form
10/A filed on May 30, 1997, or any description of the common stock that
appears in any prospectus forming a part of any subsequent registration
statement of the Company or in any registration statement filed pursuant
to Section 12 of the Securities Exchange Act of 1934, as amended, or the
Exchange Act, including any amendments or reports filed for the purpose of
updating such description.
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In addition, all documents that we file
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the
date of the registration statement to which this prospectus relates and prior to
the termination of the offering of the securities to which this prospectus
relates will automatically be deemed to be incorporated by reference into this
prospectus. In no event, however, will any of the information that we
“furnish” to the SEC in any Current Report on Form 8-K from time to time be
incorporated by reference into, or otherwise be included in, this
prospectus. Any statement contained in a document incorporated or
deemed to be incorporated by reference in this prospectus shall be deemed to be
modified or superseded to the extent that a statement contained in this
prospectus or in a document subsequently filed modifies or supersedes such
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
prospectus.
We will promptly provide without charge
to each person to whom this prospectus is delivered a copy of any or all
information that has been incorporated herein by reference (not including
exhibits to the information that is incorporated by reference unless such
exhibits are specifically incorporated by reference into such information) upon
the written or oral request of such person. Written requests should
be directed to: Shore Bancshares, Inc. Corporate Secretary, 18 East
Dover Street, Easton, Maryland 21601. Telephone requests should be
directed to the Corporate Secretary at (410) 822-1400.
WHERE
YOU CAN FIND MORE INFORMATION
We have filed a registration statement
on Form S-3 with the SEC covering the securities that may be offered and sold
under this prospectus and any prospectus supplement. This prospectus
and any prospectus supplement are only a part of that registration statement and
do not contain all the information in the registration
statement. Because this prospectus and any prospectus supplement may
not contain all the information that you may find important, and because
references to contracts and other documents of Shore Bancshares made in this
prospectus or in any prospectus supplement are only summaries of those contracts
and other documents, you should review the full text of the registration
statement and the exhibits that are a part of the registration
statement. We have included copies of these contracts and other
documents as exhibits to the registration statement that contains this
prospectus.
We are subject to the information
requirements of the Exchange Act, which means we are required to file annual
reports, quarterly reports, current reports, proxy statements and other
information with the SEC. You may read and copy any document we file
with the SEC at the SEC’s public reference room in Washington, D.C., located at
100 F Street, N.E., Washington D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference
room. Our SEC filings are also available to the public from the SEC’s
Internet site at
http://www.sec.gov
and from our Internet site at
http://www.shbi.net
. However,
information found on, or otherwise accessible through, these Internet sites is
not incorporated into, and does not constitute a part of, this prospectus or any
other document we file with or furnish to the SEC. You should not
rely on any of this information in deciding whether to purchase the
securities.
A
WARNING ABOUT FORWARD-LOOKING STATEMENTS
Some of
the statements contained, or incorporated by reference, in this prospectus and
in any prospectus supplement may include projections, predictions, expectations
or statements as to beliefs or future events or results or refer to other
matters that are not historical facts. Such statements constitute
“forward-looking information” within the meaning of Section 21E of the Exchange
Act, and the Private Securities Litigation Reform Act of 1995. Those
statements are subject to known and unknown risks, uncertainties and other
factors that could cause the actual results to differ materially from those
contemplated by the statements. The forward-looking statements are
based on various factors and were derived using numerous
assumptions. In some cases, you can identify these forward-looking
statements by words like “may”, “will”, “should”, “expect”, “plan”,
“anticipate”, intend”, “believe”, “estimate”, “predict”, “potential”, or
“continue” or the negative of those words and other comparable
words. You should be aware that those statements reflect only our
predictions. If known or unknown risks or uncertainties should materialize, or
if underlying assumptions should prove inaccurate, actual results could differ
materially from past results and from those that we anticipate, estimate or
project. You should bear this in mind in reading this prospectus and
any prospectus supplement. Factors that might cause such differences
include, but are not limited to:
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unfavorable
business and economic conditions in the markets we serve, which could
decrease the demand for loan, deposit and other financial services and
increase loan delinquencies and
defaults;
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·
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changes
in market rates and prices, which may adversely impact the value of
securities, loans, deposits and other financial instruments and the
interest rate sensitivity of our balance
sheet;
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·
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changes
in our assets and liabilities, which could increase our liquidity
requirements;
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·
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legislative
or regulatory developments, including changes in laws concerning taxes,
banking, securities, insurance and other aspects of the financial services
industry;
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·
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competitive
factors among financial services organizations, including product and
pricing pressures and our ability to attract, develop and retain qualified
banking professionals;
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·
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changes
in accounting policies and practices, as may be adopted by the Financial
Accounting Standards Board, the SEC, the Public Company Accounting
Oversight Board and other regulatory agencies;
and
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·
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fiscal
and governmental policies of the United States federal government and any
changes thereto.
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We undertake no obligation to publicly
update forward-looking statements, whether as a result of new information,
future events or otherwise. You are advised, however, to consult any
further disclosures we make on related subjects in our periodic and current
reports that we file with the SEC. Also note that we provide
cautionary discussion of risks, uncertainties and possibly inaccurate
assumptions relevant to our businesses in our periodic and current reports to
the SEC incorporated by reference in this prospectus and in prospectus
supplements and other offering materials. These are factors that,
individually or in the aggregate, management believes could cause our actual
results to differ materially from expected and historical results.
We note these factors for investors as
permitted by the Private Securities Litigation Reform Act of
1995. You should understand that it is not possible to predict or
identify all such factors. Consequently, you should not consider such
disclosures to be a complete discussion of all potential risks or
uncertainties.
RISK
FACTORS
An investment in our securities
involves certain risks. You should carefully consider the risks and
uncertainties and the risk factors set forth in the documents and reports filed
with the SEC that are incorporated by reference into this prospectus, as well as
any risks described in any applicable prospectus supplement, before making an
investment decision. Our business, financial condition and/or results
of operations could be materially adversely affected by any of these
risks. The trading price of our securities could decline due to any
of these risks, and you may lose all or part of your investment. This
prospectus also contains, and any prospectus supplement may also contain,
forward-looking statements that involve risks and uncertainties. Our
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including the risks
faced by us described below and elsewhere in this prospectus and the documents
incorporated by reference in this prospectus and any prospectus
supplement.
ABOUT
SHORE BANCSHARES, INC.
Shore Bancshares is a Maryland
corporation and the largest independent financial holding company located on the
Eastern Shore of Maryland. We are the parent company of The Talbot
Bank of Easton, Maryland, a Maryland-chartered commercial bank located in
Easton, Maryland; The Centreville National Bank of Maryland, a national banking
association located in Centreville, Maryland; and The Felton Bank, a
Delaware-chartered commercial bank located in Felton, Delaware. These
bank subsidiaries operate 18 full service branches in Kent, Queen Anne’s,
Talbot, Caroline and Dorchester Counties in Maryland and Kent County,
Delaware. We engage in the insurance business through three insurance
producer subsidiaries, The Avon-Dixon Agency, LLC, Elliott Wilson Insurance, LLC
and Jack Martin Associates, Inc.; a wholesale insurance company, TSGIA, Inc.;
and two insurance premium finance subsidiaries, Mubell Finance, LLC and ESFS,
Inc.; and the mortgage broker business through our subsidiary, Wye Mortgage
Group, LLC. A detailed discussion of our business is contained in
Item 1 of Part I of our Annual Report on Form 10-K for the year ended December
31, 2009, and any subsequent reports that we file with the SEC, which are
incorporated by reference in this prospectus. See “WHERE YOU CAN FIND
MORE INFORMATION” above for information on how to obtain a copy of our annual
report and any subsequent reports.
Our principal executive office is
located at 18 East Dover Street, Easton, Maryland 21601 and our telephone number
is (410) 822-1400. We maintain an Internet site at
http://www.shbi.net
on which we make available free of charge our Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments
to the foregoing as soon as reasonably practicable after these reports are
electronically filed with, or furnished to, the SEC.
At March 31, 2010, we had consolidated
total assets of approximately $1.15 billion, total loans (net of the allowance
for credit losses) of approximately $892.40 million, total deposits of
approximately $990.75 million, and stockholders’ equity of approximately $125.11
million.
SUPERVISION
AND REGULATION
We are a financial holding company
registered under the federal Bank Holding Company Act of 1956, as
amended. We and our bank subsidiaries are extensively regulated under
federal and state laws. The regulation of financial holding companies
and banks is intended primarily for the protection of depositors and the deposit
insurance fund and not for the benefit of security holders. For a
discussion of the material elements of the extensive regulatory framework
applicable to us and our bank subsidiaries, please refer to Item 1 of Part I of
our Annual Report on Form 10-K for the year ended December 31, 2009 under the
heading “Supervision and Regulation” and any subsequent reports that we file
with the SEC, which are incorporated by reference in this
prospects. See “WHERE YOU CAN FINE MORE INFORMATION” above for
information on how to obtain a copy of our Form 10-K and any subsequent
reports.
USE
OF PROCEEDS
Except as we may indicate otherwise in
a prospectus supplement accompanying this prospectus, we intend to use the
proceeds from the sale of the securities for acquisitions, capital expenditures,
repayment of indebtedness we may incur in the future, working capital and other
general corporate purposes. Before we use the proceeds for these
purposes, we may invest them in short-term investments. If we decide
to use the proceeds from a particular offering of the securities for a specific
purpose, we will describe that purpose in the related prospectus
supplement.
RATIOS
WITH RESPECT TO EARNINGS
The following table sets forth our
ratio of earnings to fixed charges and our ratio of earnings to combined fixed
charges and preference dividends, in each case on a historical basis for the
periods indicated. For purposes of this calculation: (i)
“earnings” consists of income from continuing operations before income taxes
plus fixed charges and amortization of capitalized interest, less interest
capitalized; (ii) “fixed charges” consists of the sum of interest expense,
interest capitalized, amortized premiums, discounts and capitalized expenses
related to indebtedness, the component of rental expense deemed to represent
interest, and preference security dividend requirements of our consolidated
subsidiaries; and (iii) “preference security dividends” consists of the amounts
of pre-tax earnings that are required to pay the dividends on outstanding
preference securities.
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Three Months
Ended
March 31,
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Year Ended December 31,
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2010
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2009
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2008
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2007
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2006
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2005
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Ratio
of Earnings to Fixed Charges
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Including
interest on deposits
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0.22
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1.67
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1.86
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1.89
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2.14
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2.74
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Excluding
interest on deposits
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(54.44
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)
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30.73
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12.06
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9.89
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|
|
|
12.16
|
|
|
|
27.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio
of Earnings to Combined Fixed Charges and Preference
Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Including
interest on deposits
|
|
|
(1
|
)
|
|
|
1.51
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
Excluding
interest on deposits
|
|
|
(1
|
)
|
|
|
5.32
|
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
|
|
(1
|
)
|
(1)
|
We
did not have any preferred stock authorized or outstanding during these
periods, so the ratios are as set forth under “Ratio of Earnings to Fixed
Charges”.
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DESCRIPTION
OF OUR SECURITIES AND THE SECURITIES TO BE REGISTERED
This prospectus relates to the offer
and sale of shares of
our common
stock, shares of our preferred stock, debt securities, and warrants to purchase
shares of our common stock, shares of our preferred stock and/or debt
securities, and units comprised of one or more shares of common stock, shares of
preferred stock and warrants in any combination.
The following
is a summary of the general terms of our capital stock, the securities covered
by this prospectus, and an outstanding common stock purchase warrant issued to
the United States Department of the Treasury, or the Treasury. The
full terms of our capital stock, the securities covered by this prospectus, and
the warrant issued to the Treasury are set forth in Exhibit 3.1(i) through
Exhibit 4.11, inclusive, to the registration statement that contains this
prospectus, which are incorporated by reference in this
prospectus. Unless expressly stated otherwise, the following summary
does not give effect to provisions of applicable statutory or common
law.
Capital
Stock
We are authorized by our Amended and
Restated Articles of Incorporation, or Charter, to issue up to 35,000,000 shares
of capital stock, par value $.01 per share, all of which are currently
classified as shares of common stock. Our Charter generally permits
the Board of Directors of the Company to increase or decrease the number of
authorized shares of capital stock of any class or series without the approval
of our stockholders. Our Charter also generally permits the Board to
classify and reclassify any unissued shares of capital stock of any class or
series by setting or changing in any one or more respects the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications, or terms or conditions of redemption of the shares of
stock.
Common
Stock
As of May 30, 2010, we had 8,443,436
shares of common stock issued and outstanding held by approximately 1,672 owners
of record. We anticipate that the shares of common stock covered by
this prospectus will be listed on The NASDAQ Global Select Market under the
symbol “SHBI”.
The following section describes the
material features and rights of our common stock. The summary does
not purport to be exhaustive and is qualified in its entirety by reference to
our Charter, as supplemented, and Amended and Restated Bylaws, as amended, which
have been filed as exhibits to the registration statement of which this
prospectus is a part, and to applicable Maryland law, including the Maryland
General Corporation Law, or the MGCL.
General
The holders of our common stock are
entitled to one vote for each share held of record on all matters submitted to a
vote of stockholders. Holders of shares of common stock are not
entitled to cumulative voting rights in the election of
directors. Subject to preferences that may be applicable to any
outstanding preferred stock, holders of common stock are entitled to receive
ratable dividends which are declared by our Board of Directors out of funds
legally available for such a purpose.
We are subject to various bank
regulatory policies and requirements relating to the payment of dividends,
including requirements to maintain adequate capital above regulatory
minimums. Our ability to pay dividends to holders of the common stock
is largely dependent upon our receipt of dividends from our bank
subsidiaries. Both federal and state laws impose restrictions on the
ability of banks to pay dividends. Federal law prohibits the payment
of a dividend by an insured depository institution if the depository institution
is considered “undercapitalized” or if the payment of the dividend would make
the institution “undercapitalized”. Maryland state-chartered banks
may pay dividends only out of undivided profits or, with the prior approval of
the Maryland Commissioner, from surplus in excess of 100% of required capital
stock. If, however, the surplus of a Maryland bank is less than 100%
of its required capital stock, then cash dividends may not be paid in excess of
90% of net earnings. National banking associations are generally
limited, subject to certain exceptions, to paying dividends out of undivided
profits. Delaware state-chartered banks may pay dividends only out of
net profits, and then only if its surplus fund is equal to or greater than 50%
of its required capital stock. If a Delaware bank’s surplus is less
than 100% of capital stock when it declares a dividend, then it must carry 25%
of its net profits of the preceding period for which the dividend is paid to its
surplus fund until the surplus amounts to 100% of its capital
stock. In addition to these specific restrictions, bank regulatory
agencies have the ability to prohibit a proposed dividend by a financial
institution that would otherwise be permitted under applicable law if the
regulatory body determines that the payment of the dividend would constitute an
unsafe or unsound banking practice.
As a general corporate law matter, the
MGCL prohibits us from paying dividends on shares of the common stock unless,
after giving effect to a proposed dividend, (a) we will be able to pay our debts
as they come due in the normal course of business and (b) our total assets will
be greater than our total liabilities plus, unless our Charter permits
otherwise, the amount that would be needed, if we were to be dissolved at the
time of the dividend, to satisfy the preferential rights upon dissolution of
stockholders whose preferential rights on dissolution are superior to those
receiving the dividend. Currently, we have no authorized class of
capital stock with preferential rights upon dissolution that are superior to the
common stock.
In the event of our liquidation,
dissolution or winding up, holders of common stock are entitled to share ratably
in all assets remaining after payment of liabilities and liquidation
preferences, if any, on any outstanding shares of preferred
stock. Holders of common stock have no preemptive rights and have no
rights to convert their common stock into any other securities. The
common stock is not redeemable. All of the outstanding shares of our
common stock are fully paid and nonassessable.
The Transfer Agent for the common stock
is Registrar & Transfer Company.
Anti-Takeover
Provisions under Maryland Law, Our Charter and Our Bylaws
The provisions of Maryland law and our
Charter and Bylaws we summarize below may have an anti-takeover effect and may
delay, defer or prevent a tender offer or takeover attempt that a stockholder
might consider in his or her best interest, including those attempts that might
result in a premium over the market price for the common stock.
Business Combinations under Maryland
Law
. The Maryland Business Combination Act generally prohibits
corporations from being involved in any “business combination” (defined as a
variety of transactions, including a merger, consolidation, share exchange,
asset transfer or issuance or reclassification of equity securities) with any
“interested stockholder” for a period of five years following the most recent
date on which the interested stockholder became an interested
stockholder. An interested stockholder is defined generally as a
person who is the beneficial owner of 10% or more of the voting power of the
outstanding voting stock of the corporation after the date on which the
corporation had 100 or more beneficial owners of its stock or who is an
affiliate or associate of the corporation and was the beneficial owner, directly
or indirectly, of 10% percent or more of the voting power of the then
outstanding stock of the corporation at any time within the two-year period
immediately prior to the date in question and after the date on which the
corporation had 100 or more beneficial owners of its stock.
A business combination that is not
prohibited must be recommended by the board of directors and approved by the
affirmative vote of at least 80% of the votes entitled to be cast by outstanding
shares of voting stock of the corporation, voting together as a single voting
group and two-thirds of the votes entitled to be cast by holders of voting stock
other than voting stock held by the interested stockholder who will (or whose
affiliate will) be a party to the business combination or by an affiliate or
associate of the interested stockholder, voting together as a single voting
group, unless, among other things, the corporation’s stockholders receive a
minimum price, as defined in the Maryland Business Combination Act for their
shares, in cash or in the same form as paid by the interested stockholder for
its shares. These provisions will not apply if the board of directors
has exempted the transaction in question or the interested stockholder prior to
the time that the interested stockholder became an interested
stockholder. In addition, the board of directors may adopt a
resolution approving or exempting specific business combinations, business
combinations generally, or generally by type, as to specifically identified or
unidentified existing or future stockholders or their affiliates from the
business combination provisions of the Maryland Business Combination
Act.
Control Share
Acquisitions
. The Maryland Control Share Acquisition Act
generally provides that “control shares” of a corporation acquired in a “control
share acquisition” have no voting rights except to the extent approved by the
stockholders at a meeting by the affirmative vote of two-thirds of all the votes
entitled to be cast on the matter, excluding all interested
shares. “Control shares” are shares of stock that, if aggregated with
all other shares of stock of the corporation previously acquired by a person or
in respect of which that person is entitled to exercise or direct the exercise
of voting power, except solely by virtue of a revocable proxy, entitle that
person, directly or indirectly, to exercise or direct the exercise of the voting
power of shares of stock of the corporation in the election of directors within
any of the following ranges of voting power: one-tenth or more, but
less than one-third of all voting power; one-third or more, but less than a
majority of all voting power or a majority or more of all voting
power. “Control share acquisition” means the acquisition, directly or
indirectly, of control shares, subject to certain exceptions. If
voting rights or control shares acquired in a control share acquisition are not
approved at a stockholders’ meeting, then, subject to certain conditions, the
issuer may redeem any or all of the control shares for fair value. If
voting rights of such control shares are approved at a stockholders’ meeting and
the acquiror becomes entitled to vote a majority of the shares of stock entitled
to vote, all other stockholders may exercise appraisal rights.
Our Bylaws contain a provision exempting all
shares of our capital stock from the Maryland Control Share Acquisition
Act.
Preference Stock
Authorization
. As noted above under the heading “Capital
Stock”, the Charter gives our Board of Directors the authority to, without
stockholder approval, create and issue a class or series of capital stock with
rights superior to the rights of the holders of our common stock. As
a result, this “blank check” stock, while not intended as a defensive measure
against takeovers, could be issued quickly and easily, could adversely affect
the rights of holders of common stock and could be issued with terms calculated
to delay or prevent a change of control of the Company or make removal of
management more difficult.
Advance Notice Procedure for
Stockholder Proposals.
Our Charter and Bylaws allow
stockholders to submit director nominations and stockholder
proposals. For nominations and proposals to properly come before the
meeting, however, the proposing stockholder must have given timely notice in
writing to the Secretary of Shore Bancshares.
For an annual meeting, notice of
intention to make a director nomination must be delivered or mailed to the
Secretary at Shore Bancshares’ principal executive offices not less than 120
days nor more than 180 days prior to the meeting called for the election of
directors. In the event that the date of the annual meeting is
advanced by more than 30 days or delayed by more than 60 days from the
anniversary date of the preceding year’s annual meeting, notice by the
stockholder must be delivered not earlier than the 180th day prior to such
annual meeting and no later than close of business on the later of the 120
th
day
prior to such annual meeting of the 10
th
day
following the day on which public announcement of the date of such annual
meeting is first made. In the case of a special meeting called for
the purpose of electing directors, a stockholder’s notice must be given not
later than the close of business on the 10
th
day
following the day on which notice of the date of the special meeting was mailed
or public announcement of the meeting was made, which ever occurs
first. Notice to the secretary shall set forth:
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the
name and address of each proposed
nominee;
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the
principal occupation of each proposed
nominee;
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the
number of shares of capital stock of Shore Bancshares owned by each
proposed nominee;
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the
name and residence address of the notifying
stockholder;
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the
number of shares of capital stock of Shore Bancshares owned by the
notifying stockholder;
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the
consent in writing of the proposed nominee as to the proposed nominee’s
name being placed in nomination for
director;
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a
description of all arrangements or understandings between the stockholder
and nominee and any other person(s) (including their names) pursuant to
which the nomination is made;
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a
representation that such stockholder intends to appear in person or by
proxy at the meeting to make the nomination;
and
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any
other information relating to the nominee required to be disclosed in a
proxy statement in connection with solicitation of proxies for election of
directors by Regulation 14A under the Exchange Act and Rule 14a-11
promulgated thereunder.
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A stockholder proposal will be timely
if it is delivered or mailed and received by the Secretary at Shore Bancshares’
principal executive offices not less than 60 days nor more than 90 days prior to
the first anniversary of the preceding year’s annual meeting. If,
however, the date of the annual meeting is advanced by more than 30 days or
delayed by more than 60 days from the anniversary date of the preceding year’s
annual meeting, then notice by the stockholder must be so delivered not earlier
than the 90
th
day
prior to such annual meeting and not later than the close of business on the
later of the 60
th
day
prior to such annual meeting or the tenth day following the day on which public
announcement of the date of such meeting is first made. Notice to the
Secretary shall set forth as to each proposal:
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a
brief description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the
meeting;
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the
name and address of such stockholder as they appear on Shore Bancshares’
books and of the beneficial owner, if any, on whose behalf the proposal is
made;
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the
class or series and number of shares of capital stock of Shore Bancshares
owned beneficially or of record by such stockholder and such beneficial
owner;
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a
description of all arrangements or understandings between the stockholder
and any other person(s) (including their names) in connection with the
proposal and any material interest of such stockholder in such business;
and
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a
representation that such stockholder intends to appear in person or by
proxy at the meeting to make the
proposal.
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Classified Board; Removal of
Directors.
Our Charter provides that the members of our Board
of Directors are divided into three classes as nearly equal as
possible. Each class is elected for a three-year term. At
each annual meeting of stockholders, approximately one-third of the members of
the Board are elected for a three-year term and the other directors remain in
office until their three-year terms expire. Our Bylaws provide that
no director may be removed without cause, and that any removal for cause
requires the affirmative vote of the holders of at least a majority of the
entire Board of Directors or at least a majority of the voting power of the
outstanding capital stock entitled to vote for the election of
directors. Thus, control of the Board of Directors cannot be changed
in one year without removing the directors for cause as described above; rather,
at least two annual meetings must be held before a majority of the members of
the Board could be changed. An amendment or repeal of these
provisions requires the approval of at least 80% of the aggregate votes entitled
to be cast on the matter.
Preferred
Stock
All of our authorized capital stock is
currently classified as common stock. As stated above, however, our
Charter gives the Board of Directors the authority to, without stockholder
approval, create a class or series of capital stock, such as preferred stock,
with rights superior to the rights of the holders of our common
stock. Prior to the issuance of any shares of preferred stock, our
Board would authorize such preferred stock by classifying authorized but
unissued shares of common stock as one or more classes or series of preferred
stock and approve the rights, preferences, privileges and restrictions
applicable to such class or series of preferred stock, including the dividend
rate, the time of payment for dividends, whether such dividends shall be
cumulative or non-cumulative, and the date or dates from which any cumulative
dividends will begin to accrue, redemption terms (including sinking fund
provisions), redemption price or prices, liquidation preferences, the extent of
the voting powers, if any, and conversion rights. The terms of any
class or series of preferred stock so created would be set forth in Articles
Supplementary, which we would file with the State Department of Assessments and
Taxation of Maryland. The prospectus supplement will describe the
specific terms of any preferred stock we offer. To the extent any
preferred stock we offer has general voting rights, or voting rights with
respect to the election of directors, the anti-takeover provisions discussed
above in the “Common Stock” section would apply to such preferred
stock. All of the shares of preferred stock offered by us, when
issued and paid for, will be fully paid and not subject to further call or
assessment by us.
Debt
Securities
If we issue any debt securities offered
by this prospectus and any accompanying prospectus supplement, we will issue
them under an indenture to be entered into by the Company and a trustee to be
identified in the applicable prospectus supplement, as trustee. The
terms of the debt securities will include those stated in the indenture and
those made part of the indenture by reference to the Trust Indenture Act of
1939, as in effect on the date of the indenture. We have filed a copy
of the proposed form of indenture as an exhibit to the registration statement
that contains this prospectus. Each indenture will be subject to and
governed by the terms of the Trust Indenture Act of 1939. Unless
otherwise specified in the applicable prospectus supplement, the debt securities
will represent direct, unsecured obligations of the Company and will rank
equally with all of our other unsecured indebtedness, if any. The
following statements relating to the debt securities and the indenture are
summaries only. These summaries are subject in their entirety to the
detailed provisions of the indenture. For complete information, we urge you to
read the actual documents.
General
We may issue the debt securities in one
or more series with the same or various maturities, at par, at a premium, or at
a discount. We will describe the particular terms of each series of debt
securities in a prospectus supplement relating to that series, which we will
file with the SEC. To review the terms of a series of debt securities, you must
refer to both the prospectus supplement for the particular series and to the
description of debt securities in this prospectus.
The prospectus supplement will set
forth the following terms of the debt securities in respect of which this
prospectus is delivered:
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the
aggregate principal amount and whether there is any limit on the aggregate
principal amount that we may subsequently
issue;
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the
issue price or prices (expressed as a percentage of the principal amount
thereof);
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the
date or dates on which principal is
payable;
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·
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the
interest rate or rates (which may be fixed or variable), or, if
applicable, the method used to determine such rate or
rates;
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the
date or dates from which the interest, if any, will accrue and the date or
dates on which such interest, if any, shall commence and be payable and
any regular record date for the interest
payable;
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the
place or places where principal (and premium, if any) and interest, if
any, is payable or the method of such payment, if by wire transfer, mail
or other means;
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the
period or periods within which, the price or prices at which and the terms
and conditions upon which we may redeem the debt
securities;
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our
obligation, if any, to redeem or purchase the debt securities pursuant to
any sinking fund or analogous provisions or at the option of a holder of
such debt security and the period or periods within which, the price or
prices at which and the terms and conditions upon which such debt
securities shall be redeemed or purchased, in whole or in part, pursuant
to such obligation;
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the
dates, if any, on which and the price or prices at which we will
repurchase the debt security at the option of the holders of such debt
security and other terms and provisions of such repurchase
obligations;
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the
denominations in which the debt securities may be
issuable;
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whether
the debt securities are to be issuable in the form of certificated debt
securities (as described below) or global debt securities (as described
below);
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the
portion of principal amount that will be payable upon declaration of
acceleration of the maturity date in the case of debt securities issued at
a discount from their face amount;
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the
currency of denomination;
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the
designation of the currency, currencies or currency units in which payment
of principal (and premium, if any) and interest, if any, will be
made;
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if
payments of principal (and premium, if any) and interest, if any, on the
debt securities are to be made in one or more currencies or currency units
other than the currency of denomination, the manner in which the exchange
rate with respect to these payments will be
determined;
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if
amounts of principal (and premium, if any) and interest, if any, may be
determined (a) by reference to an index based on a currency or currencies
other than the currency of denomination or designation or (b) by reference
to a commodity, commodity index, stock exchange index or financial index,
then the manner in which these amounts will be
determined;
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the
provisions, if any, relating to any security provided for the debt
securities;
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any
addition to or change in the covenants in the
indenture;
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any
addition to or change in the events of default and/or the acceleration
provisions described in the
indenture;
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the
terms and conditions for conversion into or exchange for shares of common
stock or preferred stock;
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any
other terms, which may modify or delete any provision of the indenture
insofar as it applies to that
series;
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any
depositaries, interest rate calculation agents, exchange rate calculation
agents or other agents;
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the
terms and conditions, if any, upon which the debt securities and any
guarantees thereof shall be subordinated in right of payment to our other
indebtedness, if any, or other indebtedness of any
guarantor;
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any
provisions relating to covenant defeasance and legal defeasance;
and
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the
form and terms of any guarantee of the debt
securities.
|
We may issue discount debt securities
that provide for an amount less than the stated principal amount to be due and
payable upon acceleration of the maturity of the debt securities in accordance
with the terms of the indenture. We may also issue debt securities in bearer
form, with or without coupons. If we issue discount securities or debt
securities in bearer form, we will describe United States federal income tax
considerations and other special considerations that apply to the debt
securities in the applicable prospectus supplement. We may issue debt securities
denominated in or payable in a foreign currency or currencies or a foreign
currency unit or units. If we do so, we will describe the restrictions,
elections, general tax considerations, specific terms and other information with
respect to the issue of debt securities and the foreign currency or currencies
or foreign currency unit or units in the applicable prospectus
supplement.
Exchange
and/or Conversion Rights
If we issue debt securities that may be
exchanged for or converted into shares of common stock or preferred stock, we
will describe the terms of exchange or conversion in the prospectus supplement
relating to those debt securities.
Transfer
and Exchange
We may issue debt securities that will
be represented by either:
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“book-entry
securities”, which means that there will be one or more global securities
registered in the name of The Depository Trust Company, as depository, or
a nominee of the depository; or
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“certificated
securities”, which means that they will be represented by a certificate
issued in definitive registered
form.
|
We will specify in the prospectus
supplement applicable to a particular offering whether the debt securities
offered will be book-entry or certificated securities.
Certificated
Debt Securities
If you hold certificated debt
securities that have been offered by this prospectus, you may transfer or
exchange them at the trustee’s office or at the paying agency in accordance with
the terms of the indenture. You will not be charged a service charge
for any transfer or exchange of certificated debt securities, but may be
required to pay an amount sufficient to cover any tax or other governmental
charge payable in connection with the transfer or exchange.
You may effect the transfer of
certificated debt securities and of the right to receive the principal of (and
premium, if any) and interest, if any, on your certificated debt securities only
by surrendering the certificate representing your certificated debt securities
and having us or the trustee issue a new certificate to the new
holder.
Global
Debt Securities and Book Entry System
If we decide to issue debt securities
in the form of one or more global securities, then we will register the global
securities in the name of the depositary for the global securities or the
nominee of the depositary and the global securities will be delivered by the
trustee to the depositary for credit to the accounts of the holders of
beneficial interests in the debt securities.
The prospectus supplement or term sheet
will describe the specific terms of the depositary arrangement for debt
securities of a series that are issued in global form. None of our company, the
trustee, any payment 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 in a global debt
security or for maintaining, supervising or reviewing any records relating to
these beneficial ownership interests.
No
Protection in the Event of Change of Control
The indenture does not provide for a
put or increased interest or otherwise that would give holders of debt
securities additional protection in the event of a recapitalization transaction,
a change of control or a highly leveraged transaction. If we offer this type of
provision with respect to any debt securities in the future, we will describe it
in the applicable prospectus supplement.
Covenants
Unless otherwise indicated in this
prospectus or a prospectus supplement, the debt securities will not have the
benefit of any covenants that limit or restrict our business or operations, the
pledging of our assets or the incurrence by us of additional
indebtedness.
Consolidation,
Merger and Sale of Assets
We will agree in the indenture not to
consolidate with or merge into any other person or convey, transfer, sell or
lease all or substantially all of our properties and assets to any person,
unless:
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either
(a) in the case of a merger or consolidation, we are the surviving person,
or (b) the person formed by the consolidation or into or with which we are
merged or the person to which our properties and assets are conveyed,
transferred, sold or leased, is a corporation organized and existing under
the laws of the United States, any State thereof or the District of
Columbia and such person has expressly assumed all of our obligations,
including the payment of the principal of (and premium, if any) and
interest, if any, on the debt securities and the performance of the other
covenants under the indenture; and
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immediately
before and immediately after giving effect to the transaction, no event of
default, and no event which, after notice or lapse of time or both, would
become an event of default, has occurred and is continuing under the
indenture.
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Events
of Default
Unless otherwise specified in the
applicable prospectus supplement, the following events will be events of default
under the indenture with respect to debt securities of any series:
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we
fail to pay any principal or premium, if any, when it becomes
due;
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we
fail to pay any interest within 30 days after it becomes
due;
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we
fail to observe or perform any other covenant in the debt securities or
the indenture for 90 days after written notice from the trustee or the
holders of not less than 25% in aggregate principal amount of the
outstanding debt securities of that series;
and
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certain
events occur involving bankruptcy, insolvency or
reorganization.
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The trustee may withhold notice to the
holders of the debt securities of any series of any default, except in payment
of the principal of (and premium, if any) and interest, if any, on the debt
securities of that series, if the trustee considers it to be in the interest of
the holders of the debt securities of that series to do so. If an
event of default (other than an event of default resulting from certain events
of bankruptcy, insolvency or reorganization) occurs, and is continuing, then the
trustee or the holders of not less than 25% in aggregate principal amount of the
outstanding debt securities of any series may accelerate the maturity of the
debt securities.
If this happens, the entire principal
amount of all the outstanding debt securities of that series plus accrued
interest to the date of acceleration will be immediately due and payable. At any
time after an acceleration, but before a judgment or decree based on the
acceleration is obtained by the trustee, the holders of a majority in aggregate
principal amount of outstanding debt securities of that series may rescind and
annul the acceleration if (a) all events of default (other than nonpayment of
accelerated principal, premium or interest) have been cured or waived, (b) all
overdue interest and overdue principal has been paid and (c) the rescission
would not conflict with any judgment or decree.
If an event of default resulting from
certain events of bankruptcy, insolvency or reorganization occurs, the
principal, premium and interest amount with respect to all of the debt
securities of any series shall be due and payable immediately without any
declaration or other act on the part of the trustee or the holders of the debt
securities of that series. Subject to certain limitations specified
in the indenture, the holders of a majority in principal amount of the
outstanding debt securities of a series shall have the right to waive any
existing default or compliance with any provision of the indenture or the debt
securities of that series.
No holder of any debt security of a
series will have any right to institute any proceeding or pursue any remedy with
respect to the indenture or the debt securities of that series,
unless:
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the
holder gives to the trustee written notice of a continuing event of
default;
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the
holders of at least 25% in aggregate principal amount of the outstanding
debt securities of that series make a written request and offer reasonable
indemnity to the trustee to pursue the
remedy;
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the
trustee fails to comply with the request within 60 days of the receipt of
the request and the offer of indemnity;
and
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the
holders of a majority in aggregate principal amount of the outstanding
debt securities of that series have not given the trustee a direction
inconsistent with such written request during the 60-day
period.
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However, these limitations do not apply
to a suit instituted for payment on debt securities of any series on or after
the due dates expressed in the debt securities.
Modification
and Waiver
From time to time, we and the trustee
may, without the consent of holders of the debt securities of one or more
series, amend the indenture or the debt securities of one or more series, or
supplement the indenture, for certain specified purposes,
including:
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to
provide that the surviving entity following a change of control permitted
under the indenture shall assume all of our obligations under the
indenture and debt securities;
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to
provide for uncertificated debt securities in addition to certificated
debt securities;
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to
comply with any requirements of the SEC under the Trust Indenture Act of
1939;
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to
cure any ambiguity, defect or inconsistency, or make any other change that
does not adversely affect the rights of any
holder;
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to
issue and establish the form and terms and conditions of debt securities
of any series as permitted by the indenture;
and
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to
appoint a successor trustee under the indenture with respect to one or
more series.
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From time to time, we and the trustee
may, with the consent of holders of at least a majority in principal amount of
the outstanding debt securities of any series, amend or supplement the indenture
or the debt securities of such series, or waive compliance in a particular
instance by us with any provision of the indenture or the debt securities of
such series. However, without the consent of each holder affected by the action,
we may not modify or supplement the indenture or the debt securities or waive
compliance with any provision of the indenture or the debt securities
to:
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reduce
the amount of debt securities whose holders must consent to an amendment,
supplement, or waiver to the indenture or the debt
security;
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reduce
the rate of or change the time for payment of interest on any debt
security;
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reduce
the principal or change the stated maturity of any debt security or reduce
the amount of, or postpone the date fixed for, the payment of any sinking
fund or analogous obligation;
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make
any debt security payable in money other than that stated in the debt
security;
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change
the amount or time of any payment required by the debt security or reduce
the premium payable upon any redemption of the debt security, or change
the time before which no such redemption may be
made;
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waive
a default or event of default in the payment of the principal of (and
premium, if any) and interest, if any, on any debt security, except as
specified in the indenture;
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waive
a redemption payment with respect to any debt security or change any of
the provisions with respect to the redemption of any debt
security;
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make
any changes in the sections of the indenture relating to waiver of past
defaults, the rights of holders to receive payment of the principal of
(and premium, if any) and interest, if any, on any debt security, or
amendments of or supplements to the indenture or any debt security that
require the consent of the holders, except as specified in the indenture;
or
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take
any other action otherwise prohibited by the indenture to be taken without
the consent of each holder affected by that
action.
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Defeasance
and Discharge of Debt Securities and Certain Covenants in Certain
Circumstances
The indenture permits us, at any time,
to elect to discharge our obligations with respect to one or more series of debt
securities by following certain procedures described in the
indenture. These procedures will allow us either:
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to
defease and be discharged from any and all of our obligations with respect
to any debt securities except for the following obligations (which
discharge is referred to as “legal
defeasance”):
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(1)
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to
register the transfer or exchange of the debt
securities;
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(2)
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to
replace temporary or mutilated, destroyed, lost or stolen debt
securities;
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(3)
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to
compensate and indemnify the trustee;
or
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(4)
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to
maintain an office or agency in respect of the debt securities and to hold
monies forpayment in trust; or
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to
be released from our obligations with respect to the debt securities under
certain covenants contained in the indenture, as well as any additional
covenants which may be contained in the applicable prospectus supplement
(which release is referred to as “covenant
defeasance”).
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To exercise either defeasance option,
we must deposit with the trustee or other qualifying trustee, in trust for this
purpose:
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U.S.
Government Obligations (as described below) or Foreign Government
Obligations (as described below) which through the scheduled payment of
principal and interest in accordance with their terms will provide money;
or
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a
combination of money and/or U.S. Government Obligations and/or Foreign
Government Obligations sufficient in the written opinion of a
nationally-recognized firm of independent accountants to provide
money;
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which, in
each case, provides a sufficient amount to pay the principal of (and premium, if
any) and interest, if any, on the debt securities of a series, on the scheduled
due dates or on a selected date of redemption in accordance with the terms of
the indenture.
In addition, defeasance may be effected
only if, among other things:
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in
the case of either legal or covenant defeasance, we deliver to the trustee
an opinion of counsel, as specified in the indenture, stating that as a
result of the defeasance neither the trust nor the trustee will be
required to register as an investment company under the Investment Company
Act of 1940;
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in
the case of legal defeasance, we deliver to the trustee an opinion of
counsel stating that we have received from, or there has been published
by, the Internal Revenue Service a ruling to the effect that, or there has
been a change in any applicable federal income tax law with the effect
that, and the opinion shall confirm that, the holders of outstanding debt
securities will not recognize income, gain or loss for United States
federal income tax purposes solely as a result of the legal defeasance and
will be subject to United States federal income tax on the same amounts,
in the same manner, including as a result of prepayment, and at the same
times as would have been the case if a legal defeasance had not
occurred;
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in
the case of covenant defeasance, we deliver to the trustee an opinion of
counsel to the effect that the holders of the outstanding debt securities
will not recognize income, gain or loss for United States federal income
tax purposes as a result of the covenant defeasance and will be subject to
United States federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if a covenant defeasance
had not occurred; and
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certain
other conditions described in the indenture are
satisfied.
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If we fail to comply with our remaining
obligations under the indenture and applicable supplemental indenture after a
covenant defeasance of the indenture and applicable supplemental indenture, and
the debt securities are declared due and payable because of the occurrence of
any undefeased event of default, the amount of money and/or U.S. Government
Obligations and/or Foreign Government Obligations on deposit with the trustee
could be insufficient to pay amounts due under the debt securities of that
series at the time of acceleration. We will, however, remain liable in respect
of these payments.
The term “U.S. Government Obligations”
as used in the above discussion means securities which are direct non-callable
obligations of, or non-callable obligations guaranteed by, the United States of
America for the payment of which obligation or guarantee the full faith and
credit of the United States of America is pledged. The term “Foreign Government
Obligations” as used in the above discussion means, with respect to debt
securities of any series that are denominated in a currency other than U.S.
dollars (a) direct obligations of the government that issued or caused to be
issued the currency for the payment of which obligations its full faith and
credit is pledged or (b) obligations of a person controlled or supervised by or
acting as an agent or instrumentality of that government the timely payment of
which is unconditionally guaranteed as a full faith and credit obligation by
that government, which in either case under clauses (a) or (b) are not callable
or redeemable at the option of the issuer.
The
Trustee
We will identify the trustee with
respect to any series of debt securities in the prospectus supplement relating
to the debt securities. You should note that if the trustee becomes a creditor
of ours, the indenture and the Trust Indenture Act of 1939 limit the rights of
the trustee to obtain payment of claims in certain cases, or to realize on
certain property received in respect of certain claims, as security or
otherwise. The trustee and its affiliates may engage in, and will be permitted
to continue to engage in, other transactions with us and our affiliates. If,
however, the trustee acquires any “conflicting interest” within the meaning of
the Trust Indenture Act of 1939, it must eliminate the conflict or
resign.
Generally, the holders of a majority in
principal amount of the debt securities then outstanding of any series may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the trustee. If an event of default occurs and is
continuing, the trustee, in the exercise of its rights and powers, must use the
degree of care and skill of a prudent person in the conduct of his or her own
affairs. Subject to this provision, the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
of the holders of the debt securities, unless they have offered to the trustee
reasonable indemnity or security.
Warrants
We may issue warrants, including
warrants to purchase debt securities, common stock or preferred stock or any
combination of the foregoing. Warrants may be issued independently or together
with any other securities offered by this prospectus and may be attached to or
separate from the other securities. If warrants are issued, they will be issued
under warrant agreements to be entered into between us and a bank or trust
company, as warrant agent, all of which will be described in the prospectus
supplement relating to warrants being offered.
A prospectus supplement relating to any
warrants being offered will include specific terms relating to the offering,
including a description of any other securities sold together with the warrants.
Such terms will include:
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the
title of the warrants;
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the
aggregate number of the warrants;
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the
price or prices at which the warrants will be
issued;
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the
currencies in which the price or prices of the warrants may be
payable;
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the
designation, amount, and terms of the debt securities, common stock or
preferred stock purchasable upon exercise of the warrants and procedures
by which those numbers may be
adjusted;
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the
designation and terms of the other offered securities, if any, with which
the warrants are issued and the number of the warrants issued with each
security;
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if
applicable, the date on and after which the warrants and the offered
securities purchasable upon exercise of the warrants will be separately
transferable;
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the
price or prices at which the offered securities purchasable upon exercise
of the warrants may be purchased;
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the
date on which the right to exercise the warrants shall commence and the
date on which the right shall
expire;
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the
minimum or maximum amount of the warrants that may be exercised at any one
time;
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any
terms relating to the modification of the warrants, including adjustments
in the exercise price;
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information
with respect to book-entry procedures, if
any;
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a
discussion of any material federal income tax considerations;
and
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any
other material terms of the warrants, including terms, procedures, and
limitations relating to the transferability, exchange, exercise or
redemption of the warrants.
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The descriptions of the warrant
agreements in this prospectus and in any prospectus supplement are summaries of
the applicable provisions of the applicable agreements. These descriptions do
not restate those agreements in their entirety and do not contain all of the
information that you may find useful. We urge you to read the applicable
agreements because they, and not the summaries, define your rights as holders of
the warrants. For more information, please review the form of the relevant
agreements, which we will file with the SEC and will be available as described
in the heading “WHERE YOU CAN FIND MORE INFORMATION” above.
Units
We may issue units comprised of one or
more shares of common stock, shares of preferred stock, debt securities and
warrants in any combination. Each unit will be issued so that the holder of the
unit is also the holder of each security included in the unit. Thus,
the holder of a unit will have the rights and obligations of a holder of each
included security. If units are issued, they will be issued under unit
agreements to be entered into between us and a unit agent, as detailed in the
prospectus supplement relating to the units being offered. The unit agreement
under which a unit is issued may provide that the securities included in the
unit may not be held or transferred separately at any time or before a specified
date. A prospectus supplement relating to any units being offered will include
specific terms relating to the offering, including a description of any
securities included in each unit. Such terms will
include:
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the
designation and terms of the units, and the terms of any of the debt
securities, common stock, preferred stock and warrants comprising the
units, including whether and under what circumstances those securities may
be held or transferred separately;
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a
description of the terms of any unit agreement governing the
units;
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a
description of the provisions for the issuance, payment, settlement,
transfer or exchange of the units or of the securities comprising the
units;
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a
discussion of material federal income tax considerations, if applicable;
and
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whether
the units will be issued in fully registered or in global
form.
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The descriptions of the units in this
prospectus and in any prospectus supplement are summaries of the applicable
provisions of the applicable agreements. These descriptions do not restate those
agreements in their entirety and do not contain all of the information that you
may find useful. We urge you to read the applicable agreements because they, and
not the summaries, define your rights as holders of the units. For more
information, please review the form of the relevant agreements, which we will
file with the SEC and will be available as described in the heading “WHERE YOU
CAN FIND MORE INFORMATION” above.
Treasury
Warrant
On January 9, 2009, we participated in
the Troubled Asset Relief Program Capital Purchase Program established by the
Treasury. As part of our participation, we issued a warrant to
purchase 172,970 shares of our common stock to the Treasury. This
transaction was accomplished pursuant to a Securities Purchase Agreement –
Standard Terms dated January 9, 2009. On June 3, 2009, pursuant to a
Letter Agreement dated April 15, 2009, we issued a substitute warrant to the
Treasury, which we refer to in this prospectus as the Treasury
Warrant. The following is a brief description of the terms of the
Treasury Warrant. This summary does not purport to be complete in all
respects. This description is subject to and qualified in its
entirety by reference to the Treasury Warrant, a copy of which is filed as
Exhibit 4.11 to the registration statement that contains this prospectus and
incorporated by reference herein.
Shares
of Common Stock Subject to the Treasury Warrant
The Treasury Warrant is initially
exercisable for 172,970 shares of our common stock, subject to the adjustments
described below under the heading “
Adjustments to the
Warrant
”.
Exercise
of the Treasury Warrant
The initial exercise price applicable
to the Treasury Warrant is $21.68 per share of common stock for which the
Treasury Warrant may be exercised. The Treasury Warrant may be
exercised at any time on or before January 9, 2019 by surrender of the Treasury
Warrant and a completed notice of exercise attached as an annex to the Treasury
Warrant and the payment of the exercise price for the shares of common stock for
which the Treasury Warrant is being exercised. The exercise price may
be paid either by the withholding by Shore Bancshares of such number of shares
of common stock issuable upon exercise of the Treasury Warrant equal to the
value of the aggregate exercise price of the Treasury Warrant determined by
reference to the market price of our common stock on the trading day on which
the Treasury Warrant is exercised or, if agreed to by us and the holder of the
Treasury Warrant, by the payment of cash equal to the aggregate exercise
price. The exercise price applicable to the Treasury Warrant is
subject to the further adjustments described below under the heading “
Adjustments to the Treasury
Warrant
”.
Certificates for the shares of common
stock issuable upon the exercise of the Treasury Warrant will be issued to the
holder of the Treasury Warrant upon such exercise. We will not issue
fractional shares upon any exercise of the Treasury Warrant. Instead,
the holder of the Treasury Warrant will be entitled to a cash payment equal to
the market price of our common stock on the last day preceding the exercise of
the Treasury Warrant (less the pro-rated exercise price of the Treasury Warrant)
for any fractional shares that would have otherwise been issuable upon exercise
of the Treasury Warrant. We will at all times reserve the aggregate
number of shares of our common stock for which the Treasury Warrant may be
exercised.
Rights
as a Stockholder
The holder of the Treasury Warrant has
no rights or privileges of the holders of our common stock, including any voting
rights, until (and then only to the extent) the Treasury Warrant has been
exercised.
Transferability
The Treasury Warrant, and all rights
under the Treasury Warrant, are transferable without restriction. We
filed a Registration Statement on Form S-3 (File No. 333-157141) with the SEC to
register the Treasury Warrant and the shares subject to the Treasury Warrant for
resale by the holder of the Treasury Warrant, which was declared effective on
July 27, 2009. We have listed the shares of common stock issuable
upon exercise of the Treasury Warrant with the NASDAQ Global Select Market under
the symbol “SHBI”.
Adjustments
to the Treasury Warrant
Adjustments in Connection with Stock
Splits, Subdivisions, Reclassifications and Combinations
. The
number of shares for which the Treasury Warrant may be exercised and the
exercise price applicable to the Treasury Warrant will be proportionately
adjusted in the event we pay dividends of or otherwise make distributions of our
common stock, or subdivide, combine or reclassify outstanding shares of our
common stock.
Anti-dilution
Adjustment
. Until the earlier of January 9, 2012 and the date
the Treasury no longer holds any portion of the Treasury Warrant (and other than
in certain permitted transactions described below), if we issue any shares of
common stock (or securities convertible or exercisable into common stock) for
less than 90% of the market price of the common stock on the last trading day
prior to pricing such shares, then the number of shares of common stock for
which the Treasury Warrant is exercisable and the exercise price will be
adjusted. Permitted transactions include issuances of common stock
and/or securities convertible or exercisable into common stock:
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as
consideration for or to fund the acquisition of businesses and/or related
assets;
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in
connection with employee benefit plans and compensation related
arrangements in the ordinary course and consistent with past practice
approved by our Board of Directors;
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in
connection with public or broadly marketed offerings and sales of common
stock or convertible securities for cash conducted by us or our affiliates
pursuant to registration under the Securities Act of 1933, as amended, or
the Securities Act, or Rule 144A thereunder on a basis consistent with
capital-raising transactions by comparable financial institutions (but do
not include other private transactions);
and
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in
connection with the exercise of preemptive rights on terms existing as of
January 9, 2009.
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Other
Distributions
. If we declare any dividends or distributions
other than our historical, ordinary cash dividends, then the exercise price of
the Treasury Warrant will be adjusted to reflect such distribution.
Certain
Repurchases
. If we effect a pro rata repurchase of common
stock, then both the number of shares issuable upon exercise of the Treasury
Warrant and the exercise price will be adjusted.
Business
Combinations
. In the event of a merger, consolidation or
similar transaction involving Shore Bancshares and requiring stockholder
approval, the right of the holder of the Treasury Warrant to receive shares of
our common stock upon exercise of the Treasury Warrant shall be converted into
the right to exercise the Treasury Warrant for the consideration that would have
been payable to that holder with respect to the shares of common stock for which
the Treasury Warrant may be exercised, as if the Treasury Warrant had been
exercised prior to such merger, consolidation or similar
transaction.
PLAN
OF DISTRIBUTION
We may sell the securities to or
through one or more underwriters or dealers, and also may sell the securities
directly to other purchasers or through agents. These firms may also act as our
agents in the sale of the securities. Only underwriters named in the prospectus
supplement will be considered as underwriters of the securities offered by the
prospectus supplement.
We may distribute the securities at
different times in one or more transactions. We may sell the securities at fixed
prices, which may change, at market prices prevailing at the time of sale, at
prices related to the prevailing market prices or at negotiated
prices.
In connection with the sale of the
securities, underwriters may receive compensation from us or from purchasers of
the securities in the form of discounts, concessions or commissions.
Underwriters, dealers and agents that participate in the distribution of the
securities may be deemed to be underwriters. Discounts or commissions they
receive and any profit on their resale of the securities may be considered
underwriting discounts and commissions under the Securities Act. We will
identify any underwriter or agent, and we will describe any compensation, in the
prospectus supplement.
We may agree to indemnify underwriters,
dealers and agents who participate in the distribution of the securities against
certain liabilities, including liabilities under the Securities
Act.
We may authorize dealers or other
persons who act as our agents to solicit offers by certain institutions to
purchase the securities from us under contracts which provide for payment and
delivery on a future date. We may enter into these contracts with commercial and
savings banks, insurance companies, pension funds, investment companies,
educational and charitable institutions and others. If we enter into these
agreements concerning any series of securities, we will indicate that in the
prospectus supplement.
In connection with an offering of the
securities, underwriters may engage in transactions that stabilize, maintain or
otherwise affect the price of the securities. Specifically, underwriters may
over-allot in connection with the offering, creating a syndicate short position
in the securities for their own account. In addition, underwriters may bid for,
and purchase, securities in the open market to cover short positions or to
stabilize the price of the securities. Finally, underwriters may reclaim selling
concessions allowed for distributing the securities in the offering if the
underwriters repurchase previously distributed securities in transactions to
cover short positions, in stabilization transactions or otherwise. Any of these
activities may stabilize or maintain the market price of the securities above
independent market levels. Underwriters are not required to engage in any of
these activities and may end any of these activities at any time.
Each series of securities (other than
our common stock) offered will be a new issue of securities and will have no
established trading market. The securities (other than our common stock) may or
may not be listed on a national securities exchange. No assurance can be given
as to the existence of trading markets for any securities offered (other than
with respect to our common stock) or the liquidity of any securities
offered.
INDEMNIFICATION
OF OUR DIRECTORS AND OFFICERS
Our Charter and Bylaws provide for the
elimination of personal liability for directors and officers to the fullest
extent permitted by the MGCL. Under the MGCL, a director or an
officer of Shore Bancshares will have no personal liability for monetary damages
except: (a) to the extent that the person actually received an
improper benefit or profit in money, property, or services; or (b) to the extent
that a judgment or other final adjudication adverse to the person is entered in
a proceeding based on a finding that the person’s action, or failure to act, was
the result of active and deliberate dishonesty and was material to the cause of
action adjudicated in the proceeding. An amendment or repeal of these
provisions requires the approval of at least 80% of the aggregate votes entitled
to be cast on the matter.
These provisions may have the practical
effect in certain cases of eliminating the ability of our stockholders to
collect monetary damages from directors and executive officers. We
believe that these provisions are necessary to attract and retain qualified
persons as directors and executive officers.
Our Bylaws obligate us to indemnify and
advance expenses to a director or an officer in connection with a proceeding to
the fullest extent permitted by and in accordance with the indemnification
section of the MGCL. However, we may not indemnify a director or an
officer in connection with a proceeding commenced by such director or officer
unless the Board authorized the proceeding. We may indemnify and
advance expenses to employees and agents, other than directors and officers, as
determined by and in the discretion of the Board, in connection with a
proceeding to the extent permitted by and in accordance with the indemnification
section of the MGCL.
MGCL Section 2-418 permits us to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that the
person was a director, officer, employee or agent of Shore Bancshares if he or
she (a) acted in good faith, (b) reasonably believed her actions to be in or not
opposed to the best interests of Shore Bancshares, (c) did not actually receive
an improper personal benefit in money, property, or services, and (d) in a
criminal proceeding, had no reasonable cause to believe her conduct was
unlawful.
Under MGCL Section 2-418,
indemnification may be against judgments, penalties, fines, settlements, and
reasonable expenses actually incurred by the director in connection with the
proceeding. Indemnification may not be made unless authorized for a
specific proceeding after a determination has been made that the director has
met the applicable standard of conduct. This determination is
required to be made: (a) by the board of directors; (b) by special
legal counsel selected by the board of directors or a committee of the board by
vote; or (c) by the stockholders.
We may pay, before final disposition,
the expenses, including attorneys’ fees, incurred by a director, officer,
employee or agent in defending a proceeding when the director of officer gives
and undertaking to Shore Bancshares to repay the amounts advanced if it is
ultimately determined that he or she is not entitled to
indemnification. Shore Bancshares is required to indemnify any
director who has been successful on the merits or otherwise, in defense of a
proceeding for reasonable expenses incurred in connection with the
proceeding.
These indemnification and advancement
of expenses provisions are not exclusive of any other rights to which a person
seeking indemnification or advancement of expenses may be entitled under any
bylaw, agreement, vote of stockholders, vote of directors or
otherwise.
Notwithstanding the above, insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions, or otherwise, the Company has been advised that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
LEGAL
MATTERS
The validity of the securities offered
pursuant to this prospectus has been passed upon for us by Gordon, Feinblatt,
Rothman, Hoffberger & Hollander, LLC, Baltimore, Maryland. If
legal matters in connection with offerings made pursuant to this prospectus are
passed upon by counsel for the underwriters, dealers or agents, if any, such
counsel will be named in the prospectus supplement relating to such
offering.
EXPERTS
The consolidated financial statements
incorporated in this prospectus by reference from our Annual Report on Form 10-K
for the year ended December 31, 2009 and the effectiveness of our internal
control over financial reporting have been audited by Stegman & Company, an
independent registered public accounting firm, as stated in their report, which
is incorporated herein by reference. Such consolidated financial
statements have been so incorporated in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
* *
*
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other
Expenses of Issuance and Distribution.
The following table itemizes the
expenses incurred by Shore Bancshares, Inc. (the “Corporation”) in connection
with the offering of the securities being registered hereby. All
amounts shown are estimates.
Registration
Fee - Securities and Exchange Commission
|
|
$
|
5,347.50
|
|
Accounting
Fees and Expenses
|
|
|
*
|
|
Legal
Fees and Expenses
|
|
|
*
|
|
Printing
Fees and Expenses
|
|
|
*
|
|
Miscellaneous
|
|
|
*
|
|
Total
|
|
$
|
5,347.50
|
|
*
These fees depend on the
securities offered and the number of issuances and cannot be estimated at this
time.
Item
15. Indemnification
of Directors and Officers.
The
Maryland General Corporation Law permits a corporation to indemnify its present
and former directors, among others, against judgments, penalties, fines,
settlements and reasonable expenses actually incurred by them in connection with
any proceeding to which they may be made a party by reason of their services in
those capacities, unless it is established that:
|
(1)
|
the
act or omission of the director was material to the matter giving rise to
such proceeding and
|
(A) was
committed in bad faith or
(B) was
the result of active and deliberate dishonesty;
|
(2)
|
the
director actually received an improper personal benefit in money,
property, or services; or
|
|
(3)
|
in
the case of any criminal proceeding, the director had reasonable cause to
believe that the act or omission was
unlawful.
|
Maryland
law permits a corporation to indemnify a present and former officer to the same
extent as a director.
In addition to the foregoing, a court
of appropriate jurisdiction: (1) shall order indemnification of
reasonable expenses incurred by a director who has been successful, on the
merits or otherwise, in the defense of any proceeding identified above, or in
the defense of any claim, issue or matter in the proceeding; and (2) may under
certain circumstances order indemnification of a director or an officer who the
court determines is fairly and reasonably entitled to indemnification in view of
all of the relevant circumstances, whether or not the director or officer has
met the standards of conduct set forth in the preceding paragraph or has been
declared liable on the basis that a personal benefit improperly received in a
proceeding charging improper personal benefit to the director or the officer,
provided, however, that if the proceeding was an action by or in the right of
the corporation or involved a determination that the director or officer
received an improper personal benefit, no indemnification may be made if the
director or officer is adjudged liable to the corporation, except to the extent
of expenses approved by a court of appropriate jurisdiction.
The Maryland General Corporation Law
also permits a corporation to pay or reimburse, in advance of the final
disposition of a proceeding, reasonable expenses incurred by a present or former
director or officer made a party to the proceeding by reason of his or her
service in that capacity, provided that the corporation shall have
received:
|
(1)
|
a
written affirmation by the director or officer of his good faith belief
that he has met the standard of conduct necessary for indemnification by
the corporation; and
|
|
(2)
|
a
written undertaking by or on behalf of the director to repay the amount
paid or reimbursed by the corporation if it shall ultimately be determined
that the standard of conduct was not
met.
|
The Corporation has provided for
indemnification of directors, officers, employees and agents in Section (a)(5)
of Article Seventh of its Amended and Restated Articles of Incorporation (the
“Charter”). This provision of the Charter reads as
follows:
(5) The
Corporation shall indemnify (A) its directors and officers, whether serving the
Corporation or at its request any other entity, to the full extent required or
permitted by the General Laws of the State of Maryland now or hereafter in
force, including the advance of expenses under the procedures and to the full
extent permitted by law and (B) other employees and agents to such extent as
shall be authorized by the Board of Directors or the Corporation’s Bylaws and be
permitted by law. The foregoing rights of indemnification shall not
be exclusive of any other rights to which those seeking indemnification may be
entitled. The Board of Directors may take such action as is necessary
to carry out these indemnification provisions and is expressly empowered to
adopt, approve and amend from time to time such by-laws, resolutions or
contracts implementing such provisions or such further indemnification
arrangements as may be permitted by law. No amendment of the Charter
of the Corporation or repeal of any of its provisions shall limit or eliminate
the right to indemnification provided hereunder with respect to acts or
omissions occurring prior to such amendment or repeal.
The Maryland General Corporation Law
authorizes a Maryland corporation to limit by provision in its Articles of
Incorporation the liability of directors and officers to the corporation or to
its stockholders for money damages except to the extent:
|
(1)
|
the
director or officer actually receives an improper benefit or profit in
money, property, or services, for the amount of the benefit or profit
actually received, or
|
|
(2)
|
a
judgment or other final adjudication adverse to the director or officer is
entered in a proceeding based on a finding in the proceeding that the
director’s or officer’s action, or failure to act, was the result of
active and deliberate dishonesty and was material to the cause of action
adjudicated in the proceeding.
|
The Corporation has limited the
liability of its directors and officers for money damages in Section (a)(6) of
Article Seventh of the Charter. This provision reads as
follows:
(6) To
the fullest extent permitted by Maryland statutory or decisional law, as amended
or interpreted, no director or officer of the Corporation shall be personally
liable to the Corporation or its stockholders for money damages. No
amendment of the Charter of the Corporation or repeal of any of its provisions
shall limit or eliminate the limitation on liability provided to directors and
officers hereunder with respect to any act or omission occurring prior to such
amendment or repeal.
As permitted under Section 2-418(k) of
the Maryland General Corporation Law, the Corporation has purchased and
maintains insurance on behalf of its directors and officers against any
liability asserted against such directors and officers in their capacities as
such, whether or not the Corporation would have the power to indemnify such
persons under the provisions of Maryland law governing
indemnification.
Section 8(k) of the Federal Deposit
Insurance Act (the “FDI Act”) provides that the Federal Deposit Insurance
Corporation (the “FDIC”) may prohibit or limit, by regulation or order, payments
by any insured depository institution or its holding company for the benefit of
directors and officers of the insured depository institution, or others who are
or were “institution-affiliated parties,” as defined under the FDI Act, to pay
or reimburse such person for any liability or legal expense sustained with
regard to any administrative or civil enforcement action which results in a
final order against the person. The FDIC has adopted regulations
prohibiting, subject to certain exceptions, insured depository institutions,
their subsidiaries and affiliated holding companies from indemnifying officers,
directors or employees for any civil money penalty or judgment resulting from an
administrative or civil enforcement action commenced by any federal banking
agency, or for that portion of the costs sustained with regard to such an action
that results in a final order or settlement that is adverse to the director,
officer or employee.
Item
16. Exhibits.
The exhibits filed with this
Registration Statement are listed in the Exhibit Index which immediately follows
the signatures hereto and which is incorporated herein by
reference.
Item
17. Undertakings.
(a) The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i)
To include
any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii)
To reflect in the
prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20% change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the effective
registration statement;
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement;
Provided
,
however
, that
paragraphs (a)(1)(i), (a)(1)(ii), and (a)(1)(iii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the registration statement,
or is contained in a form of prospectus filed pursuant to Rule 424(b) that is
part of the registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof;
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering;
(4) N/A;
(5) That,
for the purpose of determining liability under the Securities Act to any
purchaser:
(i) Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to
be part of this registration statement as of the date the filed prospectus was
deemed part of and included in this registration statement; and
(ii) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as
part of this registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of
providing the information required by section 10(a) of the Securities Act shall
be deemed to be part of and included in this registration statement as of the
earlier of the date such form of prospectus is first used after effectiveness or
the date of the first contract of sale of securities in the offering described
in the prospectus. As provided in Rule 430B, for liability purposes of the
issuer and any person that is at that date an underwriter, such date shall be
deemed to be a new effective date of this registration statement relating to the
securities in this registration statement to which that prospectus relates, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Provided
,
however
, that no
statement made in a registration statement or prospectus that is part of this
registration statement or made in a document incorporated or deemed incorporated
by reference into this registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of contract of sale
prior to such effective date, supersede or modify any statement that was made in
this registration statement or prospectus that was part of this registration
statement or made in any such document immediately prior to such effective
date;
(6) That,
for the purpose of determining liability of the registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the securities, the
undersigned registrant undertakes that in a primary offering of securities of
the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
(i) Any
preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned
registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
(b) The
undersigned registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant’s annual
report pursuant to section 13(a) or section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan’s annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time will be deemed to be the initial bona fide offering
thereof.
(c)–(g) N/A.
(h) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by
the final
adjudication of such issue.
(i)-(l) N/A.
SIGNATURES
Pursuant to the requirements of the
Securities Act of 1933, the registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Easton, State of
Maryland, on June 24, 2010.
SHORE
BANCSHARES, INC.:
|
|
|
By:
|
/s/ W. Moorhead Vermilye
|
|
W.
Moorhead Vermilye
|
|
President
and CEO
|
KNOW ALL MEN BY THESE PRESENTS, that
each person whose signature appears below constitutes and appoints W. Moorhead
Vermilye and Susan E. Leaverton, and each of them (with full power to each of
them to act alone), his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign any or all
amendments (including post-effective amendments) to this registration statement,
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the
Securities Act of 1933, this registration statement has been signed by the
following persons in the capacities and on June 24, 2010.
/s/
Herbert L. Andrew, III
|
|
/s/
Blenda W. Armistead
|
|
Herbert
L. Andrew, III, Director
|
|
Blenda
W. Armistead, Director
|
|
|
|
|
|
|
|
/s/
William W. Duncan, Jr.
|
|
Lloyd
L. Beatty, Jr., Director
|
|
William
W. Duncan, Jr., Director
|
|
|
|
|
|
/s/
Neil R. LeCompte
|
|
/s/
James A. Judge
|
|
Neil
R. LeCompte, Director
|
|
James
A. Judge, Director
|
|
|
|
|
|
/s/
Christopher F. Spurry
|
|
/s/
Jerry F. Pierson
|
|
Christopher
F. Spurry, Director
|
|
Jerry
F. Pierson, Director
|
|
|
|
|
|
|
|
/s/
F. Winfield Trice, Jr.
|
|
|
|
F.
Winfield Trice, Jr., Director
|
|
/s/ W. Moorhead Vermilye
|
|
|
|
W.
Moorhead Vermilye, Director,
|
|
John
H. Wilson, Director
|
|
President
and CEO
|
|
|
|
|
|
|
|
/s/ Susan E. Leaverton
|
|
|
|
Susan
E. Leaverton, Treasurer and
|
|
|
|
Principal
Accounting Officer
|
|
|
|
EXHIBIT
INDEX
Exhibit No.
|
|
Description
|
|
|
|
3.1(i)
|
|
Amended
and Restated Articles of Incorporation (incorporated by reference to
Exhibit 3.1 of the Company’s Form 8-K filed on December 14,
2000)
|
|
|
|
3.1(ii)
|
|
Articles
Supplementary filed for record on January 7, 2009 creating the Fixed Rate
Cumulative Perpetual Preferred Stock, Series A (incorporated by reference
Exhibit 4.1 of the Company’s Form 8-K filed on January 13,
2009)
|
|
|
|
3.1(iii)
|
|
Articles
Supplementary filed for record on June 16, 2009 reclassifying all shares
of authorized Fixed Rate Cumulative Perpetual Preferred Stock, Series A as
shares of common stock (incorporated by reference to Exhibit 3.1 of the
Company’s Form 8-K filed on June 17, 2009)
|
|
|
|
3.2(i)
|
|
Amended
and Restated By-Laws (incorporated by reference to Exhibit 3.2(i) of the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2007)
|
|
|
|
3.2(ii)
|
|
First
Amendment to Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.2(ii) of the Company’s Annual Report on Form 10-K for the year
ended December 31, 2007)
|
|
|
|
4.1
|
|
Specimen
Common Stock Certificate (filed herewith)
|
|
|
|
4.2
|
|
Form
of Articles Supplementary relating to Preferred Stock
*
|
|
|
|
4.3
|
|
Specimen
Preferred Stock Certificate*
|
|
|
|
4.4
|
|
Form
of Indenture (filed herewith)
|
|
|
|
4.5
|
|
Form
of Note*
|
|
|
|
4.6
|
|
Form
of Warrant*
|
|
|
|
4.7
|
|
Form
of Warrant Agreement*
|
|
|
|
4.8
|
|
Form
of Unit Agreement*
|
|
|
|
4.9
|
|
Letter
Agreement, including the related Securities Purchase Agreement – Standard
Terms, dated January 9, 2009 by and between the Company and the U.S.
Department of Treasury (incorporated by reference to Exhibit 10.1 of the
Company’s Form 8-K filed on January 13, 2009)
|
|
|
|
4.10
|
|
Letter
Agreement dated as of April 15, 2009 between the Company and the U.S.
Department of the Treasury (incorporated by reference to Exhibit 10.1 to
the Company’s Form 8-K filed on April 16,
2009)
|
4.11
|
|
Substitute
Common Stock Purchase Warrant dated January 9, 2009 issued to the U.S.
Department of Treasury (incorporated by reference to Exhibit 4.1 of the
Company’s Form 8-K filed on June 4, 2009)
|
|
|
|
5.1
|
|
Opinion
of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC
(filed
herewith)
|
|
|
|
12.1
|
|
Computation
of Ratios of Earnings to Fixed Charges and of Earnings to Combined Fixed
Charges and Preferred Stock Dividends (filed herewith)
|
|
|
|
23.1
|
|
Consent
of Stegman & Company, Independent Registered Public Accounting Firm
(filed herewith)
|
|
|
|
23.2
|
|
Consent
of Gordon, Feinblatt, Rothman, Hoffberger & Hollander, LLC (contained
in Exhibit 5.1)
|
|
|
|
24.1
|
|
Power
of Attorney (included in the signature page hereto)
|
|
|
|
25.1
|
|
Statement
of Eligibility of Trustee under the Indenture on Form T-1 (to be filed
separately pursuant to Section 305(b)(2) of the Trust Indenture Act of
1939)*
|
* To be
filed, if necessary, by amendment or as an exhibit to a Current Report on Form
8-K.
Exhibit
4.4
SHORE
BANCSHARES, INC.
and
______________________,
as Trustee
INDENTURE
Dated
as of ______________, _____
TABLE
OF CONTENTS
|
|
|
Page
|
ARTICLE
1 – DEFINITIONS AND INCORPORATION BY REFERENCE
|
|
1
|
1.1
|
Definitions
|
|
1
|
1.2
|
Other
Definitions
|
|
5
|
1.3
|
Incorporation
by Reference of Trust Indenture Act
|
|
6
|
1.4
|
Rules
of Construction
|
|
6
|
|
|
|
|
ARTICLE
2 – THE SECURITIES
|
|
7
|
2.1
|
Issuable
in Series
|
|
7
|
2.2
|
Establishment
of Terms of Series of Securities
|
|
7
|
2.3
|
Execution
and Authentication
|
|
10
|
2.4
|
Registrar
and Paying Agent
|
|
10
|
2.5
|
Paying
Agent To Hold Assets in Trust
|
|
11
|
2.6
|
Securityholder
Lists
|
|
11
|
2.7
|
Transfer
and Exchange
|
|
12
|
2.8
|
Replacement
Securities
|
|
13
|
2.9
|
Outstanding
Securities
|
|
13
|
2.10
|
Treasury
Securities
|
|
13
|
2.11
|
Temporary
Securities
|
|
14
|
2.12
|
Cancellation
|
|
14
|
2.13
|
Payment
of Interest; Defaulted Interest; Computation of Interest
|
|
14
|
2.14
|
CUSIP
Number
|
|
15
|
2.15
|
Provisions
for Global Securities
|
|
15
|
2.16
|
Persons
Deemed Owners
|
|
16
|
|
|
|
|
ARTICLE
3 – REDEMPTION
|
|
16
|
3.1
|
Notices
of Trustee
|
|
16
|
3.2
|
Selection
by Trustee of Securities to Be Redeemed
|
|
16
|
3.3
|
Notice
of Redemption
|
|
17
|
3.4
|
Effect
of Notice of Redemption
|
|
18
|
3.5
|
Deposit
of Redemption Price
|
|
18
|
3.6
|
Securities
Redeemed in Part
|
|
18
|
|
|
|
|
ARTICLE
4 – COVENANTS
|
|
18
|
4.1
|
Payment
of Securities
|
|
18
|
4.2
|
SEC
Reports
|
|
19
|
4.3
|
Waiver
of Stay, Extension or Usury Laws
|
|
19
|
4.4
|
Compliance
Certificate
|
|
19
|
4.5
|
Payment
of Taxes and Other Claims
|
|
20
|
4.6
|
Corporate
Existence
|
|
20
|
4.7
|
Maintenance
of Properties
|
|
20
|
|
|
|
|
ARTICLE
5 – SUCCESSOR CORPORATION
|
|
21
|
5.1
|
Limitation
on Consolidation, Merger and Sale of Assets
|
|
21
|
5.2
|
Successor
Person Substituted
|
|
21
|
|
|
|
|
ARTICLE
6 – DEFAULTS AND REMEDIES
|
|
22
|
6.1
|
Events
of Default
|
|
22
|
6.2
|
Acceleration
|
|
23
|
6.3
|
Other
Remedies
|
|
23
|
6.4
|
Waiver
of Past Defaults and Events of Default
|
|
24
|
6.5
|
Control
by Majority
|
|
24
|
6.6
|
Limitation
on Suits
|
|
24
|
6.7
|
Rights
of Holders To Receive Payment
|
|
24
|
6.8
|
Collection
Suit by Trustee
|
|
25
|
6.9
|
Trustee
May File Proofs of Claim
|
|
25
|
6.10
|
Priorities
|
|
25
|
6.11
|
Undertaking
for Costs
|
|
26
|
|
|
|
|
ARTICLE
7 – TRUSTEE
|
|
26
|
7.1
|
Duties
of Trustee
|
|
26
|
7.2
|
Rights
of Trustee
|
|
27
|
7.3
|
Individual
Rights of Trustee
|
|
28
|
7.4
|
Trustee’s
Disclaimer
|
|
28
|
7.5
|
Notice
of Default
|
|
28
|
7.6
|
Reports
by Trustee to Holders
|
|
28
|
7.7
|
Compensation
and Indemnity
|
|
29
|
7.8
|
Replacement
of Trustee
|
|
29
|
7.9
|
Successor
Trustee by Consolidation, Merger or Conversion
|
|
30
|
7.10
|
Eligibility;
Disqualification
|
|
30
|
7.11
|
Preferential
Collection of Claims Against Company
|
|
30
|
7.12
|
Paying
Agents
|
|
30
|
|
|
|
|
ARTICLE
8 – AMENDMENTS, SUPPLEMENTS AND WAIVERS
|
|
31
|
8.1
|
Without
Consent of Holders
|
|
31
|
8.2
|
With
Consent of Holders
|
|
32
|
8.3
|
Compliance
with Trust Indenture Act
|
|
33
|
8.4
|
Revocation
and Effect of Consents
|
|
33
|
8.5
|
Notation
on or Exchange of Securities
|
|
33
|
8.6
|
Trustee
to Sign Amendments, Etc.
|
|
34
|
|
|
|
|
ARTICLE
9 DISCHARGE OF INDENTURE; DEFEASANCE
|
|
34
|
9.1
|
Discharge
of Indenture
|
|
34
|
9.2
|
Legal
Defeasance
|
|
34
|
9.3
|
Covenant
Defeasance
|
|
35
|
9.4
|
Conditions
to Legal Defeasance or Covenant Defeasance
|
|
35
|
9.5
|
Deposited
Money and U.S. and Foreign Government Obligations to be Held in
Trust; Other Miscellaneous Provisions
|
|
36
|
9.6
|
Reinstatement
|
|
37
|
9.7
|
Moneys
Held by Paying Agent
|
|
37
|
9.8
|
Moneys
Held by Trustee
|
|
37
|
|
|
|
|
ARTICLE
10 – MISCELLANEOUS
|
38
|
10.1
|
Trust
Indenture Act Controls
|
|
38
|
10.2
|
Notices
|
|
38
|
10.3
|
Communications
by Holders with Other Holders
|
|
39
|
10.4
|
Certificate
and Opinion as to Conditions Precedent
|
|
39
|
10.5
|
Statement
Required in Certificate and Opinion
|
|
39
|
10.6
|
Rules
by Trustee and Agents
|
|
40
|
10.7
|
Business
Days; Legal Holidays
|
|
40
|
10.8
|
Governing
Law
|
|
40
|
10.9
|
No
Adverse Interpretation of Other Agreements
|
|
40
|
10.10
|
No
Recourse Against Others
|
|
40
|
10.11
|
Successors
and Assigns
|
|
40
|
10.12
|
Multiple
Counterparts
|
|
41
|
10.13
|
Table
of Contents, Headings, Etc.
|
|
41
|
10.14
|
Separabilty
|
|
41
|
10.15
|
Securities
in a Foreign Currency or in ECU
|
|
41
|
10.16
|
Judgment
Currency
|
|
42
|
CROSS-REFERENCE
TABLE
TIA
SECTION
|
INDENTURE
SECTION
|
310
(a)(1)
|
7.10
|
(a)(2)
|
7.10
|
(a)(3)
|
N/A
|
(a)(4)
|
N/A
|
(a)(5)
|
7.10
|
(b)
|
7.8;
7.10; 10.2
|
(b)(1)
|
7.10
|
(b)(9)
|
7.10
|
(c)
|
N/A
|
311
(a)
|
7.11
|
(b)
|
7.11
|
(c)
|
N/A
|
312
(a)
|
2.6
|
(b)
|
10.3
|
(c)
|
10.3
|
313
(a)
|
7.6
|
(b)(1)
|
7.6
|
(b)(2)
|
7.6
|
(c)
|
7.6;
10.2
|
(d)
|
7.6
|
314
(a)
|
4.2;
4.4; 10.2
|
(b)
|
N/A
|
(c)(1)
|
10.4;
10.5
|
(c)(2)
|
10.4;
10.5
|
(c)(3)
|
N/A
|
(d)
|
N/A
|
(e)
|
10.5
|
(f)
|
N/A
|
315
(a)
|
7.1,
7.2
|
(b)
|
7.5;
10.2
|
(c)
|
7.1
|
(d)
|
6.5;
7.1; 7.2
|
(e)
|
6.11
|
316
(a)(last sentence)
|
2.10
|
(a)(1)(A)
|
6.5
|
(a)(1)(B)
|
6.4
|
(a)(2)
|
8.2
|
(b)
|
6.7
|
(c)
|
8.4
|
317
(a)(1)
|
6.8
|
(a)(2)
|
6.9
|
(b)
|
2.5;
7.12
|
318
(a)
|
10.1
|
N/A means
not applicable
Note:
This Cross-Reference Table shall not, for any purpose, be deemed to be a part of
the Indenture.
THIS INDENTURE (this “Indenture”) is
dated as of ______________, ____, by and between Shore Bancshares, Inc., a
Maryland corporation, as Issuer (the “
Company
”), and
____________________________, a _______________ organized under the laws of
____________, as Trustee (the “
Trustee
”).
RECITALS
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 debentures, notes or other evidences of indebtedness to be issued
in one or more series (the “
Securities
”), as herein
provided, up to such principal amount as may from time to time be authorized in
or pursuant to one or more resolutions of the Board of Directors or by
supplemental indenture.
All things necessary to make this
Indenture a valid agreement of the Company in accordance with its terms have
been done, and the execution and delivery thereof have been in all respects duly
authorized by the parties hereto.
NOW, THEREFORE, THIS INDENTURE
WITNESSETH:
Each party agrees as follows for the
benefit of the other parties and for the equal and ratable benefit of the
Holders of the Securities issued under this Indenture:
ARTICLE
1
DEFINITIONS
AND INCORPORATION BY REFERENCE
1.1
Definitions
.
“
Affiliate
” of any specified
Person means any other Person which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
such specified Person. For the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlling,” “controlled by,”
and “under common control with”), as used with respect to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
“
Agent
” means any Registrar,
Paying Agent, co-registrar or agent for service of notices and
demands.
“
Bankruptcy Law
” means Title
11, U.S. Code or any similar Federal or state law for the relief of
debtors.
“
Board of Directors
” means the
Board of Directors of the Company or any committee authorized to act
therefor.
“
Board Resolution
” means a
copy of a resolution certified pursuant to an Officers’ Certificate to have been
duly adopted by the Board of Directors of the Company and to be in full force
and effect on the date of such certification, and delivered to the
Trustee.
“
Capital Stock
” means, with
respect to any Person, any and all shares or other equivalents (however
designated) of capital stock or any other participation, right or other interest
in the nature of an equity interest in such Person or any option, warrant or
other security convertible into any of the foregoing.
“
Company
” means the party
named as such in the first paragraph of this Indenture until a successor
replaces such party pursuant to
Article 5
of this Indenture,
and thereafter means the successor and any other primary obligor on the
Securities.
“
Company Order
” means a
written order signed in the name of the Company by two Officers, one of whom
must be its Chief Executive Officer or its Principal Accounting
Officer.
“
Company Request
” means any
written request signed in the name of the Company by its Chief Executive
Officer, its President, any Vice President, its Principal Accounting Officer or
its Treasurer and attested to by the Secretary or any Assistant Secretary of the
Company.
“
Corporate Trust Office
” means
the office of the Trustee at which at any particular time its corporate trust
business shall be principally administered.
“
Custodian
” means any
receiver, trustee, assignee, liquidator or similar official under any Bankruptcy
Law.
“
Default
” means any event that
is, or with the passing of time or giving of notice or both would be, an Event
of Default.
“
Depositary
” means, with
respect to the Securities of any Series issuable or issued in whole or in part
in the form of one or more Global Securities, the Person designated as
Depositary for such Series by the Company, which Depositary shall be a clearing
agency registered under the Exchange Act, until a successor Depositary shall
have become such pursuant to the applicable provisions of this Indenture, and
thereafter “
Depositary
”
shall mean each Person who is then a Depositary hereunder, and if at any time
there is more than one such Person, such Persons.
“
Dollars
” means the currency
of the United States of America.
“
ECU
” means the European
Currency Unit as determined by the Commission of the European
Union.
“
Exchange Act
” means the
Securities Exchange Act of 1934, as amended.
“
Foreign Currency
” means any
currency or currency unit issued by a government other than the government of
the United States of America.
“
Foreign Government
Obligations
” means with respect to Securities of any Series that are
denominated in a Foreign Currency, (i) direct obligations of the government that
issued or caused to be issued such currency for the payment of which obligations
its full faith and credit is pledged or (ii) obligations of a person controlled
or supervised by or acting as an agency or instrumentality of such government
the timely payment of which is unconditionally guaranteed as a full faith and
credit obligation by such government, which, in either case under clauses (i) or
(ii), are not callable or redeemable at the option of the issuer
thereof.
“
GAAP
” means generally
accepted accounting principles consistently applied as in effect in the United
States from time to time.
“
Global Security
” or “
Global Securities
” means a
Security or Securities, as the case may be, in the form established pursuant to
Section 2.2
hereof,
evidencing all or part of a Series of Securities issued to the Depositary for
such Series or its nominee, registered in the name of such Depositary or
nominee, and bearing the legend set forth in
Section 2.15(c)
hereof (or
such legend as may be specified as contemplated by
Section 2.2
hereof for such
Securities).
“
Holder
” or “
Securityholder
” means the
Person in whose name a Security is registered on the Registrar’s
books.
“
Indebtedness
” means (without
duplication), with respect to any Person, any indebtedness at any time
outstanding, secured or unsecured, contingent or otherwise, which is for
borrowed money (whether or not the recourse of the lender is to the whole of the
assets of such Person or only to a portion thereof), or evidenced by bonds,
notes, debentures or similar instruments or representing the balance deferred
and unpaid of the purchase price of any property (excluding any balances that
constitute accounts payable or trade payables, and other accrued liabilities
arising in the ordinary course of business) if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP.
“
Indenture
” means this
Indenture as amended, restated or supplemented from time to time.
“
Interest Payment Date
” means
the Stated Maturity of an installment of interest on Securities of any
Series.
“
Lien
” means, with respect to
any property or assets of any Person, any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, security interest, lien, charge,
easement, encumbrance, preference, priority, or other security agreement or
preferential arrangement of any kind or nature whatsoever on or with respect to
such property or assets (including, without limitation, any capitalized lease
obligation, conditional sales, or other title retention agreement having
substantially the same economic effect as any of the
foregoing).
“
Maturity Date
” when used with
respect to any Security or installment of principal thereof, means the date on
which the principal of such Security or such installment of principal becomes
due and payable as therein or herein provided, whether at the Stated Maturity or
by declaration of acceleration, call for redemption, notice of option to elect
payment or otherwise.
“
Officer
” means the Chief
Executive Officer, the President, any Vice President, the Principal Accounting
Officer, the Treasurer or the Secretary of the Company or any other officer
designated by the Board of Directors, as the case may be.
“
Officers’ Certificate
” means,
with respect to any Person, a certificate signed by the Chief Executive Officer,
the President or any Vice President, and the Principal Accounting Officer or any
Treasurer of such Person that shall comply with applicable provisions
of
this
Indenture.
“
Opinion of Counsel
” means a
written opinion from legal counsel which counsel is reasonably acceptable to the
Trustee.
“
Person
” means any individual,
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government (including any agency or
political subdivision thereof).
“
Redemption Date
” when used
with respect to any Security of a Series to be redeemed, means the date fixed
for such redemption pursuant to this Indenture.
“
Responsible Officer
” when
used with respect to the Trustee, means any officer or officers within the
corporate trust department of the Trustee (or any successor group of the
Trustee) or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and who are
responsible for compliance with the obligations of the Trustee as set forth in
this Indenture and also means, with respect to a particular corporate trust
matter or obligation required of the Trustee as set forth in this Indenture, any
other officer to whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
“
SEC
” means the United States
Securities and Exchange Commission as constituted from time to time or any
successor performing substantially the same functions.
“
Securities
” means the
securities that are issued under this Indenture, as amended or supplemented from
time to time pursuant to this Indenture.
“
Securities Act
” means the
Securities Act of 1933, as amended.
“
Securityholder
” has the
meaning set forth above for the defined term “
Holder
”.
“
Series
” or “
Series of Securities
” means
each series of debentures, notes or other debt instruments of the Company
created pursuant to
Section
2.1
or
Section
2.2
hereof.
“
Significant Subsidiary
” means
(i) any direct or indirect Subsidiary of the Company that would be a
“significant subsidiary”
as
defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the
Securities Act, as such regulation is in effect on the date hereof, or (ii) any
group of direct or indirect Subsidiaries of the Company that, taken together as
a group, would be a “significant subsidiary” as defined in Article 1, Rule 1-02
of Regulation S-X, promulgated pursuant to the Securities Act, as such
regulation is in effect on the date hereof.
“
Stated Maturity
” means, (i)
when used with respect to any Security of any Series or any installment of
principal thereof or interest thereon, the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
principal or interest is due and payable and, (ii) when used with respect to any
other Indebtedness, the date specified in the instrument governing such
Indebtedness as the fixed date on which the principal of such Indebtedness, or
any installment of interest thereon, is due and payable.
“
Subsidiary
” of any specified
Person means any corporation, partnership, joint venture, association or other
business entity, whether now existing or hereafter organized or acquired, (i) in
the case of a corporation, of which more than 50% of the total voting power of
the Capital Stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors thereof is held, directly or indirectly by
such Person or any of its Subsidiaries; or (ii) in the case of a partnership,
joint venture, association or other business entity, with respect to which such
Person or any of its Subsidiaries has the power to direct or cause the direction
of the management and policies of such entity by contract or otherwise or if in
accordance with GAAP such entity is consolidated with such Person for financial
statement purposes.
“
TIA
” or “
Trust Indenture Act
” means
the Trust Indenture Act of 1939 (15 U.S. Code Section 77aaa-77bbbb) as in
effect on the date of this Indenture (except as provided
in
Section 8.3
hereof).
“
Trustee
” means the party
named as such in this Indenture until a successor replaces it pursuant to this
Indenture and thereafter means the successor.
“
U.S. Government
Obligations
” means direct non-callable obligations of, or non-callable
obligations guaranteed by, the United States of America for the payment of which
obligation or guarantee the full faith and credit of the United States of
America is pledged.
1.2
Other
Definitions
. The definitions of the following terms may be found in
the sections indicated as follows:
Term
|
|
Defined in Section
|
|
|
|
“
Business
Day
”
|
|
10.7
|
“
Covenant
Defeasance
”
|
|
9.3
|
“
Event of
Default
”
|
|
6.1
|
“
Journal
”
|
|
10.15
|
“
Judgment
Currency
”
|
|
10.16
|
“
Legal
Defeasance
”
|
|
9.2
|
“
Legal
Holiday
”
|
|
10.7
|
“
Market Exchange
Rate
”
|
|
10.15
|
“
New York Banking
Day
”
|
|
10.16
|
“
Paying
Agent
”
|
|
2.4
|
“
Registrar
”
|
|
2.4
|
“
Required
Currency
”
|
|
10.16
|
“
Service
Agent
”
|
|
2.4
|
1.3
Incorporation by Reference
of Trust Indenture Act
. Whenever this Indenture refers to a
provision of the TIA, the portion of such provision required to be incorporated
herein for this Indenture to be qualified under the TIA is incorporated by
reference in and made a part of this Indenture. The following TIA terms
used in this Indenture have the following meanings:
“
Commission
” means the
SEC.
“
indenture securities
” means
the Securities.
“
indenture securityholder
”
means a Securityholder.
“
indenture to be qualified
”
means this Indenture.
“
indenture trustee
” or “
institutional trustee
” means
the Trustee.
“
obligor on the indenture
securities
” means the Company or any other obligor on the
Securities.
All other terms used in this Indenture
that are defined by the TIA, defined in the TIA by reference to another statute
or defined by SEC rule have the meanings therein assigned to them.
1.4
Rules of
Construction
. Unless the context otherwise requires:
(1) a
term has the meaning assigned to it herein, whether defined expressly or by
reference;
(2) an
accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP;
(3) “
or
” is not
exclusive;
(4) words
in the singular include the plural, and in the plural include the
singular;
(5) words
used herein implying any gender shall apply to each gender; and
(6) the
words “herein,” “hereof” and “hereunder” and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section or other
sub-division.
ARTICLE
2
THE
SECURITIES
2.1
Issuable in
Series
. The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited. The
Securities may be issued in one or more Series. All Securities of a Series
shall be identical except as may be set forth in a Board Resolution, a
supplemental indenture or an Officers’ Certificate detailing the adoption of the
terms thereof pursuant to the authority granted under a Board Resolution.
In the case of Securities of a Series to be issued from time to time, the Board
Resolution, supplemental indenture or Officers’ Certificate may provide for the
method by which specified terms (such as interest rate, Stated Maturity, record
date or date from which interest shall accrue) are to be determined.
Securities may differ between Series in respect of any matters, provided
that all Series of
Securities shall be equally and ratably entitled to the benefits of the
Indenture.
2.2
Establishment of Terms of
Series of Securities
. At or prior to the issuance of any Securities
within a Series, the following shall be established (as to the Series generally,
in the case of
Section
2.2(1)
and either as to such Securities within the Series or as to the
Series generally in the case of
paragraphs (2)
through
(25)
, inclusive, of
Section 2.2
) by a Board
Resolution, a supplemental indenture or an Officers’ Certificate, in each case,
pursuant to authority granted under a Board Resolution:
(1) the
title of the Series (which shall distinguish the Securities of that particular
Series from the Securities of any other Series);
(2) the
price or prices (expressed as a percentage of the principal amount thereof) at
which the Securities of the Series will be issued;
(3) any
limit upon the aggregate principal amount of the Securities of the Series which
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
2.7
,
Section 2.8
,
Section 2.11
,
Section 3.6
or
Section 8.5
hereof);
(4) the
date or dates on which the principal of the Securities of the Series is
payable;
(5) the
rate or rates (which may be fixed or variable) per annum or, if applicable, the
method used to determine such rate or rates (including, but not limited to, any
commodity, commodity index, stock exchange index or financial index) at which
the Securities of the Series shall bear interest, if any, the date or dates from
which such interest, if any, shall accrue, the date or dates on which such
interest, if any, shall commence and be payable and any regular record date for
the interest payable on any Interest Payment Date;
(6) the
place or places where the principal of (and premium, if any) and interest, if
any, on the Securities of the Series shall be payable, or the method of such
payment, if by wire transfer, mail or other means;
(7) if
applicable, the period or periods within which, the price or prices at which and
the terms and conditions upon which the Securities of the Series may be
redeemed, in whole or in part, at the option of the Company;
(8) the
obligation, if any, of the Company to redeem or purchase the Securities of the
Series pursuant to any sinking fund or analogous provisions or at the option of
a Holder thereof and the period or periods within which, the price or prices at
which and the terms and conditions upon which Securities of the Series shall be
redeemed or purchased, in whole or in part, pursuant to such
obligation;
(9) the
dates, if any, on which and the price or prices at which the Securities of the
Series will be repurchased by the Company at the option of the Holders thereof
and other detailed terms and provisions of such repurchase
obligations;
(10) if
other than denominations of $1,000 and any integral multiple thereof, the
denominations in which the Securities of the Series shall be
issuable;
(11) whether
the Securities of the Series will be issued in bearer or fully registered form
(and, if in fully registered form, whether the Securities will be issuable as
Global Securities);
(12) if
other than the principal amount thereof, the portion of the principal amount of
the Securities of the Series that shall be payable upon declaration of
acceleration of the maturity thereof pursuant to
Section 6.2
hereof;
(13) the
currency of denomination of the Securities of the Series, which may be Dollars
or any Foreign Currency, including, but not limited to, the ECU, and if such
currency of denomination is a composite currency other than the ECU, the agency
or organization, if any, responsible for overseeing such composite
currency;
(14) the
designation of the currency, currencies or currency units in which payment of
the principal of (and premium, if any) and interest, if any, on the Securities
of the Series will be made;
(15) if
payments of principal of (and premium, if any) and interest, if any, on the
Securities of the Series are to be made in one or more currencies or currency
units other than that or those in which such Securities are denominated, the
manner in which the exchange rate with respect to such payments will be
determined;
(16) the
manner in which the amounts of payment of principal of (and premium, if any) and
interest, if any, on the Securities of the Series will be determined, if such
amounts may be determined by reference to an index based on a currency or
currencies other than the currency of denomination or designation or by
reference to a commodity, commodity index, stock exchange index or financial
index;
(17) the
provisions, if any, relating to any security provided
for the Securities of
the Series;
(18) any
addition to or change in the Events of Default which applies to any Securities
of the Series and any change in the right of the Trustee or the requisite
Holders of such Securities to declare the principal amount thereof due and
payable pursuant to
Section
6.2
hereof;
(19) any
addition to or change in the covenants set forth in
Article 4
or
Article 5
hereof which
applies to Securities of the Series;
(20) any
other terms of the Securities of the Series (which terms shall not be
inconsistent with the provisions of this Indenture, except as permitted by
Section 8.1
hereof, but which
may modify or delete any provision of this Indenture insofar as it applies to
such Series);
(21) any
depositories, interest rate calculation agents, exchange rate calculation agents
or other agents with respect to Securities of such Series if other than those
appointed herein;
(22) the
terms and conditions, if any, upon which the Securities and any guarantees
thereof shall be subordinated in right of payment to other indebtedness of the
Company or any guarantor;
(23) the
form and terms of any guarantee of the Securities;
(24) if
applicable, that the Securities of the Series, in whole or any specified part,
shall be defeasible pursuant to
Article 9
hereof;
and
(25) if
applicable, that the Securities of the Series, in whole or any specified part,
shall be convertible into equity securities of the Company.
All Securities of any one Series need
not be issued at the same time and may be issued from time to time, consistent
with the terms of this Indenture, if so provided
by or pursuant to the
Board Resolution, supplemental indenture or Officers’ Certificate referred to
above, and the authorized principal amount of any Series may not be increased to
provide for issuances of additional Securities of such Series, unless otherwise
provided
in such
Board Resolution, supplemental indenture or Officers’
Certificate.
2.3
Execution and
Authentication
. The Securities shall be executed on behalf of the
Company by two Officers of the Company or an Officer and an Assistant Secretary
of the Company. Each such signature may be either manual or
facsimile. The Company’s seal may be impressed, affixed, imprinted or
reproduced on the Securities and may be in facsimile form. If an Officer
whose signature is on a Security no longer holds that office at the time the
Security is authenticated, the Security shall nevertheless be valid. A
Security shall not be valid until authenticated by the manual signature of the
Trustee or an authenticating agent. The signature shall be conclusive
evidence that the Security has been authenticated under this Indenture.
The Trustee shall at any time, and from time to time, authenticate Securities
for original issue in the principal amount provided
in the Board
Resolution, supplemental indenture hereto or Officers’ Certificate, upon receipt
by the Trustee of a Company Order. Such Company Order may authorize
authentication and delivery pursuant to oral or electronic instructions from the
Company or its duly authorized agent or agents, which oral instructions shall be
promptly confirmed in writing. Each Security shall be dated the date of
its authentication unless otherwise provided
by a Board Resolution,
a supplemental indenture hereto or an Officers’ Certificate. The aggregate
principal amount of Securities of any Series outstanding at any time may not
exceed any limit upon the maximum principal amount for such Series set forth in
the Board Resolution, supplemental indenture hereto or Officers’ Certificate
delivered pursuant to
Section
2.2
hereof, except as provided
in
Section 2.8
hereof.
Prior to the issuance of Securities of
any Series, the Trustee shall have received and (subject to
Section 7.2
hereof) shall be
fully protected in relying on: (a) the Board Resolution, supplemental
indenture hereto or Officers’ Certificate establishing the form of the
Securities of that Series or of Securities within that Series and the terms of
the Securities of that Series or of Securities within that Series, (b) an
Officers’ Certificate complying with
Section 10.4
hereof, and (c)
an Opinion of Counsel complying with
Section 10.4
hereof.
The Trustee shall have the right to
decline to authenticate and deliver any Securities of such
Series: (a) if the Trustee, being advised in writing by outside
counsel, determines that such action may not lawfully be taken; or (b) if the
Trustee in good faith by its board of directors or trustees, executive committee
or a trust committee of directors and/or vice-presidents shall reasonably
determine that such action would expose the Trustee to personal liability, or
cause it to have a conflict of interest with respect to Holders of any then
outstanding Series of Securities.
The Trustee may appoint an
authenticating agent reasonably acceptable to the Company to authenticate
Securities. An authenticating agent may authenticate Securities whenever
the Trustee may do so. Any appointment shall be evidenced by instrument
signed by an authorized officer of the Trustee, a copy of which shall be
furnished to the Company. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
2.4
Registrar and Paying
Agent
. The Company shall maintain an office or agency where
Securities of any Series may be presented for registration of transfer or for
exchange (“
Registrar
”),
an office or agency where Securities may be presented for payment (“
Paying Agent
”), and an office
or agency where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served (“
Service Agent
”). The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may have one or more co-registrars and one or more
additional paying agents. The Company shall give prompt written notice to
the Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such
required office or to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
address of the Trustee as set forth in
Section 10.2
hereof.
Neither the Company nor any Affiliate of the Company may act as Paying
Agent.
The Company may change any Paying
Agent, Registrar or co-registrar without notice to any Securityholder. The
Company may also from time to time designate one or more other offices or
agencies where the Securities may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations. The
Company shall give prompt written notice to the Trustee of such designation or
rescission and of any change in the location of any such other office or
agency.
The Company shall enter into an
appropriate agency agreement with any Registrar or Paying Agent not a party to
this Indenture. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee
of the name and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, or agent for service of notices and
demands, or fails to give the foregoing notice, the Trustee shall act as
such. The Company hereby appoints the Trustee as the initial Registrar,
Paying Agent and Service Agent for each Series unless another Registrar, Paying
Agent or Service Agent, as the case may be, is appointed prior to the time
Securities of that Series are first issued. The Company hereby initially
designates the Corporate Trust Office of the Trustee as such office of the
Company.
2.5
Paying Agent To Hold Assets
in Trust
. The Trustee as Paying Agent shall, and the Company shall
require each Paying Agent other than the Trustee to agree in writing that each
Paying Agent shall, hold in trust for the benefit of the Holders of any Series
of Securities or the Trustee all assets held by the Paying Agent for the payment
of principal of (and premium, if any) and interest, if any, on such Series of
Securities (whether such assets have been distributed to it by the Company or
any other obligor on such Series of Securities), and the Company and the Paying
Agent shall notify the Trustee in writing of any Default by the Company (or any
other obligor on such Series of Securities) in making any such payment.
The Company at any time may require a Paying Agent to distribute all assets held
by it to the Trustee and account for any assets disbursed, and the Trustee may
at any time during the continuance of any payment default with respect to any
Series of Securities, upon written request to a Paying Agent, require such
Paying Agent to distribute all assets held by it to the Trustee and to account
for any assets distributed. Upon distribution to the Trustee of all assets
that shall have been delivered by the Company to the Paying Agent, the Paying
Agent shall have no further liability for such assets.
2.6
Securityholder
Lists
. The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Securityholders of each Series of Securities. If the Trustee
is not the Registrar, the Company shall furnish to the Trustee as of each
regular record date for the payment of interest on the Securities of a Series
and before each related Interest Payment Date, and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders of
each Series of Securities.
2.7
Transfer and
Exchange
. When Securities of a Series are presented to the
Registrar with a request to register the transfer thereof, the Registrar shall
register the transfer as requested, and when such Securities of a Series are
presented to the Registrar with a request to exchange them for an equal
principal amount of other authorized denominations of Securities of the same
Series, the Registrar shall make the exchange as requested. To permit
transfers and exchanges, upon surrender of any Security for registration of
transfer at the office or agency maintained pursuant to
Section 2.4
hereof, the
Company shall execute and the Trustee shall authenticate Securities at the
Registrar’s request.
Notwithstanding any other provision of
this
Section 2.7
,
unless and until it is exchanged in whole or in part for definitive Securities,
a Global Security may not be transferred except as a whole by the Depositary to
a nominee of such Depositary or by a nominee of such Depositary to such
Depositary or another nominee of such Depositary or by such Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary.
If (i) the Depositary is at any time
unwilling, unable or ineligible to continue as Depositary and a successor
Depositary is not appointed by the Company within 90 days after the date the
Company is so informed in writing or becomes aware of the same, or (ii) a
Default or an Event of Default has occurred and is continuing, the Company
promptly will execute and deliver to the Trustee definitive Securities, and the
Trustee, upon receipt of a Company Request for the authentication and delivery
of such definitive
Securities (which the Company will
promptly execute and deliver to the Trustee), will authenticate and deliver
definitive Securities, without charge, in an aggregate principal amount equal to
the principal amount of the outstanding Global Securities, in exchange for and
upon surrender of all such Global Securities.
In any exchange provided
for in the preceding
paragraph, the Company will execute and the Trustee will authenticate and
deliver definitive Securities in the authorized denominations provided
by
Section 2.3
hereof.
Upon the exchange of a Global Security for definitive Securities, such Global
Security shall be canceled by the Trustee. Definitive Securities issued in
exchange for Global Securities pursuant to this
Section 2.7
shall be
registered in such names and in such authorized denominations as the Depositary,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee.
All Securities issued upon any
registration of transfer or exchange of Securities shall be the valid
obligations of the Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon such
registration of transfer or exchange. Every Security presented or
surrendered for registration of transfer or for exchange shall (if so required
by the Company or the Registrar or a co-Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Registrar or a co-Registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing.
Any exchange or transfer shall be
without charge, except that the Company may require payment by the Holder of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in relation to a transfer or exchange, but this provision shall not apply to any
exchange pursuant to
Section
2.11
,
Section
3.6
or
Section
8.5
hereof. The Trustee shall not be required to register transfers
of Securities of any Series or to exchange Securities of any Series for a period
of 15 days before selection for redemption of such Securities. The Trustee
shall not be required to exchange or register transfers of Securities of any
Series called or being called for redemption in whole or in part, except the
unredeemed portion of such Security being redeemed in part.
2.8
Replacement
Securities
. If a mutilated Security is surrendered to the Trustee
or if the Holder of a Security presents evidence to the satisfaction of the
Company and the Trustee that the Security has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee shall authenticate a replacement
Security of the same Series and of like tenor and principal amount and bearing a
number not contemporaneously outstanding. An indemnity bond may be
required by the Company or the Trustee that is sufficient in the reasonable
judgment of the Company or the Trustee, as the case may be, to protect the
Company, the Trustee or any Agent from any loss which any of them may suffer if
a Security is replaced. The Company may charge such Holder for its
reasonable, out-of-pocket expenses in replacing a Security, including the fees
and expenses of counsel. Every replacement Security shall constitute an
additional obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionally with
any and all other Securities of that Series duly issued hereunder.
2.9
Outstanding
Securities
. Securities outstanding at any time are all Securities
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, and those described in this
Section 2.9
as not
outstanding.
If a Security is replaced pursuant to
Section 2.8
hereof
(other than a mutilated Security surrendered for replacement), it ceases to be
outstanding until the Company and the Trustee receive proof satisfactory to each
of them that the replaced Security is held by a bona fide purchaser. A
mutilated Security ceases to be outstanding upon surrender of such Security and
replacement thereof pursuant to
Section 2.8
hereof.
If a Paying Agent holds on a Redemption
Date or Maturity Date of a Series of Securities money sufficient to pay the
principal of (and premium, if any) and interest, if any, on Securities payable
on that date and is not prohibited from paying such money to the Holders thereof
pursuant to the terms of this Indenture, then on and after that date such
Securities cease to be outstanding and interest on them ceases to
accrue.
Subject to
Section 2.10
hereof, a
Security does not cease to be outstanding solely because the Company or an
Affiliate holds the Security.
2.10
Treasury
Securities
. In determining whether the Holders of the required
principal amount of Securities of a Series have concurred in any request,
demand, authorization, direction, notice, consent or waiver, Securities of a
Series owned by the Company or an Affiliate shall be disregarded, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such request, demand, authorization, direction, notice, consent
or waiver only Securities of a Series that the Trustee knows are so owned shall
be so disregarded.
2.11
Temporary
Securities
. Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form, and
shall carry all rights, of definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee shall authenticate
definitive Securities in exchange for temporary Securities presented to
it.
2.12
Cancellation
.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the
Trustee any Securities surrendered to them for transfer, exchange or
payment. At the direction of the Trustee, the Registrar or the Paying
Agent, and no one else, shall cancel and, at the written request of the Company,
shall dispose of all Securities surrendered for transfer, exchange, payment or
cancellation. If the Company shall acquire any of the Securities, such
acquisition shall not operate as a redemption or satisfaction of the
Indebtedness represented by such Securities unless and until the same are
surrendered to the Trustee for cancellation pursuant to this
Section 2.12
.
2.13
Payment of Interest;
Defaulted Interest; Computation of Interest
. Except as otherwise
provided
as
contemplated by
Section
2.2
hereof with respect to any Series of Securities, interest on any
Security which is payable, and is punctually paid or duly provided
for, on any Interest
Payment Date shall be paid to the Person in whose name that Security is
registered at the close of business on the regular record date for such
interest, as provided
in the Board
Resolution, supplemental indenture hereto or Officers’ Certificate establishing
the terms of such Series.
At the option of the Company, Holders
shall receive payments of interest by check, by transfer to an account
maintained by such Holder in the United States or, upon receipt by the Trustee
of a written request from a Holder, by wire transfer of immediately available
funds.
If the Company defaults in a payment of
interest on the Securities, it shall pay the defaulted amounts, plus any
interest payable on defaulted amounts pursuant to
Section 4.1
hereof, to the
persons who are Securityholders on a subsequent special record date, which date
shall be the fifteenth day next preceding the date fixed by the Company for the
payment of defaulted interest or the next succeeding Business Day if such date
is not a Business Day. At least 15 days before the special record date,
the Company shall mail or cause to be mailed to each Securityholder, with a copy
to the Trustee, a notice that states the special record date, the payment date,
and the amount of defaulted interest, and interest payable on such defaulted
interest, if any, to be paid.
Except as otherwise specified as
contemplated by
Section
2.2
hereof for Securities of any Series, interest on the Securities of
each Series shall be computed on the basis of a 360-day year of twelve 30-day
months.
2.14
CUSIP Number
.
The Company in issuing the Securities may use one or more “CUSIP” numbers, and
if so, the Trustee shall use the CUSIP number(s) in notices of redemption or
exchange as a convenience to Holders, provided
that any such notice
may state that no representation is made as to the correctness or accuracy of
the CUSIP number(s) printed in the notice or on the Securities, and that
reliance may be placed only on the other identification numbers printed on the
Securities.
2.15
Provisions for Global
Securities
.
(a) A
Board Resolution, a supplemental indenture hereto or an Officers’ Certificate
shall establish whether the Securities of a Series shall be issued in whole or
in part in the form of one or more Global Securities and the Depositary for such
Global Security or Securities.
(b) Notwithstanding
any provisions to the contrary contained in
Section 2.7
hereof and in
addition thereto, any Global Security shall be exchangeable pursuant to
Section 2.7
hereof for
Securities registered in the names of Holders other than the Depositary for such
Security or its nominee only if (i) such Depositary notifies the Company that it
is unwilling or unable to continue as Depositary for such Global Security or if
at any time such Depositary ceases to be a clearing agency registered under the
Exchange Act, and, in either case, the Company fails to appoint a successor
Depositary within 90 days after such event, (ii) the Company executes and
delivers to the Trustee an Officers’ Certificate to the effect that such Global
Security shall be so exchangeable or (iii) a Default or an Event of Default with
respect to the Securities represented by such Global Security shall have
occurred and be continuing. Any Global Security that is exchangeable
pursuant to the preceding sentence shall be exchangeable for Securities
registered in such names as the Depositary shall direct in writing in an
aggregate principal amount equal to the principal amount of the Global Security
with like tenor and terms. Except as provided
in this
Section 2.15(b)
, a Global
Security may not be transferred except as a whole by the Depositary with respect
to such Global Security to a nominee of such Depositary, by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such a
successor Depositary.
(c) Any
Global Security issued hereunder shall bear a legend in substantially the
following form:
“This
Security is a Global Security within the meaning of the Indenture hereinafter
referred to and is registered in the name of the Depositary or a nominee of the
Depositary. This Security is exchangeable for Securities registered in the
name of a person other than the Depositary or its nominee only in the limited
circumstances described in the Indenture, and may not be transferred except as a
whole by the Depositary to a nominee of the Depositary, by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such a
successor Depositary.”
(d) The
Depositary, as a Holder, may appoint agents and otherwise authorize participants
to give or take any request, demand, authorization, direction, notice, consent,
waiver or other action which a Holder is entitled to give or take under the
Indenture.
(e) Notwithstanding
the other provisions of this Indenture, unless otherwise specified as
contemplated by
Section
2.2
hereof, payment of the principal of (and premium, if any) and
interest, if any, on any Global Security shall be made to the Depositary or its
nominee in its capacity as the Holder thereof.
(f) Except
as provided
in
Section 2.15(e)
hereof,
the Company, the Trustee and any Agent shall treat a person as the Holder of
such principal amount of outstanding Securities of any Series represented by a
Global Security as shall be specified in a written statement of the Depositary
(which may be in the form of a participants’ list for such Series) with respect
to such Global Security, for purposes of obtaining any consents, declarations,
waivers or directions required to be given by the Holders pursuant to this
Indenture.
2.16
Persons Deemed
Owners
. Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee, the Registrar and any agent of the Company,
the Registrar or the Trustee may treat the Person in whose name such Security is
registered as the owner of such Security for the purpose of receiving payment of
principal of (and premium, if any) and (subject to
Section 2.13
hereof)
interest, if any, on such Security and for all other purposes whatsoever, and
neither the Company, the Trustee, the Registrar nor any agent of the Company,
the Registrar or the Trustee shall be affected by notice to the
contrary.
\
ARTICLE
3
REDEMPTION
3.1
Notices of
Trustee
. The Company may, with respect to any Series of Securities,
reserve the right to redeem and pay the Series of Securities or may covenant to
redeem and pay the Series of Securities or any part thereof prior to the Stated
Maturity thereof at such time and on such terms as provided
for in such Securities
or the related Board Resolution, supplemental indenture or Officers’
Certificate. If a Series of Securities is redeemable and the Company
elects to redeem such Securities of a Series, it shall notify the Trustee of the
Redemption Date and the principal amount of Securities to be redeemed at least
35 days (unless a shorter notice shall be satisfactory to the Trustee) but not
more than 60 days before the Redemption Date. Any such notice may be
canceled at any time prior to notice of such redemption being mailed to any
Holder and shall thereby be void and of no effect.
3.2
Selection by Trustee of
Securities to Be Redeemed
. Unless otherwise indicated for a
particular Series of Securities by a Board Resolution, a supplemental indenture
or an Officers’ Certificate, if fewer than all of the Securities of a Series are
to be redeemed, the Trustee shall select the Securities of a Series to be
redeemed pro rata, by lot or by any other method that the Trustee considers fair
and appropriate and, if such Securities are listed on any securities exchange,
by a method that complies with the requirements of such
exchange.
The Trustee shall make the selection
from Securities of a Series outstanding and not previously called for redemption
and shall promptly notify the Company in writing of the Securities selected for
redemption and, in the case of any Security selected for partial redemption, the
principal amount thereof to be redeemed. Securities of a Series in
denominations of $1,000 may be redeemed only in whole. The Trustee may
select for redemption portions of the principal of Securities of a Series that
have denominations larger than $1,000. Securities of a Series and portions
of them it selects shall be in amounts of $1,000 or, with respect to Securities
of any Series issuable in other denominations pursuant to
Section 2.2(10)
hereof, the
minimum principal denomination for each Series and integral multiples
thereof. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for
redemption.
3.3
Notice of
Redemption
. Unless otherwise indicated for a particular Series by
Board Resolution, a supplemental indenture hereto or an Officers’ Certificate,
at least 30 days, and no more than 60 days, before a Redemption Date, the
Company shall mail, or cause to be mailed, a notice of redemption by first-class
mail to each Holder of Securities to be redeemed at his or her last address as
the same appears on the registry books maintained by the Registrar. The
notice shall identify the Securities to be redeemed (including the CUSIP
number(s) thereof, if any) and shall state:
(1) the
Redemption Date;
(2) the
redemption price;
(3) if
any Security of a Series is being redeemed in part, the portion of the principal
amount of such Security of a Series to be redeemed and that, after the
Redemption Date and upon surrender of such Security of a Series, a new Security
or Securities in principal amount equal to the unredeemed portion will be
issued;
(4) the
name and address of the Paying Agent;
(5) that
Securities of a Series called for redemption must be surrendered to the Paying
Agent to collect the redemption price, and the place or places where each such
Security is to be surrendered for such payment;
(6) that,
unless the Company defaults in making the redemption payment, interest on the
Securities of a Series called for redemption ceases to accrue on or after the
Redemption Date, and the only remaining right of the Holders of such Securities
is to receive payment of the redemption price upon surrender to the Paying Agent
of the Securities redeemed; and
(7) if
fewer than all the Securities of a Series are to be redeemed, the identification
of the particular Securities of a Series (or portion thereof) to be redeemed, as
well as the aggregate principal amount of Securities of a Series to be redeemed
and the aggregate principal amount of Securities of a Series to be outstanding
after such partial redemption.
At the Company’s request, the Trustee
shall give the notice of redemption in the Company’s name and at the Company’s
sole expense.
3.4
Effect of Notice of
Redemption
. Once the notice of redemption described in
Section 3.3
hereof is mailed,
Securities of a Series called for redemption become due and payable on the
Redemption Date and at the redemption price, plus interest, if any, accrued to
(but not including) the Redemption Date. Upon surrender to the Trustee or
Paying Agent, such Securities of a Series shall be paid at the redemption price,
plus accrued interest, if any, to (but not including) the Redemption Date,
provided
that if
the Redemption Date is after a regular interest payment record date and on or
prior to the next Interest Payment Date, the accrued interest shall be payable
to the Holder of the redeemed Securities registered on the relevant record date,
as specified by the Company in the notice to the Trustee pursuant to
Section 3.1
hereof.
3.5
Deposit of Redemption
Price
. On or prior to the Redemption Date, the Company shall
deposit with the Paying Agent money sufficient to pay the redemption price of
and accrued interest, if any, on all Securities to be redeemed on that date
other than Securities or portions thereof called for redemption on that date
which have been delivered by the Company to the Trustee for
cancellation.
On and after any Redemption Date, if
money sufficient to pay the redemption price of and accrued interest on
Securities called for redemption shall have been made available in accordance
with the preceding paragraph and the Company and the Paying Agent are not
prohibited from paying such moneys to Holders, the Securities called for
redemption will cease to accrue interest and the only right of the Holders of
such Securities will be to receive payment of the redemption price of and,
subject to the proviso in
Section 3.4
hereof, accrued
and unpaid interest on such Securities to the Redemption Date. If any
Security called for redemption shall not be so paid, interest will be paid, from
the Redemption Date until such redemption payment is made, on the unpaid
principal of the Security and any premium or interest, if any, not paid on such
unpaid principal, in each case, at the rate and in the manner provided
in the
Securities.
3.6
Securities Redeemed in
Part
. Upon surrender of a Security of a Series that is redeemed in
part, the Trustee shall authenticate for a Holder a new Security of the same
Series equal in principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE
4
COVENANTS
4.1
Payment of
Securities
. The Company shall pay the principal of (and premium, if
any) and interest, if any, on each Series of Securities on the dates and in the
manner provided
in
such Securities and this Indenture. An installment of principal or
interest shall be considered paid on the date it is due if the Trustee or Paying
Agent holds on that date money designated for and sufficient to pay such
installment and is not prohibited from paying such money to the Holders pursuant
to the terms of this Indenture or otherwise. The Company shall pay
interest on overdue principal, and overdue interest, to the extent lawful, at
the rate specified in the Series of Securities.
4.2
SEC Reports
.
The Company will:
(1) file
with the Trustee, within 15 days after the Company is required to file the same
with the SEC, copies of the annual reports and of the information, documents,
and other reports (or copies of such portions of any of the foregoing as the SEC
may from time to time by rules and regulations prescribe) which the Company may
be required to file with the SEC pursuant to Section 13 or Section 15(d) of the
Exchange Act; or, if the Company is not required to file information, documents
or reports pursuant to either of such Sections, then it will file with the
Trustee and the SEC, in accordance with rules and regulations prescribed from
time to time by the SEC, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;
(2) file
with the Trustee and the SEC, in accordance with rules and regulations
prescribed from time to time by the SEC, such additional information, documents
and reports with respect to compliance by the Company with the conditions and
covenants of this Indenture as may be required from time to time by such rules
and regulations; and
(3) comply
with all other provisions of TIA Section 314(a).
4.3
Waiver of Stay, Extension or
Usury Laws
. The Company covenants (to the extent that it may
lawfully do so) that they will not at any time insist upon, or plead (as a
defense or otherwise) or in any manner whatsoever claim or take the benefit or
advantage of, any stay, extension law, usury law or other law which would
prohibit or forgive the Company from paying all or any portion of the principal
of (and premium, if any) and interest, if any, on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that they may lawfully do so) the Company hereby expressly waives all benefit or
advantage of any such law, and covenants that it will not hinder, delay or
impede the execution of any power herein granted to the Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
4.4
Compliance
Certificate
.
(a) The
Company shall deliver to the Trustee, within 90 days after the end of each
fiscal year of the Company, an Officers’ Certificate which complies with TIA
Section 314(a)(4) stating that a review of the activities of the Company and its
Subsidiaries during such fiscal year has been made under the supervision of the
signing Officers with a view to determining whether each has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge each has kept, observed, performed and fulfilled each and
every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions hereof
(or, if a Default or Event of Default shall have occurred, describing all such
Defaults or Events of Default of which he or she may have knowledge and what
action each is taking or proposes to take with respect thereto) and that to the
best of his or her knowledge no event has occurred and remains in existence by
reason of which payments on account of the principal of (and premium, if any)
and interest, if any, on the Securities is prohibited or if such event has
occurred, a description of the event and what action each is taking or proposes
to take with respect thereto.
(b) (i)
If any Default or Event of Default has occurred and is continuing or (ii) if any
Holder seeks to exercise any remedy hereunder with respect to a claimed Default
under this Indenture or the Securities, the Company shall deliver to the Trustee
an Officers’ Certificate specifying such event, notice or other action within
five Business Days of its becoming aware of such occurrence and what action the
Company is taking or proposes to take with respect thereto.
4.5
Payment of Taxes and Other
Claims
. The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all taxes, assessments
and governmental charges (including withholding taxes and any penalties,
interest and additions to taxes) levied or imposed upon it or any of its
Significant Subsidiaries or properties of it or any of its Significant
Subsidiaries and (ii) all lawful claims for labor, materials and supplies that,
if unpaid, might by law become a Lien upon the property of it or any of its
Significant Subsidiaries;
provided, however,
that
neither the Company nor any of its Significant Subsidiaries shall be required to
pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim if the amount, applicability or validity thereof is being
contested in good faith by appropriate proceedings and an adequate reserve has
been established therefor to the extent required by GAAP.
4.6
Corporate
Existence
. Subject to
Article 5
hereof, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence, and the corporate or other existence
of each Significant Subsidiary, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company and of
each Significant Subsidiary, and the rights (charter and statutory), licenses
and franchises of the Company and its Significant Subsidiaries;
provided, however,
that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate or other existence of any of its Significant Subsidiaries, if
the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Significant Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders.
4.7
Maintenance of
Properties
. The Company will cause all properties used or useful in
the conduct of its business or the business of any Subsidiary to be maintained
and kept in good condition, repair and working order and supplied with all
necessary equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times;
provided, however,
that
nothing in this
Section
4.7
shall prevent the Company from discontinuing the operation or
maintenance of any of such properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to the
Holders.
ARTICLE
5
SUCCESSOR
CORPORATION
5.1
Limitation on Consolidation,
Merger and Sale of Assets
.
(a) The
Company will not, in any transaction or series of transactions, merge or
consolidate with or into, or sell, assign, convey, transfer, lease or otherwise
dispose of all or substantially all of its properties and assets (as an entirety
or substantially as an entirety in one transaction or a series of related
transactions), to any Person or Persons, unless at the time of and after giving
effect thereto (i) either (A) if the transaction or series of transactions is a
merger or consolidation, the Company shall be the surviving Person of such
merger or consolidation, or (B) the Person formed by such consolidation or into
which the Company is merged or to which the properties and assets of the Company
are transferred (any such surviving person or transferee Person being the “
Surviving Entity
”) shall be a
corporation organized and existing under the laws of the United States of
America, any state thereof or the District of Columbia and shall expressly
assume by a supplemental indenture executed and delivered to the Trustee, in
form reasonably satisfactory to the Trustee, all the obligations of the Company
(including, without limitation, the obligation to pay the principal of (and
premium, if any) and interest, if any, on the Securities and the performance of
the other covenants) under the Securities of each Series and this Indenture, and
in each case, this Indenture shall remain in full force and effect; and (ii)
immediately before and immediately after giving effect to such transaction or
series of transactions on a pro forma basis (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions), no Default or Event of
Default shall have occurred and be continuing.
(b) In
connection with any consolidation, merger or transfer of assets contemplated by
this
Section 5.1
, the
Company shall deliver, or cause to be delivered, to the Trustee, in form and
substance reasonably satisfactory to the Trustee, an Officers’ Certificate and
an Opinion of Counsel, each stating that such consolidation, merger or transfer
and the supplemental indenture in respect thereto comply with this
Section 5.1
and that all
conditions precedent herein provided
for relating to such
transaction or transactions have been complied with.
5.2
Successor Person
Substituted
. Upon any consolidation or merger, or any transfer of
all or substantially all of the assets of the Company in accordance with
Section 5.1
hereof, the
successor corporation formed by such consolidation or into which the Company is
merged or to which such transfer is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor corporation had been named as the
Company herein, and thereafter (except with respect to any such transfer which
is a lease) the predecessor corporation shall be relieved of all obligations and
covenants under this Indenture and the Securities.
ARTICLE
6
DEFAULTS
AND REMEDIES
6.1
Events of
Default
. “
Events
of Default
,” wherever used herein with respect to Securities of any
Series, means any one of the following events, unless in the establishing Board
Resolution, supplemental indenture or Officers’ Certificate, it is provided
that such Series shall
not have the benefit of said Event of Default:
(1) there
is a default in the payment of any principal of or premium, if any, on the
Securities when the same becomes due and payable at maturity, upon acceleration,
redemption or otherwise;
(2) there
is a default in the payment of any interest on any Security of a Series when the
same becomes due and payable and the Default continues for a period of 30
days;
(3) the
Company defaults in the observance or performance of any other covenant in the
Securities of a Series or this Indenture for 90 days after written notice from
the Trustee or the Holders of not less than 25% in the aggregate principal
amount of the Securities of such Series then outstanding;
(4) the
Company or any Significant Subsidiary pursuant to or within the meaning of any
Bankruptcy Law:
(A) commences
a voluntary case,
(B) consents
to the entry of an order for relief against it in an involuntary
case,
(C) consents
to the appointment of a Custodian of it or for all or substantially all of its
property,
(D) makes
a general assignment for the benefit of its creditors, or
(E) generally
is not paying its debts as they become due;
(5) a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that:
(A) is
for relief against the Company or any Significant Subsidiary in an involuntary
case;
(B) appoints
a Custodian of the Company or any Significant Subsidiary or for all or
substantially all of the property of the Company or any Significant Subsidiary;
or
(C) orders
the liquidation of the Company or any Significant Subsidiary, and the order or
decree remains unstayed and in effect for 60 days; or
(6) any
other Event of Default provided
with respect to
Securities of that Series, which is specified in a Board Resolution, a
supplemental indenture hereto or an Officers’ Certificate, in accordance with
Section 2.2(18)
hereof.
The Trustee may withhold notice of any
Default (except in payment of principal of (and premium, if any) and interest,
if any, on the Securities) to the Holders of the Securities of any Series in
accordance with
Section
7.5
hereof.
6.2
Acceleration
.
If an Event of Default with respect to Securities of any Series at the time
outstanding (other than an Event of Default arising under
Section 6.1(4)
or
Section 6.1(5)
hereof) occurs
and is continuing, the Trustee by written notice to the Company, or the Holders
of not less than 25% in aggregate principal amount of the Securities of that
Series then outstanding may by written notice to the Company and the Trustee
declare that the entire principal amount of all the Securities of that Series
then outstanding plus accrued and unpaid interest to the date of acceleration
are immediately due and payable, in which case such amounts shall become
immediately due and payable;
provided, however,
that after
such acceleration but before a judgment or decree based on such acceleration is
obtained by the Trustee, the Holders of a majority in aggregate principal amount
of the outstanding Securities of that Series may rescind and annul such
acceleration and its consequences if (i) all existing Events of Default, other
than the nonpayment of accelerated principal (and premium, if any) or interest
that has become due solely because of the acceleration, have been cured or
waived, (ii) to the extent the payment of such interest is lawful, interest on
overdue installments of interest and overdue principal, which has become due
otherwise than by such declaration of acceleration, has been paid and (iii) the
rescission would not conflict with any judgment or decree. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto. In case an Event of Default specified in
Section 6.1(4)
or
Section 6.1(5)
hereof with
respect to the Company occurs, such principal (and premium, if any) and interest
amount with respect to all of the Securities of that Series shall be due and
payable immediately without any declaration or other act on the part of the
Trustee or the Holders of the Securities of that Series.
6.3
Other Remedies
.
If an Event of Default with respect to Securities of any Series at the time
outstanding occurs and is continuing, the Trustee may pursue any available
remedy by proceeding at law or in equity to collect the payment of principal of
(and premium, if any) and interest, if any, on the Securities of that Series or
to enforce the performance of any provision of the Securities of that Series or
this Indenture. The Trustee may maintain a proceeding even if it does not
possess any of the Securities of that Series or does not produce any of them in
the proceeding. A delay or omission by the Trustee or any Securityholder
in exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. No remedy is exclusive of any other remedy. All
available remedies are cumulative to the extent permitted by
law.
6.4
Waiver of Past Defaults and
Events of Default
. Subject to
Section 6.2
,
Section 6.7
and
Section 8.2
hereof, the
Holders of a majority in principal amount of the Securities of any Series then
outstanding have the right to waive any existing Default or Event of Default
with respect to such Series or compliance with any provision of this Indenture
(with respect to such Series) or the Securities of such Series. Upon any
such waiver, such Default with respect to such Series shall cease to exist, and
any Event of Default with respect to such Series arising therefrom shall be
deemed to have been cured for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or Event of Default or
impair any right consequent thereto.
6.5
Control by
Majority
. The Holders of a majority in principal amount of the
Securities of any Series then outstanding may direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee by this Indenture with
respect to such Series. The Trustee, however, may refuse to follow any
direction that conflicts with law or this Indenture or that the Trustee
determines may be unduly prejudicial to the rights of another Securityholder or
that may involve the Trustee in personal liability; provided
that the Trustee may
take any other action deemed proper by the Trustee which is not inconsistent
with such direction.
6.6
Limitation on
Suits
. Subject to
Section 6.7
hereof, a
Securityholder may not institute any proceeding or pursue any remedy with
respect to this Indenture or the Securities of a Series unless:
(1) the
Holder gives to the Trustee written notice of a continuing Event of Default with
respect to the Securities of that Series;
(2) the
Holders of at least 25% in aggregate principal amount of the Securities of such
Series then outstanding make a written request to the Trustee to pursue the
remedy;
(3) such
Holder or Holders offer to the Trustee indemnity reasonably satisfactory to the
Trustee against any loss, liability or expense to be incurred in compliance with
such request;
(4) the
Trustee does not comply with the request within 60 days after receipt of the
request and the offer of indemnity; and
(5) no
direction inconsistent with such written request has been given to the Trustee
during such 60-day period by the Holders of a majority in aggregate principal
amount of the Securities of such Series then outstanding.
A Securityholder may not use this
Indenture to prejudice the rights of another Securityholder or to obtain a
preference or priority over another Securityholder.
6.7
Rights of Holders To Receive
Payment
. Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security of a Series to receive payment of principal of
(and premium, if any) and interest, if any, on the Security of such Series on or
after the respective due dates expressed in the Security of such Series, or to
bring suit for the enforcement of any such payment on or after such respective
dates, is absolute and unconditional and shall not be impaired or affected
without the consent of the Holder.
6.8
Collection Suit by
Trustee
. If an Event of Default in payment of principal, premium or
interest specified in
Section
6.1(1)
or
Section
6.1(2)
hereof with respect to Securities of any Series at the time
outstanding occurs and is continuing, the Trustee may recover judgment in its
own name and as trustee of an express trust against the Company (or any other
obligor on the Securities of that Series) for the whole amount of unpaid
principal and accrued interest remaining unpaid, together with interest on
overdue principal and, to the extent that payment of such interest is lawful,
interest on overdue installments of interest, in each case at the rate then
borne by the Securities of that Series, and such further amounts as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
6.9
Trustee May File Proofs of
Claim
. The Trustee may 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 the
Securityholders allowed in any judicial proceedings relative to the Company (or
any other obligor upon the Securities), any of their respective creditors or any
of their respective property and shall be entitled and empowered to collect and
receive any monies or other property payable or deliverable on any such claims
and to distribute the same after deduction of its charges and expenses to the
extent that any such charges and expenses are not paid out of the estate in any
such proceedings and any custodian in any such judicial proceeding is hereby
authorized by each Securityholder 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 to it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under
Section 7.7
hereof.
Nothing herein contained shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Securityholder any plan or
reorganization, arrangement, adjustment or composition affecting the Securities
of a Series or the rights of any Holder thereof, or to authorize the Trustee to
vote in respect of the claim of any Securityholder in any such
proceedings.
6.10
Priorities
. If
the Trustee collects any money pursuant to this
Article 6
, it shall pay out
the money in the following order:
FIRST: to
the Trustee for amounts due under
Section 7.7
hereof;
SECOND:
to Securityholders for amounts then due and unpaid for principal of (and
premium, if any) and interest, if any, on the Securities in respect of which or
for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable on
such Securities for principal and any premium and interest, respectively;
and
THIRD: to
the Company.
The Trustee may fix a record date and
payment date for any payment to Securityholders pursuant to this
Section 6.10
hereof.
6.11
Undertaking for
Costs
. In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys’ fees, against any party litigant in the suit, having due
regard to the merits and good faith of the claims or defenses made by the party
litigant. This
Section
6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant
to
Section 6.7
hereof
or a suit by Holders of more than 10% in principal amount of the Securities of a
Series then outstanding.
ARTICLE
7
TRUSTEE
7.1
Duties of
Trustee
.
(a) If
an Event of Default has occurred and is continuing, the Trustee shall exercise
such of the rights and powers vested in it by this Indenture and use the same
degree of care and skill in its exercise as a prudent person would exercise or
use under the same circumstances in the conduct of his own affairs.
(b) Except
during the continuance of an Event of Default:
(1) The
Trustee need perform only those duties that are specifically set forth in this
Indenture and no covenants or obligations shall be implied in this Indenture
against the Trustee.
(2) In
the absence of bad faith on its part, the Trustee may conclusively rely, as to
the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture but, in the case of any such certificates
or opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture.
(c) The
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except
that:
(1) This
paragraph does not limit the effect of
paragraph (b)
of this
Section 7.1
.
(2) The
Trustee shall not be liable for any error of judgment made in good faith by a
Responsible Officer, unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(3) The
Trustee shall not be liable with respect to any action it takes or omits to take
in good faith in accordance with a direction received by it pursuant to
Section 6.2
and
Section 6.5
hereof.
(d) No
provision of this Indenture shall require the Trustee to expend or risk its own
funds or otherwise incur any financial liability in the performance of any of
its rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity satisfactory to it against such
risk or liability is not reasonably assured to it.
(e) Whether
or not therein expressly so provided,
paragraphs (a)
,
(b)
,
(c)
and
(d)
of this
Section 7.1
shall govern
every provision of this Indenture that in any way relates to the
Trustee.
(f) The
Trustee shall not be liable for interest on any money received by it except as
the Trustee may agree in writing with the Company. Money held in trust by
the Trustee need not be segregated from other funds except to the extent
required by the law.
(g) The
Paying Agent, the Registrar and any authenticating agent shall be entitled to
the protections, immunities and standard of care set forth in
paragraphs (a), (b), (c),
and
(d)
of this
Section 7.1
and in
Section 7.2
hereof with
respect to the Trustee.
7.2
Rights of
Trustee
.
(a) Subject
to
Section 7.1
hereof:
(1) The
Trustee may rely on and shall be protected in acting or refraining from acting
upon any document reasonably believed by it to be genuine and to have been
signed or presented by the proper person. The Trustee need not investigate
any fact or matter stated in the document.
(2) Before
the Trustee acts or refrains from acting, it may require an Officers’
Certificate or an Opinion of Counsel, or both, which shall conform to the
provisions of
Section
10.5
hereof. The Trustee shall be protected and shall not be liable
for any action it takes or omits to take in good faith in reliance on such
certificate or opinion.
(3) The
Trustee may act through agents and shall not be responsible for the misconduct
or negligence of any agent appointed by it with due care.
(4) The
Trustee shall not be liable for any action it takes or omits to take in good
faith which it reasonably believes to be authorized or within its rights or
powers.
(5) The
Trustee may consult with counsel of its selection, and the advice or opinion of
such counsel as to matters of law shall be full and complete authorization and
protection from liability in respect of any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(6) 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
Holders pursuant to the provisions of this Indenture, unless such Holders shall
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.
(7) The
Trustee shall not be deemed to have knowledge of any fact or matter unless such
fact or matter is known to a Responsible Officer of the Trustee.
7.3
Individual Rights of
Trustee
. The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may make loans to, accept deposits
from, perform services for or otherwise deal with the Company, or any Affiliate
thereof, with the same rights it would have if it were not Trustee. Any
Agent may do the same with like rights. The Trustee, however, shall be
subject to
Section 7.10
and
Section 7.11
hereof.
7.4
Trustee’s
Disclaimer
. The Trustee makes no representation as to the validity
or adequacy of this Indenture or the Securities (except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture and
authenticate the Securities and perform its obligations hereunder), it shall not
be accountable for the Company’s use of the proceeds from the sale of Securities
or any money paid to the Company pursuant to the terms of this Indenture and it
shall not be responsible for any statement in the Securities other than its
certificates of authentication.
7.5
Notice of
Default
. If a Default or an Event of Default occurs and is
continuing with respect to the Securities of any Series and if it is known to
the Trustee, the Trustee shall mail to each Securityholder of the Securities of
that Series notice of the Default or the Event of Default, as the case may be,
within 30 days after it occurs. Except in the case of a Default or an
Event of Default in payment of the principal of (and premium, if any) and
interest, if any, on any Security of any Series, the Trustee may withhold the
notice if and so long as the Board of Directors of the Trustee, the executive
committee or any trust committee of such board and/or its Responsible Officers
in good faith determine(s) that withholding the notice is in the interests of
the Securityholders of that Series.
7.6
Reports by Trustee to
Holders
. If and to the extent required by the TIA, within 60 days
after September 1 of each year, commencing the September 1 following the date of
this Indenture, the Trustee shall mail to each Securityholder a brief report
dated as of such September 1 that complies with TIA Section 313(a). The
Trustee also shall comply with TIA Sections 313(b) and 313(c). A copy of
each report at the time of its mailing to Securityholders shall be filed with
the SEC and any stock exchange on which the Securities of that Series are
listed. The Company shall promptly notify the Trustee when the Securities
of any Series are listed on any stock exchange, and the Trustee shall comply
with TIA Section 313(d).
7.7
Compensation and
Indemnity
. The Company shall pay to the Trustee from time to time
reasonable compensation for its services. The Trustee’s compensation shall
not be limited by any provision of law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for
all reasonable disbursements, expenses and advances incurred or made by it in
connection with its duties under this Indenture, including the reasonable
compensation, disbursements and expenses of the Trustee’s agents and
counsel. The Company shall indemnify the Trustee for, and hold it harmless
against, any and all loss or liability incurred by it in connection with the
acceptance or performance of its duties under this Indenture including the
reasonable costs and expenses of defending itself against any claim or liability
in connection with the exercise or performance of any of its powers or duties
hereunder. The Trustee shall notify the Company promptly of any claim
asserted against the Trustee for which it may seek indemnity. However, the
failure by the Trustee to so notify the Company shall not relieve the Company of
its obligations. Notwithstanding the foregoing, the Company need not
reimburse the Trustee for any expense or indemnify it against any loss or
liability incurred by the Trustee through its negligence or bad
faith.
To secure the payment obligations of
the Company in this
Section
7.7
, the Trustee shall have a Lien prior to the Securities of any Series
on all money or property held or collected by the Trustee, except such money or
property held in trust to pay principal of (and premium, if any) and interest,
if any, on particular Securities of that Series.
When the Trustee incurs expenses or
renders services after an Event of Default specified in
clauses (4)
or
(5)
of
Section 6.1
hereof occurs,
the expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
For purposes of this
Section 7.7
, the term “
Trustee
” shall include any
trustee appointed pursuant to
Article 9
hereof.
7.8
Replacement of
Trustee
. The Trustee may resign with respect to the Securities of
one or more Series by so notifying the Company in writing at least 90 days in
advance of such resignation. The Holders of a majority in principal amount
of the outstanding Securities of any Series may remove the Trustee with respect
to that Series by notifying the removed Trustee in writing and may appoint a
successor Trustee with respect to that Series with the written consent of the
Company, which consent shall not be unreasonably withheld. The Company may
remove the Trustee with respect to that Series at its election if:
(1) the
Trustee fails to comply with, or ceases to be eligible under,
Section 7.10
hereof;
(2) the
Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered
with respect to the Trustee under any Bankruptcy Law;
(3) a
Custodian or other public officer takes charge of the Trustee or its property;
or
(4) the
Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or
if a vacancy exists in the office of Trustee with respect to any Series of
Securities for any reason, the Company shall promptly notify each Holder of such
event and shall promptly appoint a successor Trustee. If a successor
Trustee with respect to the Securities of one or more Series does not take
office within 60 days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of at least 10% in principal amount
of the outstanding Securities of the applicable Series may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee with respect to the
Securities of one or more Series fails to comply with
Section 7.10
hereof, any
Securityholder of the applicable Series may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee. A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company.
Immediately following such delivery (i)
the retiring Trustee with respect to one or more Series shall, subject to its
rights under
Section
7.7
hereof, transfer all property held by it as Trustee with respect to
such Series to the successor Trustee, (ii) the resignation or removal of the
retiring Trustee shall become effective, and (iii) the successor Trustee with
respect to such Series shall have all the rights, powers and duties of the
Trustee under this Indenture. A successor Trustee with respect to the
Securities of one or more Series shall mail notice of its succession to each
Securityholder of such Series.
7.9
Successor Trustee by
Consolidation, Merger or Conversion
. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all of its
corporate trust assets to, another corporation, subject to
Section 7.10
hereof, the
successor corporation without any further act shall be the successor
Trustee.
7.10
Eligibility;
Disqualification
. This Indenture shall always have a Trustee who
satisfies the requirements of TIA Sections 310(a)(1), (2) and (5) in every
respect. The Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
condition. The Trustee shall comply with TIA Section 310(b), including the
provision in Section 310(b)(1). If at any time the Trustee shall cease to
be eligible in accordance with the provisions of this
Section 7.10
, it shall resign
immediately in the manner and with the effect specified in this
Article 7
.
7.11
Preferential Collection of
Claims Against Company
. The Trustee shall comply with TIA Section
311(a), excluding any creditor relationship listed in TIA Section 311(b).
A Trustee who has resigned or been removed shall be subject to TIA Section
311(a) to the extent indicated therein.
7.12
Paying Agents
.
The Company shall cause each Paying Agent other than the Trustee to execute and
deliver to it and the Trustee an instrument in which such agent shall agree with
the Trustee, subject to the provisions of this
Section 7.12
:
(1) that
it will hold all sums held by it as agent for the payment of principal of (and
premium, if any) and interest, if any, on the Securities (whether such sums have
been paid to it by the Company or by any obligor on the Securities) in trust for
the benefit of Holders of the Securities or the Trustee;
(2) that
it will at any time during the continuance of any Event of Default, upon written
request from the Trustee, deliver to the Trustee all sums so held in trust by it
together with a full accounting thereof; and
(3) that
it will give the Trustee written notice within three (3) Business Days of any
failure of the Company (or by any obligor on the Securities) in the payment of
any installment of the principal of (and premium, if any) and interest, if any,
on the Securities when the same shall be due and payable.
ARTICLE
8
AMENDMENTS,
SUPPLEMENTS AND WAIVERS
8.1
Without Consent of
Holders
. The Company, when authorized by a Board Resolution, and
the Trustee may amend or supplement this Indenture or the Securities of one or
more Series without notice to or consent of any Securityholder:
(1) to
comply with
Section 5.1
hereof;
(2) to
provide for uncertificated Securities in addition to certificated
Securities;
(3) to
comply with any requirements of the SEC under the TIA;
(4) to
cure any ambiguity, defect or inconsistency, or to make any other change that
does not adversely affect the rights of any Securityholder;
(5) to
provide for the issuance of and establish the form and terms and conditions of
Securities of any Series as permitted by this Indenture; or
(6) to
evidence and provide for the acceptance of appointment hereunder by a successor
Trustee with respect to the Securities of one or more Series and to add to or
change any of the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Trustee.
The Trustee is hereby authorized to
join with the Company in the execution of any supplemental indenture authorized
or permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into any such supplemental indenture which
adversely affects its own rights, duties or immunities under this
Indenture.
8.2
With Consent of
Holders
.
(a) The
Company, when authorized by a Board Resolution, and the Trustee may amend or
supplement this Indenture or the Securities of one or more Series with the
written consent of the Holders of not less than a majority in aggregate
principal amount of the outstanding Securities of such Series affected by such
amendment or supplement without notice to any Securityholder. The Holders
of not less than a majority in aggregate principal amount of the outstanding
Securities of each such Series affected by such amendment or supplement may
waive compliance in a particular instance by the Company with any provision of
this Indenture or the Securities of such Series without notice to any
Securityholder. Subject to
Section 8.4
hereof, without
the consent of each Securityholder affected, however, an amendment, supplement
or waiver, including a waiver pursuant to
Section 6.4
hereof, may
not:
(1) reduce
the amount of Securities whose Holders must consent to an amendment, supplement
or waiver to this Indenture or the Securities;
(2) reduce
the rate of or change the time for payment of interest on any
Security;
(3) reduce
the principal or change the Stated Maturity of any Security or reduce the amount
of, or postpone the date fixed for, the payment of any sinking fund or analogous
obligation;
(4) make
any Security payable in money other than that stated in the
Security;
(5) change
the amount or time of any payment required by the Securities or reduce the
premium payable upon any redemption of the Securities, or change the time before
which no such redemption may be made;
(6) waive
a Default or Event of Default in the payment of the principal of (and premium,
if any) and interest, if any, on any Security (except a rescission of
acceleration of the Securities of any Series by the Holders of at least a
majority in principal amount of the outstanding Securities of such Series and a
waiver of the payment default that resulted from such
acceleration);
(7) waive
a redemption payment with respect to any Security or change any of the
provisions with respect to the redemption of any Securities;
(8) make
any changes in
Section
6.4
or
Section
6.7
hereof or this
Section 8.2
, except to
increase any percentage of Securities the Holders of which must consent to any
matter; or
(9) take
any other action otherwise prohibited by this Indenture to be taken without the
consent of each Holder affected thereby.
(b) Upon
the request of the Company, accompanied by a Board Resolution authorizing the
execution of any such supplemental indenture, and upon the receipt by the
Trustee of evidence reasonably satisfactory to the Trustee of the consent of the
Securityholders as aforesaid and upon receipt by the Trustee of the documents
described in
Section
8.6
hereof, 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, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such supplemental indenture.
(c) It
shall not be necessary for the consent of the Holders under this section to
approve the particular form of any proposed amendment, supplement or waiver, but
it shall be sufficient if such consent approves the substance
thereof.
8.3
Compliance with Trust
Indenture Act
. Every amendment to or supplement of this Indenture
or the Securities shall comply with the TIA as then in effect.
8.4
Revocation and Effect of
Consents
. Until an amendment, supplement, waiver or other action
becomes effective, a consent to it by a Holder of a Security is a continuing
consent conclusive and binding upon such Holder and every subsequent Holder of
the same Security or portion thereof, and of any Security issued upon the
transfer thereof or in exchange therefor or in place thereof, even if notation
of the consent is not made on any such Security. Any such Holder or
subsequent Holder, however, may revoke the consent as to his Security or portion
of a Security, if the Trustee receives the notice of revocation before the date
the amendment, supplement, waiver or other action becomes effective. The
Company may, but shall not be obligated to, fix a record date for the purpose of
determining the Holders entitled to consent to any amendment, supplement, or
waiver which record date shall be at least 30 days prior to the first
solicitation of such consent. If a record date is fixed, then,
notwithstanding the preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only such Persons, shall be
entitled to consent to such amendment, supplement, or waiver or to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for
more than 90 days after such record date without the applicable amendment,
supplement or waiver becoming effective.
After an amendment, supplement, waiver
or other action becomes effective, it shall bind every Securityholder, unless it
makes a change described in any of
clauses (1)
through
(9)
of
Section 8.2
hereof. In
that case the amendment, supplement, waiver or other action shall bind each
Holder of a Security who has consented to it and every subsequent Holder of a
Security or portion of a Security that evidences the same debt as the consenting
Holder’s Security;
provided
that any such waiver shall not impair or affect the right of any Holder
to receive payment of principal of (and premium, if any) and interest, if any,
on a Security, on or after the respective due dates expressed in such Security,
or to bring suit for the enforcement of any such payment on or after such
respective dates without the consent of such Holder.
8.5
Notation on or Exchange of
Securities
. If an amendment, supplement, or waiver changes the
terms of a Security of any Series, the Trustee may request the Holder of such
Security to deliver it to the Trustee. In such case, the Trustee shall
place an appropriate notation on such Security about the changed terms and
return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for such Security shall issue and the
Trustee shall authenticate a new security that reflects the changed terms.
Failure to make the appropriate notation or issue a new Security shall not
affect the validity and effect of such amendment, supplement or
waiver.
8.6
Trustee to Sign Amendments,
Etc
. The Trustee shall sign any amendment, supplement or waiver
authorized pursuant to this
Article 8
hereof if the
amendment, supplement or waiver does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may, but
need not, sign it. In signing such amendment, supplement or waiver the
Trustee shall be entitled to receive and, subject to
Section 7.1
hereof, shall be
fully protected in relying upon an Officers’ Certificate and an Opinion of
Counsel stating that such amendment, supplement or waiver is authorized or
permitted by this Indenture. The Company may not sign an amendment or
supplement until the Board of Directors of the Company approves it.
ARTICLE
9
DISCHARGE
OF INDENTURE; DEFEASANCE
9.1
Discharge of
Indenture
. The Company may terminate its obligations under the
Securities of any Series and this Indenture with respect to such Series, except
the obligations referred to in the last paragraph of this
Section 9.1
, if there shall
have been canceled by the Trustee or delivered to the Trustee for cancellation
all Securities of such Series theretofore authenticated and delivered (other
than any Securities of such Series that are asserted to have been destroyed,
lost or stolen and that shall have been replaced as provided
in
Section 2.8
hereof) and the
Company has paid all sums payable by it hereunder or deposited all required sums
with the Trustee. After such delivery the Trustee upon request shall
acknowledge in writing the discharge of the Company’s obligations under the
Securities of such Series and this Indenture except for those surviving
obligations specified below. Notwithstanding the satisfaction and
discharge of this Indenture, the obligations of the Company in
Section 7.7
,
Section 9.5
and
Section 9.6
hereof shall
survive.
9.2
Legal
Defeasance
. The Company may at its option, by Board Resolution, be
discharged from its obligations with respect to the Securities of any Series on
the date the conditions set forth in
Section 9.4
hereof are
satisfied (hereinafter, “
Legal
Defeasance
”). For this purpose, such Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire indebtedness
represented by the Securities of such Series and to have satisfied all its other
obligations under such Securities and this Indenture insofar as such Securities
are concerned (and the Trustee, at the expense of the Company, shall, subject to
Section 9.6
hereof,
execute proper instruments acknowledging the same), except for the following
which shall survive until otherwise terminated or discharged hereunder: (A) the
rights of Holders of outstanding Securities of such Series to receive solely
from the trust funds described in
Section 9.4
hereof and as
more fully set forth in such section, payments in respect of the principal of
(and premium, if any) and interest, if any, on the Securities of such Series
when such payments are due, (B) the Company’s obligations with respect to the
Securities of such Series under
Section 2.4
through
Section 2.9
, inclusive,
hereof, (C) the rights, powers, trusts, duties, and immunities of the Trustee
hereunder (including claims of, or payments to, the Trustee under or pursuant to
Section 7.7
hereof) and
(D) this
Article
9
. Subject to compliance with this
Article 9
, the Company may
exercise its option under this
Section 9.2
with respect to
the Securities of any Series notwithstanding the prior exercise of its option
under
Section 9.3
hereof with respect to the Securities of such Series.
9.3
Covenant
Defeasance
. At the option of the Company, pursuant to a Board
Resolution, the Company shall be released from its obligations under
Section 4.2
through
Section 4.7
hereof,
inclusive, and
Section
5.1
hereof, with respect to the outstanding Securities of any Series, on
and after the date the conditions set forth in
Section 9.4
hereof are
satisfied (hereinafter, “
Covenant Defeasance
”).
For this purpose, such Covenant Defeasance means that the Company may omit to
comply with and shall have no liability in respect of any term, condition or
limitation set forth in any such specified section or portion thereof, whether
directly or indirectly by reason of any reference elsewhere herein to any such
specified Section or portion thereof or by reason of any reference in any such
specified section or portion thereof to any other provision herein or in any
other document, but the remainder of this Indenture and the Securities of any
Series shall be unaffected thereby.
9.4
Conditions to Legal
Defeasance or Covenant Defeasance
. The following shall be the
conditions to application of
Section 9.2
or
Section 9.3
hereof to the
outstanding Securities of a Series:
(1) the
Company shall irrevocably have deposited or caused to be deposited with the
Trustee (or another trustee satisfying the requirements of
Section 7.10
hereof who shall
agree to comply with the provisions of this
Article 9
applicable to it)
as funds in trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the Holders of
the Securities, (A) money in an amount, or (B) U.S. Government Obligations
or Foreign Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms will
provide, not later than the due date of any payment, money in an amount, or (C)
a combination thereof, sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which shall be
applied by the Trustee (or other qualifying trustee) to pay and discharge, the
principal of (and premium, if any) and interest, if any, on the outstanding
Securities of such Series at the Stated Maturity of such principal, premium, if
any, or interest, if any, or on dates for payment and redemption of such
principal, premium, if any, and interest, if any, selected in accordance with
the terms of this Indenture and of the Securities of such Series;
(2) no
Event of Default or Default with respect to the Securities of such Series shall
have occurred and be continuing on the date of such deposit, or shall have
occurred and be continuing at any time during the period ending on the 91st day
after the date of such deposit or, if longer, ending on the day following the
expiration of the longest preference period under any Bankruptcy Law applicable
to the Company in respect of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such
period);
(3) such
Legal Defeasance or Covenant Defeasance shall not cause the Trustee to have a
conflicting interest for purposes of the TIA with respect to any securities of
the Company;
(4) such
Legal Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute default under any other agreement or instrument to
which the Company is a party or by which it is bound;
(5) the
Company shall have delivered to the Trustee an Opinion of Counsel stating that,
as a result of such Legal Defeasance or Covenant Defeasance, neither the trust
nor the Trustee will be required to register as an investment company under the
Investment Company Act of 1940, as amended;
(6) in
the case of an election under
Section 9.2
hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the Internal
Revenue Service a ruling to the effect that or (ii) there has been a change in
any applicable Federal income tax law with the effect that, and such opinion
shall confirm that, the Holders of the outstanding Securities of such Series or
persons in their positions will not recognize income, gain or loss for Federal
income tax purposes solely as a result of such Legal Defeasance and will be
subject to Federal income tax on the same amounts, in the same manner, including
as a result of prepayment, and at the same times as would have been the case if
such Legal Defeasance had not occurred;
(7) in
the case of an election under
Section 9.3
hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the outstanding Securities of such Series will not recognize
income, gain or loss for Federal income tax purposes as a result of such
Covenant Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred;
(8) the
Company shall have delivered to the Trustee an Officers’ Certificate and an
Opinion of Counsel, each stating that all conditions precedent provided
for in this
Article 9
relating to either
the Legal Defeasance under
Section 9.2
hereof or the
Covenant Defeasance under
Section 9.3
hereof (as the
case may be) have been complied with;
(9) the
Company shall have delivered to the Trustee an Officers’ Certificate stating
that the deposit under clause (1) was not made by the Company with the intent of
defeating, hindering, delaying or defrauding any creditors of the Company or
others; and
(10) the
Company shall have paid or duly provided
for payment under terms
mutually satisfactory to the Company and the Trustee all amounts then due to the
Trustee pursuant to
Section
7.7
hereof.
9.5
Deposited Money and
U.S. and Foreign Government Obligations to be Held in Trust; Other
Miscellaneous Provisions
. All money, U.S. Government
Obligations and Foreign Government Obligations (including the proceeds thereof)
deposited with the Trustee pursuant to
Section 9.4
hereof in respect
of the outstanding Securities shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent as the Trustee may
determine, to the Holders of such Securities, of all sums due and to become due
thereon in respect of principal, premium, if any, and interest, if any, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the
U.S. Government Obligations and Foreign Government Obligations deposited
pursuant to
Section 9.4
hereof or the principal, premium, if any, and interest, if any, received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of the outstanding Securities.
Anything in this
Article 9
to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company from time to
time upon Company Request any money, U.S. Government Obligations or
Foreign Government Obligations held by it as provided
in
Section 9.4
hereof which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect an equivalent Legal Defeasance or Covenant Defeasance.
9.6
Reinstatement
.
If the Trustee or Paying Agent is unable to apply any money, U.S.
Government Obligations or Foreign Government Obligations in accordance with
Section 9.1
,
Section 9.2, Section 9.3
or
Section 9.4
hereof by reason of any legal proceeding or by reason of any order or judgment
of any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company’s obligations under this Indenture and
the Securities shall be revived and reinstated as though no deposit had occurred
pursuant to this
Article
9
until such time as the Trustee or Paying Agent is permitted to apply
all such money, U.S. Government Obligations or Foreign Government
Obligations, as the case may be, in accordance with
Section 9.1
,
Section 9.2
,
Section 9.3
or
Section 9.4
hereof;
provided, however,
that if
the Company has made any payment of principal of (and premium, if any) and
interest, if any, on any Securities because of the reinstatement of their
obligations, the Company shall be subrogated to the rights of the Holders of
such Securities to receive such payment from the money, U.S. Government
Obligations or Foreign Government Obligations held by the Trustee or Paying
Agent.
9.7
Moneys Held by Paying
Agent
. In connection with the satisfaction and discharge of this
Indenture, all moneys then held by any Paying Agent under the provisions of this
Indenture shall, upon demand of the Company, be paid to the Trustee, or if
sufficient moneys have been deposited pursuant to
Section 9.1
hereof, to the
Company, and thereupon such Paying Agent shall be released from all further
liability with respect to such moneys.
9.8
Moneys Held by
Trustee
. Any moneys deposited with the Trustee or any Paying Agent
or then held by the Company in trust for the payment of the principal of (and
premium, if any) and interest, if any, on any Security that are not applied but
remain unclaimed by the Holder of such Security for two years after the date
upon which the principal of (and premium, if any) and interest, if any, on such
Security shall have respectively become due and payable shall be repaid to the
Company upon Company Request, or if such moneys are then held by the Company in
trust, such moneys shall be released from such trust; and the Holder of such
Security entitled to receive such payment shall thereafter, as an unsecured
general creditor, look only to the Company for the payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money
shall thereupon cease;
provided, however,
that the
Trustee or any such Paying Agent, before being required to make any such
repayment, may, at the expense of the Company, either mail to each
Securityholder affected, at the address shown in the register of the Securities
maintained by the Registrar or cause to be published once a week for two
successive weeks, in a newspaper published in the English language, customarily
published each Business Day and of general circulation in the City of
___________, ____________, a notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such mailing or publication, any unclaimed balance of such moneys then
remaining will be repaid to the Company. After payment to the Company or
the release of any money held in trust by the Company, Securityholders entitled
to the money must look only to the Company for payment as general creditors
unless applicable abandoned property law designates another
person.
ARTICLE
10
MISCELLANEOUS
10.1
Trust Indenture Act
Controls
. If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included in this
Indenture by the TIA, the required provision shall control. If any
provision of this Indenture modifies or excludes any provision of the TIA which
may be so modified or excluded, the latter provision shall be deemed to apply to
this Indenture as so modified or to be excluded, as the case may
be.
10.2
Notices
. Any
notice or communication shall be given in writing and delivered in person, sent
by facsimile, delivered by commercial courier service or mailed by first-class
mail, postage prepaid, addressed as follows:
If to the Company:
Shore Bancshares, Inc.
18 East Dover Street
Easton, Maryland 21601
Attention: Principal Accounting
Officer
Copy to:
If to the Trustee:
The Company or the Trustee by written
notice to the other may designate additional or different addresses for
subsequent notices or communications. Any notice or communication to the
Company or the Trustee shall be deemed to have been given or made as of the date
so delivered if personally delivered; when answered back, if telexed; when
receipt is acknowledged, if telecopied; and five (5) calendar days after mailing
if sent by registered or certified mail, postage prepaid (except that a notice
of change of address shall not be deemed to have been given until actually
received by the addressee).
Any notice or communication mailed to a
Securityholder shall be mailed to him by first-class mail, postage prepaid, at
his address shown on the register kept by the Registrar. Failure to mail a
notice or communication to a Securityholder or any defect in it shall not affect
its sufficiency with respect to other Securityholders. If a notice or
communication to a Securityholder is mailed in the manner provided
above, it shall be
deemed duly given five (5) calendar days after mailing, whether or not the
addressee receives it. In case by reason of the suspension of regular mail
service, or by reason of any other cause, it shall be impossible to mail any
notice as required by this Indenture, then such method of notification as shall
be made with the approval of the Trustee shall constitute a sufficient mailing
of such notice. In the case of Global Securities, notices or
communications to be given to Securityholders shall be given to the Depositary,
in accordance with its applicable policies as in effect from time to
time.
10.3
Communications by Holders
with Other Holders
. Securityholders of any Series may communicate
pursuant to TIA Section 312(b) with other Securityholders of that Series or any
other Series with respect to their rights under this Indenture or the Securities
of that Series or any other Series. The Company, the Trustee, the
Registrar and anyone else shall have the protection of TIA Section
312(c).
10.4
Certificate and Opinion as
to Conditions Precedent
. Upon any request or application by the
Company to the Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee:
(1) an
Officers’ Certificate (which shall include the statements set forth in
Section 10.5
hereof) stating
that, in the opinion of the signers, all conditions precedent, if any,
provided
for in
this Indenture relating to the proposed action have been complied with;
and
(2) an
Opinion of Counsel (which shall include the statements set forth in
Section 10.5
hereof) stating
that, in the opinion of such counsel, all such conditions precedent have been
complied with.
10.5
Statement Required in
Certificate and Opinion
. Each certificate and opinion with respect
to compliance with a condition or covenant provided
for in this Indenture
shall include:
(1) a
statement that the Person making such certificate or opinion has read such
covenant or condition;
(2) a
brief statement as to the nature and scope of the examination or investigation
upon which the statements or opinions contained in such certificate or opinion
are based;
(3) a
statement that, in the opinion of such Person, it or he has made such
examination or investigation as is necessary to enable it or him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a
statement as to whether or not, in the opinion of such Person, such covenant or
condition has been complied with.
10.6
Rules by Trustee and
Agents
. The Trustee may make reasonable rules for action by or at
meetings of Securityholders. The Registrar and Paying Agent may make
reasonable rules for their functions.
10.7
Business Days; Legal
Holidays
. A “
Business Day
” is a day that
is not a Legal Holiday. A “
Legal Holiday
” is a Saturday,
a Sunday, a federally recognized holiday or a day on which banking institutions
are not required to be open in the State of ____________. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period.
10.8
Governing Law
.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW THAT WOULD APPLY THE LAW OF ANY OTHER JURISDICTION. EACH
OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
INDENTURE OR THE SECURITIES.
10.9
No Adverse
Interpretation of Other Agreements
. This Indenture may not be used
to interpret another indenture, loan, security or debt agreement of the Company
or any Subsidiary thereof. No such indenture, loan, security or debt
agreement may be used to interpret this Indenture.
10.10
No Recourse Against
Others
. A director, officer, employee, stockholder or incorporator,
as such, of the Company shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creations. Each
Securityholder by accepting a Security waives and releases all such
liability. Such waiver and release are part of the consideration for the
issuance of the Securities.
10.11
Successors and
Assigns
. All agreements of the Company in this Indenture and the
Securities shall bind its successors and assigns, whether so expressed or
not. All agreements of the Trustee, any additional trustee and any Paying
Agents in this Indenture shall bind their respective successors and
assigns.
10.12
Multiple
Counterparts
. The parties may sign multiple counterparts of this
Indenture. Each signed counterpart shall be deemed an original, but all of
them together represent one and the same agreement.
10.13
Table of Contents, Headings,
Etc.
The table of contents, cross-reference sheet and headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
10.14
Separabilty
.
Each provision of this Indenture shall be considered separable, and if for any
reason any provision which is not essential to the effectuation of the basic
purpose of this Indenture or the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
10.15
Securities in a Foreign
Currency or in ECU
. Unless otherwise specified in a Board
Resolution, a supplemental indenture hereto or an Officers’ Certificate
delivered pursuant to
Section
2.2
hereof with respect to a particular Series of Securities, whenever
for purposes of this Indenture any action may be taken by the Holders of a
specified percentage in aggregate principal amount of Securities of all Series
or all Series affected by a particular action at the time outstanding and, at
such time, there are outstanding Securities of any Series which are denominated
in a coin or currency other than Dollars (including ECU), then the principal
amount of Securities of such Series which shall be deemed to be outstanding for
the purpose of taking such action shall be that amount of Dollars that could be
obtained for such amount at the Market Exchange Rate at such time. For
purposes of this
Section
10.15
, the term “
Market
Exchange Rate
” shall mean the noon Dollar buying rate in New York City
for cable transfers of that currency as published by the Federal Reserve Bank of
New York;
provided,
however,
in the case of ECUs, Market Exchange Rate shall mean the rate of
exchange determined by the Commission of the European Union (or any successor
thereto) as published in the Official Journal of the European Union (such
publication or any successor publication, the “
Journal
”). If such
Market Exchange Rate is not available for any reason with respect to such
currency, the Trustee shall use, in its sole discretion and without liability on
its part, such quotation of the Federal Reserve Bank of New York or, in the case
of ECUs, the rate of exchange as published in the Journal, as of the most recent
available date, or quotations or, in the case of ECUs, rates of exchange from
one or more major banks in The City of New York or in the country of issue of
the currency in question or, in the case of ECUs, in Luxembourg or such other
quotations or, in the case of ECUs, rates of exchange as the Trustee, upon
consultation with the Company, shall deem appropriate. The provisions of
this
paragraph
shall
apply in determining the equivalent principal amount in respect of Securities of
a Series denominated in currency other than Dollars in connection with any
action taken by Holders of Securities pursuant to the terms of this
Indenture. All decisions and determinations of the Trustee regarding the
Market Exchange Rate or any alternative determination provided
for in the preceding
paragraph shall be in its sole discretion and shall, in the absence of manifest
error, be conclusive to the extent permitted by law for all purposes and
irrevocably binding upon the Company and all Holders.
10.16
Judgment
Currency
. The Company agrees, to the fullest extent that it may
effectively do so under applicable law, that (a) if for the purpose of obtaining
judgment in any court it is necessary to convert the sum due in respect of the
principal of (and premium, if any) and interest, if any, or other amount on the
Securities of any Series (the “
Required Currency
”) into a
currency in which a judgment will be rendered (the “
Judgment Currency
”), the rate
of exchange used shall be the rate at which in accordance with normal banking
procedures the Trustee could purchase in The City of New York the Required
Currency with the Judgment Currency on the day on which final unappealable
judgment is entered, unless such day is not a New York Banking Day, then, the
rate of exchange used shall be the rate at which in accordance with normal
banking procedures the Trustee could purchase in The City of New York the
Required Currency with the Judgment Currency on the New York Banking Day
preceding the day on which final unappealable judgment is entered and (b) its
obligations under this Indenture to make payments in the Required Currency (i)
shall not be discharged or satisfied by any tender, any recovery pursuant to any
judgment (whether or not entered in accordance with subsection (a)), in any
currency other than the Required Currency, except to the extent that such tender
or recovery shall result in the actual receipt, by the payee, of the full amount
of the Required Currency expressed to be payable in respect of such payments,
(ii) shall be enforceable as an alternative or additional cause of action for
the purpose of recovering in the Required Currency the amount, if any, by which
such actual receipt shall fall short of the full amount of the Required Currency
so expressed to be payable, and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture. For purposes of the
foregoing, “
New York Banking
Day
” means any day except a Saturday, Sunday or a legal holiday in The
City of New York on which banking institutions are authorized or required by
law, regulation or executive order to close.
[Remainder
of Page Intentionally Left Blank]
IN WITNESS WHEREOF, the parties hereto
have caused this Indenture to be duly executed as of the day and year first
above written.
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SHORE
BANCSHARES, INC.
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By:
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Name:
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Title:
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[Name
of Trustee]
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By:
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Name:
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Title:
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