UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
(Mark one)
| x | ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, |
For the fiscal year ended December 31, 2005
OR
| ¨ | TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934, |
For the transition period from to
Commission file number 000-50719
VISION BANCSHARES, INC.
(Name of small business issuer in its charter)
| Alabama | 63-1230752 | |
|
(State or jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| 2200 Stanford Road, Panama City, Florida | 32405 | |
| (Address of principal executive offices) | (Zip Code) |
Issuer’s telephone number (251) 967-4212
Securities registered under Section 12(b) of the Exchange Act:
NONE
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $1.00
Title of class
Check whether the issuer is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act ¨
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
State issuer’s revenues for its most recent fiscal year. $40,584,567
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days. (See definition of affiliate in Rule 12b-2 of the Exchange Act.) $68,266,291
Note: If determining whether a person is an affiliate will involve an unreasonable effort and expense, the issuer may calculate the aggregate market value of the common equity held by non-affiliates on the basis of reasonable assumptions, if the assumptions are stated.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date. 6,063,462 shares outstanding as of March 15, 2006
DOCUMENTS INCORPORATED BY REFERENCE.
If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) any annual report to security holders; (2) any proxy or information statement; and (3) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 (“Securities Act”). The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1990). Certain sections of the registrant’s Proxy Statement for the 2006 Annual Meeting of Stockholders (Part III).
Transitional Small Business Disclosure Format (Check one): Yes ¨ ; No x
| PART I | 1 | |||
| ITEM 1 | DESCRIPTION OF BUSINESS | 1 | ||
| ITEM 2 | DESCRIPTION OF PROPERTIES | 4 | ||
| ITEM 3 | LEGAL PROCEEDINGS | 5 | ||
| ITEM 4 | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | 5 | ||
| PART II | 6 | |||
| ITEM 5 | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS | 6 | ||
| ITEM 6 | MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION | 7 | ||
| ITEM 7 | FINANCIAL STATEMENTS | 31 | ||
| ITEM 8 | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 31 | ||
| ITEM 8A | CONTROLS AND PROCEDURES | 31 | ||
| ITEM 8B | OTHER INFORMATION | 31 | ||
| PART III | 32 | |||
| ITEM 9 | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT | 32 | ||
| ITEM 10 | EXECUTIVE COMPENSATION | 32 | ||
| ITEM 11 | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 32 | ||
| ITEM 12 | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 33 | ||
| ITEM 13 | EXHIBITS | 34 | ||
| ITEM 14 | PRINCIPAL ACCOUNTANT FEES AND SERVICES. | 37 | ||
ITEM 1 DESCRIPTION OF BUSINESS
General
Vision Bancshares, Inc. (“Vision Bancshares” or the “Company”) was organized as an Alabama corporation on July 16, 1999 and is a bank holding company under the Bank Holding Act of 1956, as amended. On February 1, 2005, Vision Bancshares relocated its corporate headquarters to 2200 Stanford Road, Florida, from Gulf Shores, Alabama.
Vision Bancshares does not have any significant operations and serves primarily as the parent company for Vision Bank, its wholly owned Alabama bank subsidiary, (“Vision Alabama”) and Vision Bank, its wholly owned Florida bank subsidiary, (“Vision Florida”). Under the Bank Holding Company Act of 1956, as amended, Vision Bancshares, as a bank holding company, may engage in certain bank related businesses that Vision Alabama and Vision Florida may not conduct, although Vision Bancshares has no present plans for such activities.
Vision Alabama is a state banking corporation organized under the laws of the State of Alabama. Vision Alabama provides general retail and commercial banking services principally to customers in Baldwin County, Alabama through its seven locations in Gulf Shores, Orange Beach, Point Clear, Foley, Fairhope, Elberta and Daphne. Vision Alabama does not provide trust or fiduciary services, but may do so in the future. Vision Alabama opened for business on March 29, 2000.
On October 15, 2004, Vision Bancshares completed its acquisition of BankTrust of Florida, formerly Wewahitchka State Bank, located in Wewahitchka, Gulf County, Florida and changed the name of BankTrust of Florida to “Vision Bank.” Subsequent to the acquisition, the Company merged Vision Bank, FSB, its wholly owned federal savings bank operating since January 2003 and located in Panama City, Florida, with and into Vision Florida. The main office for Vision Florida is located in Panama City, Florida. Vision Florida provides general retail and commercial banking services to customers in Bay, Gulf, Okaloosa and Walton County in the panhandle of Florida through its seven full service offices located in Panama City, Panama City Beach, Santa Rosa Beach, Wewahitchka, Port St. Joe, Port St. Joe Beach and through its loan production office in Destin.
Vision Bancshares and its subsidiaries have 174 full-time employees and 4 part-time employees.
Forward-Looking Statements
The following discussion as well as other statements in this Form 10-KSB include “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are not based on historical facts and may be identified by their reference to a future period or by the use of forward-looking terminology, such as “anticipate,” “estimate,” “expect,” “may” and “should.” We caution you not to place undue reliance on these forward-looking statements. Actual results could differ materially from those indicated in such forward-looking statements due to a variety of factors. These factors include, but are not limited to, changes in economic conditions and government fiscal and monetary policies, changes in
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prevailing interest rates and effectiveness of the Company’s interest rate strategies, laws, regulations and regulatory authorities affecting financial institutions, changes in and effectiveness of the Company’s operating or expansion strategies, geographic concentration of the Company’s assets and operations, competition from other financial services companies, unexpected financial results or outcomes of legal proceedings, the limited loan loss experience in the Company’s loan portfolio, unanticipated liabilities in, and consolidation problems associated with, the Company’s recent acquisition of BankTrust of Florida, and other risks detailed from time to time in the Company’s press releases and filings with the Securities and Exchange Commission. We undertake no obligation to update these forward-looking statements to reflect events or circumstances occurring after the date of this Report.
Additional Information
We maintain a Website for Vision Alabama at www.visionbank.net and Vision Florida at www.visionbankfl.net. Among other items we make available on our Websites, we provide a link to our filings with the Securities and Exchange Commission (“SEC”) provided on the SEC’s Website, www.sec.gov.
Risks in Industry
The banking business involves risks over which management has little, if any, direct control. Some of these risks include:
| • | Loan Losses - Making loans involves the risk that loans will not be repaid by the borrower. Vision Alabama and Vision Florida reserves for potential loan losses, but there is no precise method of predicting loan losses and reserves could be insufficient to absorb losses. |
| • | Changes in Interest Rates - Changes in interest rates, especially increasing rates, can have a negative impact on profitability, especially if loans made at lower rates are long-term loans. |
| • | Asset/Liability Management - The profitability of Vision Alabama and Vision Florida can be affected by the spread between its interest income and interest expense. If interest expense is greater than interest income, or if interest expense increases at a rate higher than interest income, profitability could be affected negatively. |
Competition
Banking is a highly competitive business. Because Vision Alabama and Vision Florida are significantly smaller than the majority of our competitors, they may lack the financial and technological resources to compete successfully. Vision Alabama and Vision Florida compete for customers and employees with banks that are more established as well as with other financial and depository institutions. Many of these institutions have much greater financial resources and experience. The banking business is becoming more dependent on technology, and many customers of banks are utilizing new ways to conduct their banking business such as through the use of personal computers and the Internet. This technology is enabling financial institutions to reach potential customers in geographic areas and in ways not previously served by these
2
institutions. In addition, existing legislation permits banks and bank holding companies to acquire and operate securities firms, insurance companies, and other businesses in the financial services industry. This legislation may be particularly helpful to larger banks.
Regulations
Regulatory requirements may impose additional costs on Vision Alabama and Vision Florida and adversely affect profitability. State and federal banking laws have a material effect on the business and operations of Vision Bancshares, Vision Alabama and Vision Florida. The operation of Vision Bancshares, Vision Alabama and Vision Florida are at all times subject to these laws, regulations and procedures. The purpose of those laws is to protect the financial stability of the banking system and consumer and commercial confidence in that system and is not to protect investors. Vision Bancshares is required to comply with all such laws, regulations and procedures.
Vision Bancshares is a bank holding company registered with, and subject to supervision by, the Board of Governors of the Federal Reserve System under the Bank Holding Company Act of 1956 (the “BHC Act”). The Federal Reserve Board may examine Vision Bancshares, Vision Alabama and Vision Florida.
Vision Alabama is a state bank organized under the laws of the State of Alabama and its deposits are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to the maximum amount permitted by law. Vision Alabama is subject to regulation, supervision and regular examination by the Superintendent of the Alabama State Banking Department and the FDIC. Federal and state banking laws and regulations regulate, among other things, the scope of the banking business conducted by Vision Alabama, its loans and investments, reserves against deposits, mergers and acquisitions, borrowings, dividends, minimum capital requirements, and the locations of branch offices and certain facilities. The relationships of Vision Alabama with its executive officers, directors and affiliates are also the subject of statutory and regulatory requirements. A wholly-owned subsidiary of Vision Alabama is licensed to sell insurance products, including variable annuities, and is therefore subject to examination by the Alabama Department of Insurance and Alabama State Securities Commission.
Under the Alabama Banking Code, a state bank may not declare or pay a dividend in excess of 90% of the net earnings of such bank until the surplus of the bank is equal to at least 20% of its capital, and thereafter the prior written approval of the superintendent is required if the total of all dividends declared by the bank in any calendar year exceeds the total of its net earnings for that year combined with its retained net earnings for the preceding two years less any required transfers to surplus. No dividends, withdrawals or transfers may be made from the bank’s surplus without prior written approval of the superintendent.
Vision Florida is organized under the laws of the State of Florida and its deposits are insured by the FDIC up to the maximum amount permitted by law. Vision Florida is subject to regulation, supervision and regular examination by the State of Florida’s Office of Financial Regulation and the FDIC. Federal and state banking laws and regulations regulate, among other things, the scope of the banking business conducted by Vision Florida, its loans and investments, reserves against deposits, mergers and acquisitions, borrowings, dividends, minimum capital requirements, and the locations of branch offices and certain facilities. The relationships of Vision Florida to its executive officers, directors and affiliates are also the subject of statutory and regulatory requirements.
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Under Florida law, a bank generally may pay dividends out of net profits for the period for which dividends are declared combined with retained net profits of the preceding two years. Before declaring a dividend on its common stock, a bank must carry 20 percent of its net profits for the preceding period that is covered by the dividend to its surplus fund, until the same shall at least equal the amount of its common and preferred stock then issued and outstanding. A bank may not declare any dividend at any time at which its net income from the current year combined with the retained net income from the preceding two years is a loss or which would cause the capital accounts of the bank to fall below the minimum amount required by law, regulation, order, or any written agreement with the office or a stat of federal regulatory agency.
ITEM 2 DESCRIPTION OF PROPERTIES
As of December 31, 2005 the executive offices of Vision Bancshares are located in Panama City, Florida. The bank and its subsidiaries occupy offices throughout Baldwin County Alabama and Bay, Gulf, Okaloosa and Walton counties in Florida.
All of the branches described above are leased properties except for the Wewahitchka, Port St. Joe and Port St. Joe Beach properties which are owned by the Company or its subsidiaries.
Management insures and will continue to insure its properties adequately.
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Not Applicable.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
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ITEM 5 MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The Company’s common stock is not listed on any exchange, nor is it included on NASDAQ. However, trades may be reported on the OTC Bulletin Board under the symbol “VBAL.OB”. The Company is aware that FIG Partners, LLC and Morgan Keegan & Company, Inc. currently make a market in the Company’s common stock. Management is aware that there are also private transactions in the Company’s common stock and the data set forth below may not reflect all such transactions.
The following table summarizes the range of sales prices of the Company’s Common Stock for each quarter during the last two fiscal years. The quotations reflect the price that would be received by the seller without retail mark-up, mark-down or commissions and may not have represented actual transactions:
|
Year 2004 |
High* | Low* | Dividends Paid | ||||||
|
1 st Quarter |
$ | 10.13 | $ | 8.55 | $ | 0 | |||
|
2 nd Quarter |
$ | 12.00 | $ | 8.95 | $ | 0 | |||
|
3 rd Quarter |
$ | 11.50 | $ | 10.18 | $ | 0 | |||
|
4 th Quarter |
$ | 12.50 | $ | 10.88 | $ | 0 | |||
|
Year 2005 |
High | Low | Dividends Paid | ||||||
|
1 st Quarter |
$ | 16.05 | $ | 12.50 | $ | 0 | |||
|
2 nd Quarter |
$ | 18.10 | $ | 15.12 | $ | 0 | |||
|
3 rd Quarter |
$ | 21.50 | $ | 16.75 | $ | 0 | |||
|
4 th Quarter |
$ | 20.65 | $ | 18.70 | $ | 0 | |||
| * | Price adjusted for split |
Stockholders
As of March 15, 2006, Vision Bancshares had approximately 1,025 shareholders of record.
Dividends
It is not likely in the near future that Vision Bancshares will generate sufficient profit to justify paying dividends. Vision Bancshares will rely on dividend payments from Vision Alabama and Vision Florida in order to provide funds for the payment of dividends to its shareholders. In addition, banking regulations restrict the payment of dividends under certain circumstances. The future dividend policy of Vision Bancshares will be subject therefore not only to banking regulations, but to the discretion of the directors, and will be contingent on the financial condition and capital requirements of Vision Alabama and Vision Florida, general business conditions and other factors. Vision Bancshares has not paid any dividends and does not expect cash dividends to be paid for the foreseeable future.
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ITEM 6 MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The purpose of this discussion and analysis is to focus on significant changes in the financial condition of Vision Bancshares and its subsidiaries and on their results of operations during 2005 and 2004. Virtually all of the Company’s operations are contained in its two banking subsidiaries, Vision Alabama and Vision Florida (together, the “Banks”). This discussion and analysis is intended to supplement and highlight information contained elsewhere in this annual report on Form 10-KSB, particularly the consolidated financial statements and related notes and the selected financial data presented elsewhere in this Report.
OVERVIEW
Executive Summary
Vision Bancshares is a $587.9 million financial institution with community banking offices, operations and team members located in Baldwin County, Alabama, Bay County, Florida, Walton County, Florida, Okaloosa County, Florida and Gulf County, Florida. Vision Bancshares gathers substantially all of its deposits in these market areas. We use these deposits, as well as other financing sources, to fund our loan and investment portfolios. We earn interest income on our loans and investments and pay interest on customer deposits and other borrowed funds. In addition, we generate non-interest income from a number of sources including deposit and loan services, and sales of residential loans, insurance and investment products. Our principal non-interest expenses include employee compensation and benefits, occupancy and equipment related costs, technology and other administrative expenses. Our volumes and, accordingly, our financial results are affected by the economic environment, including interest rates, consumer and business confidence and spending, as well as the competitive conditions within our industry and market.
Our subsidiaries are community banks and we believe our customers select the Vision Banks for banking and other financial services based on our ability to assist them by understanding and anticipating their individual financial needs and providing excellent customer service. Our major strengths include: a stable, low cost core deposit base; a focus on quality assets; strong service culture; personal commitment to our local communities and high individual service to our customers. Our weaknesses include lower than average capital ratios when compared against our peers, and less than desired market share in some of our geographic markets. In 2005, management implemented strategies to address these weaknesses. With respect to our capital position, the Company issued trust preferred securities in 2005 to provide sufficient capital to support the Company’s growth and expansion activities. Going forward, management also anticipates strengthening our capital ratios through the internal generation of earnings. To address the weakness in our position in certain markets, Vision Bancshares continued its expansion by adding two new banking offices and converting one existing office to a full service location in 2005. Going forward, our growth through acquisition or otherwise is significantly dependent upon our capital levels.
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In 2005, the Company continued its efforts to strengthen its back office and information technology systems by centralizing specific bank functions. Vision Bancshares believes that the simplification of the organizational structure, the strengthening of the loan review procedures and improvement of the back office operations will position the Company to take advantage of the opportunities to grow our business within our market areas.
For the year ended December 31, 2005, we reported consolidated net income of $6.7 million compared to consolidated net income of $1.2 million for the year ended December 31, 2004. The Company had earnings of $1.10 and $1.04 per share on basic and diluted basis, respectively, for the year 2005 versus earnings per share of $0.22 and $0.21 on basic and diluted basis, respectively for the year 2004. This increase in financial performance in 2005 was due to strong net interest income growth of $14.2 million or 121.3%, primarily due to our successful acquisition of BankTrust of Florida in October of 2004 and solid internal loan growth paired with the benefits of having an asset sensitive balance sheet in a rising interest rate environment. The increase in net interest income was driven by the increase in earning assets that were funded, in part, with low cost core deposits. The cost of funds increased at a slower rate than the increase in the yield on earning assets. Fee income reached record levels in 2005 as a result of our growth. Our provision for loan losses decreased year over year primarily due to an increase in reserves at year-end 2004. This increase in reserves at year-end 2004 was to protect against any unforeseen possible losses due to the acquisition of BankTrust of Florida and the potential economic impact of hurricane Ivan in the Vision Alabama market area. As the effects of these events were minimal and the credit quality of the loan portfolio remained good, the loan loss percentage decreased during the year 2005 and lesser provisions for loan loss were needed. Our operating expense as a percentage of average assets declined from the year ended 2004 as compared to 2005. See “Results of Operations” below for more details as to the factors, which affect year-over-year performance.
In January 2005, the Company’s board of directors granted options to certain employees which were immediately vested upon grant to mitigate the impact of the adoption of SFAS 123(R) on the Company in future years. The board of directors took the foregoing action in the strong belief that it is in the best interest of shareholders to minimize the future compensation expense associated with stock options upon adoption of SFAS 123(R). The adoption of SFAS 123(R) will not have a material impact on the financial condition or the results of operations for the first quarter of 2006 or for the year ended December 31, 2006.
Critical Accounting Estimates
Vision Bancshares prepares its financial statements in accordance with accounting principles generally accepted in the United States. Note 2 to the consolidated financial statements discusses certain accounting principles and methods of applying those principles that are particularly important to this process. In applying these principles to determine the amounts and other disclosures that are presented in the financial statements and discussed in this section, the Company is required to make estimates and assumptions.
Allowance for Loan Losses
Vision Bancshares believes that the determination of its estimates of the allowance for loan losses involves a higher degree of judgment and complexity than its application of other
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significant accounting policies. Although management uses available information to recognize losses on loans, because of uncertainties associated with local economic conditions, collateral values, and future cash flows on impaired loans, it is reasonably possible that changes can occur in the allowance for loan losses. However, the amount of the change that is reasonably possible cannot be estimated. Factors considered in this determination and the processes used by management are discussed in Note 2 to the consolidated financial statements. Also, see our discussion of Loans and Allowance for Loan Losses practices below.
Goodwill and Other Intangible Assets
Goodwill represents the excess of cost over the fair value of the net assets purchased in a business combination. Goodwill is required to be tested annually for impairment or whenever events occur that may indicate that the recoverability of the carrying amount is not probable. In the event of impairment, the amount by which the carrying amount exceeds the fair value would be charged to earnings.
The Company performs an annual test of impairment and determined that there was no impairment in the carrying value of goodwill for the year ended December 31, 2005. Goodwill amounting to $0.1 million has been allocated to the Vision Alabama operating unit. As a result of the acquisition of BankTrust of Florida and subsequent merger of Vision Bank, FSB, goodwill amounting to $3.3 million and a core deposit intangible of $0.6 million was allocated to the Vision Florida’s operating unit. The core deposit intangible was $0.5 million and $0.6 million at December 31, 2005 and 2004, respectively. There has been no impairment of goodwill since the date of acquisition.
Intangible assets consist of core deposit premiums acquired in connection with the business combinations. The core deposit premium is initially recognized based on a valuation performed as of the consummation date. The core deposit premium is amortized over the average remaining life of the acquired customer deposits, or five to eight years. Amortization periods are reviewed annually in connection with the annual impairment testing of goodwill.
CURRENT INTEREST RATE ENVIRONMENT
Net interest income represents the majority of the Company’s revenues. Accordingly, the interest rate environment has a substantial impact on Vision Bancshares’ earnings. The Company currently has an asset sensitive balance sheet. An institution that maintains an asset sensitive balance sheet generally experiences reduced net interest income in a declining interest rate environment, while earnings are enhanced in an increasing interest rate cycle. The rise in the interest rate environment during 2005 had a favorable impact on our margin and Vision Bancshares would expect to benefit further from any substantial increase in interest rates if they occur in 2006. The impact of a low and declining interest rate environment in 2003 and early part of 2004 were mitigated in part by our growth and the rate floors on many of our loans. See our discussion of Asset and Liability Management practices below, including the estimated impact of changes in interest rates on Vision Bancshares’ net interest income.
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FINANCIAL CONDITION
Interest-Earning Assets
In banking, the predominant interest-earning assets are loans and investment securities. The proportion of interest earning assets to total assets measures the effectiveness of management’s efforts to invest available funds into the most profitable interest-earning assets. An overview of the interest-earning assets follows:
COMPOSITION OF INTEREST-EARNING ASSETS
| December 31, | ||||||||||||||||||
| 2005 | 2004 | 2003 | ||||||||||||||||
|
(dollars in thousands) |
Average
Balance |
Percent of
Total |
Average
Balance |
Percent
of Total |
Average
Balance |
Percent
of Total |
||||||||||||
|
Loans net of unearned income (1) |
$ | 447,711 | 87.9 | % | $ | 243,420 | 82.7 | % | $ | 142,869 | 86.4 | % | ||||||
|
Available for sale securities (2) |
32,457 | 6.4 | % | 21,756 | 7.4 | % | 12,592 | 7.6 | % | |||||||||
|
Other interest-earning assets |
28,973 | 5.7 | % | 29,081 | 9.9 | % | 9,948 | 6.0 | % | |||||||||
|
Total |
$ | 509,141 | 100.0 | % | $ | 294,257 | 100.0 | % | $ | 165,409 | 100.0 | % | ||||||
| (1) | Includes loans held for sale |
| (2) | Available for sale securities excludes adjustment for market valuation and certain noninterest-earning marketable equity securities |
Loans and Allowance for Loan Losses
Total loans, net of unearned income (excluding loans held for sale) increased 44.7%, or $154.2 million, from year-end 2004, and the prior year total was up 97.4%, or $170.3 million, from the end of 2003. Average loans for 2005 (excluding loans held for sale) were 83.3%, or $201 million, above the prior year’s level. This growth in total loans outstanding during 2005 resulted from continued loan demand in the Vision Alabama and Vision Florida markets and from the acquisition of BankTrust of Florida. The growth reflects new customer and branch development and continued increase in the economic activity along the Gulf Coast.
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The following table, which is based on regulatory reporting codes, shows loan balances at
LOANS OUTSTANDING BY TYPE
| December 31 | ||||||||||||||
|
(dollars in thousands) |
2005 | 2004 | ||||||||||||
|
Commercial and financial |
$ | 48,320 | 10 | % | $ | 49,201 | 14 | % | ||||||
|
Agricultural |
700 | 0 | % | 65 | 0 | % | ||||||||
|
Consumer |
9,727 | 2 | % | 10,384 | 3 | % | ||||||||
|
Equity lines |
24,331 | 5 | % | 13,093 | 4 | % | ||||||||
|
Real estate - construction |
260,828 | 52 | % | 140,749 | 41 | % | ||||||||
|
Real estate - residential |
84,740 | 17 | % | 72,339 | 21 | % | ||||||||
|
Real estate - commercial and other |
71,370 | 14 | % | 59,371 | 17 | % | ||||||||
|
Other loans |
1,259 | 0 | % | 931 | 0 | % | ||||||||
| 501,275 | 100 | % | 346,133 | 100 | % | |||||||||
|
Unearned income |
(2,033 | ) | 0 | % | (1,127 | ) | 0 | % | ||||||
| 499,242 | 100 | % | 345,006 | 100 | % | |||||||||
|
Allowance for loan losses |
(5,749 | ) | -1 | % | (4,565 | ) | -1 | % | ||||||
|
Loans, net |
$ | 493,493 | 99 | % | $ | 340,441 | 99 | % | ||||||
|
Loans held for sale |
$ | 2,482 | $ | 1,254 | ||||||||||
The portfolio of commercial loans, other than those secured by real property, decreased by $0.9 million, or 1.8%, from year-end 2004 as the loan portfolio continued to shift to loans secured by real estate. Included in the commercial loan category are loans to individuals, generally secured by collateral other than real estate, that are used to fund investments in new or expanded business opportunities. The rate of commercial loan growth in 2006 will depend on the Company’s ability to take advantage of competitive opportunities to attract new business in established markets and to develop customers in our newest market areas.
Commercial real estate lending, which includes loans secured by properties used in commercial or industrial operations, increased $12.0 million, or 20.2%, compared to year-end 2004. The Banks have been able to develop new business in a competitive market. Furthermore, a portion of the increase is due to the new branches opened in 2005.
Our growth in residential construction lending in our Gulf Coast communities was the primary reason for the $120.1 million, or 85.3%, increase in our real estate construction loans during 2005.
Residential real estate loans to individuals and equity lines, increased $23.6 million, or 31.2%, in 2005 over 2004 due to the growth of the Company within its markets and due to the opening of additional branches. The Company has a strategy of selling its fixed rate residential first mortgage loans in the secondary market.
Total real estate loans, as a percentage of the total loan portfolio, increased throughout the year and represented approximately 83.2% of the total portfolio at year-end 2005. To manage the Company’s exposure, Vision Alabama and Vision Florida have established internal limits with regard to the maximum number and dollar amount of loans to any one borrower and in any one geographic location or development. Borrowers are also required to invest sufficient cash to maintain adequate loan-to-value ratios. To provide diversification within the real estate portfolio, management has established guidelines based on percentages of the total loan portfolio and percentages of capital according to loan types.
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Loans to individuals include various consumer installment and credit line loan products other than retail mortgage loan products. There was a slight decrease of 6.3%, or $0.7 million, in 2005 from the prior year. Loans to individuals continue to represent a small share of our loan portfolio.
Total loans as of December 31, 2005 are shown in the following table according to contractual loan maturities, unadjusted for scheduled principal
LOANS MATURITIES
|
(Dollars in thousands) |
|||
|
One year or less |
$ | 324,337 | |
|
After one year through five years |
133,393 | ||
|
After five years |
41,512 | ||
| $ | 499,242 | ||
Approximately 25.5% of the value of loans with a maturity greater than one year carries a fixed rate of interest.
Each loan carries a degree of credit risk. Management’s evaluation of this risk is ultimately reflected in the estimate of probable loan losses that is reported in the Company’s financial statements as the allowance for loan losses. Changes in this ongoing evaluation over time are reflected in the provision for loan losses charged to operating expense.
12
At December 31, 2005, the reserve for possible loan losses was $5.7 million, or 1.15% of total loans, compared to $4.6 million, or 1.32% of total loans at the end of 2004. The increase in reserves at year-end 2004 was to protect against any unforeseen possible losses due to the acquisition of BankTrust of Florida and the potential economic impact of hurricane Ivan in the Vision Alabama market area. As the effects of these events were minimal, the loan loss reserve as a percentage of total loans has decreased during the year 2005. In addition; this decrease in the allowance for loan losses, as a percentage of outstanding loans, was due to growth in the loan portfolio and loans charged-off during the third quarter of 2005. The following table shows the activity in the reserve for possible loan losses over the past five years.
SUMMARY OF ACTIVITY IN THE ALLOWANCE FOR LOAN LOSSES
| December 31, | ||||||||||||||||||||
|
(dollars in thousands) |
2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
|
Balance at the beginning of year |
$ | 4,565 | $ | 2,072 | $ | 1,390 | $ | 1,013 | $ | 396 | ||||||||||
|
Provision for loan losses charged to operations |
1,595 | 1,819 | 1,290 | 616 | 655 | |||||||||||||||
|
Reserve acquired through acquisition |
— | 836 | — | |||||||||||||||||
|
Loans charged to the allowance Commercial, financial and agricultural |
401 | 106 | 555 | 200 | 15 | |||||||||||||||
|
Real estate |
25 | 38 | 7 | 14 | — | |||||||||||||||
|
Individuals |
41 | 113 | 61 | 39 | 23 | |||||||||||||||
|
Total |
467 | 257 | 623 | 253 | 38 | |||||||||||||||
|
Recoveries of loans previously charged off Commercial, financial and agricultural |
3 | — | 5 | 11 | — | |||||||||||||||
|
Real estate |
8 | 2 | — | — | — | |||||||||||||||
|
Individuals |
45 | 93 | 10 | 2 | — | |||||||||||||||
|
Total |
56 | 95 | 15 | 13 | — | |||||||||||||||
|
Net charge-offs |
411 | 162 | 608 | 240 | 38 | |||||||||||||||
|
Balance at the end of year |
$ | 5,749 | $ | 4,565 | $ | 2,072 | $ | 1,390 | $ | 1,013 | ||||||||||
|
Ratios |
||||||||||||||||||||
|
Net charge offs to average loans |
0.09 | % | 0.07 | % | 0.42 | % | 0.25 | % | 0.06 | % | ||||||||||
|
Gross charge-offs to average loans |
0.11 | % | 0.11 | % | 0.44 | % | 0.27 | % | 0.06 | % | ||||||||||
|
Recoveries to gross charge-offs |
11.99 | % | 36.96 | % | 2.41 | % | 5.14 | % | 0.00 | % | ||||||||||
|
Allowance for loan losses to loans at end of year (1) |
1.15 | % | 1.32 | % | 1.19 | % | 1.28 | % | 1.30 | % | ||||||||||
| (1) | Excludes loans held for sale |
In making its risk evaluation and establishing an allowance level that it believes is adequate to absorb probable losses in the portfolio, management considers various sources of information. Some of the more important sources include management’s ongoing review of the loan portfolio, which is undertaken both to ascertain whether there are probable losses, which must be charged off, and to assess the risk characteristics of the portfolio in the aggregate. This review takes into consideration the judgments of the responsible lending officers and senior management, and also those of bank regulatory agencies that review the loan portfolio as part of the regular bank examination process. Finally, Vision Bancshares engages internal and external credit reviewers to perform independent reviews of the risk management process, adequacy of loan documentation and the risk ratings and appropriateness of the level of allowance for loan losses. The results of such examinations are reported to the Audit Committee of the Board of Directors. Loans identified as having increased credit risk are classified in accordance with the Company’s loan policy and appropriate reserves are established for each loan classification category based on pre-determined reserve percentages. Due to limited loan loss experience, reserves are established for the remaining unclassified portion of the loan portfolio based on a predetermined factor established by management.
13
In evaluating the allowance, management also considers the historical loan loss experience of the Company, the amount of past due and nonperforming loans, current and anticipated economic conditions, lender requirements and other appropriate information.
Management allocated the allowance for loan losses to specific loan classes, as of the dates indicated, as follows:
ALLOCATION OF THE RESERVE FOR POSSIBLE LOAN LOSSES
| December 31, | ||||||||||||||||||||||||||||||
| 2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||||||||||||
| Loans | Reserve | Loans | Reserve | Loans | Reserve | Loans | Reserve | Loans | Reserve | |||||||||||||||||||||
|
Commercial, financial and agricultural |
$ | 5,131 | 89.3 | % | $ | 3,786 | 82.9 | % | $ | 1,747 | 84.3 | % | $ | 1,005 | 72.3 | % | $ | 385 | 38.0 | % | ||||||||||
|
Real estate loans |
292 | 5.1 | % | 251 | 5.5 | % | 48 | 2.3 | % | 75 | 5.4 | % | — | 0.0 | % | |||||||||||||||
|
Loans to individuals |
326 | 5.7 | % | 528 | 11.6 | % | 277 | 13.4 | % | 310 | 22.3 | % | 628 | 62.0 | % | |||||||||||||||
|
Total |
$ | 5,749 | 100.0 | % | $ | 4,565 | 100.0 | % | $ | 2,072 | 100.0 | % | $ | 1,390 | 100.0 | % | $ | 1,013 | 100.0 | % | ||||||||||
Management believes that the allowance for loan losses at December 31, 2005 is adequate to absorb known risks in the Company’s loan portfolio based upon the Company’s historical experience. No assurance can be given, however, that increased loan volume, adverse economic conditions or other circumstances will not result in increased losses in the Company’s loan portfolio or additional provisions to the allowance for loan losses.
Nonperforming Assets
Management closely monitors loans and other assets that are classified as nonperforming assets. Nonperforming assets consist of nonperforming loans (loans classified as nonaccrual or renegotiated and loans past due 90 days or more for which interest is still being accrued) and foreclosed assets (foreclosed properties and repossessions). There have been no identifiable trends related to industries or markets underlying the changes in nonperforming assets and management is aware of no factors which should suggest that they are prone to significant increases in 2006. There were no commitments to lend any additional funds on nonaccrual or renegotiated loans at December 31, 2005.
14
The following table provides information on nonperforming assets for each year in the five-year period
NONPERFORMING ASSETS
| December 31, | ||||||||||||||||||||
|
(dollars in thousands) |
2005 | 2004 | 2003 | 2002 | 2001 | |||||||||||||||
|
Nonaccrual loans |
$ | 2,588 | $ | 1,920 | $ | 458 | $ | 306 | $ | 286 | ||||||||||
|
Restructured loans |
— | — | — | — | — | |||||||||||||||
|
Total nonperforming loans |
2,588 | 1,920 | 458 | 306 | 286 | |||||||||||||||
|
Foreclosed properties |
— | 452 | — | 606 | 1,017 | |||||||||||||||
|
Repossessions |
— | 3 | — | 87 | 24 | |||||||||||||||
|
Total nonperforming assets |
$ | 2,588 | $ | 2,375 | $ | 458 | $ | 999 | $ | 1,327 | ||||||||||
|
Accruing loans 90 days past due |
$ | 1 | $ | — | $ | — | $ | — | $ | — | ||||||||||
|
Ratios |
||||||||||||||||||||
|
Loan loss allowance to nonperforming loans |
222.13 | % | 237.76 | % | 452.40 | % | 454.25 | % | 354.20 | % | ||||||||||
|
Nonperforming loans to total loans, net of unearned interest |
0.52 | % | 0.56 | % | 0.26 | % | 0.28 | % | 0.38 | % | ||||||||||
|
Nonperforming assets to total assets |
0.44 | % | 0.58 | % | 0.22 | % | 0.71 | % | 1.36 | % | ||||||||||
Loans considered to be impaired totaled $2.4 million at December 31, 2005, an increase of $0.9 million, or 60.0%, from the $1.5 million total at December 31, 2004, however, impaired loans only increased from 0.44% of total gross loans at December 31, 2004 to 0.48% at December 31, 2005. The relatively low levels of impaired loans at December 31, 2005 and 2004 reflect the economic environment experienced by our clients as well as our ability to effectively manage client credit risk. Management monitors these credits on a continued basis and believes the Company has adequately reserved to absorb any potential losses associated with these loans. The related valuation allowance for impaired loans, included as a component of the allowance for loan losses, was $1.0 million at December 31, 2005 and 2004. No interest income was recognized on impaired loans for the years ended December 31, 2005 and 2004.
The difference between the gross interest income that would have been recorded in each period if nonaccruing loans had been current in accordance with their original terms and the amount of interest income on those loans that was included in each period’s net income was approximately $0.3 million for 2005 and $0.1 million for 2004.
There were no concentrations of loans exceeding 10% of total loans, which are not otherwise disclosed as a category of loans at December 31, 2005 or the preceding years.
It is the general policy of the Banks to stop accruing interest income and recognize interest on a cash basis when any commercial, industrial or real estate loan is past due as to principal or interest and the ultimate collection of either is in doubt. Accrual of interest income on consumer installment loans is suspended when any payment of principal or interest, or both, is more than 90 days delinquent. When a loan is placed on a nonaccrual basis any interest previously accrued but not collected is reversed against current income unless the collateral for the loan is sufficient to cover the accrued interest or a guarantor assures payment of interest.
15
Investment Portfolio
The carrying amount of investment securities at the end of each of the last two years are set forth in the following table.
INVESTMENT PORTFOLIO
| December 31, | ||||||
|
(dollars in thousands) |
2005 | 2004 | ||||
|
U.S. government and agency securities |
$ | 15,242 | $ | 6,492 | ||
|
Mortgage-backed securities |
15,176 | 20,002 | ||||
|
State and municipal securities |
1,146 | — | ||||
|
Equity securities |
2,041 | 1,033 | ||||
| $ | 33,605 | $ | 27,527 | |||
The composition of the Company’s investment securities portfolio reflects the Company’s investment strategy of maximizing portfolio yields subject to risk and liquidity considerations. The primary objectives of the Company’s investment strategy are to maintain an appropriate level of liquidity and provide a tool to assist in controlling the Company’s interest rate position while at the same time producing adequate levels of interest income. Vision Bancshares classifies its debt and equity securities as either held to maturity (HTM), available for sale (AFS) or trading securities. The Company’s entire portfolio is classified as AFS securities to appropriately reflect the nature of the Company’s holdings that are available for sale should liquidity needs dictate. AFS securities are carried at market value with unrealized gains or losses, net of deferred taxes, reported in accumulated other comprehensive income in shareholder’s equity. Management of the maturity of the portfolio is necessary to provide liquidity and to control interest rate risk.
The following table shows the maturities of investment securities (excluding equity securities) and weighted average
INVESTMENT PORTFOLIO MATURITY SCHEDULE
| December 31, 2005 | ||||||||||||||||||||||||
|
(dollars in thousands) |
Within One Year |
After One but
Within Five Years |
After Five but
Within Ten Years |
After Ten Years |
||||||||||||||||||||
| Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | |||||||||||||||||
|
Securities-All Available for Sale: |
||||||||||||||||||||||||
|
U.S. Government agencies |
$ | 8,948 | 3.70 | % | $ | 4,535 | 6.95 | % | $ | 1,993 | 5.10 | % | $ | — | 0.00 | % | ||||||||
|
Mortgage-backed securities |
— | — | 5,381 | 7.39 | % | 4,429 | 7.36 | % | 5,872 | 9.58 | % | |||||||||||||
|
State and municipal securities (a) |
— | — | $ | — | 0.00 | % | 500 | 4.92 | % | 686 | 4.83 | % | ||||||||||||
|
Total |
$ | 8,948 | 3.70 | % | $ | 9,916 | 14.34 | % | $ | 6,922 | 17.38 | % | $ | 6,558 | 14.41 | % | ||||||||
| (a) | Tax exempt yields are expressed on a fully taxable equivalent basis. |
The average maturity of the investment portfolio was 3.33 years at year-end 2005 compared to 4.05 years at year-end 2004 with an average tax equivalent yield of 3.95% and 4.03% at December 31, 2005 and 2004, respectively. Mortgage-backed securities have been included in the maturity table based upon the stated maturity of each security.
16
There was a net unrealized loss on the Company’s portfolio of $0.8 million at December 31, 2005 compared to $0.1 million at December 31, 2004. These fluctuations in the gross unrealized gains and losses in the Company’s investment portfolio resulted primarily from the reaction of the investment securities to changes in market interest rates.
Mortgage-backed securities have varying degrees of risk of impairment of principal, as opposed to U.S. Treasury and U.S. government agency obligations, which are considered to contain virtually no default or prepayment risk. Impairment risk is primarily associated with accelerated prepayments, particularly with respect to longer maturities purchased at a premium and interest-only strip securities. The Company’s mortgage-backed securities portfolio as of December 31, 2005 and 2004 contained no interest-only strips and the amount of unamortized premium on mortgage-backed securities at December 31, 2005 was $0.3 million, compared to $0.4 million at December 31, 2004. The recoverability of the Company’s investment in mortgage-backed securities is reviewed periodically by management, and if necessary, appropriate adjustments would be made to income for impaired values.
Average federal funds sold decreased $0.1 million or 0.4% to $28.7 million at December 31, 2005. These fluctuations resulted from ordinary increases and decreases in loan demand and the level of deposit balances. As a percentage of average earning assets, these funds represented 5.6% for 2005, compared to 9.8% for 2004.
Deposits
Vision Bancshares’ primary source of funds is its deposits. Continued enhancement of existing products, emphasis upon better customer service and expansion into new market areas have fueled the growth in the Company’s deposit base. Emphasis has been placed upon attracting both commercial and consumer deposits. It is the Company’s intent to expand its deposit base in order to continue to fund asset growth.
At December 31, 2005, deposits were 41.3%, or $144.7 million, above the level at December 31, 2004. Average deposits were up 78.6%, or $208.2 million. This significant increase in total deposits resulted as the Company placed emphasis on new business development and offered competitive rates to attract new deposits in 2005, coupled with the addition of three new branches and one loan production office. In addition the acquisition of BankTrust of Florida in October of 2004 contributed to the growth in deposits in 2005.
17
The following table presents the average amounts outstanding and the average rates paid for each of the
AVERAGE DEPOSIT BALANCES AND RATE PAID
|
(dollars in thousands) |
2005 | 2004 | ||||||||||
|
Average
balance |
Average
rate paid |
Average
balance |
Average
rate paid |
|||||||||
|
Noninterest-bearing demand |
$ | 85,395 | 0.00 | % | $ | 44,161 | 0.00 | % | ||||
|
Interest-bearing demand |
122,699 | 2.48 | % | 53,254 | 1.33 | % | ||||||
|
Savings and money market deposit accounts |
97,558 | 1.85 | % | 54,167 | 1.14 | % | ||||||
|
Time |
167,512 | 3.52 | % | 113,408 | 3.14 | % | ||||||
|
Total (1) |
$ | 473,164 | 2.77 | % | $ | 264,990 | 2.21 | % | ||||
| (1) | The rate paid on total average deposits represents the rate paid on total average interest-bearing deposits only. |
Average noninterest-bearing deposits grew 93.4% in 2005 compared to 115.7% in 2004. Noninterest-bearing deposits continue to be a significant funding source for Vision Bancshares, accounting for 18.0% of average total deposits in 2005 and 16.7% in 2004.
Total interest-bearing deposits grew 44.3%, or $126.6 million, between year-end 2004 and the most recent year end. On average, total interest-bearing deposits were up 75.6%, or $166.9 million, in 2005 compared to 2004. The savings account category, which includes money market deposit accounts, increased 11.6%, or $9.0 million, during 2005, but was up 80.1% on average from the prior year. Total interest-bearing deposits grew primarily due to the Company’s efforts to attract new deposits in existing markets and its expansion into new markets.
Total certificates of deposits increased 34.6%, or $49.4 million, from the end of 2004, and were up 47.7% on average in 2005 compared to the prior year. Time deposits of $100,000 or more grew 59.8% in 2005 and 82.5% in 2004. Certificates of deposits of less than $100,000 increased 12.9% in 2005. The Company had $4.0 million in time deposit open accounts at December 31, 2005 and 2004. The following table presents the maturities of the larger time deposits of $100,000 or more at December 31, 2005:
MATURITIES OF LARGE TIME DEPOSITS
|
(dollars in thousands) |
December 31, 2005 | ||||||||
|
Time
Certificates of Deposit |
Other
Time Deposits |
Total | |||||||
|
Three months or less |
$ | 12,919 | $ | 4,000 | $ | 16,919 | |||
|
Over three through six months |
9,834 | — | 9,834 | ||||||
|
Over six through twelve months |
27,760 | — | 27,760 | ||||||
|
Over twelve months |
56,834 | — | 56,834 | ||||||
| $ | 107,347 | $ | 4,000 | $ | 111,347 | ||||
18
Borrowed Funds
The Company has used borrowed funds on a limited basis as a source of funding asset growth in excess of deposit growth and for short-term liquidity needs. The mixture of borrowed funds and deposits as sources of funds depends on the relative availability and costs of those funds and Vision Bancshares’ need for funding.
At December 31, 2005, Vision Bancshares had $19.6 million in an available credit line with the Federal Home Loan Bank and an additional $30.8 million in unsecured Fed Funds lines of credit available with four correspondent banks.
Borrowings at December 31, 2005 were up 57.4%, or $9.6 million, from year-end 2004. As with most community banks, loan volume is the driver for our balance sheet. Since our loan volume has been up, Vision Bancshares increased advances from the FHLB by $10.0 million from the prior year. These funds were utilized to fund the growth in the loan areas and help meet liquidity needs. Additional information on borrowings is presented in Note 10 to the consolidated financial statements.
On December 5, 2005, Vision Bancshares, through Vision Bancshares Trust I, a statutory trust, sold to institutional investors $15.0 million of floating rate capital securities. Holders of the Capital Securities are entitled to receive preferential cumulative cash distributions from the Trust, at a rate per annum reset quarterly equal to the sum of three month LIBOR plus 148 basis points. The rate was 6.01% at December 31, 2005. Interest is payable quarterly. The Company can defer payment of the cash distributions on the securities at any time or from time to time for a period not to exceed twenty consecutive quarters.
Vision Bancshares has, through various contractual arrangements, fully and unconditionally guaranteed all of Vision Bancshares Trust I’s obligations with respect to the capital securities. These Capital Securities qualify as a Tier I Capital, subject to certain limitations, and are presented in the consolidated balance sheets as subordinated debentures. The sole asset of Vision Bancshares Trust I is $15.5 million of junior subordinated debentures issued by Vision Bancshares. These junior subordinated debentures also carry the same floating rate as the Capital Securities and both mature on December 30, 2035; however, the maturity of both may be shortened to a date not earlier than December 30, 2010.
Liquidity Management
Liquidity is defined as the ability of a company to convert assets into cash or cash equivalents without significant loss. Liquidity management involves maintaining the Company’s ability to meet the day-to-day cash flow requirements of Vision Bancshares’ customers, whether they are depositors wishing to withdraw funds or borrowers requiring funds to meet their credit needs. Without proper liquidity management, the Company would not be able to perform the primary function of a financial intermediary and would, therefore, not be able to meet the production and growth needs of the communities it serves.
One function of asset and liability management is to assure adequate liquidity in order for the Company to meet the needs of its customer base. Daily monitoring of the sources and uses of funds is necessary to maintain an acceptable cash position that meets both its customers’ needs
19
and its shareholders’ objectives. In a banking environment, both assets and liabilities are considered sources of liquidity funding and both are, therefore, monitored on a daily basis. Payment of dividends by the Company is at the discretion of the Company’s Board of Directors, and is dependent upon, among other things, the Company’s earnings, financial condition and capital ratios.
Proceeds from the sale of stock and dividends paid by the Banks are the primary source of funds available to the Company for payment of operating expenses and dividends to its shareholders. The Board of Directors has not declared or paid a dividend during the past five years. Vision Bancshares has not and will not likely generate any significant earnings on its own and will depend upon the payment of dividends by the Banks, if it is to pay dividends on its common stock. It is expected that for at least the next year of operation for the Banks, all earnings will be retained by the Banks for their future needs. State and federal banking laws restrict the payment of dividends by the Banks.
The asset portion of the balance sheet provides liquidity primarily through loan principal repayments or sales, maturities, calls and pay downs of investment securities. Loans that mature or reprice in one year or less totaled approximately $453.2 million, or 90.4% of loans, net of unearned income, at December 31, 2005. The Company has $8.9 million of investment securities with stated maturities of one year or less at December 31, 2005. The Company has 45.2% of the investment portfolio in mortgage backed securities for which the Company receives regular monthly paydowns. Other sources of liquidity include cash on deposit with other banks and short-term investments such as federal funds sold.
The liability portion of the balance sheet provides liquidity through various customers’ interest-bearing and noninterest-bearing deposit accounts. Funds are also available through the purchase of federal funds from other commercial banks. As members of the Federal Home Loan Bank (“FHLB”) of Atlanta, the Banks also have access to various credit programs to assist with liquidity needs. Liquidity management involves the daily monitoring of the sources and uses of funds to maintain an acceptable Company cash position.
At December 31, 2005, the Company had $0.2 million in binding commitments for capital expenditures. This includes $0.1 million to complete projects currently under construction and $0.1 million for Vision Florida’s Santa Rosa branch improvements.
Asset/Liability Management
The objective of the Company’s asset/liability management is to implement strategies for the funding and deployment of its financial resources that are expected to maximize soundness and profitability over time at acceptable levels of risk.
Interest rate sensitivity is the potential impact of changing rate environment on both net interest income and cash flows. Management monitors its interest rate risk exposure through the use of static gap analysis, interest rate shock analysis, and monitoring the economic value of equity.
The static gap analysis measures the amount of repricing risk embedded in the balance sheet at a specific point in time, by comparing the difference in the volume of interest-earning
20
assets and interest-bearing liabilities that are subject to repricing within specific time periods. At December 31, 2005, the Company was asset sensitive, indicating that it had more interest-bearing assets than interest-earning liabilities repricing during the twelve months ending December 31, 2005.
The following table sets forth the Company’s maturity and repricing exposure at December 31, 2005 for the time frames presented:
INTEREST RATE SENSITIVITY
| By Maturity or Repricing Dates at December 31, 2005 | |||||||||||||||||
|
(dollars in thousands) |
Zero to
Three Months |
Three
Months to One Year |
One Year
Five Years |
Over Five Years |
Total | ||||||||||||
|
EARNING ASSETS |
|||||||||||||||||
|
Federal Funds sold and interest-bearing deposits in banks |
$ | 18,452 | — | — | — | $ | 18,452 | ||||||||||
|
Investment securities |
10,226 | 9,916 | 6,922 | 6,541 | 33,605 | ||||||||||||
|
Loans |
436,417 | 17,304 | 37,008 | 10,995 | 501,724 | ||||||||||||
|
Total interest earning assets |
465,095 | 27,220 | 43,930 | 17,536 | 553,781 | ||||||||||||
|
INTEREST-BEARING LIABILITIES |
|||||||||||||||||
|
Interest-bearing demand deposits |
133,937 | — | — | — | 133,937 | ||||||||||||
|
Savings and money market accounts |
86,107 | — | — | — | 86,107 | ||||||||||||
|
Certificates of deposits |
36,939 | 65,284 | 85,872 | 137 | 188,232 | ||||||||||||
|
Time open deposit accounts |
4,000 | — | — | 4,000 | |||||||||||||
|
Total interest-bearing liabilities |
260,983 | 65,284 | 85,872 | 137 | 412,276 | ||||||||||||
|
Interest rate sensitivity gap |
$ | 204,112 | $ | (38,064 | ) | $ | (41,942 | ) | $ | 17,399 | $ | 141,505 | |||||
|
Cumulative interest rate sensitivity gap |
$ | 204,112 | $ | 166,048 | $ | 124,106 | $ | 141,505 | |||||||||
|
Interest rate sensitivity gap ratio |
1.78 | 0.42 | 0.51 | 128.00 | |||||||||||||
|
Cumulative interest rate sensitivity gap ratio |
1.78 | 1.51 | 1.30 | 1.34 | |||||||||||||
The interest rate shock analysis measures the impact on the Company’s net interest income as a result of an immediate and sustained shift in interest rates. The movements in market rates are based on statistical regression analyses while management makes assumptions concerning balance sheet growth and the magnitude of interest rate movements for certain interest-earning assets and interest-bearing liabilities. Using actual maturity and repricing opportunities of the Company’s portfolio, in conjunction with management’s assumptions, a rate shock analysis is performed using a plus 200 basis points shift and a minus 200 basis points shift in interest rates. The Company’s Assets/Liability Policy limits have established a change of not more than—15% in net interest income using a +/- 200 basis points shock. If the Bank’s net interest margin dollars and return on assets (ROA) are above the financial targets, then the maximum guideline for percentage change may be more liberal than -15%. At December 31, 2005, the change in net interest income over the next 12 months using a 200 basis points downward shift in interest rates was outside policy limits at -20.2%, indicating the negative impact due to such change would be more than anticipated. However, ROA was still well above the minimum guideline of 0.55% at 0.98% when using the 200 basis point downward shift in interest rates. A 200 basis point upward shift in interest rates for this same time period was within policy limits at 19.3%, indicating a positive change in net interest income. The Company does not have a percentage policy limit for positive change in net interest income.
21
The following table estimates the impact of shifts in interest rates on the Company’s net interest
RATE SHOCK ANALYSIS
|
(dollars in thousands) |
-200
Basis Points |
Stable
Rates |
+200
Basis Points |
||||||||
|
Interest income |
$ | 41,580 | $ | 51,142 | $ | 61,993 | |||||
|
Interest expense |
14,278 | 16,945 | 21,202 | ||||||||
|
Net interest income |
$ | 27,302 | $ | 34,197 | $ | 40,791 | |||||
|
Dollar change from level |
$ | (6,895 | ) | $ | 6,594 | ||||||
|
Percentage change from level |
(20.16 | %) | 19.28 | % | |||||||
Changes in interest rates also have an impact on the value of the Company’s equity. Applying the same interest rate scenarios used in the rate shock analysis, a measurement is made as to the impact of these changes on the economic value of the Company’s equity. At December 31, 2005 the Company’s net portfolio value (the difference between the market value of assets and liabilities) was 14.3% of total assets. This percentage increases to 16.2% in response to a 200 basis point rise in interest rates and declines to 11.7% under the 200 basis points decrease in interest rates both of which are within the Company’s policy limits. This volatility is typical when trying to reduce earnings at risk.
While movement of interest rates cannot be predicted with any certainty, management believes that the Company’s current interest rate sensitivity analysis fairly reflects its interest rate risk exposure during the twelve months ending December 31, 2006. Management continually evaluates the condition of the economy, the pattern of market interest rates and other economic data to determine the types of investments that should be made and at what maturities.
Shareholders’ Equity and Capital Adequacy
At December 31, 2005, shareholder’s equity totaled $47.4 million compared to $40.8 million at the end of 2004. This represents a growth of $6.6 million, or 16.2%, of which approximately $0.1 million was attributable to the issuance of additional common stock. In addition, the Company had net income of $6.7 million and a decrease of $0.4 million in accumulated other comprehensive income. Stock owned by and stock receivables from related VIEs decreased by $0.2 million due to pay downs on the debt secured by Company stock (see Note 10 to the consolidated financial statements.)
On March 9, 2004, the Company commenced a private placement stock offering in which it issued 1,132,353 shares of common stock, at a price of $17.00 per share. This offer closed on April 9, 2004 after being fully subscribed. The Company raised $19.3 million in proceeds before payment of commissions and expenses. Of total shares subscribed, 886,472 shares were funded and $15.1 million disbursed from escrow as of March 31, 2004. The remaining 245,881 shares were funded and $4.2 million was disbursed from escrow as of April 9, 2004.
22
The ratios in the following table indicate that the Company remained well capitalized at
RISK-BASED CAPITAL AND CAPITAL RATIOS
| December 31, | ||||||||
|
(dollars in thousands) |
2005 | 2004 | ||||||
|
Tier 1 regulatory capital |
$ | 58,633 | $ | 36,883 | ||||
|
Tier 2 regulatory capital |
6,107 | 4,565 | ||||||
|
Total regulatory capital |
$ | 64,740 | $ | 41,448 | ||||
|
Risk-weighted assets |
$ | 547,994 | $ | 376,590 | ||||
|
Ratios |
||||||||
|
Leverage ratio (Tier 1 capital to average assets) |
10.06 | % | 10.09 | % | ||||
|
Tier 1 capital to risk-weighted assets |
10.70 | % | 9.79 | % | ||||
|
Total capital to risk-weighted assets |
11.81 | % | 11.01 | % | ||||
A strong capital position is vital to the continued profitability of the Company because it promotes depositor and shareholder confidence and provides a solid foundation for future growth of the organization. Bank regulatory authorities have issued risk-based capital guidelines that take into consideration risk factors associated with various categories of assets, both on and off the balance sheet. The primary quantitative measures used by regulators to gauge capital adequacy are the ratio of Tier 1 regulatory capital to average total assets, also known as the leverage ratio, and the ratios of total and Tier 1 regulatory capital to risk-weighted assets. The regulators define the components and computation of each of these ratios. The minimum capital ratios for both the Company and the Banks are generally 4% leverage, 8% total capital and 4% Tier 1 capital. However, regulators may set higher capital requirements for an individual institution when particular circumstances warrant.
Under the regulatory framework for prompt corrective action, the capital levels of banks are categorized into one of five classifications ranging from well-capitalized to critically under-capitalized. For an institution to qualify as well-capitalized, its total capital, Tier 1 capital and leverage ratios must be at least 10%, 6% and 5%, respectively. Maintaining capital ratios at the well-capitalized levels avoids certain restrictions that, for example, could impact the FDIC insurance premium rate. As of December 31, 2005 and 2004, the Company’s bank subsidiaries were categorized as well-capitalized. Due to rapid growth, the Banks experienced periods during 2005 in which the total capital fell below the regulatory well capitalized minimum of 10%. On December 5, 2005, Vision Bancshares through Vision Bancshares Trust I, sold to institutional investors capital securities. These trust preferred securities qualify as Tier 1 Capital under current regulatory definitions. After the issuance of the trust preferred securities, the Company injected additional capital to keep its subsidiaries from operating below the well-capitalized level for more than two consecutive quarters.
As a result of the 2004 acquisition and merger, Vision Florida agreed with the Florida banking regulators to maintain a minimum Tier I Leverage capital ratio of 8.00% for a period of two years following the merger. As a condition of the recent branch approvals, Vision Alabama has agreed with the Alabama State Banking Department to maintain a minimum Tier I leverage capital ratio of 7.00%.
23
The following rate of return information for the periods indicated is presented below.
RETURN ON EQUITY AND ASSETS
| December 31, | ||||||
| 2005 | 2004 | |||||
|
Return on average assets |
1.24 | % | 0.38 | % | ||
|
Return on average equity |
15.13 | % | 3.28 | % | ||
|
Dividends payout ratio |
0.00 | % | 0.00 | % | ||
|
Average equity to average assets ratio |
8.21 | % | 11.58 | % | ||
The Board of Directors has not declared or paid a dividend since beginning operation in 2000.
Vision Bancshares has not and will not likely generate any significant earnings on its own, and it will depend upon the payment of dividends by the Banks, if it is to pay dividends on its common stock. It is expected that for at least the next year
of operation for the Banks, all earnings will be retained by the Banks for their future needs. State and federal banking laws restrict the payment of dividends by the Banks. The Company does not anticipate paying a cash dividend in the foreseeable
Results of Operations
General
Our principal asset is the ownership of our Banks. Accordingly, our results of operations are primarily dependent upon the results of operations of our Banks. The Banks’ profitability depends primarily on net interest income, which is the difference between interest income generated from interest-earning assets (i.e., loans and investments) less the interest expense incurred on interest-bearing liabilities (i.e., customer deposits and borrowed funds). Net interest income is affected by the relative amounts of interest-earning assets and interest-bearing liabilities, and the interest rate earned and paid on these balances. Net interest income is dependent upon the Banks’ interest rate spread, which is the difference between the average yield earned on its interest-earning assets and the average rate paid on its interest-bearing liabilities. When interest-earning assets approximate or exceed interest-bearing liabilities, any positive interest rate spread will generate interest income. The interest rate spread is impacted by interest rates, deposit flows and loan demand. Additionally, and to a lesser extent, the profitability of the Banks is affected by such factors as the level of noninterest income and expenses, the provision for loan losses and the effective tax rate. Noninterest income consists primarily of mortgage fee income on mortgage loans sold in the secondary market, service charges on deposit accounts, income from the sale of investment securities and other fee income. Noninterest expenses consist of compensation and benefits, occupancy-related expenses and other operating expenses.
Earnings Summary
The Company reported net earnings of $6.7 million for 2005 representing an increase in earnings of $5.5 million or 458.3% compared to net income of $1.2 million for 2004. Earnings per basic common share were $1.10 in 2005 compared to $0.22 in 2004.
24
Net interest income increased 121.4% in 2005 to $25.9 million from $11.7 million in 2004. The significant increase in net interest income in 2005 is attributable to the general growth of the Banks and the acquisition of BankTrust of Florida during the last quarter of 2004. The net interest spread increased 100 basis points to 4.50% in 2005 from 3.50% in 2004 and was driven by the increased yields on variable rate loans, coupled with an increase of 93.4% in average balances of noninterest bearing deposits in 2005 over 2004. The cost of funds increased at a slower rate than the yield on earning assets.
Our provision for loan losses totaled $1.6 million in 2005 and $1.8 million in 2004. The allowance for loan losses represented 1.15% and 1.32% of total loans outstanding at December 31, 2005 and 2004, respectively. The allowance for loan losses is discussed in more detail under “Loans and Allowance for Loan Losses” above.
Noninterest income increased 59.9% to $3.1 million in 2005 compared to 2004. The increase in noninterest income in 2005 is mainly attributable to secondary mortgage fees which increased 104.8% to $1.2 million in 2005. In addition, the Company recorded an increase of 40.9% to $1.4 million in service charges on deposit accounts in 2005 from the amount recorded in 2004. The Company also recorded $0.5 million in other noninterest income in 2005.
Noninterest expense increased $6.8 million to $16.7 million in 2005 from $9.9 million in 2004. Salaries and employee benefits increased $3.8 million; equipment and occupancy expense increased $1.0 million; data processing expense increased $0.4 million and all other expenses increased a net of $1.6 million. These increases resulted from the acquisition of BankTrust of Florida in October of 2004, and the general growth of the bank subsidiaries which included opening three additional branches and opening a loan production office during the year ended December 31, 2005.
Net Interest Income
Net interest income is the principal source of a financial institution’s earnings stream and represents the difference or spread between interest and fee income generated from earning assets and the interest expense paid on deposits and borrowed funds. Fluctuations in interest rates as well as volume and mix changes in earning assets and interest-bearing liabilities impact net interest income.
Net interest income, before the provision for loan losses, totaled $25.9 million in 2005 representing an increase of 121.4% compared to net interest income of $11.7 million in 2004. The Company experienced significant growth in both average earning assets and average interest-bearing liabilities during 2005 and 2004. The “Summary of Changes in Net Interest Income” table in the section below provides information about changes in interest income, interest expense and net interest income due to changes in average balances and rates.
The Company’s interest income increased $20.5 million, or 120.6%, to $37.5 million in 2005 from $17.0 million in 2004. The increase in 2005 was due to the 73.0% increase in average earning assets paired with a 158 basis points increase in the yield on average earning assets during 2005 as compared to 2004. Interest and fee income on loans increased 122.9% during 2005, primarily due to an increase of 83.9% in the average loan balances outstanding paired by an increase in the yield on loans of 137 basis points. The interest income on investment securities
25
increased $0.5 million or 58.9% during 2005, compared to 2004 due to an increase in average balance outstanding paired with an increase in the yield on average balances. Interest income on federal funds sold increased $0.6 million or 163.2% during 2005 compared to 2004. This increase is primarily due to the increase in the yield on average balances outstanding of federal funds sold.
During 2005, the Company’s interest expense increased $6.3 million, or 119.3%, to $11.6 million, as average interest-bearing liabilities outstanding during 2005 increased 74.9%. Interest-bearing deposits are the major component of interest bearing liabilities, representing approximately 95.6% in 2005, and 95.2% in 2004 of average total interest-bearing liabilities outstanding. Average interest-bearing deposits outstanding increased 75.6% during 2005, and the rate paid on these average balances reflected an increase of 56 basis points. Interest expense on borrowings and federal funds purchased during 2005 totaled $0.8 million as compared to $0.4 million for 2004. The Company had $0.1 million in interest expense on junior subordinated debentures in 2005 and none in 2004.
The trend in net interest income is also evaluated in terms of average rates using the net interest margin and the interest rate spread. The net interest margin, or the net yield on earning assets, is computed by dividing net interest income by average earning assets. This ratio represents the difference between the average yield returned on average earning assets and the average rate paid for funds used to support those earning assets, including both interest-bearing and noninterest-bearing sources. The Company’s net interest margin for 2005 was 5.08%, compared to 3.98% for 2004.
The interest rate spread measures the difference between the average yield on earning assets and the average rate paid on interest-bearing sources of funds. The interest rate spread eliminates the impact of noninterest-bearing funds and gives a more direct perspective to the effect of market interest rate movements. The net interest spread for 2005 increased 100 points to 4.50% from the Company’s 2004 spread of 3.50% as the yield on earning assets increased 158 basis points while the cost of interest-bearing sources of funds increased 58 basis points. See the tables in this section below entitled “Summary of Average Balance Sheet, Net Interest Income and Interest Rates” and “Summary of Changes in Net Interest Income” for more information. The Summary of Average Balance Sheet, Net Interest Income and Interest Rates table presents, for the periods shown, the average balance of certain balance sheet items, the dollar amount of interest income from average earning assets and resultant yields, the interest expense and rate paid on average interest-bearing liabilities, and the net-interest margin. The Summary of Changes in Net Interest Income table presents an analysis of changes in interest income, interest expense and net interest income attributable to changes in volume and interest rate.
26
SUMMARY OF AVERAGE BALANCE SHEETS, NET INTEREST INCOME AND INTEREST RATES
(on a taxable equivalent basis)
| * | Loans on nonaccrual status have been included in the computation of average balances |
27
SUMMARY OF CHANGES IN NET INTEREST INCOME (on taxable equivalent basis)
| Year Ended December 31, | ||||||||||||||||||||
| 2005 Compared to 2004 | 2004 Compared to 2003 | |||||||||||||||||||
|
Due to Change in |
Total
(Decrease) |
Due to Change in |
Total
(Decrease) |
|||||||||||||||||
|
(dollars in thousands) |
Volume | Rate | Volume | Rate | ||||||||||||||||
|
INTEREST INCOME |
||||||||||||||||||||
|
Loans, net of unearned income |
$ | 15,553 | $ | 3,900 | $ | 19,453 | $ | 6,546 | $ | (174 | ) | $ | 6,372 | |||||||
|
Investment securities, taxable |
404 | 57 | 461 | 320 | 131 | 451 | ||||||||||||||
|
Investment securities, tax-exempt |
— | 26 | 26 | — | — | — | ||||||||||||||
|
Total investment securities |
404 | 83 | 487 | 320 | 131 | 451 | ||||||||||||||
|
Interest bearing deposits with other banks |
— | — | — | — | — | — | ||||||||||||||
|
Federal funds sold |
(1 | ) | 559 | 558 | 224 | 18 | 242 | |||||||||||||
|
Total interest income |
15,956 | 4,542 | 20,498 | 7,090 | (25 | ) | 7,065 | |||||||||||||
|
INTEREST EXPENSE |
||||||||||||||||||||
|
Demand |
1,408 | 932 | 2,340 | 368 | (5 | ) | 363 | |||||||||||||
|
Savings |
670 | 521 | 1,191 | 213 | (67 | ) | 146 | |||||||||||||
|
Time deposits |
1,856 | 471 | 2,327 | 1,512 | (403 | ) | 1,109 | |||||||||||||
|
Total interest bearing deposits |
3,934 | 1,924 | 5,858 | 2,093 | (475 | ) | 1,618 | |||||||||||||
|
Other short term borrowings |
23 | 1 | 24 | 2 | — | 2 | ||||||||||||||
|
FHLB borrowings |
260 | 113 | 373 | 230 | 9 | 239 | ||||||||||||||
|
Subordinated debentures |
— | 64 | 64 | — | — | — | ||||||||||||||
|
Total interest expense |
4,217 | 2,102 | 6,319 | 2,325 | (466 | ) | 1,859 | |||||||||||||
|
Change in net interest income |
$ | 11,739 | $ | 2,440 | $ | 14,179 | $ | 4,765 | $ | 441 | $ | 5,206 | ||||||||
| * | Loans on nonaccrual status have been included in the computation of average balances |
During 2005, the banking industry experienced an increase in the interest rate environment as the prime interest rate moved from 5.25% to 7.25%. In 2004, the prime interest rate increased from 4.00% to 5.25%.
Provision for Loan Losses, Net Charge-offs and Allowance for Loan Losses
The Company maintains an allowance for loan losses to absorb losses inherent in the loan portfolio. The allowance is based upon management’s estimated range of those losses. Actual losses for these loans may vary significantly from this estimate.
The provision for loan losses is charged to current earnings to bring the allowance for loan losses to a level deemed appropriate by management. Actual loan losses, net of recoveries, are charged directly to the allowance for loan losses. The amount of the provision for loan losses is based on the growth of the loan portfolio, the amount of net loan losses incurred and management’s estimation of potential future losses based on an evaluation of the risk in the loan portfolio.
During 2005, management made increases in the Banks’ allowance for loan losses. The Company provided $1.6 million for loan losses in 2005, compared to $1.8 million in 2004. This increase reflects provision for net charge-offs of $0.4 million and $1.2 million for the growth in the loan portfolio in 2005. This increase in the overall level of the allowance for loan losses in 2004 was due to provision for net charge-offs of $0.2 million and $1.6 million for the general growth in the loan portfolio in 2004.
28
Loan charge-offs exceeded recoveries by $0.4 million and $0.2 million during 2005, and 2004, respectively. This represented an increase of $0.2 million during 2005.
For a more detailed discussion of changes in the allowance for loan losses, nonperforming assets and general credit quality, see “Loans and Allowance for Loan Losses and Nonperforming Assets” above. The future level of the allowance and provisions for loan losses will reflect management’s ongoing evaluation of credit risk, based on established internal policies and practices.
Noninterest Income
Noninterest income for 2005 increased $1.1 million to $3.1 million from $2.0 million in 2004. This increase was primarily due to an increase of $0.6 million in secondary mortgage fees due to the expansion of the mortgage department. In addition, service charges on deposit accounts increased $0.4 million. Other noninterest income increased to $0.5 million in 2005 from $0.3 million in 2004.
NONINTEREST INCOME
| Year Ended December 31, | ||||||||||
|
(dollars in thousands) |
2005 | % change | 2004 | |||||||
|
Service charges on deposit accounts |
$ | 1,441 | 40.86 | % | $ | 1,023 | ||||
|
Loss on sale of securities |
— | — | (6 | ) | ||||||
|
Secondary mortgage fees |
1,188 | 104.83 | % | 580 | ||||||
|
Other noninterest income |
490 | 38.81 | % | 353 | ||||||
|
Total noninterest income |
$ | 3,119 | 59.95 | % | $ | 1,950 | ||||
Noninterest Expenses
The main components of noninterest expense are salaries and employee benefits, occupancy expense, furniture and equipment expense, data processing expense, and other noninterest expense. Noninterest expenses totaled approximately $16.7 million in 2005 compared to $9.9 million in 2004. All noninterst expense categories increased from 2004 to 2005 due to the growth of the Company including the acquisition of BankTrust of Florida during the last quarter of 2004.
Total salaries and benefits increased $3.8 million or 71.0% from 2004 to $9.2 million in 2005. The increase in salaries and employee benefits during 2005 resulted primarily from an increase in the number of employees due to the Company’s growth and expansion in Florida, in addition to merit increases and incentive payments for existing personnel. At December 31, 2005, the Company had 176 full-time equivalent employees, compared to 131 at December 31, 2004. The increase in employees in 2005 resulted primarily from the opening of additional branches and growth in the secondary mortgage area in 2005, in addition to the general growth of the Company.
Occupancy expense increased 65.3% in 2005 to $1.7 million while furniture and equipment expenses increased 54.2% in 2005 to $0.9 million. These increases were due to the opening of three branches and one loan production office in 2005.
29
Data processing expenses increased 62.1% to $1.0 million in 2005 compared to in 2004. These expenses increased due to the general growth of the Company.
Advertising expenses increased 21.7% in 2005 to $0.3 million. The increase in 2005 reflects the Company’s expansion and committed desire to attract new relationships into their banks.
All other operating expenses
increased $1.6 million in 2005 to $3.7 million, as compared to $2.1 million 2004. These increases during 2005 reflect the higher cost associated with the Company’s significant growth, including the opening of two new banking offices and
NONINTEREST EXPENSE
| Year Ended December 31, | |||||||||
|
(dollars in thousands) |
2005 | % change | 2004 | ||||||
|
Salaries and employee benefits |
$ | 9,167 | 71.03 | % | $ | 5,360 | |||
|
Occupancy expense |
1,663 | 65.31 | % | 1,006 | |||||
|
Furniture and equipment expense |
888 | 54.17 | % | 576 | |||||
|
Data processing |
1,005 | 62.10 | % | 620 | |||||
|
Professional fees |
753 | 95.08 | % | 386 | |||||
|
Printing and office supplies |
320 | 44.80 | % | 221 | |||||
|
Advertising expense |
297 | 21.72 | % | 244 | |||||
|
Other |
2,592 | 73.03 | % | 1,498 | |||||
| $ | 16,685 | 68.35 | % | $ | 9,911 | ||||
Income Taxes
The Company incurred income tax expense of $3.9 million on pre-tax income (adjusted for noncontrolling interest) of $10.5 million for 2005, compared to a tax expense of $0.6 million on pre-tax income (adjusted for noncontrolling interest) of $1.8 million for 2004. The effective income tax rate was 36.6% in 2005, compared to 34.2% in 2004. The statutory federal rate was 35 % during 2005 and 2004. The Company attempts to maximize any tax benefits and minimize any tax liabilities through active tax planning. A more detailed explanation of income tax expense is included in Note 20 to the Company’s Consolidated Financial Statements included elsewhere in this Report.
Impact of Inflation and Changing Prices
A bank’s asset and liability structure is substantially different from that of an industrial company in that virtually all assets and liabilities of a bank are monetary in nature. Management believes the impact of inflation on financial results depends upon the Company’s ability to react to changes in interest rates and by such reaction to reduce the inflationary impact on performance. Interest rates do not necessarily move in the same direction, or at the same magnitude, as the prices of other goods and services. As discussed above, management seeks to manage the relationship between interest-sensitive assets and liabilities in order to protect against wide interest rate fluctuations, including those resulting from inflation.
Various information shown elsewhere in this report should assist in an understanding of how well the Company is positioned to react to changing interest rates and inflationary trends. In particular, the summary of net interest income, the maturity distributions, the composition of the loan and security portfolios and the data on the interest sensitivity of loans and deposits should be considered.
30
See Table of Contents to Consolidated Financial Statements on Page F-1. Such Financial Statements are incorporated in this Item 7 by reference.
ITEM 8 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable.
ITEM 8A CONTROLS AND PROCEDURES
The Chief Executive Officer and Chief Financial Officer of Vision Bancshares have concluded, based on their evaluation as of the end of the period covered by this Form 10-KSB, that Vision Bancshares’ disclosure controls and procedures are effective to ensure that information required to be disclosed by Vision Bancshares in the reports filed or submitted by it under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange commission, and include controls and procedures designed to ensure that information required to be disclosed by Vision Bancshares in such reports is accumulated and communicated to Vision Bancshares management, including Vision Bancshares’ Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
None.
31
ITEM 9 DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) IF THE EXCHANGE ACT
Information regarding our directors and executive officers, board committees, codes of ethics, and compliance with Section 16 of the Exchange Act will be included in our definitive Proxy Statement relating to the 2006 annual meeting of stockholders (the “2006 Proxy Statement”) under the sections thereof entitled “ Election of Directors, ” “ Committees ,” “Code of Ethics” , and “ Section 16(a) Beneficial Ownership Reporting Compliance” and are incorporated herein by reference.
ITEM 10 EXECUTIVE COMPENSATION
Information regarding executive compensation will be included in the 2006 Proxy Statement under the section entitled “Executive Compensation” and is incorporated herein by reference.
ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Information regarding beneficial ownership of our common stock will be included in the 2006 Proxy Statement under the section entitled “ Voting Securities and Principal Shareholders ” and is incorporated herein by reference.
The following table summarizes certain information regarding the Company’s equity compensation plans as of December 31, 2005. The underlying compensation plans, which are more fully described in Note 14 to the consolidated financial statements included in Item 7, have been previously approved by a vote of the shareholders.
| Equity Compensation Plan Information | |||||||
|
Plan category |
Number of securities to be issued upon
exercise
of
warrants and rights |
Weighted-average
exercise price of
warrants and rights |
Number of securities
remaining available for
|
||||
| Equity compensation plans approved by shareholders | 886,334 | $ | 8.10 | 61,000 | |||
| Equity compensation plans not approved by shareholders | — | — | — | ||||
| Total | 886,334 | $ | 8.10 | 61,000 | |||
32
ITEM 12 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions will be included in the 2006 Proxy Statement under the section entitled “ Certain Relationships and Related Transactions ” and is incorporated herein by reference.
33
The following financial statements and supplementary data are filed as part of this Report:
| (a) | Exhibits and Description |
Exhibit 3 - Articles and By-laws.
| 3.1 | The Amended and Restated Articles of Incorporation of Vision Bancshares Inc., filed as Exhibit 3.1 to the Registration Statement on Form SB-2, Amendment No. 1 (File Number 333-88073) and incorporated herein by reference. | |
| 3.2 | The Bylaws of Vision Bancshares, Inc., filed as Exhibit 3.2 to the Registrant’s Registration Statement on Form SB-2 (File Number 333-88073) and incorporated herein by reference. | |
Exhibit 4 - Instruments Defining the Rights of Holders, Including Indentures.
Sections 3.03 and 3.04 and Article VI of the Articles of Incorporation contained at Exhibit 3 hereof and incorporated herein by reference and Article II and Section 2 of Article III of the Bylaws contained at Exhibit 3.2 of the Registrant’s Registration Statement on Form SB-2 (File Number 333-88073) and incorporated herein by reference.
34
Exhibit 10 - Material Contracts.
*10.1 Vision Bancshares, Inc. Incentive Stock Compensation Plan filed as Exhibit 10.1 to the Form SB-2 Registration Statement (File Number 333-88073) filed on September 28, 1999, and incorporated herein by reference.
10.2 Vision Bancshares, Inc. Director Stock Plan as Exhibit 10.2 to the Form SB-2 Registration Statement (File Number 333-88073) filed on September 28, 1999, and incorporated herein by reference.
10.3 Vision Bancshares, Inc. Employee Stock Purchase Plan filed as Exhibit 10.3 to the Form SB-2 Registration Statement (File Number 333-88073) filed on September 28, 1999, and incorporated herein by reference.
10.4 Forms of Ground Lease and Facilities Lease Agreements (four agreements) with Gulf Shores Investment Group, LLC, included at Exhibit 10.5 of the Registrant’s Registration Statement on Form SB-2, Amendment No. 1 (File Number 333-88073) and incorporated herein by reference.
*10.5 Form of Change of Control Agreement for Executive Officers filed as Exhibit 10.1 of the Registrant’s Registration Statement (File Number 333-81574) filed on January 29, 2002, and incorporated herein by reference.
10.6 Services Agreement, dated October 4, 2002, by and between Vision Bancshares Financial Group, Inc., Vision Bank, and Skipper Insurance Agencies, included as exhibit 10.1 of the Registrants Form 10-KSB for the fiscal year ended December 31, 2003 and incorporated herein by reference.
10.7 Lease Agreement, dated June 3, 2003 by and between Vision Bancshares, Inc. and Shoppes at Edgewater, included as exhibit 10.1 of the Registrants Form 10-QSB for the quarter ended September 30, 2003, and incorporated herein by reference.
*10.8 Form of Agreement pursuant to the Vision Bancshares, Inc. Incentive Stock Compensation Plan.
10.9 Form of Agreement pursuant to the Vision Bancshares, Inc. Director Stock Plan.
*10.10 Term Sheet regarding Executive Compensation Adjustment
10.11 Lease agreement, dated November 1, 2004 by and between Vision Bank and Elberta Holdings, LLC, included as exhibit 10.11 of the Registrants Form 10-KSB for the year ended December 31, 2005, and incorporated herein by reference.
10.12 Lease agreement, dated December 6, 2004 by and between Vision Bancshares, Inc. and Sunset Promenade, LLC, included as exhibit 10.12 of the Registrants Form 10-KSB for the year ended December 31, 2005, and incorporated herein by reference.
10.13 Lease agreement and addendum, dated February 1, 2005 by and between Vision Bank and Forest View Apartments, Inc, included as exhibit 10.13 of the Registrants Form 10-KSB for the year ended December 31, 2005, and incorporated herein by reference.
35
10.14 Subordination, Non-disturbance and Attornment Agreement, dated February 1, 2005 by and between Vision Bank, Forest View Apartments Inc., and First Gulf Bank, included as exhibit 10.14 of the Registrants Form 10-KSB for the year ended December 31, 2005, and incorporated herein by reference.
10.15 Amended and Restated Trust Agreement as to Vision Bancshares Trust I dated as of December 5, 2005.
10.16 Junior Subordinated Debentures as to Vision Bancshares Trust I dated as of December 5, 2005.
10.17 Guarantee Agreement as to Vision Bancshares Trust I dated as of December 5, 2005.
10.18 Placement Agreement as to Vision Bancshares Trust I dated as of December 5, 2005.
Exhibit 14 - Code of Ethics for Chief Executive Officer and Senior Financial Officers of Vision Bancshares, Inc., Vision Alabama and Vision Florida included as Exhibit 14 of the Registrants Form 10-KSB for the year ended December 31, 2004, and incorporated herein by reference.
Exhibit 21 - Subsidiaries of Vision Bancshares, Inc.
Exhibit 23 - Consent of Mauldin & Jenkins, LLC.
Exhibit 31.1 - Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
Exhibit 31.2 - Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
Exhibit 32.2 - Section 1350 Certification by the Chief Financial Officer.
| * | Identifies management contract or compensatory plan or arrangement. |
36
ITEM 14 PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information regarding principal accountant fees and services will be included in the 2006 Proxy Statement under the section entitled “ Independent Public Accountants ” and is incorporated herein by reference.
37
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Vision Bancshares, Inc. | ||
| By: |
/s/ J. Daniel Sizemore |
|
| J. Daniel Sizemore, | ||
|
Chairman, President and Chief Executive Officer |
||
| Date: March 27, 2006 | ||
In accordance with the Exchange Act, this report has been signed below by the following persons in the capacities indicated on March 27, 2006.
|
SIGNATURE |
TITLE |
|
|
/s/ Warren Banach, M.D. |
Director | |
| Warren Banach, M.D. | ||
|
/s/ Gordon Barnhill, Jr. |
Director | |
| Gordon Barnhill, Jr. | ||
|
/s/ R. J. Billingsley, Jr. |
Director | |
| R. J. Billingsley, Jr. | ||
|
/s/ William E. Blackmon |
Chief Financial Officer & Chief Accounting Officer |
|
| William E. Blackmon | ||
|
/s/ J. Donald Boggus, Jr. |
Director |
|
| J. Donald Boggus, Jr. | ||
|
/s/ Julian Brackin |
Director | |
| Julian Brackin | ||
|
/s/ James D. Campbell |
Director | |
| James D. Campbell | ||
|
/s/ Joe C. Campbell |
Director | |
| Joe C. Campbell | ||
|
/s/ Joey W. Ginn |
Director | |
| Joey W. Ginn | ||
38
|
SIGNATURE |
TITLE |
|
|
/s/ Charles S. Isler III |
Director | |
| Charles S. Isler III | ||
|
/s/ Robert S. McKean |
Director | |
| Robert S. McKean | ||
|
/s/ William D. Moody |
Director | |
| William D. Moody | ||
|
/s/ James Ray Owen, Jr. |
Director | |
| James Ray Owen, Jr. | ||
|
/s/ Donald W. Peak |
Director | |
| Donald W. Peak | ||
|
/s/ Rick A. Phillips |
Director | |
| Rick A. Phillips | ||
|
/s/ Daniel W. Scarborough |
Director | |
| Daniel W. Scarborough | ||
|
/s/ J. Daniel Sizemore |
Chairman and Chief Executive Officer |
|
| J. Daniel Sizemore | ||
|
/s/ George W. Skipper, III |
Director |
|
| George W. Skipper, III | ||
|
/s/ Thomas Gray Skipper |
Director | |
| Thomas Gray Skipper | ||
|
/s/ J. Douglas Warren |
Director | |
| J. Douglas Warren | ||
|
/s/ Patrick Willingham |
Director | |
| Patrick Willingham | Director | |
|
/s/ Royce T. Winborne |
Director | |
| Royce T. Winborne | ||
39
T ABLE OF CONTENTS TO CONSOLIDATED FINANCIAL STATEMENTS
AND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-1
R EPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Vision Bancshares, Inc.
Panama City, Florida 36542
We have audited the consolidated statements of financial condition of Vision Bancshares, Inc. and Subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, comprehensive income, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Vision Bancshares, Inc. and Subsidiaries as of December 31, 2005 and 2004 and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.
Albany, Georgia
March 7, 2006
| /s/ MAULDIN & JENKINS, LLC |
| MAULDIN & JENKINS, LLC |
F-2
V ISION BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
| December 31, | ||||||||
|
(dollars in thousands) |
2005 | 2004 | ||||||
|
Assets |
||||||||
|
Cash and due from banks |
$ | 13,820 | $ | 10,450 | ||||
|
Federal funds sold |
18,202 | 7,799 | ||||||
|
Cash and cash equivalents |
32,022 | 18,249 | ||||||
|
Investment securities available for sale |
33,605 | 27,527 | ||||||
|
Loans held for sale |
2,482 | 1,254 | ||||||
|
Loans |
499,242 | 345,006 | ||||||
|
Less: Allowance for loan losses |
(5,749 | ) | (4,565 | ) | ||||
|
Loans, net |
493,493 | 340,441 | ||||||
|
Premises and equipment, net |
12,958 | 12,172 | ||||||
|
Accrued interest receivable |
2,839 | 1,414 | ||||||
|
Deferred tax benefit |
2,315 | 1,480 | ||||||
|
Goodwill |
3,407 | 3,436 | ||||||
|
Cash Value Life Insurance |
2,789 | 2,683 | ||||||
|
Core deposit intangible |
486 | 563 | ||||||
|
Other assets |
1,483 | 948 | ||||||
|
Total Assets |
$ | 587,879 | $ | 410,167 | ||||
|
Liabilities and Stockholders’ Equity |
||||||||
|
Deposits: |
||||||||
|
Noninterest-bearing |
$ | 82,471 | $ | 64,435 | ||||
|
Interest-bearing |
412,276 | 285,636 | ||||||
|
Total Deposits |
494,747 | 350,071 | ||||||
|
Advances from Federal Home Loan Bank |
19,000 | 9,000 | ||||||
|
Other borrowings |
7,283 | 7,700 | ||||||
|
Total Borrowings |
26,283 | 16,700 | ||||||
|
Junior subordinated debentures |
15,464 | — | ||||||
|
Accrued interest payable |
920 | 523 | ||||||
|
Other liabilities |
2,161 | 1,504 | ||||||
|
Total Liabilities |
539,575 | 368,798 | ||||||
|
Noncontrolling interest |
913 | 573 | ||||||
|
Commitments and contingencies |
||||||||
|
Stockholders’ Equity |
||||||||
|
Common stock, $1.00 par value; 10,000,000 shares authorized; |
||||||||
|
6,060,530 and 3,024,004 shares issued and outstanding at December 31, 2005 and 2004, respectively |
6,061 | 3,024 | ||||||
|
Preferred stock $1.00 par value; |
||||||||
|
1,000,000 shares authorized; none issued |
— | — | ||||||
|
Additional paid-in capital |
36,030 | 38,960 | ||||||
|
Retained earnings |
6,708 | 27 | ||||||
|
Accumulated other comprehensive loss |
(492 | ) | (86 | ) | ||||
|
Less stock owned by and stock receivables from related variable interest entities |
(916 | ) | (1,129 | ) | ||||
|
Total Stockholders’ Equity |
47,391 | 40,796 | ||||||
|
Total Liabilities and Stockholders’ Equity |
$ | 587,879 | $ | 410,167 | ||||
See Notes to Consolidated Financial Statements
F-3
V ISION BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
| Years Ended December 31, | |||||||
|
(dollars in thousands) |
2005 | 2004 | |||||
|
Interest income: |
|||||||
|
Interest and fees on loans |
$ | 35,275 | $ | 15,825 | |||
|
Interest and dividends on investment securities |
1,290 | 812 | |||||
|
Interest on federal funds sold |
900 | 342 | |||||
|
Total interest income |
37,465 | 16,979 | |||||
|
Interest expense: |
|||||||
|
Interest on deposits |
10,745 | 4,887 | |||||
|
Interest on borrowings |
806 | 409 | |||||
|
Interest on junior subordinated debentures |
64 | — | |||||
|
Total interest expense |
11,615 | 5,296 | |||||
|
Net interest income before provision for loan losses |
25,850 | 11,683 | |||||
|
Provision for loan losses |
1,595 | 1,819 | |||||
|
Net interest income after provision for loan losses |
24,255 | 9,864 | |||||
|
Noninterest income: |
|||||||
|
Service charges on deposits accounts |
1,441 | 1,023 | |||||
|
Loss on sale of securities |
— | (6 | ) | ||||
|
Secondary mortgage fees |
1,188 | 580 | |||||
|
Other noninterest income |
490 | 353 | |||||
|
Total noninterest income |
3,119 | 1,950 | |||||
|
Noninterest expense: |
|||||||
|
Salaries and benefits |
9,167 | 5,360 | |||||
|
Occupancy expense |
1,663 | 1,006 | |||||
|
Equipment expense |
888 | 576 | |||||
|
Data processing expense |
1,005 | 620 | |||||
|
Professional fees |
753 | 386 | |||||
|
Printing and office supplies |
320 | 221 | |||||
|
Advertising expense |
297 | 244 | |||||
|
Other noninterest expense |
2,592 | 1,498 | |||||
|
Total noninterest expense |
16,685 | 9,911 | |||||
|
Income before income taxes |
10,689 | 1,903 | |||||
|
Income tax expense |
3,854 | 618 | |||||
|
Noncontrolling interest |
154 | 96 | |||||
|
Net income |
$ | 6,681 | $ | 1,189 | |||
|
Basic earnings per share |
$ | 1.10 | $ | 0.22 | |||
|
Diluted earnings per share |
1.04 | 0.21 | |||||
|
Average number of shares outstanding |
6,055,688 | 5,476,097 | |||||
|
Average number of shares outstanding, diluted |
6,404,514 | 5,637,344 | |||||
See Notes to Consolidated Financial Statements
F-4
V ISION BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Years Ended December 31, | ||||||||
|
(dollars in thousands) |
2005 | 2004 | ||||||
|
Net income |
$ | 6,681 | $ | 1,189 | ||||
|
Unrealized holding losses arising during period |
(643 | ) | (149 | ) | ||||
|
Reclassification adjustments for losses on securities included in net income |
— | 6 | ||||||
|
Other comprehensive loss, before income taxes: |
(643 | ) | (143 | ) | ||||
|
Income tax benefit related to other comprehensive loss |
(237 | ) | (52 | ) | ||||
|
Unrealized losses on investment securities available for sale arising during the period, net of income taxes |
(406 | ) | (91 | ) | ||||
|
Other comprehensive income |
$ | 6,275 | $ | 1,098 | ||||
See Notes to Consolidated Financial Statements
F-5
V ISION BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
| Common Stock |
Additional
Capital |
Retained
(Deficit) |
Accumulated
Income (Loss) |
Stock Owned
and Stock
Related VIEs |
Total
Equity |
||||||||||||||||||||
|
(dollars in thousands) |
Shares | Par Value | |||||||||||||||||||||||
|
Balance-December 31, 2003 |
1,888,516 | $ | 1,889 | $ | 21,672 | $ | (1,162 | ) | $ | 5 | $ | (1,257 | ) | $ | 21,147 | ||||||||||
|
Issuance of common stock |
1,135,488 | 1,135 | 17,288 | 18,424 | |||||||||||||||||||||
|
Net income |
1,189 | 1,189 | |||||||||||||||||||||||
|
Cash received - stock owned by and stock receivables from related VIEs |
128 | 128 | |||||||||||||||||||||||
|
Change in unrealized gains on securities available for sale |
(91 | ) | (91 | ) | |||||||||||||||||||||
|
Balance-December 31, 2004 |
3,024,004 | $ | 3,024 | $ | 38,960 | $ | 27 | $ | (86 | ) | $ | (1,129 | ) | $ | 40,796 | ||||||||||
|
Two-for-one stock split |
3,026,404 | 3,026 | (3,026 | ) | 0 | ||||||||||||||||||||
|
Issuance of common stock |
10,122 | 10 | 96 | 106 | |||||||||||||||||||||
|
Net income |
6,681 | 6,681 | |||||||||||||||||||||||
|
Cash received - stock owned by and stock receivables from related VIEs |
213 | 213 | |||||||||||||||||||||||
|
Change in unrealized gains on securities available for sale |
(406 | ) | (406 | ) | |||||||||||||||||||||
|
Balance-December 31, 2005 |
6,060,530 | $ | 6,061 | $ | 36,030 | $ | 6,708 | $ | (492 | ) | $ | (916 | ) | $ | 47,391 | ||||||||||
See Notes to Consolidated Financial Statements
F-6
V ISION BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Years Ended December 31, | ||||||||
|
(dollars in thousands) |
2005 | 2004 | ||||||
|
Cash flows from operating activities: |
||||||||
|
Net income |
$ | 6,681 | $ | 1,189 | ||||
|
Adjustments to reconcile net income to net cash provided by operations |
||||||||
|
Depreciation and amortization |
972 | 754 | ||||||
|
Provision for loan losses |
1,595 | 1,819 | ||||||
|
Net loss on sales of premises and equipment |
40 | 27 | ||||||
|
Net loss on sales of investment securities |
— | (6 | ) | |||||
|
Deferred income tax benefit |
(598 | ) | (435 | ) | ||||
|
Increase in loans originated and held for sale |
(1,228 | ) | (1,254 | ) | ||||
|
Increase in accrued interest receivable |
(1,425 | ) | (440 | ) | ||||
|
Increase in accrued interest payable |
397 | 241 | ||||||
|
Increase in other assets and bank owned life insurance |
(467 | ) | (673 | ) | ||||
|
Increase in other liabilities |
659 | 431 | ||||||
|
Net cash provided by operating activities |
6,626 | 1,653 | ||||||
|
Cash flows from investing activities: |
||||||||
|
Proceeds from maturities/calls/paydown of investment securities available for sale |
4,377 | 7,186 | ||||||
|
Proceeds from sales of investment securities |
— | 5,998 | ||||||
|
Purchases of investment securities available for sale |
(11,038 | ) | (20,354 | ) | ||||
|
Cash disbursed in acquisition of branch office |
— | (1,577 | ) | |||||
|
Increase in noncontrolling interest |
340 | 287 | ||||||
|
Purchase of cash value life insurance |
— | (2,600 | ) | |||||
|
Net increase in loans outstanding |
(154,647 | ) | (136,253 | ) | ||||
|
Proceeds from sales of foreclosed assets |
452 | — | ||||||
|
Proceeds from sales of premises and equipment |
108 | 12 | ||||||
|
Purchase of premises and equipment |
(2,023 | ) | (3,511 | ) | ||||
|
Net cash used in investing activities |
(162,431 | ) | (150,812 | ) | ||||
|
Cash flows from financing activities: |
||||||||
|
Net increase in demand, savings and time deposits |
144,676 | 127,313 | ||||||
|
Net increase from borrowings |
9,835 | 6,497 | ||||||
|
Payments on principal of capital lease obligation |
(39 | ) | (28 | ) | ||||
|
Proceeds from issuance of subordinated debt |
15,000 | — | ||||||
|
Proceeds from the issuance of common stock |
106 | 18,423 | ||||||
|
Net cash provided by financing activities |
169,578 | 152,205 | ||||||
|
Net increase in cash and cash equivalents |
13,773 | 3,046 | ||||||
|
Cash and cash equivalents at beginning of period |
18,249 | 15,203 | ||||||
|
Cash and cash equivalents at end of period |
$ | 32,022 | $ | 18,249 | ||||
|
Supplemental cash flow information: |
||||||||
|
Cash paid during period for interest |
$ | 11,218 | $ | 5,055 | ||||
|
Cash paid during period for income taxes |
$ | 4,200 | $ | 480 | ||||
See Notes to Consolidated Financial Statements
F-7
N OTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS
Vision Bancshares, Inc. (the “Company” or “Vision Bancshares”) was organized as an Alabama corporation on July 16, 1999 and is a bank holding company under the Bank Holding Act of 1956, as amended. On February 1, 2005, Vision Bancshares relocated its corporate headquarters to 2200 Stanford Road in Panama City, Florida from Gulf Shores, Alabama. The Company’s principal subsidiaries are Vision Bank in Alabama (“Vision Alabama”) and Vision Bank in Florida (“Vision Florida”) (together, the “Banks”). Virtually all of the Company’s operations are conducted through the Banks. Vision Alabama is an Alabama state chartered bank that offers general retail and commercial banking services through seven branch offices in Baldwin County, Alabama. Vision Florida is a Florida state chartered bank that offers general retail and commercial banking services through six branch offices and one loan production office in Bay, Gulf, Walton and Okaloosa Counties, Florida.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of the Company and its subsidiaries follow accounting principles and practices generally accepted in the United States of America. The following is a summary of the more significant accounting policies:
Basis of Consolidation
The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Vision Florida and Vision Alabama, and Vision Alabama’s wholly owned subsidiary, Vision Bancshares Financial Group, Inc. The consolidated financial statements also include all Variable Interest Entities (“VIEs) for which the Company is the primary beneficiary. All material inter-company balances and transactions have been eliminated. Certain financial information for prior years has been reclassified, with no effect on total assets or net income, to conform to the current year’s presentation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
The determination of the adequacy of the allowance for loan losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. In connection with the determination of the estimated losses on loans, management obtains independent appraisals for significant collateral.
F-8
The Banks’ loans are generally secured by specific items of collateral including real property, consumer assets, and business assets. Although the Banks have diversified loan portfolios, a substantial portion of the debtors’ ability to honor their contracts is dependent on local economic conditions.
While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans. Such agencies may require the Banks to recognize additional losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated losses on loans can change in the future. However, the amount of the change that is reasonably possible cannot be estimated.
Investment Securities and Other Earning Assets
Debt securities are classified as held to maturity when the Company has the positive intent and ability to hold the securities to maturity. Securities held to maturity are carried at amortized cost. The amortization of premiums and accretion of discounts are recognized in interest income using methods approximating the interest method over the period to maturity. For securities which have a call feature, amortization of premiums is recognized to the first call date.
Debt securities not classified as held to maturity are classified as available for sale. The Company has classified all debt securities as available for sale. Securities available for sale are carried at fair value with unrealized gains and losses reported in other comprehensive income. Realized gains (losses) on securities available for sale are included in income (expense) and, if applicable, are reported as a reclassification adjustment, net of tax, in other comprehensive income. Gains and losses on sales of securities are determined on the specific identification method.
Declines in the fair value of individual securities below their cost that are other than temporary result in write-downs of the individual securities to their fair value. The related write-downs are included in earnings as realized losses.
In estimating other than temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer and, (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery and fair value.
In response to the opportunities that the Company believed to be available by the use of Bank-Owned Life Insurance (BOLI), the Company bought five single-premium BOLI policies for an aggregate purchase price of $2,600 thousand in March 2004 to help finance the cost of certain employee benefit plan expenses. Based on the Company’s research, BOLI is a widely used tool intended to benefit the Company and to enable the Company to provide cost-effective benefits for certain employees.
The BOLI investment is accomplished through the purchase of life insurance on the lives of certain employees through an insurance company with a Standard & Poor’s rating of AA or better. The Company, not the employee or family, is the beneficiary of the insurance policies. The first
F-9
source of income is from the growth of the cash surrender value (CSV) of the policy. The CSV increases each year as interest (rate is guaranteed each year and changes annually to reflect market rates) is added by the insurance company. The second source of income comes from the insurance proceeds paid to the Bank when an employee dies. The payment of the insurance proceeds and the earnings from the cash value are income tax free (unless the policy is surrendered). The earnings from the investment are recorded in other income on the Company’s income statement and the Company now owns the BOLI policies (including both the cash value and all increases in the cash value).
Loans
Loans are stated at unpaid principal balances, less the allowance for loan losses and net deferred loan fees and unearned income.
Loan origination and commitment fees, as well as certain direct organization costs, are deferred and amortized as a yield adjustment over the lives of the related loans using the interest method. Amortization of deferred loan fees is discontinued when a loan is placed on non-accrual status.
Interest income generally is not recognized on specific impaired loans unless the likelihood of further loss is remote. Payments received on such loans are applied as a reduction of the loan principal balance. Interest income on other impaired loans is recognized only to the extent of interest payments received.
Allowance for Loan Losses
The allowance for loan losses is maintained at a level which, in management’s judgment, is adequate to absorb credit losses inherent in the loan portfolio. The amount of the allowance is based on management’s evaluation of the collectibility of the loan portfolio, including the nature of the portfolio, credit concentrations, trends in historical loss experience, specific impaired loans, economic conditions, and other risks inherent in the portfolio. Allowances for impaired loans are generally determined based on collateral values or the present value of estimated cash flows. Management uses available information to recognize losses on loans. However, because of uncertainties associated with local economic conditions, collateral values, and future cash flows on impaired loans, it is reasonably possible that changes can occur in the allowance for loan losses. The allowance is increased by a provision for loan losses, which is charged to expense and reduced by charge-offs, net of recoveries. Changes in the allowance relating to impaired loans are charged or credited to the provision for loan losses.
F-10
Premises and Equipment
Land is carried at cost. Other premises and equipment are carried at cost net of accumulated depreciation. Depreciation is computed using the straight-line and double declining balance method based on the estimated useful lives of the assets ranging from three to forty years. Depreciation expense for leasehold interest in building recorded as a capital lease is included with depreciation expense on owned assets. Maintenance and repairs are expensed as incurred while major additions and improvements are capitalized. Gains and losses on dispositions are included in current operations.
Foreclosed Assets and Other Real Estate
Collateral acquired through foreclosure or in settlement of loans are reported with other assets in the consolidated balance sheets. These assets are recorded at estimated fair value, less estimated selling costs, if this value is lower than the carrying value of the related loan or property asset. The initial reduction in the carrying amount of a loan to the fair value of the collateral received is charged to the reserve for possible loan losses. Subsequent valuation adjustments for foreclosed assets or surplus property are also included in current earnings, as are the revenues and expenses associated with managing these assets prior to sale.
Other real estate comprises properties acquired through a foreclosure proceeding or acceptance of a deed in lieu of foreclosure. These properties are initially carried at the lower of cost or fair market value based on appraised value at the date acquired. Loan losses arising from the acquisition of such properties are charged against the allowance for loan losses. Costs of improvements are capitalized, whereas costs relating to holding other real estate owned and subsequent adjustments to the value are expensed.
Goodwill and Other Intangible Assets
Goodwill represents the excess of cost over the fair value of the net assets purchased in a business combination. Goodwill is required to be tested annually for impairment or whenever events occur that may indicate that the recoverability of the carrying amount is not probable. In the event of impairment, the amount by which the carrying amount exceeds the fair value would be charged to earnings.
The Company performs an annual test of impairment and determined that there was no impairment in the carrying value of goodwill for the year ended December 31, 2005. Goodwill amounting to $0.1 million has been allocated to the Vision Alabama operating unit. As a result of the acquisition of BankTrust of Florida and subsequent merger of Vision Bank, FSB, goodwill amounting to $3.3 million and a core deposit intangible of $0.6 million was allocated to the Vision Florida’s operating unit. The core deposit intangible was $0.5 million and $0.6 million at December 31, 2005 and 2004, respectively. There has been no impairment of goodwill since the date of acquisition.
Intangible assets consist of core deposit premiums acquired in connection with the business combinations. The core deposit premium is initially recognized based on a valuation performed as of the consummation date. The core deposit premium is amortized over the average remaining life of the acquired customer deposits, or five to eight years. Amortization periods are reviewed annually in connection with the annual impairment testing of goodwill.
F-11
Income Taxes
Income taxes are provided for the tax effects of the transactions reported in the financial statements and consist of taxes currently due plus deferred taxes related primarily to net operating loss carryforwards and differences between the basis of the allowance for loan losses, intangibles, securities and accumulated depreciation. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets and liabilities are reflected at income tax rates applicable to the period in which the deferred tax assets or liabilities are expected to be recorded. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. The Company files a consolidated federal income tax return with its subsidiaries.
Earnings per Share
Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share are computed using the weighted-average number of common shares outstanding increased by the number of additional shares that would have been issued if potentially dilutive stock options had been exercised as determined using the treasury stock method. “ Stock owned by and stock receivables from related variable interest” represents 81,375 shares of the Company’s common stock owned by a VIE or owned individually by the members of a VIE. Because the right to vote these shares and the entitlement to receive dividends is retained by the owners of such shares, no adjustment has been made to the average shares outstanding in calculating basic and diluted earnings per share.
Statements of Cash Flows
The Company considers all cash and amounts due from depository institutions, interest-bearing deposits in other banks, and federal funds sold to be cash equivalents for purposes of the statements of cash flows.
Cash and Due from Banks
The Banks maintain cash balances at several other financial institutions. Accounts at each institution are insured by the Federal Deposit Insurance Corporation up to $100 thousand. At December 31, 2005, balances in excess of the amount insured were $8,909 thousand. At December 31, 2004, balances in excess of the amount insured were $6,398 thousand.
The Banks are required to maintain reserve balances in cash or on deposit with the Federal Reserve Bank through their respondent relationship with certain correspondent banks, based on a percentage of deposits. The total of those reserve balances was approximately $14,737 thousand and $7,634 thousand at December 31, 2005 and 2004, respectively.
F-12
Stock-Based Compensation
SFAS No. 123, “Accounting for Stock-Based Compensation,” defines a fair value based method of accounting for an employee stock option or similar equity instrument. However, SFAS No. 123 allows an entity to continue to measure compensation costs for those plans using the intrinsic value based method of accounting prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees. Entities electing to remain with the accounting in Opinion No. 25 must make pro forma disclosures of net income and earnings per share as if the fair value based method of accounting defined in SFAS No. 123 had been applied. Under the fair value based method, the value of the award is measured at the grant date and is recognized over the service period, which is usually the vesting period. Under the intrinsic value based method, compensation cost is the excess, if any, of the quoted market price of the stock at the grant date or other measurement date over the amount an employee must pay to acquire the stock. The Company has elected to measure compensation cost for its stock option plans under the provisions in APB Opinion 25.
The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provision of FASB Statement No. 123,
Accounting for Stock-Based
STOCK-BASED COMPENSATION
| Years Ended December 31, | ||||||||
|
(dollars in thousands, except per share data) |
2005 | 2004 | ||||||
|
Net income as reported |
$ | 6,681 | $ | 1,189 | ||||
|
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects |
(556 | ) | (251 | ) | ||||
|
Proforma net income |
$ | 6,125 | $ | 938 | ||||
|
Earnings per share: |
||||||||
|
Basic - as reported |
$ | 1.10 | $ | 0.22 | ||||
|
Basic - pro forma |
$ | 1.01 | $ | 0.17 | ||||
|
Diluted - as reported |
$ | 1.04 | $ | 0.21 | ||||
|
Diluted - pro forma |
$ | 0.96 | $ | 0.17 | ||||
The Plan’s Administration Committee determines vesting periods. The options granted in January 2005 were immediately vested upon grant to avoid the income statement impact of the adoption of FASB 123(R) in future years.
Mortgage Rate Premiums
Vision originates mortgage loans held for sale which are funded by the Banks with a prior commitment for the loan to be purchased in the secondary market. Vision also originates mortgage loans that are pre-approved and funded at closing by the secondary market purchaser. Because these loans are generally recorded as an asset of the Banks’ for less than twenty business days, origination fees associated with these loans are recognized in income on a cash basis. The mortgage rate premiums received on secondary mortgage market loans are recognized in income when funds are received from the secondary market investor.
F-13
Stock Split
On April 6, 2005, the Company’s Board of Directors approved a two-for-one stock split, to be issued in the form of a one-for-one stock dividend payable on April 25, 2005 to the shareholders of record on April 15, 2005. The stock split increased the number of shares outstanding by 3,026,404. All per-share computations and amounts for all periods presented have been retroactively adjusted for this split as if it occurred on January 1, 2004.
Variable Interest Entities
In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, and interpretation of ARB No. 51” and, on December 24, 2003, the FASB issued FASB Interpretation No. 46 (Revised December 2003), “Consolidation of Variable Interest Entities” which replaced FIN 46. The interpretation addresses consolidation by business enterprises of variable interest entities. A variable interest entity is defined as an entity subject to consolidation according to the provisions of the interpretation. The revised interpretation provided for special effective dates for entities that had fully or partially applied the original interpretation as of December 24, 2003. Otherwise, application of the interpretation is required in financial statements of public entities that have interests in special-purpose entities, or SPEs, for periods ending after December 15, 2003. Application by public entities, other than small business issuers, for all other types of variable interest entities (i.e., non-SPEs) is required in financial statements for periods ending after March 15, 2004. Application by small business issuers to variable interest entities other than SPEs and by nonpublic entities to all types of variable interest entities is required at various dates in 2004 and 2005. The Company has determined that the provisions of FIN 46 require consolidation of three variable interest entities. The Company has adopted the provisions under the revised interpretation and has revised each of the years presented in the Company’s consolidated financial statements.
F-14
The Company has determined that three variable interest entities should be included in its consolidated financial statements. Two of the variable interest entities are owned by directors of the Company and one variable interest entity is majority-owned by the directors of the Company. The variable interest entities own properties that are leased to the Banks. Following are condensed combined balance sheets of the three variable interest entities at December 31, 2005 and 2004.
Borrowings collateralized by the Company’s common stock have been included in the consolidated financial statements as a reduction of stockholders’ equity. The combined equity of the variable interest entities has been included in the consolidated financial statements as noncontrolling interest.
Recently Issued Accounting Standards
In December 2004, the Financial Accounting Standards Board (FASB) issued Statement No. 123R, Share-Based Payment, a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation. This Statement supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and its related implementation guidance. This Statement establishes standards for accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. This Statement focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions such as the issuance of stock options in exchange for employee services. This Statement requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award—the requisite service period (usually the vesting period). The grant-date fair value of employee share options and similar instruments will be estimated using option-pricing models adjusted for the unique characteristics of those instruments (unless observable market prices for the same or similar instruments are available). This Statement is effective for public entities as of the beginning of the first interim or annual reporting period that begins after December 15, 2005. This Statement applies to all awards granted and vesting after the required effective date and to awards
F-15
modified, repurchased, or cancelled after that date. The adoption of this standard will result in an expense in the first quarter of 2006 of $20 thousand and expense for the year ended December 31, 2006 of $50 thousand.
3. INVESTMENT SECURITIES
The amortized cost of securities available for sale and their approximate fair values are as follows:
INVESTMENT PORTFOLIO
|
(dollars in thousands) |
Gross
Amortized Cost |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Fair
Value |
|||||||||
|
December 31, 2005 |
|||||||||||||
|
Federal agency securities |
$ | 15,477 | $ | — | $ | (235 | ) | $ | 15,242 | ||||
|
Mortgage-backed securities |
15,681 | — | (505 | ) | 15,176 | ||||||||
|
State and municipal securities |
1,186 | — | (40 | ) | 1,146 | ||||||||
|
Total debt securities |
32,344 | — | (780 | ) | 31,564 | ||||||||
|
Common stock |
2,041 | — | — | 2,041 | |||||||||
|
Total equity securities |
2,041 | — | — | 2,041 | |||||||||
|
Total available for sale securities |
$ | 34,385 | $ | — | $ | (780 | ) | $ | 33,605 | ||||
|
December 31, 2004 |
|||||||||||||
|
Federal agency securities |
$ | 6,523 | $ | 10 | $ | (41 | ) | $ | 6,492 | ||||
|
Mortgage-backed securities |
20,108 | 19 | (125 | ) | 20,002 | ||||||||
|
Total debt securities |
26,631 | 29 | (166 | ) | 26,494 | ||||||||
|
Common stock |
1,033 | — | — | 1,033 | |||||||||
|
Total equity securities |
1,033 | — | — | 1,033 | |||||||||
|
Total available for sale securities |
$ | 27,664 | $ | 29 | $ | (166 | ) | $ | 27,527 | ||||
The amortized cost and estimated fair value of debt securities available for sale as of December 31, 2005 by contractual maturity are shown below. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
INVESTMENT PORTFOLIO MATURITY SCHEDULE
|
(dollars in thousands) |
Amortized
Cost |
Estimated
Fair Value |
||||
|
Amounts maturing in: |
||||||
|
One year or less |
$ | 8,948 | $ | 8,918 | ||
|
After one years through five years |
9,916 | 9,608 | ||||
|
After five year through ten years |
6,922 | 6,686 | ||||
|
After ten years |
6,558 | 6,352 | ||||
|
Total investment in debt securities |
$ | 32,344 | $ | 31,564 | ||
F-16
Realized gains and losses are determined on the basis of specific identification. During 2004 and 2005, sales proceeds
GAINS AND LOSSES ON SECURITIES
| Years Ended December 31, | |||||||
|
(dollars in thousands) |
2005 | 2004 | |||||
|
Sales proceeds |
$ | — | $ | 5,998 | |||
|
Gross realized losses |
$ | — | $ | (6 | ) | ||
|
Gross realized gains |
$ | — | $ | — | |||
The following table shows the gross unrealized losses and fair value of securities, aggregated by category and length of time that securities have been in a continuous unrealized loss position at December 31, 2005.
|
2005 (dollars in thousands) |
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||
|
Description of securities |
Fair
Value |
Unrealized
Losses |
Fair
Value |
Unrealized
Losses |
Fair
Value |
Unrealized
Losses |
|||||||||||||||
|
U.S. Treasury and Govt Agency |
$ | 13,803 | $ | (175 | ) | $ | 1,439 | $ | (60 | ) | $ | 15,242 | $ | (235 | ) | ||||||
|
Mortgage-backed securities |
4,044 | (106 | ) | 11,123 | (399 | ) | 15,167 | (505 | ) | ||||||||||||
|
State and municipal securities |
1,146 | (40 | ) | — | — | 1,146 | (40 | ) | |||||||||||||
|
Total temporarily impaired debt securities |
$ | 18,993 | $ | (321 | ) | $ | 12,562 | $ | (459 | ) | $ | 31,555 | $ | (780 | ) | ||||||
|
2004 (dollars in thousands) |
Less Than 12 Months | 12 Months or More | Total | ||||||||||||||||||
|
Description of securities |
Fair
Value |
Unrealized
Losses |
Fair
Value |
Unrealized
Losses |
Fair
Value |
Unrealized
Losses |
|||||||||||||||
|
U.S. Treasury and Govt Agency |
$ | 4,441 | $ | (41 | ) | $ | — | $ | — | $ | 4,441 | $ | (41 | ) | |||||||
|
Mortgage-backed securities |
16,285 | (125 | ) | — | — | 16,285 | (125 | ) | |||||||||||||
|
Total temporarily impaired debt securities |
$ | 20,726 | $ | (166 | ) | $ | — | $ | — | $ | 20,726 | $ | (166 | ) | |||||||
As of December 31, 2005, the Company had ten issuances (nine mortgage-backed securities and one agency security) that had been in an unrealized loss position for more than twelve months. The unrealized losses associated with these securities are not considered to be other-than-temporarily impaired because their unrealized losses are related to changes in interest rates and do not effect the expected cash flows of the issuer or underlying collateral. Unrealized losses on securities have not been recognized in income because the securities are of high credit quality and management has the intent and ability to hold them for the foreseeable future. The fair value is expected to recover as the securities approach their maturity date or market rates change.
Securities with a carrying value of $27,473 thousand were pledged at December 31, 2005 and securities with a carrying value of $23,037 thousand were pledged at December 31, 2004 to secure public deposits and for other purposes required or permitted by law.
F-17
4. LOANS
The composition of the Company’s loan portfolio follows:
LOANS OUTSTANDING BY TYPE
| December 31, | ||||||||
|
(dollars in thousands) |
2005 | 2004 | ||||||
|
Loans |
||||||||
|
Commercial and financial |
$ | 48,320 | $ | 49,201 | ||||
|
Agricultural |
700 | 65 | ||||||
|
Consumer |
9,727 | 10,384 | ||||||
|
Equity |
24,331 | 13,093 | ||||||
|
Real estate - Construction |
260,828 | 140,749 | ||||||
|
Real estate - Residential |
84,740 | 72,339 | ||||||
|
Real estate - Commercial and other |
71,370 | 59,371 | ||||||
|
Other loans |
1,259 | 931 | ||||||
| 501,275 | 346,133 | |||||||
|
Unearned income |
(2,033 | ) | (1,127 | ) | ||||
| 499,242 | 345,006 | |||||||
|
Allowance for loan losses |
(5,749 | ) | (4,565 | ) | ||||
|
Loans, net |
$ | 493,493 | $ | 340,441 | ||||
The Banks have entered into transactions with certain directors, executive officers, significant stockholders, and their affiliates. Such transactions were made in the ordinary course of business on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at the same time for comparable transactions with other customers, and did not, in the opinion of management, involve more than normal credit risk or present other unfavorable features. An analysis of the changes in loans to related parties during 2005 follows:
EXTENSION OF CREDIT TO RELATED PARTIES
|
(dollars in thousands) |
2005 | |||
|
Beginning balance |
$ | 17,428 | ||
|
Additions |
34,677 | |||
|
Repayments |
(15,815 | ) | ||
|
Ending balance |
$ | 36,290 | ||
5. ALLOWANCE FOR POSSIBLE LOAN LOSSES
A summary analysis of changes in the allowance for possible loan losses follows:
ALLOWANCE FOR LOAN LOSSES
| Years Ended December 31, | ||||||||
|
(dollars in thousands) |
2005 | 2004 | ||||||
|
Allowance for loan losses |
||||||||
|
Balances, beginning of year |
$ | 4,565 | $ | 2,072 | ||||
|
Provision for losses |
1,595 | 1,819 | ||||||
|
Loans charged off, net of recoveries |
(411 | ) | (162 | ) | ||||
|
Acquired loan loss reserve |
— | 836 | ||||||
|
Balances, end of year |
$ | 5,749 | $ | 4,565 | ||||
F-18
6. IMPAIRED LOANS, NONPERFORMING LOANS, FORECLOSED ASSETS AND OTHER REAL ESTATE OWNED
The following is a summary of information pertaining to impaired loans:
IMPAIRED LOANS
| Year Ended December 31, | ||||||
|
(dollars in thousands) |
2005 | 2004 | ||||
|
Impaired loans without a valuation allowance |
$ | — | $ | — | ||
|
Impaired loans with a valuation allowance |
2,431 | 1,523 | ||||
|
Total impaired loans |
$ | 2,431 | $ | 1,523 | ||
|
Valuation allowance related to impaired loans |
$ | 612 | $ | 650 | ||
|
Average investment in impaired loans |
1,883 | 1,613 | ||||
|
Interest income recognized on impaired loans |
— | — | ||||
Loans on nonaccrual status amounted to approximately $2,588 thousand and $1,920 thousand at December 31, 2005 and 2004, respectively. Management monitors these credits on a continuing basis and believes the Company has adequate allowance to absorb any potential losses associated with these loans.
There was no other real estate owned at December 31, 2005. The carrying amount of other real estate owned at December 31, 2004 was $452 thousand.
There were no foreclosed assets and repossessions at December 31, 2005. The carrying amount of foreclosed assets at December 31, 2004 was $3 thousand.
7. PREMISES AND EQUIPMENT
A summary of premises and equipment:
PREMISES & EQUIPMENT
| December 31, | ||||||||
|
(dollars in thousands) |
2005 | 2004 | ||||||
|
Leasehold improvements |
$ | 1,515 | $ | 729 | ||||
|
Capitalized leases |
1,750 | 1,750 | ||||||
|
Land |
1,734 | 1,745 | ||||||
|
Buildings |
6,193 | 6,138 | ||||||
|
Furniture, fixtures & equipment |
5,400 | 4,590 | ||||||
|
Automobiles |
149 | 167 | ||||||
|
Construction in progress |
89 | 189 | ||||||
| 16,830 | 15,308 | |||||||
|
Less: Accumulated depreciation |
(3,872 | ) | (3,136 | ) | ||||
| $ | 12,958 | $ | 12,172 | |||||
Depreciation expense was $955 thousand and $620 thousand for the years ended December 31, 2005 and 2004, respectively.
F-19
At December 31, 2005, the Company had $179 thousand in binding commitments for capital expenditures. This includes
8. INTANGIBLE ASSETS
Following is a summary of information related to acquired intangible assets:
| As of December 31, 2005 | As of December 31, 2004 | |||||||||||
|
(dollars in thousands) |
Gross
Amount |
Accumulated
Amortization |
Gross
Amount |
Accumulated
Amortization |
||||||||
|
Amortized intangible assets |
||||||||||||
|
Core deposit premiums |
$ | 577 | $ | 91 | $ | 577 | $ | 14 | ||||
The amortization expense for intangible assets was $77 thousand and $14 thousand for the years ended December 31, 2005 and 2004, respectively.
The estimated amortization expense for each of the next five years is as follows:
|
(dollars in thousands) |
|||
|
Years Ending December 31, |
|||
|
2006 |
$ | 74 | |
|
2007 |
74 | ||
|
2008 |
74 | ||
|
2009 |
74 | ||
|
2010 |
74 | ||
|
Thereafter |
116 | ||
| $ | 486 | ||
Changes in the carrying amount of goodwill are as follows:
F-20
9. DEPOSITS
Deposit account balances are summarized as follows:
DEPOSITS
| December 31, | ||||||
|
(dollars in thousands) |
2005 | 2004 | ||||
|
Noninterest bearing demand accounts |
$ | 82,471 | $ | 64,435 | ||
|
Interest-bearing demand accounts |
133,937 | 65,674 | ||||
|
Savings and money market deposits |
86,107 | 77,157 | ||||
|
Certificates of deposits less than $100,000 |
80,885 | 71,641 | ||||
|
Certificates of deposits of $100,000 or more |
107,347 | 67,164 | ||||
|
Time deposit open accounts |
4,000 | 4,000 | ||||
| $ | 494,747 | $ | 350,071 | |||
Certificates maturing in years ending December 31, as of December 31, 2005:
|
(in thousands) |
|||
|
2006 |
$ | 106,222 | |
|
2007 |
37,427 | ||
|
2008 |
15,866 | ||
|
2009 |
4,795 | ||
|
2010 and thereafter |
27,922 | ||
| $ | 192,232 | ||
The Company had $6,959 thousand and $4,286 thousand in brokered deposits at December 31, 2005 and 2004 respectively.
At December 31, 2005 and 2004, overdraft demand deposits reclassified to loans totaled $336 thousand and $196 thousand, respectively.
F-21
10. BORROWINGS
Borrowings consist of the following:
BORROWINGS
| * | Prime rate at December 31, 2005 was 7.25% |
The advances from the Federal Home Loan Bank are secured by a blanket lien against the Banks’ 1-4 family first mortgage loans. These loans totaled approximately $73,090 thousand at December 31,
F-22
2005. At December 31, 2004, the advances from the Federal Home Loan Bank were secured by Vision Alabama’s 1-4 family first mortgages and these loans totaled $44,868 thousand. At December 31, 2005 the Banks’ had available unused lines of credit with the Federal Home Loan Bank totaling $19,597 thousand.
The following table presents maturity information for the Company’s FHLB and other borrowings as of December 31, 2005.
The Company and subsidiaries also have available unused lines of credit with various financial institutions totaling $30,800 thousand at December 31, 2005.
11. JUNIOR SUBORDINATED DEBENTURES
In December 2005, the Company formed a wholly-owned Delaware statutory business trust, Vision Bancshares Trust I (“Trust I”), which issued $15,000 thousand of the Trust’s floating rate Preferred Securities (the “Trust Preferred Securities”). These debentures qualify as Tier I capital under Federal Reserve Board guidelines. All of the common securities of Trust I are owned by the Company. The proceeds from the issuance of the common securities and the Trust Preferred Securities were used by Vision Bancshares Trust I to purchase $15,464 thousand of junior subordinated debentures of the Company, which carry a floating rate based on a three-month LIBOR plus 148 basis points. The debentures represent the sole asset of Trust I. The Trust Preferred Securities accrue and pay distributions at a floating rate of three-month LIBOR plus 148 basis points per annum of the stated liquidation value of $1,000 per capital security. The Company has entered into contractual agreements which, taken collectively, fully and unconditionally guarantee payment of: (i) accrued and unpaid distributions required to be paid on the Trust Preferred Securities; (ii) the redemption price with respect to any Trust Preferred Securities called for redemption by Trust I and (iii) payments due upon a voluntary or involuntary dissolution, winding up or liquidation of Trust I. The Trust Preferred Securities are mandatorily redeemable upon maturity of the debentures in December 2035, or upon earlier redemption as provided in the indenture. The Company has the right to redeem the debentures purchased by Trust I in whole or in part, on or after December 30, 2010. As specified in the indenture, if the debentures are redeemed prior to maturity, the redemption price will be the principal amount, plus any unpaid accrued interest.
F-23
12. REGULATORY CAPITAL
The Company and its subsidiary Banks are subject to various regulatory capital requirements administered by the state and federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory – and possible additional discretionary – actions by regulators that, if taken, could have a direct material effect on the consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company, Vision Alabama, and Vision Florida must meet specific capital guidelines that involve quantitative measures of the Company’s and Banks’ assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy require the Company, Vision Alabama, and Vision Florida to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 2005 and 2004, that the Company and the Banks meet all capital adequacy requirements to which they are subject.
F-24
As of December 31, 2005, the most recent notification from the Federal Deposit Insurance Corporation categorized the Banks as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Banks must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the following table. There are no conditions or events since that notification that management believes have changed the Banks’ categories. Prompt corrective action provisions are not applicable to bank holding companies.
REGULATORY CAPITAL
| Actual |
For Capital
Purposes |
To Be Well
Under the Prompt
|
||||||||||||||
|
(dollars in thousands) |
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||
|
As of December 31, 2005 |
||||||||||||||||
|
Total Risk-Based Capital (to Risk-Weighted Assets) |
||||||||||||||||
|
Consolidated |
$ | 64,740 | 11.81 | % | $ | 43,840 | 8.00 | % | N/A | N/A | ||||||
|
Vision Bank-AL |
38,457 | 10.81 | 28,461 | 8.00 | 35,576 | 10.00 | ||||||||||
|
Vision Bank-FL |
20,064 | 10.77 | 14,900 | 8.00 | 18,625 | 10.00 | ||||||||||
|
Tier 1 Capital (to Risk-Weighted Assets) |
||||||||||||||||
|
Consolidated |
58,633 | 10.70 | 21,920 | 4.00 | N/A | N/A | ||||||||||
|
Vision Bank-AL |
34,698 | 9.75 | 14,230 | 4.00 | 21,346 | 6.00 | ||||||||||
|
Vision Bank-FL |
18,074 | 9.70 | 7,450 | 4.00 | 11,175 | 6.00 | ||||||||||
|
Tier 1 Leverage Capital (to Average Assets) |
||||||||||||||||
|
Consolidated |
58,633 | 10.06 | 23,305 | 4.00 | N/A | N/A | ||||||||||
|
Vision Bank-AL |
34,698 | 9.24 | 15,018 | 4.00 | 18,773 | 5.00 | ||||||||||
|
Vision Bank-FL |
18,074 | 9.11 | 7,937 | 4.00 | 9,921 | 5.00 | ||||||||||
|
As of December 31, 2004 |
||||||||||||||||
|
Total Risk-Based Capital (to Risk-Weighted Assets) |
||||||||||||||||
|
Consolidated |
$ | 41,448 | 11.01 | % | $ | 30,127 | 8.00 | % | N/A | N/A | ||||||
|
Vision Bank-AL |
27,566 | 10.53 | 20,950 | 8.00 | 26,188 | 10.00 | ||||||||||
|
Vision Bank-FL |
13,414 | 12.32 | 8,710 | 8.00 | 10,888 | 10.00 | ||||||||||
|
Tier 1 Capital (to Risk-Weighted Assets) |
||||||||||||||||
|
Consolidated |
36,883 | 9.79 | 15,064 | 4.00 | N/A | N/A | ||||||||||
|
Vision Bank-AL |
24,423 | 9.33 | 10,475 | 4.00 | 15,713 | 6.00 | ||||||||||
|
Vision Bank-FL |
12,052 | 11.07 | 4,355 | 4.00 | 6,533 | 6.00 | ||||||||||
|
Tier 1 Leverage Capital (to Average Assets) |
||||||||||||||||
|
Consolidated |
36,883 | 10.09 | 14,779 | 4.00 | N/A | N/A | ||||||||||
|
Vision Bank-AL |
24,423 | 9.26 | 10,545 | 4.00 | 13,182 | 5.00 | ||||||||||
|
Vision Bank-FL |
12,052 | 10.85 | 4,445 | 4.00 | 5,556 | 5.00 | ||||||||||
The Banks are subject to certain restrictions on the amount of dividends that may be declared without prior regulatory approval. At December 31, 2005, approximately $9,256 thousand were available for dividend declaration without prior regulatory approval.
F-25
13. EMPLOYEE BENEFIT PLANS
Vision sponsors an employee savings plan under Section 401(k) of the Internal Revenue Code that covers substantially all full-time employees. This plan allows the employee to contribute a minimum of 1% to a maximum of 15% of their total compensation annually. The Banks provide a matching contribution to the Plan of 50% of the first 6% of the total annual compensation of the employee’s contribution, thus allowing contributions totaling 18% of the employees’ annual compensation. Tax law imposes limits on total annual participant savings. Participants are fully vested in their savings. Participants are vested in employer match contributions based on years of vesting service in which they worked at least 1,000 hours as shown below.
|
Years |
Less than 2 | 2 | 3 | 4 | 5 | 6 or more | |||||||
|
Vesting % |
0 | % | 20 | 40 | 60 | 80 | 100 |
The expense of the Company’s matching contributions was $124 thousand in 2005 and $106 thousand in 2004.
In 2004, the Company’s subsidiary Banks have entered into separate deferred compensation arrangements with certain executive officers. The plans call for certain amounts payable at retirement, death or disability. The estimated present value of the deferred compensation is being accrued over the expected service period. Vision Alabama and Vision Florida have purchased life insurance policies which they intend to use to finance this liability. Cash surrender value of life insurance was approximately $2,789 thousand and $2,683 thousand at December 31, 2005 and 2004, respectively and is included in other assets. Accrued deferred compensation of $227 thousand and $84 thousand at December 31, 2005 and 2004, respectively, is included in other liabilities. Aggregate compensation expense under the plans was $143 thousand for 2005 and $84 thousand for 2004 and is included in salary and benefit expenses.
Vision Alabama also entered into an arrangement with one of its executive officers whereby salary increases for 2003 and 2004 are being deferred and earning interest at a rate indexed to the Wall Street Prime rate. This arrangement calls for amounts to be payable once the executive reaches his sixtieth (60th) birthday or ceases to serve as an executive officer of the Bank, which ever occurs later. However, no payments under this arrangement will extend beyond the executive’s seventy-fifth (75th) birthday. Accrued deferred amounts of $70 thousand and $41 thousand at December 31, 2005 and 2004, respectively are included in other liabilities. Compensation expense under this arrangement was $29 thousand for both years ended December 31, 2005 and 2004, and is included in salary and benefit expenses.
14. STOCK PLANS
The Company has adopted an Incentive Stock Compensation (“Plan”) to provide an incentive to certain officers and key management employees of the Company and its subsidiaries. Options granted under the Plan must be at a price not less than the fair market value of the shares at the date of grant.
F-26
As of December 31, 2005, the Company had reserved 500,000 shares, adjusted for the two-for-one stock split on April 25, 2005, for issuance under the Plan. All options expire no more than ten years from the date of grant, or 90 days after an employee’s termination. At December 31, 2005, approximately 53,000 shares remained available for the granting of options under the Plan.
The Plan’s Administration Committee determines vesting periods. All options issued between March 30, 2000 and February 6, 2004 under the Plan have vesting requirements. The option recipients are required to remain in the employment of the Company for three years to fully vest in the options granted. Options granted January 31, 2005 were fully vested at the time of grant. Of the 447,000 options granted under the Plan, 366,490 options were vested at December 31, 2005. In the event of a change in control, options issued under this plan, become 100 percent vested.
The Company has adopted a Director Stock Plan (“Director’s Plan”) whereby directors of the Company and its subsidiaries may be granted non-qualified stock options and receive common stock in lieu of cash directors’ fees. As of December 31, 2005, the Company had reserved 450,000 shares for issuance under the Director’s Plan. The Director’s Plan Administration Committee determines vesting periods. All options issued under the Director’s Plan were 100 percent vested at the date of grant. All options expire no more than ten years from the date of grant. At December 31, 2005, approximately 8,000 shares remained available for the granting of options under the Director’s Plan. This plan also provides for each director to receive restricted stock, pursuant to a written election, in lieu of part or such director’s entire director fee. The number of shares of restricted stock granted to a director pursuant to such election shall be equal to the dollar amount of director’s fees which the director has elected not to receive, divided by seventy-five percent (75%) of the fair market value of the common stock as of each applicable payment date. As of December 31, 2005, no shares have been issued pursuant to this provision.
Following is
STOCK PLANS
|
Number
of Shares |
Weighted
Average Exercise Price |
||||||
|
Balance, December 31, 2003 |
625,000 | $ | 6.55 | ||||
|
Granted, year ended December 31, 2004 |
132,000 | 9.00 | |||||
|
Exercised and expired, year ended December 31, 2004 |
(9,000 | ) | (7.50 | ) | |||
|
Balance, December 31, 2004 |
748,000 | 6.97 | |||||
|
Granted, year ended December 31, 2005 |
144,000 | 13.88 | |||||
|
Exercised and expired, year ended December 31, 2005 |
(5,666 | ) | (6.76 | ) | |||
|
Balance, December 31, 2005 |
886,334 | $ | 8.10 | ||||
F-27
At December 31, 2005, the total shares outstanding and exercisable under the Plan and the Director’s Plan were
SHARES OUTSTANDING
|
Number
Outstanding |
Average
(In Years) |
Options
Exercisable |
||||
|
Options with exercise price of $5.00 |
238,334 | 4.7 | 238,334 | |||
|
Options with exercise price of $7.50 |
352,000 | 6.7 | 306,760 | |||
|
Options with exercise price of $7.875 |
20,000 | 7.6 | 13,200 | |||
|
Options with exercise price of $9.00 |
132,000 | 8.1 | 104,530 | |||
|
Options with exercise price of $13.875 |
144,000 | 9.1 | 144,000 | |||
|
Total outstanding, December 31, 2005 |
886,334 | 6.8 | 806,824 | |||
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants in 2005: dividend yield of 2.00%; expected volatility of 20%, risk-free interest rate of 4.14%, and expected lives of ten years. The weighted-average assumptions used for grants in 2004: dividend yield of 2.00%; expected volatility of 20%, risk-free interest rates of 4.12%, and expected lives of ten years. The weighted average fair value of options granted during 2005 and 2004 was $3.74 and $2.42, respectively.
The Company has adopted an Employee Stock Purchase Plan that provides active full-time employees with a convenient way to become shareholders of the Company. Employees have the opportunity to subscribe to purchase shares of a series of offerings occurring at six-month intervals. As of December 31, 2005, there were 45,000 shares authorized for issuance under this Plan from authorized but unissued shares. As of December 31, 2005, 25,436 shares were issued under the plan. The total subscription liability under the plan for all covered employees totaled 4,565 shares as of December 31, 2005. Approximately 14,999 shares remained available for subscription under this Plan.
15. OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS
In the normal course of business, the Company has outstanding commitments and contingent liabilities, such as commitments to extend credit and standby letters of credit, which are not included in the accompanying consolidated financial statements. They involve, to varying degrees, elements of credit risk and interest rate risk in excess of the amount recognized in the balance sheets. The majority of all commitments to extend credit and standby letters of credit are variable rate instruments.
F-28
The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments
for commitments to extend credit and standby letters of credit is represented by the contractual or notional amount of those instruments. The Company uses the same credit policies in making such commitments as it does for instruments that are
UNFUNDED COMMITMENTS
| December 31, | ||||||
|
(dollars in thousands) |
2005 | 2004 | ||||
|
Commitments to extend credit |
$ | 100,062 | $ | 53,017 | ||
|
Unused lines of credit |
19,277 | 10,217 | ||||
|
Financial standby letters of credit |
35,854 | 26,544 | ||||
| $ | 155,193 | $ | 89,778 | |||
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since some commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company upon extension of credit, is based on management’s credit evaluation. Collateral held varies but may include accounts receivable, inventory, property and equipment, and income-producing commercial properties.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Standby letters of credit generally have fixed expiration dates or other termination clauses and may require payment of a fee. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Company’s policy for obtaining collateral, and the nature of such collateral, is essentially the same as that involved in making commitments to extend credit.
At December 31, 2005 and 2004, the carrying amount of liabilities related to the Company’s obligation to perform under financial standby letters of credits represented approximately 76% and 65%, respectively, of total capital. The Company has not been required to perform on any financial standby letter of credit, and the Company has not incurred any losses on financial standby letters of credit for the years ended December 31, 2005 and 2004.
16. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair value is based on discounted cash flows or other valuation techniques. These techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. SFAS No. 107, Disclosures about Fair Value of Financial Instruments, excludes certain
F-29
financial instruments and all nonfinancial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
The following methods and assumptions were used by the Company in estimating the fair value of its financial instruments:
Cash and Cash Equivalents : For these short-term instruments, the carrying amount is a reasonable estimate of fair value.
Securities : Fair value of securities is based on available quoted market prices. The carrying amount of equity securities with no readily determinable fair value approximates fair value.
Loans : The carrying amount of variable-rate loans that reprice frequently and have no significant change in credit risk approximates fair value. The fair value of fixed-rate loans is estimated based on discounted contractual cash flows, using interest rates currently being offered for loans with similar terms to borrowers with similar credit quality.
Deposits : The carrying amount of demand deposits, savings deposits, and variable-rate certificates of deposit approximates fair value. The fair value of fixed-rate certificates of deposit is estimated based on discounted contractual cash flows using interest rates currently being offered for certificates of similar maturities.
Federal Funds Purchased, Repurchase Agreements and Other Short Term Borrowings : The carrying values of federal funds purchased, securities sold under agreements to repurchase and other short-term borrowings approximate their carrying values.
Federal Home Loan Bank, Subordinated Debentures and Other Long Term Borrowings : The fair value of fixed rate borrowings are estimated using discounted cash flows, based on current incremental borrowing rates for similar types of borrowing arrangements. The carrying amount on variable rate borrowings approximate their fair value.
Accrued Interest : The carrying amount of accrued interest approximates their fair value.
Off-Balance-Sheet Instruments : The carrying amount of commitments of to extend credit and standby letters of credit approximates fair value. The carrying amount of the off-balance-sheet financial instruments is based on fees charged to enter into such agreements. These fees are not considered material.
F-30
The carrying amount and estimated fair values of the Company’s financial instruments are as follows:
FAIR VALUE OF FINANCIAL INSTRUMENTS
| December 31, | ||||||||||||
|
(dollars in thousands) |
2005 | 2004 | ||||||||||
|
Carrying
Amount |
Fair Value |
Carrying
Amount |
Fair Value |
|||||||||
|
Financial assets: |
||||||||||||
|
Cash and short-term investments |
$ | 32,022 | $ | 32,022 | $ | 18,249 | $ | 18,249 | ||||
|
Securities available-for-sale |
33,605 | 33,605 | 27,527 | 27,527 | ||||||||
|
Loans held for sale |
2,482 | 2,482 | 1,254 | 1,247 | ||||||||
|
Loans, net |
493,493 | 491,512 | 340,441 | 340,322 | ||||||||
|
Accrued interest receivable |
2,839 | 2,839 | 1,414 | 1,414 | ||||||||
|
TOTAL |
$ | 564,441 | $ | 562,460 | $ | 388,885 | $ | 388,759 | ||||
|
Financial liabilities |
||||||||||||
|
Deposits |
$ | 494,747 | $ | 493,273 | $ | 350,071 | $ | 351,326 | ||||
|
Federal funds purchased |
— | — | — | — | ||||||||
|
Other borrowings |
41,747 | 41,362 | 16,700 | 16,674 | ||||||||
|
Accrued interest payable |
920 | 920 | 523 | 523 | ||||||||
|
TOTAL |
$ | 537,414 | $ | 535,555 | $ | 367,294 | $ | 368,523 | ||||
17. RELATED PARTY TRANSACTIONS
The Company and its subsidiary, Vision Bank, lease premises from Gulf Shores Investment Group, LLC, an Alabama limited liability company. Gulf Shores Investment Group, LLC consists of a majority of the directors of Vision Bancshares, Inc. Amounts paid under these leases and agreements approximated $327 thousand and $312 thousand in 2005 and 2004, respectively.
In November 2004, Vision Alabama entered into a lease agreement, as the tenant, with Elberta Holdings, LLC, an Alabama limited liability company. J. Daniel Sizemore and James R. Owen, Jr. (directors of Vision Bancshares, Inc.) are members of Elberta Holdings, LLC. The term of the lease is for ten years with an option to renew the lease for two additional terms of five years each. The monthly rent on this lease is in the amount of $5,418 per month. Payments to Elberta Holdings, LLC for this lease totaled approximately $65 thousand and $11 thousand in 2005 and 2004, respectively. In addition, Vision Alabama agreed to pay insurance on the property and the buildings and all real estate taxes.
In August 2004, Vision Florida entered into a lease agreement, as the tenant, with Bay County Investment Group, LLC, a Florida limited liability company. Bay County Investment Group, LLC consists of 23 directors of Vision Bancshares, Inc and/or Vision Florida. The term of this lease is for ten years with an option to renew the lease for three additional terms of three years each. The monthly rent on this lease is in the amount of $18,858 per month. Payments to Bay County Investment Group, LLC for this lease totaled approximately $226 thousand and $94 thousand in 2005 and 2004, respectively. In addition, Vision Florida agreed to pay all insurance on the property and building, and all real estate taxes.
The Skipper Insurance Agency, of which George W. Skipper, III (a director and principal shareholder of Vision Bancshares, Inc.) is an owner, provides insurance coverage, including but not limited to
F-31
fire and extended coverage, general liability, fidelity bond and directors and officers liability insurance for the Company and its subsidiaries. The Company paid gross premiums of approximately $454 thousand in 2005 compared to $226 thousand in 2004.
In the opinion of the Company, the cost for the above services is at least as favorable as those that could have been obtained from an unaffiliated party.
Vision Bancshares Financial Group, Inc. (“Financial Group”), a wholly owned subsidiary of Vision Alabama, was incorporated in 2002 to conduct permissible insurance and securities networking activities. The Financial Group is licensed with the Alabama Department of Insurance as a producer. In October 2002, the Financial Group entered into a Services Agreement with Skipper Insurance Agencies (“Skipper Insurance”) whereby Skipper Insurance would market and sell insurance products through the Financial Group to customers of Vision Alabama. One or more employees of Skipper Insurance serve as dual employees of the Financial Group. Pursuant to the Services Agreement, Skipper Insurance pays the Financial Group fifty percent (50%) of all dual employees’ agent commissions under the New York Standard Contract attributable to the sale of insurance products and twenty percent (20%) of Skipper Insurance’s commissions attributable to the sale of property and casualty insurance products. During 2005 and 2004, the Financial Group received approximately $35 thousand and $29 thousand, respectively, in commissions from Skipper Insurance. In the opinion of the Company, the agreement for services is at least as favorable as those that could have been obtained from an unaffiliated party.
18. LEASES
The Company and its subsidiaries have entered into certain noncancellable operating and capitalized leases for premises and equipment used in connection with its operations. The majority of these noncancellable lease
agreements contain renewal options for varying periods at the same or renegotiated rentals. Future minimum lease payments under all noncancellable operating and capitalized leases with initial or remaining terms (exclusive of renewal options) of one
FUTURE MINIMUM LEASE PAYMENTS
|
(dollars in thousands) |
Operating | Capitalized | |||||
|
Years Ending December 31, |
|||||||
|
2006 |
$ | 1,230 | $ | 175 | |||
|
2007 |
1,183 | 175 | |||||
|
2008 |
1,073 | 175 | |||||
|
2009 |
1,058 | 175 | |||||
|
2010 |
809 | 175 | |||||
|
Thereafter |
3,801 | 2,323 | |||||
|
Total minimum lease payments |
$ | 9,154 | $ | 3,198 | |||
|
Less amount representing interest |
(1,515 | ) | |||||
|
Present value of minimum lease payments |
$ | 1,683 | |||||
Rental expense totaled $1,300 thousand and $797 thousand for the years ended December 31, 2005 and 2004, respectively.
F-32
19. EARNINGS PER COMMON SHARE
The components used to calculate basic and diluted earnings per share are as follows:
EARNINGS PER COMMON SHARE
| Years Ended December 31, | ||||||
|
(dollars in thousands, except per share data) |
2005 | 2004 | ||||
|
Earnings per common share computation: |
||||||
|
Numerator: |
||||||
|
Net Income |
$ | 6,681 | $ | 1,189 | ||
|
Denominator: |
||||||
|
Average common shares outstanding |
6,055,688 | 5,476,098 | ||||
|
Earnings per common share |
$ | 1.10 | $ | 0.22 | ||
|
Diluted earnings per common share computation: |
||||||
|
Numerator: |
||||||
|
Net Income |
$ | 6,681 | $ | 1,189 | ||
|
Denominator: |
||||||
|
Average common shares outstanding |
6,055,688 | 5,476,098 | ||||
|
Dilutive shares contingently issuable |
348,826 | 161,248 | ||||
|
Average diluted common shares outstanding |
6,404,514 | 5,637,346 | ||||
|
Diluted earnings per common share |
$ | 1.04 | $ | 0.21 | ||
20. INCOME TAXES
The consolidated provision for income taxes for the years ended December 31, 2005 and 2004 consists of the following:
PROVISION FOR INCOME TAXES
| Years Ended December 31, | ||||||||
|
(dollars in thousands) |
2005 | 2004 | ||||||
|
Income Tax Expense: |
||||||||
|
Current Tax Expense |
$ | 4,452 | $ | 1,053 | ||||
|
Deferred Tax (Benefit) |
(598 | ) | (435 | ) | ||||
| $ | 3,854 | $ | 618 | |||||
The difference between actual income tax expense and the amount computed by applying the statutory federal income tax rate to income before income taxes are as follows:
F-33
The significant temporary differences that created deferred tax assets and liabilities at December 31 are as
DEFERRED TAX ASSETS AND LIABILITIES
| Years Ended December 31, | ||||||
|
(dollars in thousands) |
2005 | 2004 | ||||
|
Deferred tax assets: |
||||||
|
Allowance for possible loan losses |
$ | 1,680 | $ | 1,188 | ||
|
Capitalized loan fees |
756 | 421 | ||||
|
Net operating loss carryforward |
35 | 128 | ||||
|
Deferred compensation |
110 | 46 | ||||
|
Unamortized intangible assets |
102 | 135 | ||||
|
Unrealized loss on securities available for sale |
290 | 50 | ||||
|
Other |
— | 17 | ||||
|
Total deferred tax assets |
2,973 | 1,985 | ||||
|
Deferred tax liabilities: |
||||||
|
Fixed assets |
$ | 538 | $ | 494 | ||
|
Goodwill |
112 | 11 | ||||
|
Other |
8 | — | ||||
|
Total deferred tax liability |
658 | 505 | ||||
|
Net deferred tax assets |
$ | 2,315 | $ | 1,480 | ||
Management believes it is more likely than not the Company will generate taxable income sufficient to realize the deferred tax benefit. If the Company is unable to generate sufficient taxable income in the future through operating results, increases in the valuation allowance will be required through a charge to income tax expense.
The Company had available at December 31, 2005, $794 thousand of unused state operating loss carryforwards that may be applied against future taxable income and that expire in various years from 2010 to 2012.
F-34
21. CONDENSED PARENT COMPANY INFORMATION
STATEMENTS OF FINANCIAL CONDITION
| December 31, | ||||||||
|
(dollars in thousands) |
2005 | 2004 | ||||||
|
Assets |
||||||||
|
Cash and due from banks |
$ | 6,579 | $ | 1,387 | ||||
|
Investment in subsidiaries |
56,700 | 40,389 | ||||||
|
Deferred tax assets |
485 | 149 | ||||||
|
Other assets |
7 | 8 | ||||||
|
Total assets |
$ | 63,771 | $ | 41,933 | ||||
|
Liabilities and stockholder’s equity |
||||||||
|
Accounts payable |
$ | — | $ | — | ||||
|
Junior subordinated debentures |
15,464 | — | ||||||
|
Notes payable, stock owned and stock receivables from related VIEs |
916 | 1,129 | ||||||
|
Other liabilities |
— | 8 | ||||||
|
Total liabilities |
16,380 | 1,137 | ||||||
|
Stockholder’s equity |
||||||||
|
Common Stock, $1.00 par value; 10,000,000 authorized; |
||||||||
|
6,060,530 and 3,024,004 shares issued and outstanding at December 31, 2005 and 2004, respectively |
6,061 | 3,024 | ||||||
|
Preferred stock $1.00 par value; 1,000,000 authorized; none issued |
— | — | ||||||
|
Additional paid in capital |
36,030 | 38,960 | ||||||
|
Retained earnings |
6,708 | 27 | ||||||
|
Accumulated other comprehensive loss |
(492 | ) | (86 | ) | ||||
|
Less stock owned by and stock receivables from related VIEs |
(916 | ) | (1,129 | ) | ||||
|
Total stockholder’s equity |
47,391 | 40,796 | ||||||
|
Total liabilities and stockholder’s equity |
$ | 63,771 | $ | 41,933 | ||||
F-35
STATEMENTS OF INCOME
| Years Ended December 31, | ||||||||
|
(dollars in thousands) |
2005 | 2004 | ||||||
|
Income |
||||||||
|
Interest income |
$ | 23 | $ | 138 | ||||
|
Dividends from subsidiaries |
65 | — | ||||||
|
Expenses |
||||||||
|
Interest expense |
64 | — | ||||||
|
Salaries and employee benefits |
365 | 186 | ||||||
|
Occupancy expense |
68 | 47 | ||||||
|
Legal fee expense |
34 | 34 | ||||||
|
Accounting and professional fees |
64 | 64 | ||||||
|
Miscellaneous expense |
402 | 159 | ||||||
|
Total expenses |
997 | 490 | ||||||
|
Loss before income tax benefit and equity in undistributed earnings of subsidiaries |
(908 | ) | (352 | ) | ||||
|
Income tax benefit |
(335 | ) | (129 | ) | ||||
|
Loss before equity in undistributed earnings of subsidiaries |
(573 | ) | (223 | ) | ||||
|
Equity in undistributed earnings of subsidiaries |
7,254 | 1,412 | ||||||
|
Net income |
$ | 6,681 | $ | 1,189 | ||||
F-36
STATEMENTS OF CASH FLOWS
| Years Ended December 31, | ||||||||
|
(dollars in thousands) |
2005 | 2004 | ||||||
|
Cash Flows From Operating Activities: |
||||||||
|
Net income |
$ | 6,681 | $ | 1,189 | ||||
|
Adjustments to reconcile net income to net cash provided by operations |
||||||||
|
Deferred income tax expense (benefit) |
(336 | ) | (129 | ) | ||||
|
Equity in undistributed earnings of subsidiaries |
(7,254 | ) | (1,412 | ) | ||||
|
Net change in: |
||||||||
|
Other assets |
(5 | ) | 138 | |||||
|
Net cash used in operating activities |
(914 | ) | (214 | ) | ||||
|
Cash Flows From Investing Activities: |
||||||||
|
Investment in subsidiaries |
(9,000 | ) | (10,300 | ) | ||||
|
Cash paid in acquisition |
— | (7,500 | ) | |||||
|
Net cash used in investing activities |
(9,000 | ) | (17,800 | ) | ||||
|
Cash Flows From Financing Activities: |
||||||||
|
Increase in other long term debt |
15,000 | — | ||||||
|
Proceeds from the issuance of common stock |
106 | 18,423 | ||||||
|
Net cash provided by financing activities |
15,106 | 18,423 | ||||||
|
Net increase in cash and cash equivalents |
5,192 | 409 | ||||||
|
Cash and cash equivalents at beginning of period |
1,387 | 978 | ||||||
|
Cash and cash equivalents at end of period |
$ | 6,579 | $ | 1,387 | ||||
F-37
INDEX TO EXHIBITS
|
Exhibit Number |
Description of Exhibit |
|
| 10.8 | Form of Agreement pursuant to the Vision Bancshares, Inc. Incentive Stock Compensation Plan. | |
| 10.9 | Form of Agreement pursuant to the Vision Bancshares, Inc. Director Stock Plan. | |
| 10.10 | Term Sheet regarding Executive Compensation Adjustment | |
| 10.15 | Amended and Restated Trust Agreement as to Vision Bancshares Trust I dated as of December 5, 2005. | |
| 10.16 | Junior Subordinated Debentures as to Vision Bancshares Trust I dated as of December 5, 2005. | |
| 10.17 | Guarantee Agreement as to Vision Bancshares Trust I dated as of December 5, 2005. | |
| 10.18 | Placement Agreement as to Vision Bancshares Trust I dated as of December 5, 2005. | |
| 21 | Subsidiaries of Vision Bancshares, Inc. | |
| 23 | Consent of Mauldin & Jenkins, LLC. | |
| 31.1 | Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer | |
| 31.2 | Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer | |
| 32.1 | Section 1350 Certification by the Chief Executive Officer | |
| 32.2 | Section 1350 Certification by the Chief Financial Officer | |
Exhibit 10.8
INCENTIVE STOCK OPTION AGREEMENT PURSUANT
TO THE VISION BANCSHARES, INC.
INCENTIVE STOCK COMPENSATION PLAN
This INCENTIVE STOCK OPTION AGREEMENT (this “Agreement”) is made as of the
of , , by and between Vision Bancshares, Inc., an Alabama corporation (the “Company”), and (“Employee”).
WITNESSETH:
The Company has determined that it is in the best interests of the Company and its shareholders to encourage ownership in the Company by qualified employees of the Company thereby providing additional incentive for them to continue in the employ of the Company or its affiliates. To that end, an Incentive Stock Option is granted by the Board of Directors to Employee pursuant, and subject to, the Company’s Incentive Stock Compensation Plan (“the Plan”) in the following terms and conditions:
SECTION I
DEFINED TERMS
Unless otherwise defined herein or, unless the context requires a different definition, capitalized terms used herein shall have the meanings assigned to them in the Plan.
SECTION II
SHARES OPTIONED, OPTION PRICE, AND TIME OF EXERCISE
Effective as of the date hereof, the Company grants to Employee, subject to the terms and provisions set forth hereinafter and in the Plan, the right and option to purchase all or any part of the number of shares set forth on Exhibit A of the presently authorized but unissued common stock (“Common Stock”) of the Company at the purchase price per share set forth as the option price on Exhibit A.
The Option shall not be considered granted (as of the effective date described above) or become exercisable unless and until Employee delivers to the Company a fully executed counterpart hereof. Thereafter, the Option shall be granted as of such effective date and shall be exercisable in accordance with the exercise schedule set forth in Exhibit A, subject to any termination, acceleration or change in the exercise schedule set forth in this Agreement apart from Exhibit A.
Neither the Option nor any other rights granted under this Agreement may be
exercised after the Expiration Date set forth on Exhibit A and, before that time, the Option may be terminated as hereinafter provided. If the Employee does not purchase the full number of shares to which Employee is entitled in any one year, Employee may purchase such shares in the next year specified in the exercise schedule hereto, in addition to the shares which he is otherwise entitled to purchase in the next year.
SECTION III
EXERCISE PROCEDURE
Employee shall exercise the Option by notifying the Company of the number of shares that he desires to purchase and by delivering with such notice the full payment for the purchase price of the shares being purchased. Such purchase price shall be payable in cash, in Common Stock or in a combination of cash and Common Stock. For purposes of determining the amount, if any, of the purchase price satisfied by payment in Common Stock, such Common Stock shall be valued at its Fair Market Value on the date of exercise, as determined by the Board of Directors at the time of exercise. In no event shall the purchase price be less than one hundred percent (100%) of the Fair Market Value of such stock at the time the Option is granted; except that the purchase price shall be one hundred ten percent (110%) of the Fair Market Value in the case of any person who owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company. Any Common Stock delivered in satisfaction of all or a portion of the purchase price shall be approximately endorsed for transfer and assignment to the Company.
The Company will, as soon as is reasonably possible, notify the Employee of the amount of withholding tax, if any, that must be paid under federal, state and local law due to the exercise of the Option. The Company shall have no obligation to deliver certificates for the shares purchased until Employee pays to the Company the amount of withholding specified in the Company’s notice in cash or in Common Stock. Alternatively, Employee may direct the Company to withhold that number of shares of Common Stock (valued according to the procedures set forth in this section on the date of withholding) sufficient to satisfy such obligation.
SECTION IV
TERMINATION OF EMPLOYMENT
If Employee’s employment (or other service) with the Company terminates for reasons other than Total and Permanent Disability or death, this Option shall be exercised not later than three months after such termination, but may be exercised only to the extent the Option was exercisable on the date of termination, and in no event after ten (10) years from the date of granting thereof. Except as may be
otherwise provided in this Agreement, the Option granted hereunder shall not be affected by any change of employment so long as Employee continues to be employed by the Company.
SECTION V
ACCELERATION OF EXERCISE
| (a) | Total and Permanent Disability . If the Employee should incur a Total and Permanent Disability while holding this Option, the Option shall become fully exercisable as to all shares subject to it and may be exercised at any time within 365 days following the date of disability, but in no event after the Expiration date set forth on Exhibit A. If such Option is exercised after three months from the date Employee ceased to be an employee of the Company, such Option may not receive favorable tax treatment under Code Section 421(a). |
| (b) | Death. If Employee should die while holding this Option, the Option may be exercised at any time within 365 days following the date of death. Such option may be exercised by the beneficiary designated by the Employee on Exhibit B hereto, in accordance with Section X hereto, or if no beneficiary is designated on Exhibit B, by the executor or administrator of the Employee’s estate, but in no event after the earlier of (i) the date 365 days following the Employee’s date of death, or (ii) the Expiration date set forth on Exhibit A hereto. |
| (c) | Change of Control. This Option shall become fully exercisable upon a Change of Control or Potential Change of Control. |
SECTION VI
NON-ASSIGNABILITY AND TERM OF OPTION
The Option shall not be transferable or assignable by the Employee, otherwise than by will or the laws of descent and distribution and the Option shall be exercisable, during the Employee’s lifetime, only by him or, during periods of legal disability by his legal representative. No Option shall be subject to execution, attachment or similar process.
In no event may the Option be exercisable to any extent by anyone after the Expiration Date specified in Exhibit A. It is expressly agreed that, anything contained herein to the contrary notwithstanding, this Agreement shall not constitute, or be evidence of, any agreement or understanding, express or implied, that the Company will employ Employee for any period of time or in any position or for any particular compensation.
SECTION VII
RIGHTS OF EMPLOYEE IN STOCK
Neither Employee, nor his successors in interest, shall have any of the rights of a shareholder of the Company with respect to the shares for which the Option is exercised until such shares are issued by the Company.
SECTION VIII
NOTICES
Any notice to be given hereunder shall be in writing and shall be addressed to the Company, at 2201 West 1 st Street, P. O. Box 4649, Gulf Shores, Alabama 36547, Attention: President, and any notice to be given to Employee shall be addressed to the address designated below the signature appearing hereinafter, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall have been deemed duly given upon three (3) days of sending such notice enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified and deposited (with the proper postage and registration or certificate fee prepaid) in the United States mail.
SECTION IX
SUCCESSORS OR ASSIGNS OF THE COMPANY
The Option shall be binding upon and shall inure to the benefit of any successor of the Company.
SECTION X
MISCELLANEOUS
| (a) |
Designation of Beneficiary. The Employee shall have the right to appoint any individual or legal entity in writing, on Exhibit B hereto, as Employee’s Beneficiary to receive any Option (to the extent not previously terminated or forfeited) under this Agreement upon the Employee’s death. Such designation under this Agreement maybe revoked by the Employee at any time and a new beneficiary may be designated by the Employee by execution and submission to the Board of Directors of a revised Exhibit B to this Agreement. In order to be |
|
effective, a designation of beneficiary must be completed by the Employee on Exhibit B and received by the Board of Directors, or its designee, prior to the date of the Employee’s death. In the absence of such designation, the Employee’s beneficiary shall be the legal representative of the Employee’s estate. |
| (b) | Incapacity of Employee or Beneficary. If any person entitled to a distribution under this Agreement is deemed by the Board of Directors to be incapable of making an election hereunder or of personally receiving and giving a valid receipt for such distribution hereunder, then, unless and until an election or claim therefore shall have been made by a duly appointed guardian or other legal representative of such person, the Board of Directors may provide for such election or distribution or any part thereof to be made to any other person or institution then contributing toward or providing for the care and maintenance of such person. Any such distribution shall be a distribution for the account of such person and a complete discharge of any libility of the Board of Directors, the Company and the Plan therefor. |
| (c) | Incorporation of the Plan. The terms and provisions of the Plan are hereby incorporated in this Agreement. Unless otherwise specifically stated herein, such terms and provisions shall control in the event of any inconsistency between the Plan and this Agreement. |
| (d) | Gender. Reference to the masculine herein shall be deemed to include the feminine, wherever appropriate. |
| (e) | Counterparts. This Agreement may be executed in one or more counterparts, which shall together constitute a valid and binding agreement. |
| (f) | Regulatory Capital Requirements. The Employee hereby agrees that all Options subject to this Agreement, to the extent not exercised, may be canceled at any time by the Company, or the Employee may be required to exercise such Options, to the extent they may be exercised, in accordance with Section 4.9 of the Plan. |
IN WITNESS WHEREOF, this Agreement has been executed by the Company and the Employee as of the date and year first written above.
| Employee: |
|
VISION BANCSHARES, INC. | ||||||
| Address: |
|
BY: |
|
|||||
|
|
J. DANIEL SIZEMORE | |||||||
| CHAIRMAN & CEO | ||||||||
EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT
PURSUANT TO THE VISION BANCSHARES, INC.
INCENTIVE STOCK COMPENSATION PLAN
| Date of Grant: | ||||
| Employee: | ||||
| Number of Shares: | shares of Common Stock | |||
| Option Price per share: | $ | |||
| Exercise Schedule | ||||
| (subject to Article III of the Plan): | ||||
| Expiration Date: | 10 yrs from grant | |||
To qualify the favorable federal income tax treatment for incentive Stock Options tax treatment, the Employee must not dispose of shares obtained from exercise of an Option until at least two years after the date of grant and one year after the date of exercise of the Option. If these holding periods are not met, the sale or other disposition of shares will be a disqualifying disposition pursuant to code Section 422 (c).
EXHIBIT B
DESIGNATION OF BENEFICIARY FOR THE
INCENTIVE STOCK OPTION AGREEMENT PURSUANT
TO THE VISION BANCSHARES, INC.
INCENTIVE STOCK COMPENSATION PLAN
Name of Employee:
Original Date of Agreement:
If I shall cease to be an employee of the Company by reason of my death, or if I shall die after I have terminated my employment with the Company but, prior to the expiration of the Option (as provided in the Agreement), then all rights to the Option granted under this Agreement that I hereby hold upon my death, to the extent not previously terminated or forfeited, shall be transferred to
as my primary beneficiary, or to
,
as my secondary beneficiary if my primary beneficiary is unable to accept transfer, in the manner provided for in the Plan and the Agreement.
| Employee: |
|
|
| Dated: |
|
|
| Receipt acknowledged by: | ||
|
|
||
| Dated: |
|
|
Exhibit 10.9
STOCK OPTION AGREEMENT PURSUANT TO THE VISION BANCSHARES, INC. DIRECTOR STOCK PLAN
This STOCK OPTION AGREEMENT (this “Agreement”) is made as of the day of , by and between Vision Bancshares, Inc., an Alabama corporation (the “Company”), and (“Director”).
WITNESSETH:
The Company has determined that it is in the best interests of the Company and its shareholders to encourage ownership in the Company by Directors of the Company thereby providing additional incentive for them to continue in the service of the Company or its affiliates. To that end, a Stock Option is granted by the Company to Director pursuant, and subject to, the Company’s Director Stock Plan (“the Plan”) in the following terms and conditions:
SECTION I
DEFINED TERMS
Unless otherwise defined herein or, unless the context requires a different definition, capitalized terms used herein shall have the meanings assigned to them in the Plan.
SECTION II
SHARES OPTIONED, OPTION PRICE, AND TIME OF EXERCISE
(a) Effective as of the date hereof, the Company grants to Director, subject to the terms and provisions set forth hereinafter and in the Plan, the right and option to purchase all or any part of the number of shares set forth on Exhibit A of the presently authorized but unissued common stock (“Common Stock”) of the Company at the purchase price per share set forth as the option price on Exhibit A.
(b) Once Director delivers to the Company a fully executed counterpart hereof, the option shall be exercisable in accordance with the exercise schedule set forth on Exhibit A, subject only to any termination, acceleration or change in such exercise schedule set forth in this Agreement apart from Exhibit A.
SECTION III
EXERCISE PROCEDURE
(a) Director shall exercise the Option by notifying the Company of the number of shares that he desires to purchase and by delivering with such notice the full payment for the purchase price of the shares being purchased. Such purchase price shall be payable in cash, in Common Stock or in a combination of cash and Common Stock. For
purposes of determining the amount, if any, of the purchase price satisfied by payment in Common Stock, such Common Stock shall be valued at its Fair Market Value on the date of exercise, as determined by the Board of Directors at the time of exercise. In no event shall the purchase price be less than one hundred percent (100%) of the Fair Market Value of such stock at the time the Option is granted. Any Common Stock delivered in satisfaction of all or a portion of the purchase price shall be appropriately endorsed for transfer and assignment to the Company.
(b) The Company will, as soon as is reasonably possible, notify the Director of the amount of withholding tax, if any, that must be paid under federal, state and local law due to the exercise of the Option. The Company shall have no obligation to deliver certificates for the shares purchased until Director pays to the Company the amount of withholding specified in the Company’s notice in cash or in Common Stock. Alternatively, Director may direct the Company to withhold that number of shares of Common Stock (valued according to the procedures set forth in this section on the date of withholding) sufficient to satisfy such obligation.
SECTION IV
TERMINATION OF SERVICE
If Director’s service as a director with the Company terminates as a result of a Change of Control specified in Section 8 of the Plan, this Option shall be exercised in the manner specified in Section 8.
SECTION V
ACCELERATION OF EXERCISE
(a ) Total and Permanent Disability . If the Director should incur disability while holding this Option, the Option shall become fully exercisable as to all shares subject to it and may be exercised at any time within 90 days following the date of disability or December 31 of the year in which the disability occurs, whichever is later.
(b) Death. If Director should die while holding this Option, the Option may be exercised at any time within 90 days following the date of death. Such option may be exercised by the beneficiary designated by the Employee on Exhibit B hereto, in accordance with Section X hereto, or if no beneficiary is designated on Exhibit B, by the executor or administrator of the Employee’s estate, but in no event after the date 90 days following the Director’s date of death or December 31 of the year in which such death occurs, whichever is later.
SECTION VI
NON-ASSIGNABILITY AND TERM OF OPTION
(a) Option shall not be transferable or assignable by Director, otherwise than by will or the laws of descent and distribution and the Option shall be exercisable, during the Director’s lifetime, only by him or, during periods of legal disability by his legal representative. No Option shall be subject to execution, attachment or similar process.
(b) It is expressly agreed that, anything contained herein to the contrary notwithstanding, this Agreement shall not constitute, or be evidence of, any agreement or understanding, express or implied, that the Company will retain the Director as a director or employ director for any period of time or in any position or for any particular compensation.
SECTION VII
RIGHTS OF DIRECTOR IN STOCK
Neither Director, nor his successors in interest, shall have any of the rights of a shareholder of the Company with respect to the shares for which the Option is exercised until such shares are issued by the Company.
SECTION VIII
NOTICES
Any notice to be given hereunder shall be in writing and shall be addressed to the Company, at 2201 West 1 st Street, Gulf Shores, Alabama 36542, Attention: Chief Executive Officer, and any notice to be given to Director shall be addressed to the address designated below the signature appearing hereinafter, or at such other address as either party may hereafter designate in writing to the other. Any such notice shall have been deemed duly given upon three (3) days of sending such notice enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified and deposited (with the proper postage and registration or certificate fee prepaid) in the United States mail.
SECTION IX
SUCCESSORS OR ASSIGNS OF THE COMPANY
The Option shall be binding upon and shall inure to the benefit of any successor of the Company.
SECTION X
MISCELLANEOUS
(a) Designation of Beneficiary. The Director shall have the right to appoint any individual or legal entity in writing, on Exhibit B hereto, as Director’s Beneficiary to receive any Option (to the extent not previously terminated or forfeited) under this Agreement upon the Director’s death. Such designation under this Agreement maybe revoked by the Director at any time and a new beneficiary may be designated by the Director by execution and submission to the Board of Directors of a revised Exhibit B to this Agreement. In order to be effective, a designation of beneficiary must be completed by the Director on Exhibit B and received by the Board of Directors, or its designee, prior to the date of the Director’s death. In the absence of such designation, the Director’s beneficiary shall be the legal representative of the Director’s estate.
(b) Incapacity of Director or Beneficiary. If any person entitled to a distribution under this Agreement is deemed by the Board of Directors to be incapable of making an election hereunder or of personally receiving and giving a valid receipt for such distribution hereunder, then, unless and until an election or claim therefore shall have been made by a duly appointed guardian or other legal representative of such person, the Board of Directors may provide for such election or distribution or any part thereof to be made to any other person or institution then contributing toward or providing for the care and maintenance of such person. Any such distribution shall be a distribution for the account of such person and a complete discharge of any liability of the Board of Directors, the Company and the Plan therefor.
(c) Incorporation of the Plan. The terms and provisions of the Plan are hereby incorporated in this Agreement. Unless otherwise specifically stated herein, such terms and provisions shall control in the event of any inconsistency between the Plan and this Agreement.
(d) Gender. Reference to the masculine herein shall be deemed to include the feminine, wherever appropriate.
(e) Counterparts. This Agreement may be executed in one or more counterparts, which shall together constitute a valid and binding agreement.
(f) Regulatory Capital Requirements. The Director hereby agrees that all Options subject to this Agreement, to the extent not exercised, may be canceled at any time by the Company, or the Director may be required to exercise such Options, to the extent they may be exercised, in accordance with Section 4.9 of the Plan.
IN WITNESS WHEREOF, this Agreement has been executed by the Company and the Director as of the date and year first written above.
| VISION BANCSHARES, INC. | DIRECTOR: | |||||||
| BY: |
|
|
||||||
| J. DANIEL SIZEMORE | ||||||||
| CHAIRMAN & CEO | ||||||||
| Address: | ||||||||
|
|
||||||||
|
|
||||||||
EXHIBIT A
STOCK OPTION AGREEMENT PURSUANT TO THE VISION
BANCSHARES, INC. DIRECTOR COMPENSATION PLAN
| 1. | Date of Grant: | |||
| 2. | Director: | |||
| 3. | Number of Shares: | shares of Common Stock | ||
| 4: | Option Price per share: | $ | ||
| 5. | Exercise Schedule: | 100% vested on (date of Grant) | ||
| 6: | Expiration of the rights to exercise Option: | The Option must be exercised no later than ten (10) years after the Date of Grant. | ||
EXHIBIT B
DESIGNATION OF BENEFICIARY FOR THE
STOCK OPTION AGREEMENT PURSUANT TO THE
VISION BANCSHARES, INC. DIRECTOR STOCK PLAN
Name of Director:
Original Date of Agreement:
If I shall cease to be a Director of the Company by reason of my death, or if I shall die after I have terminated my service to the Company but, prior to the expiration of the Option (as provided in the Agreement), then all rights to the Option granted under this Agreement that I hereby hold upon my death, to the extent not previously terminated or forfeited, shall be transferred to
as my primary beneficiary, or to
as my secondary beneficiary
if my primary beneficiary is unable to accept transfer, in the manner provided for in the Plan and the Agreement.
| DIRECTOR | ||
|
|
||
| Dated: |
|
|
| Receipt acknowledged by: | ||
|
|
||
| Dated: |
|
|
Exhibit 10.10
EXECUTIVE COMPENSATION TERM SHEET
The Compensation Committee for Vision Bancshares, Inc. met on January 11, 2005, unanimously making the following recommendations which were approved by the Company’s Board of Directors at its regular meeting on January 31, 2005: J. Daniel Sizemore, Chairman and CEO, received a salary increase of $36,500 for a total annual compensation of $275,000 and William E. Blackmon, CFO received a salary increase of $10,000 for a total annual compensation of $131,900. Robert S. McKean, President, Vision Bank (Alabama), received a one time bonus in the amount of $16,700 in lieu of an annual salary increase.
Incentive bonuses were approved for the following executive officers of the Company and its subsidiaries: J. Daniel Sizemore, Chairman and CEO, $78,705; William E. Blackmon, CFO, $40,227; Robert S. McKean, President, Vision Bank (Alabama), $45,375; and Joey W. Ginn, President, Vision Bank (Florida), $17,025.
Stock options were granted, effective January 31, 2005, under the Employee Incentive Stock Option Plan to the following executive officers of Company and its subsidiaries: J. Daniel Sizemore, Chairman and CEO, was granted 4,000 shares; William E. Blackmon, CFO, was granted 2,500 shares; Robert S. McKean, President, Vision Bank (Alabama), was granted 2,500 shares; and Joey W. Ginn, President, Vision Bank (Florida), was granted 2,500 shares. These options were granted at a strike price of $27.75 per share, were 100% vested at the date of grant and expire ten years from the date of grant.
Stock options were granted, effective January 31, 2005, under the Director Stock Option Plan. Each non-employee director of Vision Bancshares, Inc. was granted 2,500 shares. These options were granted at a strike price.
Exhibit 10.15
AMENDED AND RESTATED TRUST AGREEMENT
among
VISION BANCSHARES, INC.,
as Depositor
WILMINGTON TRUST COMPANY,
as Property Trustee
WILMINGTON TRUST COMPANY,
as Delaware Trustee
and
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
as Administrative Trustees
Dated as of December 5, 2005
VISION BANCSHARES TRUST I
TABLE OF CONTENTS
| Page | ||||
|
ARTICLE I. |
Defined Terms |
1 | ||
|
SECTION 1.1. |
Definitions |
1 | ||
|
ARTICLE II. |
The Trust |
11 | ||
|
SECTION 2.1. |
Name |
11 | ||
|
SECTION 2.2. |
Office of the Delaware Trustee; Principal Place of Business |
11 | ||
|
SECTION 2.3. |
Initial Contribution of Trust Property; Fees, Costs and Expenses |
11 | ||
|
SECTION 2.4. |
Purposes of Trust |
11 | ||
|
SECTION 2.5. |
Authorization to Enter into Certain Transactions |
12 | ||
|
SECTION 2.6. |
Assets of Trust |
14 | ||
|
SECTION 2.7. |
Title to Trust Property |
14 | ||
|
ARTICLE III. |
Payment Account; Paying Agents |
15 | ||
|
SECTION 3.1. |
Payment Account |
15 | ||
|
SECTION 3.2. |
Appointment of Paying Agents |
15 | ||
|
ARTICLE IV. |
Distributions; Redemption |
16 | ||
|
SECTION 4.1. |
Distributions |
16 | ||
|
SECTION 4.2. |
Redemption |
17 | ||
|
SECTION 4.3. |
Subordination of Common Securities |
20 | ||
|
SECTION 4.4. |
Payment Procedures |
20 | ||
|
SECTION 4.5. |
Withholding Tax |
21 | ||
|
SECTION 4.6. |
Tax Returns and Other Reports |
21 | ||
|
SECTION 4.7. |
Payment of Taxes, Duties, Etc. of the Trust |
22 | ||
|
SECTION 4.8. |
Payments under Indenture or Pursuant to Direct Actions |
22 | ||
|
SECTION 4.9. |
Exchanges |
22 | ||
|
SECTION 4.10. |
Calculation Agent |
22 | ||
|
SECTION 4.11. |
Certain Accounting Matters |
23 | ||
|
ARTICLE V. |
Securities |
24 | ||
|
SECTION 5.1. |
Initial Ownership |
24 | ||
|
SECTION 5.2. |
Authorized Trust Securities |
24 | ||
|
SECTION 5.3. |
Issuance of the Common Securities; Subscription and Purchase of Notes |
24 | ||
|
SECTION 5.4. |
The Securities Certificates |
24 | ||
|
SECTION 5.5. |
Rights of Holders |
25 | ||
|
SECTION 5.6. |
Book-Entry Preferred Securities |
25 | ||
|
SECTION 5.7. |
Registration of Transfer and Exchange of Preferred Securities Certificates |
27 | ||
|
SECTION 5.8. |
Mutilated, Destroyed, Lost or Stolen Securities Certificates |
28 | ||
|
SECTION 5.9. |
Persons Deemed Holders |
29 | ||
|
SECTION 5.10. |
Cancellation |
29 | ||
|
SECTION 5.11. |
Ownership of Common Securities by Depositor |
30 | ||
|
SECTION 5.12. |
Restricted Legends |
30 | ||
|
SECTION 5.13. |
Form of Certificate of Authentication |
33 | ||
|
ARTICLE VI. |
Meetings; Voting; Acts of Holders |
33 | ||
|
SECTION 6.1. |
Notice of Meetings |
33 | ||
|
SECTION 6.2. |
Meetings of Holders of the Preferred Securities |
33 | ||
|
SECTION 6.3. |
Voting Rights |
34 | ||
|
SECTION 6.4. |
Proxies, Etc |
34 | ||
|
SECTION 6.5. |
Holder Action by Written Consent |
34 | ||
|
SECTION 6.6. |
Record Date for Voting and Other Purposes |
34 | ||
|
SECTION 6.7. |
Acts of Holders |
35 | ||
|
SECTION 6.8. |
Inspection of Records |
36 | ||
|
SECTION 6.9. |
Limitations on Voting Rights |
36 | ||
|
SECTION 6.10. |
Acceleration of Maturity; Rescission of Annulment; Waivers of Past Defaults |
37 |
i
|
ARTICLE VII. |
Representations and Warranties |
39 | ||
|
SECTION 7.1. |
Representations and Warranties of the Property Trustee and the Delaware Trustee |
39 | ||
|
SECTION 7.2. |
Representations and Warranties of Depositor |
40 | ||
|
ARTICLE VIII. |
The Trustees |
41 | ||
|
SECTION 8.1. |
Number of Trustees |
41 | ||
|
SECTION 8.2. |
Property Trustee Required |
41 | ||
|
SECTION 8.3. |
Delaware Trustee Required |
41 | ||
|
SECTION 8.4. |
Appointment of Administrative Trustees |
42 | ||
|
SECTION 8.5. |
Duties and Responsibilities of the Trustees |
42 | ||
|
SECTION 8.6. |
Notices of Defaults and Extensions |
44 | ||
|
SECTION 8.7. |
Certain Rights of Property Trustee |
44 | ||
|
SECTION 8.8. |
Delegation of Power |
46 | ||
|
SECTION 8.9. |
May Hold Securities |
46 | ||
|
SECTION 8.10. |
Compensation; Reimbursement; Indemnity |
47 | ||
|
SECTION 8.11. |
Resignation and Removal; Appointment of Successor |
48 | ||
|
SECTION 8.12. |
Acceptance of Appointment by Successor |
49 | ||
|
SECTION 8.13. |
Merger, Conversion, Consolidation or Succession to Business |
49 | ||
|
SECTION 8.14. |
Not Responsible for Recitals or Issuance of Securities |
49 | ||
|
SECTION 8.15. |
Property Trustee May File Proofs of Claim |
50 | ||
|
SECTION 8.16. |
Reports to and from the Property Trustee |
50 | ||
|
ARTICLE IX. |
Termination, Liquidation and Merger |
51 | ||
|
SECTION 9.1. |
Dissolution Upon Expiration Date |
51 | ||
|
SECTION 9.2. |
Early Termination |
51 | ||
|
SECTION 9.3. |
Termination |
52 | ||
|
SECTION 9.4. |
Liquidation |
52 | ||
|
SECTION 9.5. |
Mergers, Consolidations, Amalgamations or Replacements of Trust |
53 | ||
|
ARTICLE X. |
Information to Purchaser |
54 | ||
|
SECTION 10.1. |
Depositor Obligations to Purchaser |
54 | ||
|
SECTION 10.2. |
Property Trustee’s Obligations to Purchaser |
55 | ||
|
ARTICLE XI. |
Miscellaneous Provisions |
55 | ||
|
SECTION 11.1. |
Limitation of Rights of Holders |
55 | ||
|
SECTION 11.2. |
Agreed Tax Treatment of Trust and Trust Securities |
55 | ||
|
SECTION 11.3. |
Amendment |
55 | ||
|
SECTION 11.4. |
Separability |
57 | ||
|
SECTION 11.5. |
Governing Law |
57 | ||
|
SECTION 11.6. |
Successors |
57 | ||
|
SECTION 11.7. |
Headings |
57 | ||
|
SECTION 11.8. |
Reports, Notices and Demands |
57 | ||
|
SECTION 11.9. |
Agreement Not to Petition |
58 | ||
|
Exhibit A |
Certificate of Trust of Vision Bancshares Trust I |
|||
|
Exhibit B |
Form of Common Securities Certificate |
|||
|
Exhibit C |
Form of Preferred Securities Certificate |
|||
|
Exhibit D |
Junior Subordinated Indenture |
|||
|
Exhibit E |
Form of Transferee Certificate to be Executed by Transferees other than QIBs |
|||
|
Exhibit F |
Form of Transferor Certificate to be Executed by QIBs |
|||
|
Exhibit G |
Form of Officer’s Certificate |
|||
|
Exhibit H |
Officers’ Certificate pursuant to Section 8.16(a) |
|||
|
Schedule A |
Calculation of LIBOR |
|||
ii
AMENDED AND RESTATED TRUST AGREEMENT, dated as of December 5, 2005, among (i) Vision Bancshares, Inc., an Alabama corporation (including any successors or permitted assigns, the “Depositor”), (ii) Wilmington Trust Company, a Delaware banking corporation, as property trustee (in such capacity, the “Property Trustee”), (iii) Wilmington Trust Company, a Delaware banking corporation, as Delaware trustee (in such capacity, the “Delaware Trustee”), (iv) William E. Blackmon, an individual, Matthew Ivers, an individual, and Siri Albright, an individual, each of whose address is c/o Vision Bancshares, Inc., P.O. Box 4649, Gulf Shores, Alabama 36547, as administrative trustees (in such capacities, each an “Administrative Trustee” and, collectively, the “Administrative Trustees” and, together with the Property Trustee and the Delaware Trustee, the “Trustees”) and (v) the several Holders, as hereinafter defined.
W ITNESSETH
W HEREAS , the Depositor, the Property Trustee and the Delaware Trustee have heretofore created a Delaware statutory trust pursuant to the Delaware Statutory Trust Act by entering into a Trust Agreement, dated as of December 1, 2005 (the “Original Trust Agreement”), and by executing and filing with the Secretary of State of the State of Delaware the Certificate of Trust, substantially in the form attached as Exhibit A ; and
W HEREAS , the Depositor and the Trustees desire to amend and restate the Original Trust Agreement in its entirety as set forth herein to provide for, among other things, (i) the issuance of the Common Securities by the Trust to the Depositor, (ii) the issuance and sale of the Preferred Securities by the Trust pursuant to the Subscription Agreement and (iii) the acquisition by the Trust from the Depositor of all of the right, title and interest in and to the Notes;
N OW , T HEREFORE , in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each party, for the benefit of the other parties and for the benefit of the Holders, hereby amends and restates the Original Trust Agreement in its entirety and agrees as follows:
Defined Terms
Definitions.
For all purposes of this Trust Agreement, except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article I have the meanings assigned to them in this Article I;
(b) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”;
(c) all accounting terms used but not defined herein have the meanings assigned to them in accordance with United States generally accepted accounting principles;
(d) unless the context otherwise requires, any reference to an “Article”, a “Section”, a “Schedule” or an “Exhibit” refers to an Article, a Section, a Schedule or an Exhibit, as the case may be, of or to this Trust Agreement;
(e) the words “hereby”, “herein”, “hereof” and “hereunder” and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or other subdivision;
(f) a reference to the singular includes the plural and vice versa; and
(g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.
“Act” has the meaning specified in Section 6.7 .
“Additional Interest” has the meaning specified in Section 1.1 of the Indenture.
“Additional Interest Amount” means, with respect to Trust Securities of a given Liquidation Amount and/or a given period, the amount of Additional Interest paid by the Depositor on a Like Amount of Notes for such period.
“Additional Taxes” has the meaning specified in Section 1.1 of the Indenture.
“Additional Tax Sums” has the meaning specified in Section 10.5 of the Indenture.
“Administrative Trustee” means each of the Persons identified as an “Administrative Trustee” in the preamble to this Trust Agreement, solely in each such Person’s capacity as Administrative Trustee of the Trust and not in such Person’s individual capacity, or any successor Administrative Trustee appointed as herein provided.
“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Applicable Depositary Procedures” means, with respect to any transfer or transaction involving a Book-Entry Preferred Security, the rules and procedures of the Depositary for such Book-Entry Preferred Security, in each case to the extent applicable to such transaction and as in effect from time to time.
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“Bankruptcy Event” means, with respect to any Person:
(a) the entry of a decree or order by a court having jurisdiction in the premises (i) judging such Person a bankrupt or insolvent, (ii) approving as properly filed a petition seeking reorganization, arrangement, adjudication or composition of or in respect of such Person under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, (iii) appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of such Person or of any substantial part of its property or (iv) ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of sixty (60) consecutive days; or
(b) the institution by such Person of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization or relief under any applicable Federal or State bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of any such petition or to the appointment of a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of such Person or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt or insolvent, or the taking of corporate action by such Person in furtherance of any such action.
“Bankruptcy Laws” means all Federal and state bankruptcy, insolvency, reorganization and other similar laws, including the United States Bankruptcy Code.
“Book-Entry Preferred Security” means a Preferred Security, the ownership and transfers of which shall be made through book entries by a Depositary.
“Business Day” means a day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed or (c) a day on which the Corporate Trust Office is closed for business.
“Calculation Agent” has the meaning specified in Section 4.10 .
“Capital Disqualification Event” has the meaning specified in Section 1.1 of the Indenture.
“Closing Date” has the meaning specified in the Placement Agreement.
“Code” means the United States Internal Revenue Code of 1986, as amended.
“Commission” means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act or, if at any time after the execution of this Trust Agreement such Commission is not existing and performing the duties assigned to it, then the body performing such duties at such time.
“Common Securities Certificate” means a certificate evidencing ownership of Common Securities, substantially in the form attached as Exhibit B .
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“Common Security” means a common security of the Trust, denominated as such and representing an undivided beneficial interest in the assets of the Trust, having a Liquidation Amount of $1,000 and having the terms provided therefor in this Trust Agreement.
“Corporate Trust Office” means the principal office of the Property Trustee at which any particular time its corporate trust business shall be administered, which office at the date of this Trust Agreement is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Capital Markets.
“Definitive Preferred Securities Certificates” means Preferred Securities issued in certificated, fully registered form that are not Global Preferred Securities.
“Delaware Statutory Trust Act” means Chapter 38 of Title 12 of the Delaware Code, 12 Del. Code § 3801 et seq., or any successor statute thereto, in each case as amended from time to time.
“Delaware Trustee” means the Person identified as the “Delaware Trustee” in the preamble to this Trust Agreement, solely in its capacity as Delaware Trustee of the Trust and not in its individual capacity, or its successor in interest in such capacity, or any successor Delaware Trustee appointed as herein provided.
“Depositary” means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Depositor or any successor thereto. DTC will be the initial Depositary.
“Depository Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time the Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.
“Depositor” has the meaning specified in the preamble to this Trust Agreement and any successors and permitted assigns.
“Depositor Affiliate” has the meaning specified in Section 4.9 .
“Distribution Date” has the meaning specified in Section 4.1(a)(i) .
“Distributions” means amounts payable in respect of the Trust Securities as provided in Section 4.1 .
“DTC” means The Depository Trust Company or any successor thereto.
“Early Termination Event” has the meaning specified in Section 9.2 .
“Event of Default” means any one of the following events (whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
(a) the occurrence of a Note Event of Default; or
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(b) default by the Trust in the payment of any Distribution when it becomes due and payable, and continuation of such default for a period of thirty (30) days; or
(c) default by the Trust in the payment of any Redemption Price of any Trust Security when it becomes due and payable; or
(d) default in the performance, or breach, in any material respect of any covenant or warranty of the Trustees in this Trust Agreement (other than those specified in clause (b) or (c) above) and continuation of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the Trustees and to the Depositor by the Holders of at least twenty five percent (25%) in aggregate Liquidation Amount of the Outstanding Preferred Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or
(e) the occurrence of a Bankruptcy Event with respect to the Property Trustee if a successor Property Trustee has not been appointed within ninety (90) days thereof.
“Exchange Act” means the Securities Exchange Act of 1934, and any successor statute thereto, in each case as amended from time to time.
“Expiration Date” has the meaning specified in Section 9.1 .
“Extension Period” has the meaning specified in Section 4.1(a)(ii) .
“Federal Reserve” means the Board of Governors of the Federal Reserve System, the staff thereof, or a Federal Reserve Bank, acting through delegated authority, in each case under the rules, regulations and policies of the Federal Reserve System, or if at any time after the execution of this Trust Agreement any such entity is not existing and performing the duties now assigned to it, any successor body performing similar duties or functions.
“Fiscal Year” shall be the fiscal year of the Trust, which shall be the calendar year, or such other period as is required by the Code.
“Global Preferred Security” means a Preferred Securities Certificate evidencing ownership of Book-Entry Preferred Securities.
“Guarantee Agreement” means the Guarantee Agreement executed and delivered by the Depositor and Wilmington Trust Company, as guarantee trustee, contemporaneously with the execution and delivery of this Trust Agreement for the benefit of the holders of the Preferred Securities, as amended from time to time.
“Holder” means a Person in whose name a Trust Security or Trust Securities are registered in the Securities Register; any such Person shall be a beneficial owner within the meaning of the Delaware Statutory Trust Act.
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“Indemnified Person” has the meaning specified in Section 8.10(c) .
“Indenture” means the Junior Subordinated Indenture executed and delivered by the Depositor and the Note Trustee contemporaneously with the execution and delivery of this Trust Agreement, for the benefit of the holders of the Notes, a copy of which is attached hereto as Exhibit D , as amended or supplemented from time to time.
“Indenture Redemption Price” has the meaning specified in Section 4.2(c) .
“Interest Payment Date” has the meaning specified in Section 1.1 of the Indenture.
“Investment Company Act” means the Investment Company Act of 1940, or any successor statute thereto, in each case as amended from time to time.
“Investment Company Event” has the meaning specified in Section 1.1 of the Indenture.
“LIBOR” has the meaning specified in Schedule A .
“LIBOR Business Day” has the meaning specified in Schedule A .
“LIBOR Determination Date” has the meaning specified in Schedule A .
“Lien” means any lien, pledge, charge, encumbrance, mortgage, deed of trust, adverse ownership interest, hypothecation, assignment, security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever.
“Like Amount” means (a) with respect to a redemption of any Trust Securities, Trust Securities having a Liquidation Amount equal to the principal amount of Notes to be contemporaneously redeemed or paid at maturity in accordance with the Indenture, the proceeds of which will be used to pay the Redemption Price of such Trust Securities, (b) with respect to a distribution of Notes to Holders of Trust Securities in connection with a dissolution of the Trust, Notes having a principal amount equal to the Liquidation Amount of the Trust Securities of the Holder to whom such Notes are distributed and (c) with respect to any distribution of Additional Interest Amounts to Holders of Trust Securities, Notes having a principal amount equal to the Liquidation Amount of the Trust Securities in respect of which such distribution is made.
“Liquidation Amount” means the stated amount of $1,000 per Trust Security.
“Liquidation Date” means the date on which assets are to be distributed to Holders in accordance with Section 9.4(a) hereunder following dissolution of the Trust.
“Liquidation Distribution” has the meaning specified in Section 9.4(d) .
“Majority in Liquidation Amount of the Preferred Securities” means Preferred Securities representing more than fifty percent (50%) of the aggregate Liquidation Amount of all (or a specified group of) then Outstanding Preferred Securities.
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“Note Event of Default” means any “Event of Default” specified in Section 5.1 of the Indenture.
“Note Redemption Date” means, with respect to any Notes to be redeemed under the Indenture, the date fixed for redemption of such Notes under the Indenture.
“Note Trustee” means the Person identified as the “Trustee” in the Indenture, solely in its capacity as Trustee pursuant to the Indenture and not in its individual capacity, or its successor in interest in such capacity, or any successor Trustee appointed as provided in the Indenture.
“Notes” means the Depositor’s Floating Rate Junior Subordinated Notes issued pursuant to the Indenture.
“Office of Thrift Supervision” means the Office of Thrift Supervision, as from time to time constituted or, if at any time after the execution of this Trust Agreement such Office is not existing and performing the duties now assigned to it, then the body performing such duties at such time.
“Officers’ Certificate” means a certificate signed by the Chief Executive Officer, the President or an Executive Vice President, and by the Chief Financial Officer, Treasurer or an Assistant Treasurer, of the Depositor, and delivered to the Trustees. Any Officers’ Certificate delivered with respect to compliance with a condition or covenant provided for in this Trust Agreement (other than the certificate provided pursuant to Section 8.16(a) ) shall include:
(a) a statement by each officer signing the Officers’ Certificate that such officer has read the covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or investigation undertaken by such officer in rendering the Officers’ Certificate;
(c) a statement that such officer has made such examination or investigation as, in such officer’s opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of such officer, such condition or covenant has been complied with.
“Operative Documents” means the Placement Agreement, the Indenture, the Trust Agreement, the Guarantee Agreement, the Subscription Agreement, the Notes and the Trust Securities.
“Opinion of Counsel” means a written opinion of counsel, who may be counsel for, or an employee of, the Depositor or any Affiliate of the Depositor.
“Original Issue Date” means the date of original issuance of the Trust Securities.
“Original Trust Agreement” has the meaning specified in the recitals to this Trust Agreement.
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“Outstanding”, when used with respect to any Trust Securities, means, as of the date of determination, all Trust Securities theretofore executed and delivered under this Trust Agreement, except:
(a) Trust Securities theretofore canceled by the Property Trustee or delivered to the Property Trustee for cancellation;
(b) Trust Securities for which payment or redemption money in the necessary amount has been theretofore deposited with the Property Trustee or any Paying Agent in trust for the Holders of such Trust Securities; provided, that if such Trust Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Trust Agreement; and
(c) Trust Securities that have been paid or in exchange for or in lieu of which other Trust Securities have been executed and delivered pursuant to the provisions of this Trust Agreement, unless proof satisfactory to the Property Trustee is presented that any such Trust Securities are held by Holders in whose hands such Trust Securities are valid, legal and binding obligations of the Trust;
provided, that in determining whether the Holders of the requisite Liquidation Amount of the Outstanding Preferred Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Preferred Securities owned by the Depositor, any Trustee or any Affiliate of the Depositor or of any Trustee shall be disregarded and deemed not to be Outstanding, except that (i) in determining whether any Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Preferred Securities that such Trustee knows to be so owned shall be so disregarded and (ii) the foregoing shall not apply at any time when all of the Outstanding Preferred Securities are owned by the Depositor, one or more of the Trustees and/or any such Affiliate. Preferred Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Administrative Trustees the pledgee’s right so to act with respect to such Preferred Securities and that the pledgee is not the Depositor, any Trustee or any Affiliate of the Depositor or of any Trustee.
“Owner” means each Person who is the beneficial owner of Book-Entry Preferred Securities as reflected in the records of the Depositary or, if a Depositary Participant is not the beneficial owner, then the beneficial owner as reflected in the records of the Depositary Participant.
“Paying Agent” means any Person authorized by the Administrative Trustees to pay Distributions or other amounts in respect of any Trust Securities on behalf of the Trust.
“Payment Account” means a segregated non-interest-bearing corporate trust account maintained by the Property Trustee for the benefit of the Holders in which all amounts paid in respect of the Notes will be held and from which the Property Trustee, through the Paying Agent, shall make payments to the Holders in accordance with Sections 3.1 , 4.1 and 4.2 .
“Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, company, limited liability company, trust, unincorporated association or government, or any agency or political subdivision thereof, or any other entity of whatever nature.
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“Placement Agent” means Credit Suisse First Boston LLC, as Placement Agent pursuant to the Placement Agreement, whose address is Eleven Madison Avenue, New York, New York 10010.
“Placement Agreement” means the Placement Agreement, dated as of December 5, 2005, executed and delivered by the Trust, the Depositor and Credit Suisse First Boston LLC, as placement agent.
“Preferred Security” means a preferred security of the Trust, denominated as such and representing an undivided beneficial interest in the assets of the Trust, having a Liquidation Amount of $1,000 and having the terms provided therefor in this Trust Agreement.
“Preferred Securities Certificate” means a certificate evidencing ownership of Preferred Securities, substantially in the form attached as Exhibit C .
“Property Trustee” means the Person identified as the “Property Trustee” in the preamble to this Trust Agreement, solely in its capacity as Property Trustee of the Trust and not in its individual capacity, or its successor in interest in such capacity, or any successor Property Trustee appointed as herein provided.
“Purchaser” means Credit Suisse, acting through its Cayman Islands branch, as purchaser of the Preferred Securities pursuant to the Subscription Agreement, whose address is c/o Credit Suisse First Boston LLC, Eleven Madison Avenue, New York, New York 10010.
“QIB” means a “qualified institutional buyer” as defined in Rule 144A under the Securities Act.
“Redemption Date” means, with respect to any Trust Security to be redeemed, the date fixed for such redemption by or pursuant to this Trust Agreement; provided, that each Note Redemption Date and the stated maturity (or any date of principal repayment upon early maturity) of the Notes shall be a Redemption Date for a Like Amount of Trust Securities.
“Redemption Price” means, with respect to any Trust Security, the Liquidation Amount of such Trust Security, plus accumulated and unpaid Distributions to the Redemption Date, plus the related amount of the premium, if any, paid by the Depositor upon the concurrent redemption or payment at maturity of a Like Amount of Notes.
“Reference Banks” has the meaning specified in Schedule A .
“Responsible Officer” means, with respect to the Property Trustee, any Senior Vice President, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any Trust Officer or Assistant Trust Officer or any other officer in the Corporate Trust Office of the Property Trustee with direct responsibility for the administration of this Trust Agreement and also means, with respect to a particular corporate trust matter, any other officer of the Property Trustee to whom such matter is referred because of that officer’s knowledge of and familiarity with the particular subject.
“Securities Act” means the Securities Act of 1933, and any successor statute thereto, in each case as amended from time to time.
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“Securities Certificate” means any one of the Common Securities Certificates or the Preferred Securities Certificates.
“Securities Register” and “Securities Registrar” have the respective meanings specified in Section 5.7 .
“Special Event Redemption Price” has the meaning specified in Section 11.2 of the Indenture.
“Subscription Agreement” means the Preferred Securities Subscription Agreement, dated as of December 5, 2005, by and among the Company, the Trust, the Purchaser and Credit Suisse First Boston LLC (as to certain provisions thereof).
“Successor Securities” has the meaning specified in Section 9.5(a) .
“Tax Event” has the meaning specified in Section 1.1 of the Indenture.
“Trust” means the Delaware statutory trust known as “Vision Bancshares Trust I,” which was created on December 1, 2005, under the Delaware Statutory Trust Act pursuant to the Original Trust Agreement and the filing of the Certificate of Trust, and continued pursuant to this Trust Agreement.
“Trust Agreement” means this Amended and Restated Trust Agreement, including all Schedules and Exhibits (other than Exhibit D), as the same may be modified, amended or supplemented from time to time in accordance with the applicable provisions hereof.
“Trustees” means the Administrative Trustees, the Property Trustee and the Delaware Trustee, each as defined in this Article I .
“Trust Property” means (a) the Notes, (b) any cash on deposit in, or owing to, the Payment Account and (c) all proceeds and rights in respect of the foregoing and any other property and assets for the time being held or deemed to be held by the Property Trustee pursuant to the trusts of this Trust Agreement.
“Trust Security” means any one of the Common Securities or the Preferred Securities.
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The Trust
Name.
The trust continued hereby shall be known as “Vision Bancshares Trust I,” as such name may be modified from time to time by the Administrative Trustees following written notice to the Holders of Trust Securities and the other Trustees, in which name the Trustees may conduct the business of the Trust, make and execute contracts and other instruments on behalf of the Trust and sue and be sued.
Office of the Delaware Trustee; Principal Place of Business.
The address of the Delaware Trustee in the State of Delaware is Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Capital Markets, or such other address in the State of Delaware as the Delaware Trustee may designate by written notice to the Holders, the Depositor, the Property Trustee and the Administrative Trustees. The principal executive office of the Trust is c/o Vision Bancshares, Inc., P.O. Box 4649, Gulf Shores, Alabama 36547, Attention: Chief Financial Officer, as such address may be changed from time to time by the Administrative Trustees following written notice to the Holders and the other Trustees.
Initial Contribution of Trust Property; Fees, Costs and Expenses.
The Property Trustee acknowledges receipt from the Depositor in connection with the Original Trust Agreement of the sum of ten dollars ($10), which constituted the initial Trust Property. The Depositor shall pay all fees, costs and expenses of the Trust (except with respect to the Trust Securities) as they arise or shall, upon request of any Trustee, promptly reimburse such Trustee for any such fees, costs and expenses paid by such Trustee. The Depositor shall make no claim upon the Trust Property for the payment of such fees, costs or expenses.
Purposes of Trust.
The exclusive purposes and functions of the Trust are to (i) issue and sell Trust Securities and use the proceeds from such sale to acquire the Notes and (ii) engage in only those activities necessary or incidental thereto. The Delaware Trustee, the Property Trustee and the Administrative Trustees are trustees of the Trust, and have all the rights, powers and duties to the extent set forth herein. The Trustees hereby acknowledge that they are trustees of the Trust.
So long as this Trust Agreement remains in effect, the Trust (or the Trustees acting on behalf of the Trust) shall not undertake any business, activities or transaction except as expressly provided herein or contemplated hereby. In particular, the Trust (or the Trustees acting on behalf of the Trust) shall not (i) acquire any investments or engage in any activities not authorized by this Trust Agreement, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or interests therein, including to Holders, except as expressly provided herein, (iii) incur any indebtedness for borrowed money or issue any other debt, (iv) take or consent to any action that would result in the placement of a Lien on any of the Trust Property, (v) take or consent
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to any action that would reasonably be expected to cause (or, in the case of the Property Trustee, to the actual knowledge of a Responsible Officer would cause) the Trust to become taxable as a corporation or classified as other than a grantor trust for United States federal income tax purposes, (vi) take or consent to any action that would cause (or, in the case of the Property Trustee, to the actual knowledge of a Responsible Officer would cause) the Notes to be treated as other than indebtedness of the Depositor for United States federal income tax purposes or (vii) take or consent to any action that would cause (or, in the case of the Property Trustee, to the actual knowledge of a Responsible Officer would cause) the Trust to be deemed to be an “investment company” required to be registered under the Investment Company Act.
Authorization to Enter into Certain Transactions.
The Trustees shall conduct the affairs of the Trust in accordance with and subject to the terms of this Trust Agreement. In accordance with the following provisions (i) and (ii), the Trustees shall have the authority to enter into all transactions and agreements determined by the Trustees to be appropriate in exercising the authority, express or implied, otherwise granted to the Trustees, under this Trust Agreement, and to perform all acts in furtherance thereof, including the following:
As among the Trustees, each Administrative Trustee shall severally have the power, authority and authorization to act on behalf of the Trust with respect to the following matters:
the issuance and sale of the Trust Securities;
to cause the Trust to enter into, and to execute, deliver and perform on behalf of the Trust, such agreements, documents, instruments, certificates and other writings as may be necessary or desirable in connection with the purposes and function of the Trust, including, without limitation, a common securities subscription agreement and a junior subordinated note subscription agreement and to cause the Trust to perform the Placement Agreement and the Subscription Agreement;
assisting in the sale of the Preferred Securities in one or more transactions exempt from registration under the Securities Act, and in compliance with applicable state securities or blue sky laws;
assisting in the sending of notices (other than notices of default) and other information regarding the Trust Securities and the Notes to the Holders in accordance with this Trust Agreement;
the appointment of a successor Paying Agent and Calculation Agent in accordance with this Trust Agreement;
execution and delivery of the Trust Securities on behalf of the Trust in accordance with this Trust Agreement;
execution and delivery of closing certificates, if any, pursuant to the Placement Agreement;
preparation and filing of all applicable tax returns and tax information reports that are required to be filed on behalf of the Trust;
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establishing a record date with respect to all actions to be taken hereunder that require a record date to be established, except as provided in Section 6.10(a);
unless otherwise required by the Delaware Statutory Trust Act, to execute on behalf of the Trust (either acting alone or together with the other Administrative Trustees) any documents and other writings that such Administrative Trustee has the power to execute pursuant to this Trust Agreement; and
the taking of any action incidental to the foregoing as such Administrative Trustee may from time to time determine is necessary or advisable to give effect to the terms of this Trust Agreement.
As among the Trustees, the Property Trustee shall have the power, authority and authorization to act on behalf of the Trust with respect to the following matters:
the receipt and holding of legal title of the Notes;
the establishment of the Payment Account;
the receipt of interest, principal and any other payments made in respect of the Notes and the holding of such amounts in the Payment Account;
the distribution through the Paying Agent of amounts distributable to the Holders in respect of the Trust Securities;
the exercise of all of the rights, powers and privileges of a holder of the Notes in accordance with the terms of this Trust Agreement;
the sending of notices of default and other information regarding the Trust Securities and the Notes to the Holders in accordance with this Trust Agreement;
the distribution of the Trust Property in accordance with the terms of this Trust Agreement;
to the extent provided in this Trust Agreement, the winding up of the affairs of and liquidation of the Trust and the preparation, execution and filing of the certificate of cancellation of the Trust with the Secretary of State of the State of Delaware;
application for a taxpayer identification number for the Trust;
the authentication of the Preferred Securities as provided in this Trust Agreement; and
the taking of any action incidental to the foregoing as the Property Trustee may from time to time determine is necessary or advisable to give effect to the terms of this Trust Agreement and protect and conserve the Trust Property for the benefit of the Holders (without consideration of the effect of any such action on any particular Holder).
In connection with the issue and sale of the Preferred Securities, the Depositor shall have the right and responsibility to assist the Trust with respect to, or effect on behalf of the Trust, the following (and any actions taken by the Depositor in furtherance of the following prior to the date of this Trust Agreement are hereby ratified and confirmed in all respects):
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the negotiation of the terms of, and the execution and delivery of, the Placement Agreement and the Subscription Agreement providing for the sale of the Preferred Securities in one or more transactions exempt from registration under the Securities Act, and in compliance with applicable state securities or blue sky laws; and
the taking of any other actions necessary or desirable to carry out any of the foregoing activities.
Notwithstanding anything herein to the contrary, the Administrative Trustees are authorized and directed to conduct the affairs of the Trust and to operate the Trust so that the Trust will not be taxable as a corporation or classified as other than a grantor trust for United States federal income tax purposes, so that the Notes will be treated as indebtedness of the Depositor for United States federal income tax purposes and so that the Trust will not be deemed to be an “investment company” required to be registered under the Investment Company Act. In this connection, each Administrative Trustee is authorized to take any action, not inconsistent with applicable law, the Certificate of Trust or this Trust Agreement, that such Administrative Trustee determines in his or her discretion to be necessary or desirable for such purposes, as long as such action does not adversely affect in any material respect the interests of the Holders of the Outstanding Preferred Securities. In no event shall the Administrative Trustees be liable to the Trust or the Holders for any failure to comply with this Section 2.5 to the extent that such failure results solely from a change in law or regulation or in the interpretation thereof.
Any action taken by a Trustee in accordance with its powers shall constitute the act of and serve to bind the Trust. In dealing with any Trustee acting on behalf of the Trust, no Person shall be required to inquire into the authority of such Trustee to bind the Trust. Persons dealing with the Trust are entitled to rely conclusively on the power and authority of any Trustee as set forth in this Trust Agreement.
Assets of Trust.
The assets of the Trust shall consist of the Trust Property.
Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the Property Trustee and shall be held and administered by the Property Trustee in trust for the benefit of the Trust and the Holders in accordance with this Trust Agreement.
The Holders shall not have any right or title to the Trust Property other than the undivided beneficial interest in the assets of the Trust conferred by their Trust Securities and they shall have no right to call for any partition or division of property, profits or rights of the Trust except as described below. The Trust Securities shall be personal property giving only the rights specifically set forth therein and in this Trust Agreement.
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Payment Account; Paying Agents
Payment Account.
On or prior to the Closing Date, the Property Trustee shall establish the Payment Account. The Property Trustee and the Paying Agent shall have exclusive control and sole right of withdrawal with respect to the Payment Account for the purpose of making deposits in and withdrawals from the Payment Account in accordance with this Trust Agreement. All monies and other property deposited or held from time to time in the Payment Account shall be held by the Property Trustee in the Payment Account for the exclusive benefit of the Holders and for Distribution as herein provided.
The Property Trustee shall deposit in the Payment Account, promptly upon receipt, all payments of principal of or interest on, and any other payments with respect to, the Notes. Amounts held in the Payment Account shall not be invested by the Property Trustee pending distribution thereof.
Appointment of Paying Agents.
The Property Trustee is appointed as the initial Paying Agent and hereby accepts such appointment. The Paying Agent shall make Distributions to Holders from the Payment Account and shall report the amounts of such Distributions to the Property Trustee and the Administrative Trustees. Any Paying Agent shall have the revocable power to withdraw funds from the Payment Account solely for the purpose of making the Distributions referred to above. The Administrative Trustees may revoke such power and remove the Paying Agent in their sole discretion. Any Person acting as Paying Agent shall be permitted to resign as Paying Agent upon thirty (30) days’ written notice to the Administrative Trustees and the Property Trustee. If the Property Trustee shall no longer be the Paying Agent or a successor Paying Agent shall resign or its authority to act be revoked, the Administrative Trustees shall appoint a successor (which shall be a bank or trust company) to act as Paying Agent. Such successor Paying Agent appointed by the Administrative Trustees shall execute and deliver to the Trustees an instrument in which such successor Paying Agent shall agree with the Trustees that as Paying Agent, such successor Paying Agent will hold all sums, if any, held by it for payment to the Holders in trust for the benefit of the Holders entitled thereto until such sums shall be paid to such Holders. The Paying Agent shall return all unclaimed funds to the Property Trustee and upon removal of a Paying Agent such Paying Agent shall also return all funds in its possession to the Property Trustee. The provisions of Article VIII shall apply to the Property Trustee also in its role as Paying Agent, for so long as the Property Trustee shall act as Paying Agent and, to the extent applicable, to any other Paying Agent appointed hereunder. Any reference in this Trust Agreement to the Paying Agent shall include any co-paying agent unless the context requires otherwise.
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Distributions; Redemption
Distributions.
The Trust Securities represent undivided beneficial interests in the Trust Property, and Distributions (including any Additional Interest Amounts) will be made on the Trust Securities at the rate and on the dates that payments of interest (including any Additional Interest) are made on the Notes. Accordingly:
Distributions on the Trust Securities shall be cumulative, and shall accumulate whether or not there are funds of the Trust available for the payment of Distributions. Distributions shall accumulate from December 5, 2005, and, except as provided in clause (ii) below, shall be payable quarterly in arrears on March 30, June 30, September 30 and December 30 of each year, commencing on December 30, 2005. If any date on which a Distribution is otherwise payable on the Trust Securities is not a Business Day, then the payment of such Distribution shall be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after each such date until the next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date (each date on which Distributions are payable in accordance with this Section 4.1(a)(i), a “Distribution Date”);
in the event (and to the extent) that the Depositor exercises its right under the Indenture to defer the payment of interest on the Notes, Distributions on the Trust Securities shall be deferred. Under the Indenture, so long as no Note Event of Default pursuant to paragraphs (c), (e), (f), (g) or (h) of Section 5.1 of the Indenture has occurred and is continuing, the Depositor shall have the right, at any time and from time to time during the term of the Notes, to defer the payment of interest on the Notes for a period of up to twenty (20) consecutive quarterly interest payment periods (each such extended interest payment period, an “Extension Period”), during which Extension Period no interest on the Notes shall be due and payable (except any Additional Tax Sums that may be due and payable). No interest on the Notes shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest (to the extent payment of such interest would be legally enforceable) at a variable rate per annum, reset quarterly, equal to LIBOR plus 1.48% compounded quarterly, from the dates on which amounts would have otherwise been due and payable until paid or until funds for the payment thereof have been made available for payment. If Distributions are deferred, the deferred Distributions (including Additional Interest Amounts) shall be paid on the date that the related Extension Period terminates, to Holders of the Trust Securities as they appear on the books and records of the Trust on the record date immediately preceding such termination date.
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Distributions shall accumulate in respect of the Trust Securities at a variable rate per annum, reset quarterly, equal to LIBOR plus 1.48% of the Liquidation Amount of the Trust Securities, such rate being the rate of interest payable on the Notes. LIBOR shall be determined by the Calculation Agent in accordance with Schedule A . The amount of Distributions payable for any period less than a full Distribution period shall be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant Distribution period. The amount of Distributions payable for any period shall include any Additional Interest Amounts in respect of such period; and
Distributions on the Trust Securities shall be made by the Paying Agent from the Payment Account and shall be payable on each Distribution Date only to the extent that the Trust has funds then on hand and available in the Payment Account for the payment of such Distributions.
Distributions on the Trust Securities with respect to a Distribution Date shall be payable to the Holders thereof as they appear on the Securities Register for the Trust Securities at the close of business on the relevant record date, which shall be at the close of business on the fifteenth day (whether or not a Business Day) preceding the relevant Distribution Date. Distributions payable on any Trust Securities that are not punctually paid on any Distribution Date as a result of the Depositor having failed to make an interest payment under the Notes will cease to be payable to the Person in whose name such Trust Securities are registered on the relevant record date, and such defaulted Distributions and any Additional Interest Amounts will instead be payable to the Person in whose name such Trust Securities are registered on the special record date, or other specified date for determining Holders entitled to such defaulted Distribution and Additional Interest Amount, established in the same manner, and on the same date, as such is established with respect to the Notes under the Indenture.
Redemption.
On each Note Redemption Date and on the stated maturity (or any date of principal repayment upon early maturity) of the Notes and on each other date on (or in respect of) which any principal on the Notes is repaid, the Trust will be required to redeem a Like Amount of Trust Securities at the Redemption Price.
Notice of redemption shall be given by the Property Trustee by first-class mail, postage prepaid, mailed not less than thirty (30) nor more than sixty (60) days prior to the Redemption Date to each Holder of Trust Securities to be redeemed, at such Holder’s address appearing in the Securities Register. All notices of redemption shall state:
the Redemption Date;
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the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price provided pursuant to the Indenture, as calculated by the Depositor, together with a statement that it is an estimate and that the actual Redemption Price will be calculated by the Calculation Agent on the fifth Business Day prior to the Redemption Date (and if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date that such Redemption Price is calculated);
if less than all the Outstanding Trust Securities are to be redeemed, the identification (and, in the case of partial redemption, the respective Liquidation Amounts) and Liquidation Amounts of the particular Trust Securities to be redeemed;
that on the Redemption Date, the Redemption Price will become due and payable upon each such Trust Security, or portion thereof, to be redeemed and that Distributions thereon will cease to accumulate on such Trust Security or such portion, as the case may be, on and after said date, except as provided in Section 4.2(d) ;
the place or places where the Trust Securities are to be surrendered for the payment of the Redemption Price; and
such other provisions as the Property Trustee deems relevant.
The Trust Securities (or portion thereof) redeemed on each Redemption Date shall be redeemed at the Redemption Price with the proceeds from the contemporaneous redemption or payment at maturity of Notes. Redemptions of the Trust Securities (or portion thereof) shall be made and the Redemption Price shall be payable on each Redemption Date only to the extent that the Trust has funds then on hand and available in the Payment Account for the payment of such Redemption Price. Under the Indenture, the Notes may be redeemed by the Depositor on any Interest Payment Date, at the Depositor’s option, on or after December 30, 2010, in whole or in part, from time to time at a redemption price equal to one hundred percent (100%) of the principal amount thereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, to but excluding the date fixed for redemption (the “Indenture Redemption Price”); provided, that the Depositor shall have received the prior approval of the Federal Reserve if then required. The Notes may also be redeemed by the Depositor, at its option, in whole but not in part, upon the occurrence of a Capital Disqualification Event, an Investment Company Event or a Tax Event at the Special Event Redemption Price (as set forth in the Indenture).
If the Property Trustee gives a notice of redemption in respect of any Preferred Securities, then by 10:00 A.M., New York City time, on the Redemption Date, the Depositor shall deposit sufficient funds with the Property Trustee to pay the Redemption Price. If such deposit has been made by such time, then by 12:00 noon, New York City time, on the Redemption Date, the Property Trustee will, with respect to Book-Entry Preferred Securities, irrevocably deposit with the Depositary for such Book-Entry Preferred Securities, to the extent available therefor, funds sufficient to pay the applicable Redemption Price and will give such Depositary irrevocable instructions and authority to pay the Redemption Price to the Holders of the Preferred Securities. With respect to Preferred Securities that are not Book-Entry Preferred Securities, the Property Trustee will irrevocably deposit
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with the Paying Agent, to the extent available therefor, funds sufficient to pay the applicable Redemption Price and will give the Paying Agent irrevocable instructions and authority to pay the Redemption Price to the Holders of the Preferred Securities upon surrender of their Preferred Securities Certificates. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Trust Securities (or portion thereof) called for redemption shall be payable to the Holders of such Trust Securities as they appear on the Securities Register on the relevant record dates for the related Distribution Dates. If notice of redemption shall have been given and funds deposited as required, then upon the date of such deposit, all rights of Holders holding Trust Securities (or portion thereof) so called for redemption will cease, except the right of such Holders to receive the Redemption Price and any Distribution payable in respect of the Trust Securities on or prior to the Redemption Date, but without interest, and, in the case of a partial redemption, the right of such Holders to receive a new Trust Security or Securities of authorized denominations, in aggregate Liquidation Amount equal to the unredeemed portion of such Trust Security or Securities, and such Securities (or portion thereof) called for redemption will cease to be Outstanding. In the event that any date on which any Redemption Price is payable is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after each such date until the next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date. In the event that payment of the Redemption Price in respect of any Trust Securities (or portion thereof) called for redemption is improperly withheld or refused and not paid either by the Trust or by the Depositor pursuant to the Guarantee Agreement, Distributions on such Trust Securities(or portion thereof) will continue to accumulate, as set forth in Section 4.1 , from the Redemption Date originally established by the Trust for such Trust Securities(or portion thereof) to the date such Redemption Price is actually paid, in which case the actual payment date will be the date fixed for redemption for purposes of calculating the Redemption Price.
Subject to Section 4.3 (a), if less than all the Outstanding Trust Securities are to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust Securities to be redeemed shall be allocated pro rata to the Common Securities and the Preferred Securities based upon the relative aggregate Liquidation Amounts of the Common Securities and the Preferred Securities. The Preferred Securities to be redeemed shall be selected on a pro rata basis based upon their respective Liquidation Amounts not more than sixty (60) days prior to the Redemption Date by the Property Trustee from the Outstanding Preferred Securities not previously called for redemption; provided, however, that with respect to Holders that would be required to hold less than one hundred (100) but more than zero (0) Trust Securities as a result of such redemption, the Trust shall redeem Trust Securities of each such Holder so that after such redemption such Holder shall hold either one hundred (100) Trust Securities or such Holder no longer holds any Trust Securities, and shall use such method (including, without limitation, by lot) as the Trust shall deem fair and appropriate; and provided, further, that so long as the Preferred Securities are Book-Entry Preferred Securities, such selection shall be made in accordance with the Applicable Depositary Procedures for the Preferred Securities by such Depositary. The Property Trustee shall promptly notify the Securities Registrar in writing of the Preferred Securities (or portion thereof) selected for redemption and, in the case of any Preferred Securities selected for partial redemption, the Liquidation Amount thereof to be redeemed.
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For all purposes of this Trust Agreement, unless the context otherwise requires, all provisions relating to the redemption of Preferred Securities shall relate, in the case of any Preferred Securities redeemed or to be redeemed only in part, to the portion of the aggregate Liquidation Amount of Preferred Securities that has been or is to be redeemed.
The Trust in issuing the Trust Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Property Trustee shall indicate the “CUSIP” numbers of the Trust Securities in notices of redemption and related materials as a convenience to Holders; provided, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Trust Securities or as contained in any notice of redemption and related materials.
Subordination of Common Securities.
Payment of Distributions (including any Additional Interest Amounts) on, the Redemption Price of and the Liquidation Distribution in respect of, the Trust Securities, as applicable, shall be made, pro rata among the Common Securities and the Preferred Securities based on the Liquidation Amount of the respective Trust Securities; provided, that if on any Distribution Date, Redemption Date or Liquidation Date an Event of Default shall have occurred and be continuing, no payment of any Distribution (including any Additional Interest Amounts) on, Redemption Price of or Liquidation Distribution in respect of, any Common Security, and no other payment on account of the redemption, liquidation or other acquisition of Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions (including any Additional Interest Amounts) on all Outstanding Preferred Securities for all Distribution periods terminating on or prior thereto, or in the case of payment of the Redemption Price the full amount of such Redemption Price on all Outstanding Preferred Securities then called for redemption, or in the case of payment of the Liquidation Distribution the full amount of such Liquidation Distribution on all Outstanding Preferred Securities, shall have been made or provided for, and all funds immediately available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions (including any Additional Interest Amounts) on, or the Redemption Price of or the Liquidation Distribution in respect of, the Preferred Securities then due and payable.
In the case of the occurrence of any Event of Default, the Holders of the Common Securities shall have no right to act with respect to any such Event of Default under this Trust Agreement until all such Events of Default with respect to the Preferred Securities have been cured, waived or otherwise eliminated. Until all such Events of Default under this Trust Agreement with respect to the Preferred Securities have been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the Holders of the Preferred Securities and not on behalf of the Holders of the Common Securities, and only the Holders of all the Preferred Securities will have the right to direct the Property Trustee to act on their behalf.
Payment Procedures.
Payments of Distributions (including any Additional Interest Amounts), the Redemption Price, Liquidation Amount or any other amounts in respect of the Preferred Securities shall be made by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing at least ten (10) Business Days prior to the date for payment by the Person
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entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Securities Register. If any Preferred Securities are held by a Depositary, such Distributions thereon shall be made to the Depositary in immediately available funds. Payments in respect of the Common Securities shall be made in such manner as shall be mutually agreed between the Property Trustee and the Holder of all the Common Securities.
Withholding Tax.
The Trust and the Administrative Trustees shall comply with all withholding and backup withholding tax requirements under United States federal, state and local law. The Administrative Trustees on behalf of the Trust shall request, and the Holders shall provide to the Trust, such forms or certificates as are necessary to establish an exemption from withholding and backup withholding tax with respect to each Holder and any representations and forms as shall reasonably be requested by the Administrative Trustees on behalf of the Trust to assist it in determining the extent of, and in fulfilling, its withholding and backup withholding tax obligations. The Administrative Trustees shall file required forms with applicable jurisdictions and, unless an exemption from withholding and backup withholding tax is properly established by a Holder, shall remit amounts withheld with respect to the Holder to applicable jurisdictions. To the extent that the Trust is required to withhold and pay over any amounts to any jurisdiction with respect to Distributions or allocations to any Holder, the amount withheld shall be deemed to be a Distribution in the amount of the withholding to the Holder. In the event of any claimed overwithholding, Holders shall be limited to an action against the applicable jurisdiction. If the amount required to be withheld was not withheld from actual Distributions made, the Administrative Trustees on behalf of the Trust may reduce subsequent Distributions by the amount of such required withholding.
Tax Returns and Other Reports.
The Administrative Trustees shall prepare (or cause to be prepared) at the principal office of the Trust in the United States, as defined for purposes of Treasury regulations section 301.7701-7, at the Depositor’s expense, and file, all United States federal, state and local tax and information returns and reports required to be filed by or in respect of the Trust. The Administrative Trustees shall prepare at the principal office of the Trust in the United States, as defined for purposes of Treasury regulations section 301.7701-7, and furnish (or cause to be prepared and furnished), by January 31 in each taxable year of the Trust to each Holder all Internal Revenue Service forms and returns required to be provided by the Trust. The Administrative Trustees shall provide the Depositor and the Property Trustee with a copy of all such returns and reports promptly after such filing or furnishing.
So long as the Property Trustee is the holder of the Notes, the Administrative Trustees will cause the Depositor’s reports on Form FR Y-9C, FR Y-9LP and FR Y-6 to be delivered to the Property Trustee promptly following their filing with the Federal Reserve.
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Payment of Taxes, Duties, Etc. of the Trust.
Upon receipt under the Notes of Additional Tax Sums and upon the written direction of the Administrative Trustees, the Property Trustee shall promptly pay, solely out of monies on deposit pursuant to this Trust Agreement, any Additional Taxes imposed on the Trust by the United States or any other taxing authority.
Payments under Indenture or Pursuant to Direct Actions.
Any amount payable hereunder to any Holder of Preferred Securities shall be reduced by the amount of any corresponding payment such Holder (or any Owner with respect thereto) has directly received pursuant to Section 5.8 of the Indenture or Section 6.10(b) of this Trust Agreement.
Exchanges.
If at any time the Depositor or any of its Affiliates (in either case, a “Depositor Affiliate”) is the Owner or Holder of any Preferred Securities, such Depositor Affiliate shall have the right to deliver to the Property Trustee all or such portion of its Preferred Securities as it elects and, subject to compliance with Sections 2.2 and 3.5 of the Indenture, receive, in exchange therefor, a Like Amount of Notes. Such election (i) shall be exercisable effective on any Distribution Date by such Depositor Affiliate delivering to the Property Trustee a written notice of such election specifying the Liquidation Amount of Preferred Securities with respect to which such election is being made and the Distribution Date on which such exchange shall occur, which Distribution Date shall be not less than ten (10) Business Days after the date of receipt by the Property Trustee of such election notice and (ii) shall be conditioned upon such Depositor Affiliate having delivered or caused to be delivered to the Property Trustee or its designee the Preferred Securities that are the subject of such election by 10:00 A.M. New York time, on the Distribution Date on which such exchange is to occur. After the exchange, such Preferred Securities will be canceled and will no longer be deemed to be Outstanding and all rights of the Depositor Affiliate with respect to such Preferred Securities will cease.
In the case of an exchange described in Section 4.9(a) , the Property Trustee on behalf of the Trust will, on the date of such exchange, exchange Notes having a principal amount equal to a proportional amount of the aggregate Liquidation Amount of the Outstanding Common Securities, based on the ratio of the aggregate Liquidation Amount of the Preferred Securities exchanged pursuant to Section 4.9(a) divided by the aggregate Liquidation Amount of the Preferred Securities Outstanding immediately prior to such exchange, for such proportional amount of Common Securities held by the Depositor (which contemporaneously shall be canceled and no longer be deemed to be Outstanding); provided, that the Depositor delivers or causes to be delivered to the Property Trustee or its designee the required amount of Common Securities to be exchanged by 10:00 A.M. New York time, on the Distribution Date on which such exchange is to occur.
Calculation Agent.
The Property Trustee shall initially, and, subject to the immediately following sentence, for so long as it holds any of the Notes, be the Calculation Agent for purposes of determining LIBOR for each Distribution Date. The Calculation Agent may be removed by the Administrative Trustees at any time. If the Calculation Agent is unable or unwilling to act as such or is removed by the Administrative Trustees, the Administrative Trustees will promptly appoint as a replacement
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Calculation Agent the London office of a leading bank which is engaged in transactions in three-month U.S. dollar deposits in Europe and which does not control or is not controlled by or under common control with the Administrative Trustee or its Affiliates. The Calculation Agent may not resign its duties without a successor having been duly appointed.
The Calculation Agent shall be required to agree that, as soon as possible after 11:00 a.m. (London time) on each LIBOR Determination Date, but in no event later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR Determination Date, the Calculation Agent will calculate the interest rate (rounded to the nearest cent, with half a cent being rounded upwards) for the related Distribution Date, and will communicate such rate and amount to the Depositor, the Property Trustee, each Paying Agent and the Depositary. The Calculation Agent will also specify to the Administrative Trustees the quotations upon which the foregoing rates and amounts are based and, in any event, the Calculation Agent shall notify the Administrative Trustees before 5:00 p.m. (London time) on each LIBOR Determination Date that either: (i) it has determined or is in the process of determining the foregoing rates and amounts or (ii) it has not determined and is not in the process of determining the foregoing rates and amounts, together with its reasons therefor. The Calculation Agent’s determination of the foregoing rates and amounts for any Distribution Date will (in the absence of manifest error) be final and binding upon all parties. For the sole purpose of calculating the interest rate for the Trust Securities, “Business Day” shall be defined as any day on which dealings in deposits in Dollars are transacted in the London interbank market.
Certain Accounting Matters.
At all times during the existence of the Trust, the Administrative Trustees shall keep, or cause to be kept at the principal office of the Trust in the United States, as defined for purposes of Treasury Regulations section 301.7701-7, full books of account, records and supporting documents, which shall reflect in reasonable detail each transaction of the Trust. The books of account shall be maintained on the accrual method of accounting, in accordance with generally accepted accounting principles, consistently applied.
The Administrative Trustees shall either (i) if the Depositor is then subject to such reporting requirements, cause each Form 10-K and Form 10-Q prepared by the Depositor and filed with the Commission in accordance with the Exchange Act to be delivered to each Holder, with a copy to the Property Trustee, within thirty (30) days after the filing thereof or (ii) cause to be prepared at the principal office of the Trust in the United States, as defined for purposes of Treasury Regulations section 301.7701-7, and delivered to each of the Holders, with a copy to the Property Trustee, within ninety (90) days after the end of each Fiscal Year, annual financial statements of the Trust, including a balance sheet of the Trust as of the end of such Fiscal Year, and the related statements of income or loss.
The Trust shall maintain one or more bank accounts in the United States, as defined for purposes of Treasury Regulations section 301.7701-7, in the name and for the sole benefit of the Trust; provided , however , that all payments of funds in respect of the Notes held by the Property Trustee shall be made directly to the Payment Account and no other funds of the Trust shall be deposited in the Payment Account. The sole signatories for such accounts (including the Payment Account) shall be designated by the Property Trustee.
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Securities
Initial Ownership.
Upon the creation of the Trust and the contribution by the Depositor referred to in Section 2.3 and until the issuance of the Trust Securities, and at any time during which no Trust Securities are Outstanding, the Depositor shall be the sole beneficial owner of the Trust.
Authorized Trust Securities.
The Trust shall be authorized to issue one series of Preferred Securities having an aggregate Liquidation Amount of $15,000,000 and one series of Common Securities having an aggregate Liquidation Amount of $464,000.
Issuance of the Common Securities; Subscription and Purchase of Notes.
On the Closing Date, an Administrative Trustee, on behalf of the Trust, shall execute and deliver to the Depositor Common Securities Certificates, registered in the name of the Depositor, evidencing an aggregate of 464 Common Securities having an aggregate Liquidation Amount of $464,000, against receipt by the Trust of the aggregate purchase price of such Common Securities of $464,000. Contemporaneously therewith and with the sale by the Trust to the Holders of an aggregate of 15,000 Preferred Securities having an aggregate Liquidation Amount of $15,000,000, an Administrative Trustee, on behalf of the Trust, shall subscribe for and purchase from the Depositor Notes, to be registered in the name of the Property Trustee on behalf of the Trust and having an aggregate principal amount equal to $15,464,000, and, in satisfaction of the purchase price for such Notes, the Property Trustee, on behalf of the Trust, shall deliver to the Depositor the sum of $15,464,000 (being the aggregate amount paid by the Holders for the Preferred Securities and the amount paid by the Depositor for the Common Securities).
The Securities Certificates.
The Preferred Securities Certificates shall be issued in minimum denominations of $100,000 Liquidation Amount and integral multiples of $1,000 in excess thereof, and the Common Securities Certificates shall be issued in minimum denominations of $10,000 Liquidation Amount and integral multiples of $1,000 in excess thereof. The Securities Certificates shall be executed on behalf of the Trust by manual or facsimile signature of at least one Administrative Trustee. Securities Certificates bearing the signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign such Securities Certificates on behalf of the Trust shall be validly issued and entitled to the benefits of this Trust Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the delivery of such Securities Certificates or did not have such authority at the date of delivery of such Securities Certificates.
On the Closing Date, upon the written order of an authorized officer of the Depositor, the Administrative Trustees shall cause Securities Certificates to be executed on behalf of the Trust and delivered, without further corporate action by the Depositor, in authorized denominations.
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The Preferred Securities issued to QIBs shall be, except as provided in Section 5.6 , Book-Entry Preferred Securities issued in the form of one or more Global Preferred Securities registered in the name of the Depositary, or its nominee and deposited with the Depositary or the Property Trustee as custodian for the Depositary for credit by the Depositary to the respective accounts of the Depositary Participants thereof (or such other accounts as they may direct). The Preferred Securities issued to a Person other than a QIB shall be issued in the form of Definitive Preferred Securities Certificates.
A Preferred Security shall not be valid until authenticated by the manual signature of a Responsible Officer of the Property Trustee. Such signature shall be conclusive evidence that the Preferred Security has been authenticated under this Trust Agreement. Upon written order of the Trust signed by one Administrative Trustee, the Property Trustee shall authenticate and deliver one or more Preferred Security Certificates evidencing the Preferred Securities for original issue. The Property Trustee may appoint an authenticating agent that is a U.S. Person acceptable to the Trust to authenticate the Preferred Securities. A Common Security need not be so authenticated and shall be valid upon execution by one or more Administrative Trustees. The form of this certificate of authentication can be found in Section 5.13 .
Upon issuance of the Trust Securities as provided in this Trust Agreement, the Trust Securities so issued shall be deemed to be validly issued, fully paid and nonassessable, and each Holder thereof shall be entitled to the benefits provided by this Trust Agreement.
Rights of Holders.
The Trust Securities shall have no, and the issuance of the Trust Securities is not subject to, preemptive or similar rights and when issued and delivered to Holders against payment of the purchase price therefor will be fully paid and non-assessable by the Trust. Except as provided in Section 5.11(b) , the Holders of the Trust Securities, in their capacities as such, shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware.
Book-Entry Preferred Securities.
A Global Preferred Security may be exchanged, in whole or in part, for Definitive Preferred Securities Certificates registered in the names of the Owners only if such exchange complies with Section 5.7 and (i) the Depositary advises the Administrative Trustees and the Property Trustee in writing that the Depositary is no longer willing or able properly to discharge its responsibilities with respect to the Global Preferred Security, and no qualified successor is appointed by the Administrative Trustees within ninety (90) days of receipt of such notice, (ii) the Depositary ceases to be a clearing agency registered under the Exchange Act and the Administrative Trustees fail to appoint a qualified successor within ninety (90) days of obtaining knowledge of such event, (iii) the Administrative Trustees at their option advise the Property Trustee in writing that the Trust elects to terminate the book-entry system through the Depositary or (iv) a Note Event of Default has occurred and is continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Administrative Trustees shall notify the Depositary and instruct the Depositary to notify all Owners of Book-Entry Preferred Securities, the Delaware Trustee and the Property Trustee of the occurrence
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of such event and of the availability of the Definitive Preferred Securities Certificates to Owners of the Preferred Securities requesting the same. Upon the issuance of Definitive Preferred Securities Certificates, the Trustees shall recognize the Holders of the Definitive Preferred Securities Certificates as Holders. Notwithstanding the foregoing, if an Owner of a beneficial interest in a Global Preferred Security wishes at any time to transfer an interest in such Global Preferred Security to a Person other than a QIB, such transfer shall be effected, subject to the Applicable Depositary Procedures, in accordance with the provisions of this Section 5.6 and Section 5.7 , and the transferee shall receive a Definitive Preferred Securities Certificate in connection with such transfer. A holder of a Definitive Preferred Securities Certificate that is a QIB may, upon request, and in accordance with the provisions of this Section 5.6 and Section 5.7 , exchange such Definitive Preferred Securities Certificate for a beneficial interest in a Global Preferred Security.
If any Global Preferred Security is to be exchanged for Definitive Preferred Securities Certificates or canceled in part, or if any Definitive Preferred Securities Certificate is to be exchanged in whole or in part for any Global Preferred Security, then either (i) such Global Preferred Security shall be so surrendered for exchange or cancellation as provided in this Article V or (ii) the aggregate Liquidation Amount represented by such Global Preferred Security shall be reduced, subject to Section 5.4 , or increased by an amount equal to the Liquidation Amount represented by that portion of the Global Preferred Security to be so exchanged or canceled, or equal to the Liquidation Amount represented by such Definitive Preferred Securities Certificates to be so exchanged for any Global Preferred Security, as the case may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Property Trustee, in accordance with the Applicable Depositary Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender to the Administrative Trustees or the Securities Registrar of any Global Preferred Security or Securities by the Depositary, accompanied by registration instructions, the Administrative Trustees, or any one of them, shall execute the Definitive Preferred Securities Certificates in accordance with the instructions of the Depositary, and the Property Trustee, upon receipt thereof, shall authenticate and deliver such Definitive Preferred Securities Certificates. None of the Securities Registrar or the Trustees shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.
Every Securities Certificate executed and delivered upon registration or transfer of, or in exchange for or in lieu of, a Global Preferred Security or any portion thereof shall be executed and delivered in the form of, and shall be, a Global Preferred Security, unless such Securities Certificate is registered in the name of a Person other than the Depositary for such Global Preferred Security or a nominee thereof.
The Depositary or its nominee, as registered owner of a Global Preferred Security, shall be the Holder of such Global Preferred Security for all purposes under this Trust Agreement and the Global Preferred Security, and Owners with respect to a Global Preferred Security shall hold such interests pursuant to the Applicable Depositary Procedures. The Securities Registrar and the Trustees shall be entitled to deal with the Depositary for all purposes of this Trust Agreement relating to the Global Preferred Securities (including the payment of the Liquidation Amount of and Distributions on the Book-Entry Preferred Securities represented thereby and the giving of instructions or directions by Owners of Book-Entry Preferred Securities represented thereby and the giving of
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notices) as the sole Holder of the Book-Entry Preferred Securities represented thereby and shall have no obligations to the Owners thereof. None of the Trustees nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depositary.
The rights of the Owners of the Book-Entry Preferred Securities shall be exercised only through the Depositary and shall be limited to those established by law, the Applicable Depositary Procedures and agreements between such Owners and the Depositary and/or the Depositary Participants; provided, that, solely for the purpose of determining whether the Holders of the requisite amount of Preferred Securities have voted on any matter provided for in this Trust Agreement, to the extent that Preferred Securities are represented by a Global Preferred Security, the Trustees may conclusively rely on, and shall be fully protected in relying on, any written instrument (including a proxy) delivered to the Property Trustee by the Depositary setting forth the Owners’ votes or assigning the right to vote on any matter to any other Persons either in whole or in part. To the extent that Preferred Securities are represented by a Global Preferred Security, the initial Depositary will make book-entry transfers among the Depositary Participants and receive and transmit payments on the Preferred Securities that are represented by a Global Preferred Security to such Depositary Participants, and none of the Depositor or the Trustees shall have any responsibility or obligation with respect thereto.
To the extent that a notice or other communication to the Holders is required under this Trust Agreement, for so long as Preferred Securities are represented by a Global Preferred Security, the Trustees shall give all such notices and communications to the Depositary, and shall have no obligations to the Owners.
Registration of Transfer and Exchange of Preferred Securities Certificates.
The Property Trustee shall keep or cause to be kept, at the Corporate Trust Office, a register or registers (the “Securities Register”) in which the registrar and transfer agent with respect to the Trust Securities (the “Securities Registrar”), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Preferred Securities Certificates and Common Securities Certificates and registration of transfers and exchanges of Preferred Securities Certificates as herein provided. The Property Trustee shall at all times also be the Securities Registrar. The provisions of Article VIII shall apply to the Property Trustee in its role as Securities Registrar.
Subject to Section 5.7(d), upon surrender for registration of transfer of any Preferred Securities Certificate at the office or agency maintained pursuant to Section 5.7(f) , the Administrative Trustees or any one of them shall execute by manual or facsimile signature and deliver to the Property Trustee, and upon receipt thereof the Property Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Preferred Securities Certificates in authorized denominations of a like aggregate Liquidation Amount as may be required by this Trust Agreement dated the date of execution by such Administrative Trustee or Trustees. At the option of a Holder, Preferred Securities Certificates may be exchanged for other Preferred Securities Certificates in authorized denominations and of a like aggregate Liquidation Amount upon surrender of the Preferred Securities Certificate to be exchanged at the office or agency maintained pursuant to Section 5.7(f) . Whenever any Preferred Securities Certificates are so surrendered for exchange, the Administrative Trustees or any one of them shall execute by manual or facsimile
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signature and deliver to the Property Trustee, and upon receipt thereof the Property Trustee shall authenticate and deliver, the Preferred Securities Certificates that the Holder making the exchange is entitled to receive.
The Securities Registrar shall not be required, (i) to issue, register the transfer of or exchange any Preferred Security during a period beginning at the opening of business fifteen (15) days before the day of selection for redemption of such Preferred Securities pursuant to Article IV and ending at the close of business on the day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any Preferred Security so selected for redemption in whole or in part, except, in the case of any such Preferred Security to be redeemed in part, any portion thereof not to be redeemed.
Every Preferred Securities Certificate presented or surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Securities Registrar duly executed by the Holder or such Holder’s attorney duly authorized in writing and (i) if such Preferred Securities Certificate is being transferred otherwise than to a QIB, accompanied by a certificate of the transferee substantially in the form set forth as Exhibit E hereto or (ii) if such Preferred Securities Certificate is being transferred to a QIB, accompanied by a certificate of the transferor substantially in the form set forth as Exhibit F hereto.
No service charge shall be made for any registration of transfer or exchange of Preferred Securities Certificates, but the Property Trustee on behalf of the Trust may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Preferred Securities Certificates.
The Administrative Trustees shall designate an office or offices or agency or agencies where Preferred Securities Certificates may be surrendered for registration of transfer or exchange, and initially designate the Corporate Trust Office as its office and agency for such purposes. The Administrative Trustees shall give prompt written notice to the Depositor, the Property Trustee and to the Holders of any change in the location of any such office or agency.
Mutilated, Destroyed, Lost or Stolen Securities Certificates.
If any mutilated Securities Certificate shall be surrendered to the Securities Registrar together with such security or indemnity as may be required by the Securities Registrar and the Administrative Trustees to save each of them harmless, the Administrative Trustees, or any one of them, on behalf of the Trust, shall execute and make available for delivery and, with respect to Preferred Securities, the Property Trustee shall authenticate, in exchange therefor a new Securities Certificate of like class, tenor and denomination.
If the Securities Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Securities Certificate and there shall be delivered to the Securities Registrar and the Administrative Trustees such security or indemnity as may be required by them to save each of them harmless, then in the absence of notice that such Securities Certificate shall have been acquired by a protected purchaser, the Administrative Trustees, or any one of them, on behalf of the Trust, shall execute and make available for delivery, and, with respect to Preferred Securities, the Property Trustee shall authenticate, in exchange for or in lieu of any such destroyed, lost or stolen Securities Certificate, a new Securities Certificate of like class, tenor and denomination.
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In connection with the issuance of any new Securities Certificate under this Section 5.8 , the Administrative Trustees or the Securities Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Securities Certificate issued pursuant to this Section 5.8 shall constitute conclusive evidence of an undivided beneficial interest in the assets of the Trust corresponding to that evidenced by the mutilated, lost, stolen or destroyed Securities Certificate, as if originally issued, whether or not the lost, stolen or destroyed Securities Certificate shall be found at any time.
If any such mutilated, destroyed, lost or stolen Securities Certificate has become or is about to become due and payable, the Depositor in its discretion may, instead of issuing a new Trust Security, pay such Trust Security.
The provisions of this Section 5.8 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement of mutilated, destroyed, lost or stolen Securities Certificates.
Persons Deemed Holders.
The Trustees and the Securities Registrar shall each treat the Person in whose name any Securities Certificate shall be registered in the Securities Register as the owner of the Trust Securities evidenced by such Securities Certificate for the purpose of receiving Distributions and for all other purposes whatsoever, and none of the Trustees and the Securities Registrar shall be bound by any notice to the contrary.
Cancellation.
All Preferred Securities Certificates surrendered for registration of transfer or exchange or for payment shall, if surrendered to any Person other than the Property Trustee, be delivered to the Property Trustee, and any such Preferred Securities Certificates and Preferred Securities Certificates surrendered directly to the Property Trustee for any such purpose shall be promptly canceled by it. The Administrative Trustees may at any time deliver to the Property Trustee for cancellation any Preferred Securities Certificates previously delivered hereunder that the Administrative Trustees may have acquired in any manner whatsoever, and all Preferred Securities Certificates so delivered shall be promptly canceled by the Property Trustee. No Preferred Securities Certificates shall be executed and delivered in lieu of or in exchange for any Preferred Securities Certificates canceled as provided in this Section 5.10 , except as expressly permitted by this Trust Agreement. All canceled Preferred Securities Certificates shall be disposed of by the Property Trustee in accordance with its customary practices and the Property Trustee shall deliver to the Administrative Trustees a certificate of such disposition.
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Ownership of Common Securities by Depositor.
On the Closing Date, the Depositor shall acquire, and thereafter shall retain, beneficial and record ownership of the Common Securities. Neither the Depositor nor any successor Holder of the Common Securities may transfer less than all the Common Securities, and the Depositor or any such successor Holder may transfer the Common Securities only (i) in connection with a consolidation or merger of the Depositor into another Person, or any conveyance, transfer or lease by the Depositor of its properties and assets substantially as an entirety to any Person (in which event such Common Securities will be transferred to such surviving entity, transferee or lessee, as the case may be), pursuant to Section 8.1 of the Indenture or (ii) to the Depositor or an Affiliate of the Depositor, in each such case in compliance with applicable law (including the Securities Act, and applicable state securities and blue sky laws). To the fullest extent permitted by law, any attempted transfer of the Common Securities other than as set forth in the immediately preceding sentence shall be void. The Administrative Trustees shall cause each Common Securities Certificate issued to the Depositor to contain a legend stating substantially “THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST AGREEMENT.”
Any Holder of the Common Securities shall be liable for the debts and obligations of the Trust in the manner and to the extent set forth with respect to the Depositor and agrees that it shall be subject to all liabilities to which the Depositor may be subject and, prior to becoming such a Holder, shall deliver to the Administrative Trustees an instrument of assumption satisfactory to such Trustees.
Restricted Legends.
Each Preferred Security Certificate shall bear a legend in substantially the following form:
“[ IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS PREFERRED SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE TRUST AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS PREFERRED SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT, AND NO TRANSFER OF THIS PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO VISION BANCSHARES TRUST I OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
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FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SUCH PREFERRED SECURITIES OR ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY PREFERRED SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE PREFERRED SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE TRUST AND THE DEPOSITOR THAT (A) SUCH PREFERRED SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE TRUST, (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (V) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND, IN THE CASE OF (III) OR (V), SUBJECT TO THE RIGHT OF THE TRUST AND THE DEPOSITOR TO REQUIRE AN OPINION OF COUNSEL AND OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY PREFERRED SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THE PREFERRED SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE LIQUIDATION AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF PREFERRED SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE LIQUIDATION AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE
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SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH PREFERRED SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF LIQUIDATION AMOUNT OF OR DISTRIBUTIONS ON SUCH PREFERRED SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH PREFERRED SECURITIES.
THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS PREFERRED SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY, OR ANY INTEREST THEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE AND HOLDING. ANY PURCHASER OR HOLDER OF THE PREFERRED SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN TO WHICH TITLE I OF ERISA OR SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE OR HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH FULL EXEMPTIVE RELIEF IS NOT AVAILABLE UNDER AN APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE “FDIC”).”
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The above legend shall not be removed from any of the Preferred Securities Certificates unless there is delivered to the Property Trustee and the Depositor satisfactory evidence, which may include an Opinion of Counsel, as may be reasonably required to ensure that any future transfers thereof may be made without restriction under or violation of the provisions of the Securities Act and other applicable law. Upon provision of such satisfactory evidence, one or more of the Administrative Trustees on behalf of the Trust shall execute and deliver to the Property Trustee, and the Property Trustee shall authenticate and deliver, at the written direction of the Administrative Trustees and the Depositor, Preferred Securities Certificates that do not bear the legend.
Form of Certificate of Authentication.
The Property Trustee’s certificate of authentication shall be in substantially the following form:
This represents Preferred Securities referred to in the within-mentioned Trust Agreement.
| Dated: | WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as Property Trustee | |||||
| By: |
|
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| Authorized officer | ||||||
Meetings; Voting; Acts of Holders
Notice of Meetings.
Notice of all meetings of the Holders of the Preferred Securities, stating the time, place and purpose of the meeting, shall be given by the Property Trustee pursuant to Section 10.8 to each Holder of Preferred Securities, at such Holder’s registered address, at least fifteen (15) days and not more than ninety (90) days before the meeting. At any such meeting, any business properly before the meeting may be so considered whether or not stated in the notice of the meeting. Any adjourned meeting may be held as adjourned without further notice.
Meetings of Holders of the Preferred Securities.
No annual meeting of Holders is required to be held. The Property Trustee, however, shall call a meeting of the Holders of the Preferred Securities to vote on any matter upon the written request of the Holders of at least twenty five percent (25%) in aggregate Liquidation Amount of the Outstanding Preferred Securities and the Administrative Trustees or the Property Trustee may, at any time in their discretion, call a meeting of the Holders of the Preferred Securities to vote on any matters as to which such Holders are entitled to vote.
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The Holders of at least a Majority in Liquidation Amount of the Preferred Securities, present in person or by proxy, shall constitute a quorum at any meeting of the Holders of the Preferred Securities.
If a quorum is present at a meeting, an affirmative vote by the Holders present, in person or by proxy, holding Preferred Securities representing at least a Majority in Liquidation Amount of the Preferred Securities held by the Holders present, either in person or by proxy, at such meeting shall constitute the action of the Holders of the Preferred Securities, unless this Trust Agreement requires a lesser or greater number of affirmative votes.
Voting Rights.
Holders shall be entitled to one vote for each $10,000 of Liquidation Amount represented by their Outstanding Trust Securities in respect of any matter as to which such Holders are entitled to vote.
Proxies, Etc.
At any meeting of Holders, any Holder entitled to vote thereat may vote by proxy, provided, that no proxy shall be voted at any meeting unless it shall have been placed on file with the Administrative Trustees, or with such other officer or agent of the Trust as the Administrative Trustees may direct, for verification prior to the time at which such vote shall be taken. Pursuant to a resolution of the Property Trustee, proxies may be solicited in the name of the Property Trustee or one or more officers of the Property Trustee. Only Holders of record shall be entitled to vote. When Trust Securities are held jointly by several Persons, any one of them may vote at any meeting in person or by proxy in respect of such Trust Securities, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such Trust Securities. A proxy purporting to be executed by or on behalf of a Holder shall be deemed valid unless challenged at or prior to its exercise, and the burden of proving invalidity shall rest on the challenger. No proxy shall be valid more than three years after its date of execution.
Holder Action by Written Consent.
Any action that may be taken by Holders at a meeting may be taken without a meeting and without prior notice if Holders holding at least a Majority in Liquidation Amount of all Preferred Securities entitled to vote in respect of such action (or such lesser or greater proportion thereof as shall be required by any other provision of this Trust Agreement) shall consent to the action in writing; provided, that notice of such action is promptly provided to the Holders of Preferred Securities that did not consent to such action. Any action that may be taken by the Holders of all the Common Securities may be taken without a meeting and without prior notice if such Holders shall consent to the action in writing.
Record Date for Voting and Other Purposes.
Except as provided in Section 6.10(a) , for the purposes of determining the Holders who are entitled to notice of and to vote at any meeting or to act by written consent, or to participate in any
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distribution on the Trust Securities in respect of which a record date is not otherwise provided for in this Trust Agreement, or for the purpose of any other action, the Administrative Trustees may from time to time fix a date, not more than ninety (90) days prior to the date of any meeting of Holders or the payment of a Distribution or other action, as the case may be, as a record date for the determination of the identity of the Holders of record for such purposes.
Acts of Holders.
Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Trust Agreement to be given, made or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent thereof duly appointed in writing; and, except as otherwise expressly provided herein, such action shall become effective when such instrument or instruments are delivered to an Administrative Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Trust Agreement and conclusive in favor of the Trustees, if made in the manner provided in this Section 6.7 .
The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof. Where such execution is by a signer acting in a capacity other than such signer’s individual capacity, such certificate or affidavit shall also constitute sufficient proof of such signer’s authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that any Trustee receiving the same deems sufficient.
The ownership of Trust Securities shall be proved by the Securities Register.
Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Trust Security shall bind every future Holder of the same Trust Security and the Holder of every Trust Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustees, the Administrative Trustees or the Trust in reliance thereon, whether or not notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Holder entitled hereunder to take any action hereunder with regard to any particular Trust Security may do so with regard to all or any part of the Liquidation Amount of such Trust Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise among the Holders or the Trustees with respect to the authenticity, validity or binding nature of any request, demand, authorization, direction, notice, consent, waiver or other Act of such Holder or Trustee under this Article VI , then the determination of such matter by the Property Trustee shall be conclusive with respect to such matter.
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Inspection of Records.
Upon reasonable written notice to the Administrative Trustees and the Property Trustee, the records of the Trust shall be open to inspection by any Holder during normal business hours for any purpose reasonably related to such Holder’s interest as a Holder.
Limitations on Voting Rights.
Except as expressly provided in this Trust Agreement and in the Indenture and as otherwise required by law, no Holder of Preferred Securities shall have any right to vote or in any manner otherwise control the administration, operation and management of the Trust or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Securities Certificates, be construed so as to constitute the Holders from time to time as partners or members of an association.
So long as any Notes are held by the Property Trustee on behalf of the Trust, the Property Trustee shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the Note Trustee, or exercise any trust or power conferred on the Property Trustee with respect to the Notes, (ii) waive any past default that may be waived under Section 5.13 of the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Notes shall be due and payable or (iv) consent to any amendment, modification or termination of the Indenture or the Notes, where such consent shall be required, without, in each case, obtaining the prior approval of the Holders of at least a Majority in Liquidation Amount of the Preferred Securities; provided, that where a consent under the Indenture would require the consent of each holder of Notes (or each Holder of Preferred Securities) affected thereby, no such consent shall be given by the Property Trustee without the prior written consent of each Holder of Preferred Securities. The Property Trustee shall not revoke any action previously authorized or approved by a vote of the Holders of the Preferred Securities, except by a subsequent vote of the Holders of the Preferred Securities. In addition to obtaining the foregoing approvals of the Holders of the Preferred Securities, prior to taking any of the foregoing actions, the Property Trustee shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced in such matters to the effect that such action shall not cause the Trust to be taxable as a corporation or classified as other than a grantor trust for United States federal income tax purposes.
If any proposed amendment to the Trust Agreement provides for, or the Trustees otherwise propose to effect, (i) any action that would adversely affect in any material respect the powers, preferences or special rights of the Preferred Securities, whether by way of amendment to the Trust Agreement or otherwise or (ii) the dissolution, winding-up or termination of the Trust, other than pursuant to the terms of this Trust Agreement, then the Holders of Outstanding Preferred Securities as a class will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of the Holders of at least a Majority in Liquidation Amount of the Preferred Securities. Notwithstanding any other provision of this Trust Agreement, no amendment to this Trust Agreement may be made if, as a result of such amendment, it would cause the Trust to be taxable as a corporation or classified as other than a grantor trust for United States federal income tax purposes.
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Acceleration of Maturity; Rescission of Annulment; Waivers of Past Defaults.
For so long as any Preferred Securities remain Outstanding, if, upon a Note Event of Default pursuant to paragraphs (c), (e), (f), (g) or (h) of Section 5.1 of the Indenture, the Note Trustee fails or the holders of not less than twenty five percent (25%) in principal amount of the outstanding Notes fail to declare the principal of all of the Notes to be immediately due and payable, the Holders of at least twenty-five percent (25%) in Liquidation Amount of the Preferred Securities then Outstanding shall have the right to make such declaration by a notice in writing to the Property Trustee, the Depositor and the Note Trustee. At any time after a declaration of acceleration with respect to the Notes has been made and before a judgment or decree for payment of the money due has been obtained by the Note Trustee as provided in the Indenture, the Holders of at least a Majority in Liquidation Amount of the Preferred Securities, by written notice to the Property Trustee, the Depositor and the Note Trustee, may rescind and annul such declaration and its consequences if:
the Depositor has paid or deposited with the Note Trustee a sum sufficient to pay:
all overdue installments of interest on all of the Notes;
any accrued Additional Interest on all of the Notes;
the principal of and premium, if any, on any Notes that have become due otherwise than by such declaration of acceleration and interest and Additional Interest thereon at the rate borne by the Notes; and
all sums paid or advanced by the Note Trustee under the Indenture and the reasonable compensation, expenses, disbursements and advances of the Note Trustee, the Property Trustee and their agents and counsel; and
all Note Events of Default, other than the non-payment of the principal of the Notes that has become due solely by such acceleration, have been cured or waived as provided in Section 5.13 of the Indenture.
Upon receipt by the Property Trustee of written notice requesting such an acceleration, or rescission and annulment thereof, by Holders of any part of the Preferred Securities, a record date shall be established for determining Holders of Outstanding Preferred Securities entitled to join in such notice, which record date shall be at the close of business on the day the Property Trustee receives such notice. The Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to join in such notice, whether or not such Holders remain Holders after such record date; provided, that, unless such declaration of acceleration, or rescission and annulment, as the case may be, shall have become effective by virtue of the requisite percentage having joined in such notice prior to the day that is ninety (90) days after such record date, such notice of declaration of acceleration, or rescission and annulment, as the case may be, shall automatically and without further action by any Holder be canceled and of no further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from giving, after expiration of such ninety (90)-day period, a new written notice of declaration of acceleration, or rescission and annulment thereof, as the case may be, that is identical to a written notice that has been canceled pursuant to the proviso to the preceding sentence, in which event a new record date shall be established pursuant to the provisions of this Section 6.10(a) .
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For so long as any Preferred Securities remain Outstanding, to the fullest extent permitted by law and subject to the terms of this Trust Agreement and the Indenture, upon a Note Event of Default specified in paragraph (a), (b) or (c) of Section 5.1 of the Indenture, any Holder of Preferred Securities shall have the right to institute a proceeding directly against the Depositor, pursuant to Section 5.8 of the Indenture, for enforcement of payment to such Holder of any amounts payable in respect of Notes having an aggregate principal amount equal to the aggregate Liquidation Amount of the Preferred Securities of such Holder. Except as set forth in Section 6.10(a) and this Section 6.10(b) , the Holders of Preferred Securities shall have no right to exercise directly any right or remedy available to the holders of, or in respect of, the Notes.
Notwithstanding paragraphs (a) and (b) of this Section 6.10 , the Holders of at least a Majority in Liquidation Amount of the Preferred Securities may, on behalf of the Holders of all the Preferred Securities, waive any Note Event of Default, except any Note Event of Default arising from the failure to pay any principal of or premium, if any, or interest on (including any Additional Interest) the Notes (unless such Note Event of Default has been cured and a sum sufficient to pay all matured installments of interest and all principal and premium, if any, on all Notes due otherwise than by acceleration has been deposited with the Note Trustee) or a Note Event of Default in respect of a covenant or provision that under the Indenture cannot be modified or amended without the consent of the holder of each outstanding Note. Upon any such waiver, such Note Event of Default shall cease to exist and any Note Event of Default arising therefrom shall be deemed to have been cured for every purpose of the Indenture; but no such waiver shall affect any subsequent Note Event of Default or impair any right consequent thereon.
Notwithstanding paragraphs (a) and (b) of this Section 6.10 , the Holders of at least a Majority in Liquidation Amount of the Preferred Securities may, on behalf of the Holders of all the Preferred Securities, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Trust Agreement, but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.
The Holders of a Majority in Liquidation Amount of the Preferred Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Property Trustee in respect of this Trust Agreement or the Notes or exercising any trust or power conferred upon the Property Trustee under this Trust Agreement; provided, that, subject to Sections 8.5 and 8.7 , the Property Trustee shall have the right to decline to follow any such direction if the Property Trustee being advised by counsel determines that the action so directed may not lawfully be taken, or if the Property Trustee in good faith shall, by an officer or officers of the Property Trustee, determine that the proceedings so directed would be illegal or involve it in personal liability or be unduly prejudicial to the rights of Holders not party to such direction, and provided, further, that nothing in this Trust Agreement shall impair the right of the Property Trustee to take any action deemed proper by the Property Trustee and which is not inconsistent with such direction.
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Representations and Warranties
Representations and Warranties of the Property Trustee and the Delaware Trustee.
The Property Trustee and the Delaware Trustee, each severally on behalf of and as to itself, hereby represents and warrants for the benefit of the Depositor and the Holders that:
the Property Trustee is a Delaware banking corporation with trust powers, duly organized, validly existing and in good standing under the laws of the State of Delaware;
the Property Trustee has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement;
the Delaware Trustee is a Delaware banking corporation, duly organized with trust powers, validly existing and in good standing under the laws of the State of Delaware and with its principal place of business in the State of Delaware;
the Delaware Trustee has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement;
this Trust Agreement has been duly authorized, executed and delivered by the Property Trustee and the Delaware Trustee and constitutes the legal, valid and binding agreement of each of the Property Trustee and the Delaware Trustee enforceable against each of them in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity and the discretion of the court (regardless of whether considered in a proceeding in equity or at law);
the execution, delivery and performance of this Trust Agreement have been duly authorized by all necessary corporate or other action on the part of the Property Trustee and the Delaware Trustee and do not require any approval of stockholders of the Property Trustee and the Delaware Trustee and such execution, delivery and performance will not (i) violate the Charter or By-laws of the Property Trustee or the Delaware Trustee or (ii) violate any applicable law, governmental rule or regulation of the United States or the State of Delaware, as the case may be, governing the banking and trust powers of the Property Trustee or the Delaware Trustee or any order, judgment or decree applicable to the Property Trustee or the Delaware Trustee;
neither the authorization, execution or delivery by the Property Trustee or the Delaware Trustee of this Trust Agreement nor the consummation of any of the transactions by the Property Trustee or the Delaware Trustee contemplated herein requires the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to any governmental authority or agency under any existing law of the United States or the State of Delaware governing the banking and trust powers of the Property Trustee or the Delaware Trustee, as the case may be; and
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to the best of each of the Property Trustee’s and the Delaware Trustee’s knowledge, there are no proceedings pending or threatened against or affecting the Property Trustee or the Delaware Trustee in any court or before any governmental authority, agency or arbitration board or tribunal that, individually or in the aggregate, would materially and adversely affect the Trust or would question the right, power and authority of the Property Trustee or the Delaware Trustee, as the case may be, to enter into or perform its obligations as one of the Trustees under this Trust Agreement.
Representations and Warranties of Depositor.
The Depositor hereby represents and warrants for the benefit of the Holders that:
the Depositor is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation;
the Depositor has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement;
this Trust Agreement has been duly authorized, executed and delivered by the Depositor and constitutes the legal, valid and binding agreement of the Depositor enforceable against the Depositor in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity;
the Securities Certificates issued at the Closing Date on behalf of the Trust have been duly authorized and will have been duly and validly executed, issued and delivered by the applicable Trustees pursuant to the terms and provisions of, and in accordance with the requirements of, this Trust Agreement and the Holders will be, as of such date, entitled to the benefits of this Trust Agreement;
the execution, delivery and performance of this Trust Agreement have been duly authorized by all necessary corporate or other action on the part of the Depositor and do not require any approval of stockholders of the Depositor and such execution, delivery and performance will not (i) violate the articles or certificate of incorporation or by-laws (or other organizational documents) of the Depositor or (ii) violate any applicable law, governmental rule or regulation governing the Depositor or any material portion of its property or any order, judgment or decree applicable to the Depositor or any material portion of its property;
neither the authorization, execution or delivery by the Depositor of this Trust Agreement nor the consummation of any of the transactions by the Depositor contemplated herein requires the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to any governmental authority or agency under any existing law governing the Depositor or any material portion of its property; and
there are no proceedings pending or, to the best of the Depositor’s knowledge, threatened against or affecting the Depositor or any material portion of its property in any court or before any governmental authority, agency or arbitration board or tribunal that, individually or in the aggregate, would materially and adversely affect the Trust or would question the right, power and authority of the Depositor, as the case may be, to enter into or perform its obligations under this Trust Agreement.
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The Trustees
Number of Trustees.
The number of Trustees shall be five (5), provided, that the Property Trustee and the Delaware Trustee may be the same Person, in which case the number of Trustees shall be four (4). The number of Trustees may be increased or decreased by Act of the Holder of the Common Securities subject to Sections 8.2 , 8.3 , and 8.4 . The death, resignation, retirement, removal, bankruptcy, incompetence or incapacity to perform the duties of a Trustee shall not operate to annul, dissolve or terminate the Trust.
Property Trustee Required.
There shall at all times be a Property Trustee hereunder with respect to the Trust Securities. The Property Trustee shall be a corporation organized and doing business under the laws of the United States or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least fifty million dollars ($50,000,000), subject to supervision or examination by federal or state authority and having an office within the United States. If any such Person publishes reports of condition at least annually pursuant to law or to the requirements of its supervising or examining authority, then for the purposes of this Section 8.2 , the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Property Trustee shall cease to be eligible in accordance with the provisions of this Section 8.2 , it shall resign immediately in the manner and with the effect hereinafter specified in this Article VIII .
Delaware Trustee Required.
If required by the Delaware Statutory Trust Act, there shall at all times be a Delaware Trustee with respect to the Trust Securities. The Delaware Trustee shall either be (i) a natural person who is at least 21 years of age and a resident of the State of Delaware or (ii) a legal entity that has its principal place of business in the State of Delaware, otherwise meets the requirements of applicable Delaware law and shall act through one or more persons authorized to bind such entity. If at any time the Delaware Trustee shall cease to be eligible in accordance with the provisions of this Section 8.3 , it shall resign immediately in the manner and with the effect hereinafter specified in this Article VIII .
The Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities, of the Property Trustee or the Administrative Trustees set forth herein. The Delaware Trustee shall be one of the trustees of the Trust for the sole and limited purpose of fulfilling the requirements of Section 3807 of the Delaware Statutory Trust Act and for taking such actions as are required to be taken by a Delaware trustee under the Delaware
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Statutory Trust Act. The duties (including fiduciary duties), liabilities and obligations of the Delaware Trustee shall be limited to (a) accepting legal process served on the Trust in the State of Delaware and (b) the execution of any certificates required to be filed with the Secretary of State of the State of Delaware that the Delaware Trustee is required to execute under Section 3811 of the Delaware Statutory Trust Act and there shall be no other duties (including fiduciary duties) or obligations, express or implied, at law or in equity, of the Delaware Trustee.
Appointment of Administrative Trustees.
There shall at all times be one or more Administrative Trustees hereunder with respect to the Trust Securities. Each Administrative Trustee shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more persons authorized to bind that entity. Each of the individuals identified as an “Administrative Trustee” in the preamble of this Trust Agreement hereby accepts his or her appointment as such.
Except where a requirement for action by a specific number of Administrative Trustees is expressly set forth in this Trust Agreement, any act required or permitted to be taken by, and any power of the Administrative Trustees may be exercised by, or with the consent of, any one such Administrative Trustee. Whenever a vacancy in the number of Administrative Trustees shall occur, until such vacancy is filled by the appointment of an Administrative Trustee in accordance with Section 8.11 , the Administrative Trustees in office, regardless of their number (and notwithstanding any other provision of this Trust Agreement), shall have all the powers granted to the Administrative Trustees and shall discharge all the duties imposed upon the Administrative Trustees by this Trust Agreement.
Duties and Responsibilities of the Trustees.
The rights, immunities, duties and responsibilities of the Trustees shall be as provided by this Trust Agreement and there shall be no other duties (including fiduciary duties) or obligations, express or implied, at law or in equity, of the Trustees; provided, however, that if an Event of Default known to the Property Trustee has occurred and is continuing, the Property Trustee shall, prior to the receipt of directions, if any, from the Holders of at least a Majority in Liquidation Amount of the Preferred Securities, exercise such of the rights and powers vested in it by this Trust Agreement, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs. Notwithstanding the foregoing, no provision of this Trust Agreement shall require any of the Trustees to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its or their rights or powers, if it or they shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not herein expressly so provided, every provision of this Trust Agreement relating to the conduct or affecting the liability of or affording protection to the Trustees shall be subject to the provisions of this Section 8.5 . To the extent that, at law or in equity, a Trustee has duties and liabilities relating to the Trust or to the Holders, such Trustee shall not be liable to the Trust or to any Holder for such Trustee’s good faith reliance on the provisions of this Trust Agreement. The provisions of this Trust Agreement, to the extent that they restrict the duties and liabilities of the Trustees otherwise existing at law or in equity, are agreed by the Depositor and the Holders to replace such other duties and liabilities of the Trustees.
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All payments made by the Property Trustee or a Paying Agent in respect of the Trust Securities shall be made only from the revenue and proceeds from the Trust Property and only to the extent that there shall be sufficient revenue or proceeds from the Trust Property to enable the Property Trustee or a Paying Agent to make payments in accordance with the terms hereof. Each Holder, by its acceptance of a Trust Security, agrees that it will look solely to the revenue and proceeds from the Trust Property to the extent legally available for distribution to it as herein provided and that the Trustees are not personally liable to it for any amount distributable in respect of any Trust Security or for any other liability in respect of any Trust Security. This Section 8.5(b) does not limit the liability of the Trustees expressly set forth elsewhere in this Trust Agreement.
No provisions of this Trust Agreement shall be construed to relieve the Property Trustee from liability with respect to matters that are within the authority of the Property Trustee under this Trust Agreement for its own negligent action, negligent failure to act or willful misconduct, except that:
the Property Trustee shall not be liable for any error or judgment made in good faith by an authorized officer of the Property Trustee, unless it shall be proved that the Property Trustee was negligent in ascertaining the pertinent facts;
the Property Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of at least a Majority in Liquidation Amount of the Preferred Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee hereunder or under the Indenture, or exercising any trust or power conferred upon the Property Trustee under this Trust Agreement;
the Property Trustee’s sole duty with respect to the custody, safe keeping and physical preservation of the Notes and the Payment Account shall be to deal with such Property in a similar manner as the Property Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Property Trustee under this Trust Agreement;
the Property Trustee shall not be liable for any interest on any money received by it; and money held by the Property Trustee need not be segregated from other funds held by it except in relation to the Payment Account maintained by the Property Trustee pursuant to Section 3.1 and except to the extent otherwise required by law; and
the Property Trustee shall not be responsible for monitoring the compliance by the Administrative Trustees or the Depositor with their respective duties under this Trust Agreement, nor shall the Property Trustee be liable for the default or misconduct of any other Trustee or the Depositor.
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Notices of Defaults and Extensions.
Within ninety (90) days after the occurrence of a default actually known to the Property Trustee, the Property Trustee shall transmit notice of such default to the Holders, the Administrative Trustees and the Depositor, unless such default shall have been cured or waived; provided, that, except in the case of a default in the payment of the principal of or any premium or interest (including any Additional Interest) on any Trust Security, the Property Trustee shall be fully protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Property Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Trust Securities. For the purpose of this Section 8.6 , the term “default” means any event that is, or after notice or lapse of time or both would become, an Event of Default.
Within three (3) Business Days after the receipt of written notice of the Depositor’s exercise of its right to defer the payment of interest on the Notes pursuant to the Indenture, the Property Trustee shall transmit, in the manner and to the extent provided in Section 11.8 , notice of such exercise to the Holders and the Administrative Trustees, unless such exercise shall have been revoked.
The Property Trustee shall not be deemed to have knowledge of any default or Event of Default unless the Property Trustee shall have received written notice thereof from the Depositor, any Administrative Trustee or any Holder or unless a Responsible Officer of the Property Trustee shall have obtained actual knowledge of such default or Event of Default.
The Property Trustee shall notify all Holders of the Preferred Securities of any notice of default received with respect to the Notes.
Certain Rights of Property Trustee.
Subject to the provisions of Section 8.5 :
the Property Trustee may conclusively rely and shall be protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution, Opinion of Counsel, certificate, written representation of a Holder or transferee, certificate of auditors or any other resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, appraisal, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
if (i) in performing its duties under this Trust Agreement the Property Trustee is required to decide between alternative courses of action, (ii) in construing any of the provisions of this Trust Agreement the Property Trustee finds a provision ambiguous or inconsistent with any other provisions contained herein or (iii) the Property Trustee is unsure of the application of any provision of this Trust Agreement, then, except as to any matter as to which the Holders of the Preferred Securities are entitled to vote under the terms of this Trust Agreement, the Property Trustee shall deliver a notice to the Depositor requesting the Depositor’s written instruction as to the course of action to be taken and the Property Trustee shall take such action, or refrain from taking such action, as the Property Trustee shall be instructed in writing to take, or to refrain from taking, by the Depositor; provided, that if the Property Trustee does not receive such instructions of the Depositor
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within ten (10) Business Days after it has delivered such notice or such reasonably shorter period of time set forth in such notice, the Property Trustee may, but shall be under no duty to, take such action, or refrain from taking such action, as the Property Trustee shall deem advisable and in the best interests of the Holders, in which event the Property Trustee shall have no liability except for its own negligence, bad faith or willful misconduct;
any direction or act of the Depositor contemplated by this Trust Agreement shall be sufficiently evidenced by an Officers’ Certificate unless otherwise expressly provided herein;
any direction or act of an Administrative Trustee contemplated by this Trust Agreement shall be sufficiently evidenced by a certificate executed by such Administrative Trustee and setting forth such direction or act;
the Property Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation statement or any filing under tax or securities laws) or any re-recording, re-filing or re-registration thereof;
the Property Trustee may consult with counsel (which counsel may be counsel to the Property Trustee, the Depositor or any of its Affiliates, and may include any of its employees) and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon and in accordance with such advice; the Property Trustee shall have the right at any time to seek instructions concerning the administration of this Trust Agreement from any court of competent jurisdiction;
the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request or direction of any of the Holders pursuant to this Trust Agreement, unless such Holders shall have offered to the Property Trustee reasonable security or indemnity against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction, including reasonable advances as may be requested by the Property Trustee;
the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, approval, bond, debenture, note or other evidence of indebtedness or other paper or document, unless requested in writing to do so by one or more Holders, but the Property Trustee may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Property Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Depositor, personally or by agent or attorney;
the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents, attorneys, custodians or nominees and the Property Trustee shall not be responsible for any negligence or misconduct on the part of any such agent, attorney, custodian or nominee appointed with due care by it hereunder;
whenever in the administration of this Trust Agreement the Property Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right hereunder, the
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Property Trustee (i) may request instructions from the Holders (which instructions may only be given by the Holders of the same proportion in Liquidation Amount of the Trust Securities as would be entitled to direct the Property Trustee under this Trust Agreement in respect of such remedy, right or action), (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received and (iii) shall be protected in acting in accordance with such instructions;
except as otherwise expressly provided by this Trust Agreement, the Property Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Trust Agreement;
without prejudice to any other rights available to the Property Trustee under applicable law, when the Property Trustee incurs expenses or renders services in connection with a Bankruptcy Event, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy law or law relating to creditors rights generally; and
whenever in the administration of this Trust Agreement the Property Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, request and rely on an Officers’ Certificate which, upon receipt of such request, shall be promptly delivered by the Depositor.
No provision of this Trust Agreement shall be deemed to impose any duty or obligation on any Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which such Person shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts, or to exercise any such right, power, duty or obligation.
Delegation of Power.
Any Trustee may, by power of attorney or otherwise delegate to any other Person its, his or her power for the purpose of executing any documents contemplated in Section 2.5 . The Trustees shall have power to delegate from time to time to such of their number or to the Depositor the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Trustees or otherwise as the Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of this Trust Agreement.
May Hold Securities.
Any Trustee or any other agent of any Trustee or the Trust, in its individual or any other capacity, may become the owner or pledgee of Trust Securities and except as provided in the definition of the term “Outstanding” in Article I , may otherwise deal with the Trust with the same rights it would have if it were not a Trustee or such other agent.
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Compensation; Reimbursement; Indemnity.
The Depositor agrees:
to pay to the Trustees from time to time such reasonable compensation for all services rendered by them hereunder as may be agreed by the Depositor and the Trustees from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
to reimburse the Trustees upon request for all reasonable expenses, disbursements and advances incurred or made by the Trustees in accordance with any provision of this Trust Agreement (including the reasonable compensation and the expenses and disbursements of their agents and counsel), except any such expense, disbursement or advance as may be attributable to their gross negligence, bad faith or willful misconduct; and
to the fullest extent permitted by applicable law, to indemnify and hold harmless (i) each Trustee (including in its individual capacity), (ii) any Affiliate of any Trustee, (iii) any officer, director, shareholder, employee, representative or agent of any Trustee or any Affiliate of any Trustee and (iv) any employee or agent of the Trust (referred to herein as an “Indemnified Person”) from and against any loss, damage, liability, tax (other than income, franchise or other taxes imposed on amounts paid pursuant to Section 8.10(a) or (b) hereof), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of the Trust hereunder, including the advancement of funds to cover 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 Trust shall have no payment, reimbursement or indemnity obligations to the Trustees under this Section 8.10 . The provisions of this Section 8.10 shall survive the termination of this Trust Agreement and the earlier removal or resignation of any Trustee.
No Trustee may claim any Lien on any Trust Property whether before or after termination of the Trust as a result of any amount due pursuant to this Section 8.10 .
To the fullest extent permitted by law, in no event shall the Property Trustee and the Delaware Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
In no event shall the Property Trustee and the Delaware Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Trust Agreement.
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Resignation and Removal; Appointment of Successor.
No resignation or removal of any Trustee and no appointment of a successor Trustee pursuant to this Article VIII shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 8.12 .
A Trustee may resign at any time by giving written notice thereof to the Depositor and, in the case of the Property Trustee and the Delaware Trustee, to the Holders.
Unless an Event of Default shall have occurred and be continuing, the Property Trustee or the Delaware Trustee, or both of them, may be removed (with or without cause) at any time by Act of the Holder of Common Securities. If an Event of Default shall have occurred and be continuing, the Property Trustee or the Delaware Trustee, or both of them, may be removed (with or without cause) at such time by Act of the Holders of at least a Majority in Liquidation Amount of the Preferred Securities, delivered to the removed Trustee (in its individual capacity and on behalf of the Trust). An Administrative Trustee may be removed (with or without cause) only by Act of the Holder of the Common Securities at any time.
If any Trustee shall resign, be removed or become incapable of acting as Trustee, or if a vacancy shall occur in the office of any Trustee for any reason, at a time when no Event of Default shall have occurred and be continuing, the Holder of the Common Securities, by Act of the Holder of the Common Securities, shall promptly appoint a successor Trustee or Trustees, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 8.12 . If the Property Trustee or the Delaware Trustee shall resign, be removed or become incapable of continuing to act as the Property Trustee or the Delaware Trustee, as the case may be, at a time when an Event of Default shall have occurred and be continuing, the Holders of the Preferred Securities, by Act of the Holders of a Majority in Liquidation Amount of the Preferred Securities, shall promptly appoint a successor Property Trustee or Delaware Trustee, and such successor Property Trustee or Delaware Trustee and the retiring Property Trustee or Delaware Trustee shall comply with the applicable requirements of Section 8.12 . If an Administrative Trustee shall resign, be removed or become incapable of acting as Administrative Trustee, at a time when an Event of Default shall have occurred and be continuing, the Holder of the Common Securities by Act of the Holder of Common Securities shall promptly appoint a successor Administrative Trustee and such successor Administrative Trustee and the retiring Administrative Trustee shall comply with the applicable requirements of Section 8.12 . If no successor Trustee shall have been so appointed by the Holder of the Common Securities or Holders of the Preferred Securities, as the case may be, and accepted appointment in the manner required by Section 8.12 within thirty (30) days after the giving of a notice of resignation by a Trustee, the removal of a Trustee, or a Trustee becoming incapable of acting as such Trustee, any Holder who has been a Holder of Preferred Securities for at least six (6) months may, on behalf of himself and all others similarly situated, and any resigning Trustee may, in each case, at the expense of the Depositor, petition any court of competent jurisdiction for the appointment of a successor Trustee.
The Depositor shall give notice of each resignation and each removal of the Property Trustee or the Delaware Trustee and each appointment of a successor Property Trustee or Delaware Trustee to all Holders in the manner provided in Section 10.8 . Each notice shall include the name of the successor Property Trustee or Delaware Trustee and the address of its Corporate Trust Office if it is the Property Trustee.
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Notwithstanding the foregoing or any other provision of this Trust Agreement, in the event any Administrative Trustee or a Delaware Trustee who is a natural person dies or becomes, in the opinion of the Holder of Common Securities, incompetent or incapacitated, the vacancy created by such death, incompetence or incapacity may be filled by (i) the unanimous act of the remaining Administrative Trustees if there are at least two of them or (ii) otherwise by the Holder of the Common Securities (with the successor in each case being a Person who satisfies the eligibility requirement for Administrative Trustees or Delaware Trustee, as the case may be, set forth in Sections 8.3 and 8.4 ).
Upon the appointment of a successor Delaware Trustee, such successor Delaware Trustee shall file a Certificate of Amendment to the Certificate of Trust in accordance with Section 3810 of the Delaware Statutory Trust Act.
Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee, each successor Trustee shall execute and deliver to the Depositor and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on request of the Trust or any successor Trustee such retiring Trustee shall, upon payment of its charges, duly assign, transfer and deliver to such successor Trustee all Trust Property, all proceeds thereof and money held by such retiring Trustee hereunder with respect to the Trust Securities and the Trust.
Upon request of any such successor Trustee, the Trust (or the retiring Trustee if requested by the Depositor) shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in the preceding paragraph.
No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article VIII .
Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Property Trustee or the Delaware Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Trustee shall be a party, or any Person succeeding to all or substantially all the corporate trust business of such Trustee, shall be the successor of such Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided, that such Person shall be otherwise qualified and eligible under this Article VIII .
Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities Certificates shall be taken as the statements of the Trust and the Depositor, and the Trustees do not assume any responsibility for their correctness. The Trustees make no representations as to the title to, or value or condition of, the
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property of the Trust or any part thereof, nor as to the validity or sufficiency of this Trust Agreement, the Notes or the Trust Securities. The Trustees shall not be accountable for the use or application by the Depositor of the proceeds of the Notes.
Property Trustee May File Proofs of Claim.
In case of any Bankruptcy Event (or event that with the passage of time would become a Bankruptcy Event) relative to the Trust or any other obligor upon the Trust Securities or the property of the Trust or of such other obligor or their creditors, the Property Trustee (irrespective of whether any Distributions on the Trust Securities shall then be due and payable and irrespective of whether the Property Trustee shall have made any demand on the Trust for the payment of any past due Distributions) shall be entitled and empowered, to the fullest extent permitted by law, by intervention in such proceeding or otherwise:
to file and prove a claim for the whole amount of any Distributions owing and unpaid in respect of the Trust Securities and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Property Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Property Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding; and
to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such proceeding is hereby authorized by each Holder to make such payments to the Property Trustee and, in the event the Property Trustee shall consent to the making of such payments directly to the Holders, to pay to the Property Trustee first any amount due it for the reasonable compensation, expenses, disbursements and advances of the Property Trustee, its agents and counsel, and any other amounts due the Property Trustee.
Nothing herein contained shall be deemed to authorize the Property Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or compensation affecting the Trust Securities or the rights of any Holder thereof or to authorize the Property Trustee to vote in respect of the claim of any Holder in any such proceeding.
Reports to and from the Property Trustee.
The Depositor and the Administrative Trustees shall deliver to the Property Trustee, not later than forty five (45) days after the end of each of the first three fiscal quarters of the Depositor and not later than ninety (90) days after the end of each fiscal year of the Depositor ending after the date of this Trust Agreement, an Officers’ Certificate (substantially in the form attached hereto as Exhibit H ) covering the preceding fiscal period, stating whether or not to the knowledge of the signers thereof the Depositor, the Administrative Trustees or the Trust are in default in the performance or observance of any of the terms, provisions and conditions of this Trust Agreement (without regard to any period of grace or requirement of notice provided hereunder) and, if the Depositor, the Administrative Trustees or the Trust shall be in default, specifying all such defaults and the nature and status thereof of which they have knowledge.
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The Depositor shall furnish to (i) the Property Trustee, (ii) the Purchaser, (iii) any Owner of the Preferred Securities reasonably identified to the Depositor or the Trust (which identification may be made either by such Owner or by the Placement Agent or Purchaser) and (iv) any designee of (i), (ii) or (iii) above, a duly completed and executed certificate in the form attached hereto as Exhibit G, including the financial statements referenced in such Exhibit, which certificate and financial statements shall be so furnished by the Depositor not later than forty five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Depositor and not later than ninety (90) days after the end of each fiscal year of the Depositor.
The Property Trustee shall receive all reports, certificates and information, which it is entitled to obtain under each of the Operative Documents, and deliver to (i) the Purchaser, (ii) the Placement Agent and (iii) a designee of (i) or (ii) above, as identified in writing to the Property Trustee, copies of all such reports, certificates or information promptly upon receipt thereof.
Termination, Liquidation and Merger
Dissolution Upon Expiration Date.
Unless earlier dissolved, the Trust shall automatically dissolve on December 30, 2040 (the “Expiration Date”), and the Trust Property shall be liquidated in accordance with Section 9.4 .
Early Termination.
The first to occur of any of the following events is an “Early Termination Event”, upon the occurrence of which the Trust shall be dissolved:
the occurrence of a Bankruptcy Event in respect of, or the dissolution or liquidation of, the Depositor, in its capacity as the Holder of the Common Securities, unless the Depositor shall have transferred the Common Securities as provided by Section 5.11 , in which case this provision shall refer instead to any such successor Holder of the Common Securities;
the written direction to the Property Trustee from the Holder of the Common Securities at any time to dissolve the Trust and, after satisfaction of any liabilities of the Trust as required by applicable law, to distribute the Notes to Holders in exchange for the Preferred Securities (which direction is optional and wholly within the discretion of the Holder of the Common Securities), provided, that the Holder of the Common Securities shall have received the prior approval of the Federal Reserve if then required;
the redemption of all of the Preferred Securities in connection with the payment at maturity or redemption of all the Notes; and
the entry of an order for dissolution of the Trust by a court of competent jurisdiction.
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Termination.
The respective obligations and responsibilities of the Trustees and the Trust shall terminate upon the latest to occur of the following: (a) the distribution by the Property Trustee to Holders of all amounts required to be distributed hereunder upon the liquidation of the Trust pursuant to Section 9.4 , or upon the redemption of all of the Trust Securities pursuant to Section 4.2 ; (b) the satisfaction of any expenses owed by the Trust; and (c) the discharge of all administrative duties of the Administrative Trustees, including the performance of any tax reporting obligations with respect to the Trust or the Holders.
Liquidation.
If an Early Termination Event specified in Section 9.2(a) , (b) or (d) occurs or upon the Expiration Date, the Trust shall be liquidated by the Property Trustee as expeditiously as the Property Trustee shall determine to be possible by distributing, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, to each Holder a Like Amount of Notes, subject to Section 9.4(d) . Notice of liquidation shall be given by the Property Trustee not less than thirty (30) nor more than sixty (60) days prior to the Liquidation Date to each Holder of Trust Securities at such Holder’s address appearing in the Securities Register. All such notices of liquidation shall:
state the Liquidation Date;
state that from and after the Liquidation Date, the Trust Securities will no longer be deemed to be Outstanding and (subject to Section 9.4(d) ) any Securities Certificates not surrendered for exchange will be deemed to represent a Like Amount of Notes; and
provide such information with respect to the mechanics by which Holders may exchange Securities Certificates for Notes, or if Section 9.4(d) applies, receive a Liquidation Distribution, as the Property Trustee shall deem appropriate.
Except where Section 9.2(c) or 9.4(d) applies, in order to effect the liquidation of the Trust and distribution of the Notes to Holders, the Property Trustee, either itself acting as exchange agent or through the appointment of a separate exchange agent, shall establish a record date for such distribution (which shall not be more than forty-five (45) days prior to the Liquidation Date nor prior to the date on which notice of such liquidation is given to the Holders) and establish such procedures as it shall deem appropriate to effect the distribution of Notes in exchange for the Outstanding Securities Certificates.
Except where Section 9.2(c) or 9.4(d) applies, after the Liquidation Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii) certificates representing a Like Amount of Notes will be issued to Holders of Securities Certificates, upon surrender of such Certificates to the exchange agent for exchange, (iii) the Depositor shall use its best efforts to have the Notes listed on the New York Stock Exchange or on such other exchange, interdealer quotation system or self-regulatory organization on which the Preferred Securities are then listed, if any, (iv) Securities Certificates not so surrendered for exchange will be deemed to represent a Like Amount of Notes bearing accrued and unpaid interest in an amount equal to the accumulated and unpaid Distributions on such Securities Certificates until such certificates are so surrendered (and until such certificates are so
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surrendered, no payments of interest or principal will be made to Holders of Securities Certificates with respect to such Notes) and (v) all rights of Holders holding Trust Securities will cease, except the right of such Holders to receive Notes upon surrender of Securities Certificates.
Notwithstanding the other provisions of this Section 9.4 , if distribution of the Notes in the manner provided herein is determined by the Property Trustee not to be permitted or practical, the Trust Property shall be liquidated, and the Trust shall be wound up by the Property Trustee in such manner as the Property Trustee determines. In such event, Holders will be entitled to receive out of the assets of the Trust available for distribution to Holders, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, an amount equal to the Liquidation Amount per Trust Security plus accumulated and unpaid Distributions thereon to the date of payment (such amount being the “Liquidation Distribution”). If, upon any such winding up the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then, subject to the next succeeding sentence, the amounts payable by the Trust on the Trust Securities shall be paid on a pro rata basis (based upon Liquidation Amounts). The Holder of the Common Securities will be entitled to receive Liquidation Distributions upon any such winding up pro rata (based upon Liquidation Amounts) with Holders of all Trust Securities, except that, if an Event of Default has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities as provided in Section 4.3 .
Mergers, Consolidations, Amalgamations or Replacements of Trust.
The Trust may not merge with or into, consolidate, amalgamate, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to, any Person except pursuant to this Article IX . At the request of the Holders of the Common Securities, without the consent of the Holders of the Preferred Securities, the Trust may merge with or into, consolidate, amalgamate, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to a trust organized as such under the laws of any State; provided, that:
such successor entity either (i) expressly assumes all of the obligations of the Trust under this Trust Agreement with respect to the Preferred Securities or (ii) substitutes for the Preferred Securities other securities having substantially the same terms as the Preferred Securities (such other Securities, the “Successor Securities”) so long as the Successor Securities have the same priority as the Preferred Securities with respect to distributions and payments upon liquidation, redemption and otherwise;
a trustee of such successor entity possessing substantially the same powers and duties as the Property Trustee is appointed to hold the Notes;
if the Preferred Securities or the Notes are rated, such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not cause the Preferred Securities or the Notes (including any Successor Securities) to be downgraded by any nationally recognized statistical rating organization that then assigns a rating to the Preferred Securities or the Notes;
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the Preferred Securities are listed, or any Successor Securities will be listed upon notice of issuance, on any national securities exchange or interdealer quotation system on which the Preferred Securities are then listed, if any;
such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Preferred Securities (including any Successor Securities) in any material respect;
such successor entity has a purpose substantially identical to that of the Trust;
prior to such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Depositor has received an Opinion of Counsel to the effect that (i) such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Preferred Securities (including any Successor Securities) in any material respect; (ii) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor such successor entity will be required to register as an “investment company” under the Investment Company Act and (iii) following such merger, consolidation, amalgamation, replacement, conveyance, transfer or lease, the Trust (or the successor entity) will continue to be classified as a grantor trust for U.S. federal income tax purposes; and
the Depositor or its permitted transferee owns all of the common securities of such successor entity and guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Guarantee Agreement.
Notwithstanding the foregoing, the Trust shall not, except with the consent of Holders of all of the Preferred Securities, consolidate, amalgamate, merge with or into, or be replaced by or convey, transfer or lease its properties and assets substantially as an entirety to any other Person or permit any other entity to consolidate, amalgamate, merge with or into, or replace, the Trust if such consolidation, amalgamation, merger, replacement, conveyance, transfer or lease would cause the Trust or the successor entity to be taxable as a corporation or classified as other than a grantor trust for United States federal income tax purposes or cause the Notes to be treated as other than indebtedness of the Depositor for United States federal income tax purposes.
Information to Purchaser
Depositor Obligations to Purchaser.
Notwithstanding any other provision herein, the Depositor shall furnish to (a) the Purchaser, (b) any Owner of the Preferred Securities reasonably identified to the Depositor or the Trust (which identification may be made either by such Owner or by the Placement Agent or Purchaser) and (c) any designee of (a) or (b) above, copies of all correspondence, notices, forms, filings, reports and other documents required to be provided by the Depositor, whether acting through an Administrative Trustee or otherwise, to the Property Trustee or Delaware Trustee under this Trust Agreement.
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Property Trustee’s Obligations to Purchaser.
Notwithstanding any other provision herein, the Property Trustee shall furnish to (a) the Purchaser, (b) the Placement Agent and (c) a designee of (a) or (b) above as identified in writing to the Property Trustee, copies of all (i) correspondence, notices, forms, filings, reports and other documents received by the Property Trustee or Delaware Trustee from the Depositor, whether acting through an Administrative Trustee or otherwise, under this Trust Agreement, and (ii) all correspondence, notices, forms, filings, reports and other documents required to be provided to the Depositor or a Holder by the Property Trustee or Delaware Trustee under this Trust Agreement.
Miscellaneous Provisions
Limitation of Rights of Holders.
Except as set forth in Section 9.2 , the death, bankruptcy, termination, dissolution or incapacity of any Person having an interest, beneficial or otherwise, in Trust Securities shall not operate to terminate this Trust Agreement, nor annul, dissolve or terminate the Trust nor entitle the legal representatives or heirs of such Person or any Holder for such Person, to claim an accounting, take any action or bring any proceeding in any court for a partition or winding up of the arrangements contemplated hereby, nor otherwise affect the rights, obligations and liabilities of the parties hereto or any of them.
Agreed Tax Treatment of Trust and Trust Securities.
The parties hereto and, by its acceptance or acquisition of a Trust Security or a beneficial interest therein, the Holder of, and any Person that acquires a beneficial interest in, such Trust Security intend and agree to treat the Trust as a grantor trust for United States federal, state and local tax purposes, and to treat the Trust Securities (including all payments and proceeds with respect to such Trust Securities) as undivided beneficial ownership interests in the Trust Property (and payments and proceeds therefrom, respectively) for United States federal, state and local tax purposes and to treat the Notes as indebtedness of the Depositor for United States federal, state and local tax purposes. The provisions of this Trust Agreement shall be interpreted to further this intention and agreement of the parties.
Amendment.
This Trust Agreement may be amended from time to time by the Property Trustee, the Administrative Trustees and the Holder of all the Common Securities, without the consent of any Holder of the Preferred Securities, (i) to cure any ambiguity, correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make or amend any other provisions with respect to matters or questions arising under this Trust Agreement, which shall not be inconsistent with the other provisions of this Trust Agreement, (ii) to modify, eliminate or add to any provisions of this Trust Agreement to such extent as shall be necessary to ensure that the Trust will neither be taxable as a corporation nor be classified as other than a grantor trust for
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United States federal income tax purposes at all times that any Trust Securities are Outstanding or to ensure that the Notes are treated as indebtedness of the Depositor for United States federal income tax purposes, or to ensure that the Trust will not be required to register as an “investment company” under the Investment Company Act or (iii) to add to the covenants, restrictions or obligations of the Depositor; provided, that in the case of clauses (i), (ii) or (iii), such action shall not adversely affect in any material respect the interests of any Holder.
Except as provided in Section 11.3(c) , any provision of this Trust Agreement may be amended by the Property Trustee, the Administrative Trustees and the Holder of all of the Common Securities and with (i) the consent of Holders of at least a Majority in Liquidation Amount of the Preferred Securities and (ii) receipt by the Trustees of an Opinion of Counsel to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment will not cause the Trust to be taxable as a corporation or classified as other than a grantor trust for United States federal income tax purposes or affect the treatment of the Notes as indebtedness of the Depositor for United States federal income tax purposes or affect the Trust’s exemption from status (or from any requirement to register) as an “investment company” under the Investment Company Act.
Notwithstanding any other provision of this Trust Agreement, without the consent of each Holder, this Trust Agreement may not be amended to (i) change the accrual rate, amount, currency or timing of any Distribution on or the redemption price of the Trust Securities or otherwise adversely affect the amount of any Distribution or other payment required to be made in respect of the Trust Securities as of a specified date, (ii) restrict or impair the right of a Holder to institute suit for the enforcement of any such payment on or after such date, (iii) reduce the percentage of aggregate Liquidation Amount of Outstanding Preferred Securities, the consent of whose Holders is required for any such amendment, or the consent of whose Holders is required for any waiver of compliance with any provision of this Trust Agreement or of defaults hereunder and their consequences provided for in this Trust Agreement; (iv) impair or adversely affect the rights and interests of the Holders in the Trust Property, or permit the creation of any Lien on any portion of the Trust Property; or (v) modify the definition of “Outstanding,” this Section 11.3(c) , Sections 4.1 , 4.2 , 4.3 , 6.10(e) or Article IX .
Notwithstanding any other provision of this Trust Agreement, no Trustee shall enter into or consent to any amendment to this Trust Agreement that would cause the Trust to be taxable as a corporation or to be classified as other than a grantor trust for United States federal income tax purposes or that would cause the Notes to fail or cease to be treated as indebtedness of the Depositor for United States federal income tax purposes or that would cause the Trust to fail or cease to qualify for the exemption from status (or from any requirement to register) as an “investment company” under the Investment Company Act.
If any amendment to this Trust Agreement is made, the Administrative Trustees or the Property Trustee shall promptly provide to the Depositor and the Note Trustee a copy of such amendment.
No Trustee shall be required to enter into any amendment to this Trust Agreement that affects its own rights, duties or immunities under this Trust Agreement. The Trustees shall be entitled to
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receive an Opinion of Counsel and an Officers’ Certificate stating that any amendment to this Trust Agreement is in compliance with this Trust Agreement and all conditions precedent herein provided for relating to such action have been met.
No amendment or modification to this Trust Agreement that adversely affects in any material respect the rights, duties, liabilities, indemnities or immunities of the Delaware Trustee hereunder shall be permitted without the prior written consent of the Delaware Trustee.
Separability.
If any provision in this Trust Agreement or in the Securities Certificates shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.
Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE HOLDERS, THE TRUST, THE DEPOSITOR AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REFERENCE TO ITS CONFLICTS OF LAWS PROVISIONS.
Successors.
This Trust Agreement shall be binding upon and shall inure to the benefit of any successor to the Depositor, the Trust and any Trustee, including any successor by operation of law. Except in connection with a transaction involving the Depositor that is permitted under Article VIII of the Indenture and pursuant to which the assignee agrees in writing to perform the Depositor’s obligations hereunder, the Depositor shall not assign its obligations hereunder.
Headings.
The Article and Section headings are for convenience only and shall not affect the construction of this Trust Agreement.
Reports, Notices and Demands.
Any report, notice, demand or other communication that by any provision of this Trust Agreement is required or permitted to be given or served to or upon any Holder or the Depositor may be given or served in writing delivered in person, or by reputable, overnight courier, by telecopy or by deposit thereof, first-class postage prepaid, in the United States mail, addressed, (a) in the case of a Holder of Preferred Securities, to such Holder as such Holder’s name and address may appear on the Securities Register; and (b) in the case of the Holder of all the Common Securities or the Depositor, to Vision Bancshares, Inc. P.O. Box 4649, Gulf Shores, Alabama 36547, Attention: Chief Financial Officer, or to such other address as may be specified in a written notice by the Holder of all the Common Securities or the Depositor, as the case may be, to the Property Trustee. Such report,
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notice, demand or other communication to or upon a Holder or the Depositor shall be deemed to have been given when received in person, within one (1) Business Day following delivery by overnight courier, when telecopied with receipt confirmed, or within three (3) Business Days following delivery by mail, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver.
Any notice, demand or other communication that by any provision of this Trust Agreement is required or permitted to be given or served to or upon the Property Trustee, the Delaware Trustee, the Administrative Trustees or the Trust shall be given in writing by deposit thereof, first-class postage prepaid, in the U.S. mail, personal delivery or facsimile transmission, addressed to such Person as follows: (a) with respect to the Property Trustee and the Delaware Trustee, to Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Capital Markets, facsimile no. (302) 636-4140; (b) with respect to the Administrative Trustees, to them at the address above for notices to the Depositor, marked “Attention: Administrative Trustees of Vision Bancshares Trust I,” and (c) with respect to the Trust, to its principal executive office specified in Section 2.2 , with a copy to the Property Trustee. Such notice, demand or other communication to or upon the Trust, the Property Trustee or the Administrative Trustees shall be deemed to have been sufficiently given or made only upon actual receipt of the writing by the Trust, the Property Trustee or the Administrative Trustees.
Agreement Not to Petition.
Each of the Trustees and the Depositor agree for the benefit of the Holders that, until at least one year and one day after the Trust has been terminated in accordance with Article IX , they shall not file, or join in the filing of, a petition against the Trust under any Bankruptcy Law or otherwise join in the commencement of any proceeding against the Trust under any Bankruptcy Law. If the Depositor takes action in violation of this Section 11.9 , the Property Trustee agrees, for the benefit of Holders, that at the expense of the Depositor, it shall file an answer with the applicable bankruptcy court or otherwise properly contest the filing of such petition by the Depositor against the Trust or the commencement of such action and raise the defense that the Depositor has agreed in writing not to take such action and should be estopped and precluded therefrom and such other defenses, if any, as counsel for the Property Trustee or the Trust may assert.
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Delivery of an executed signature page of this Amended and Restated Trust Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Trust Agreement as of the day and year first above written.
|
Vision Bancshares, Inc., as Depositor |
||||||||
| By: |
/s/ J. Daniel Sizemore |
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| Name: | J. Daniel Sizemore | |||||||
| Title: | Chairman and Chief Executive Officer | |||||||
| Wilmington Trust Company, as Property Trustee | Wilmington Trust Company, as Delaware Trustee | |||||||
| By: |
/s/ Christopher J. Slaybaugh |
By: |
/s/ Christopher J. Slaybaugh |
|||||
| Name: | Christopher J. Slaybaugh | Name: | Christopher J. Slaybaugh | |||||
| Title: | Senior Financial Services Officer | Title: | Senior Financial Services Officer | |||||
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/s/ William E. Blackmon |
/s/ Matthew Ivers |
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| Administrative Trustee | Administrative Trustee | |||||||
| Name: | William E. Blackmon | Name: | Matthew Ivers | |||||
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/s/ Siri Albright |
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| Administrative Trustee | ||||||||
| Name: | Siri Albright | |||||||
Exhibit A
CERTIFICATE OF TRUST
OF
VISION BANCSHARES TRUST I
This Certificate of Trust of Vision Bancshares Trust I (the “Trust”) is being duly executed and filed on behalf of the Trust by the undersigned, as trustees, to form a statutory trust under the Delaware Statutory Trust Act (12 Del . C. §3801 et seq .) (the “Act”).
1. Name . The name of the statutory trust formed by this Certificate of Trust is: Vision Bancshares Trust I.
2. Delaware Trustee . The name and business address of the trustee of the Trust with its principal place of business in the State of Delaware are Wilmington Trust Company, Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Capital Markets.
3. Effective Date . This Certificate of Trust shall be effective upon its filing with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned have duly executed this Certificate of Trust in accordance with Section 3811(a)(1) of the Act.
A-1
| Wilmington Trust Company, not in its individual capacity, but solely as Property Trustee | ||
| By: |
|
|
| Name: | ||
| Title: | ||
| Wilmington Trust Company, not in its individual capacity, but solely as Delaware Trustee | ||
| By: |
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| Name: | ||
| Title: | ||
A-2
Exhibit B
[FORM OF COMMON SECURITIES CERTIFICATE]
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION. THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN COMPLIANCE WITH APPLICABLE LAW AND SECTION 5.11 OF THE TRUST AGREEMENT
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Certificate Number
C- |
Common Securities |
Certificate Evidencing Common Securities
of
Vision Bancshares Trust I
Floating Rate Common Securities
(liquidation amount $1,000 per Common Security)
Vision Bancshares Trust I, a statutory trust created under the laws of the State of Delaware (the “Trust”), hereby certifies that (the “Holder”) is the registered owner of common securities of the Trust representing undivided common beneficial interests in the assets of the Trust and designated the Vision Bancshares Trust I Floating Rate Common Securities (liquidation amount $1,000 per Common Security) (the “Common Securities”). Except in accordance with Section 5.11 of the Trust Agreement (as defined below), the Common Securities are not transferable and, to the fullest extent permitted by law, any attempted transfer hereof other than in accordance therewith shall be void. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities are set forth in, and this certificate and the Common Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust, dated as of December 5, 2005, as the same may be amended from time to time (the “Trust Agreement”), among Vision Bancshares, Inc., as Depositor, Wilmington Trust Company, as Property Trustee, Wilmington Trust Company, as Delaware Trustee, the Administrative Trustees named therein and the Holders, from time to time, of Trust Securities. The Trust will furnish a copy of the Trust Agreement to the Holder without charge upon written request to the Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder.
B-1
This Common Securities Certificate shall be governed by and construed in accordance with the laws of the State of Delaware.
Terms used but not defined herein have the meanings set forth in the Trust Agreement.
In Witness Whereof, one of the Administrative Trustees of the Trust has executed on behalf of the Trust this certificate this day of .
| V ISION B ANCSHARES T RUST I | ||
| By: |
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| Name: | ||
| Administrative Trustee | ||
B-2
Exhibit C
[FORM OF PREFERRED SECURITIES CERTIFICATE]
“[ IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS PREFERRED SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE TRUST AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS PREFERRED SECURITY IS EXCHANGEABLE FOR PREFERRED SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE TRUST AGREEMENT, AND NO TRANSFER OF THIS PREFERRED SECURITY (OTHER THAN A TRANSFER OF THIS PREFERRED SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS PREFERRED SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO VISION BANCSHARES TRUST I OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY PREFERRED SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SUCH PREFERRED SECURITIES OR ANY INTEREST THEREIN MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY PREFERRED SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE PREFERRED SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE PREFERRED SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE TRUST AND THE DEPOSITOR THAT (A) SUCH PREFERRED SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE TRUST, (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT,
C-1
OR FOR THE ACCOUNT OF AN “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (V) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND, IN THE CASE OF (III) OR (V), SUBJECT TO THE RIGHT OF THE TRUST AND THE DEPOSITOR TO REQUIRE AN OPINION OF COUNSEL AND OTHER INFORMATION SATISFACTORY TO EACH OF THEM AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY PREFERRED SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THE PREFERRED SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE LIQUIDATION AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF PREFERRED SECURITIES OR ANY INTEREST THEREIN IN A BLOCK HAVING AN AGGREGATE LIQUIDATION AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH PREFERRED SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF LIQUIDATION AMOUNT OF OR DISTRIBUTIONS ON SUCH PREFERRED SECURITIES OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH PREFERRED SECURITIES.
THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS PREFERRED SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY, OR ANY INTEREST THEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE AND HOLDING. ANY PURCHASER OR HOLDER OF THE PREFERRED SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN TO WHICH TITLE I OF ERISA OR SECTION 4975 OF THE CODE IS
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APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE OR HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH FULL EXEMPTIVE RELIEF IS NOT AVAILABLE UNDER AN APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE “FDIC”).
C-3
| Certificate Number |
Preferred Securitiesp Aggregate Liquidation Amount |
CUSIP NO.
Certificate Evidencing Preferred Securities
of
Vision Bancshares Trust I
Floating Rate Preferred Securities
(liquidation amount $1,000 per Preferred Security)
Vision Bancshares Trust I, a statutory trust created under the laws of the State of Delaware (the “Trust”), hereby certifies that (the “Holder”) is the registered owner of Preferred Securities [if the Preferred Security is a Global Security, then insert—,or such other number of Preferred Securities represented hereby as may be set forth in the records of the Securities Registrar hereinafter referred to in accordance with the Trust Agreement (as defined below),] of the Trust representing an undivided preferred beneficial interest in the assets of the Trust and designated the Vision Bancshares Trust I Floating Rate Preferred Securities (liquidation amount $1,000 per Preferred Security) (the “Preferred Securities”). The Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer as provided in Section 5.7 of the Trust Agreement (as defined below). The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Preferred Securities are set forth in, and this certificate and the Preferred Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust, dated as of December 5, 2005, as the same may be amended from time to time (the “Trust Agreement”), among Vision Bancshares, Inc., an Alabama corporation, as Depositor, Wilmington Trust Company, as Property Trustee, Wilmington Trust Company, as Delaware Trustee, the Administrative Trustees named therein and the Holders, from time to time, of Trust Securities. The Holder is entitled to the benefits of the Guarantee Agreement entered into by Vision Bancshares, Inc. and Wilmington Trust Company, as Guarantee Trustee, dated as of December 5, 2005, as the same may be amended from time to time (the “Guarantee Agreement”), to the extent provided therein. The Trust will furnish a copy of each of the Trust Agreement and the Guarantee Agreement to the Holder without charge upon written request to the Property Trustee at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder.
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This Preferred Securities Certificate shall be governed by and construed in accordance with the laws of the State of Delaware.
All capitalized terms used but not defined in this Preferred Securities Certificate are used with the meanings specified in the Trust Agreement, including the Schedules and Exhibits thereto.
In Witness Whereof, one of the Administrative Trustees of the Trust has executed on behalf of the Trust this certificate this day of , .
| Vision Bancshares Trust I | ||
| By: |
|
|
| Name: | ||
| Administrative Trustee | ||
This represents Preferred Securities referred to in the within-mentioned Trust Agreement.
Dated:
| Wilmington Trust Company, not in its individual capacity, but solely as Property Trustee | ||
| By: |
|
|
| Authorized officer | ||
C-5
[FORM OF REVERSE OF SECURITY]
The Trust promises to pay Distributions from , 20 , or from the most recent Distribution Date to which Distributions have been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on March 30, June 30, September 30 and December 30 of each year, commencing on December 30, 2005, at a variable rate per annum, reset quarterly, equal to LIBOR plus 1.48% of the Liquidation Amount of the Preferred Securities represented by this Preferred Securities Certificate, together with any Additional Interest Amounts, in respect to such period.
Distributions on the Trust Securities shall be made by the Paying Agent from the Payment Account and shall be payable on each Distribution Date only to the extent that the Trust has funds then on hand and available in the Payment Account for the payment of such Distributions.
In the event (and to the extent) that the Depositor exercises its right under the Indenture to defer the payment of interest on the Notes, Distributions on the Preferred Securities shall be deferred.
Under the Indenture, so long as no Note Event of Default pursuant to paragraphs (c), (e), (f), (g) or (h) of Section 5.1 of the Indenture has occurred and is continuing, the Depositor shall have the right, at any time and from time to time during the term of the Notes, to defer the payment of interest on the Notes for a period of up to twenty (20) consecutive quarterly interest payment periods (each such extended interest payment period, an “Extension Period”), during which Extension Period no interest shall be due and payable (except any Additional Tax Sums that may be due and payable). No interest on the Notes shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest (to the extent payment of such interest would be legally enforceable) at a variable rate per annum, reset quarterly, equal to LIBOR plus 1.48%, compounded quarterly, from the dates on which amounts would have otherwise been due and payable until paid or until funds for the payment thereof have been made available for payment. If Distributions are deferred, the deferred Distributions (including Additional Interest Amounts) shall be paid on the date that the related Extension Period terminates to Holders (as defined in the Trust Agreement) of the Trust Securities as they appear on the books and records of the Trust on the record date immediately preceding such termination date.
Distributions on the Securities must be paid on the dates payable (after giving effect to any Extension Period) to the extent that the Trust has funds available for the payment of such Distributions in the Payment Account of the Trust. The Trust’s funds available for Distribution to the Holders of the Preferred Securities will be limited to payments received from the Depositor. The payment of Distributions out of moneys held by the Trust is guaranteed by the Depositor pursuant to the Guarantee Agreement.
During any such Extension Period, the Depositor shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Depositor’s capital stock or (ii) make any payment of principal of or any interest or premium on or repay, repurchase or redeem any debt securities of the Depositor that rank pari passu in all respects with or junior in interest to the Notes (other than (a) repurchases, redemptions or other acquisitions
C-6
of shares of capital stock of the Depositor in connection with (1) any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, (2) a dividend reinvestment or stockholder stock purchase plan or (3) the issuance of capital stock of the Depositor (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, (b) as a result of an exchange or conversion of any class or series of the Depositor’s capital stock (or any capital stock of a Subsidiary (as defined in the Indenture) of the Depositor) for any class or series of the Depositor’s capital stock or of any class or series of the Depositor’s indebtedness for any class or series of the Depositor’s capital stock, (c) the purchase of fractional interests in shares of the Depositor’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (d) any declaration of a dividend in connection with any Rights Plan (as defined in the Indenture), the issuance of rights, stock or other property under any Rights Plan, or the redemption or repurchase of rights pursuant thereto or (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock).
On each Note Redemption Date, on the stated maturity (or any date of principal repayment upon early maturity) of the Notes and on each other date on (or in respect of) which any principal on the Notes is repaid, the Trust will be required to redeem a Like Amount of Trust Securities at the Redemption Price. Under the Indenture, the Notes may be redeemed by the Depositor on any Interest Payment Date, at the Depositor’s option, on or after December 30, 2010 in whole or in part from time to time at a redemption price equal to one hundred percent (100%) of the principal amount thereof or the redeemed portion thereof, as applicable, together, in the case of any such redemption, with accrued interest, including any Additional Interest, to but excluding the date fixed for redemption; provided, that the Depositor shall have received the prior approval of the Federal Reserve if then required. The Notes may also be redeemed by the Depositor, at its option, at any time, in whole but not in part, upon the occurrence of a Capital Disqualification Event, an Investment Company Event or a Tax Event at the Special Event Redemption Price.
The Trust Securities redeemed on each Redemption Date shall be redeemed at the Redemption Price with the proceeds from the contemporaneous redemption or payment at maturity of Notes. Redemptions of the Trust Securities (or portion thereof) shall be made and the Redemption Price shall be payable on each Redemption Date only to the extent that the Trust has funds then on hand and available in the Payment Account for the payment of such Redemption Price.
Payments of Distributions (including any Additional Interest Amounts), the Redemption Price, Liquidation Amount or any other amounts in respect of the Preferred Securities shall be made by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register. If any Preferred Securities are held by a Depositary, such Distributions shall be made to the Depositary in immediately available funds.
The indebtedness evidenced by the Notes is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt (as defined in the Indenture), and this Security is issued subject to the provisions of the Indenture with respect thereto.
C-7
ASSIGNMENT
F OR V ALUE R ECEIVED , the undersigned assigns and transfers this Preferred Securities Certificate to:
(Insert assignee’s social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
agent to transfer this Preferred Securities Certificate on the books of the Trust. The agent may substitute another to act for him or her.
| Date: |
|
|||||
| Signature: |
|
|||||
| (Sign exactly as your name appears on the other side of this Preferred Securities Certificate) | ||||||
The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to S.E.C. Rule 17Ad-15.
C-8
Exhibit D
Junior Subordinated Indenture
D-1
Exhibit E
FORM OF TRANSFEREE CERTIFICATE
TO BE EXECUTED BY TRANSFEREES OTHER THAN QIBS
, [ ]
Vision Bancshares, Inc.
Vision Bancshares Trust I
P.O. Box 4649
Gulf Shores, Alabama 36547
| Re: | Purchase of $1,000 stated liquidation amount of Floating Rate Preferred |
| Securities (the “Preferred Securities”) of Vision Bancshares Trust I |
Ladies and Gentlemen:
In connection with our purchase of the Preferred Securities we confirm that:
1. We understand that the Floating Rate Preferred Securities (the “Preferred Securities”) of Vision Bancshares Trust I (the “Trust”) (including the guarantee (the “Guarantee”) of Vision Bancshares, Inc. (the “Company”) executed in connection therewith) and the Floating Rate Junior Subordinated Notes due 2035 of the Company (the “Subordinated Notes”) (the Preferred Securities, the Guarantee and the Subordinated Notes together being referred to herein as the “Offered Securities”), have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing the Offered Securities that, if we decide to offer, sell or otherwise transfer any such Offered Securities, (i) such offer, sale or transfer will be made only (a) to the Trust, (b) to a person we reasonably believe is a “qualified institutional buyer” (a “QIB”) (as defined in Rule 144 under the Securities Act) in a transaction meeting the requirements of Rule 144A, (c) to an institutional “accredited investor” within the meaning of subparagraph (a) (1), (2), (3) or (7) of Rule 501 under the Securities Act that is acquiring Offered Securities for its own account, or for the account of such an “accredited investor,” for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act, (d) pursuant to an effective registration statement under the Securities Act, or (e) pursuant to an exemption from registration under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States or any other applicable jurisdiction and, in the case of (c) or (e), subject to the right of the Trust and the depositor to require an opinion of counsel and other information satisfactory to each of them. The foregoing restrictions on resale will not apply subsequent to the date on which, in the written opinion of counsel, the Preferred Securities are not “restricted securities” within the meaning of Rule 144 under the Securities Act. If any resale or other transfer of the Offered Securities is proposed to be made pursuant to clause (c) or (e) above, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Property Trustee as Transfer Agent, which shall provide as applicable, among other things, that the transferee is an “accredited investor” within the meaning of subparagraph (a) (1), (2), (3) or (7) of Rule 501 under the Securities Act that is acquiring such Securities for investment purposes and not for distribution in violation of
E-1
the Securities Act. We acknowledge on our behalf and on behalf of any investor account for which we are purchasing Securities that the Trust and the Company reserve the right prior to any offer, sale or other transfer pursuant to clause (c) or (e) to require the delivery of any opinion of counsel, certifications and/or other information satisfactory to the Trust and the Company. We understand that the certificates for any Offered Security that we receive will bear a legend substantially to the effect of the foregoing.
2. We are an “accredited investor” within the meaning of subparagraph (a) (1), (2), (3) or (7) of Rule 501 under the Securities Act purchasing for our own account or for the account of such an “accredited investor,” and we are acquiring the Offered Securities for investment purposes and not with view to, or for offer or sale in connection with, any distribution in violation of the Securities Act, and we have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Offered Securities, and we and any account for which we are acting are each able to bear the economic risks of our or its investment.
3. We are acquiring the Offered Securities purchased by us for our own account (or for one or more accounts as to each of which we exercise sole investment discretion and have authority to make, and do make, the statements contained in this letter) and not with a view to any distribution of the Offered Securities, subject, nevertheless, to the understanding that the disposition of our property will at all times be and remain within our control.
4. In the event that we purchase any Preferred Securities or any Subordinated Notes, we will acquire such Preferred Securities having an aggregate stated liquidation amount of not less than $100,000 or such Subordinated Notes having an aggregate principal amount not less than $100,000, for our own account and for each separate account for which we are acting.
5. We acknowledge that either (A) we are not and are not acting as a fiduciary of or on behalf of an employee benefit, individual retirement account or other plan or arrangement subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or Section 4975 of the Internal Revenue Code of 1986, as amended (the “Code”) (each a “Plan”), or an entity whose underlying assets include “plan assets” by reason of any Plan’s investment in the entity, and are not purchasing the Offered Securities on behalf of or with “plan assets” by reason of any Plan’s investment in the entity; (B) we are eligible for the exemptive relief available under one or more of the following prohibited transaction class exemptions (“PTCEs”) issued by the U.S. Department of Labor: PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another applicable exemption; or (C) our purchase and holding of this security, or any interest therein, is not prohibited by Section 406 of ERISA or Section 4975 of the Code with respect to such purchase or holding.
6. We acknowledge that the Trust and the Company and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations, warranties and agreements and agree that if any of the acknowledgments, representations, warranties and agreements deemed to have been made by our purchase of the Offered Securities are no longer accurate, we shall promptly notify the Company. If we are acquiring any Offered Securities as a fiduciary or agent for one or more investor accounts, we represent that we have sole discretion with respect to each such investor account and that we have full power to make the foregoing acknowledgments, representations and agreement on behalf of each such investor account.
E-2
| (Name of Purchaser) | ||
| By: |
|
|
| Date: |
|
|
Upon transfer, the Offered Securities would be registered in the name of the new beneficial owner as follows.
| Name: |
|
|
| Address: |
|
|
| Taxpayer ID Number: |
|
E-3
Exhibit F
FORM OF TRANSFEROR CERTIFICATE
TO BE EXECUTED FOR QIBs
, [ ]
Vision Bancshares, Inc.
Vision Bancshares Trust I
P.O. Box 4649
Gulf Shores, Alabama 36547
| Re: | Purchase of $1,000 stated liquidation amount of Floating Rate |
| Preferred Securities (the “Preferred Securities”) of Vision Bancshares Trust I |
Reference is hereby made to the Amended and Restated Trust Agreement of Vision Bancshares Trust I, dated as of December 5, 2005 (the “Trust Agreement”), among William E. Blackmon, Matthew Ivers and Siri Albright, as Administrative Trustees, Wilmington Trust Company, as Delaware Trustee, Wilmington Trust Company, as Property Trustee, Vision Bancshares, Inc., as Depositor, and the holders from time to time of undivided beneficial interests in the assets of Vision Bancshares Trust I. Capitalized terms used but not defined herein shall have the meanings given them in the Trust Agreement.
This letter relates to $ aggregate liquidation amount of Preferred Securities which are held in the name of (the “Transferor”).
In accordance with Article V of the Trust Agreement, the Transferor hereby certifies that such Preferred Securities are being transferred in accordance with (i) the transfer restrictions set forth in the Preferred Securities and (ii) Rule 144A under the Securities Act (“Rule 144A”), to a transferee that the Transferor reasonably believes is purchasing the Preferred Securities for its own account or an account with respect to which the transferee exercises sole investment discretion and the transferee and any such account is a “qualified institutional buyer” within the meaning of Rule 144A, in a transaction meeting the requirements of Rule 144A and in accordance with applicable securities laws of any state of the United States or any other jurisdiction.
You are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.
| (Name of Transferor) | ||
| By: |
|
|
| Name: | ||
| Title: | ||
Date:
F-1
Exhibit G
Form of Officer’s Financial Certificate
The undersigned, the [Chief Financial Officer] [Treasurer] [Executive Vice President] hereby certifies, pursuant to Section 8.16(b) of the Amended and Restated Trust Agreement, dated as of December 5, 2005, among Vision Bancshares, Inc. (the “Company”), Wilmington Trust Company, as property trustee, Wilmington Trust Company, as Delaware trustee and the administrative trustees named therein, that, as of [date], [20 ], the Company had the following ratios and balances:
|
BANK HOLDING COMPANY As of [Quarterly Financial Dates] |
|||
|
Tier 1 Risk Weighted Assets |
% | ||
|
Ratio of Double Leverage |
% | ||
|
Non-Performing Assets to Loans and OREO |
% | ||
|
Tangible Common Equity as a Percentage of Tangible Assets |
% | ||
|
Ratio of Reserves to Non-Performing Loans |
% | ||
|
Ratio of Net Charge-Offs to Loans |
% | ||
|
Return on Average Assets (annualized) |
% | ||
|
Net Interest Margin (annualized) |
% | ||
|
Efficiency Ratio |
% | ||
|
Ratio of Loans to Assets |
% | ||
|
Ratio of Loans to Deposits |
% | ||
|
Double Leverage (exclude trust preferred as equity) |
% | ||
|
Total Assets |
$ | ||
|
Year to Date Income |
$ |
| * | A table describing the quarterly report calculation procedures is attached. |
G-1
[ FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements (including the balance sheet, income statement and statement of cash flows, and notes thereto, together with the report of the independent accountants thereon) of the Company and its consolidated subsidiaries for the three years ended , 20 .]
[ FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating financial statements (including the balance sheet and income statement) of the Company and its consolidated subsidiaries for the fiscal quarter] ended [date], 20 .
The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles (“GAAP”), the financial position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the [ quarter interim] [annual] period ended [date], 20 , and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (expect as otherwise noted therein).
IN WITNESS WHEREOF, the undersigned has executed this Officer’s Certificate as of this day of , 20
|
|
||
| Name: | ||
| Title: | ||
| V ISION B ANCSHARES , I NC . | ||
| P.O. Box 4649 | ||
| Gulf Shores, Alabama 36547 | ||
| (251) 968-1001 | ||
G-2
Financial Definitions
|
Report Item |
Corresponding FRY-9C or LP Line Items with Line Item corresponding Schedules |
Description of Calculation |
||
| Tier 1 Risk Weighted Assets |
BHCK7206 Schedule HC-R |
Tier 1 Risk Ratio: Core Capital (Tier 1)/ Risk-Adjusted Assets | ||
| Ratio of Double Leverage |
(BHCP0365)/(BCHCP3210) Schedule PC in the LP |
Total equity investments in subsidiaries divided by the total equity capital. This field is calculated at the parent company level. “Subsidiaries” include bank, bank holding company, and non-bank subsidiaries. | ||
| Non-Performing Assets to Loans and OREO |
(BHCK5525-BHCK3506+BHCK5526-BHCK3507+BHCK2744/(BHCK2122+BHCK2744) Schedules HC-C, HC-M & HC-N |
Total Nonperforming Assets (NPLs+Foreclosed Real Estate+Other Nonaccrual & Repossessed Assets)/Total Loans+Foreclosed Real Estate | ||
| Tangible Common Equity as a Percentage of Tangible Assets |
(BHDM3210-BHCK3163)/(BHCK2170-BHCK3163) Schedule HC |
(Equity Capital – Goodwill)/(Total Assets – Goodwill) | ||
| Ratio of Reserves to Non-Performing Loans |
(BHCK3123+BHCK3128)/(BHCK5525-BHCK3506+BHCK5526-BHCK3507) Schedules HC & HC-N & HC-R |
Total Loan Loss and Allocated Transfer Risk Reserves/ Total Nonperforming Loans (Nonaccrual + Restructured) | ||
| Ratio of Net Charge-Offs to Loans |
(BHCK4635-BHCK4605)/(BHCK3516) Schedules HI-B & HC-K |
Net charge offs for the period as a percentage of average loans. | ||
| Return on Average Assets (annualized) |
(BHCK4340/BHCK3368) Schedules HI & HC-K |
Net Income as a percentage of Assets. | ||
G-4
|
Report Item |
Corresponding FRY-9C or LP Line Items with Line Item corresponding Schedules |
Description of Calculation |
||
| Net Interest Margin (annualized) |
(BHCK4519/(BHCK3515+BHCK3365+BHCK3516+BHCK3401+BHCKB985) Schedules HI Memorandum and HC-K |
(Net Interest Income Fully Taxable Equivalent, if available/Average Earning Assets) | ||
| Efficiency Ratio |
(BHCK4093)/(BHCK4519+BHCK4079) Schedule HI |
(Non-interest Expense)/(Net Interest Income Fully Taxable Equivalent, if available, plus Non-interest Income) | ||
| Ratio of Loans to Assets |
(BHCKB528+BHCK5369)/(BHCK2170) Schedule HC |
Total Loans & Leases (Net of Unearned Income & Gross of Reserve)/Total Assets | ||
| Ratio of Loans to Deposits |
(BHCKB528+BHCK5369)/(BHDM6631+BHDM6636+BHFN6631+BHFN6636) Schedule HC |
Total Loans & Leases (Net of Unearned Income & Gross of Reserve)/Total Deposits (Includes Domestic and Foreign Deposits) | ||
|
Total Assets |
(BHCK2170) Schedule HC |
The sum of total assets. Includes cash and balances due from depository institutions; securities; federal funds sold and securities purchased under agreements to resell; loans and lease financing receivables; trading assets; premises and fixed assets; other real estate owned; investments in unconsolidated subsidiaries and associated companies; customer’s liability on acceptances outstanding; intangible assets; and other assets. | ||
| Net Income |
(BHCK4300) Schedule HI |
The sum of income (loss)before extraordinary items and other adjustments and extraordinary items; and other adjustments, net of income taxes. | ||
G-5
Exhibit H
FORM OF
OFFICERS’ CERTIFICATE
UNDER
SECTION 8.16(a)
Pursuant to Section 8.16(a) of the Amended and Restated Trust Agreement, dated as of December 5, 2005 (as modified, supplemented or amended from time to time, the “Trust Agreement”) of Vision Bancshares Trust I, a Delaware statutory trust (the “Trust”), each of the undersigned hereby certifies that, to the knowledge of the undersigned, none of the Depositor, the Administrative Trustees and the Trust are in default in the performance or observance of any of the terms, provisions and conditions of the Trust Agreement (without regard to any period of grace or requirement of notice provided under the Trust Agreement) for the fiscal period ending on , 20 [, except as follows: specify each such default and the nature and status thereof ].
Capitalized terms used herein, and not otherwise defined herein, have the respective meanings assigned thereto in the Trust Agreement.
[ signatures appear on the next page ]
H-1
IN WITNESS WHEREOF, the undersigned have executed this Officers’ Certificate as of , 20 .
H-2
Schedule A
With respect to the Trust Securities, the London interbank offered rate (“LIBOR”) shall be determined by the Calculation Agent in accordance with the following provisions (in each case rounded to the nearest .000001%):
(1) On the second LIBOR Business Day (as defined below) prior to a Distribution Date (except, with respect to the first distribution payment period, on December 1, 2005) (each such day, a “LIBOR Determination Date”), LIBOR for any given security shall, for the following distribution period, equal the rate, as obtained by the Calculation Agent from Bloomberg Financial Markets Commodities News, for three-month U.S. Dollar deposits in Europe, which appears on Dow Jones Telerate Page 3750 (as defined in the International Swaps and Derivatives Association, Inc. 1991 Interest Rate and Currency Exchange Definitions), or such other page as may replace such Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date.
(2) If, on any LIBOR Determination Date, such rate does not appear on Dow Jones Telerate Page 3750 or such other page as may replace such Page 3750, the Calculation Agent shall determine the arithmetic mean of the offered quotations of the Reference Banks (as defined below) to leading banks in the London interbank market for three-month U.S. Dollar deposits in Europe in an amount determined by the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks. If, on any LIBOR Determination Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal such arithmetic mean of such quotations. If, on any LIBOR Determination Date, only one or none of the Reference Banks provide such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that leading banks in the City of New York selected by the Calculation Agent are quoting on the relevant LIBOR Determination Date for three-month U.S. Dollar deposits in Europe in an amount determined by the Calculation Agent by reference to the principal London offices of leading banks in the London interbank market; provided, that if the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR as determined on the previous LIBOR Determination Date.
(3) As used herein: “Reference Banks” means four major banks in the London interbank market selected by the Calculation Agent; and “LIBOR Business Day” means a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London.
A-1
Exhibit 10.16
JUNIOR SUBORDINATED INDENTURE
between
VISION BANCSHARES, INC.
and
WILMINGTON TRUST COMPANY,
as Trustee
Dated as of December 5, 2005
TABLE OF CONTENTS
| Page | ||||
|
ARTICLE I |
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION |
|||
|
SECTION 1.1 |
Definitions. |
1 | ||
|
SECTION 1.2. |
Compliance Certificate and Opinions. |
10 | ||
|
SECTION 1.3. |
Forms of Documents Delivered to Trustee. |
10 | ||
|
SECTION 1.4. |
Acts of Holders. |
11 | ||
|
SECTION 1.5. |
Notices, Etc. to Trustee and Company. |
13 | ||
|
SECTION 1.6. |
Notice to Holders; Waiver. |
13 | ||
|
SECTION 1.7. |
Effect of Headings and Table of Contents. |
14 | ||
|
SECTION 1.8. |
Successors and Assigns. |
14 | ||
|
SECTION 1.9. |
Separability Clause. |
14 | ||
|
SECTION 1.10. |
Benefits of Indenture. |
14 | ||
|
SECTION 1.11. |
Governing Law. |
14 | ||
|
SECTION 1.12. |
Submission to Jurisdiction. |
14 | ||
|
SECTION 1.13. |
Non-Business Days |
15 | ||
|
ARTICLE II |
SECURITY FORMS |
|||
|
SECTION 2.1. |
Form of Security. |
15 | ||
|
SECTION 2.2. |
Restricted Legend. |
20 | ||
|
SECTION 2.3. |
Form of Trustee’s Certificate of Authentication. |
24 | ||
|
SECTION 2.4. |
Temporary Securities. |
25 | ||
|
SECTION 2.5. |
Definitive Securities. |
25 | ||
|
ARTICLE III |
THE SECURITIES |
|||
|
SECTION 3.1. |
Payment of Principal and Interest. |
25 | ||
|
SECTION 3.2. |
Denominations. |
27 | ||
|
SECTION 3.3. |
Execution, Authentication, Delivery and Dating. |
27 | ||
|
SECTION 3.4. |
Global Securities. |
28 | ||
|
SECTION 3.5. |
Registration, Transfer and Exchange Generally. |
30 | ||
|
SECTION 3.6. |
Mutilated, Destroyed, Lost and Stolen Securities. |
31 | ||
|
SECTION 3.7. |
Persons Deemed Owners. |
32 | ||
|
SECTION 3.8. |
Cancellation. |
32 | ||
|
SECTION 3.9. |
Deferrals of Interest Payment Dates. |
32 | ||
|
SECTION 3.10 |
Right of Set-Off. |
34 | ||
|
SECTION 3.11. |
Agreed Tax Treatment. |
34 | ||
|
SECTION 3.12. |
CUSIP Numbers. |
34 | ||
|
ARTICLE IV |
SATISFACTION AND DISCHARGE |
|||
|
SECTION 4.1. |
Satisfaction and Discharge of Indenture. |
34 | ||
|
SECTION 4.2. |
Application of Trust Money. |
36 | ||
|
ARTICLE V |
REMEDIES |
|||
|
SECTION 5.1. |
Events of Default. |
36 | ||
|
SECTION 5.2. |
Acceleration of Maturity; Rescission and Annulment. |
37 | ||
|
SECTION 5.3. |
Collection of Indebtedness and Suits for Enforcement by Trustee. |
38 | ||
|
SECTION 5.4. |
Trustee May File Proofs of Claim. |
39 | ||
|
SECTION 5.5. |
Trustee May Enforce Claim Without Possession of Securities. |
39 | ||
|
SECTION 5.6. |
Application of Money Collected. |
39 | ||
|
SECTION 5.7. |
Limitation on Suits. |
40 | ||
-i-
|
SECTION 5.8. |
Unconditional Right of Holders to Receive Principal, Premium and Interest; Direct Action by Holders of Preferred Securities. |
40 | ||
|
SECTION 5.9. |
Restoration of Rights and Remedies. |
40 | ||
|
SECTION 5.10. |
Rights and Remedies Cumulative. |
41 | ||
|
SECTION 5.11. |
Delay or Omission Not Waiver. |
41 | ||
|
SECTION 5.12. |
Control by Holders. |
41 | ||
|
SECTION 5.13. |
Waiver of Past Defaults. |
42 | ||
|
SECTION 5.14. |
Undertaking for Costs. |
42 | ||
|
SECTION 5.15. |
Waiver of Usury, Stay or Extension Laws. |
42 | ||
|
ARTICLE VI |
THE TRUSTEE |
|||
|
SECTION 6.1. |
Corporate Trustee Required. |
43 | ||
|
SECTION 6.2. |
Certain Duties and Responsibilities. |
43 | ||
|
SECTION 6.3. |
Notice of Defaults. |
44 | ||
|
SECTION 6.4. |
Certain Rights of Trustee. |
44 | ||
|
SECTION 6.5. |
May Hold Securities. |
46 | ||
|
SECTION 6.6. |
Compensation; Reimbursement; Indemnity. |
46 | ||
|
SECTION 6.7. |
Resignation and Removal; Appointment of Successor. |
47 | ||
|
SECTION 6.8. |
Acceptance of Appointment by Successor. |
48 | ||
|
SECTION 6.9. |
Merger, Conversion, Consolidation or Succession to Business. |
49 | ||
|
SECTION 6.10. |
Not Responsible for Recitals or Issuance of Securities. |
49 | ||
|
SECTION 6.11. |
Appointment of Authenticating Agent. |
49 | ||
|
ARTICLE VII |
HOLDER’S LISTS AND REPORTS BY TRUSTEE AND COMPANY |
|||
|
SECTION 7.1. |
Company to Furnish Trustee Names and Addresses of Holders. |
51 | ||
|
SECTION 7.2. |
Preservation of Information, Communications to Holders. |
51 | ||
|
SECTION 7.3. |
Reports by Company. |
51 | ||
|
ARTICLE VIII |
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE |
|||
|
SECTION 8.1. |
Company May Consolidate, Etc., Only on Certain Terms. |
52 | ||
|
SECTION 8.2. |
Successor Company Substituted. |
53 | ||
|
ARTICLE IX |
SUPPLEMENTAL INDENTURES |
|||
|
SECTION 9.1. |
Supplemental Indentures without Consent of Holders. |
53 | ||
|
SECTION 9.2. |
Supplemental Indentures with Consent of Holders. |
54 | ||
|
SECTION 9.3. |
Execution of Supplemental Indentures. |
55 | ||
|
SECTION 9.4. |
Effect of Supplemental Indentures. |
55 | ||
|
SECTION 9.5. |
Reference in Securities to Supplemental Indentures. |
55 | ||
|
ARTICLE X |
COVENANTS |
|||
|
SECTION 10.1. |
Payment of Principal, Premium and Interest. |
55 | ||
|
SECTION 10.2. |
Money for Security Payments to be Held in Trust. |
55 | ||
|
SECTION 10.3. |
Statement as to Compliance. |
57 | ||
|
SECTION 10.4. |
Calculation Agent. |
57 | ||
|
SECTION 10.5. |
Additional Tax Sums. |
58 | ||
|
SECTION 10.6. |
Additional Covenants. |
58 | ||
|
SECTION 10.7. |
Waiver of Covenants. |
59 | ||
|
SECTION 10.8. |
Treatment of Securities. |
59 | ||
|
ARTICLE XI |
REDEMPTION OF SECURITIES |
|||
|
SECTION 11.1. |
Optional Redemption. |
59 | ||
|
SECTION 11.2. |
Special Event Redemption. |
60 | ||
|
SECTION 11.3. |
Election to Redeem; Notice to Trustee. |
60 | ||
|
SECTION 11.4. |
Selection of Securities to be Redeemed. |
60 | ||
-ii-
|
SECTION 11.5. |
Notice of Redemption. |
61 | ||
|
SECTION 11.6. |
Deposit of Redemption Price. |
62 | ||
|
SECTION 11.7. |
Payment of Securities Called for Redemption. |
62 | ||
|
ARTICLE XII |
SUBORDINATION OF SECURITIES |
|||
|
SECTION 12.1. |
Securities Subordinate to Senior Debt. |
62 | ||
|
SECTION 12.2. |
No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc. |
62 | ||
|
SECTION 12.3. |
Payment Permitted If No Default. |
64 | ||
|
SECTION 12.4. |
Subrogation to Rights of Holders of Senior Debt. |
64 | ||
|
SECTION 12.5. |
Provisions Solely to Define Relative Rights. |
65 | ||
|
SECTION 12.6. |
Trustee to Effectuate Subordination. |
65 | ||
|
SECTION 12.7. |
No Waiver of Subordination Provisions. |
65 | ||
|
SECTION 12.8. |
Notice to Trustee. |
66 | ||
|
SECTION 12.9. |
Reliance on Judicial Order or Certificate of Liquidating Agent. |
66 | ||
|
SECTION 12.10. |
Trustee Not Fiduciary for Holders of Senior Debt. |
67 | ||
|
SECTION 12.11. |
Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights. |
67 | ||
|
SECTION 12.12. |
Article Applicable to Paying Agents. |
67 | ||
SCHEDULES
|
Schedule A |
Determination of LIBOR | |
|
Exhibit A |
Form of Officer’s Certificate | |
|
Exhibit B |
Form of Officer’s Certificate pursuant to Section 10.3 |
-iii-
Exhibit A
J UNIOR S UBORDINATED I NDENTURE , dated as of December 5, 2005, between V ISION B ANCSHARES , I NC ., an Alabama corporation (the “ Company ”), and W ILMINGTON T RUST C OMPANY , a Delaware banking corporation, as Trustee (in such capacity, the “ Trustee ”).
R ECITALS OF THE C OMPANY
W HEREAS , the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its unsecured junior subordinated deferrable interest notes (the “ Securities ”) issued to evidence loans made to the Company of the proceeds from the issuance by Vision Bancshares Trust I, a Delaware statutory trust (the “ Trust ”), of undivided preferred beneficial interests in the assets of the Trust (the “ Preferred Securities ”) and undivided common beneficial interests in the assets of the Trust (the “ Common Securities ” and, collectively with the Preferred Securities, the “ Trust Securities ”), and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered; and
W HEREAS , all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.
Now, therefore, this Indenture Witnesseth:
For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows:
Definitions and Other Provisions of General Application
Definitions.
For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
the terms defined in this Article I have the meanings assigned to them in this Article I ;
the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”;
all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;
unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Indenture;
the words “hereby”, “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;
a reference to the singular includes the plural and vice versa; and
the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.
Exhibit A-1
“ Act ” when used with respect to any Holder, has the meaning specified in Section 1.4 .
“ Administrative Trustee ” means, with respect to the Trust, a Person identified as an “Administrative Trustee” in the Trust Agreement, solely in its capacity as Administrative Trustee of the Trust under the Trust Agreement and not in its individual capacity, or its successor in interest in such capacity, or any successor Administrative Trustee appointed as therein provided.
“ Additional Interest ” means the interest, if any, that shall accrue on any amounts payable on the Securities, the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security.
“ Additional Tax Sums ” has the meaning specified in Section 10.5 .
“ Additional Taxes ” means taxes, duties or other governmental charges imposed on the Trust as a result of a Tax Event (which, for the sake of clarity, does not include amounts required to be deducted or withheld by the Trust from payments made by the Trust to or for the benefit of the Holder of, or any Person that acquires a beneficial interest in, the Securities).
“ Affiliate ” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control,” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“ Applicable Depositary Procedures ” means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time.
“ Authenticating Agent ” means any Person authorized by the Trustee pursuant to Section 6.11 to act on behalf of the Trustee to authenticate the Securities.
“ Bankruptcy Code ” means Title 11 of the United States Code or any successor statute thereto, in each case as amended from time to time.
“ Board of Directors ” means the board of directors of the Company or any duly authorized committee of that board.
“ Board Resolution ” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.
“ Business Day ” means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business.
2
“ Calculation Agent ” has the meaning specified in Section 10.4 .
“ Capital Disqualification Event ” means the receipt by the Company of an Opinion of Counsel experienced in such matters that, as a result of an amendment to or a change in law or regulation (including any announced prospective change) or a change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than insubstantial risk that within ninety (90) days of the date of such opinion, the aggregate liquidation amount of the Preferred Securities will not be eligible to be treated by the Company as “Tier 1 Capital” (or the then equivalent) for purposes of the capital adequacy guidelines of the Federal Reserve or other “appropriate Federal banking agency” as such term is defined in 12 U.S.C. 1813(q), which amendment, change or prospective change becomes effective or would become effective, as the case may be, on or after the date of issuance of the Securities; provided, however, that the inability of the Company to treat all or any portion of the liquidation amount of the Preferred Securities as Tier 1 Capital shall not constitute the basis for a Capital Disqualification Event if such inability results from the Company having such Preferred Securities outstanding in an amount that for any reason is in excess of the amount which may now or hereafter qualify for treatment as Tier 1 Capital under applicable capital adequacy guidelines. By way of example, the inability of the Company to treat all or any portion of the liquidation amount of the Preferred Securities as Tier 1 Capital as a result of the final rule on Risk-Based Capital Standards: Trust Preferred Securities and the Definition of Capital, adopted on March 1, 2005, by the Federal Reserve, shall not constitute the basis for a Capital Disqualification Event.
“ Common Securities ” has the meaning specified in the first recital of this Indenture.
“ Common Stock ” means the common stock, par value $1.00 per share, of the Company.
“ Company ” means the Person named as the “ Company ” in the first paragraph of this Indenture until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “ Company ” shall mean such successor corporation.
“ Company Request ” and “ Company Order ” mean, respectively, the written request or order signed in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its Chief Executive Officer, President or a Vice President, and by its Chief Financial Officer, Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.
“ Corporate Trust Office ” means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of this Indenture is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Capital Markets.
“ Debt ” means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person, whether currently existing or hereafter incurred and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every
3
reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or other accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Indenture or thereafter incurred, for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii).
“ Defaulted Interest ” has the meaning specified in Section 3.1 .
“ Delaware Trustee ” means, with respect to the Trust, the Person identified as the “Delaware Trustee” in the Trust Agreement, solely in its capacity as Delaware Trustee of the Trust under the Trust Agreement and not in its individual capacity, or its successor in interest in such capacity, or any successor Delaware Trustee appointed as therein provided.
“ Depositary ” means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Company or any successor thereto. DTC will be the initial Depositary.
“ Depositary Participant ” means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.
“ Distributions ” means amounts payable in respect of the Trust Securities as provided in the Trust Agreement and referred to therein as “Distributions.”
“ Dollar ” or “$” means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts.
“ DTC ” means The Depository Trust Company, a New York corporation.
“ Event of Default ” has the meaning specified in Section 5.1 .
“ Exchange Act ” means the Securities Exchange Act of 1934 or any statute successor thereto, in each case as amended from time to time.
“ Expiration Date ” has the meaning specified in Section 1.4 .
“ Extension Period ” has the meaning specified in Section 3.9 .
“ Federal Reserve ” means the Board of Governors of the Federal Reserve System, the staff thereof, or a Federal Reserve Bank, acting through delegated authority, in each case under the rules,
4
regulations and policies of the Federal Reserve System, or if at any time after the execution of this Indenture any such entity is not existing and performing the duties now assigned to it, any successor body performing similar duties or functions.
“ GAAP ” means United States generally accepted accounting principles, consistently applied, from time to time in effect.
“ Global Security ” means a Security that evidences all or part of the Securities, the ownership and transfers of which shall be made through book entries by a Depositary.
“ Government Obligation ” means (a) any security that is (i) a direct obligation of the United States of America of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (b) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any Government Obligation that is specified in clause (a) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any Government Obligation that is so specified and held, provided , that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.
“ Guarantee Agreement ” means the Guarantee Agreement executed by the Company and Wilmington Trust Company, as Guarantee Trustee, contemporaneously with the execution and delivery of this Indenture, for the benefit of the holders of the Preferred Securities, as modified, amended or supplemented from time to time.
“ Holder ” means a Person in whose name a Security is registered in the Securities Register.
“ Indenture ” means this instrument as originally executed or as it may from time to time be amended or supplemented by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof.
“ Interest Payment Date ” means March 30, June 30, September 30 and December 30 of each year, commencing on December 30, 2005, during the term of this Indenture.
“ Investment Company Act ” means the Investment Company Act of 1940 or any successor statute thereto, in each case as amended from time to time.
“ Investment Company Event ” means the receipt by the Company of an Opinion of Counsel experienced in such matters to the effect that, as a result of the occurrence of a change in law or regulation (including any announced prospective change) or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Trust is or, within ninety (90) days of the date of such opinion will be, considered an “investment company” that is required to be registered under the Investment Company Act, which change or prospective change becomes effective or would become effective, as the case may be, on or after the date of the issuance of the Securities.
5
“ LIBOR ” has the meaning specified in Schedule A .
“ LIBOR Business Day ” has the meaning specified in Schedule A .
“ LIBOR Determination Date ” has the meaning specified in Schedule A .
“ Liquidation Amount ” has the meaning specified in the Trust Agreement.
“ Maturity ,” when used with respect to any Security, means the date on which the principal of such Security or any 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 or otherwise.
“ Major Bank Subsidiary ,” means any subsidiary of the Company that (i) is a depository institution and (ii) meets the definition of “significant subsidiary” within the meaning of Regulation S-X promulgated by the Securities and Exchange Commission.
“ Notice of Default ” means a written notice of the kind specified in Section 5.1(d) .
“ Officers’ Certificate ” means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the Chief Executive Officer, President or a Vice President, and by the Chief Financial Officer, Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company and delivered to the Trustee.
“ Opinion of Counsel ” means a written opinion of counsel, who may be counsel for or an employee of the Company or any Affiliate of the Company.
“ Original Issue Date ” means the date of original issuance of each Security.
“ Outstanding ” means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:
Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;
Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Securities; provided , that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and
Securities that have been paid, or in substitution for or in lieu of which other Securities have been authenticated and delivered pursuant to the provisions of this Indenture, unless proof satisfactory to the Trustee is presented that any such Securities are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company;
provided , that, in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor. Notwithstanding anything herein to the contrary, Securities initially issued to the Trust that are owned by the Trust shall be deemed to be Outstanding notwithstanding the ownership by the Company or an Affiliate of any beneficial interest in the Trust.
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“ Paying Agent ” means the Trustee or any Person authorized by the Company to pay the principal of or any premium or interest on, or other amounts in respect of, any Securities on behalf of the Company.
“ Person ” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, government or any agency or political subdivision thereof, or any other entity of whatever nature.
“ Place of Payment ” means, with respect to the Securities, the Corporate Trust Office of the Trustee.
“ Placement Agent ” has the meaning specified in the Trust Agreement.
“ Preferred Securities ” has the meaning specified in the first recital of this Indenture.
“ Predecessor Security ” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security. For the purposes of this definition, any security authenticated and delivered under Section 3.6 in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
“ Proceeding ” has the meaning specified in Section 12.2 .
“ Property Trustee ” means the Person identified as the “Property Trustee” in the Trust Agreement, solely in its capacity as Property Trustee of the Trust under the Trust Agreement and not in its individual capacity, or its successor in interest in such capacity, or any successor Property Trustee appointed as therein provided.
“ Purchaser ” means Credit Suisse, acting through its Cayman Islands branch, as purchaser of the Preferred Securities pursuant to the Subscription Agreement.
“ Redemption Date ” means, when used with respect to any Security to be redeemed, the date fixed for such redemption by or pursuant to this Indenture.
“ Redemption Price ” means, when used with respect to any Security to be redeemed, in whole or in part, the price at which such Security or portion thereof is to be redeemed as fixed by or pursuant to this Indenture.
“ Reference Banks ” has the meaning specified in Schedule A .
“ Regular Record Date ” for the interest payable on any Interest Payment Date with respect to the Securities means the date that is fifteen (15) days preceding such Interest Payment Date (whether or not a Business Day).
“ Responsible Officer ” means, with respect to the Trustee, any Senior Vice President, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer,
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any Assistant Treasurer, any Trust Officer or Assistant Trust Officer, or any other officer in the Corporate Trust Office of the Trustee with direct responsibility for the administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer’s knowledge of and familiarity with the particular subject.
“ Rights Plan ” means a plan of the Company providing for the issuance by the Company to all holders of its Common Stock of rights entitling the holders thereof to subscribe for or purchase shares of any class or series of capital stock of the Company which rights (i) are deemed to be transferred with such shares of such Common Stock and (ii) are also issued in respect of future issuances of such Common Stock, in each case until the occurrence of a specified event or events.
“ Securities ” or “ Security ” means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture.
“ Securities Act ” means the Securities Act of 1933 or any successor statute thereto, in each case as amended from time to time.
“ Securities Register ” and “ Securities Registrar ” have the respective meanings specified in Section 3.5 .
“ Senior Debt ” means the principal of and any premium and interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company, whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of the Company, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior in right of payment to the Securities; provided, however, that if the Company is subject to the regulation and supervision of an “appropriate Federal banking agency” within the meaning of 12 U.S.C. 1813(q), the Company shall have received the approval of such appropriate Federal banking agency prior to issuing any such obligation if not otherwise generally approved; provided further, that Senior Debt shall not include any other debt securities, and guarantees in respect of such debt securities, issued to any trust other than the Trust (or a trustee of such trust), partnership or other entity affiliated with the Company that is a financing vehicle of the Company (a “financing entity”), in connection with the issuance by such financing entity of equity securities or other securities that are treated as equity capital for regulatory capital purposes guaranteed by the Company pursuant to an instrument that ranks pari passu with or junior in right of payment to the Securities.
“ Special Event ” means the occurrence of a Capital Disqualification Event, an Investment Company Event or a Tax Event.
“ Special Event Redemption Price ” has the meaning specified in Section 11.2 .
“ Special Record Date ” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.1 .
“ Stated Maturity ” means December 30, 2035.
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“ Subscription Agreement ” means the Preferred Securities Subscription Agreement, dated as of December 5, 2005, by and among the Company, the Trust, the Purchaser and Credit Suisse First Boston LLC (as to certain provisions thereof).
“ Subsidiary ” means a Person more than fifty percent (50%) of the outstanding voting stock or other voting interests of which is owned, directly or indirectly, by the Company or by one or more other Subsidiaries, or by the Company and one or more other Subsidiaries. For purposes of this definition, “voting stock” means stock that ordinarily has voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power by reason of any contingency.
“ Tax Event ” means the receipt by the Company of an Opinion of Counsel experienced in such matters to the effect that, as a result of (a) any amendment to or change (including any announced prospective change) in the laws or any regulations thereunder of the United States or any political subdivision or taxing authority thereof or therein or (b) any judicial decision or any official administrative pronouncement (including any private letter ruling, technical advice memorandum or field service advice) or regulatory procedure, including any notice or announcement of intent to adopt any such pronouncement or procedure (an “Administrative Action”), regardless of whether such judicial decision or Administrative Action is issued to or in connection with a proceeding involving the Company or the Trust and whether or not subject to review or appeal, which amendment, change, judicial decision or Administrative Action is enacted, promulgated or announced, in each case, on or after the date of issuance of the Securities, there is more than an insubstantial risk that (i) the Trust is, or will be within ninety (90) days of the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Securities, (ii) interest payable by the Company on the Securities is not, or within ninety (90) days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes, or (iii) the Trust is, or will be within ninety (90) days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges.
“ Trust ” has the meaning specified in the first recital of this Indenture.
“ Trust Agreement ” means the Amended and Restated Trust Agreement executed and delivered by the Company, the Property Trustee, the Delaware Trustee and the Administrative Trustees named therein, contemporaneously with the execution and delivery of this Indenture, for the benefit of the holders of the Trust Securities, as amended or supplemented from time to time.
“ Trustee ” means the Person named as the “ Trustee ” in the first paragraph of this instrument, solely in its capacity as such and not in its individual capacity, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and, thereafter, “ Trustee ” shall mean or include each Person who is then a Trustee hereunder.
“ Trust Indenture Act ” means the Trust Indenture Act of 1939, as amended and as in effect on the date as of this Indenture.
“ Trust Securities ” has the meaning specified in the first recital of this Indenture.
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Compliance Certificate and Opinions .
Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall furnish to the Trustee an Officers’ Certificate stating that all conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, have been complied with, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need be furnished.
Every certificate delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificate provided pursuant to Section 10.3 ) shall include:
a statement by each individual signing such certificate or opinion that such individual has read such covenant or condition and the definitions herein relating thereto;
a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions of such individual contained in such certificate or opinion are based;
a statement that, in the opinion of such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and
a statement as to whether, in the opinion of such individual, such condition or covenant has been complied with.
Forms of Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to matters upon which his or her certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to such matters are erroneous.
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Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officers’ Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force and effect as if originally received in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted. Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities.
Acts of Holders.
Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent thereof duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments (including any appointment of an agent) is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “ Act ” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.4 .
The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof. Where such execution is by a Person acting in other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority. The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine.
The ownership of Securities shall be proved by the Securities Register.
Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.
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Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.
Except as set forth in paragraph (g) of this Section 1.4 , the Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided , that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date (as defined below) by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities in the manner set forth in Section 1.6 .
The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration or rescission or annulment thereof referred to in Section 5.2 , (iii) any request to institute proceedings referred to in Section 5.7(b) or (iv) any direction referred to in Section 5.12 . If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided , that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company’s expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities in the manner set forth in Section 1.6 .
With respect to any record date set pursuant to paragraph (f) or (g) of this Section 1.4 , the party hereto that sets such record date may designate any day as the “ Expiration Date ” and from time to time may change the Expiration Date to any earlier or later day; provided , that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other
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party hereto in writing, and to each Holder of Securities in the manner set forth in Section 1.6 , on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section 1.4 , the party hereto that set such record date shall be deemed to have initially designated the ninetieth (90 th ) day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the one hundred and eightieth (180 th ) day after the applicable record date.
Notices, Etc.
Any request, demand, authorization, direction, notice, consent, waiver, Act of Holders, or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:
the Trustee by any Holder, any holder of Preferred Securities or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Trustee at its Corporate Trust Office,
the Company by the Trustee, any Holder or any holder of Preferred Securities shall be sufficient for every purpose hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at P.O. Box 4649, Gulf Shores, Alabama 36547, Attn: Chief Financial Officer, or at any other address previously furnished in writing to the Trustee by the Company,
the Placement Agent by the Trustee, the Company, any Holder or any holder or beneficial owner of the Preferred Securities, shall be sufficient for every purpose hereunder if in writing and mailed, first-class postage prepaid to the Placement Agent at Eleven Madison Avenue, New York, New York 10010, Attention: CDO Group, or any other address previously furnished by the Placement Agent, or
(d) the Purchaser by the Trustee, the Company, any Holder or any holder or beneficial owner of the Preferred Securities, shall be sufficient for every purpose hereunder if in writing and mailed first-class postage prepaid to the Purchaser at c/o Credit Suisse First Boston LLC, Eleven Madison Avenue, New York, New York 10010, Attention: CDO Group, or any other address previously furnished by the Purchaser.
Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class, postage prepaid, to each Holder affected by such event to the address of such Holder as it appears in the Securities Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. If, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice,
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either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction of this Indenture.
Successors and Assigns.
This Indenture shall be binding upon and shall inure to the benefit of any successor to the Company and the Trustee, including any successor by operation of law. Except in connection with a transaction involving the Company that is permitted under Article VIII and pursuant to which the assignee agrees in writing to perform the Company’s obligations hereunder, the Company shall not assign its obligations hereunder.
Separability Clause.
If any provision in this Indenture or in 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, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.
Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Debt, the Holders of the Securities and, to the extent expressly provided in Sections 5.2 , 5.8 , 5.9 , 5.11 , 5.13 , 9.2 and 10.7 , the holders of Preferred Securities, any benefit or any legal or equitable right, remedy or claim under this Indenture.
Governing Law.
This Indenture and the rights and obligations of each of the Holders, the Company and the Trustee shall be construed and enforced in accordance with and governed by the laws of the State of New York without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).
Submission to Jurisdiction.
ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS INDENTURE MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH PARTY ACCEPTS, FOR
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ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE.
Non-Business Days.
If any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest, premium, if any, or principal or other amounts in respect of such Security shall not be made on such date, but shall be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day) except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity.
Security Forms
Form of Security.
Any Security issued hereunder shall be in substantially the following form:
Vision Bancshares, Inc.
Floating Rate Junior Subordinated Note due 2035
|
No. |
$ |
Vision Bancshares, Inc., a corporation organized and existing under the laws of Alabama (hereinafter called the “ Company ,” which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to , or registered assigns, the principal sum of $ Dollars [ if the Security is a Global Security, then insert — or such other principal amount represented hereby as may be set forth in the records of the Securities Registrar hereinafter referred to in accordance with the Indenture] on , 203 . The Company further promises to pay interest on said principal sum from , 200 , or from the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on March 30th, June 30th, September 30th and December 30th of each year, commencing on , 200 , or if any such day is not a Business Day, on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date until such next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on the Interest Payment Date, at a variable rate per annum, reset quarterly, equal to LIBOR plus 1.48%, together with Additional Tax Sums, if any, as provided in
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Section 10.5 of the Indenture, until the principal hereof is paid or duly provided for or made available for payment; provided , [ further ,] that any overdue principal, premium, if any, or Additional Tax Sums and any overdue installment of interest shall bear Additional Interest (to the extent that the payment of such interest shall be legally enforceable) at a variable rate per annum, reset quarterly, equal to LIBOR plus 1.48%, compounded quarterly, from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand.
The amount of interest payable shall be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant interest period. The amount of interest payable for any full interest period shall be computed by dividing the applicable rate per annum by four. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Securities may be listed, traded or quoted and upon such notice as may be required by such exchange or automated quotation system, all as more fully provided in the Indenture.
So long as no Event of Default pursuant to Sections 5.1(c), (e), (f), (g) or (h) of the Indenture has occurred and is continuing, the Company shall have the right, at any time and from time to time during the term of this Security, to defer the payment of interest on this Security for a period of up to twenty (20) consecutive quarterly interest payment periods (each such period, an “ Extension Period ”), during which Extension Period(s), no interest shall be due and payable (except any Additional Tax Sums that may be due and payable). No Extension Period shall end on a date other than an Interest Payment Date, and no Extension Period shall extend beyond the Stated Maturity of the principal of this Security. No interest shall be due and payable during an Extension Period (except any Additional Tax Sums that may be due and payable), except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest (to the extent payment of such interest would be legally enforceable) at a variable rate per annum, reset quarterly, equal to LIBOR plus 1.48%, compounded quarterly, from the dates on which amounts would have otherwise been due and payable until paid or made available for payment. At the end of any such Extension Period, the Company shall pay all interest then accrued and unpaid on this Security, together with such Additional Interest. Prior to the termination of any such Extension Period, the Company may further defer the payment of interest; provided , that (i) all such previous and further extensions comprising such Extension Period do not exceed twenty (20) quarterly interest payment periods, (ii) no Extension Period shall end on a date other than an Interest Payment Date and (iii) no Extension Period shall extend beyond the Stated Maturity of the principal of this Security. Upon the termination of any such Extension Period and upon the payment of all accrued and unpaid interest and any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Extension Period; provided , that (i) such Extension Period does not exceed twenty (20) quarterly interest payment periods, (ii) no Extension Period shall end on
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a date other than an Interest Payment Date, (iii) no Extension Period shall extend beyond the Stated Maturity of the principal of this Security and (iv) no Event of Default pursuant to Sections 5.1(c), (e), (f), (g) or (h) has occurred and is continuing. The Company shall give (i) the Holder of this Security, (ii) the Trustee, (iii) the Property Trustee and (iv) any beneficial owner of the Preferred Securities reasonably identified to the Company (which identification may be made either by such beneficial owner or by the Placement Agent or the Purchaser) written notice of its election to begin any such Extension Period no later than the close of business on the fifteenth (15 th ) Business Day prior to the next succeeding Interest Payment Date on which interest on this Security would be payable but for such deferral.
During any such Extension Period, the Company shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company’s capital stock or (ii) make any payment of principal of or any interest or premium on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to this Security (other than (a) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with (1) any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, (2) a dividend reinvestment or stockholder stock purchase plan or (3) the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, (b) as a result of an exchange or conversion of any class or series of the Company’s capital stock (or any capital stock of a Subsidiary of the Company) for any class or series of the Company’s capital stock or of any class or series of the Company’s indebtedness for any class or series of the Company’s capital stock, (c) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (d) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan, or the redemption or repurchase of rights pursuant thereto or (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock).
Payment of principal of, premium, if any, and interest on this Security shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and interest due at the Maturity of this Security shall be made at the office or agency of the Company maintained for that purpose in the Place of Payment upon surrender of such Securities to the Paying Agent, and payments of interest shall be made, subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register. Notwithstanding the foregoing, so long as the holder of this Security is the Property Trustee, the payment of the principal of (and premium, if any) and interest (including any overdue installment of interest and Additional Tax Sums, if any) on this Security will be made at such place and to such account as may be designated by the Property Trustee.
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The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.
Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
This Security is one of a duly authorized issue of securities of the Company (the “ Securities ”) issued under the Junior Subordinated Indenture, dated as of December 5, 2005 (the “ Indenture ”), between the Company and Wilmington Trust Company, as Trustee (in such capacity, the “ Trustee ,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Debt and the Holders of the Securities, and of the terms upon which the Securities are, and are to be, authenticated and delivered.
All terms used in this Security that are defined in the Indenture or in the Amended and Restated Trust Agreement, dated as of December 5, 2005 (as modified, amended or supplemented from time to time, the “ Trust Agreement ”), relating to Vision Bancshares Trust I (the “ Trust ”), among the Company, as Depositor, the Trustees named therein and the Holders from time to time of the Trust Securities issued pursuant thereto, shall have the meanings assigned to them in the Indenture or the Trust Agreement, as the case may be.
The Company may, on any Interest Payment Date, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee) on or after December 30, 2010 and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time at a Redemption Price equal to one hundred percent (100%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, to but excluding the date fixed for redemption; provided , that the Company shall have received the prior approval of the Federal Reserve if then required.
In addition, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to
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the Trustee), redeem this Security, in whole but not in part, subject to the terms and conditions of Article XI of the Indenture at the Special Event Redemption Price; provided , that the Company shall have received the prior approval of the Federal Reserve if then required.
In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security.
The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than a majority in principal amount of the Outstanding Securities. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities, on behalf of the Holders of all Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium and interest, including any Additional Interest, on this Security at the times, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar and duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Securities, of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
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No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
The Company and, by its acceptance of this Security or a beneficial interest herein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that, for United States federal, state and local tax purposes, it is intended that this Security constitute indebtedness.
This Security shall be construed and enforced in accordance with and governed by the laws of the State of New York, without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).
IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed.
| Vision Bancshares, Inc. | ||
| By: |
|
|
| Name: | ||
| Title: | ||
Restricted Legend.
Any Security issued hereunder shall bear a legend in substantially the following form:
“[ IF THIS SECURITY IS A GLOBAL SECURITY INSERT : THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC
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TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY, (II) TO A PERSON
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WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) TO AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF AN “ACCREDITED INVESTOR,” WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (IV) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (V) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND, IN THE CASE OF (III) OR (V), SUBJECT TO THE RIGHT OF THE COMPANY TO REQUIRE AN OPINION OF COUNSEL ADDRESSING COMPLIANCE WITH THE U.S. SECURITIES LAWS, AND OTHER INFORMATION SATISFACTORY TO IT AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND
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MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.
THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ ERISA ”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “ CODE ”) (EACH A “ PLAN ”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY, OR ANY INTEREST THEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE AND HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL
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BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN TO WHICH TITLE I OF ERISA OR SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE OR HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH FULL EXEMPTIVE RELIEF IS NOT AVAILABLE UNDER APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE “ FDIC ”).”
The above legends shall not be removed from any Security unless there is delivered to the Company satisfactory evidence, which may include an Opinion of Counsel, as may be reasonably required to ensure that any future transfers thereof may be made without restriction under or violation of the provisions of the Securities Act and other applicable law. Upon provision of such satisfactory evidence, the Company shall execute and deliver to the Trustee, and the Trustee shall deliver, at the written direction of the Company, a Security that does not bear the legend.
Form of Trustee’s Certificate of Authentication.
The Trustee’s certificates of authentication shall be in substantially the following form:
This represents Securities designated therein and referred to in the within-mentioned Indenture.
Dated:
| WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Trustee | ||
| By: |
|
|
| Authorized officer | ||
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Temporary Securities.
Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.
If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.
Definitive Securities.
The Securities issued on the Original Issue Date shall be in definitive form. The definitive Securities shall be printed, lithographed or engraved, or produced by any combination of these methods, if required by any securities exchange on which the Securities may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.
The Securities
Payment of Principal and Interest.
The unpaid principal amount of the Securities shall bear interest at a variable rate per annum, reset quarterly, equal to LIBOR plus 1.48% until paid or duly provided for, such interest to accrue from the Original Issue Date or from the most recent Interest Payment Date to which interest has been paid or duly provided for, and any overdue principal, premium or Additional
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Tax Sums and any overdue installment of interest shall bear Additional Interest (to the extent payment of such interest would be legally enforceable) at a variable rate per annum, reset quarterly, equal to LIBOR plus 1.48% from the dates such amounts are due until they are paid or funds for the payment thereof are made available for payment.
Interest and Additional Interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, except that interest and any Additional Interest payable on the Stated Maturity (or any date of principal repayment upon early maturity) of the principal of a Security or on a Redemption Date shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security that is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security.
Any interest on any Security that is due and payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities (herein called “ Defaulted Interest ”) shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (i) or (ii) below:
The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment of such Defaulted Interest (a “ Special Record Date ”), which shall be fixed in the following manner. At least thirty (30) days prior to the date of the proposed payment, the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than fifteen (15) days and not less than ten (10) days prior to the date of the proposed payment and not less than ten (10) days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security at the address of such Holder as it appears in the Securities Register not less than ten (10) days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered on such Special Record Date; or
The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Securities may be listed traded or quoted and, upon such notice as may be required by such exchange or automated quotation system (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such payment shall be deemed practicable by the Trustee.
Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. Interest payments for the Securities shall be computed and
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paid on the basis of a 360-day year and the actual number of days elapsed in the relevant interest period. The amount of interest payable for any full interest period shall be computed by dividing the applicable rate per annum by four.
Payment of principal of, premium, if any, and interest on the Securities shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and interest due at the Maturity of such Securities shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent and payments of interest shall be made subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register. Notwithstanding the foregoing, so long as the holder of the Security is the Property Trustee, the payment of the principal of (and premium if any) and interest (including any overdue installment of interest and Additional Tax Sums, if any) on the Security will be made at such place and to such account as may be designated by the Property Trustee.
Subject to the foregoing provisions of this Section 3.1 , each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.
Denominations.
The Securities shall be in registered form without coupons and shall be issuable in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof.
Execution, Authentication, Delivery and Dating.
At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities in an aggregate principal amount (including all then Outstanding Securities) not in excess of $15,464,000 executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and shall be fully protected in relying upon:
a copy of any Board Resolution relating thereto; and
an Opinion of Counsel stating that (1) such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; (2) the Securities have been duly authorized and executed by the Company and have been delivered to the Trustee for authentication in accordance with this Indenture; and (3) the Securities are not required to be registered under the Securities Act.
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The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Vice Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.
No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized officers, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in Section 3.8 , for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.
Each Security shall be dated the date of its authentication.
Global Securities.
Upon the election of the Holder after the Original Issue Date, which election need not be in writing, the Securities owned by such Holder shall be issued in the form of one or more Global Securities registered in the name of the Depositary or its nominee. Each Global Security issued under this Indenture shall be registered in the name of the Depositary designated by the Company for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.
Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for registered Securities, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Security, and no qualified successor is appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90) days after obtaining knowledge of such event, (iii) the Company executes and delivers to the Trustee a Company Order stating that the Company elects to terminate the book-entry system through the Depositary or (iv) an Event of Default shall have occurred and be continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Trustee shall notify the Depositary and instruct the Depositary to notify all owners of beneficial interests in such Global Security of the occurrence of such event and of the availability of Securities to such owners of beneficial interests
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requesting the same. Upon the issuance of such Securities and the registration in the Securities Register of such Securities in the names of the Holders of the beneficial interests therein, the Trustees shall recognize such holders of beneficial interests as Holders.
If any Global Security is to be exchanged for other Securities or canceled in part, or if another Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation as provided in this Article III or (ii) the principal amount thereof shall be reduced or increased by an amount equal to the portion thereof to be so exchanged or canceled, or equal to the principal amount of such other Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Trustee, in accordance with the Applicable Depositary Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Security by the Depositary, accompanied by registration instructions, the Company shall execute and the Trustee shall authenticate and deliver any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depositary. The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.
Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.
Securities distributed to holders of Book-Entry Preferred Securities (as defined in the Trust Agreement) upon the dissolution of the Trust shall be distributed in the form of one or more Global Securities registered in the name of a Depositary or its nominee, and deposited with the Securities Registrar, as custodian for such Depositary, or with such Depositary, for credit by the Depositary to the respective accounts of the beneficial owners of the Securities represented thereby (or such other accounts as they may direct). Securities distributed to holders of Preferred Securities other than Book-Entry Preferred Securities upon the dissolution of the Trust shall not be issued in the form of a Global Security or any other form intended to facilitate book-entry trading in beneficial interests in such Securities.
The Depositary or its nominee, as the registered owner of a Global Security, shall be the Holder of such Global Security for all purposes under this Indenture and the Securities, and owners of beneficial interests in a Global Security shall hold such interests pursuant to the Applicable Depositary Procedures. Accordingly, any such owner’s beneficial interest in a Global Security shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Depositary Participants. The Securities Registrar and the Trustee shall be entitled to deal with the Depositary for all purposes of this Indenture relating to a Global Security (including the payment of principal and interest thereon and the giving of instructions or directions by owners of beneficial interests therein and the giving of notices) as the sole Holder of the Security and shall have no obligations to the owners of beneficial interests therein. Neither the Trustee nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depositary.
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The rights of owners of beneficial interests in a Global Security shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its Depositary Participants.
No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company, the Trustee nor any agent of the Company or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Security.
Registration, Transfer and Exchange Generally.
The Trustee shall cause to be kept at the Corporate Trust Office a register (the “ Securities Register ”) in which the registrar and transfer agent with respect to the Securities (the “ Securities Registrar ”), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Securities and of transfers and exchanges of Securities. The Trustee shall at all times also be the Securities Registrar. The provisions of Article VI shall apply to the Trustee in its role as Securities Registrar.
Subject to compliance with Section 2.2(b), upon surrender for registration of transfer of any Security at the offices or agencies of the Company designated for that purpose the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations of like tenor and aggregate principal amount.
At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations, of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and upon receipt thereof the Trustee shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive.
All Securities issued upon any 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 transfer or exchange.
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Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.
No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities.
Neither the Company nor the Trustee shall be required pursuant to the provisions of this Section 3.5 to (i) issue, register the transfer of or exchange any Security during a period beginning at the opening of business fifteen (15) days before the day of selection for redemption of Securities pursuant to Article XI and ending at the close of business on the day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except, in the case of any such Security to be redeemed in part, any portion thereof not to be redeemed.
The Company shall designate an office or offices or agency or agencies where Securities may be surrendered for registration or transfer or exchange. The Company initially designates the Corporate Trust Office as its office and agency for such purposes. The Company shall give prompt written notice to the Trustee and to the Holders of any change in the location of any such office or agency.
Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Company or the Trustee to save each of them harmless, the Company shall execute and upon receipt thereof the Trustee shall authenticate and deliver in exchange therefor a new Security of like tenor and aggregate principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and to the Trustee (i) evidence to their satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and aggregate principal amount as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding.
If any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section 3.6 , the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
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Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, 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 proportionately with any and all other Securities duly issued hereunder.
The provisions of this Section 3.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
Persons Deemed Owners.
The Company, the Trustee and any agent of the Company or the Trustee shall treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any interest on such Security and for all other purposes whatsoever, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.
Cancellation.
All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section 3.8 , except as expressly permitted by this Indenture. All canceled Securities shall be disposed of by the Trustee in accordance with its customary practices and the Trustee shall deliver to the Company a certificate of such disposition.
Deferrals of Interest Payment Dates.
So long as no Event of Default pursuant to Sections 5.1(c), (e), (f), (g) or (h) has occurred and is continuing, the Company shall have the right, at any time and from time to time during the term of the Security, to defer the payment of interest on the Securities for a period of up to twenty (20) consecutive quarterly interest payment periods (each such period, an “ Extension Period ”), during which Extension Period(s), the Company shall have the right to make no payments or partial payments of interest on any Interest Payment Date (except any Additional Tax Sums that otherwise may be due and payable). No Extension Period shall end on a date other than an Interest Payment Date and no Extension Period shall extend beyond the Stated Maturity of the principal of the Securities. No interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise
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have been due and payable during such Extension Period shall bear Additional Interest (to the extent payment of such interest would be legally enforceable) at a variable rate per annum, reset quarterly, equal to LIBOR plus 1.48%, compounded quarterly, from the dates on which amounts would have otherwise been due and payable until paid or until funds for the payment thereof have been made available for payment. At the end of any such Extension Period, the Company shall pay all interest then accrued and unpaid on the Securities together with such Additional Interest. Prior to the termination of any such Extension Period, the Company may extend such Extension Period and further defer the payment of interest; provided , that (i) all such previous and further extensions comprising such Extension Period do not exceed twenty (20) quarterly interest payment periods, (ii) no Extension Period shall end on a date other than an Interest Payment Date and (iii) no Extension Period shall extend beyond the Stated Maturity of the principal of the Securities. Upon the termination of any such Extension Period and upon the payment of all accrued and unpaid interest and any Additional Interest then due on any Interest Payment Date, the Company may elect to begin a new Extension Period; provided , that (i) such Extension Period does not exceed twenty (20) quarterly interest payment periods, (ii) no Extension Period shall end on a date other than an Interest Payment Date, (iii) no Extension Period shall extend beyond the Stated Maturity of the principal of the Securities and (iv) no Event of Default pursuant to Sections 5.1(c), (e), (f), (g) or (h) has occurred and is continuing. The Company shall give (i) the Holders of the Securities, (ii) the Trustee, (iii) the Property Trustee and (iv) any beneficial owner of the Preferred Securities reasonably identified to the Company (which identification may be made either by such beneficial owner or by the Placement Agent or the Purchaser) written notice of its election to begin any such Extension Period no later than the close of business on the fifteenth (15th) Business Day prior to the next succeeding Interest Payment Date on which interest on the Securities would be payable but for such deferral.
In connection with any such Extension Period, the Company shall be subject to the restrictions set forth in Section 10.6(a) .
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Right of Set-Off.
Notwithstanding anything to the contrary herein, the Company shall have the right to set off any payment it is otherwise required to make in respect of any Security to the extent the Company has theretofore made, or is concurrently on the date of such payment making, a payment under the Guarantee Agreement relating to such Security or to a holder of Preferred Securities pursuant to an action undertaken under Section 5.8 of this Indenture.
Agreed Tax Treatment.
Each Security issued hereunder shall provide that the Company and, by its acceptance or acquisition of a Security or a beneficial interest therein, the Holder of, and any Person that acquires a direct or indirect beneficial interest in, such Security, intend and agree to treat such Security as indebtedness of the Company for United States Federal, state and local tax purposes and to treat the Preferred Securities (including but not limited to all payments and proceeds with respect to the Preferred Securities) as an undivided beneficial ownership interest in the Securities (and payments and proceeds therefrom, respectively) for United States Federal, state and local tax purposes. The provisions of this Indenture shall be interpreted to further this intention and agreement of the parties.
CUSIP Numbers.
The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption and other similar or related materials as a convenience to Holders; provided , that any such notice or other materials may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other materials and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.
Satisfaction and Discharge
Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and as otherwise provided in this Section 4.1 ) and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when
either
all Securities theretofore authenticated and delivered (other than (A) Securities that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.6 and (B) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 10.2) have been delivered to the Trustee for cancellation; or
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all such Securities not theretofore delivered to the Trustee for cancellation
have become due and payable, or
will become due and payable at their Stated Maturity within one year of the date of deposit, or
are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose (x) an amount in the currency or currencies in which the Securities are payable, (y) 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 (z) a combination thereof, in each case 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 the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest (including any Additional Interest) to the date of such deposit (in the case of Securities that have become due and payable) or to the Stated Maturity (or any date of principal repayment upon early maturity) or Redemption Date, as the case may be;
the Company has paid or caused to be paid all other sums payable hereunder by the Company; and
the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.6 , the obligations of the Company to any Authenticating Agent under Section 6.11 and, if money shall have been deposited with the Trustee pursuant to subclause (a)(ii) of this Section 4.1 , the obligations of the Trustee under Section 4.2 and Section 10.2(e) shall survive.
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Application of Trust Money.
Subject to the provisions of Section 10.2(e) , all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment in accordance with Section 3.1 , either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest (including any Additional Interest) for the payment of which such money or obligations have been deposited with or received by the Trustee. Moneys held by the Trustee under this Section 4.2 shall not be subject to the claims of holders of Senior Debt under Article XII .
Remedies
Events of Default.
“ Event of Default ” means, wherever used herein with respect to the Securities, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
default in the payment of any interest upon any Security, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of thirty (30) days (subject to the deferral of any due date in the case of an Extension Period); or
default in the payment of the principal of or any premium on any Security at its Maturity; or
default in the payment of any interest upon any Security, including any Additional Interest in respect thereof, following the nonpayment of any such interest for twenty (20) or more consecutive quarterly interest payment periods; or
default in the performance, or breach, of any covenant or warranty of the Company in this Indenture and continuance of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least twenty five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or
the entry by a court having jurisdiction in the premises of a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of sixty (60) consecutive days; or
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the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company to the institution of bankruptcy or insolvency proceedings against it, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt or insolvent, or the taking of corporate action by the Company in furtherance of any such action; or
either (1) a court or administrative or governmental agency or body shall enter a decree or order for the appointment of a receiver of a Major Bank Subsidiary or all or substantially all of its property in any liquidation, insolvency or similar proceeding, or (2) a Major Bank Subsidiary shall consent to the appointment of a receiver for it or all or substantially all of its property in any liquidation, insolvency or similar proceeding.
the Trust shall have voluntarily or involuntarily liquidated, dissolved, wound-up its business or otherwise terminated its existence, except in connection with (1) the distribution of the Securities to holders of the Preferred Securities in liquidation of their interests in the Trust, (2) the redemption of all of the outstanding Preferred Securities or (3) certain mergers, consolidations or amalgamations, each as and to the extent permitted by the Trust Agreement.
Acceleration of Maturity; Rescission and Annulment.
If an Event of Default pursuant to Sections 5.1(c), (e), (f), (g) or (h) occurs and is continuing, then and in every such case the Trustee or the Holders of not less than twenty five percent (25%) in principal amount of the Outstanding Securities may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), provided, that if, upon an Event of Default pursuant to Sections 5.1(c), (e), (f), (g) or (h), the Trustee or the Holders of not less than twenty five percent (25%) in principal amount of the Outstanding Securities fail to declare the principal of all the Outstanding Securities to be immediately due and payable, the holders of at least twenty five percent (25%) in aggregate Liquidation Amount of the Preferred Securities then outstanding shall have the right to make such declaration by a notice in writing to the Property Trustee, the Company and the Trustee; and upon any such declaration the principal amount of and the accrued interest (including any Additional Interest) on all the Securities shall become immediately due and payable.
At any time after such a declaration of acceleration with respect to Securities has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article V , the Holders of a majority in principal amount of the Outstanding Securities, by written notice to the Indenture Trustee, or the holders of a majority
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in aggregate Liquidation Amount of the Preferred Securities, by written notice to the Property Trustee, the Company and the Trustee, may rescind and annul such declaration and its consequences if:
the Company has paid or deposited with the Trustee a sum sufficient to pay:
all overdue installments of interest on all Securities,
any accrued Additional Interest on all Securities,
the principal of and any premium on any Securities that have become due otherwise than by such declaration of acceleration and interest (including any Additional Interest) thereon at the rate borne by the Securities, and
all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, the Property Trustee and their agents and counsel; and
all Events of Default with respect to Securities, other than the non-payment of the principal of Securities that has become due solely by such acceleration, have been cured or waived as provided in Section 5.13;
provided , that if the Holders of such Securities fail to annul such declaration and waive such default, the holders of not less than a majority in aggregate Liquidation Amount of the Preferred Securities then outstanding shall also have the right to rescind and annul such declaration and its consequences by written notice to the Property Trustee, the Company and the Trustee, subject to the satisfaction of the conditions set forth in paragraph (b) of this Section 5.2 . No such rescission shall affect any subsequent default or impair any right consequent thereon.
Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if:
default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of thirty (30) days, or
default is made in the payment of the principal of and any premium on any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest (including any Additional Interest) and, in addition thereto, all amounts owing the Trustee under Section 6.6 .
If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated.
If an Event of Default with respect to Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
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Trustee May File Proofs of Claim.
In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or similar judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized hereunder in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder 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 Holders, to first pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6 .
Trustee May Enforce Claim Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, subject to Article XII and after provision for the payment of all the amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6 , be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.
Application of Money Collected.
Any money or property collected or to be applied by the Trustee with respect to the Securities pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or any premium or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee, any predecessor Trustee and other Persons under Section 6.6 ;
SECOND: To the payment of all Senior Debt of the Company if and to the extent required by Article XII .
THIRD: Subject to Article XII , to the payment of the amounts then due and unpaid upon the Securities for principal and any premium and interest (including any Additional Interest) in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and any premium and interest (including any Additional Interest), respectively; and
FOURTH: The balance, if any, to the Person or Persons entitled thereto.
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Limitation on Suits.
Subject to Section 5.8 , no Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless:
such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities;
the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;
the Trustee after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding for sixty (60) days; and
no direction inconsistent with such written request has been given to the Trustee during such sixty (60)-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities;
it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.
Unconditional Right of Holders to Receive Principal, Premium and Interest; Direct Action by Holders of Preferred Securities.
Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium on such Security at its Maturity and payment of interest (including any Additional Interest) on such Security when due and payable and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. Any registered holder of the Preferred Securities shall have the right, upon the occurrence of an Event of Default described in Section 5.1(a) , Section 5.1(b) or Section 5.1(c) , to institute a suit directly against the Company for enforcement of payment to such holder of principal of and any premium and interest (including any Additional Interest) on the Securities having a principal amount equal to the aggregate Liquidation Amount of the Preferred Securities held by such holder.
Restoration of Rights and Remedies.
If the Trustee, any Holder or any holder of Preferred Securities has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or
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abandoned for any reason, or has been determined adversely to the Trustee, such Holder or such holder of Preferred Securities, then and in every such case the Company, the Trustee, such Holders and such holder of Preferred Securities shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee, such Holder and such holder of Preferred Securities shall continue as though no such proceeding had been instituted.
Rights and Remedies Cumulative.
Except as otherwise provided in Section 3.6(f) , no right or remedy herein conferred upon or reserved to the Trustee or the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
Delay or Omission Not Waiver.
No delay or omission of the Trustee, any Holder of any Securities or any holder of any Preferred Security to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Trustee or to the Holders and the right and remedy given to the holders of Preferred Securities by Section 5.8 may be exercised from time to time, and as often as may be deemed expedient, by the Trustee, the Holders or the holders of Preferred Securities, as the case may be.
Control by Holders.
The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities (or, as the case may be, the holders of a majority in aggregate Liquidation Amount of the Preferred Securities) shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided , that:
such direction shall not be in conflict with any rule of law or with this Indenture,
the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction, and
subject to the provisions of Section 6.2 , the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, reasonably determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability.
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Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities and the holders of not less than a majority in aggregate Liquidation Amount of the Preferred Securities may waive any past Event of Default hereunder and its consequences except an Event of Default:
in the payment of the principal of or any premium or interest (including any Additional Interest) on any Security (unless such Event of Default has been cured and the Company has paid to or deposited with the Trustee a sum sufficient to pay all installments of interest (including any Additional Interest) due and past due and all principal of and any premium on all Securities due otherwise than by acceleration), or
in respect of a covenant or provision hereof that under Article IX cannot be modified or amended without the consent of each Holder of any Outstanding Security.
Any such waiver shall be deemed to be on behalf of the Holders of all the Securities or, in the case of a waiver by holders of Preferred Securities issued by such Trust, by all holders of Preferred Securities.
Upon any such waiver, such Event of Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.
Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section 5.14 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than ten percent (10%) in aggregate principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or any premium on the Security after the Stated Maturity or any interest (including any Additional Interest) on any Security after it is due and payable.
Waiver of Usury, Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
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The Trustee
Corporate Trustee Required.
There shall at all times be a Trustee hereunder with respect to the Securities. The Trustee shall be a corporation organized and doing business under the laws of the United States or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or state authority and having an office within the United States. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then, for the purposes of this Section 6.1 , the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.1 , it shall resign immediately in the manner and with the effect hereinafter specified in this Article VI .
Certain Duties and Responsibilities.
Except during the continuance of an Event of Default:
the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
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; provided , that in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they substantially conform on their face to the requirements of this Indenture.
If an Event of Default known to the Trustee has occurred and is continuing, the Trustee shall, prior to the receipt of directions, if any, from the Holders of at least a majority in aggregate principal amount of the Outstanding Securities (or, if applicable, from the holders of a majority in aggregate Liquidation Amount of the Preferred Securities), exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
Notwithstanding the foregoing, 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 duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or
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liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.2 . To the extent that, at law or in equity, the Trustee has duties and liabilities relating to the Holders, the Trustee shall not be liable to any Holder for the Trustee’s good faith reliance on the provisions of this Indenture. The provisions of this Indenture, to the extent that they restrict the duties and liabilities of the Trustee otherwise existing at law or in equity, are agreed by the Company and the Holders to replace such other duties and liabilities of the Trustee.
No provisions of this Indenture shall be construed to relieve the Trustee from liability with respect to matters that are within the authority of the Trustee under this Indenture for its own negligent action, negligent failure to act or willful misconduct, except that:
the Trustee shall not be liable for any error or judgment made in good faith by an authorized officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities (or, if applicable, from the holders of a majority in aggregate Liquidation Amount of the Preferred Securities), relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee under this Indenture; and
the Trustee shall be under no liability for interest on any money received by it hereunder and money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.
Notice of Defaults.
Within ninety (90) days after the occurrence of any default actually known to the Trustee, the Trustee shall give the Holders notice of such default unless such default shall have been cured or waived; provided , that except in the case of a default in the payment of the principal of or any premium or interest on any Securities, the Trustee shall be fully protected in withholding the notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interest of holders of Securities; and provided , further , that in the case of any default of the character specified in Section 5.1(d) , no such notice to Holders shall be given until at least thirty (30) days after the occurrence thereof. For the purpose of this Section 6.3 , the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default.
Certain Rights of Trustee.
Subject to the provisions of Section 6.2 :
the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
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if (i) in performing its duties under this Indenture the Trustee is required to decide between alternative courses of action, (ii) in construing any of the provisions of this Indenture the Trustee finds ambiguous or inconsistent with any other provisions contained herein or (iii) the Trustee is unsure of the application of any provision of this Indenture, then, except as to any matter as to which the Holders are entitled to decide under the terms of this Indenture, the Trustee shall deliver a notice to the Company requesting the Company’s written instruction as to the course of action to be taken and the Trustee shall take such action, or refrain from taking such action, as the Trustee shall be instructed in writing to take, or to refrain from taking, by the Company; provided , that if the Trustee does not receive such instructions from the Company within ten Business Days after it has delivered such notice or such reasonably shorter period of time set forth in such notice the Trustee may, but shall be under no duty to, take such action, or refrain from taking such action, as the Trustee shall deem advisable and in the best interests of the Holders, in which event the Trustee shall have no liability except for its own negligence, bad faith or willful misconduct;
any request or direction of the Company shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
the Trustee may consult with counsel (which counsel may be counsel to the Trustee, the Company or any of its Affiliates, and may include any of its employees) and the advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders or any holder of Preferred Securities pursuant to this Indenture, unless such Holders (or such holders of Preferred Securities) shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction, including reasonable advances as may be requested by the Trustee;
the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, note or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney;
the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent, attorney, custodian or nominee appointed with due care by it hereunder;
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whenever in the administration of this Indenture the Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action with respect to enforcing any remedy or right hereunder, the Trustees (i) may request instructions from the Holders (which instructions may only be given by the Holders of the same aggregate principal amount of Outstanding Securities as would be entitled to direct the Trustee under this Indenture in respect of such remedy, right or action), (ii) may refrain from enforcing such remedy or right or taking such action until such instructions are received and (iii) shall be protected in acting in accordance with such instructions;
except as otherwise expressly provided by this Indenture, the Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Indenture;
without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with any bankruptcy, insolvency or other proceeding referred to in clauses (d) or (e) of the definition of Event of Default, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy laws or law relating to creditors rights generally;
whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officers’ Certificate addressing such matter, which, upon receipt of such request, shall be promptly delivered by the Company;
the Trustee shall not be charged with knowledge of any default or Event of Default unless either (i) a Responsible Officer of the Trustee shall have actual knowledge or (ii) the Trustee shall have received written notice thereof from the Company or a Holder; and
in the event that the Trustee is also acting as Paying Agent, Authenticating Agent or Securities Registrar hereunder, the rights and protections afforded to the Trustee pursuant to this Article VI shall also be afforded such Paying Agent, Authenticating Agent, or Securities Registrar.
May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent.
Compensation; Reimbursement; Indemnity.
The Company agrees
to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amounts as the Company and the Trustee shall agree from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
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to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct; and
to the fullest extent permitted by applicable law, to indemnify the Trustee (including in its individual capacity) and its Affiliates, and their officers, directors, shareholders, agents, representatives and employees for, and to hold them harmless against, any loss, damage, liability, tax (other than income, franchise or other taxes imposed on amounts paid pursuant to (i) or (ii) hereof), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part arising out of or in connection with the acceptance or administration of this trust or the performance of the Trustee’s duties hereunder, including the advancement of funds to cover the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.
To secure the Company’s payment obligations in this Section 6.6 , the Company hereby grants and pledges to the Trustee and the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, other than money or property held in trust to pay principal and interest on particular Securities. Such lien shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee.
The obligations of the Company under this Section 6.6 shall survive the satisfaction and discharge of this Indenture and the earlier resignation or removal of the Trustee.
In no event shall the Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
In no event shall the Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Indenture.
Resignation and Removal; Appointment of Successor.
No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article VI shall become effective until the acceptance of appointment by the successor Trustee under Section 6.8 .
The Trustee may resign at any time by giving written notice thereof to the Company.
Unless an Event of Default shall have occurred and be continuing, the Trustee may be removed at any time by the Company by a Board Resolution. If an Event of Default shall have occurred and be continuing, the Trustee may be removed by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, delivered to the Trustee and to the Company.
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If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason, at a time when no Event of Default shall have occurred and be continuing, the Company, by a Board Resolution, shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8 . If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason, at a time when an Event of Default shall have occurred and be continuing, the Holders, by Act of the Holders of a majority in aggregate principal amount of the Outstanding Securities, shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8 . If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment within sixty (60) days after the giving of a notice of resignation by the Trustee or the removal of the Trustee in the manner required by Section 6.8 , any Holder who has been a bona fide Holder of a Security for at least six months may, on behalf of such Holder and all others similarly situated, and any resigning Trustee may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.
The Company shall give notice to all Holders in the manner provided in Section 1.6 of each resignation and each removal of the Trustee and each appointment of a successor Trustee. Each notice shall include the name of the successor Trustee and the address of its Corporate Trust Office.
Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Trustee, each successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.
Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) of this Section 6.8 .
No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article VI .
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Merger, Conversion, Consolidation or Succession to Business.
Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided , that such Person shall be otherwise qualified and eligible under this Article VI . In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation or as otherwise provided above in this Section 6.9 to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have.
Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof.
Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities, which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to Section 3.6 , and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation organized and doing business under the laws of the United States of America, or of any State or Territory thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or state authority. If such Authenticating Agent publishes reports of condition at least annually pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this Section 6.11 the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.11 , such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section 6.11 .
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Any Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such Person shall be otherwise eligible under this Section 6.11 , without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section 6.11 , the Trustee may appoint a successor Authenticating Agent eligible under the provisions of this Section 6.11 , which shall be acceptable to the Company, and shall give notice of such appointment to all Holders. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent.
The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this Section 6.11 in such amounts as the Company and the Authenticating Agent shall agree from time to time.
If an appointment of an Authenticating Agent is made pursuant to this Section 6.11 , the Securities may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:
This represents Securities designated therein and referred to in the within mentioned Indenture.
Dated:
| WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as Trustee | ||
|
|
||
| Authenticating Agent | ||
| By: |
|
|
| Authorized Officer | ||
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Holder’s Lists and Reports by Trustee and Company
Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
semi-annually, on or before June 30 and December 31 of each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more than fifteen (15) days prior to the delivery thereof, and
at such other times as the Trustee may request in writing, within thirty (30) days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than fifteen (15) days prior to the time such list is furnished, in each case to the extent such information is in the possession or control of the Company and has not otherwise been received by the Trustee in its capacity as Securities Registrar.
Preservation of Information, Communications to Holders.
The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 7.1 and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar. The Trustee may destroy any list furnished to it as provided in Section 7.1 upon receipt of a new list so furnished.
The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act.
Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act.
Reports by Company and Trustee.
The Company shall furnish to the Holders and to prospective purchasers of Securities, upon their request, the information required to be furnished pursuant to Rule 144A(d)(4) under the Securities Act. The Company shall furnish to the Trustee and, so long as the Property Trustee holds any of the Securities, the Company shall furnish to the Property Trustee, reports on Form FR Y-9C, FR Y-9LP and FR Y-6 promptly following their filing with the Federal Reserve.
The Company shall furnish to (i) the Holders and to subsequent holders of Securities, (ii) the Purchaser, (iii) any beneficial owner of the Securities reasonably identified to the Company (which identification may be made either by such beneficial owner or by the Placement Agent or the Purchaser) and (iv) any designee of (i), (ii) or (iii) above, a duly completed and executed
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certificate in the form attached hereto as Exhibit A, including the financial statements referenced in such Exhibit, which certificate and financial statements shall be so furnished by the Company not later than forty five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company.
(c) The Trustee shall receive all reports, certificates and information, which it is entitled to receive under each of the Operative Documents (as defined in the Trust Agreement), and deliver to (i) the Purchaser, (ii) the Placement Agent and (iii) a designee of (i) or (ii) above, as identified in writing to the Trustee, all such reports, certificates or information promptly upon receipt thereof.
Consolidation, Merger, Conveyance, Transfer or Lease
Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless:
if the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Company substantially as an entirety shall be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed;
immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and
the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this Article VIII and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officers’ Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1 .
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Successor Company Substituted.
Upon any consolidation or merger by the Company with or into any other Person, or any conveyance, transfer or lease by the Company of its properties and assets substantially as an entirety to any Person in accordance with Section 8.1 and the execution and delivery to the Trustee of the supplemental indenture described in Section 8.1(a) , the successor entity formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease 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 Person had been named as the Company herein; and in the event of any such conveyance or transfer, following the execution and delivery of such supplemental indenture, the Company shall be discharged from all obligations and covenants under the Indenture and the Securities.
Such successor Person may cause to be executed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities that such successor Person thereafter shall cause to be executed and delivered to the Trustee on its behalf. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture.
In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate to reflect such occurrence.
Supplemental Indentures
Supplemental Indentures without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, for any of the following purposes:
to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities; or
to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make or amend any other provisions with respect to matters or questions arising under this Indenture, which shall not be inconsistent with the other provisions of this Indenture, provided , that such action pursuant to this clause (b) shall not adversely affect in any material respect the interests of any Holders or the holders of the Preferred Securities; or
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to add to the covenants, restrictions or obligations of the Company or to add to the Events of Default, provided , that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders or the holders of the Preferred Securities; or
to modify, eliminate or add to any provisions of the Indenture or the Securities to such extent as shall be necessary to ensure that the Securities are treated as indebtedness of the Company for United States Federal income tax purposes, provided , that such action pursuant to this clause (d) shall not adversely affect in any material respect the interests of any Holders or the holders of the Preferred Securities.
Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities under this Indenture; provided , that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security,
change the Stated Maturity of the principal or any premium of any Security or change the date of payment of any installment of interest (including any Additional Interest) on any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or restrict or impair the right to institute suit for the enforcement of any such payment on or after such date, or
reduce the percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with any provision of this Indenture or of defaults hereunder and their consequences provided for in this Indenture, or
modify any of the provisions of this Section 9.2, Section 5.13 or Section 10.7, except to increase any percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any reason, or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security;
provided, further, that, so long as any Preferred Securities remain outstanding, no amendment under this Section 9.2 shall be effective until the holders of a majority in Liquidation Amount of the Trust Securities shall have consented to such amendment; provided, further, that if the consent of the Holder of each Outstanding Security is required for any amendment under this Indenture, such amendment shall not be effective until the holder of each Outstanding Trust Security shall have consented to such amendment.
It shall not be necessary for any Act of Holders under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.
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Execution of Supplemental Indentures.
In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in conclusively relying upon, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent herein provided for relating to such action have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee’s own rights, duties, indemnities or immunities under this Indenture or otherwise. Copies of the final form of each supplemental indenture shall be delivered by the Trustee at the expense of the Company to each Holder, and, if the Trustee is the Property Trustee, to each holder of Preferred Securities, promptly after the execution thereof.
Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article IX , this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and shall if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities.
Covenants
Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of the Holders of the Securities that it will duly and punctually pay the principal of and any premium and interest (including any Additional Interest) on the Securities in accordance with the terms of the Securities and this Indenture.
Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent with respect to the Securities, it will, on or before each due date of the principal of and any premium or interest (including any Additional Interest) on the Securities, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal and any premium or interest (including Additional Interest) so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided, and will promptly notify the Trustee in writing of its failure so to act.
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Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m., New York City time, on each due date of the principal of or any premium or interest (including any Additional Interest) on any Securities, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided in the Trust Indenture Act and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act.
The Company will cause each Paying Agent for the Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this Section 10.2 , that such Paying Agent will (i) comply with the provisions of this Indenture and the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities.
The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same terms as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then held by the Company in trust for the payment of the principal of and any premium or interest (including any Additional Interest) on any Security and remaining unclaimed for two years after such principal and any premium or interest has become due and payable shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided , that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.
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Statement as to Compliance.
The Company shall deliver to the Trustee, within one hundred and twenty (120) days after the end of each fiscal year of the Company ending after the date hereof, an Officers’ Certificate (substantially in the form attached hereto as Exhibit B) covering the preceding fiscal year, stating whether or not to the knowledge of the signers thereof the Company is in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.
Calculation Agent.
The Company hereby agrees that for so long as any of the Securities remain Outstanding, there will at all times be an agent appointed to calculate LIBOR in respect of each Interest Payment Date in accordance with the terms of Schedule A (the “ Calculation Agent ”). The Company has initially appointed the Property Trustee as Calculation Agent for purposes of determining LIBOR for each Interest Payment Date. The Calculation Agent may be removed by the Company at any time. Except as described in the immediately preceding sentence, so long as the Property Trustee holds any of the Securities, the Calculation Agent shall be the Property Trustee. If the Calculation Agent is unable or unwilling to act as such or is removed by the Company, the Company will promptly appoint as a replacement Calculation Agent the London office of a leading bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar market and which does not control or is not controlled by or under common control with the Company or its Affiliates. The Calculation Agent may not resign its duties without a successor having been duly appointed.
The Calculation Agent shall be required to agree that, as soon as possible after 11:00 a.m. (London time) on each LIBOR Determination Date (as defined in Schedule A ), but in no event later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR Determination Date, the Calculation Agent will calculate the interest rate (rounded to the nearest cent, with half a cent being rounded upwards) for the related Interest Payment Date, and will communicate such rate and amount to the Company, the Trustee, each Paying Agent and the Depositary. The Calculation Agent will also specify to the Company the quotations upon which the foregoing rates and amounts are based and, in any event, the Calculation Agent shall notify the Company before 5:00 p.m. (London time) on each LIBOR Determination Date that either: (i) it has determined or is in the process of determining the foregoing rates and amounts or (ii) it has not determined and is not in the process of determining the foregoing rates and amounts, together with its reasons therefor. The Calculation Agent’s determination of the foregoing rates and amounts for any Interest Payment Date will (in the absence of manifest error) be final and binding upon all parties. For the sole purpose of calculating the interest rate for the Securities, “Business Day” shall be defined as any day on which dealings in deposits in Dollars are transacted in the London interbank market.
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Additional Tax Sums.
So long as no Event of Default has occurred and is continuing, if (a) the Trust is the Holder of all of the Outstanding Securities and (b) a Tax Event described in clause (i) or (iii) in the definition of Tax Event in Section 1.1 hereof has occurred and is continuing, the Company shall pay to the Trust (and its permitted successors or assigns under the related Trust Agreement) for so long as the Trust (or its permitted successor or assignee) is the registered holder of the Outstanding Securities, such amounts as may be necessary in order that the amount of Distributions (including any Additional Interest Amount (as defined in the Trust Agreement)) then due and payable by the Trust on the Preferred Securities and Common Securities that at any time remain outstanding in accordance with the terms thereof shall not be reduced as a result of any Additional Taxes arising from such Tax Event (additional such amounts payable by the Company to the Trust, the “ Additional Tax Sums ”). Whenever in this Indenture or the Securities there is a reference in any context to the payment of principal of or interest on the Securities, such mention shall be deemed to include mention of the payments of the Additional Tax Sums provided for in this Section 10.5 to the extent that, in such context, Additional Tax Sums are, were or would be payable in respect thereof pursuant to the provisions of this Section 10.5 and express mention of the payment of Additional Tax Sums (if applicable) in any provisions hereof shall not be construed as excluding Additional Tax Sums in those provisions hereof where such express mention is not made; provided , that the deferral of the payment of interest pursuant to Section 3.9 on the Securities shall not defer the payment of any Additional Tax Sums that may be due and payable.
Additional Covenants.
The Company covenants and agrees with each Holder of Securities that if an Event of Default shall have occurred and be continuing or the Company shall have given notice of its election to begin an Extension Period with respect to the Securities and shall not have rescinded such notice, or such Extension Period, or any extension thereof, shall be continuing, it shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make a liquidation payment with respect to, any shares of the Company’s capital stock, or (ii) make any payment of principal of or any interest or premium on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the Securities (other than (A) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Event of Default or Extension Period, (B) as a result of an exchange or conversion of any class or series of the Company’s capital stock (or any capital stock of a Subsidiary of the Company) for any class or series of the Company’s capital stock or of any class or series of the Company’s indebtedness for any class or series of the Company’s capital stock, (C) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (D) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the redemption or repurchase of rights
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pursuant thereto, or (E) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock).
The Company also covenants with each Holder of Securities (i) to hold, directly or indirectly, one hundred percent (100%) of the Common Securities of the Trust, provided , that any permitted successor of the Company hereunder may succeed to the Company’s ownership of such Common Securities, (ii) as holder of such Common Securities, not to voluntarily dissolve, wind-up or liquidate the Trust other than (A) in connection with a distribution of the Securities to the holders of the Preferred Securities in liquidation of the Trust or (B) in connection with certain mergers, consolidations or amalgamations permitted by the Trust Agreement and (iii) to use its reasonable commercial efforts, consistent with the terms and provisions of the Trust Agreement, to cause the Trust to continue to be taxable as a grantor trust and not as a corporation for United States Federal income tax purposes.
Waiver of Covenants.
The Company may omit in any particular instance to comply with any covenant or condition contained in Section 10.6 if, before or after the time for such compliance, the Holders of at least a majority in aggregate principal amount of the Outstanding Securities shall, by Act of such Holders, and at least a majority of the aggregate Liquidation Amount of the Preferred Securities then outstanding, by consent of such holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect.
Treatment of Securities.
The Company will treat the Securities as indebtedness, and the amounts payable in respect of the principal amount of such Securities as interest, for all U.S. federal income tax purposes. All payments in respect of the Securities will be made free and clear of U.S. withholding tax to any beneficial owner thereof that has provided an Internal Revenue Service Form W-8BEN (or any substitute or successor form) establishing its non-U.S. status for U.S. federal income tax purposes.
Redemption of Securities
Optional Redemption.
The Company may, at its option, on any Interest Payment Date, on or after December 30, 2010, redeem the Securities in whole at any time or in part from time to time, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof (or of the redeemed portion thereof, as applicable), together, in the case of any such redemption, with accrued interest, including
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any Additional Interest, to but excluding the date fixed for redemption; provided , that the Company shall have received the prior approval of the Federal Reserve with respect to such redemption if then required.
Special Event Redemption.
Upon the occurrence and during the continuation of a Special Event, the Company may, at its option, redeem the Securities, in whole but not in part, at a redemption price equal to one hundred (100%) percent of the principal amount thereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, to but excluding the date fixed for redemption (the “Special Event Redemption Price”); provided , that the Company shall have received the prior approval of the Federal Reserve with respect to such redemption if then required.
Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities, in whole or in part, shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company, the Company shall, not less than forty five (45) days and not more than seventy five (75) days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee and the Property Trustee under the Trust Agreement in writing of such date and of the principal amount of the Securities to be redeemed and provide the additional information required to be included in the notice or notices contemplated by Section 11.5 . In the case of any redemption of Securities, in whole or in part, (a) prior to the expiration of any restriction on such redemption provided in this Indenture or the Securities or (b) pursuant to an election of the Company which is subject to a condition specified in this Indenture or the Securities, the Company shall furnish the Trustee with an Officers’ Certificate and an Opinion of Counsel evidencing compliance with such restriction or condition.
Selection of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected and redeemed on a pro rata basis not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, provided , that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.
The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed.
The provisions of paragraphs (a) and (b) of this Section 11.4 shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in
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whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.
Notice of Redemption.
Notice of redemption shall be given not later than the thirtieth (30th) day, and not earlier than the sixtieth (60th) day, prior to the Redemption Date to each Holder of Securities to be redeemed, in whole or in part (unless a shorter notice shall be satisfactory to the Property Trustee under the related Trust Agreement).
With respect to Securities to be redeemed, in whole or in part, each notice of redemption shall state:
the Redemption Date;
the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price, as calculated by the Company, together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the fifth Business Day prior to the Redemption Date (and if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date that such Redemption Price is calculated);
if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Securities to be redeemed;
that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that any interest (including any Additional Interest) on such Security or such portion, as the case may be, shall cease to accrue on and after said date; and
the place or places where such Securities are to be surrendered for payment of the Redemption Price.
Notice of redemption of Securities to be redeemed, in whole or in part, at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company and shall be irrevocable. The notice if mailed in the manner provided above shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.
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Deposit of Redemption Price.
Prior to 10:00 a.m., New York City time, on the Redemption Date specified in the notice of redemption given as provided in Section 11.5 , the Company will deposit with the Trustee or with one or more Paying Agents (or if the Company is acting as its own Paying Agent, the Company will segregate and hold in trust as provided in Section 10.2 ) an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including any Additional Interest) on, all the Securities (or portions thereof) that are to be redeemed on that date.
Payment of Securities Called for Redemption.
If any notice of redemption has been given as provided in Section 11.5 , the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date. On presentation and surrender of such Securities at a Place of Payment specified in such notice, the Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date.
Upon presentation of any Security redeemed in part only, the Company shall execute and upon receipt thereof the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms.
If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and any premium on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.
Subordination of Securities
Securities Subordinate to Senior Debt.
The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article XII , the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt.
No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.
In the event and during the continuation of any default by the Company in the payment of any principal of or any premium or interest on any Senior Debt (following any grace period, if
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applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of such Senior Debt or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.
In the event of a bankruptcy, insolvency or other proceeding described in clause (d) or (e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as a “ Proceeding ”), all Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt in accordance with the priorities then existing among such holders until all Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.
In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Company ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt is hereby irrevocably authorized to endorse or assign the same.
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The Trustee and the Holders, at the expense of the Company, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior Debt or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.
The provisions of this Section 12.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.
The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.
Payment Permitted If No Default.
Nothing contained in this Article XII or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time, except during the pendency of the conditions described in paragraph (a) of Section 12.2 or of any Proceeding referred to in Section 12.2 , from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with Section 12.8 ) that such payment would have been prohibited by the provisions of this Article XII , except as provided in Section 12.8 .
Subrogation to Rights of Holders of Senior Debt.
Subject to the payment in full of all amounts due or to become due on all Senior Debt, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt pursuant to the provisions of this Article XII (equally and ratably with the holders of all indebtedness of the Company that by its express terms is subordinated to Senior Debt of the Company to substantially the same extent as the Securities are subordinated to the Senior Debt and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt) to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the
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Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XII , and no payments made pursuant to the provisions of this Article XII to the holders of Senior Debt by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Debt, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt.
Provisions Solely to Define Relative Rights.
The provisions of this Article XII are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt on the other hand. Nothing contained in this Article XII or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Debt or (c) prevent the Trustee or the Holder of any Security (or to the extent expressly provided herein, the holder of any Preferred Security) from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Article XII of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.
Trustee to Effectuate Subordination.
Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article XII and appoints the Trustee his or her attorney-in-fact for any and all such purposes.
No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.
Without in any way limiting the generality of paragraph (a) of this Section 12.7 , the holders of Senior Debt may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided in this Article XII or the obligations hereunder of such Holders of the Securities to the holders of Senior Debt, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt, or otherwise amend or supplement in any manner Senior Debt or any instrument evidencing the same or any agreement under which Senior Debt is
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outstanding, (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt, (iii) release any Person liable in any manner for the payment of Senior Debt and (iv) exercise or refrain from exercising any rights against the Company and any other Person.
Notice to Trustee.
The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article XII or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder of Senior Debt or from any trustee, agent or representative therefor; provided , that if the Trustee shall not have received the notice provided for in this Section 12.8 at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date.
The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this Article XII , the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XII , and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to in this Article XII , the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XII .
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Trustee Not Fiduciary for Holders of Senior Debt.
The Trustee, in its capacity as trustee under this Indenture, shall not owe or be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this Article XII or otherwise.
Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights.
The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XII with respect to any Senior Debt that may at any time be held by it, to the same extent as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Debt of the Company, the Trustee undertakes to perform only such of its obligations as are specifically set forth in this Article XII, and no implied covenants or obligations with respect to the holders of such Senior Debt shall be read into this Indenture against the Trustee. Nothing in this Article XII shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6.
Article Applicable to Paying Agents.
If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “ Trustee ” as used in this Article XII shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XII in addition to or in place of the Trustee; provided , that Sections 12.8 and 12.11 shall not apply to the Company or any Affiliate of the Company if the Company or such Affiliate acts as Paying Agent.
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Delivery of an executed signature page of this Indenture by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.
* * * *
67
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.
| Vision Bancshares, Inc. | ||
| By: |
/s/ J. Daniel Sizemore |
|
| Name: | J. Daniel Sizemore | |
| Title: | Chairman and Chief Executive Officer | |
| WILMINGTON TRUST COMPANY, as Trustee | ||
| By: |
/s/ Christopher J. Slaybaugh |
|
| Name: | Christopher J. Slaybaugh | |
| Title: | Senior Financial Services Officer | |
68
Schedule A
DETERMINATION OF LIBOR
With respect to the Securities, the London interbank offered rate (“ LIBOR ”) shall be determined by the Calculation Agent in accordance with the following provisions (in each case rounded to the nearest .000001%):
(1) On the second LIBOR Business Day (as defined below) prior to an Interest Payment Date (except, with respect to the first interest payment period, on December 1, 2005) (each such day, a “ LIBOR Determination Date ”), LIBOR for any given security shall, for the following interest payment period, equal the rate, as obtained by the Calculation Agent from Bloomberg Financial Markets Commodities News, for three-month U.S. Dollar deposits in Europe, which appears on Dow Jones Telerate Page 3750 (as defined in the International Swaps and Derivatives Association, Inc. 1991 Interest Rate and Currency Exchange Definitions), or such other page as may replace such Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date.
(2) If, on any LIBOR Determination Date, such rate does not appear on Dow Jones Telerate Page 3750 or such other page as may replace such Page 3750, the Calculation Agent shall determine the arithmetic mean of the offered quotations of the Reference Banks (as defined below) to leading banks in the London interbank market for three-month U.S. Dollar deposits in Europe in an amount determined by the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks. If, on any LIBOR Determination Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal such arithmetic mean of such quotations. If, on any LIBOR Determination Date, only one or none of the Reference Banks provide such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that leading banks in the City of New York selected by the Calculation Agent are quoting on the relevant LIBOR Determination Date for three-month U.S. Dollar deposits in Europe in an amount determined by the Calculation Agent by reference to the principal London offices of leading banks in the London interbank market; provided that, if the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR as determined on the previous LIBOR Determination Date.
(3) As used herein: “ Reference Banks ” means four major banks in the London interbank market selected by the Calculation Agent; and “ LIBOR Business Day ” means a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London.
69
Exhibit A
Officer’s Certificate
The undersigned, the [Chief Financial Officer] [Treasurer] [Executive
Vice President] hereby certifies, pursuant to Section 7.3(b) of the Junior Subordinated Indenture, dated as of December 5, 2005, among Vision Bancshares, Inc. (the “Company”) and Wilmington Trust Company, as trustee, that, as of
BANK HOLDING COMPANY
As of [Quarterly Financial Dates]
| Tier 1 Risk Weighted Assets | % | ||
| Ratio of Double Leverage | % | ||
| Non-Performing Assets to Loans and OREO | % | ||
| Tangible Common Equity as a Percentage of Tangible Assets | % | ||
| Ratio of Reserves to Non-Performing Loans | % | ||
| Ratio of Net Charge-Offs to Loans | % | ||
| Return on Average Assets (annualized) | % | ||
| Net Interest Margin (annualized) | % | ||
| Efficiency Ratio | % | ||
| Ratio of Loans to Assets | % | ||
| Ratio of Loans to Deposits | % | ||
| Double Leverage (exclude trust preferred as equity) | % | ||
| Total Assets | $ | ||
| Year to Date Income | $ |
| * | A table describing the quarterly report calculation procedures is attached. |
[ FOR FISCAL YEAR END : Attached hereto are the audited consolidated financial statements (including the balance sheet, income statement and statement of cash flows, and notes thereto, together with the report of the independent accountants thereon) of the Company and its consolidated subsidiaries for the three years ended , 20 .]
[ FOR FISCAL QUARTER END : Attached hereto are the unaudited consolidated and consolidating financial statements (including the balance sheet and income statement) of the Company and its consolidated subsidiaries for the fiscal quarter] ended [date], 20 .
The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles (“GAAP”), the financial position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the [ quarter interim] [annual] period ended [date], 20 , and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (expect as otherwise noted therein).
IN WITNESS WHEREOF, the undersigned has executed this Officer’s Certificate as of this day of , 20
|
|
| Name: |
| Title: |
| Vision Bancshares, Inc. |
| P.O. Box 4649 |
| Gulf Shores, Alabama |
| (251) 968-1001 |
Exhibit A-1
Financial Definitions
|
Report Item |
Corresponding FRY-9C or LP Line Items with Line Item
|
Description of Calculation |
||
|
Tier 1 Risk Weighted Assets |
BHCK7206 Schedule HC-R |
Tier 1 Risk Ratio: Core Capital (Tier 1)/ Risk-Adjusted Assets | ||
| Ratio of Double Leverage |
(BHCP0365)/(BCHCP3210) Schedule PC in the LP |
Total equity investments in subsidiaries divided by the total equity capital. This field is calculated at the parent company level. “Subsidiaries” include bank, bank holding company, and non-bank subsidiaries. | ||
| Non-Performing Assets to Loans and OREO |
(BHCK5525-BHCK3506+BHCK5526-BHCK3507+BHCK2744/(BHCK2122+BHCK2744) Schedules HC-C, HC-M & HC-N |
Total Nonperforming Assets (NPLs+Foreclosed Real Estate+Other Nonaccrual & Repossessed Assets)/Total Loans+Foreclosed Real Estate | ||
| Tangible Common Equity as a Percentage of Tangible Assets |
(BHDM3210-BHCK3163)/(BHCK2170-BHCK3163) Schedule HC |
(Equity Capital – Goodwill)/(Total Assets – Goodwill) | ||
| Ratio of Reserves to Non-Performing Loans |
(BHCK3123+BHCK3128)/(BHCK5525-BHCK3506+BHCK5526-BHCK3507) Schedules HC & HC-N & HC-R |
Total Loan Loss and Allocated Transfer Risk Reserves/ Total Nonperforming Loans (Nonaccrual + Restructured) |
||
| Ratio of Net Charge-Offs to Loans |
(BHCK4635-BHCK4605)/(BHCK3516) Schedules HI-B & HC-K |
Net charge offs for the period as a percentage of average loans. | ||
| Return on Average Assets (annualized) |
(BHCK4340/BHCK3368) Schedules HI & HC-K |
Net Income as a percentage of Assets. | ||
| Net Interest Margin (annualized) |
(BHCK4519/(BHCK3515+BHCK3365+ BHCK3516+BHCK3401+BHCKB985) Schedules HI Memorandum and HC-K |
(Net Interest Income Fully Taxable Equivalent, if available/Average Earning Assets) | ||
| Efficiency Ratio |
(BHCK4093)/(BHCK4519+BHCK4079) Schedule HI |
(Non-interest Expense)/(Net Interest Income Fully Taxable Equivalent, if available, plus Non-interest Income) | ||
| Ratio of Loans to Assets |
(BHCKB528+BHCK5369)/(BHCK2170) Schedule HC |
Total Loans & Leases (Net of Unearned Income & Gross of Reserve)/Total Assets | ||
|
Report Item |
Corresponding FRY-9C or LP Line Items with Line Item
|
Description of Calculation |
||
| Ratio of Loans to Deposits |
(BHCKB528+BHCK5369)/(BHDM6631+BHDM6636+BHFN6631+BHFN6636) Schedule HC |
Total Loans & Leases (Net of Unearned Income & Gross of Reserve)/Total Deposits (Includes Domestic and Foreign Deposits) | ||
| Total Assets |
(BHCK2170) Schedule HC |
The sum of total assets. Includes cash and balances due from depository institutions; securities; federal funds sold and securities purchased under agreements to resell; loans and lease financing receivables; trading assets; premises and fixed assets; other real estate owned; investments in unconsolidated subsidiaries and associated companies; customer’s liability on acceptances outstanding; intangible assets; and other assets. | ||
| Net Income |
(BHCK4300) Schedule HI |
The sum of income (loss)before extraordinary items and other adjustments and extraordinary items; and other adjustments, net of income taxes. | ||
Exhibit B
FORM OF
OFFICERS’ CERTIFICATE
UNDER
SECTION 10.3
Pursuant to Section 10.3 of the Indenture, dated as of December 5, 2005 (as amended or supplemented from time to time, the “Indenture”), between Vision Bancshares, Inc., as issuer (the “Company”), and Wilmington Trust Company, as trustee, each of the undersigned hereby certifies that, to the knowledge of the undersigned, the Company is not in default in the performance or observance of any of the terms, provisions or conditions contained in the Indenture (without regard to any period of grace or requirement of notice provided under the Indenture), for the fiscal year ending on , 20 [, except as follows: specify each such default and the nature and status thereof ].
Capitalized terms used herein, and not otherwise defined herein, have the respective meanings assigned thereto in the Indenture.
IN WITNESS WHEREOF, the undersigned have executed this Officers’ Certificate as of , 20 .
|
|
||
| Name: | ||
| Title: | [ Must be the Chairman of the Board, | |
| a Vice Chairman of the Board, the | ||
| Chief Executive Officer, the | ||
| President, or a Vice President ] of | ||
| Vision Bancshares, Inc. | ||
|
|
||
| Name: | ||
| Title: | [ Must be the Chief Financial Officer, | |
| the Treasurer, an Assistant Treasurer, | ||
| the Secretary or an Assistant | ||
| Secretary ] of Vision Bancshares, Inc. | ||
Exhibit 10.17
GUARANTEE AGREEMENT
BETWEEN
Vision Bancshares, Inc.,
AS GUARANTOR,
AND
Wilmington Trust Company,
AS GUARANTEE TRUSTEE
DATED AS OF DECEMBER 5, 2005
Vision Bancshares Trust I
TABLE OF CONTENTS
|
ARTICLE I |
Interpretation and Definitions |
2 | ||
|
SECTION 1.1 |
Interpretation |
2 | ||
|
SECTION 1.2 |
Definitions |
2 | ||
|
ARTICLE II |
Reports |
6 | ||
|
SECTION 2.1 |
List of Holders |
6 | ||
|
SECTION 2.2 |
Periodic Reports to the Guarantee Trustee |
6 | ||
|
SECTION 2.3 |
Event of Default; Waiver |
6 | ||
|
SECTION 2.4 |
Event of Default; Notice |
6 | ||
|
ARTICLE III |
Powers, Duties And Rights Of The Guarantee Trustee |
7 | ||
|
SECTION 3.1 |
Powers and Duties of the Guarantee Trustee. |
7 | ||
|
SECTION 3.2 |
Certain Rights of the Guarantee |
9 | ||
|
SECTION 3.3 |
Compensation |
10 | ||
|
SECTION 3.4 |
Indemnity |
11 | ||
|
SECTION 3.5 |
Securities |
11 | ||
|
ARTICLE IV |
Guarantee Trustee |
11 | ||
|
SECTION 4.1 |
Guarantee Trustee; Eligibility |
11 | ||
|
SECTION 4.2 |
Appointment, Removal and Resignation of the Guarantee Trustee |
12 | ||
|
ARTICLE V |
Guarantee |
12 | ||
|
SECTION 5.1 |
Guarantee |
12 | ||
|
SECTION 5.2 |
Waiver of Notice and Demand |
13 | ||
|
SECTION 5.3 |
Obligations Not Affected |
13 | ||
|
SECTION 5.4 |
Rights of Holders |
14 | ||
|
SECTION 5.5 |
Guarantee of Payment |
15 | ||
|
SECTION 5.6 |
Subrogation |
15 | ||
|
SECTION 5.7 |
Independent Obligations |
15 | ||
|
SECTION 5.8 |
Enforcement |
15 | ||
|
ARTICLE VI |
Covenants and Subordination |
15 | ||
|
SECTION 6.1 |
Dividends, Distributions and Payments |
15 | ||
|
SECTION 6.2 |
Subordination |
17 | ||
|
SECTION 6.3 |
Pari Passu Guarantees |
17 | ||
|
ARTICLE VII |
Termination |
17 | ||
|
SECTION 7.1 |
Termination |
17 | ||
|
ARTICLE VIII |
Miscellaneous |
17 | ||
|
SECTION 8.1 |
Successors and Assigns |
17 | ||
|
SECTION 8.2 |
Amendments |
18 | ||
|
SECTION 8.3 |
Notices |
18 | ||
|
SECTION 8.4 |
Benefit |
19 | ||
|
SECTION 8.5 |
Governing Law |
19 | ||
|
SECTION 8.6 |
Submission to Jurisdiction |
19 | ||
|
SECTION 8.7 |
Counterparts, Facsimile |
19 |
i
Exhibit A
G UARANTEE A GREEMENT , dated as of December 5, 2005, executed and delivered by V ISION B ANCSHARES , I NC ., an Alabama corporation (the “Guarantor” ) having its principal office at P.O. Box 4649, Gulf Shores, Alabama 36547, and W ILMINGTON T RUST C OMPANY , a Delaware banking corporation, as trustee (in such capacity, the “Guarantee Trustee” ), for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of Vision Bancshares Trust I, a Delaware statutory trust (the “Issuer” ).
W I T N E S S E T H :
W HEREAS , pursuant to an Amended and Restated Trust Agreement, dated as of the date hereof (the “Trust Agreement” ), among the Guarantor, as Depositor, the Property Trustee, the Delaware Trustee and the Administrative Trustees named therein and the holders from time to time of the Preferred Securities (as hereinafter defined), the Issuer is issuing $15,000,000 aggregate Liquidation Amount (as defined in the Trust Agreement) of its Floating Rate Preferred Securities (Liquidation Amount $1,000 per preferred security) (the “Preferred Securities” ) representing preferred undivided beneficial interests in the assets of the Issuer and having the terms set forth in the Trust Agreement;
W HEREAS , the Preferred Securities will be issued by the Issuer and the proceeds thereof, together with the proceeds from the issuance of the Issuer’s Common Securities (as defined below), will be used to purchase the Notes (as defined in the Trust Agreement) of the Guarantor; and
W HEREAS , as incentive for the Holders to purchase Preferred Securities the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth herein, to pay to the Holders of the Preferred Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein.
N OW , T HEREFORE , in consideration of the purchase by each Holder of Preferred Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee Agreement to provide as follows for the benefit of the Holders from time to time of the Preferred Securities:
Interpretation and Definitions
Interpretation.
In this Guarantee Agreement, unless the context otherwise requires:
capitalized terms used in this Guarantee Agreement but not defined in the preamble hereto have the respective meanings assigned to them in Section 1.2 ;
the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”;
all references to “the Guarantee Agreement” or “this Guarantee Agreement” are to this Guarantee Agreement as modified, supplemented or amended from time to time;
all references in this Guarantee Agreement to Articles and Sections are to Articles and Sections of this Guarantee Agreement unless otherwise specified;
the words “hereby”, “herein”, “hereof” and “hereunder” and other words of similar import refer to this Guarantee Agreement as a whole and not to any particular Article, Section or other subdivision;
a reference to the singular includes the plural and vice versa; and
the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.
Definitions.
As used in this Guarantee Agreement, the terms set forth below shall, unless the context otherwise requires, have the following meanings:
“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; provided , that the Issuer shall not be deemed to be an Affiliate of the Guarantor. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Beneficiaries” means any Person to whom the Issuer is or hereafter becomes indebted or liable.
“Board of Directors” means either the board of directors of the Guarantor or any duly authorized committee of that board.
2
“Common Securities” means the securities representing common undivided beneficial interests in the assets of the Issuer.
“Debt” means with respect to any Person, whether recourse is to all or a portion of the assets of such Person, whether currently existing or hereafter incurred, and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Guarantee Agreement or thereafter incurred, for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options, swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii).
“Event of Default” means a default by the Guarantor on any of its payment or other obligations under this Guarantee Agreement; provided, that except with respect to a default in payment of any Guarantee Payments, the Guarantor shall have received notice of default from the Guarantee Trustee and shall not have cured such default within thirty (30) days after receipt of such notice.
“Guarantee Payments” means the following payments or distributions, without duplication, with respect to the Preferred Securities, to the extent not paid or made by or on behalf of the Issuer: (i) any accumulated and unpaid Distributions (as defined in the Trust Agreement) required to be paid on the Preferred Securities, to the extent the Issuer shall have funds on hand available therefor at such time, (ii) the Redemption Price with respect to any Preferred Securities to the extent the Issuer shall have funds on hand available therefor at such time, and (iii) upon a voluntary or involuntary termination, winding up or liquidation of the Issuer, unless Notes are distributed to the Holders, the lesser of (a) the aggregate of the Liquidation Amount of $1,000 per Preferred Security plus accumulated and unpaid Distributions on the Preferred Securities to the date of payment, to the extent that the Issuer shall have funds available therefor at such time and (b) the amount of assets of the Issuer remaining available for distribution to Holders in liquidation of the Issuer after satisfaction of liabilities to creditors of the Issuer in accordance with applicable law (in either case, the “Liquidation Distribution” ).
3
“Guarantee Trustee” means Wilmington Trust Company in its capacity as trustee hereunder, until a Successor Guarantee Trustee, as defined below, has been appointed and has accepted such appointment pursuant to the terms of this Guarantee Agreement, and thereafter means each such Successor Guarantee Trustee.
“Holder” means any holder, as registered on the books and records of the Issuer, of any Preferred Securities; provided , that, in determining whether the holders of the requisite percentage of Preferred Securities have given any request, notice, consent or waiver hereunder, “Holder” shall not include the Guarantor, the Guarantee Trustee or any Affiliate of the Guarantor or the Guarantee Trustee.
“Indenture” means the Junior Subordinated Indenture, dated as of the date hereof, as supplemented and amended, between the Guarantor and Wilmington Trust Company, as trustee.
“List of Holders” has the meaning specified in Section 2.1.
“Majority in Liquidation Amount of the Preferred Securities” means a vote by the Holder(s), voting separately as a class, of more than fifty percent (50%) of the aggregate Liquidation Amount of all then outstanding Preferred Securities issued by the Issuer.
“Obligations” means any costs, expenses or liabilities (but not including liabilities related to taxes) of the Issuer, other than obligations of the Issuer to pay to holders of any Trust Securities the amounts due such holders pursuant to the terms of the Trust Securities.
“Officers’ Certificate” means, with respect to any Person, a certificate signed by the Chief Executive Officer, Chief Financial Officer, President or a Vice President of such Person, and by the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of such Person, and delivered to the Guarantee Trustee. Any Officers’ Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee Agreement (other than the certificate provided pursuant to Section 2.4 ) shall include:
4
a statement that each officer signing the Officers’ Certificate has read the covenant or condition and the definitions relating thereto;
a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers’ Certificate;
a statement that each officer has made such examination or investigation as, in such officer’s opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and
a statement as to whether, in the opinion of each officer, such condition or covenant has been complied with.
“Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, government or any agency or political subdivision thereof or any other entity of whatever nature.
“Responsible Officer” means, with respect to the Guarantee Trustee, any Senior Vice President, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any Trust Officer or Assistant Trust Officer or any other officer in the Corporate Trust Office of the Guarantee Trustee with direct responsibility for the administration of this Guarantee Agreement and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer’s knowledge of and familiarity with the particular subject.
“Senior Debt” means the principal of and any premium and interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Guarantor whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of the Guarantor, whether incurred on or prior to the date of the Indenture or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior in right of payment to the Preferred Securities; provided, however , that if the Guarantor is subject to the regulation and supervision of an “appropriate Federal banking agency” within the meaning of 12 U.S.C. 1813(q), the Guarantor shall have received the approval of such appropriate Federal banking agency prior to issuing any such obligation if not otherwise generally approved; provided further , that Senior Debt shall not include any other debt securities, and guarantees in respect of such debt securities, issued to any trust other than the Issuer (or a trustee of such trust), partnership or other entity affiliated with the Guarantor that is a financing vehicle of the Guarantor (a “financing entity”), in connection with the issuance by such financing entity of equity securities or other securities that are treated as equity capital for regulatory capital purposes guaranteed by the Guarantor pursuant to an instrument that ranks pari passu with or junior in right of payment to this Guarantee Agreement.
5
“Successor Guarantee Trustee” means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 4.1.
“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended and as in effect on the date of this Guarantee Agreement.
Capitalized or otherwise defined terms used but not otherwise defined herein shall have the meanings assigned to such terms in the Trust Agreement as in effect on the date hereof.
Reports
List of Holders.
The Guarantor shall furnish or cause to be furnished to the Guarantee Trustee at such times as the Guarantee Trustee may request in writing, within thirty (30) days after the receipt by the Guarantor of any such request, a list, in such form as the Guarantee Trustee may reasonably require, of the names and addresses of the Holders (the “List of Holders” ) as of a date not more than fifteen (15) days prior to the time such list is furnished, in each case to the extent such information is in the possession or control of the Guarantor and is not identical to a previously supplied list of Holders or has not otherwise been received by the Guarantee Trustee in its capacity as such. The Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders.
Periodic Reports to the Guarantee Trustee.
The Guarantor shall deliver to the Guarantee Trustee, within one hundred and twenty (120) days after the end of each fiscal year of the Guarantor ending after the date of this Guarantee Agreement, an Officers’ Certificate covering the preceding fiscal year, stating whether or not to the knowledge of the signers thereof the Guarantor is in default in the performance or observance of any of the terms or provisions or any of the conditions of this Guarantee Agreement (without regard to any period of grace or requirement of notice provided hereunder) and, if the Guarantor shall be in default thereof, specifying all such defaults and the nature and status thereof of which they have knowledge.
Event of Default; Waiver.
The Holders of a Majority in Liquidation Amount of the Preferred Securities may, on behalf of the Holders, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Guarantee Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent therefrom.
Event of Default; Notice.
The Guarantee Trustee shall, within ninety (90) days after the occurrence of a default, transmit to the Holders notices of all defaults actually known to the Guarantee Trustee, unless such defaults have been cured or waived before the giving of such notice, provided , that, except in the case of a default in the payment of a Guarantee Payment, the
6
Guarantee Trustee shall be protected in withholding such notice if and so long as the Board of Directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Guarantee Trustee in good faith determine that the withholding of such notice is in the interests of the Holders. For the purpose of this Section 2.4 , the term “default” means any event that is, or after notice or lapse of time or both would become, an Event of Default.
The Guarantee Trustee shall not be deemed to have knowledge of any default or Event of Default unless the Guarantee Trustee shall have received written notice, or a Responsible Officer charged with the administration of this Guarantee Agreement shall have received written notice, of such default or Event of Default from the Guarantor or a Holder.
Powers, Duties And Rights Of The Guarantee Trustee
Powers and Duties of the Guarantee Trustee.
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This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit of the Holders, and the Guarantee Trustee shall not transfer this Guarantee Agreement to any Person except a Holder exercising its rights pursuant to Section 5.4(d) or to a Successor Guarantee Trustee upon acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor Guarantee Trustee, upon acceptance by such Successor Guarantee Trustee of its appointment hereunder, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Guarantee Trustee.
The rights, immunities, duties and responsibilities of the Guarantee Trustee shall be as provided by this Guarantee Agreement and there shall be no other duties or obligations, express or implied, of the Guarantee Trustee. Notwithstanding the foregoing, no provisions of this Guarantee Agreement shall require the Guarantee Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not herein expressly so provided, every provision of this Guarantee Agreement relating to the conduct or affecting the liability of or affording protection to the Guarantee Trustee shall be subject to the provisions of this Section 3.1 . To the extent that, at law or in equity, the Guarantee Trustee has duties and liabilities relating to the Guarantor or the Holders, the Guarantee Trustee shall not be liable to any Holder for the Guarantee Trustee’s good faith reliance on the provisions of this Guarantee Agreement. The provisions of this Guarantee Agreement, to the extent that they restrict the duties and liabilities of the Guarantee Trustee otherwise existing at law or in equity, are agreed by the Guarantor and the Holders to replace such other duties and liabilities of the Guarantee Trustee.
No provision of this Guarantee Agreement shall be construed to relieve the Guarantee Trustee from liability for its own negligent action, negligent failure to act or own willful misconduct, except that:
the Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; and
the Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in Liquidation Amount of the Preferred Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee Agreement.
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Certain Rights of the Guarantee Trustee.
Subject to the provisions of Section 3.1 :
the Guarantee Trustee may conclusively rely and shall be fully protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document reasonably believed by it to be genuine and to have been signed, sent or presented by the proper party or parties;
any direction or act of the Guarantor contemplated by this Guarantee Agreement shall be sufficiently evidenced by an Officers’ Certificate unless otherwise prescribed herein;
the Guarantee Trustee may consult with counsel, and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted to be taken by it hereunder in good faith and in reliance thereon and in accordance with such advice. Such counsel may be counsel to the Guarantee Trustee, the Guarantor or any of its Affiliates and may be one of its employees. The Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee Agreement from any court of competent jurisdiction;
the Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee Agreement at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee reasonable security or indemnity against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Guarantee Trustee; provided , that, nothing contained in this Section 3.2(a)(iv) shall be taken to relieve the Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Guarantee Agreement;
the Guarantee Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and if the Guarantee Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Guarantor, personally or by agent or attorney;
the Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents, attorneys, custodians or nominees and the Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any such agent, attorney, custodian or nominee appointed with due care by it hereunder;
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whenever in the administration of this Guarantee Agreement the Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right hereunder, the Guarantee Trustee (A) may request instructions from the Holders of a Majority in Liquidation Amount of the Preferred Securities, (B) may refrain from enforcing such remedy or right or taking such other action until such instructions are received and (C) shall be protected in acting in accordance with such instructions;
except as otherwise expressly provided by this Guarantee Agreement, the Guarantee Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Guarantee Agreement;
whenever, in the administration of this Guarantee Agreement, the Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting to take any action hereunder, the Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and rely upon an Officers’ Certificate which, upon receipt of such request from the Guarantee Trustee, shall be promptly delivered by the Guarantor; and
the Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument or other writing (or any rerecording, refilling or reregistration thereof).
No provision of this Guarantee Agreement shall be deemed to impose any duty or obligation on the Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Guarantee Trustee shall be construed to be a duty to act in accordance with such power and authority.
Compensation.
The Guarantor agrees to pay to the Guarantee Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provisions of law in regard to the compensation of a trustee of an express trust) and to reimburse the Guarantee Trustee upon request for all reasonable expenses, disbursements and advances (including the reasonable fees and expenses of its attorneys and agents) incurred or made by the Guarantee Trustee in accordance with any provisions of this Guarantee Agreement.
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Indemnity.
The Guarantor agrees to indemnify and hold harmless the Guarantee Trustee (including in its individual capacity) and any of its Affiliates and any of their officers, directors, shareholders, employees, representatives or agents from and against any loss, damage, liability, tax (other than income, franchise or other taxes imposed on amounts paid pursuant to Section 3.3 ), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part, arising out of or in connection with the acceptance or administration of this Guarantee Agreement, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its rights, powers or duties hereunder. The Guarantee Trustee will not claim or exact any lien or charge on any Guarantee Payments as a result of any amount due to it under this Guarantee Agreement. This indemnity shall survive the termination of this Agreement or the resignation or removal of the Guarantee Trustee.
In no event shall the Guarantee Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Guarantee Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
In no event shall the Guarantee Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (declared or undeclared), terrorism, fire, riot, embargo or government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Guarantee Agreement.
Securities.
The Guarantee Trustee or any other agent of the Guarantee Trustee, in its individual or any other capacity, may become the owner or pledgee of Common or Preferred Securities.
Guarantee Trustee
Guarantee Trustee; Eligibility .
There shall at all times be a Guarantee Trustee which shall:
not be an Affiliate of the Guarantor; and
be a corporation organized and doing business under the laws of the United States or of any State thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least fifty million dollars ($50,000,000), subject to supervision or examination by Federal or State authority and having an office within the United States. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then, for the purposes of this Section 4.1 , the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
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If at any time the Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a) , the Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.2(c) .
If the Guarantee Trustee has or shall acquire any “conflicting interest” within the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee shall either eliminate such interest or resign in the manner and with the effect set out in Section 4.2(c) .
Appointment, Removal and Resignation of the Guarantee Trustee.
Subject to Section 4.2(b) , the Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor, except during an Event of Default.
The Guarantee Trustee shall not be removed until a Successor Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Guarantee Trustee and delivered to the Guarantor.
The Guarantee Trustee appointed hereunder shall hold office until a Successor Guarantee Trustee shall have been appointed or until its removal or resignation. The Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee Trustee.
If no Successor Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.2 within thirty (30) days after delivery to the Guarantor of an instrument of resignation, the resigning Guarantee Trustee may petition, at the expense of the Guarantor, any court of competent jurisdiction for appointment of a Successor Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee.
Guarantee
Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by or on behalf of the Issuer), as and when due, regardless of any defense (except for the defense of payment by the Issuer), right of set-off or counterclaim which the Issuer may have or assert. The Guarantor’s obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Issuer to pay such amounts to the Holders. The Guarantor shall give prompt written notice to the Guarantee Trustee in the event it makes any direct payment to the Holders hereunder.
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The Guarantor hereby also agrees to assume any and all Obligations of the Issuer, and, in the event any such Obligation is not so assumed, subject to the terms and conditions hereof, the Guarantor hereby irrevocably and unconditionally guarantees to each Beneficiary the full payment, when and as due, of any and all Obligations to such Beneficiaries. This Guarantee is intended to be for the Beneficiaries who have received notice hereof.
Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Guarantee Agreement and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Guarantee Trustee, Issuer or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands.
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Obligations Not Affected.
The obligations, covenants, agreements and duties of the Guarantor under this Guarantee Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following:
the release or waiver, by operation of law or otherwise, of the performance or observance by the Issuer of any express or implied agreement, covenant, term or condition relating to the Preferred Securities to be performed or observed by the Issuer;
the extension of time for the payment by the Issuer of all or any portion of the Distributions (other than an extension of time for payment of Distributions that results from the extension of any interest payment period on the Notes as provided in the Indenture), Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Preferred Securities;
any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Preferred Securities, or any action on the part of the Issuer granting indulgence or extension of any kind;
the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Issuer or any of the assets of the Issuer;
any invalidity of, or defect or deficiency in, the Preferred Securities;
the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or
any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.3 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain the consent of, the Guarantor with respect to the happening of any of the foregoing.
Rights of Holders.
The Guarantor expressly acknowledges that: (a) this Guarantee Agreement will be deposited with the Guarantee Trustee to be held for the benefit of the Holders; (b) the Guarantee Trustee has the right to enforce this Guarantee Agreement on behalf of the Holders; (c) the Holders of a Majority in Liquidation Amount of the Preferred Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee in respect of this Guarantee Agreement or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee
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Agreement; and (d) any Holder may institute a legal proceeding directly against the Guarantor to enforce its rights under this Guarantee Agreement, without first instituting a legal proceeding against the Guarantee Trustee, the Issuer or any other Person.
Guarantee of Payment.
This Guarantee Agreement creates a guarantee of payment and not of collection. This Guarantee Agreement will not be discharged except by payment of the Guarantee Payments in full (without duplication of amounts theretofore paid by the Issuer) or upon distribution of Notes to Holders as provided in the Trust Agreement.
Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders against the Issuer in respect of any amounts paid to the Holders by the Guarantor under this Guarantee Agreement and shall have the right to waive payment by the Issuer pursuant to Section 5.1 ; provided , that, the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Guarantee Agreement, if, at the time of any such payment, any amounts are due and unpaid under this Guarantee Agreement. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders.
Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer with respect to the Preferred Securities and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee Agreement notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.3 .
Enforcement.
A Beneficiary may enforce the Obligations of the Guarantor contained in Section 5.1(b) directly against the Guarantor, and the Guarantor waives any right or remedy to require that any action be brought against the Issuer or any other person or entity before proceeding against the Guarantor.
Covenants and Subordination
Dividends, Distributions and Payments.
So long as any Preferred Securities remain outstanding, if there shall have occurred and be continuing an Event of Default or the Guarantor shall have entered into an Extension Period as provided for in the Indenture and such period, or any extension thereof, shall have commenced and be continuing, then the Guarantor may not (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire or make liquidation payment with respect to, any of the Guarantor’s capital stock or (b) make any payment of principal of or any interest or premium on or repay, repurchase or redeem any debt securities of the Guarantor
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that rank pari passu in all respects with or junior in interest to the Preferred Securities (other than (i) repurchases, redemptions or other acquisitions of shares of capital stock of the Guarantor in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Guarantor (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the occurrence of such Event of Default or the applicable Extension Period, (ii) as a result of an exchange or conversion of any class or series of the Guarantor’s capital stock (or any capital stock of a subsidiary of the Guarantor) for any class or series of the Guarantor’s capital stock or any class of series of the Guarantor’s indebtedness for any class or series of the Guarantor’s capital stock, (iii) the purchase of fractional interests in shares of the Guarantor’s capital stock pursuant to the conversions or exchange provisions of such capital stock or the security being converted or exchanged, (iv) any declaration of a dividend in connection with any rights plan, the issuance of rights, stock or other property under any rights plan or the redemption or repurchase of rights pursuant thereto, or (v) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock).
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Subordination.
The obligations of the Guarantor under this Guarantee Agreement will constitute unsecured obligations of the Guarantor and will rank subordinate and junior in right of payment to all Senior Debt of the Guarantor.
Pari Passu Guarantees.
The obligations of the Guarantor under this Guarantee Agreement shall rank pari passu with the obligations of the Guarantor under any similar guarantee agreements issued by the Guarantor with respect to preferred securities (if any) similar to the Preferred Securities, issued by trusts other than the Issuer established or to be established by the Guarantor (if any), in each case similar to the Issuer.
The right of the Guarantor to participate in any distribution of assets of any of its subsidiaries upon any such subsidiary’s liquidation or reorganization or otherwise is subject to the prior claims of creditors of that subsidiary, except to the extent the Guarantor may itself be recognized as a creditor of that subsidiary. Accordingly, the Guarantor’s obligations under this Guarantee will be effectively subordinated to all existing and future liabilities of the Guarantor’s subsidiaries, and claimants should look only to the assets of the Guarantor for payments thereunder. This Guarantee does not limit the incurrence or issuance of other secured or unsecured debt of the Guarantor, including Senior Debt of the Guarantor, under any indenture or agreement that the Guarantor may enter into in the future or otherwise.
Termination
Termination.
This Guarantee Agreement shall terminate and be of no further force and effect upon (a) full payment of the Redemption Price of all Preferred Securities, (b) the distribution of Notes to the Holders in exchange for all of the Preferred Securities or (c) full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will continue to be effective or will be reinstated, as the case may be, if at any time any Holder must restore payment of any sums paid with respect to Preferred Securities or this Guarantee Agreement. The obligations of the Guarantor under Sections 3.3 and 3.4 shall survive any such termination or the resignation and removal of the Guarantee Trustee.
Miscellaneous
Successors and Assigns.
All guarantees and agreements contained in this Guarantee Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Preferred Securities then outstanding. Except in connection with a consolidation, merger or sale involving the Guarantor that is permitted under Article VIII of the Indenture and pursuant to which the successor or assignee agrees in writing to
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perform the Guarantor’s obligations hereunder, the Guarantor shall not assign its rights or delegate its obligations hereunder without the prior approval of the Holders of a Majority in Liquidation Amount of the Preferred Securities.
Amendments.
Except with respect to any changes that do not adversely affect the rights of the Holders in any material respect (in which case no consent of the Holders will be required), this Guarantee Agreement may only be amended with the prior approval of the Guarantor, the Guarantee Trustee and the Holders of not less than a Majority in Liquidation Amount of the Preferred Securities. The provisions of Article VI of the Trust Agreement concerning meetings or consents of the Holders shall apply to the giving of such approval.
Notices.
Any notice, request or other communication required or permitted to be given hereunder shall be in writing, duly signed by the party giving such notice, and delivered, telecopied or mailed by first class mail as follows:
if given to the Guarantor, to the address or facsimile number set forth below or such other address, facsimile number or to the attention of such other Person as the Guarantor may give notice to the Guarantee Trustee and the Holders:
Vision Bancshares, Inc.
P.O. Box 4649
Gulf Shores, Alabama 36547
Facsimile No.: (251) 968-3363
Attention: Executive Vice President and Chief Financial Officer
if given to the Issuer, at the Issuer’s address or facsimile number set forth below or such other address, facsimile number or to the attention of such other Person as the Issuer may give notice to the Guarantee Trustee and the Holders:
Vision Bancshares Trust I
c/o Vision Bancshares, Inc.
P.O. Box 4649
Gulf Shores, Alabama 36547
Facsimile No.: (251) 968-3363
Attention: Administrative Trustee
if given to the Guarantee Trustee, at the address or facsimile number set forth below or such other address, facsimile number or to the attention of such other Person as the Guarantee Trustee may give notice to the Guarantor and the Holders:
Wilmington Trust Company
Rodney Square North, 1100 North Market Street
Wilmington, Delaware 19890-0001
Facsimile No.: (302) 636-4140
Attention: Corporate Capital Markets
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if given to any Holder, at the address set forth on the books and records of the Issuer.
All notices hereunder shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid, except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver.
Benefit.
This Guarantee Agreement is solely for the benefit of the Holders and is not separately transferable from the Preferred Securities.
Governing Law.
This Guarantee Agreement and the rights and obligations of each party hereto, shall be construed and enforced in accordance with and governed by the laws of the State of New York without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).
Submission to Jurisdiction.
ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS GUARANTEE AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS GUARANTEE AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS GUARANTEE AGREEMENT.
Counterparts; facsimile.
This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Delivery of an executed signature page of this Guarantee Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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I N W ITNESS W HEREOF , the undersigned have executed this Guarantee Agreement as of the date first above written.
| VISION BANCSHARES, INC. | ||
| By: |
/s/ J. Daniel Sizemore |
|
| Name | J. Daniel Sizemore | |
| Title: | Chairman and Chief Executive Officer | |
| WILMINGTON TRUST COMPANY, not in its individual capacity, but solely as Guarantee Trustee | ||
| By: |
/s/ Christopher J. Slaybaugh |
|
| Name: | Christopher J. Slaybaugh | |
| Title: | Senior Financial Services Officer | |
Exhibit 10.18
PLACEMENT AGREEMENT
among
VISION BANCSHARES, INC.,
Vision Bancshares Trust I
and
CREDIT SUISSE FIRST BOSTON LLC
Dated as of December 5, 2005
Vision Bancshares, Inc.
$ 15,000,000 Preferred Securities
Floating Rate Preferred Securities
(Liquidation Amount $1,000 per Preferred Security)
PLACEMENT AGREEMENT
December 5, 2005
Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, New York 10010
Ladies and Gentlemen:
Vision Bancshares, Inc., an Alabama corporation (the “Company”), and its financing subsidiary, Vision Bancshares Trust I, a Delaware statutory trust (the “Trust,” and hereinafter together with the Company, the “Offerors”), hereby confirm their agreement (this “Agreement”) with you as placement agent (the “Placement Agent”), as follows:
Issuance and Sale of Securities.
Introduction . The Offerors propose to issue and sell at the Closing (as defined in Section 2.3.1 hereof) FIFTEEN MILLION AND 00/100 ($15,000,000) DOLLARS of the Trust’s Floating Rate Preferred Securities, with a liquidation amount of $1,000 per preferred security, bearing a variable rate of interest per annum, reset quarterly, equal to LIBOR (as defined in the Indenture (as defined below)) plus 1.48% (the “Preferred Securities”), directly or indirectly, to Credit Suisse, acting through its Cayman Islands branch, a Swiss banking corporation (the “Purchaser”), pursuant to the terms of the Preferred Securities Subscription Agreement entered into, or to be entered into on or prior to the Closing Date (as defined in Section 2.3.1 hereof), between the Offerors and the Purchaser (the “Subscription Agreement”), the form of which is attached hereto as Exhibit A and incorporated herein by this reference.
Operative Agreements . The Preferred Securities shall be fully and unconditionally guaranteed on a subordinated basis by the Company with respect to distributions and amounts payable upon liquidation, redemption or repayment (the “Guarantee”) pursuant and subject to the Guarantee Agreement (the “Guarantee Agreement”), to be dated as of the Closing Date and executed and delivered by the Company and Wilmington Trust Company, as guarantee trustee (the “Guarantee Trustee”), for the benefit from time to time of the holders of the Preferred Securities. The entire proceeds from the sale by the Trust to the holders of the Preferred Securities shall be combined with the entire proceeds from the sale by the Trust to the Company of its common securities (the
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“Common Securities”), and shall be used by the Trust to purchase FIFTEEN MILLION FOUR HUNDRED SIXTY-FOUR THOUSAND AND 00/100 ($15,464,000) DOLLARS in principal amount of the Floating Rate Junior Subordinated Notes (the “Junior Subordinated Notes”) of the Company. The Preferred Securities and the Common Securities of the Trust shall be issued pursuant to an Amended and Restated Trust Agreement among Wilmington Trust Company, as property trustee (the “Property Trustee”), and as Delaware trustee (the “Delaware Trustee”) the Administrative Trustees named therein and the Company, to be dated as of the Closing Date and in substantially the form heretofore delivered to the Placement Agent (the “Trust Agreement”). The Junior Subordinated Notes shall be issued pursuant to an Indenture (the “Indenture”), to be dated as of the Closing Date, between the Company and Wilmington Trust Company, as indenture trustee (the “Indenture Trustee”). The documents identified in this Section 1.2 and in Section 1.1 are referred to herein as the “Operative Documents.” The Preferred Securities, the Common Securities and the Junior Subordinated Notes are collectively referred to as the “Securities.” All other capitalized terms used but not defined in this Agreement shall have the meanings ascribed to them in the Indenture.
Rights of Purchaser . The Preferred Securities shall be offered and sold by the Trust, directly or indirectly, to the Purchaser without registration of any of the Preferred Securities, the Junior Subordinated Notes or the Guarantee under the Securities Act of 1933, as amended (the “Securities Act”), or any other applicable securities laws in reliance upon exemptions from the registration requirements of the Securities Act and other applicable securities laws. The Offerors agree that this Agreement shall be incorporated by reference into the Subscription Agreement and the Purchaser shall be entitled to each of the benefits of the Placement Agent and the Purchaser under this Agreement and shall be entitled to enforce obligations of the Offerors under this Agreement as fully as if the Purchaser were a party to this Agreement. The Offerors and the Placement Agent have entered into this Agreement to set forth their understanding as to their relationship and their respective rights, duties and obligations.
Legends . Upon original issuance thereof, and until such time as the same is no longer required under the applicable requirements of the Securities Act, the Preferred Securities and Junior Subordinated Notes certificates shall each contain a legend as required pursuant to any of the Operative Documents.
Purchase of Preferred Securities.
Exclusive Rights; Purchase Price . From the date hereof until the Closing Date (which date may be extended by mutual agreement of the Offerors and the Placement Agent), the Offerors hereby grant to the Placement Agent the exclusive right to arrange for the sale to the Purchaser of the Preferred Securities at a purchase price equal to $1,000 per Preferred Security. The aggregate purchase price shall be FIFTEEN MILLION AND 00/100 ($15,000,000) DOLLARS (the “Purchase Price”), which Purchase Price is equal to 100% of the stated liquidation amount of the Preferred Securities.
Subscription . The Offerors hereby agree to evidence their acceptance of the subscription by countersigning a copy of the Subscription Agreement and returning the same to the Placement Agent.
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Closing and Delivery of Payment.
Closing; Closing Date . The closing (the “Closing”) for the sale and purchase of the Preferred Securities by the Offerors to the Purchaser shall occur at the offices of Thacher Proffitt & Wood LLP , Two World Financial Center, New York, New York 10281, or such other place as the parties hereto shall agree at 11:00 a.m. (New York time) on December 5, 2005, or such other later date (not later than January 5, 2006) as the parties may designate (such date and time of delivery and payment for the Preferred Securities being herein called the “Closing Date”). The Preferred Securities shall be transferred and delivered to the Purchaser or its designee against the payment of the Purchase Price to the Offerors in immediately available funds on the Closing Date to a U.S. account designated in writing by the Company at least two (2) business days prior to the Closing Date.
Delivery. Delivery of the Preferred Securities shall be made at such location, and in such names and denominations, as the Purchaser shall designate at least two (2) business days in advance of the Closing Date. The Company and the Trust agree to have the Preferred Securities available for inspection and checking by the Purchaser in New York, New York not later than 1:00 P.M., New York time, on the business day prior to the Closing Date.
Placement Agents’ Fees and Expenses.
Placement Agents’ Compensation . The Trust shall use the proceeds from the sale of the Preferred Securities, together with the proceeds from the sale of the Common Securities, to purchase the Junior Subordinated Notes. The Company shall pay no fees or commissions (the “Commission”) to the Placement Agent. The Placement Agent shall be responsible for the following expenses: (i) rating agency costs and expenses and (ii) any fee payable to the Company’s introducing agent; provided, that such introducing agent has an agreement with the Placement Agent, but excluding the fees and expenses set forth in Section 2.4.2 hereof.
Costs and Expenses . The Company hereby covenants and agrees that it shall pay or cause to be paid (directly or by reimbursement) all costs and expenses incident to the performance of the obligations of the Offerors under this Agreement, whether or not the transactions contemplated herein are consummated or this Agreement is terminated, including (i) all costs and expenses incident to the authorization, issuance, sale and delivery of the Preferred Securities and any taxes payable in connection therewith; (ii) the fees and expenses of qualifying the Preferred Securities under the securities laws of the several jurisdictions as provided in Section 6.4 ; (iii) the fees and expenses of the counsel, the accountants and any other experts or advisors retained by the Company or the Trust, which counsel fees and expenses incurred in connection with the closing of the transactions contemplated hereby, in an amount up to $15,000, shall be reimbursed by the Purchaser on the Closing Date and (iv) the fees and all reasonable expenses of the Guarantee Trustee, the Property Trustee, the Delaware Trustee, the Indenture Trustee and any other trustee or paying agent appointed under the Operative Documents, including the reasonable fees and disbursements of counsel for such trustees, except for any acceptance fee and annual administrative fees of any such trustee and the fees and disbursements of counsel to such trustees incurred in connection with the closing of the transactions contemplated hereby, which shall be paid by the Purchaser.
Reimbursement of Expenses . If the sale of the Preferred Securities provided for in this Agreement is not consummated because any condition set forth in Section 3 to be satisfied by either the Company or the Trust is not satisfied, because this Agreement is terminated pursuant to Section 10
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or because of any failure, refusal or inability on the part of the Company or the Trust to perform all obligations and satisfy all conditions on its part to be performed or satisfied hereunder other than by a reason of a default by the Placement Agent, the Company will reimburse the Placement Agent upon demand for all reasonable out-of-pocket expenses (including the fees and expenses of each of the Placement Agent’s or Purchaser’s counsel) that shall have been incurred by the Placement Agent or Purchaser in connection with the proposed purchase and sale of the Preferred Securities. The Company shall not in any event be liable to the Placement Agent or Purchaser for the loss of anticipated profits from the transactions contemplated by this Agreement.
Failure to Close . If any of the conditions to the Closing specified in this Agreement shall not have been fulfilled to the satisfaction of the Placement Agent or if the Closing shall not have occurred on or before 11:00 a.m. (New York time) on January 5, 2006, then each party hereto, notwithstanding anything to the contrary in this Agreement, shall be relieved of all further obligations under this Agreement without thereby waiving any rights it may have by reason of such nonfulfillment or failure; provided, however, that the obligations of the parties under Sections 2.4, and 8 shall not be so relieved and shall continue in full force and effect.
Closing Conditions . The obligations of the parties under this Agreement on the Closing Date are subject to the following conditions:
Accuracy of Representations and Warranties . The representations and warranties contained in this Agreement, and the statements of the Offerors made in any certificates pursuant to this Agreement, shall be accurate as of the date of delivery of the Preferred Securities:
Opinions of Counsel . On the Closing Date, the Placement Agent shall have received the following favorable opinions or certificate, as the case may be, each dated as of the Closing Date: (a) from Thacher Proffitt & Wood LLP , special counsel for the Placement Agent and Purchaser and addressed to the Placement Agent and Purchaser in substantially the form set forth on Exhibit B-1 attached hereto and incorporated herein by this reference, (b) either (i) an opinion from Balch & Bingham LLP, counsel for the Offerors, or (ii) an Officers’ Certificate, from the General Counsel or Chief Legal Officer of the Company, or (iii) if the Company does not have a General Counsel or Chief Legal Officer, an Officers’ Certificate from the Chief Executive Officer, President or Executive Vice President of the Company, and the Chief Financial Officer, Treasurer or Assistant Treasurer of the Company, in each case addressed to the Purchaser and the Placement Agent in substantially the form set forth on Exhibit B-2 attached hereto and incorporated herein by this reference, (c) from Thacher Proffitt & Wood LLP , special tax counsel for the Placement Agent and Purchaser and addressed to the Placement Agent and Purchaser in substantially the form set forth on Exhibit B-3 attached hereto and incorporated herein by this reference, (d) from Morris, James, Hitchens & Williams LLP., special Delaware counsel to the Trust and addressed to the Purchaser, the Placement Agent and the Offerors, in substantially the form set forth on Exhibit B-4 attached hereto and incorporated herein by this reference, and (e) from Morris, James, Hitchens & Williams LLP, special counsel to the Indenture Trustee, the Property Trustee, the Delaware Trustee and the Guarantee Trustee and addressed to the Purchaser, the Placement Agent and the Offerors, in substantially the form set forth on Exhibit B-5 attached hereto and incorporated herein by this reference. Each opinion addressed to the Purchaser shall state that the first entity, if any, to which the Purchaser transfers any of the Preferred Securities and, if such transferee is a warehouse lender, the next subsequent transferee that is not a warehouse lender (each, a “Subsequent Purchaser”), shall be entitled to rely on such opinion.
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Officer’s Certificate . The Company shall have furnished to the Placement Agent and the Purchaser a certificate of the Company, signed by the Chief Executive Officer, President or an Executive Vice President and by the Chief Financial Officer, Treasurer or Assistant Treasurer of the Company, and the Trust shall have furnished to the Placement Agent and the Purchaser a certificate of the Trust, signed by an Administrative Trustee of the Trust, in each case dated the Closing Date, and, in the case of the Company, as to 3.3.1 and 3.3.2 below and, in the case of the Trust, as to 3.3.1 below:
the representations and warranties in this Agreement are true and correct on and as of the Closing Date with the same effect as if made on the Closing Date, and the Company and the Trust have complied with all the agreements and satisfied all the conditions on either of their part to be performed or satisfied at or prior to the Closing Date; and
since the date of the Interim Financial Statements (as defined below), there has been no material adverse change in the condition (financial or other), earnings, business, prospects or assets of the Company and its subsidiaries, whether or not arising from transactions occurring in the ordinary course of business.
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No Subsequent Change . Subsequent to the execution of this Agreement, there shall not have been any change, or any development involving a prospective change, in or affecting the condition (financial or other), earnings, business, prospects or assets of the Company and its subsidiaries, whether or not occurring in the ordinary course of business, the effect of which is, in the Placement Agent’s or Purchaser’s judgment, so material and adverse as to make it impractical or inadvisable to proceed with the purchase of the Preferred Securities.
Purchase Permitted by Applicable Laws; Legal Investment . The purchase of and payment for the Preferred Securities as described in this Agreement and pursuant to the Subscription Agreement shall (a) not be prohibited by any applicable law or governmental regulation, (b) not subject the Purchaser or the Placement Agent to any penalty or, in the reasonable judgment of the Purchaser and the Placement Agent, other onerous conditions under or pursuant to any applicable law or governmental regulation, and (c) be permitted by the laws and regulations of the jurisdictions to which the Purchaser and the Placement Agent are subject.
Consents and Permits . The Company and the Trust shall have received all consents, permits and other authorizations, and made all such filings and declarations, as may be required from any person or entity pursuant to any law, statute, regulation or rule (federal, state, local and foreign), or pursuant to any agreement, order or decree to which the Company or the Trust is a party or to which either is subject, in connection with the transactions contemplated by this Agreement.
Information . Prior to or on the Closing Date, the Offerors shall have furnished to the Placement Agent, the Purchaser and their respective counsel such further information, certificates, opinions and documents as the Placement Agent, Purchaser or their respective counsel may reasonably request.
If any of the conditions specified in this Section 3 shall not have been fulfilled when and as required in this Agreement, or if any of the opinions, certificates and documents mentioned above or elsewhere in this Agreement shall not be reasonably satisfactory in form and substance to the Placement Agent, the Purchaser or their respective counsel, this Agreement and all the Placement Agent’s obligations hereunder may be canceled at, or any time prior to, the Closing Date by the Placement Agent. Notice of such cancellation shall be given to the Offerors in writing or by telephone or facsimile confirmed in writing.
Each certificate signed by any trustee of the Trust or any officer of the Company and delivered to the Placement Agent, Purchaser or their respective counsel in connection with the Operative Documents and the transactions contemplated hereby and thereby shall be deemed to be a representation and warranty of the Trust and/or the Company, as the case may be, and not by such trustee or officer in any individual capacity.
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Representations and Warranties of the Offerors . The Offerors jointly and severally represent and warrant to the Placement Agent and the Purchaser as of the date hereof and as of the Closing Date as follows:
Securities Laws Matters:
Neither the Company nor the Trust, nor any of their “Affiliates” (as defined in Rule 501(b) of Regulation D under the Securities Act (“Regulation D”)), nor any person acting on any of their behalf (except for the Placement Agent, as to which neither the Company nor the Trust make any representation) has, directly or indirectly, made offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the registration under the Securities Act of any of the Securities.
Neither the Company nor the Trust, nor any of their Affiliates, nor any person acting on its or their behalf (except for the Placement Agent, as to which neither the Company nor the Trust make any representation) has (i) offered for sale or solicited offers to purchase the Securities, (ii) engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of any of the Securities, or (iii) engaged in any “directed selling efforts” within the meaning of Regulation S under the Securities Act (“Regulation S”) with respect to the Securities.
The Securities (i) are not and have not been listed on a national securities exchange registered under section 6 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or quoted on a U.S. automated interdealer quotation system and (ii) are not of an open-end investment company, unit investment trust or face-amount certificate company that are, or are required to be, registered under section 8 of the Investment Company Act of 1940, as amended (the “Investment Company Act”), and the Securities otherwise satisfy the eligibility requirements of Rule 144A(d)(3) promulgated pursuant to the Securities Act (“Rule 144A(d)(3)”).
Neither the Company nor the Trust is, and, immediately following consummation of the transactions contemplated hereby and the application of the net proceeds therefrom, neither the Company nor the Trust will be, an “investment company” or an entity “controlled” by an “investment company,” in each case within the meaning of section 3(a) of the Investment Company Act.
Neither the Company nor the Trust has paid or agreed to pay to any person or entity, directly or indirectly, any fees or other compensation for soliciting another to purchase any of the Securities, except for the Commission and/or any fee payable to the Company’s introducing agent; provided, that such introducing agent has an agreement with the Placement Agent.
Standing and Qualification of the Trust . The Trust has been duly created and is validly existing in good standing as a statutory trust under the Delaware Statutory Trust Act, 12 Del. C. §3801, et seq. (the “Statutory Trust Act”) with all requisite power and authority to own property and to conduct the business it transacts and proposes to transact and to enter into and perform its obligations under the Operative Documents to which it is a party. The Trust is duly qualified to transact business as a foreign entity and is in good standing in each jurisdiction in which such qualification is necessary, except where the failure to so qualify or be in good standing would not have a material adverse effect on the condition (financial or otherwise), earnings, business, prospects or assets of the Trust, whether or not occurring in the ordinary course of business. The Trust is not a party to, or otherwise bound by, any agreement other than the Operative Documents. The Trust is, and under current law will continue to be, classified for federal income tax purposes as a grantor trust and not as an association or publicly traded partnership taxable as a corporation.
Trust Agreement . The Trust Agreement has been duly authorized by the Company and, on the Closing Date specified in Section 2.3.1, will have been duly executed and delivered by the Company and the Administrative Trustees of the Trust, and, assuming due authorization, execution and delivery by the Property Trustee and the Delaware Trustee, will be a legal, valid and binding obligation of the Company and the Administrative Trustees, enforceable against them in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity. Each of the Administrative Trustees of the Trust
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is an employee of the Company or one of its subsidiary banks and has been duly authorized by the Company to execute and deliver the Trust Agreement. To the knowledge of the Administrative Trustees, the Trust is not in violation of any provision of the Statutory Trust Act.
Guarantee Agreement and the Indenture . Each of the Guarantee and the Indenture has been duly authorized by the Company and, on the Closing Date, will have been duly executed and delivered by the Company, and, assuming due authorization, execution and delivery by the Guarantee Trustee, in the case of the Guarantee, and by the Indenture Trustee, in the case of the Indenture, will be a legal, valid and binding obligation of the Company enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.
Preferred Securities and Common Securities . The Preferred Securities and the Common Securities have been duly authorized by the Trust and, when issued and delivered against payment therefor on the Closing Date to the Purchaser in accordance with this Agreement and the Subscription Agreement, in the case of the Preferred Securities, and to the Company in accordance with the Common Securities Subscription Agreement between the Company and the Trust, dated as of the Closing Date, in the case of the Common Securities, will be validly issued, fully paid and nonassessable and will represent undivided beneficial interests in the assets of the Trust entitled to the benefits of the Trust Agreement, enforceable against the Trust in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity. The issuance of the Securities is not subject to preemptive or other similar rights. On the Closing Date, all of the issued and outstanding Common Securities will be directly owned by the Company free and clear of any pledge, security interest, claim, lien or other encumbrance (each, a “Lien”).
Junior Subordinated Notes . The Junior Subordinated Notes have been duly authorized by the Company and, on the Closing Date, will have been duly executed and delivered to the Indenture Trustee for authentication in accordance with the Indenture and, when authenticated in the manner provided for in the Indenture and delivered to the Trust against payment therefor in accordance with the Junior Subordinated Note Subscription Agreement between the Company and the Trust, dated as of the Closing Date, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.
Placement Agreement . This Agreement has been duly authorized, executed and delivered by the Company and the Trust and constitutes the legal, valid and binding obligation of the Company and the Trust, enforceable against the Company and the Trust in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.
Defaults . Neither the issue and sale of the Common Securities, the Preferred Securities or the Junior Subordinated Notes, nor the purchase of the Junior Subordinated Notes by the Trust, the execution and delivery of and compliance with the Operative Documents by the Company or the Trust, the consummation of the transactions contemplated herein or therein, or the use of the
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proceeds therefrom, (i) will conflict with or constitute a breach of, or a default under, the Trust Agreement or the charter or bylaws of the Company or any subsidiary of the Company or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, governmental authority, agency or instrumentality or court, domestic or foreign, having jurisdiction over the Trust, or the Company or any of its subsidiaries, or their respective properties or assets (collectively, “Governmental Entities”), (ii) will conflict with or constitute a violation or breach of, or a default or Repayment Event (as defined below) under, or result in the creation or imposition of any Lien upon any property or assets of the Trust, the Company or any of the Company’s subsidiaries pursuant to any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which (A) the Trust, the Company or any of its subsidiaries is a party or by which it or any of them may be bound, or (B) any of the property or assets of any of them is subject, or any judgment, order or decree of any court, Governmental Entity or arbitrator, except, in the case of this clause (ii), for such conflicts, breaches, violations, defaults, Repayment Events (as defined below) or Liens which (X) would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents and (Y) would not, singly or in the aggregate, have a material adverse effect on the condition (financial or otherwise), earnings, business, liabilities, prospects and assets (taken as a whole) or business prospects of the Company and its subsidiaries taken as a whole, whether or not occurring in the ordinary course of business (a “Material Adverse Effect”) or (iii) require the consent, approval, authorization or order of any court or Governmental Entity. As used herein, a “Repayment Event” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Trust or the Company or any of its subsidiaries prior to its scheduled maturity.
Organization, Standing and Qualification of the Company . The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of Alabama, with all requisite corporate power and authority to own, lease and operate its properties and conduct the business it transacts and proposes to transact, and is duly qualified to transact business and is in good standing as a foreign corporation in each jurisdiction where the nature of its activities requires such qualification, except where the failure of the Company to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect.
Subsidiaries of the Company . The Company has no subsidiaries that are material to its business, financial condition or earnings other than those subsidiaries listed in Schedule 1 attached hereto (the “Significant Subsidiaries”). Each Significant Subsidiary has been duly organized and is validly existing and in good standing under the laws of the jurisdiction in which it is chartered or organized, with all requisite power and authority to own its properties and conduct the business it transacts and proposes to transact. Each Significant Subsidiary is duly qualified to transact business and is in good standing as a foreign entity in each jurisdiction where the nature of its activities requires such qualification, except where the failure of any such Significant Subsidiary to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect.
Government Licenses . Each of the Trust, the Company and each of its subsidiaries hold all necessary approvals, authorizations, orders, licenses, certificates and permits (collectively, “Government Licenses”) of and from Governmental Entities necessary to conduct its respective business as now being conducted, and neither the Trust, the Company nor any of the Company’s
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subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Government License, except where the failure to be so licensed or approved or the receipt of an unfavorable decision, ruling or finding, would not, singly or in the aggregate, have a Material Adverse Effect; all of the Government Licenses are valid and in full force and effect, except where the invalidity or the failure of such Government Licenses to be in full force and effect, would not, singly or in the aggregate, have a Material Adverse Effect; and the Company and its subsidiaries are in compliance with all applicable laws, rules, regulations, judgments, orders, decrees and consents, except where the failure to be in compliance would not, singly or in the aggregate, have a Material Adverse Effect.
Stock . All of the issued and outstanding shares of capital stock of the Company and each of its subsidiaries are validly issued, fully paid and nonassesssable; all of the issued and outstanding capital stock of each subsidiary of the Company is owned by the Company, directly or through subsidiaries, free and clear of any Lien, claim or equitable right; and none of the issued and outstanding capital stock of the Company or any subsidiary was issued in violation of any preemptive or similar rights arising by operation of law, under the charter or by-laws of such entity or under any agreement to which the Company or any of its subsidiaries is a party.
Property . Each of the Trust, the Company and each subsidiary of the Company has good and marketable title to all of its respective real and personal properties, in each case free and clear of all Liens and defects, except for those that would not, singly or in the aggregate, have a Material Adverse Effect; and all of the leases and subleases under which the Trust, the Company or any subsidiary of the Company holds properties are in full force and effect, except where the failure of such leases and subleases to be in full force and effect would not, singly or in the aggregate, have a Material Adverse Effect and none of the Trust, the Company or any subsidiary of the Company has any notice of any claim of any sort that has been asserted by anyone adverse to the rights of the Trust, the Company or any subsidiary of the Company under any such leases or subleases, or affecting or questioning the rights of such entity to the continued possession of the leased or subleased premises under any such lease or sublease, except for such claims that would not, singly or in the aggregate, have a Material Adverse Effect.
Conflicts, Authorizations and Approvals . Neither the Company nor any of its subsidiaries is (i) in violation of its respective charter, bylaws or similar organizational documents or (ii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which either the Company or any such subsidiary is a party or by which it or any of them may be bound or to which any of the property or assets of any of them is subject, except, in the case of clause (ii), where such default would not, singly or in the aggregate, have a Material Adverse Effect. No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Governmental Entity, other than those that have been made or obtained, is necessary or required for the performance by the Trust or the Company of their respective obligations under the Operative Documents, as applicable, or the consummation by the Trust and the Company of the transactions contemplated by the Operative Documents.
Holding Company Registration and Deposit Insurance . The Company is duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended (the “ Bank
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Holding Company Act ”), and the regulations of the Board of Governors of the Federal Reserve System (the “ Federal Reserve ”), and the deposit accounts of the Company’s subsidiary depository institutions are insured by the Federal Deposit Insurance Corporation (“FDIC”) to the fullest extent permitted by law and the rules and regulations of the FDIC, and no proceeding for the termination of such insurance are pending or, to the knowledge of the Company or the Trust after due inquiry, threatened.
Financial Statements.
The audited consolidated financial statements (including the notes thereto) and schedules of the Company and its consolidated subsidiaries at and for each of the three fiscal years ended December 31, 2004, 2003 and 2002 (the “Financial Statements”) and the interim unaudited consolidated financial statements of the Company and its consolidated subsidiaries at and for the quarter and nine months ended September 30, 2005 (the “Interim Financial Statements”) provided to the Placement Agent are the most recently available audited and unaudited consolidated financial statements of the Company and its consolidated subsidiaries, respectively, and fairly present in all material respects, in accordance with U.S. generally accepted accounting principles (“GAAP”), the financial position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the dates and for the periods therein specified, subject, in the case of Interim Financial Statements, to year-end adjustments (which are expected to consist solely of normal recurring adjustments). Such consolidated financial statements and schedules have been prepared in accordance with GAAP consistently applied throughout the periods involved (except as otherwise noted therein).
The Company’s report on FRY-9C, dated September 30, 2005 (the “FRY-9C”), provided to the Placement Agent is the most recently available such report, and the information therein fairly presents in all material respects the financial position of the Company and its subsidiaries. None of the Company or any of its subsidiaries has been requested by a Governmental Entity to republish, restate or refile any regulatory or financial report.
Since the respective dates of the Financial Statements, Interim Financial Statements and the FRY-9C, there has not been (A) any material adverse change or development with respect to the condition (financial or otherwise), earnings, business, assets or business prospects of the Company and its subsidiaries, taken as a whole, whether or not occurring in the ordinary course of business or (B) any dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock other than regular quarterly dividends on the Company’s common stock.
The accountants of the Company who certified the Financial Statements are independent public accountants of the Company and its subsidiaries within the meaning of the Securities Act and the rules and regulations of the Securities and Exchange Commission (“SEC”) thereunder.
Regulatory Enforcement Matters . None of the Trust, the Company nor any of its subsidiaries,
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nor any of their respective officers, directors, employees or representatives, is subject or is party to, or has received any notice from any Regulatory Agency (as defined below) that any of them will become subject or party to any investigation with respect to, any cease-and-desist order, agreement, civil monetary penalty, consent agreement, memorandum of understanding or other regulatory enforcement action, proceeding or order with or by, or is a party to any commitment letter or similar undertaking to, or is subject to any directive by, or has been a recipient of any supervisory letter from, or has adopted any board resolutions at the request or suggestion of, any Regulatory Agency that, in any such case, currently restricts in any material respect the conduct of their business or that in any material manner relates to their capital adequacy, their credit policies, their management or their business (each, a “Regulatory Action”), nor has the Trust, the Company or any of its subsidiaries been advised by any Regulatory Agency that it is considering issuing or requesting any such Regulatory Action; and there is no unresolved violation, criticism or exception by any Regulatory Agency with respect to any report or statement relating to any examinations of the Trust, the Company or any of its subsidiaries, except where such unresolved violation, criticism or exception would not, singly or in the aggregate, have a Material Adverse Effect. If the Company is a bank holding company that is subject to the Bank Holding Company Act, it is a “well-run” bank holding company that satisfies the criteria of the Federal Reserve’s regulations at 12 C.F.R. §225.14(c). Each of the Company’s subsidiaries that is a depository institution, the accounts of which are insured by the FDIC (i) is “well-capitalized” within the meaning of 12 U.S.C. §1831o and applicable implementing regulations thereunder; and (ii) is not, and has not been notified by any Regulatory Agency that it is, in “troubled condition” within the meaning of 12 U.S.C. §1831i and applicable implementing regulations thereunder. As used herein, the term “Regulatory Agency” means any federal or state agency charged with the supervision or regulation of depositary institutions or holding companies of depositary institutions, or engaged in the insurance of depositary institution deposits, or any court, administrative agency or commission or other governmental agency, authority or instrumentality having supervisory or regulatory authority with respect to the Trust, the Company or any of its subsidiaries.
No Undisclosed Liabilities . None of the Trust, the Company nor any of its subsidiaries has any material liability, whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability for taxes (and there is no past or present fact, situation, circumstance, condition or other basis for any present or future action, suit, proceeding, hearing, charge, complaint, claim or demand against the Company or its subsidiaries that could give rise to any such liability), except for (i) liabilities set forth in the Financial Statements or the Interim Financial Statements and (ii) normal fluctuations in the amount of the liabilities referred to in clause (i) above occurring in the ordinary course of business of the Trust, the Company and all of its subsidiaries since the date of the most recent balance sheet included in such Financial Statements.
Litigation . There is no action, suit or proceeding before or by any Governmental Entity, arbitrator or court, domestic or foreign, now pending or, to the knowledge of the Company or the Trust after due inquiry, threatened against or affecting the Trust or the Company or any of the Company’s subsidiaries, except for such actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents or have a Material Adverse Effect; and the aggregate of all pending legal or governmental proceedings to which the Trust or the Company or any of its
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subsidiaries is a party or of which any of their respective properties or assets is subject, including ordinary routine litigation incidental to the business, are not expected to result in a Material Adverse Effect.
No Labor Disputes . No labor dispute with the employees of the Trust, the Company or any of its subsidiaries exists or, to the knowledge of the executive officers of the Trust or the Company, is imminent, except those which would not, singly or in the aggregate, have a Material Adverse Effect.
Filings with the SEC . The documents of the Company filed with the SEC in accordance with the Exchange Act, from and including the commencement of the fiscal year covered by the Company’s most recent Annual Report on Form 10-K, at the time they were or hereafter are filed by the Company with the SEC (collectively, the “1934 Act Reports”), complied and will comply in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC thereunder (the “1934 Act Regulations”), and, at the date of this Agreement and on the Closing Date, do not and will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and other than such instruments, agreements, contracts and other documents as are filed as exhibits to the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, there are no instruments, agreements, contracts or documents of a character described in Item 601 of Regulation S-K promulgated by the SEC to which the Company or any of its subsidiaries is a party. The Company is in compliance with all currently applicable requirements of the Exchange Act that were added by the Sarbanes-Oxley Act of 2002.
Deferral of Interest Payments on Junior Subordinated Notes . The Company has no present intention to exercise its option to defer payments of interest on the Junior Subordinated Notes as provided in the Indenture. The Company believes that the likelihood that it would exercise its rights to defer payments of interest on the Junior Subordinated Notes as provided in the Indenture at any time during which the Junior Subordinated Notes are outstanding is remote because of the restrictions that would be imposed on the Company’s ability to declare or pay dividends or distributions on, or to redeem, purchase, acquire or make a liquidation payment with respect to, any of the Company’s capital stock and on the Company’s ability to make any payments of principal, interest or premium on, or repay, repurchase or redeem, any of its debt securities that rank pari passu in all respects with or junior in interest to the Junior Subordinated Notes.
Information . The information provided by the Company and the Trust pursuant to this Agreement does not, as of the date hereof, and will not, as of the Closing Date, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
Representations and Warranties of the Placement Agent . The Placement Agent represents and warrants to, and agrees with, the Company and the Trust as follows:
General Solicitation . Neither the Placement Agent, nor any of the Placement Agent’s affiliates, nor any person acting on the Placement Agent’s or the Placement Agent’s Affiliate’s
14
behalf has engaged, or will engage, in any form of “general solicitation or general advertising” (within the meaning of Regulation D under the Securities Act) in connection with any offer or sale of the Preferred Securities.
Purchaser . The Placement Agent has made such reasonable inquiry as is necessary to determine that the Purchaser is acquiring the Preferred Securities for its own account, the Purchaser does not intend to distribute the Preferred Securities in contravention of the Securities Act or any other applicable securities laws.
Qualified Purchasers . The Placement Agent has not offered or sold, and will not arrange for the offer or sale of, the Preferred Securities except (i) to those the Placement Agent reasonably believes are institutional “accredited investors” (within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 of Regulation D), (ii) in an offshore transaction complying with Rule 903 of Regulation S or (iii) in any other manner that does not require registration of the Preferred Securities under the Securities Act. In connection with each such sale, the Placement Agent has taken or will take reasonable steps to ensure that the Purchaser is aware that (a) such sale is being made in reliance on an exemption under the Securities Act and (b) future transfers of the Preferred Securities may not be made except in compliance with applicable securities laws.
Offering Circulars . Neither the Placement Agent nor its representatives will include any nonpublic information about the Company, the Trust or any of their affiliates in any registration statement, prospectus, offering circular or private placement memorandum used in connection with any purchase of Preferred Securities without the prior written consent of the Trust and the Company.
Covenants of the Offerors . The Offerors covenant and agree with the Placement Agent and the Purchaser as follows:
Compliance with Representations and Warranties . During the period from the date of this Agreement to the Closing Date, the Offerors shall use their best efforts and take all action necessary or appropriate to cause their representations and warranties contained in Section 4 hereof to be true as of the Closing Date, after giving effect to the transactions contemplated by this Agreement, as if made on and as of the Closing Date.
Sale and Registration of Securities . Neither the Company nor the Trust will, nor will either of them permit any of its Affiliates to, nor will either of them permit any person acting on its or their behalf (other than the Placement Agent and the Purchaser and their respective affiliates) to, directly or indirectly, (i) resell any Preferred Securities that have been acquired by any of them, (ii) sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Securities Act) that would or could be integrated with the sale of the Preferred Securities in any manner that would require the registration of the Securities under the Securities Act or (iii) make offers or sales of any such Security, or solicit offers to buy any such Security, under any circumstances that would require the registration of any of such Securities under the Securities Act.
Lock Up . Neither the Company nor the Trust will, until one hundred eighty (180) days following the Closing Date, without the Purchaser’s prior written consent, offer, sell, contract to sell, grant any option to purchase or otherwise dispose of, directly or indirectly, (i) any Preferred
15
Securities or other securities of the Trust other than as contemplated by this Agreement or (ii) any other securities convertible into, or exercisable or exchangeable for, any Preferred Securities or other securities of the Trust.
Qualification of Securities . The Company and the Trust will arrange for the qualification of the Preferred Securities for sale under the laws of such jurisdictions as the Placement Agent may designate and will maintain such qualifications in effect so long as required for the sale of the Preferred Securities. The Company or the Trust, as the case may be, will promptly advise the Placement Agent of the receipt by the Company or the Trust, as the case may be, of any notification with respect to the suspension of the qualification of the Preferred Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose.
Use of Proceeds . The Trust shall use the proceeds from the sale of the Preferred Securities and the Common Securities to purchase the Junior Subordinated Notes from the Company.
Investment Company . So long as any of the Securities are outstanding, (i) the Securities shall not be listed on a national securities exchange registered under section 6 of the Exchange Act or quoted in a U.S. automated interdealer quotation system, (ii) neither the Company nor the Trust shall be an open-end investment company, unit investment trust or face-amount certificate company that is, or is required to be, registered under section 8 of the Investment Company Act, and, the Securities shall otherwise satisfy the eligibility requirements of Rule 144A(d)(3) and (iii) neither of the Offerors shall engage, or permit any subsidiary to engage, in any activity which would cause it or any subsidiary to be an “investment company” under the provisions of the Investment Company Act.
Solicitation and Advertising . Neither the Company nor the Trust will, nor will either of them permit any of their Affiliates or any person acting on their behalf to (other than the Placement Agent, the Purchaser or their respective affiliates), (i) engage in any “directed selling efforts” within the meaning of Regulation S under the Securities Act or (ii) engage in any form of “general solicitation or general advertising” (within the meaning of Regulation D) in connection with any offer or sale of any of the Securities.
Compliance with Rule 144A(d)(4) under the Securities Act . So long as any of the Securities are outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the Securities Act, the Offerors will, during any period in which they are not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, or the Offerors are not exempt from such reporting requirements pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act, provide to each holder of such restricted securities and to each prospective purchaser (as designated by such holder) of such restricted securities, upon the request of such holder or prospective purchaser in connection with any proposed transfer, any information required to be provided by Rule 144A(d)(4) under the Securities Act, if applicable. The information provided by the Offerors pursuant to this Section 6.8 will not, at the date thereof, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company and the Trust are required to register under the Exchange Act, such reports filed in compliance with Rule 12g3-2(b) shall be sufficient information as required above. This covenant is intended to be for the benefit of the Purchaser, the holders of the Securities, and the prospective purchasers designated by such holders, from time to time, of the Securities.
16
Reports . Each of the Company and the Trust shall furnish to (i) the Placement Agent, (ii) the Purchaser and any subsequent holder of the Securities, and (iii) any beneficial owner of the Securities reasonably identified to the Company and the Trust (which identification may be made by either such beneficial owner or by the Purchaser), a duly completed and executed certificate in the form attached hereto as Annex F, including the financial statements referenced in such Annex, which certificate and financial statements shall be so furnished by the Company and the Trust not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company.
Covenants of the Placement Agent . The Placement Agent covenants and agrees with the Offerors that, during the period from the date of this Agreement to the Closing Date, the Placement Agent shall use its best efforts and take all action necessary or appropriate to cause its representations and warranties contained in Section 5 to be true as of the Closing Date, after giving effect to the transactions contemplated by this Agreement, as if made on and as of the Closing Date. The Placement Agent further covenants and agrees not to engage in hedging transactions with respect to the Preferred Securities unless such transactions are conducted in compliance with the Securities Act.
Indemnification & Contribution.
Indemnification.
The Company and the Trust agree jointly and severally to indemnify and hold harmless the Placement Agent, the Purchaser, the Placement Agent’s affiliates, a Subsequent Purchaser (collectively, the “Indemnified Parties”) and the Indemnified Parties’ respective directors, officers, employees and agents and each person who “controls” the Indemnified Parties within the meaning of either the Securities Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any information or documents furnished or made available to the Purchaser or the Placement Agent by or on behalf of the Company, (ii) the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) the breach or alleged breach of any representation, warranty or agreement of either Offeror contained herein, and agrees to reimburse each such Indemnified Party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability which the Company or the Trust may otherwise have.
Promptly after receipt by an Indemnified Party under this Section 8 of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8 , promptly notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not
17
relieve the indemnifying party from liability under Section 8.1.1 above unless and to the extent that such failure results in the forfeiture by the indemnifying party of material rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any Indemnified Party other than the indemnification obligation provided in Section 8.1.1 above. The Placement Agent shall be entitled to appoint counsel to represent the Indemnified Party in any action for which indemnification is sought. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the Indemnified Party) also be counsel to the Indemnified Party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all Indemnified Parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. An indemnifying party will not, without the prior written consent of the Indemnified Parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not the Indemnified Parties are actual or potential parties to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising out of such claim, action, suit or proceeding.
Contribution.
In order to provide for just and equitable contribution in circumstances under which the indemnification provided for in Section 8.1 hereof is for any reason held to be unenforceable for the benefit of an Indemnified Party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such Indemnified Party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Offerors, on the one hand, and the Placement Agent, on the other hand, from the offering of the Securities or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above, but also the relative fault of the Offerors, on the one hand, and the Placement Agent, on the other hand, in connection with the statements, omissions or breaches, which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Offerors, on the one hand, and the Placement Agent, on the other hand, in connection with the offering of the Securities shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities (before deducting expenses) received by the Offerors and the Commission received by the Placement Agent bear to the aggregate of such net proceeds and Commission.
The Offerors and the Placement Agent agree that it would not be just and equitable if contribution pursuant to this Section 8.2 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 8.2 . The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an Indemnified Party and referred to above in this Section 8.2 shall be deemed to include any legal or other expenses reasonably incurred by such Indemnified Party in investigating, preparing or
18
defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement, omission or alleged omission or breach or alleged breach.
Notwithstanding any provision of this Section 8 to the contrary, the Placement Agent shall not be required to contribute any amount in excess of the amount of the Commission.
No person guilty of fraudulent misrepresentation (within the meaning of section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 8.2 , the Placement Agent, each person, if any, who controls the Placement Agent within the meaning of section 15 of the Securities Act or section 20 of the Exchange Act and the respective partners, directors, officers, employees and agents of the Placement Agent or any such controlling person shall have the same rights to contribution as the Placement Agent, while each officer and director of the Company, each trustee of the Trust and each person, if any, who controls the Company within the meaning of section 15 of the Securities Act or section 20 of the Exchange Act shall have the same rights to contribution as the Offerors.
Additional Remedies . The indemnity and contribution agreements contained in this Section 8 are in addition to any liability that the Offerors may otherwise have to any Indemnified Party.
Additional Indemnification . The Company shall indemnify and hold harmless the Trust against all loss, liability, claim, damage and expense whatsoever, as due from the Trust under Sections 8.1 through 8.3 hereof.
Rights and Responsibilities of Placement Agent.
Reliance . In performing its duties under this Agreement, the Placement Agent shall be entitled to rely upon any notice, signature or writing which it shall in good faith believe to be genuine and to be signed or presented by a proper party or parties. The Placement Agent may rely upon any opinions or certificates or other documents delivered by the Offerors or their counsel or designees to either the Placement Agent or the Purchaser.
Rights of Placement Agent . In connection with the performance of its duties under this Agreement, the Placement Agent shall not be liable for any error of judgment or any action taken or omitted to be taken unless the Placement Agent was grossly negligent or engaged in willful misconduct in connection with such performance or non-performance. No provision of this Agreement shall require the Placement Agent to expend or risk its own funds or otherwise incur any financial liability on behalf of the Purchaser in connection with the performance of any of its duties hereunder. The Placement Agent shall be under no obligation to exercise any of the rights or powers vested in it by this Agreement.
Termination . This Agreement shall be subject to termination in the absolute discretion of the Placement Agent, by notice given to the Company and the Trust prior to delivery of and payment for the Preferred Securities, if prior to such time (i) a downgrading shall have occurred in the rating accorded the Company’s debt securities or preferred stock by any “nationally recognized statistical
19
rating organization,” as that term is used by the SEC in Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act, or such organization shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of the Company’s debt securities or preferred stock, (ii) the Trust shall be unable to sell and deliver to the Purchaser at least $ 15,000,000 stated liquidation value of Preferred Securities, (iii) the Company or any of its subsidiaries that is an insured depository institution shall cease to be “adequately-capitalized” within the meaning of 12 U.S.C. Section 1831 and applicable regulations adopted thereunder, or any formal administrative or judicial action is taken by any appropriate federal banking agency against the Company or any such insured subsidiary for unsafe and unsound banking practices, or violations of law, (iv) a suspension or material limitation in trading in securities generally shall have occurred on the New York Stock Exchange, (v) a suspension or material limitation in trading in any of the Company’s securities shall have occurred on the exchange or quotation system upon which the Company’s securities are traded, if any, (vi) a general moratorium on commercial banking activities shall have been declared either by federal or Alabama authorities or (vii) there shall have occurred any outbreak or escalation of hostilities, or declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets is such as to make it, in the Placement Agent’s or Purchaser’s judgment, impracticable or inadvisable to proceed with the offering or delivery of the Preferred Securities.
Miscellaneous.
Disclosure Schedule . The term “Disclosure Schedule,” as used herein, means the schedule, if any, attached to this Agreement that sets forth items the disclosure of which is necessary or appropriate as an exception to one or more representations or warranties contained in Section 4 hereof. The Disclosure Schedule shall be arranged in paragraphs corresponding to the section numbers contained in Section 4. Nothing in the Disclosure Schedule shall be deemed adequate to disclose an exception to a representation or warranty made herein unless the Disclosure Schedule identifies the exception with reasonable particularity and describes the relevant facts in reasonable detail. Without limiting the generality of the immediately preceding sentence, the mere listing (or inclusion of a copy) of a document or other item in the Disclosure Schedule shall not be deemed adequate to disclose an exception to a representation or warranty made herein unless the representation or warranty has to do with the existence of the document or other item itself. Information provided by the Company in response to any due diligence questionnaire shall not be deemed part of the Disclosure Schedule and shall not be deemed to be an exception to one or more representations or warranties contained in Section 4 hereof unless such information is specifically included on the Disclosure Schedule in accordance with the provisions of this Section 11.1.
Notices . All communications hereunder will be in writing and effective only on receipt, and will be mailed, delivered by hand or courier or sent by facsimile and confirmed:
If to the Placement Agent, to:
Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, New York 10010-3629
Facsimile: (212) 743-5043
Attention: The CDO Group
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with a copy to:
Thacher Proffitt & Wood LLP
Two World Financial Center
New York, New York 10281
Facsimile: (212) 912-7751
Telephone: (212) 912-7400
Attention: Mark I. Sokolow, Esq.
if to the Offerors, to:
Vision Bancshares, Inc.
P.O. Box 4649
Gulf Shores, Alabama 36547
Facsimile: (251) 968-3363
Telephone: (251) 968-1001
Attention: Chief Financial Officer
with a copy to:
Balch & Bingham LLP
1901 Sixth Avenue North
Suite 2600
Birmingham, Alabama 35203-4644
Facsimile: (205) 226-8799
Telephone: (205) 226-8720
Attention: Michael D. Waters, Esq.
All such notices and communications shall be deemed to have been duly given (i) at the time delivered by hand, if personally delivered, (ii) five business days after being deposited in the mail, postage prepaid, if mailed, (iii) when answered back, if telexed, (iv) the next business day after being telecopied, or (v) the next business day after timely delivery to a courier, if sent by overnight air courier guaranteeing next-day delivery. From and after the Closing, the foregoing notice provisions shall be superseded by any notice provisions of the Operative Documents under which notice is given. The Placement Agent, the Company, and their respective counsel, may change their respective notice addresses, from time to time, by written notice to all of the foregoing persons.
Parties in Interest, Successors and Assigns . This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person other than the parties hereto and the affiliates, directors, officers, employees, agents and controlling persons referred to in Section 8 hereof, their successors, assigns, heirs and legal representatives, and any Subsequent Purchaser, any right or obligation hereunder. None of the rights or obligations of the Company or the Trust under this Agreement may be assigned, whether by operation of law or otherwise, without the Placement Agent’s prior written consent. The rights and obligations of the Placement Agent and Purchaser under this Agreement may be assigned by such party without the Company’s or the Trust’s consent; provided that the assignee assumes the obligations of such party under this Agreement.
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Amendments . This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement by each of the parties hereto.
Counterparts and Facsimile . This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. This Agreement may be executed by any one or more of the parties hereto by facsimile. Delivery of an executed signature page of this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.
Headings . The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
Governing Law . THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).
Submission to Jurisdiction . ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
Entire Agreement . This Agreement, together with the Operative Documents and the other documents delivered in connection with the transactions contemplated by this Agreement, is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein and therein. This Agreement, together with the Operative Documents and the other documents delivered in connection with the transaction contemplated by this Agreement, supersedes all prior agreements and understandings between the parties with respect to such subject matter.
Severability . In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected, it being intended that all of the Placement Agent’s and the Purchaser’s rights and privileges shall be enforceable to the fullest extent permitted by law.
Survival . The respective agreements, representations, warranties, indemnities and other statements of the Company and the Trust and their respective officers or trustees and of the Placement Agent set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Placement Agent, the Purchaser, the Company or the Trust or any of their respective officers, directors, trustees or controlling persons, and will survive delivery of and payment for the Preferred Securities. The provisions of Sections 2.4 and 8 shall survive the termination or cancellation of this Agreement.
Signatures appear on the following page
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If this Agreement is satisfactory to you, please so indicate by signing the acceptance of this Agreement and deliver such counterpart to the Offerors whereupon this Agreement will become binding between us in accordance with its terms.
Very truly yours,
| V ISION B ANCSHARES , I NC . | ||||
| By: |
/s/ J. Daniel Sizemore |
|||
| Name: | J. Daniel Sizemore | |||
| Title: | Chairman and Chief Executive Officer | |||
| V ISION B ANCSHARES T RUST I | ||||
| By: | Vision Bancshares, Inc., as Depositor | |||
| By: |
/s/ J. Daniel Sizemore |
|||
| Name: | J. Daniel Sizemore | |||
| Title: | Chairman and Chief Executive Officer | |||
| CONFIRMED AND ACCEPTED | ||
| as of the date first set forth above | ||
|
C REDIT S UISSE F IRST B OSTON LLC, as Placement Agent |
||
| By: |
/s/ Hao Jiang |
|
| Name: | Hao Jiang | |
| Title: | Director | |
23
Schedule 1
List of Significant Subsidiaries
Vision Bank (Alabama)
Vision Bank (Florida)
24
EXHIBIT A
FORM OF SUBSCRIPTION AGREEMENT
PREFERRED SECURITIES SUBSCRIPTION AGREEMENT
December 5, 2005
THIS PREFERRED SECURITIES SUBSCRIPTION AGREEMENT (this “Agreement”) made among Vision Bancshares Trust I (the “Trust”), a statutory trust created under the Delaware Statutory Trust Act (12 Del. C. §3801, et seq .), Vision Bancshares, Inc., an Alabama corporation, with its principal offices located at P.O. Box 4649, Gulf Shores, Alabama 36547 (the “Company” and, together with the Trust, the “Offerors”), Credit Suisse, acting through its Cayman Islands branch, a Swiss banking corporation (the “Purchaser”), and Credit Suisse First Boston LLC (as to Sections 1.2, 1.3 and Article III).
RECITALS:
A. The Trust desires to issue FIFTEEN MILLION AND 00/100 ($15,000,000) DOLLARS of its Floating Rate Preferred Securities (the “Preferred Securities”), liquidation amount $1,000 per Preferred Security, representing an undivided beneficial interest in the assets of the Trust (the “Offering”), to be issued pursuant to an Amended and Restated Trust Agreement (the “Trust Agreement”) by and among the Company, Wilmington Trust Company, as Property Trustee (the “Property Trustee”), Wilmington Trust Company, as Delaware Trustee, the administrative trustees named therein and the Holders (as defined therein), which Preferred Securities are to be guaranteed by the Company with respect to distributions and payments upon liquidation, redemption and otherwise pursuant to the terms of a Guarantee Agreement between the Company and Wilmington Trust Company, as Guarantee Trustee (the “Guarantee”); and
B. The proceeds from the sale of the Preferred Securities will be combined with the proceeds from the sale by the Trust to the Company of its Common Securities, and will be used by the Trust to purchase an equivalent amount of Floating Rate Junior Subordinated Notes of the Company (the “Notes”) to be issued by the Company pursuant to an indenture (the “Indenture”) to be executed by the Company and Wilmington Trust Company, as Indenture Trustee; and
C. In consideration of the premises and the mutual representations and covenants hereinafter set forth, the parties hereto agree as follows:
Article I
PURCHASE AND SALE OF PREFERRED SECURITIES
1.1 Upon the execution of this Agreement, the Purchaser hereby agrees to purchase, directly or indirectly, from the Trust, Preferred Securities at a price equal to $1,000 per Preferred Security for an aggregate purchase price equal to FIFTEEN MILLION AND 00/100 ($15,000,000) Dollars (the “Purchase Price”), and the Trust agrees to sell such Preferred Securities to the Purchaser for said Purchase Price. The rights and preferences of the Preferred Securities are set forth in the Trust Agreement. The closing of the sale and purchase of the Preferred Securities by the Offerors to the Purchaser shall occur on December 5, 2006, or such other later date (not later than January 5, 2005) as the parties may designate (the “Closing Date”) The Purchase Price is payable in immediately available funds on the Closing Date. The Offerors shall provide the Purchaser payment instructions to later than two (2) days prior to the Closing Date.
A-1
1.2 The Placement Agreement, dated as of December 5, 2005 (the “Placement Agreement”), among the Offerors and the Placement Agent identified therein (the “Placement Agent”) includes certain representations and warranties, covenants and conditions to closing and certain other matters governing the Offering. The Placement Agreement is hereby incorporated by reference into this Agreement, and the Purchaser shall be entitled to each of the benefits of the Placement Agent and the Purchaser under the Placement Agreement and shall be entitled to enforce the obligations of the Offerors under such Placement Agreement as fully as if the Purchaser were a party to such Placement Agreement.
1.3 The Purchaser is purchasing the Preferred Securities in its capacity as a warehouse lender, and Purchaser may resell the Preferred Securities to a subsequent purchaser (any such purchaser from the Purchaser and, if such purchaser is a warehouse lender, the next subsequent purchaser that is not a warehouse lender, being referred to hereinafter as a “Subsequent Purchaser”). Upon transfer of the Preferred Securities to a Subsequent Purchaser, the Subsequent Purchaser shall be entitled to each of the benefits of the Placement Agent and the Purchaser under the Placement Agreement and this Agreement, and shall be entitled to enforce the obligations of the Offerors under the Placement Agreement and this Agreement, as fully as if the Subsequent Purchaser were a party to the Placement Agreement and this Agreement.
Article II
REPRESENTATIONS AND WARRANTIES OF PURCHASER
2.1 The Purchaser understands and acknowledges that none of Preferred Securities, the Notes nor the Guarantee (i) have been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any other applicable securities law, (ii) are being offered for sale by the Trust in transactions not requiring registration under the Securities Act and (iii) may not be offered, sold, pledged or otherwise transferred by the Purchaser except in compliance with the registration requirements of the Securities Act or any other applicable securities laws, pursuant to an exemption therefrom or in a transaction not subject thereto.
2.2 The Purchaser represents and warrants that it is purchasing the Preferred Securities for its own account and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or other applicable securities laws, subject to any requirement of law that the disposition of its property be at all times within its control and subject to its ability to resell such Preferred Securities pursuant to an effective registration statement under the Securities Act or under Rule 144A or any other exemption from registration available under the Securities Act or any other applicable securities law. The Purchaser understands that no public market exists for any of the Preferred Securities, and that it is unlikely that a public market will ever exist for the Preferred Securities.
A-2
2.3 The Purchaser represents and warrants that (a) it has consulted with its own legal, regulatory, tax, business, investment, financial and accounting advisers in connection herewith to the extent it has deemed necessary; (b) it has had a reasonable opportunity to ask questions of and receive answers from officers and representatives of the Offerors concerning their respective financial condition and results of operations and the purchase of the Preferred Securities and any such questions have been answered to its satisfaction; (c) it has had the opportunity to review all publicly available records and filings concerning the Offerors and it has carefully reviewed such records and filings that it considers relevant to making an investment decision; and (d) it has made its own investment decisions based upon its own judgment, due diligence and advice from such advisers as it has deemed necessary and not upon any view expressed by the Offerors or the Placement Agent.
2.4 The Purchaser represents and warrants that it is an institutional “accredited investor” within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 of Regulation D under the Securities Act.
Article III
MISCELLANEOUS
3.1 Any notice or other communication given hereunder shall be deemed sufficient if in writing and sent by registered or certified mail, return receipt requested, international courier or delivered by hand against written receipt therefor, or by facsimile transmission and confirmed by telephone, to the following addresses, or such other address as may be furnished to the other parties as herein provided:
| To the Offerors: | Vision Bancshares, Inc. | |
| P.O. Box 4649 | ||
| Gulf Shores, Alabama 36547 | ||
| Fax: (251) 968-3363 | ||
| Attention: Chief Financial Officer | ||
| To the Purchaser: | Credit Suisse, acting through its Cayman Islands branch | |
| c/o Credit Suisse First Boston LLC | ||
| Eleven Madison Avenue | ||
| New York, New York 10010-3629 | ||
| Fax: (212) 743-5043 | ||
| Attention: The CDO Group | ||
Unless otherwise expressly provided herein, notices shall be deemed to have been given on the date of mailing, except notice of change of address, which shall be deemed to have been given when received.
A-3
3.2 This Agreement shall not be changed, modified or amended except by a writing signed by the parties to be charged, and this Agreement may not be discharged except by performance in accordance with its terms or by a writing signed by the party to be charged.
3.3 Upon the execution and delivery of this Agreement by the Purchaser, this Agreement shall become a binding obligation of the Purchaser with respect to the purchase of Preferred Securities as herein provided.
3.4 NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT ALL THE TERMS AND PROVISIONS HEREOF SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
3.5 The parties agree to execute and deliver all such further documents, agreements and instruments and take such other and further action as may be necessary or appropriate to carry out the purposes and intent of this Agreement.
3.6 This Agreement may be executed in one or more counterparts each of which shall be deemed an original, but all of which shall together constitute one and the same instrument. Delivery of an executed signature page of this Agreement by facsimile transmission shall be effective as delivery of a manually executed counterpart hereof.
3.7 In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected, it being intended that all of the Offerors’ and the Purchaser’s rights and privileges shall be enforceable to the fullest extent permitted by law.
Signatures appear on the following page
A-4
IN WITNESS WHEREOF, this Agreement is agreed to and accepted as of the day and year first written above.
| Credit Suisse, acting through its Cayman Islands branch, as Purchaser | ||
| By: |
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| Name: | ||
| Title: | ||
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V ISION B ANCSHARES , I NC . |
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| By: |
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| Name: | ||
| Title: | ||
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V ISION B ANCSHARES T RUST I |
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| By: | Vision Bancshares, Inc., as Depositor | |
| By: |
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| Name: | ||
| Title: | ||
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C REDIT S UISSE F IRST B OSTON LLC (for purposes of the rights and obligations in Sections 1.2, 1.3 and Article III only) |
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| By: |
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| Name: | ||
| Title: | ||
A-5
EXHIBIT B-1
FORM OF THACHER PROFFITT & WOOD llp OPINION
Pursuant to Section 3.2(a) of the Placement Agreement, Thacher Proffitt & Wood LLP, special counsel for the Placement Agent and Purchaser, shall deliver an opinion to the effect that:
| 1. | the Company and each Significant Subsidiary is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized; the Company has corporate power and authority to (a) execute and deliver, and to perform its obligations under, the Operative Documents to which it is a party and (b) issue and perform its obligations under the Notes; |
| 2. | neither the issue and sale of the Common Securities, the Preferred Securities or the Junior Subordinated Notes, nor the purchase by the Trust of the Junior Subordinated Notes, nor the execution and delivery of and compliance with the Operative Documents by the Company or the Trust nor the consummation of the transactions contemplated thereby will constitute a breach or violation of the Trust Agreement or the charter or by-laws of the Company; |
| 3. | the Amended and Restated Trust Agreement has been duly authorized, executed and delivered by the Company and duly executed and delivered by the Administrative Trustees; |
| 4. | each of the Guarantee and the Indenture has been duly authorized, executed and delivered by the Company and, assuming it has been duly authorized, executed and delivered by the Guarantee Trustee and the Indenture Trustee, respectively, constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity; |
| 5. | the Junior Subordinated Notes have been duly authorized and executed by the Company and delivered to the Indenture Trustee for authentication in accordance with the Indenture and, when authenticated in accordance with the provisions of the Indenture and delivered to the Trust against payment therefor, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture and enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity; |
| 6. | the Trust is not, and, following the issuance of the Preferred Securities and the consummation of the transactions contemplated by the Operative Documents and the application of the proceeds therefrom, the Trust will not be, an “investment company” or an entity “controlled” by an “investment company,” in each case within the meaning of Section 3(a) of the Investment Company Act; |
| 7. | assuming (a) the accuracy of the representations and warranties, and compliance with the agreements contained in the Placement Agreement and (b) that the Preferred Securities are sold in a manner contemplated by, and in accordance with the Placement Agreement, Subscription Agreement and the Amended and Restated Trust Agreement, it is not necessary in connection with the offer, sale and delivery of the Preferred Securities by the Trust to the Purchaser, to register any of the Securities under the Securities Act or to require qualification of the Indenture under the Trust Indenture Act of 1939, as amended; |
| 8. | the Placement Agreement and Subscription Agreement have been duly authorized, executed and delivered by the Company; |
| 9. | the Subscription Agreement has been duly executed and delivered by the Administrative Trustees; and, |
| 10. | the Indenture constitutes the legal, valid and binding obligation of Wilmington Trust Company enforceable against Wilmington Trust Company in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity. |
In rendering such opinions, such counsel may (A) state that its opinion is limited to the laws of the State of New York, the Delaware General Corporation Law and the federal laws of the United States; (B) as to matters involving the application of laws of any jurisdiction other than the State of New York and the Delaware General Corporation Law or the federal laws of the United States, (i) rely, to the extent deemed proper and specified in such opinion, upon the opinion of other counsel of good standing believed to be reliable and who are satisfactory to the Purchaser or (ii) assume such law is substantially similar to the law of the State of New York and, (C) as to matters of fact, rely to the extent deemed proper, on certificates of responsible officers of the Company and public officials.
B-1-1
EXHIBIT B-2
FORM OF COMPANY COUNSEL OPINION
or officers’ certificate
Pursuant to Section 3.2(b) of the Placement Agreement, [General] counsel for the Company shall deliver an opinion, or the [[General Counsel/Chief Legal Officer], or, if none, [Chief Executive Officer/President/Executive Vice President] and [Chief Financial Officer/Treasurer/Assistant Treasurer]] of the Company shall provide an Officers’ Certificate, to the effect that:
| 11. | all of the issued and outstanding shares of capital stock of each Significant Subsidiary are owned of record by the Company, and the issuance of the Preferred Securities and the Common Securities is not subject to any contractual preemptive rights known to such [counsel/officer]; |
| 12. | no consent, approval, authorization or order of any court or governmental authority is required for the issue and sale of the Common Securities, the Preferred Securities or the Junior Subordinated Notes, the purchase by the Trust of the Junior Subordinated Notes, the execution and delivery of and compliance with the Operative Documents by the Company or the Trust or the consummation of the transactions contemplated in the Operative Documents, except such approvals (specified in such [opinion/certificate]) as have been obtained; |
| 13. | to the knowledge of such [counsel/officer], there is no action, suit or proceeding before or by any government, governmental instrumentality, arbitrator or court, domestic or foreign, now pending or threatened against or affecting the Trust or the Company or any Significant Subsidiary that could adversely affect the consummation of the transactions contemplated by the Operative Documents or could have a Material Adverse Effect; |
| 14. | the Company is duly registered as a bank holding company under the Bank Holding Company Act and the regulations thereunder of the Federal Reserve Board , and the deposit accounts of the Company’s banking subsidiary are insured by the FDIC to the fullest extent permitted by law and the rules and regulations of the FDIC, and no proceeding for the termination of such insurance are pending or, to such person’s knowledge, threatened; |
| 15. | The execution, delivery and performance of the Operative Documents, as applicable, by the Company and the Trust and the consummation by the Company and the Trust of the transactions contemplated by the Operative Documents, as applicable, (a) will not result in any violation of the charter or bylaws of the Company, the charter or bylaws of the Bank, the Amended and Restated Trust Agreement or the Certificate of Trust, and (b) will not conflict with, or result in a breach of any of the terms or provisions of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the creation or imposition of any lien, charge and encumbrance upon any assets or properties of the Company or any Significant Subsidiary under, (A) any agreement, indenture, mortgage or instrument that the Company or any Significant Subsidiary of the Company is a party to or by which it may be bound or to which any of its assets or properties may be subject, or (B) any existing applicable law, rule or administrative regulation [for General Counsel only: except that I express no opinion with respect to the securities laws of the State of Delaware] of any court or governmental agency or authority having jurisdiction over the Company or any Significant Subsidiary of the Company or any of their respective assets or properties, except in case of (b), where any such violation, conflict, breach, default, lien, charge or encumbrance, would not have a material adverse effect on the assets, properties, business, results of operations or financial condition of the Company and its subsidiaries, taken as whole. |
All terms used but not defined herein shall have the meanings assigned to them in the Placement Agreement. A Subsequent Purchaser shall be entitled to rely on this [opinion/certificate].
[Applies only to in-house counsel opinion] [In rendering such opinions, such counsel may (A) state that the above is limited to the laws of the States of [Jurisdiction of bar admission], (B) rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Company and public officials.]
B-2-1
EXHIBIT B-3
FORM OF TAX COUNSEL OPINION
Pursuant to Section 3.2(c) of the Placement Agreement, Thacher Proffitt & Wood LLP, special tax counsel for the Placement Agent and Purchaser, shall deliver an opinion to the effect that:
| 1. | the Trust will be classified for United States federal income tax purposes as a grantor trust and not as an association or a publicly traded partnership taxable as a corporation; and |
| 2. | for United States federal income tax purposes, the Junior Subordinated Notes will constitute indebtedness of the Company. |
In rendering such opinions, such counsel may (A) state that its opinion is limited to the laws of the State of New York and the federal laws of the United States and (B) rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Company and public officials.
B-3-1
EXHIBIT B-4
FORM OF DELAWARE COUNSEL TRUST OPINION
Pursuant to Section 3.2(d) of the Placement Agreement, Morris, James, Hitchens & Williams LLP, special Delaware counsel for the Trust, shall deliver an opinion to the effect that:
| 1. | The Trust has been duly created and is validly existing in good standing as a statutory trust under the Delaware Statutory Trust Act, and all filings required under the laws of the State of Delaware with respect to the creation and valid existence of the Trust as a statutory trust have been made. |
| 2. | Under the Delaware Statutory Trust Act and the Amended and Restated Trust Agreement, the Trust has the trust power and authority (i) to own property and conduct its business, all as described in the Amended and Restated Trust Agreement, (ii) to execute and deliver, and to perform its obligations under, each of the Placement Agreement, the Subscription Agreement, the Common Securities Subscription Agreement, the Junior Subordinated Note Subscription Agreement and the Preferred Securities and the Common Securities and (iii) to purchase and hold the Junior Subordinated Notes. |
| 3. | Under the Delaware Statutory Trust Act, the certificate attached to the Amended and Restated Trust Agreement as Exhibit C is an appropriate form of certificate to evidence ownership of the Preferred Securities. The Preferred Securities have been duly authorized by the Amended and Restated Trust Agreement and, when issued in accordance with the Amended and Restated Trust Agreement and delivered against payment therefor in accordance with the Amended and Restated Trust Agreement and the Subscription Agreement, the Preferred Securities will be validly issued and (subject to the qualifications set forth in this paragraph) fully paid and nonassessable and will represent undivided beneficial interests in the assets of the Trust, and the Preferred Security Holders will be entitled to the benefits of the Amended and Restated Trust Agreement. The Preferred Security Holders as beneficial owners of the Trust, will be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. The Preferred Security Holders may be obligated to make payments or provide indemnity or security as set forth in the Amended and Restated Trust Agreement. |
| 4. | The Common Securities have been duly authorized by the Amended and Restated Trust Agreement and, when issued in accordance with the Amended and Restated Trust Agreement and delivered against payment therefor in accordance with the Amended and Restated Trust Agreement and the Common Securities Subscription Agreement, will be validly issued and will represent undivided beneficial interests in the assets of the Trust, and the Common Security Holder will be entitled to the benefits of the Amended and Restated Trust Agreement. |
| 5. | Under the Delaware Statutory Trust Act and the Amended and Restated Trust Agreement, the issuance of the Preferred Securities and the Common Securities is not subject to preemptive or other similar rights. |
| 6. | Under the Delaware Statutory Trust Act and the Amended and Restated Trust Agreement, the execution and delivery by the Trust of the Placement Agreement, the Subscription Agreement, the Common Securities Subscription Agreement and the Junior Subordinated Note Subscription Agreement, and the performance by the Trust of its obligations thereunder, have been duly authorized by all necessary trust action on the part of the Trust. |
| 7. | The Amended and Restated Trust Agreement constitutes a legal, valid and binding obligation of the Company and the Trustees, enforceable against the Company and the Trustees, in accordance with its terms. |
| 8. | The issuance and sale by the Trust of the Preferred Securities and the Common Securities, the purchase by the Trust of the Junior Subordinated Notes, the execution, delivery and performance by the Trust of the Placement Agreement, the Subscription Agreement, the Common Securities Subscription Agreement and the Junior Subordinated Note Subscription Agreement, the consummation by the Trust of the transactions contemplated by the Placement Agreement, the Subscription Agreement, the Common Securities Subscription Agreement and the Junior Subordinated Note Subscription Agreement and compliance by the Trust with its obligations thereunder are not prohibited by (i) the Certificate of Trust or the Amended and Restated Trust Agreement or (ii) any law or regulation of the State of Delaware applicable to the Trust. |
B-4-1
| 9. | No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Delaware court or Delaware governmental authority or Delaware agency is required solely in connection with the issuance and sale by the Trust of the Trust Securities, the purchase by the Trust of the Junior Subordinated Notes, the execution, delivery and performance by the Trust of the Placement Agreement, the Subscription Agreement, the Common Securities Subscription Agreement and the Junior Subordinated Note Subscription Agreement, the consummation by the Trust of the transactions contemplated by the Placement Agreement and the Subscription Agreement and compliance by the Trust with its obligations thereunder. |
| 10. | The Preferred Security Holders (other than those Preferred Security Holders who reside or are domiciled in the State of Delaware) will have no liability for income taxes imposed by the State of Delaware solely as a result of their participation in the Trust and the Trust will not be liable for any income tax imposed by the State of Delaware. |
In rendering such opinions, such counsel may (A) state that its opinion is limited to the laws of the State of Delaware and (B) rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Company and the Trust and public officials.
B-4-2
EXHIBIT B-5
FORM OF TRUSTEE COUNSEL OPINION
Pursuant to Section 3.2(e) of the Placement Agreement, Morris, James, Hitchens & Williams LLP, special counsel for the Property Trustee, the Guarantee Trustee, the Delaware Trustee and the Indenture Trustee, shall deliver an opinion to the effect that:
| (i) | Wilmington Trust Company is duly incorporated and validly existing as a Delaware banking corporation in good standing under the laws of the State of Delaware with trust powers and its principal place of business in the State of Delaware. |
| (ii) | Wilmington Trust Company has requisite corporate power and authority to execute and deliver, and to perform its obligations under, the Amended and Restated Trust Agreement, the Guarantee Agreement and the Indenture. |
| (iii) | The execution, delivery, and performance by Wilmington Trust Company of the Amended and Restated Trust Agreement, the Guarantee Agreement and the Indenture have been duly authorized by all necessary corporate action on the part of Wilmington Trust Company, and the Amended and Restated Trust Agreement, the Guarantee Agreement and the Indenture have been duly executed and delivered by Wilmington Trust Company. |
| (iv) | The Amended and Restated Trust Agreement is a legal, valid and binding obligation of Wilmington Trust Company, enforceable against Wilmington Trust Company, in accordance with its terms. |
| (v) | No approval, authorization or other action by, or filing with, any governmental authority or agency under any law or regulation of the State of Delaware or the United States of America governing the trust powers of Wilmington Trust Company is required solely in connection with the execution, delivery and performance by Wilmington Trust Company of the Amended and Restated Trust Agreement, the Guarantee Agreement and the Indenture, except for the filing of the Certificate of Trust with the Secretary of State, which Certificate of Trust has been duly filed with the Secretary of State. |
| (vi) | The execution, delivery and performance of the Amended and Restated Trust Agreement, the Guarantee Agreement and the Indenture by Wilmington Trust Company are not prohibited by (i) the Charter or Bylaws of Wilmington Trust Company, (ii) any law or regulation of the State of Delaware or the United States of America governing the trust powers of Wilmington Trust Company, or (iii) to our knowledge (based and relying solely on the Officer Certificates), any agreements or instruments to which Wilmington Trust Company is a party or by which Wilmington Trust Company is bound or any judgment or order applicable to Wilmington Trust Company. |
| 7. | The Junior Subordinated Notes delivered on the date hereof have been authenticated by due execution thereof and delivered by Wilmington Trust Company, as Indenture Trustee, in accordance with the Company Order. The Preferred Securities delivered on the date hereof have been authenticated by due execution thereof and delivered by Wilmington Trust Company, as Property Trustee, in accordance with the Trust Order. |
In rendering such opinions, such counsel may (A) state that its opinion is limited to the laws of the State of Delaware and the federal laws of the United States governing the trust powers of Wilmington Trust Company and (B) rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of Wilmington Trust Company and public officials.
B-5-1
Annex F
EXHIBIT F
Officer’s Certificate
The undersigned, the [Chief Financial Officer] [Treasurer] [Executive Vice President] hereby certifies, pursuant to Section 6.9 of the Placement Agreement, dated as of December 5, 2005 among Vision Bancshares, Inc. (the “Company”), Vision Bancshares Trust I (the “Trust”) and Credit Suisse First Boston LLC that, as of [date], [20 ], the Company had the following ratios and balances:
BANK HOLDING COMPANY
As of [Quarterly Financial Dates]
| Tier 1 Risk Weighted Assets | % | ||
| Ratio of Double Leverage | % | ||
| Non-Performing Assets to Loans and OREO | % | ||
| Tangible Common Equity as a Percentage of Tangible Assets | % | ||
| Ratio of Reserves to Non-Performing Loans | % | ||
| Ratio of Net Charge-Offs to Loans | % | ||
| Return on Average Assets (annualized) | % | ||
| Net Interest Margin (annualized) | % | ||
| Efficiency Ratio | % | ||
| Ratio of Loans to Assets | % | ||
| Ratio of Loans to Deposits | % | ||
| Double Leverage (exclude trust preferred as equity) | % | ||
| Total Assets | $ | ||
| Year to Date Income | $ |
| * | A table describing the quarterly report calculation procedures is attached. |
[FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements (including the balance sheet, income statement and statement of cash flows, and notes thereto, together with the report of the independent accountants thereon) of the Company and its consolidated subsidiaries for the three years ended [date], 20 .]
[FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating financial statements (including the balance sheet and income statement) of the Company and its consolidated subsidiaries for the fiscal quarter ended [date], 20 .]
The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles (“GAAP”), the financial position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the [ quarter interim] [annual] period ended [date], 20 , and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (expect as otherwise noted therein).
F-1
Annex F
IN WITNESS WHEREOF, the undersigned has executed this Officer’s Certificate as of this day of , 20
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|
| Name: |
| Title: |
| Vision Bancshares, Inc. |
| P.O. Box 4649 |
| Gulf Shores, Alabama 36547 |
| (251) 968-1001 |
F-2
Annex F
Financial Definitions
BANK HOLDING COMPANY
|
Report Item |
Corresponding FRY-9C or LP Line Items with Line Item corresponding Schedules |
Description of Calculation |
||
| Tier 1 Risk Weighted Assets |
BHCK7206 Schedule HC-R |
Tier 1 Risk Ratio: Core Capital (Tier 1)/ Risk-Adjusted Assets | ||
| Ratio of Double Leverage |
(BHCP0365)/(BCHCP3210) Schedule PC in the LP |
Total equity investments in subsidiaries divided by the total equity capital. This field is calculated at the parent company level. “Subsidiaries” include bank, bank holding company, and non-bank subsidiaries. | ||
| Non-Performing Assets to Loans and OREO |
(BHCK5525-BHCK3506+BHCK5526-BHCK3507+BHCK2744/(BHCK2122+BHCK2744) Schedules HC-C, HC-M & HC-N |
Total Nonperforming Assets (NPLs+Foreclosed Real Estate+Other Nonaccrual & Repossessed Assets)/Total Loans+Foreclosed Real Estate | ||
| Tangible Common Equity as a Percentage of Tangible Assets |
(BHDM3210-BHCK3163)/(BHCK2170-BHCK3163) Schedule HC |
(Equity Capital – Goodwill)/(Total Assets – Goodwill) | ||
| Ratio of Reserves to Non-Performing Loans |
(BHCK3123+BHCK3128)/(BHCK5525-BHCK3506+BHCK5526-BHCK3507) Schedules HC & HC-N & HC-R |
Total Loan Loss and Allocated Transfer Risk Reserves/ Total Nonperforming Loans (Nonaccrual + Restructured) | ||
| Ratio of Net Charge-Offs to Loans |
(BHCK4635-BHCK4605)/(BHCK3516) Schedules HI-B & HC-K |
Net charge offs for the period as a percentage of average loans. | ||
| Return on Average Assets (annualized) |
(BHCK4340/BHCK3368) Schedules HI & HC-K |
Net Income as a percentage of Assets. | ||
| Net Interest Margin (annualized) |
(BHCK4519/(BHCK3515+BHCK3365+BHCK3516+ BHCK3401+BHCKB985) Schedules HI Memorandum and HC-K |
(Net Interest Income Fully Taxable Equivalent, if available/Average Earning Assets) | ||
| Efficiency Ratio |
(BHCK4093)/(BHCK4519+BHCK4079) Schedule HI |
(Non-interest Expense)/(Net Interest Income Fully Taxable Equivalent, if available, plus Non-interest Income) | ||
| Ratio of Loans to Assets |
(BHCKB528+BHCK5369)/(BHCK2170) Schedule HC |
Total Loans & Leases (Net of Unearned Income & Gross of Reserve)/Total Assets | ||
| Ratio of Loans to Deposits |
(BHCKB528+BHCK5369)/(BHDM6631+ BHDM6636+BHFN6631+BHFN6636) Schedule HC |
Total Loans & Leases (Net of Unearned Income & Gross of Reserve)/Total Deposits (Includes Domestic and Foreign Deposits) | ||
| Total Assets |
(BHCK2170) Schedule HC |
The sum of total assets. Includes cash and balances due from depository institutions; securities; federal funds sold and securities purchased under agreements to resell; loans and lease financing receivables; trading assets; premises and fixed assets; other real estate owned; investments in unconsolidated subsidiaries and associated companies; customer’s liability on acceptances outstanding; intangible assets; and other assets. | ||
Exhibit 21
(1) Vision Bank, an Alabama banking corporation.
(2) Vision Bancshares Financial Group, Inc., a wholly owned insurance subsidiary of Vision Alabama.
(3) Vision Bank, a Florida banking corporation.
(4) Vision Bancshares Trust I, a Delaware statutory trust.
Exhibit 23
CONSENT OF REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our report dated March 7, 2006 accompanying the consolidated financial statements included in the Annual Report of Vision Bancshares, Inc. on Form 10-KSB for the year ended December 31, 2005. We hereby consent to the incorporation by reference of said report in the Registration Statements of Vision Bancshares, Inc. on Form S-8, effective October 31, 2003 (file no. 333-110133), on Form S-8, effective October 31, 2003 (file no. 333-110134), and on Form S-8, effective October 31, 2003 (file no. 333-110137).
Albany, Georgia
March 29, 2006
| /s/ MAULDIN & JENKINS, LLC |
| MAULDIN & JENKINS, LLC |
Exhibit 31.1
RULE 13a-14(a)/15d-14(a) CERTIFICATION
OF
CHIEF EXECUTIVE OFFICER
I, J. Daniel Sizemore, certify that:
1. I have reviewed this annual report on Form 10-KSB of Vision Bancshares, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a 15(e) and 15d 15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ J. Daniel Sizemore |
||
| By: |
J. Daniel Sizemore, Chief Executive Officer of Vision Bancshares, Inc. |
|
| Date: March 27, 2006 | ||
Exhibit 31.2
RULE 13a-14(a)/15d-14(a) CERTIFICATION
OF
CHIEF FINANCIAL OFFICER
I, William E. Blackmon, certify that:
1. I have reviewed this annual report on Form 10-KSB of Vision Bancshares, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a 15(e) and 15d 15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ William E. Blackmon |
||
| By: |
William E. Blackmon, Chief Financial Officer |
|
| Date: March 27, 2006 | ||
Exhibit 32.1
SECTION 1350 CERTIFICATION
Pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2003, the undersigned officer of Vision Bancshares, Inc. (the “Company”), hereby certifies, to such officer’s knowledge, that the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in the Report fairly represents, in all material respects, the financial condition and results of operations of the Company.
| Dated | March 27, 2006 | |||||
| By: |
/s/ J. Daniel Sizemore |
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| J. Daniel Sizemore, | ||||||
| Chief Executive Officer |
Exhibit 32.2
SECTION 1350 CERTIFICATION
Pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2003, the undersigned officer of Vision Bancshares, Inc. (the “Company”), hereby certifies, to such officer’s knowledge, that the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2005 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and the information contained in the Report fairly represents, in all material respects, the financial condition and results of operations of the Company.
| Dated | March 27, 2006 | |||||
| By: |
/s/ William E. Blackmon |
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| William E. Blackmon, | ||||||
| Chief Financial Officer |