-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U+rORB5wf9zxXNKGnMNKQhVXAJMbkwo8g2Y9rhmnd5CcSCMcclNo7rwU/CBWeGLg zYgZ4qwIEAve8zuFyDSWpQ== 0000950170-99-001926.txt : 19991222 0000950170-99-001926.hdr.sgml : 19991222 ACCESSION NUMBER: 0000950170-99-001926 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19991221 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANKATLANTIC BANCORP INC CENTRAL INDEX KEY: 0000921768 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 650507804 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-93139 FILM NUMBER: 99777793 BUSINESS ADDRESS: STREET 1: 1750 E SUNRISE BLVD CITY: FORT LAUDERDALE STATE: FL ZIP: 33304 BUSINESS PHONE: 9547605000 MAIL ADDRESS: STREET 1: 1750 EAST SUNRISE BOULEVARD CITY: FORT LAUDERVALE STATE: FL ZIP: 33304 S-3 1 As filed with the Securities and Exchange Commission on December 20, 1999. Registration No. 333-________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 BANKATLANTIC BANCORP, INC. (Exact name of registrant is specified in its charter) FLORIDA 65-05070804 (State or other jurisdiction (I.R.S. Employer incorporation or organization) Identification Number) 1750 EAST SUNRISE BOULEVARD FORT LAUDERDALE, FLORIDA 33304 TELEPHONE (954) 760-5000 (Address, including Zip Code, and telephone number, including area code, of registrant's and co-registrant's principal executive offices) ALAN B. LEVAN BANKATLANTIC BANCORP, INC. 1750 EAST SUNRISE BOULEVARD FORT LAUDERDALE, FLORIDA 33304 TELEPHONE (954) 760-5000 (Name, address, including Zip Code, and telephone number, including area code, of agent for service) Please send copies of all communications to: ALISON W. MILLER, ESQ. STEARNS WEAVER MILLER WEISSLER ALHADEFF & SITTERSON, P.A. 150 WEST FLAGLER STREET, SUITE 2400 MIAMI, FLORIDA 33130 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after this Registration Statement becomes effective, as determined in light of market and other conditions. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. |_| If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box |X|. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering |_|. If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering |_|. If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box |_|. CALCULATION OF REGISTRATION FEE
Title of each class Proposed maxi- Amount of of securities to be Amount to be Proposed maximum mum aggregate registration registered registered offering price per unit(1) offering price(1) fee - ----------------------------- -------------- ------------------- ------------------ ----------------- Subordinated Investment Notes $150,000,000 100% $150,000,000 $39,600 ============================= ============== =================== ================== =================
(1) Estimated solely for the purposes of determining the registration fee pursuant to Rule 457(o) under the Securities Act. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. SUBJECT TO COMPLETION, DATED DECEMBER 20, 1999 PROSPECTUS BANKATLANTIC BANCORP, INC. [LOGO] $150,000,000 SUBORDINATED INVESTMENT NOTES This prospectus covers investment notes that we may issue from time to time. We will provide the specific terms of these securities in supplements to this prospectus. You should read this prospectus and the accompanying supplement carefully before you invest. TERMS OF SUBORDINATED INVESTMENT NOTES - ------------------------------------------------------------------------------- Annual Interest Rate Fixed at the rate indicated upon issuance. - ------------------------------------------------------------------------------- Payment of Interest Monthly, quarterly, semi-annually, annually, or at maturity at your election. - ------------------------------------------------------------------------------- Redemption Upon Request of Holder Upon death or total permanent disability for investment notes with remaining maturities greater than one year. - ------------------------------------------------------------------------------- Redemption at Company's Option Redeemable at prices indicated upon issuance. - ------------------------------------------------------------------------------- Maturity The period indicated upon issuance subject to renewal or extension. - ------------------------------------------------------------------------------- Transferability Only with our prior written consent. - ------------------------------------------------------------------------------- No minimum amount of investment notes must be sold in this offering. If we sell all of the investment notes offered, we will receive proceeds of approximately $___ million after paying expenses estimated to be approximately $_____ million. We do not presently intend to use registered broker-dealers to assist with the sale of these securities. If we elect to use broker-dealers on a best efforts basis in connection with future sales of the investment notes, we anticipate that we will pay commissions of up to 10% of the sales price to those brokers and we may reimburse those brokers for some of their costs and expenses. If we use brokers, expenses of the offering will increase and the proceeds we receive will be less than currently estimated. The investment notes are non-negotiable, which means that you may not transfer them without our consent. There is no public trading market for these securities and it is unlikely that a trading market will develop. These investment notes are unsecured obligations, which are subordinated to our senior indebtedness. YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE ____ IN THIS PROSPECTUS. These investment notes are not savings or deposit accounts and the payment of principal and interest on these securities is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency, private insurance fund or other entity. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or passed upon the adequacy or accuracy of this prospectus or any accompanying prospectus supplement. Any representation to the contrary is a criminal offense. The date of this prospectus is ________________, 1999. TABLE OF CONTENTS PAGE Summary .................................................................. Selected Consolidated Financial Data of BankAtlantic Bancorp, Inc. and Subsidiaries ......................................... Risk Factors ............................................................. Use of Proceeds .......................................................... Forward-Looking Statements ............................................... Description of the Investment Notes Offered and Indenture ................ Plan of Distribution ..................................................... Legal Matters ............................................................ Experts .................................................................. Where You Can Find More Information ...................................... SUMMARY This summary provides a brief overview of BankAtlantic Bancorp and the most significant terms of the investment notes covered by this prospectus. It does not contain all the information that you need to consider in making your investment decision. For a more complete understanding of these securities you should carefully read: o this prospectus, o the accompanying prospectus supplement, which describes the specific terms of the investment notes being offered and which may update and change information in this prospectus, and o the documents referred to in "Where You Can Find More Information" for information on BankAtlantic Bancorp, including its financial statements. BANKATLANTIC BANCORP We are a Florida-based savings bank holding company which owns BankAtlantic. BankAtlantic: o is a federally-chartered, federally-insured savings bank organized in 1952, o provides traditional retail banking services and a full range of commercial banking products and related financial services, including the following activities: o attracting checking and savings deposits from the public and general business customers, o originating commercial real estate and business loans, residential real estate loans and consumer loans, o purchasing wholesale residential loans from third parties, and o making other permitted investments such as investments in mortgage-backed securities, tax certificates and other investment securities, o currently operates through 68 branch offices located primarily in Miami-Dade, Broward, Hillsborough and Palm Beach Counties in South Florida, and o is regulated and examined by the Office of Thrift Supervision and the FDIC. Although our primary activities relate to the activities of our wholly-owned subsidiary, BankAtlantic, our other activities include: o providing investment banking services and capital raising and advisory services to the financial services industry through our wholly-owned subsidiary, Ryan Beck. Ryan Beck: o was acquired by us during 1998, and o is an investment banking firm whose activities include underwriting, distributing and trading tax-exempt securities, and o engaging in real estate development and investment activities through BankAtlantic's wholly-owned subsidiary, BankAtlantic Development Corporation. BankAtlantic Development Corporation: o owns St. Lucie West Holding Corp., the developer of a master planned residential, commercial and industrial community in St. Lucie County, Florida, o has several investments in real estate development projects in South Florida, and o plans to acquire Levitt Corporation, a developer of single-family home communities and condominium and rental apartment complexes, in December 1999. At September 30, 1999, on a consolidated basis we had: o total assets of $4.0 billion, o total deposits of $2.1 billion, o total stockholders' equity of $237.0 million, and o net income for the nine months of $26.9 million. -1- Our principal executive offices are located at 1750 East Sunrise Boulevard, Fort Lauderdale, Florida 33304. Our telephone number is (954) 760-5000. THE OFFERING Offering Amount................... We are offering up to $150 million of investment notes. No minimum amount of investment notes must be sold in the offering. We may withdraw or cancel the offering at any time. In the event of a withdrawal or cancellation, the investment notes previously sold will remain outstanding until maturity or redemption and pending orders will be irrevocable. See "Plan of Distribution." Orders ...................... Your order will be irrevocable upon receipt by us. We may reject your order in whole or in part, for any reason. If we do not accept your order, we will promptly refund the funds you paid with your order without deducting any costs and without interest. Upon acceptance of an order, we will issue a transaction statement reflecting ownership to each purchaser. This statement is not a negotiable instrument, and no rights of ownership in the security may be transferred by the endorsement and delivery of the statement by the purchaser. See "Plan of Distribution." Use of Proceeds................... We will use the net proceeds from the offering of the investment notes for general corporate purposes, including repurchases of our common stock, redemptions or repurchases of our outstanding debt securities and acquisitions by us or our subsidiaries. Minimum Initial Purchases and Additional Purchases. .......... Minimum purchase amounts will be indicated in a prospectus supplement. Interest Rate..................... The interest rate will be the rate fixed upon issuance as indicated in a prospectus supplement. Payment of Interest............... We will pay simple interest on investment notes either monthly, quarterly, semi-annually, annually or at maturity, at your election. Maturity.......................... The maturity date will be the period indicated in a prospectus supplement. Automatic Extension............... The investment notes will be automatically extended for a period equal to the original term unless: o we notify the holder at least seven days prior to the maturity date that an extension will not be provided, -2- o the holder elects within sixty days prior to the maturity date to have his or her investment notes repaid at maturity, or o we have previously extended the maturity date for an additional year as described in the next sentence. In addition, we may elect at our discretion on one occasion to automatically extend the maturity date of your investment note for an additional one year period even if you have elected to have your investment note repaid at the maturity date. Book Entry/Transferability. ...... We will issue the investment notes in book-entry form only. The investment notes will be non-negotiable and may not be transferred without our prior written consent. Optional Redemption by the Company.................... We may redeem the investment notes at our option, in whole or in part, from and after the dates and at the fixed redemption prices specified in the prospectus supplement relating to the particular investment notes we are offering. Redemption Upon Request in the Event of Death of Total Disability..................... Notes with maturities of one year or greater will be redeemed at the option of the holder following his or her total permanent disability, or by his or her estate after death, at the principal amount plus accrued interest. A holder will have no other right to cause redemption prior to maturity. Unsecured Obligations............. The investment notes are not guaranteed or secured by any lien on any of our assets. We will not be required to contribute funds to a separate fund, such as a sinking fund, to provide funds to repay the investment notes upon maturity. Subordinated Obligations.......... The investment notes are junior in right of repayment, or subordinated, to our existing and future senior indebtedness. At September 30, 1999, we had no senior indebtedness outstanding. There is no limitation on the amount of senior indebtedness we may incur. See "Description of the Investment Notes Offered and the Indenture" for a description of what constitutes senior indebtedness. At September 30, 1999 we had $172.2 million of indebtedness which will rank equally in right of payment with the investment notes. Since we are a holding company, our obligations under the investment notes will be structurally subordinated to all existing and future liabilities and obligations of our subsidiaries, including deposits of BankAtlantic. See "Description of the Investment Notes Offered and the Indenture." -3- Certain Restrictions.............. The indenture restricts us from paying dividends or distributions on, or purchasing or redeeming our capital stock if, at the time of the dividend declaration or the date of the redemption, purchase, payment or distribution, we are in default. We may not consolidate or merge with another entity unless: o if the other entity survives the consolidation or merger, it assumes our obligations under the indenture and, immediately after the transaction, is not in default under the indenture, or o we survive the consolidation or merger, and immediately after the transaction we are not in default under the indenture. Events of Default................. An event of default under the indenture occurs if we: o fail to pay principal or any premium on the investment notes at maturity or upon redemption, o fail to pay interest on the investment notes and the failure continues for a 30-day period, o breach any of the provisions of the indenture and the breach continues after 60 days' notice, or o reorganize or become bankrupt or insolvent in certain events. We may be required as a result of certain events of default to accelerate our payment of principal and interest on the investment notes. Periodic Statements............... We will mail to each holder no later than the tenth business day following the end of each quarter a statement detailing the current balance on each note and any accrued interest. RISK FACTORS Your investment in the investment notes will involve risk. Before making an investment decision, you should consider all of the information contained in this prospectus and a supplementary prospectus. In particular, you should carefully evaluate the risks discussed under "Risk Factors" before deciding whether an investment in these investments notes is suitable for you. FINANCIAL HIGHLIGHTS (In thousands)
AT OR FOR THE NINE MONTHS ENDED SEPTEMBER 30, AT OR FOR THE YEARS ENDED DECEMBER 31, ---------------------------------------------------------------------- 1999 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- ---------- Income from Continuing Operations $ 25,691 $ 10,186 $ 23,658 $ 17,639 $ 16,264 $ 16,059 Total Stockholders Equity 236,967 240,440 207,171 147,704 120,561 105,520 Total Assets 3,970,629 3,788,975 3,064,480 2,605,527 1,750,689 1,539,653
-4- SELECTED CONSOLIDATED FINANCIAL DATA OF BANKATLANTIC BANCORP, INC. AND SUBSIDIARIES
AT OR FOR THE NINE MONTHS ENDED SEPTEMBER 30, AT OR FOR THE YEARS ENDED DECEMBER 31, ----------------------- -------------------------------------------------------------- 1999 1998 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- ---------- ---------- OPERATING RESULTS: (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Net interest income $ 87,960 $ 78,274 $ 102,285 $ 94,530 $ 76,266 $ 63,921 $ 56,555 Provision for loan losses 19,056 9,811 21,788 11,268 5,844 4,182 2,299 Net interest income after provision for loan losses 68,904 68,463 80,497 83,262 70,422 59,739 54,256 Non-interest income 74,542 38,684 56,880 33,366 26,818 13,974 10,683 Non-interest expenses 101,133 83,250 120,665 77,722 68,221 48,785 39,706 Income before income taxes and discontinued operations 42,313 23,897 16,712 38,906 29,019 24,928 25,233 Provision for income taxes 16,622 9,388 6,526 15,248 11,380 8,664 9,174 Income from continuing operations 25,691 14,509 10,186 23,658 17,639 16,264 16,059 Income (loss) from discontinued operations (less applicable income taxes (benefit) 1,174 (12,406) (18,220) 4,111 1,372 2,155 776 Net income 26,865 2,103 (8,034) 27,769 19,011 18,419 16,835 Total dividends on non-cumulative preferred stock 0 0 0 0 0 2,030 880 Net income available for common shares $ 26,865 $ 2,103 $ (8,034) $ 27,769 $ 19,011 $ 16,389 $ 15,955 CLASS A COMMON SHARES Diluted earnings per share from continuing operations $ 0.51 $ 0.36 $ 0.25 $ 0.58 $ 0.47 $N/A $ N/A Diluted earnings (loss) per share from discontinued operations 0.02 (0.31) (0.45) 0.09 0.03 N/A N/A Diluted earnings (loss) per share $ 0.53 $ 0.05 $ (0.20) $ 0.67 $ 0.50 $N/A $ N/A CLASS B COMMON SHARES Diluted earnings per share from continuing operations $ 0.49 $ 0.33 $ 0.23 $ 0.59 $ 0.56 $ 0.47 $ 0.51 Diluted earnings (loss) per share from discontinued operations 0.02 (0.28) (0.41) 0.09 0.03 0.07 0.03 Diluted earnings (loss) per share $ 0.51 $ 0.05 $ (0.18) $ 0.68 $ 0.59 $ 0.54 $ 0.54 AT OR FOR THE NINE MONTHS ENDED SEPTEMBER 30, AT OR FOR THE YEARS ENDED DECEMBER 31, ----------------------- -------------------------------------------------------------- 1999 1998 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- ---------- ---------- BALANCE SHEET DATA: (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Total assets $3,970,629 $3,682,624 $3,788,975 $3,064,480 $2,605,527 $1,750,689 $1,539,653 Loans receivable-net (1) 2,567,905 2,546,173 2,635,369 2,072,825 1,824,856 828,630 546,396 Mortgage-backed securities held to maturity 0 0 0 0 0 0 573,913 Securities available for sale 872,149 609,115 599,435 607,490 439,345 691,803 53,969 Investment and trading securities, net 105,966 78,976 79,901 60,280 54,511 49,856 211,776 Mortgage servicing rights 897 51,651 44,315 38,789 25,002 20,738 20,584 Cost over fair value of net assets acquired and other intangibles 54,729 56,368 55,493 26,327 29,008 11,521 0 Deposits 2,140,096 1,883,229 1,925,772 1,763,733 1,832,780 1,300,377 1,085,782 Guaranteed preferred beneficial interests in the Company's Junior Subordinated Debentures 74,750 74,750 74,750 74,750 0 0 0 Subordinated debentures, capital notes and notes payable 186,544 178,334 177,114 179,600 78,500 21,001 0 Advances from FHLB, federal funds purchased and securities sold under agreements to repurchase 1,259,545 1,157,580 1,225,165 758,923 486,288 269,222 311,879 TOTAL STOCKHOLDERS' EQUITY 236,967 247,321 240,440 207,171 147,704 120,561 105,520 - ---------------------------------------------------- (1) Includes $19.2 million, $3.3 million, $9.7 million, $160.1 million and $207,000 of banker's acceptances at September 30, 1999 and 1998, and at December 31, 1998, 1997, and 1996, respectively. -5- AT OR FOR THE NINE MONTHS ENDED SEPTEMBER 30, AT OR FOR THE YEARS ENDED DECEMBER 31, ----------------------- -------------------------------------------------------------- 1999 1998 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- ---------- ---------- OTHER DATA: (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Loan Fundings: (1) Residential real estate loans $ 104,241 $ 109,138 $ 144,586 $ 68,513 $ 133,184 $ 111,361 $ 40,706 Commercial loans 656,504 546,788 753,992 550,318 461,519 412,632 282,243 Small business loans 24,942 101,762 135,239 20,467 0 0 0 Consumer loans (2) 72,391 125,593 165,927 161,154 154,940 114,607 45,159 Lease financing 24,363 13,620 19,214 0 0 0 0 Purchases: Residential real estate loans 230,902 1,071,747 1,256,185 524,498 465,942 9,930 0 Commercial loans 126,613 8,792 37,314 0 0 0 0 Lease financing 0 3,519 6,054 0 0 0 0 Loan Sales 116,852 236,832 279,034 273,901 59,408 34,153 38,168 Net interest spread (during period) (3) 2.89% 2.86% 2.83% 3.41% 3.77% 3.57% 3.97% Interest rate margin (during period) (3) 3.17% 3.18% 3.12% 3.72% 4.12% 4.01% 4.28% AT OR FOR THE NINE MONTHS ENDED SEPTEMBER 30, AT OR FOR THE YEARS ENDED DECEMBER 31, ----------------------- -------------------------------------------------------------- 1999 1998 1998 1997 1996 1995 1994 ---------- ---------- ---------- ---------- ---------- ---------- ---------- FINANCIAL RATIOS: Return on average equity (4) 14.15% 8.51% 4.39% 14.85% 13.07% 14.16% 16.28% Return on average assets (4) 0.85 0.55 0.28 0.86 0.88 0.94 1.12 Efficiency ratio from continuing operations(3) 62.21 71.18 75.81 60.77 66.12 62.63 59.05 Average equity to average assets 6.03 6.41 6.48 5.77 6.70 6.66 6.86 Net loan charge-offs as a percent of average outstanding loans --annualized 0.80 0.42 0.51 0.44 0.47 0.45 0.59 Non-performing assets as a percent of: Total loans, tax certificates and real estate owned 1.25 1.15 1.27 1.36 1.26 2.37 3.66 Total assets 0.85 0.83 0.92 0.96 0.93 1.23 1.51 Loan loss allowance as a percent of non-performing loans 143.00 140.97 142.95 156.18 167.37 149.49 134.87 Ratio of earnings to fixed charges: Including interest on deposits 1.33 1.21 1.11 1.33 1.37 1.37 1.59 EXCLUDING INTEREST ON DEPOSITS 1.61 1.37 1.19 1.80 2.26 2.22 3.33
- ------------------------------------------------------ (1) Does not include banker's acceptances. (2) Includes second mortgage loans. (3) Restated for continuing operations. (4) ROA and ROE excluding the $7.2 million SAIF one-time special assessment would have been 1.09% and 16.33%, respectively, for the year ended December 31, 1996. -6- RISK FACTORS An investment in the investment notes involves various risks, including those described below. You should carefully consider these factors, together with the other information contained or incorporated by reference in this prospectus and in the prospectus supplement provided with this prospectus before you decide to purchase any securities we are offering. RISKS ASSOCIATED WITH US CHANGES IN INTEREST RATES COULD ADVERSELY AFFECT OUR NET INTEREST INCOME AND PROFITABILITY The majority of our assets and liabilities are monetary in nature and subject us to significant risk from changes in interest rates. Changes in interest rates can impact our net interest income as well as the valuation of our assets and liabilities. CHANGES IN INTEREST RATES WILL IMPACT THE DIFFERENCE BETWEEN OUR INTEREST INCOME AND INTEREST EXPENSE Our profitability is dependent to a large extent on our net interest income. Net interest income is the difference between: o interest income on interest-earning assets, such as loans, and o interest expense on interest-bearing liabilities, such as deposits. Changes in market interest rates, changes in the relationships between short-term and long-term market interest rates, or changes in the relationships between different interest rate indices, can affect the interest rates charged on interest-earning assets differently than the interest rates paid on interest-bearing liabilities. This difference could result in an increase in interest expense relative to interest income. While we have attempted to structure our asset and liability management strategies to mitigate the impact on net interest income of changes in market interest rates, we cannot assure you that we will be successful. DECLINING INTEREST RATES RESULT IN ACCELERATED LOAN PREPAYMENTS WHICH IMPACT OUR NET INTEREST INCOME AND PROFITABILITY Loan prepayments accelerate as interest rates fall. We experienced a high volume of loan prepayments in our mortgage portfolio and our servicing portfolio during 1998 due to historically low interest rates. Prepayments in a declining interest rate environment reduce our net interest income and adversely affect our earnings because: o we amortize premiums on acquired loans that are prepaid and amortize mortgage servicing rights associated with prepaid loans that we service; and o the yields we earn on the investment of funds that we receive from prepaid loans are generally less than the yields we earned on the prepaid loans. While we have exited the mortgage servicing business and sold the mortgage servicing rights that we owned, significant loan prepayments in our mortgage portfolio in the future could have a similar adverse effect on our earnings. At September 30, 1999, we held $1.2 billion of purchased residential loans, which includes $10.6 million of net premiums on those loans. -7- OUR NON-INTEREST EXPENSES HAVE INCREASED AS WE HAVE ENTERED INTO NEW BUSINESS UNITS AND THESE BUSINESS UNITS MAY NOT GENERATE SUFFICIENT REVENUES TO COVER EXPENSES During the last four years we have grown rapidly and significantly. o Our total assets have increased from $1.75 billion at December 31, 1995 to $3.97 billion at September 30, 1999. o Our loan portfolio increased from $828.6 million at December 31, 1995 to $2.57 billion at September 30, 1999. We initiated several new business units during 1998, hired additional personnel, acquired Ryan Beck and expanded our real estate development and investment business. In addition, we established an internet banking division during 1999. This growth is intended to support our expanded operations and increase our non-interest revenue. However, this growth and expansion of operations has resulted in a significant increase in non-interest expenses. Noninterest expenses increased from $68.2 million in 1996 to $77.7 million in 1997 to $120.7 million in 1998 and were $101.1 million for the nine months ended September 30, 1999. We implemented various restructuring initiatives at BankAtlantic in the fourth quarter of 1998 with a view to streamlining its operations and improving efficiencies. However, at the same time Ryan Beck significantly expanded and hired additional personnel as it diversified into the healthcare, consumer and technology industries and expanded its research and investment banking operations. Ryan Beck's non-interest expenses were $17.5 million for the six month period after we acquired it to December 31, 1998 and were $35.5 million for the nine month period ended September 30, 1999. Our total non-interest expenses, including Ryan Beck, for the nine months ended September 30, 1999 were $101.1 million. Expenses associated with past growth have had, and expenses associated with additional future growth will likely have, an adverse impact on earnings if we are unable to generate sufficient revenues to cover this growth. OUR CONSUMER AND SMALL BUSINESS LOAN PORTFOLIO SUBJECTS US TO GREATER CREDIT RISK AND WE HAVE EXPERIENCED HIGH LEVELS OF CHARGE-OFFS During the past several years, we have experienced significant growth in our consumer and small business loan portfolio. Consumer loans, excluding second mortgages, increased to $178.1 million at September 30, 1999 from $133.5 million at December 31, 1995. A significant amount of these loans are indirect automobile loans. Indirect automobile loans are loans which are funded through automobile dealers rather than funded directly to our retail customers. At September 30, 1999, $140.3 million of our consumer loan portfolio consisted of indirect loans, primarily automobile loans. Consumer loans, especially indirect automobile loans, present more credit risk than other types of loans such as home equity or residential real estate loans. They generally result in a higher level of charge-offs than other loans. Charge-offs are amounts written off as uncollected. Our consumer loan net charge-offs were $8.9 million in 1998 and $7.5 million for the nine months ended September 30, 1999. Our net charge-offs attributable to indirect automobile loans were $8.0 million in 1998 and $6.5 million for the nine months ended September 30, 1999. During the fourth quarter of 1998, we discontinued the origination of indirect automobile loans. However, we may re-enter this market in the future. We may also experience additional losses in our current consumer loan portfolio. We began originating small business loans during the fourth quarter of 1997. We had $118.8 million of small business loans at December 31, 1998 and $119.7 million at September 30, 1999. We experienced high levels of delinquencies and charge-offs in our small business loan portfolio during the fourth quarter of 1998 and the nine months ended September 30, 1999. Our small business loan net charge-offs were $2.0 million in 1998, including $1.5 million during the 1998 fourth quarter, and $7.9 million during the period ended September 30, 1999. Further, our small business loan net charge-offs were $3.0 million for the three month period ended September 30, 1999. While we have -8- implemented personnel and operating changes in our small business lending operations which are intended to address these issues, we may experience additional significant charge-offs in this portfolio in the future. A DECLINE IN THE REAL ESTATE MARKET OR IN THE ECONOMY IN GENERAL MAY RESULT IN ADDITIONAL LOSSES IN OUR BANKING ACTIVITIES Our loans receivable increased by approximately $1.7 billion or 210% from December 31, 1995 to September 30, 1999. Balances for all loan categories increased primarily due to: o $395.0 million of loans acquired in the Bank of North America acquisition, and o wholesale residential loan purchases of $465.9 million in 1996, $524.5 million in 1997, $1.3 billion in 1998, and $105.1 million in the nine months ended September 30, 1999. Our commercial real estate and construction and development loans were $969.3 million at September 30, 1999. The real estate underlying many of those commercial real estate and construction and development loans is concentrated in Broward, Miami-Dade and Palm Beach Counties, Florida and may be in the early stages of development. Our competitors over the last several years have also increased their funding availability for commercial real estate projects. These increases could result in over-building and a decline in real estate values. The real estate securing the wholesale residential loans that we purchased is generally located outside South Florida. These loans are subject to additional risks associated with the economy where the collateral is located as well as collection risks. Declines in real estate values or in the economy generally could have a material adverse impact on our results of operations based not only on the nature of our assets and the composition of our loan portfolio, but also on our real estate development activities. WE HAVE BROAD AUTHORITY TO MAKE ACQUISITIONS AND INVESTMENTS IN BUSINESSES NOT ENGAGED IN TRADITIONAL BANKING ACTIVITIES WHICH WILL SUBJECT US TO THE RISKS OF THOSE BUSINESSES We generally have broad authority under applicable law to engage in various types of business activities, including investments in real estate, real estate development and real estate related businesses. We have historically made acquisitions and investments as a means of diversifying our sources of non-interest income and to increase non-interest revenues. Our acquisitions and investments include: o REAL ESTATE - we acquired St. Lucie West Holding Corp. in October 1997 for approximately $20 million. St. Lucie West Holding Corp. is the developer of St. Lucie West, a master planned residential, commercial and industrial community located in St. Lucie County, Florida. We have also made joint venture investments in real estate development projects located in South Florida. In addition, we have entered into an agreement to acquire Levitt Corporation, a homebuilder in South Florida, for approximately $25 million. We expect to complete the acquisition in December 1999. o EQUIPMENT LEASING - in March 1998 we acquired Leasing Technology, Inc., an equipment leasing and finance company located in South Florida, in a stock for stock exchange valued at approximately $6.2 million. Leasing Technology is now operated as a subsidiary of BankAtlantic. o INVESTMENT BANKING AND BROKERAGE SERVICES - in June 1998 we acquired Ryan Beck, in a stock for stock exchange valued at approximately $38 million. Ryan Beck is operated as an independent, autonomous subsidiary under the direction of its prior management. -9- These acquisitions and investments in businesses not engaged in traditional banking activities subject us to the risks inherent in each of the business activities. WE ENGAGE IN REAL ESTATE DEVELOPMENT AND INVESTMENT ACTIVITIES WHICH ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK We currently engage in real estate development and investment activities through BankAtlantic Development Corporation. BankAtlantic Development Corporation owns the developer of a master planned community in St. Lucie County, Florida, has made several joint venture investments in real estate development projects in South Florida, and plans to acquire Levitt Corporation, a home builder in South Florida. The real estate industry is highly cyclical by nature and future market conditions are uncertain. Factors which adversely affect the real estate and home building industries include: o the availability and cost of financing, o decreases in demand or over-building, o unfavorable interest rates, o changes in general economic conditions, o a surplus of available real estate and related projects, and o the significant volatility and fluctuations in underlying real estate values. In addition, St. Lucie West Holding Corp. incurred operating expenses of approximately $5.2 million during 1998 and $4.3 million during the nine months ended September 30, 1999. Periodic sales of properties may be insufficient to ensure profitability of St. Lucie West Holding Corp. Further, if sales are not adequate to cover operating expenses we will be required to seek a source of additional operating funds. Declines in real estate values or in the economy generally could have a material adverse impact on our results of operations based not only on our real estate development activities, but also on the nature of our assets and the composition of our loan portfolio. OUR ACTIVITIES ARE REGULATED BY THE OFFICE OF THRIFT SUPERVISION, THE FDIC AND OTHER REGULATORS WHO POSSESS DISCRETION IN THEIR SUPERVISORY AND ENFORCEMENT ACTIVITIES The banking industry is one of this country's most heavily regulated industries. The Office of Thrift Supervision: o is BankAtlantic's chartering authority and its primary federal regulator, o regulates, supervises and examines BankAtlantic, and o regulates and oversees us, as the holding company of BankAtlantic. In addition to the Office of Thrift Supervision, the FDIC also regulates, supervises and examines BankAtlantic by virtue of insuring its deposits up to applicable limits. Furthermore, BankAtlantic is a member of the Federal Home Loan Bank of Atlanta and, consequently, is subject to certain limited regulation by the Federal Reserve Board. The regulation and supervision of financial institutions is intended primarily for the protection of the FDIC insurance funds and depositors. Regulatory authorities possess extensive discretion in connection with their supervisory and enforcement activities. As an example, banking regulators have in the past implemented regulations which have increased capital requirements, insurance premiums and administrative, professional and compensation expenses for the institutions which they regulate. Any change in the existing regulatory structure or the laws or regulations applicable to us could significantly affect our powers, authority and operations and our business could be adversely affected. -10- WE HAVE MANY COMPETITORS WHO MAY HAVE GREATER FINANCIAL RESOURCES OR OPERATE UNDER FEWER REGULATORY CONSTRAINTS Our competitors include: o other savings institutions, o investment firms, o commercial banks, o finance companies, o mortgage banking companies, o money market funds, o financial consultants, o credit unions, and o real estate developers, operators and investors. We compete not only with financial institutions headquartered in the State of Florida but also with a growing number of financial institutions headquartered outside of Florida who are active in the State. In addition, the Gramm- Leach-Bliley Act was recently enacted into law. This law, which repeals the Glass Steagall Act, o permits bank holding companies to engage in a substantially wider range of non-banking activities than they were previously permitted, such as insurance and investment banking, and o enables insurers and other financial service companies to acquire banks. This new legislation may significantly increase the number of entities that we compete with. Many of our competitors have substantially greater financial resources than we have and, in some cases, operate under fewer regulatory constraints. THE YEAR 2000 PROBLEM COULD DISRUPT OUR BUSINESS Many existing computer programs use only two digits to identify a year in the date field. These programs were designed and developed without considering the impact of the upcoming change in the century. If not corrected, many computer applications could fail or create erroneous results by or at the year 2000. The consequences of incomplete or untimely resolution of year 2000 issues represent an uncertainty that could affect future financial results. The year 2000 problem poses the following principal risks to our business: o disruption of our business due to our failure to achieve year 2000 readiness, o disruption of our business due to failure of third parties to achieve year 2000 readiness, o disruption in our loan operations due to failure of our borrowers to achieve year 2000 readiness, and o litigation due to year 2000 noncompliance from customers, borrowers and suppliers as a result of both internal and third party system failures. We have undertaken various initiatives intended to ensure that computer applications will function properly with respect to dates in the year 2000 and thereafter and have established a year 2000 action plan based on the guidelines outlined in the Federal Financial Institutions Examination Council's "The Effect of 2000 on Computer Systems". However, we cannot assure you that our initiatives and action plan have identified all costs, risks or possible losses which we may experience associated with year 2000 issues. Due to the general uncertainty inherent in the year 2000 problem, resulting in part from the uncertainty of the year 2000 readiness of third party suppliers, borrowers and customers, we are unable to determine whether the consequences of year 2000 failures will have a material impact on our results of operations, liquidity or financial condition. -11- RISKS ASSOCIATED WITH THE INVESTMENT NOTES OUR DEPENDENCE ON DIVIDENDS FROM OUR SUBSIDIARIES FOR A SIGNIFICANT PORTION OF OUR REVENUE AND REGULATORY RESTRICTIONS ON DIVIDENDS FROM BANKATLANTIC MAY LIMIT OUR ABILITY TO PAY PRINCIPAL OR INTEREST ON THE INVESTMENT NOTES We own 100% of BankAtlantic's outstanding capital stock and depend upon dividends from BankAtlantic for a significant portion of our revenues. BankAtlantic's ability to pay dividends or make other capital distributions to us is governed by Office of Thrift Supervision regulations, which focus primarily on BankAtlantic's regulatory capital levels and net income. Office of Thrift Supervision regulations define "capital distributions" as o cash dividends, o payments by a savings association or savings bank holding company to repurchase or otherwise acquire its shares, o payments to shareholders of another entity in a cash-out merger, and o other distributions charged against capital. If an institution has regulatory capital that is at least equal to its capital requirements both before and after giving effect to the distribution, and has not been notified that it "is in need of more than normal supervision," the Office of Thrift Supervision deems it a "Tier 1 association." BankAtlantic currently qualifies as a Tier 1 association under applicable Office of Thrift Supervision regulations. The Office of Thrift Supervision permits a Tier 1 association to make capital distributions during a calendar year of up to the greater of: o 100% of net income for the current calendar year, plus 50% of its capital surplus, or o 75% of its net income over the most recent four quarters. Capital surplus is the amount of capital in excess of an association's regulatory capital requirements. However, the association seeking to pay the capital distribution must first notify the Office of Thrift Supervision of its intention and the Office of Thrift Supervision must not raise any objection to the distribution. Any additional capital distributions would require prior regulatory approval. Additionally, all capital distributions of BankAtlantic are subject to the Office of Thrift Supervision' right to object to a distribution on safety and soundness grounds. We cannot assure you that BankAtlantic will remain a Tier 1 association or that it will be in a position to make capital distributions to us in an amount sufficient for us to satisfy our obligations. Our ability to pay interest on the investment notes will be significantly dependent on the ability of our subsidiaries, especially BankAtlantic, to pay dividends or distributions to us in amounts sufficient to service our obligations. Our obligations at September 30, 1999 include: o 9% Subordinated Debentures due 2005 - $21.0 million outstanding principal amount, o 6 3/4% Convertible Subordinated Debentures due 2000 - $51.2 million outstanding principal amount, o 55/8% Convertible Subordinated Debentures due 2007 - $100.0 million outstanding principal amount, and o 9 1/2% Junior Subordinated Debenture due 2027 - $74.8 million outstanding principal amount We may also become obligated to make other payments on securities which we issue in the future which are on a parity with or have a preference over the investment notes with respect to the payment of principal or interest. HOLDERS OF OUR SENIOR INDEBTEDNESS AND CREDITORS OF OUR SUBSIDIARIES HAVE PRIORITY OVER THE PAYMENTS TO BE PAID UNDER THE INVESTMENT NOTES The investment notes are subordinated to all of our current or future senior indebtedness or liabilities which are not expressly by their terms made subordinate or equal in right of payment to the investment notes. Since we are a holding -12- company, the investment notes will be effectively subordinated to all existing and future liabilities of our subsidiaries, including the rights of the depositors of BankAtlantic. As of September 30, 1999, we had: o $172.2 million of indebtedness ranking equally with the investment notes, o $74.8 million of indebtedness ranking junior in right of payment to the investment notes, and o no senior indebtedness. Further, at September 30, 1999 our subsidiaries had liabilities of $3.5 billion, which includes $2.1 billion of deposits at BankAtlantic. The indenture relating to the investment notes does not limit our ability to incur additional indebtedness, including senior indebtedness, or additional indebtedness by BankAtlantic or our other subsidiaries. INVESTMENT NOTES ARE NOT INSURED The investment notes are not insured by the Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC or by any other governmental agency or private insurer. THE COVENANTS IN THE INDENTURE ARE LIMITED AND DO NOT PROVIDE YOU WITH SIGNIFICANT PROTECTION The covenants in the indenture are limited and do not protect holders of investment notes in the event of a material adverse change in our financial condition or results of operations. In addition, payment of principal of and interest on the investment notes can only be accelerated if we: o fail to pay principal of or any premium on the investment notes at maturity or upon redemption, o fail to pay interest on any of the investment notes and the failure continues for a 30-day period, o breach any of the provisions of the indenture and the breach continues for a 60-day period after receipt of notice, or o reorganize or become bankrupt or insolvent in certain events. The indenture does not require us to: o adhere to any financial ratios or specified levels of liquidity, or o repurchase, redeem or modify the terms of the investment notes upon a change in control or other events involving us which may adversely affect the creditworthiness of the investment notes. Therefore, neither the covenants nor the other provisions of the indenture should be a significant factor in evaluating our obligations under the investment notes. See "Description of the Investment Notes Offered and Indenture." TRANSFER RESTRICTIONS AND THE LACK OF A TRADING MARKET WILL LIMIT YOUR ABILITY TO LIQUIDATE YOUR INVESTMENT The investment notes are non-negotiable, which means they may not be transferred without our prior written consent. There is no established trading market for the investment notes and it is unlikely that one will develop. Accordingly, even if we permitted a transfer, you may be unable to liquidate your investment. See "Description of the Investment Notes Offered and the Indenture." WE MAY EXTEND THE MATURITY OF THE INVESTMENT NOTES IN OUR SOLE DISCRETION Even if the investment notes mature by their terms and you have indicated that you do not want to renew the term of the investment notes, we can, in our sole discretion, extend their maturity for an additional one-year period. In the event that we make this election, the principal amount of the investment notes will not be repaid on the anticipated maturity date and you will continue to receive interest at the same rate until the expiration of that one-year period. -13- USE OF PROCEEDS We intend to use the net proceeds resulting from the sale of the investment notes (estimated to be approximately $___ million net of estimated offering expenses if all of the investment notes being offered through this prospectus are sold) for general corporate purposes, including: o repurchases of our common stock, o redemptions or repurchases of our outstanding debt securities, and o acquisitions by us or our subsidiaries. The precise amounts and timing of the application of such proceeds depends upon many factors, including, but not limited to, the amount of any such proceeds and actual funding requirements. Until the proceeds are used, we may invest the proceeds, depending on our cash flow requirements, in short and long-term investments, including, but not limited to: o treasury bills, o commercial paper, o certificates of deposit, o securities issued by U.S. government agencies, o money market funds, and o repurchase agreements. FORWARD-LOOKING STATEMENTS Some of the statements contained or incorporated by reference in this prospectus include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Some of the forward-looking statements can be identified by the use of words such as "anticipate", "believe", "estimate", "may", "intend", "expect", "will", "should", "seeks" and similar expressions. Forward-looking statements are based largely on our expectations and involve inherent risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. Some factors include: o the potential adverse impact on BankAtlantic's operations and profitability of changes in interest rates and future legislation, o economic conditions, both generally and particularly in areas where we or our subsidiaries, including BankAtlantic, operate or hold assets, o interest rate and credit risk associated with BankAtlantic's loan portfolio, o BankAtlantic's recent rapid growth and increased operating expenses and its announced restructuring which may not prove to be successful, o uncertainty relating to the realization of benefits from our restructuring initiatives and expense reductions, o our ability to manage new banking and non-banking initiatives and investments, o regulatory limitations on BankAtlantic's ability to pay dividends, and o the highly competitive nature of our businesses. Many of these factors are beyond our control and beyond the control of BankAtlantic. For a discussion of factors that could cause actual results to differ, please see the discussion under "Risk Factors" contained in this prospectus and in other information contained in our publicly available SEC filings. DESCRIPTION OF THE INVESTMENT NOTES OFFERED AND THE INDENTURE The investment notes will be issued under an indenture between us and U.S. Bank Trust National Association, as trustee. The terms and provisions of the investment notes include those stated in the indenture and those made part of the -14- indenture by reference to the Trust Indenture Act of 1939 as in effect on the date of the indenture. The following briefly summarizes the material terms of the indenture and the investment notes, other than maturity, pricing and other related terms disclosed in the accompanying prospectus supplement. This summary is not complete and is qualified in its entirety by reference to the indenture, including the definitions in the indenture of certain terms used below. You should read the entire indenture and the Trust Indenture Act of 1939 for a complete understanding of the terms of the indenture and the investment notes. GENERAL The investment notes: o are general obligations and are limited to $150 million in aggregate principal amount, o are not secured by our assets or otherwise, o do not have the benefit of a sinking fund for the retirement of principal, o rank equal to all of our subordinated indebtedness, o are subordinated in right of payment to all of our future Senior Indebtedness (as we define this term below in "-- Subordination") or liabilities which are not expressly by their terms subordinate or equal in right of payment to the investment notes, and o are not savings accounts or deposits and are not insured by the FDIC or any other governmental agency. We, or any of our subsidiaries, may incur additional indebtedness constituting Senior Indebtedness or indebtedness that ranks equal or junior to the investment notes. The indenture does not limit the total indebtedness that either we or any of our subsidiaries may incur. At September 30, 1999 we had no Senior Indebtedness, $172.2 million of indebtedness ranking equal to the investment notes and $74.8 million of indebtedness ranking junior to the investment notes. Because we are a holding company, our primary source of funds for the payment of our obligations, including the payment of principal and interest on the investment notes, is dividends and distributions from our subsidiaries, especially BankAtlantic. Our subsidiaries are separate and distinct legal entities and have no obligation to pay any amounts due with respect to the investment notes or to make funds available for those payments. Further, from time to time while the investment notes are outstanding, BankAtlantic and our other subsidiaries may be subject to regulatory or contractual constraints that restrict their ability to pay dividends to us. See "Risk Factors--Our Dependence on Dividends from Our Subsidiaries for a Significant Portion of our Revenue and Regulatory Restrictions on Dividends from BankAtlantic May Limit Our Ability to Pay Principal or Interest on the Investment Notes." The investment notes will be effectively subordinated to all existing and future liabilities, including deposits, of our subsidiaries. At September 30, 1999, our subsidiaries had liabilities of $3.5 billion, which includes $2.1 billion of deposits at BankAtlantic. Our right to participate in any distribution of assets of our subsidiaries upon any liquidation or reorganization or otherwise of those subsidiaries is subject to the prior claims of creditors of the subsidiary, including depositors in BankAtlantic, except to the extent that we may be recognized as a creditor of the subsidiary. Thus, the ability of holders of the investment notes to benefit indirectly from such distribution is affected by those creditor claims. Investment notes of a single series may be issued at various times with different maturity dates, different optional redemption provisions and different interest rates. We reserve the right to vary from time to time in our discretion interest rates, redemption terms or maturity dates based on our fundraising objectives, circumstances in the financial markets and the economy, the attraction of new investors in particular regions and other factors. Once determined, the rate of interest payable on an investment note will remain fixed for its term. Interest on the investment notes will be paid in arrears either monthly, quarterly, semi-annually, annually or at maturity, at the election of the purchaser. Unless otherwise provided in a prospectus supplement, we will compute interest on the investment notes as simple interest on the basis of a 360-day year of twelve 30-day months. We will pay the principal and interest on the investment notes when due by check mailed to the person entitled to payment. -15- The investment notes will be in U.S. dollars and payments of principal and interest on the investment notes will be in U.S. dollars. AUTOMATIC EXTENSION OF MATURITY DATE We may elect at any time prior to maturity to automatically extend the maturity date of an investment note for an additional one year period by providing written notice of our election to a holder within seven days after such election has been made. After extension, the investment note will continue with terms identical to those fixed upon issuance. If we elect to extend the maturity date for an additional one year, a holder will have no right to cause the investment note to be repaid prior to the maturity date as extended. However, we may elect to extend the maturity date of an investment note for an additional year only once; and after the election has been made, the investment note will not be subject to any further extensions or renewals. In addition, the maturity of an investment note will be automatically extended for a term identical to the original term of the investment note unless: o we notify the holders at least seven days prior to the maturity date of our intention not to extend the maturity date of the investment note; o the holder elects within sixty days prior to the maturity date to have his or her investment note repaid at maturity; or o we have previously exercised our right to extend the maturity date of the investment note for an additional year. The investment notes will continue to renew in this manner until termination or redemption under the indenture and the investment notes. Interest shall continue to accrue from the first day of such renewed term. Each renewed investment note will continue with identical terms, including provisions relating to interest rate and payment. If we notify you of our intention to repay an investment note at maturity, no interest will accrue after the date of maturity. As a courtesy, we will provide a request for repayment form approximately sixty days prior to the maturity date of an investment note. However, a written request for repayment will be valid and use of this specific form by a holder will not be required. REDEMPTION OF INVESTMENT NOTES AT OUR OPTION Our right, if any, to redeem the Investment Notes will be set forth in a prospectus supplement. Investment notes which are redeemable at our option will be redeemable, in whole or in part, at any time, on not less than 30 days notice, but not more than 60 days prior to the redemption date. The redemption price payable will be expressed as a percentage of principal amount and will be set forth in a prospectus supplement covering the particular investment notes offered. REDEMPTION AT REQUEST OF HOLDER UPON DEATH OR TOTAL PERMANENT DISABILITY. Except for investment notes with remaining maturities of less than 12 months, an investment note will be redeemed by us at the election of the holder following his or her total permanent disability, as established to our satisfaction, or by his or her estate following his or her death. The redemption price, in the event of a death or total permanent disability, will be the principal amount of the investment note, plus interest accrued and not previously paid, to the date of redemption. If the investment note is held jointly, the election to redeem will apply when either record owner dies or becomes subject to a total permanent disability. The holder has no other right to require us to prepay his or her investment note prior to its maturity date as originally stated or as it may be extended. We may in the future modify this policy on redemption after death or total permanent disability. However, no modification will adversely affect the right of redemption applicable to any outstanding investment note. For the purpose of determining the right of a holder to demand early repayment of an investment note, total permanent disability shall mean a determination by a physician chosen by us that the holder, who was gainfully employed -16- on a full time basis at the time of purchase, is unable to work on a full time basis, defined as working at least forty hours per week during the succeeding twenty-four months. SUBORDINATION The principal, interest and any premium on the investment notes are subordinate and junior in right of payment to the prior payment in full of all of our Senior Indebtedness. The indenture does not limit the amount of Senior Indebtedness or other indebtedness, secured or unsecured, that we or any of our subsidiaries may incur. If our payments on Senior Indebtedness are accelerated, we will be prohibited from making any payment of principal, premium or interest on the investment notes until payments of the Senior Indebtedness are made or provided for. If we dissolve, wind up, liquidate or reorganize and our assets are distributed, payment of principal, premium or interest on the investment notes will be subordinated, to the prior payment in full of Senior Indebtedness, which means that all Senior Indebtedness must be paid in full before any payment may be made to any holders of investment notes. If our assets are distributed in any such proceeding, some of our general creditors may recover more, proportionately, than holders of the investment notes by reason of such subordination. "Indebtedness" means: o all of our obligations for borrowed money, whether or not the recourse of the lender is to the whole of our assets or only to a portion of such assets, o all of our indebtedness which is evidenced by a note, debenture, bond or other similar instrument, including lease obligations that we incur with respect to any property acquired or leased and used in our business that is required to be recorded as a capitalized lease, o all of our indebtedness representing the unpaid balance of the purchase price of any goods or other property or balance owed for any services rendered, o all of our indebtedness, including capitalized lease obligations, incurred, assumed or given in an acquisition, whether by way of purchase, merger or otherwise, of any business, real property or other assets, o any indebtedness of others described in the preceding four bullet points that we have guaranteed or for which we are otherwise liable, and o any amendment, renewal, extension, deferral, modification, restructuring or refunding of any such indebtedness, obligation or guarantee. "Senior Indebtedness" means any and all of our Indebtedness, except for any particular Indebtedness for which the instrument creating or evidencing it or pursuant to which it is outstanding expressly provides that it is subordinate or shall rank equal in right of payment to the investment notes. CERTAIN COVENANTS The indenture contains certain customary covenants found in indentures under the Trust Indenture Act, including covenants with respect to: o paying principal and interest, o maintaining an office or agency for administering the investment notes, o holding funds for payments on the investment notes in trust, o paying taxes and other claims, o maintaining our properties and our corporate existence, and o delivering annual certifications to the trustee. However, the indenture does not require us to o adhere to any financial ratios or specified levels of liquidity, or -17- o repurchase, redeem or modify the terms of the investment notes upon a change in control or other events involving us which may adversely affect the creditworthiness of the investment notes. RESTRICTIONS ON DIVIDENDS The indenture provides that we cannot: o declare or pay dividends on, or purchase, redeem or acquire for value any of our capital stock, o return any capital to holders of our capital stock, or o make any distribution of assets to holders of our capital stock unless at the time we declare the dividend or the date on which we make the purchase, redemption, payment or distribution described above, we are not in default in the payment of interest on the investment notes or an event of default has not occurred. The indenture does not prohibit or restrict us from selling additional shares of our capital stock or other debt securities nor from pledging shares of capital stock in our subsidiaries. Further, neither we nor any of our subsidiaries is restricted from issuing any shares of capital stock or debt securities. DEFAULTS AND REMEDIES As provided in the indenture, an event of default results if we: o fail to pay principal of or premium, if any, on the investment notes at maturity or upon redemption, whether or not the payment is prohibited by the subordination provisions, o fail to pay interest on any of the investment notes when due and such failure continues for a period of 30 days, whether or not the payment is prohibited by the subordination provisions, o fail to comply with any of our other material agreements or covenants in the indenture and the default continues for a period of 60 days after the trustee or the holders of at least 25% in principal amount of the outstanding investment notes notify us in writing of the default, or o reorganize or become bankrupt or insolvent in certain events. The notice referred to in the third bullet point above must specify the default, demand that it be remedied and state that the notice is a "Notice of Default." The trustee must give the notice if requested to do so in writing by the holders of at least 25% in principal amount of the investment notes then outstanding. The trustee must deliver any notice which it is required to deliver to us promptly after it becomes aware of the default or is requested by the holders to deliver the notice. An event of default for a particular series of investment notes will constitute an event of default for all other series of investment notes under the indenture. The indenture provides that the trustee will, within 90 days after the occurrence of any default known to it which has not been cured, mail to the holders of the investment notes notice of the default. If we default in paying principal of or interest on any of the investment notes, the trustee will be protected from withholding the notice if it in good faith determines that withholding the notice is in the interest of the holders of the investment notes. The indenture permits the acceleration of payment of principal of the investment notes only upon an event of default resulting from our failure to pay principal or interest on the investment notes or if we reorganize or become bankrupt or insolvent in certain events. If an event of default of this kind is continuing, the indenture provides that the trustee or holders of not less than 30% in aggregate principal amount of the investment notes then outstanding, by notice in writing to us (and to the trustee if given by the holders), may declare all unpaid principal of all the investment notes to be immediately due and payable. Holders of a majority in principal amount of the investment notes then outstanding may rescind an acceleration and -18- its consequences and may waive past defaults upon conditions provided in the indenture. No holder of investment notes may pursue any remedy under the indenture unless: o the holder has previously given to the trustee written notice of a continuing event of default, o the holders of at least 30% in principal amount of the investment notes then outstanding o have requested the trustee in writing to pursue the remedy, and o have offered the trustee satisfactory indemnity against loss, liability and expense incurred by pursuing the remedy, and o the trustee has failed to act within 60 days after receipt of the request. The indenture requires us to file periodic reports with the trustee as to the absence of defaults. CONSOLIDATION, MERGER OR SALE The indenture provides that the Company may not merge or consolidate with or sell all or substantially all of its assets to, any entity unless o we are the surviving or successor entity in the transaction and we are not immediately thereafter in default under the indenture, or o if we are not the surviving or successor entity, the successor entity expressly assumes our obligations under the indenture and, immediately after the transaction is not in default under the indenture. Any successor entity must expressly assume all of our obligations under the investment notes and the indenture and it shall succeed to, be substituted for, and may exercise all of our rights and powers under the indenture. BOOK ENTRY; NON-NEGOTIABLE The investment notes are non-negotiable debt instruments and, subject to certain exceptions, will be issued only in book-entry form. Upon acceptance of an order, we will credit our book-entry registration and transfer system to the account of the purchaser of the investment note the principal amount of the investment note owned of record by the purchaser. Upon acceptance of your order, you will receive a transaction statement which will indicate our acceptance of the order. The Company may deliver the transaction statement to the trustee who will accept the transaction statement on your behalf and promptly deliver the transaction statement to you. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of these securities in definitive form. These legal requirements may impair the ability to transfer the record ownership of the investment notes. The transaction statement is not a negotiable instrument, and no rights of record ownership can be transferred without our prior written consent. The record owners of investment notes issued in this book-entry interest form will not receive or be entitled to receive physical delivery of a note or other certificate evidencing such indebtedness. The registered owners of the accounts we establish upon the purchase or transfer of investment notes will be the owners of the investment notes under the indenture. The person holding a book-entry interest in the investment notes must rely upon the procedures established by the trustee to exercise any rights of a holder of investment notes under the indenture. We will provide the trustee with information regarding the establishment of new accounts and the transfer of existing accounts on a monthly basis. We will also provide the trustee with information, as requested, regarding the total amount of any principal and/or interest due to book-entry owners with regard to the investment notes on any interest payment date or upon redemption. Ownership of investment notes may be transferred on our register only by written notice to us signed by the owner(s) or such owner's duly authorized representative on a form to be supplied by us and with our written consent. We may also, in our discretion, require an opinion from such holder's counsel that the proposed transfer will not violate any applicable -19- securities laws and/or a signature guarantee in connection with a transfer. Upon transfer of an investment note, we will provide the new owner of such security with a transaction statement which will evidence the transfer of the account on our records. Book-entry interests in the accounts evidencing ownership of the investment notes are exchangeable for fully registered notes in those names as we direct only if: (i) we, at our option, advise the trustee in writing of our election to terminate the book-entry system, or (ii) after the occurrence of an event of default under the indenture, holders of investment notes aggregating more than 50% of the aggregate outstanding amount of the investment notes advise the trustee in writing that the continuation of a book-entry system is no longer in the best interests of the holders of investment notes and the trustee notifies all registered holders of these securities, of the occurrence of any such event and the availability of definitive notes to holders of these securities requesting such notes. Subject to the exceptions described above, the book-entry interests in these securities shall not otherwise be exchangeable for fully registered notes. MODIFICATION OF THE INDENTURE The indenture provides that we and the trustee may, without the consent of any holders of investment notes, enter into supplemental indentures for purposes, among other things, of: o establishing the form or terms of investment notes, o evidencing the succession of another person to us and the assumption by any such successor of our covenants, or o curing any ambiguity, defect or inconsistency. as long as any of the foregoing will not adversely affect the interest of any holder in any material respect. Most of the terms of the indenture and the investment notes may be modified with the consent of the holders of not less than two-thirds of the principal amount of investment notes then outstanding. However, all holders must agree to any change which would: o extend the maturity date of his or her investment notes, o reduce the principal amount or the rate of interest on his or her investment notes, o reduce any applicable redemption premium on his or her investment notes, or o reduce the two-thirds percentage required for modification. We may omit in any particular instance to comply with any covenant or condition in the indenture if before the time for compliance with the covenant or condition, two-thirds of the holders of the principal amount of investment notes then outstanding shall either waive such compliance in such instance or generally waive compliance. No waiver will extend to or affect a covenant or condition except to the extent so expressly waived. Until the waiver has become effective, our obligation and the duties of the trustee in respect of any such covenant will remain in full force and effect. No supplemental indenture will affect the seniority rights of the holders of Senior Indebtedness without the consent of those holders. REGARDING THE TRUSTEE We and our subsidiaries may maintain deposit accounts and other banking transactions with the trustee in the ordinary course of business. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS No director, officer, employee, incorporator or stockholder of ours, shall have any liability for any obligations of ours under the investment notes, the indenture or for any claim relating to these obligations or their creation. Each holder of the investment notes waives and releases these persons from any liability. The waiver and release are part of the consideration -20- for issuance of the investment notes. We have been advised that the waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy. SERVICE CHARGES We reserve the right to assess service charges for replacing lost or stolen investment notes (for which an affidavit from the holder will be required), changing the registration of any investment note to reflect a change in name of the holder, or a transfer (whether by operation of law or otherwise) of an investment note by the holder to another person. INTEREST WITHHOLDING We reserve the right to withhold 31% of any interest paid to a holder who does not provide us with a fully executed Form W-8 or Form W-9. Otherwise, no interest will be withheld, except on investment notes held by foreign business entities. It is our policy that no sale will be made to anyone refusing to provide a fully executed Form W-8 or Form W-9. ADDITIONAL SECURITIES We may offer from time to time additional classes of securities with terms and conditions different from the investment notes being offered. We will amend or supplement this prospectus if and when we decide to offer to the public any additional class of security under this prospectus. VARIATIONS BY STATE We reserve the right to offer different securities and to vary the terms and conditions of the offer (including, but not limited to, additional interest payments and service charges for all notes) depending upon the state where the purchaser resides. PLAN OF DISTRIBUTION We currently intend to sell the investment notes directly to investors. We do not currently intend to use a broker-dealer or agent to assist in the sales of these securities. However, we may retain the services of an NASD member broker-dealer in the future to assist in the sales of investment notes on a "best efforts" or agency basis. If an agreement concerning the use of the services of any broker-dealer is reached, we may pay any broker dealer a commission which we estimate will range from 0.5% to 10% of the sale price of any notes sold through the broker-dealer, depending on numerous factors. We may also agree to indemnify the broker-dealer against certain liabilities, including liabilities under the Securities Act and to reimburse the broker-dealer for its costs and expenses, up to a maximum to be determined, based upon the total dollar value of the securities sold. We will otherwise offer the investment notes through our employees in accordance with Rule 3a 4-1 under the Exchange Act. We reserve the right to reject any order, in whole or in part, for any reason. Your order will be irrevocable upon receipt by us. In the event that your order is not accepted, we will promptly refund your funds, without deduction of any costs and without interest. We expect that orders will be refunded within 48 hours after receipt. Once your order has been accepted, your funds will be promptly deposited in our account. We will send a receipt to you as soon as practicable after acceptance of your order. No minimum number of notes must be sold in the offering. You will not know at the time of the order whether we will be successful in completing the sale of all of the notes being offered. We reserve the right to withdraw or cancel the offering at any time. In the event of a withdrawal or cancellation of the offering, orders previously received will be irrevocable and no funds will be refunded. -21- LEGAL MATTERS The validity of the investment notes will be passed upon for us by Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., Miami, Florida. EXPERTS The consolidated financial statements of BankAtlantic Bancorp, Inc. as of December 31, 1998 and 1997, and for each of the years in the three-year period ended December 31, 1998, have been incorporated by reference herein and in the registration statement on Form S-3 in reliance upon the report of KPMG LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing. WHERE YOU CAN FIND MORE INFORMATION We file reports, proxy statements, and other information with the SEC. You can read and copy these reports, proxy statements, and other information concerning BankAtlantic Bancorp at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Room. The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, including BankAtlantic Bancorp. Our Class A common stock is quoted on the New York Stock Exchange and our Class B common stock is quoted on the Nasdaq Stock Market's National Market System. These reports, proxy statements and other information are also available for inspection at the offices of the New York Stock Exchange, 20 Broad Street, New York City, New York 10005, and the National Association of Securities Dealers, Inc., Report Section, 1735 K Street N.W., Washington, D.C. 20006. We have filed a registration statement on Form S-3 with the SEC covering the investment notes offered by this prospectus. This prospectus, which forms a part of the registration statement, does not contain all of the information included in the registration statement. For further information about us and the investment notes you should refer to the registration statement and its exhibits. You can obtain the full registration statement from the SEC as indicated above, or from us. The SEC allows us to "incorporate by reference" the information we file with the SEC. This permits us to disclose important information to you by referring to these filed documents. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference: o our Annual Report on Form 10-K for the year ended December 31, 1998, filed with the SEC on March 26, 1999, o our Amendment to Annual Report on Form 10-K/A for the year ended December 31, 1998, filed with the SEC on April 30, 1999, o our Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999, June 30, 1999 and September 30, 1999, filed with the SEC on May 12, 1999, August 12, 1999 and November 15, 1999, respectively, and o any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) under the Securities Exchange Act of 1934 until we sell all of the investment notes. You may request a copy of these filings at no cost by writing or telephoning us at the following address: Corporate Communications BankAtlantic Bancorp 1750 East Sunrise Boulevard Fort Lauderdale, Florida 33304 (954) 760-5000 -22- You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. We have not authorized anyone else to provide you with different information. We are not making an offer of the investment notes in any state where the offer is not permitted. You should not assume that the information in this or any prospectus supplement is accurate as of any date other than the date on the front of those documents. -23- PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following table sets forth the expenses to be paid by BankAtlantic Bancorp, Inc. (the "Registrant") in connection with the offering. All of the amounts shown are estimates except the SEC registration fee. SEC Registration Fee ............................... $39,600 Legal Fees and Expenses ............................ Trustee Fees and Expenses .......................... Accounting Fees and Expenses ....................... Printing and Mailing Expenses ...................... Blue Sky Fees and Expense .......................... Marketing Expenses ................................. Miscellaneous Expenses ............................. -------- TOTAL FEES AND EXPENSES .................... $ -------- ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS Section 607.0850 of the Florida Business Corporation Act and the Articles of Incorporation and Bylaws of the Registrant provide for indemnification of the Registrant's directors and officers against claims, liabilities, amounts paid in settlement and expenses in a variety of circumstances, which may include liabilities under the Securities Act of 1933, as amended (the "Securities Act"). In addition, the Registrant carries insurance permitted by the laws of the State of Florida on behalf of directors, officers, employees or agents which may cover liabilities under the Securities Act. ITEM 16. EXHIBITS The following exhibits either are filed herewith or incorporated by reference to documents previously filed or will be filed by amendment, as indicated below: EXHIBITS DESCRIPTION 4 Form of Indenture with respect to the Registrant's Subordinated Investment Notes. 5 Opinion of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A. 12 Statement regarding computation of earnings to fixed charges. 23.1 Consent of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A. (included in Exhibit 5). 23.2 Consent of KPMG LLP. 24 Power of Attorney (included with signature pages to this Registration Statement). 25.1 Form T-1: Statement of Eligibility of Trustee. 99 Form of Advertising Materials and Order Form* - ------------------------------- * To be filed by amendment. II-1 ITEM 17. UNDERTAKINGS (1) The undersigned Registrant hereby undertakes: (a) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission (the "Commission") pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective Registration Statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; provided, however, that paragraphs (a)(i) and (a)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") that are incorporated by reference in the Registration Statement. (b) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (2) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions under Item 15, or otherwise, the Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-2 (4) The undersigned Registrant hereby undertakes that: (a) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (b) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Company certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Fort Lauderdale, State of Florida, on the 20th day of December, 1999. BANKATLANTIC BANCORP, INC. By: /S/ ALAN B. LEVAN Alan B. Levan, Chairman of the Board of Directors, Chief Executive Officer and President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Alan B. Levan and Frank V. Grieco and each of them acting alone, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, to this Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE /S/ ALAN B. LEVAN Chairman of the Board December 20, 1999 - ----------------------------- Chief Executive Officer Alan B. Levan and President /S/ JOHN E. ABDO Vice-Chairman of the December 20, 1999 - ----------------------------- Board John E. Abdo /S/ FRANK V. GRIECO Senior Executive Vice December 20, 1999 - ----------------------------- President and Principal Financial Frank V. Grieco and Accounting Officer /S/ STEVEN M. COLDREN Director December 20, 1999 - ----------------------------- Steven M. Coldren /S/ BRUNO DIGIULIAN Director December 20, 1999 - ----------------------------- Bruno DiGiulian /S/ MARY E. GINESTRA Director December 20, 1999 - ----------------------------- Mary E. Ginestra II-4 SIGNATURE TITLE DATE /S/ JARETT S. LEVAN Director December 20, 1999 - ----------------------------- Jarett S. Levan /S/ BEN A. PLOTKIN Director December 20, 1999 - ----------------------------- Ben A. Plotkin /S/ IRA SIEGEL Director December 20, 1999 - ----------------------------- Ira Siegel /S/ CHARLIE C. WINNINGHAM, II Director December 20, 1999 - ----------------------------- Charlie C. Winningham, II
II-5 INDEX TO EXHIBITS EXHIBIT DESCRIPTION 4 Form of Indenture, with respect to the Registrant's Subordinated Investment Notes. 5 Opinion of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A. 12 Statement regarding computation of earnings to fixed charges. 23.1 Consent of Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A. (included in Exhibit 5) 23.2 Consent of KPMG LLP. 24 Power of Attorney (included with signature pages to this Registration Statement). 25.1 Form T-1: Statement of Eligibility of Trustee. EX-4 2 EXHIBIT 4 BANKATLANTIC BANCORP, INC. AND U.S. BANK TRUST NATIONAL ASSOCIATION, Trustee INDENTURE Dated as of December __, 1999 $150,000,000 Subordinated Investment Notes BankAtlantic Bancorp, Inc. Reconciliation and tie between Trust Indenture Act of 1939 and Indenture, dated as of December ___ , 1999 Trust Indenture Act Section Indenture Section ss. 310(a)(1) ........................................... 6.8 (a)(2) ........................................... 6.8 (a)(3) ........................................... N/A (a)(4) ........................................... N/A (b) .............................................. 6.8, 6.9 (c) .............................................. N/A ss. 311(a) .............................................. 6.12 (b) .............................................. 6.12 (c) .............................................. N/A ss. 312(a) .............................................. 4.1, 4.2 (b) .............................................. 4.2 (c) .............................................. 4.2 ss.313(a) ............................................... 4.3 (b)(1) ........................................... N/A (b)(2) ........................................... N/A (c) .............................................. 4.3 (d) .............................................. 4.3 ss.314(a) ............................................... 4.4 (b) .............................................. N/A (c) .............................................. 2.2 (d) .............................................. N/A (e) .............................................. 1.3 (f) .............................................. N/A ss.315(a) ............................................... 6.1(a) (b) .............................................. 6.2 (c) .............................................. 6.1(b) (d) .............................................. 6.1(c) (e) .............................................. 5.14 ss. 316(a)(1)(A) ........................................ 5.12 (a)(1)(B) ........................................ 5.13 (a)(2) ........................................... N/A (b) .............................................. 5.8 ss. 317(a)(1) ........................................... 5.3 (a)(2) ........................................... 5.4 (b) .............................................. 4.3 ss.318(a) ............................................... 1.7 - -------------------- NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Indenture. TABLE OF CONTENTS
RECITALS OF THE COMPANY...........................................................................................1 ARTICLE I Definitions and Other Provisions of General Application................................................1 SECTION 1.1 Definitions...................................................................1 SECTION 1.2 Compliance Certificates and Opinions..........................................6 SECTION 1.3 Form of Documents Delivered to Trustee........................................6 SECTION 1.4 Action by Holders.............................................................6 SECTION 1.5 Notices, etc., to Trustee and Company.........................................8 SECTION 1.6 Notices to Holders; Waiver....................................................8 SECTION 1.7 Conflict with Trust Indenture Act.............................................8 SECTION 1.8 Effect of Headings and Table of Contents......................................9 SECTION 1.9 Successors and Assigns........................................................9 SECTION 1.10 Separability Clause...........................................................9 SECTION 1.11 Benefits of Indenture.........................................................9 SECTION 1.12 Legal Holidays................................................................9 SECTION 1.13 Governing Law.................................................................9 ARTICLE II The Investment Notes..................................................................................9 SECTION 2.1 General Terms of Investment Notes.............................................9 SECTION 2.2 Transaction Statement........................................................11 SECTION 2.3 Registrar and Paying Agent...................................................11 SECTION 2.4 Transfer and Exchange........................................................12 SECTION 2.5 Payment of Interest and Principal; Interest and Principal Rights Preserved.........................................................12 SECTION 2.6 Defaulted Interest...........................................................13 SECTION 2.7 Book-Entry Registration......................................................13 SECTION 2.8 Periodic Statements..........................................................14 SECTION 2.9 Mutilated, Destroyed, Lost and Stolen Investment Notes.......................14 SECTION 2.10 Holder Lists.................................................................15 SECTION 2.11 Cancellation.................................................................15 SECTION 2.12 Execution, Authentication and Delivery.......................................15 ARTICLE III Covenants...........................................................................................16 SECTION 3.1 Payment of Principal and Interest............................................16 SECTION 3.2 Maintenance of Office or Agency..............................................16 SECTION 3.3 Money for Investment Note Payments to be Held in Trust.......................16 SECTION 3.4 Payment of Taxes and Other Claims............................................17 SECTION 3.5 Maintenance of Properties....................................................17 SECTION 3.6 Statement as to Compliance...................................................18 SECTION 3.7 Corporate Existence..........................................................18 SECTION 3.8 Restrictions on Dividends, Redemptions and Other Payments....................18 ARTICLE IV Holders' Lists and Reports by the Trustee and the Company............................................19 SECTION 4.1 Company to Furnish Trustee Names and Addresses of Holders....................19 SECTION 4.2 Preservation of Information; Communications to Holders......................19 -i- SECTION 4.3 Reports by Trustee...........................................................19 SECTION 4.4 Reports by Company...........................................................19 ARTICLE V Remedies..............................................................................................20 SECTION 5.1 Events of Default............................................................20 SECTION 5.2 Acceleration of Maturity; Rescission and Annulment...........................21 SECTION 5.3 Suits for Enforcement by Trustee.............................................21 SECTION 5.4 Trustee May File Proofs of Claim.............................................22 SECTION 5.5 Trustee May Enforce Claims Without Possession of Investment Notes.........................................................22 SECTION 5.6 Application of Money Collected...............................................22 SECTION 5.7 Limitation on Suits..........................................................23 SECTION 5.8 Unconditional Right of Holders to Receive Principal and Interest.............................................................23 SECTION 5.9 Restoration of Rights and Remedies...........................................24 SECTION 5.10 Rights and Remedies Cumulative...............................................24 SECTION 5.11 Delay or Omission Not A Waiver...............................................24 SECTION 5.12 Control by Holders...........................................................24 SECTION 5.13 Waiver of Past Defaults......................................................24 SECTION 5.14 Undertaking for Costs........................................................25 SECTION 5.15 Waiver of Stay or Extension Laws.............................................25 ARTICLE VI The Trustee..........................................................................................25 SECTION 6.1 Certain Duties and Responsibilities..........................................25 SECTION 6.2 Notice of Defaults...........................................................26 SECTION 6.3 Certain Rights of Trustee....................................................27 SECTION 6.4 Not Responsible for Recitals or Issuance of Investment Notes.................27 SECTION 6.5 May Hold Investment Notes....................................................28 SECTION 6.6 Money Held in Trust..........................................................28 SECTION 6.7 Compensation and Reimbursement...............................................28 SECTION 6.8 Corporate Trustee Required; Eligibility; Disqualification....................28 SECTION 6.9 Resignation and Removal; Appointment of Successor............................29 SECTION 6.10 Acceptance of Appointment by Successor.......................................30 SECTION 6.11 Merger, Conversion, Consolidation or Succession to Business of Trustee......................................................30 SECTION 6.12 Preferential Collection of Claims against Company............................30 ARTICLE VII Supplemental Indentures.............................................................................31 SECTION 7.1 Supplemental Indentures Without Consent of Holders...........................31 SECTION 7.2 Supplemental Indentures With Consent of Holders..............................31 SECTION 7.3 Execution of Supplemental Indentures.........................................32 SECTION 7.4 Effect of Supplemental Indentures............................................33 SECTION 7.5 Conformity with Trust Indenture Act..........................................33 SECTION 7.6 Notation on or Exchange of Investment Notes..................................33 SECTION 7.7 Subordination Unimpaired.....................................................33 -ii- ARTICLE VIII Consolidation, Merger, Conveyance, Transfer or Lease...............................................33 SECTION 8.1 Company May Consolidate, etc., Only on Certain Terms.........................33 SECTION 8.2 Successor Corporation Substituted............................................34 SECTION 8.3 Limitation on Lease of Properties as Entirety................................34 ARTICLE IX Discharge of Indenture...............................................................................34 SECTION 9.1 Termination of Company's Obligations.........................................34 SECTION 9.2 Application of Trust Money...................................................35 SECTION 9.3 Repayment to Company.........................................................35 SECTION 9.4 Reinstatement................................................................36 ARTICLE X Subordination of Investment Notes.....................................................................36 SECTION 10.1 Subordination.........................................................................36 SECTION 10.2 Distribution of Assets, etc...........................................................36 SECTION 10.3 Subrogation...........................................................................37 SECTION 10.4 Obligation of the Company Unconditional...............................................38 SECTION 10.5 Payments on Investment Notes Permitted................................................38 SECTION 10.6 Effectuation of Subordination by Trustee..............................................38 SECTION 10.7 Knowledge of Trustee..................................................................38 SECTION 10.8 Trustee May Hold Senior Indebtedness..................................................39 SECTION 10.9 Rights of Holders of Senior Indebtedness Not Impaired.................................39 SECTION 10.10 Alteration of Senior Indebtedness.....................................................39 SECTION 10.11 Article Applicable to Paying Agents...................................................39 SECTION 10.12 Trustee Not Fiduciary for Holders of Senior Indebtedness..............................39 ARTICLE XI Redemption...........................................................................................40 SECTION 11.1 Redemption at the Company's Option....................................................40 SECTION 11.2 Notices to Trustee....................................................................40 SECTION 11.3 Selection of Investment Notes to be Redeemed..........................................40 SECTION 11.4 Notice of Redemption..................................................................40 SECTION 11.5 Effect of Notice of Redemption........................................................41 SECTION 11.6 Deposit of Redemption Price...........................................................41 SECTION 11.7 Investment Notes Redeemed in Part.....................................................41 SECTION 11.8 Repurchasing of Investment Notes......................................................41 SECTION 11.9 Redemption at the Election of Holder upon Death or Total Permanent Disability.....................................................42 ARTICLE XII Immunity of Directors, Officers, Employees and Stockholders.........................................42 SECTION 12.1 Exemption from Individual Liability...................................................42 ARTICLE XIII Investment Notes in Definitive Form................................................................43 SECTION 13.1 Forms Generally.......................................................................43
-iii- THIS INDENTURE, dated as of ___________, 1999, by and between BankAtlantic Bancorp, Inc., a corporation duly organized and existing under the laws of the State of Florida ("the Company"), and U.S. Bank Trust National Association, a national banking association, as trustee (the "Trustee"). RECITALS OF THE COMPANY The Company has duly authorized the creation, execution and delivery of its Subordinated Investment Notes (the "Investment Notes"), the amount and terms of which are as hereinafter provided; and, to provide the terms and conditions upon which the Investment Notes are to be issued and delivered, the Company has duly authorized the execution and delivery of this Indenture. All acts and things necessary to make the Investment Notes, when issued and delivered as in this Indenture provided, the valid, binding and legal obligations of the Company, and to constitute these presents as a valid indenture and agreement according to its terms, have been done and performed, and the execution of this Indenture and the issue hereunder of the Investment Notes have in all respects been duly authorized, and the Company, in the exercise of the legal right and power vested in it, executes this Indenture and proposes to make, execute, and deliver the Investment Notes. NOW, THEREFORE, THIS INDENTURE WITNESSETH: Each party agrees as follows for the benefit of the other party and for the equal and proportionate benefit of the Holders of Investment Notes: ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION SECTION 1.1 DEFINITIONS. For all purposes of this Indenture and of any indenture supplemental hereto, except as otherwise expressly provided or unless the context otherwise requires: (1) the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular; (2) the term "this Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof; (3) all other terms used herein which are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (4) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles in effect on the date of execution of this Indenture; and (5) all references in this instrument to designated "Articles", "Sections" and other subdivisions are to the designated Articles, Sections and other subdivisions of this instrument as originally executed; the words "herein", "hereof" and "hereunder" and other words of -1- similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; "Account" means the record of beneficial ownership of an Investment Note maintained by the Company. "Act" when used with respect to any Holder has the meaning specified in Section 1.4. "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. "Authorized Newspaper" means a newspaper of general circulation in the relevant area, printed in the English language and customarily published on each Business Day, whether or not published on Saturdays, Sundays or holidays. Whenever successive weekly publications in an Authorized Newspaper are required hereunder they may be made (unless otherwise expressly provided herein) on the same or different days of the week and in the same or different Authorized Newspapers. "Board of Directors" means either 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, and delivered to the Trustee. "Business Day" means each day which is neither a Saturday, Sunday nor other day on which banking institutions in the State of Florida are authorized by law or required by executive order to close. "Capital Stock" means any and all shares, interests, participation rights or other equivalents (however designated) of corporate stock. "Capitalized Lease Obligation" means any lease obligation of a Person incurred with respect to any property (whether real, personal or mixed) acquired or leased by such Person and used in its business that is required to be recorded as a capitalized lease in accordance with generally accepted accounting principles. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Securities Exchange Act of 1934, or if at any time after the execution of this instrument such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties on such date. "Company" means BankAtlantic Bancorp, Inc. until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor corporation. -2- "Company Request", "Company Order" and "Company Consent" mean, respectively, a written request, order or consent signed in the name of the Company by its Chairman of the Board of Directors, President or a Vice President, and delivered to the Trustee. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. "Defaulted Interest" has the meaning specified in Section 2.6. "Event of Default" has the meaning specified in Section 5.1. "Holder" means a Person in whose name an Investment Note is registered in the Register. "Indebtedness" means (i) all Obligations of the Company for borrowed money (whether or not the recourse of the lender is to the whole of the assets of the Company or only to a portion thereof), (ii) all indebtedness of the Company which is evidenced by a note, debenture, bond or other similar instrument, including Capitalized Lease Obligations, (iii) all indebtedness of the Company representing the unpaid balance of the purchase price of any goods or other property or balance owed for any services rendered, (iv) all indebtedness of the Company, including Capitalized Lease Obligations incurred, assumed or given in an acquisition (whether by way of purchase, merger or otherwise) of any business, real property or other assets, (v) any indebtedness of others described in the preceding clauses (i), (ii), (iii) and (iv) that the Company has guaranteed or for which it is otherwise liable and (vi) any amendment, renewal, extension, deferral, modification, restructuring or refunding of any such indebtedness, obligation or guarantee. "Interest Accrual Date" means with respect to any Investment Note, the date the Company accepts funds for the purchase of the Investment Note if such funds are received by 3:00 p.m. (EDT) on a Business Day, or if such funds are not so received, on the next Business Day. "Interest Payment Date" means such date as determined by the Holder and the Company or, if such day is not a Business Day, the Business Day immediately following such day. "Investment Notes" means the subordinated investment notes issued and delivered under this Indenture. "Maturity Date" when used with respect to any Investment Note means the date specified in such Investment Note as the fixed date on which the principal of such Investment Note is due and payable, as such Maturity Date may be extended or renewed as provided herein. "Maturity Record Date" means, with respect to an Investment Note, fifteen (15) days prior to the Maturity Date or Redemption Date applicable to such Investment Note. "Obligations" means, with respect to any Indebtedness, any principal, premium, interest, penalties, fees and other liabilities payable from time to time and obligations performable under the documentation governing such Indebtedness. "Officers' Certificate" means a certificate signed by the Chairman of the Board of Directors, the President or a Vice President, and by the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. -3- "Opinion of Counsel" means a written opinion of counsel, who may, except as otherwise expressly provided in this Indenture, be counsel for the Company. "Outstanding" when used with respect to the Investment Notes means, as of the date of determination, the outstanding balances of all Accounts representing the Investment Notes maintained by the Registrar (or, if Accounts are exchanged for fully registered notes in definitive form pursuant to Section 2.7(b) hereof, then all Investment Notes theretofore authenticated and delivered under this Indenture) except: (i) Investment Notes the principal amount of which is considered paid under Section 3.1 hereof; and (ii) Investment Notes for whose payment money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Investment Notes; provided, however, that in determining whether the Holders of the requisite principal amount of Investment Notes Outstanding have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Investment Notes owned by the Company or any other obligor upon the Investment Notes 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 Investment Notes which the Trustee knows to be so owned shall be so disregarded. "Paying Agent" means any Person authorized by the Company to pay the principal of or interest on any Investment Notes on behalf of the Company. The Company or any of its subsidiaries may act as Paying Agent. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Place of Payment" means a city or political subdivision thereof designated as such by the Company in accordance with the terms of this Indenture. "Principal Corporate Trust Office" means the principal corporate trust office of the Trustee at the location set forth in Section 1.5 or at such other location as the Trustee may from time to time designate by written notice to the Company. "Redemption Price" means, with respect to any Investment Note to be redeemed, the principal amount of such Investment Note plus any premium thereon plus the interest accrued but unpaid to the date of such redemption. "Register" or "Registrar" shall mean the definition specified in Section 2.3. "Regular Record Date" for the interest payable on any Interest Payment Date means the close of business on the date fifteen (15) days prior to such Interest Payment Date. "Responsible Officer" when used with respect to the Trustee means the chairman or the vice chairman of the board of directors, the chairman or vice chairman of the executive committee of the board of directors, the president, any vice-president, the secretary, any assistant secretary, the -4- treasurer, any assistant treasurer, the cashier, any assistant cashier, any trust officer or assistant trust officer, the controller and any assistant controller or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject. "Responsible Officer of the Company" shall mean the Chairman or Vice Chairman of the Board of Directors, the President, any Vice-President, the Treasurer, the Controller or the Secretary of the Company. "Senior Indebtedness" means any and all Indebtedness of the Company, except the Company's currently outstanding 9% Subordinated Indentures due 2005, 6 3/4% Convertible Subordinated Debentures due 2006 and 55/8% Convertible Subordinated Debentures due 2007 (each of which rank pari passu in right of payment to the Investment Notes); the Company's currently outstanding 9 1/2 % Junior Subordinated Debentures due 2027 (which rank junior in right of payment to the Investment Notes) and any particular Indebtedness, the instrument creating or evidencing the same or pursuant to which the same is outstanding expressly provides that such Indebtedness shall be subordinate or shall rank pari passu in right of payment to the Investment Notes. "Special Record Date" for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 2.6. "Subsidiary" means, with respect to the Company, any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, officers or trustees thereof is at the time owned in the aggregate, directly or indirectly, by the Company and its Subsidiaries. "Total Permanent Disability" means a determination by a physician chosen by the Company that the Holder of an Investment Note, who was gainfully employed on a full-time basis at the date of issuance of such Investment Note is unable to work on a full time basis during the succeeding twenty-four (24) months. For purposes of this definition, "working on a full-time basis" shall mean working at least forty (40) hours per week. "Transaction Statement" has the meaning specified in Section 2.2. "Trustee" means U.S. Bank Trust National Association, a national banking association, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and thereafter "Trustee" shall mean such successor Trustee. "Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.77aaa- 77bbbb), as in force at the date as of which this instrument was executed, except as provided in Section 7.5. "Vice President" when used with respect to the Company or the Trustee means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president". "U.S. Government Obligations" means direct obligations of the United States of America for the payment of which the full faith and credit of the United States of America is pledged. -5- SECTION 1.2 COMPLIANCE CERTIFICATES 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 at the Trustee's request an Officers' Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, 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 or opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include: (a) a statement that each individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; and (b) a statement as to whether, in the opinion of each such individual, such condition or covenant has been complied with. SECTION 1.3 FORM 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 in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which such counsel's 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 in the exercise of reasonable care should know, that such certificate or opinion or representations are erroneous. 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. SECTION 1.4 ACTION BY HOLDERS. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by (i) one or more instruments of substantially similar tenor signed by such Holders in person or by agent or proxy duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action -6- 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 (subject to Sections 6.1 and 6.3) conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by 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 the execution thereof. Where such execution is by an officer of a corporation or association or a member of a partnership or an employee of a public or governmental agency on behalf of such corporation, association, partnership or agency, or by an agent or fiduciary, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which the Trustee deems sufficient. (c) The ownership of Investment Notes shall be proved by the Register or by a certificate of the Registrar thereof. (d) At any time prior to the taking of any action by the Holders of the percentage in aggregate principal amount of the Investment Notes specified in this Indenture in connection with such action, any Holder which has consented to such action may, by filing written notice with the Trustee at its Principal Corporate Trust Office and upon proof of holding as provided in this Section 1.4, revoke such action so far as concerns such Investment Notes. Except as aforesaid, any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Investment Note shall be conclusive and binding upon such Holder and upon all future Holders of such Investment Note and of every Investment Note 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 Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Investment Note. Any action taken by the Holders of the percentage in aggregate principal amount of the Investment Notes specified in the Indenture in connection with such action shall be conclusive and binding upon the Company, the Trustee and the Holders of all of the Investment Notes. (e) If the Company shall solicit from the Holders any request, demand, authorization, direction, notice, consent, waiver or other action, the Company may, at its option, by or pursuant to a Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other action may be given before or after such record date, but only Holders of record at the close of business on such record date shall be deemed to be the Holders for the purposes of determining whether Holders of the requisite proportion of Outstanding Investment Notes have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action, and for that purpose the Outstanding Investment Notes shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six (6) months after the record date. SECTION 1.5 NOTICES, ETC., TO TRUSTEE AND COMPANY. -7- Any request, demand, authorization, direction, notice, consent, waiver or Act of Holders or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with, (1) the Trustee by any Holder or by the Company shall be sufficient for every purpose hereunder if and only if made, given, furnished or filed in writing to or with the Corporate Trust Department of the Trustee at the Principal Corporate Trust Office which at the date of this Indenture is 101 East Fifth Street, St. Paul, Minnesota 55101-1860, or (2) the Company by the Trustee or by any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first-class, postage prepaid, to the Company addressed to it at 1750 East Sunrise Boulevard, Ft. Lauderdale, Florida 33304, to the attention of the Corporate Secretary, or at any other address furnished in writing to the Trustee by the Company with a copy to Stearns Weaver Miller Weissler Alhadeff & Sitterson, P.A., attention: Alison W. Miller. SECTION 1.6 NOTICES 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, at his address as it appears on the Register, not later than the latest date, and not earlier than the earliest date, prescribed for the 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, either before or after the event, and such waiver shall be 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. In case, by reason of the suspension of or irregularities in regular mail service, it shall be impractical to mail notice of any event to Holders when such 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 case, by reason of the suspension of publication of any Authorized Newspaper, or by reason of any other cause, it shall be impossible to make publication of any notice in an Authorized Newspaper or Authorized Newspapers as required by this Indenture, then such method of publication or notification as shall be made with the approval of the Trustee shall constitute a sufficient publication of such notice. SECTION 1.7 CONFLICT WITH TRUST INDENTURE ACT. This Indenture is subject to the TIA and if any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Indenture by any of the provisions of TIA, such required provision shall control. -8- SECTION 1.8 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 hereof. SECTION 1.9 SUCCESSORS AND ASSIGNS. All covenants and agreements in this Indenture by the Company shall bind its successors and assigns, whether so expressed or not. SECTION 1.10 SEPARABILITY CLAUSE. In case any provision in this Indenture or in the Investment Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 1.11 BENEFITS OF INDENTURE. Nothing in this Indenture or in the Investment Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the holders of Senior Indebtedness and the Holders of Investment Notes, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 1.12 LEGAL HOLIDAYS. In any case where the date of an Interest Payment Date or the Maturity Date of any Investment Note shall not be a Business Day, then (notwithstanding any other provision of the Investment Notes or this Indenture) payment of the principal of, or interest on, any Investment Notes need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the nominal date of any such Interest Payment Date or Maturity Date. SECTION 1.13 GOVERNING LAW. This Indenture and the Investment Notes issued hereunder shall be controlled, construed and enforced in accordance with the laws of the State of Florida applicable to contracts made and to be performed entirely in that State. ARTICLE II THE INVESTMENT NOTES SECTION 2.1 GENERAL TERMS OF INVESTMENT NOTES. (a) The outstanding aggregate principal amount of Investment Notes outstanding at any time is limited to $150 million, provided, however, that the Company and the Trustee may, without the consent of any Holder, increase such aggregate principal amount of Investment Notes which may be outstanding at any time. The Investment Notes may be subject to notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject or usage. -9- (b) The Investment Notes (i) shall not be evidenced by a promissory note, (ii) are non-negotiable debt instruments and (iii) absent an exchange for fully registered notes in definitive form pursuant to Section 2.10(b) hereof, shall only be issued in book-entry form. The record of beneficial ownership of the Investment Notes shall be maintained and updated by the Company through the establishment and maintenance of Accounts. Each Investment Note shall be in such denominations as may be designated from time to time by the Company. The Company may from time to time in its discretion, set minimum denomination requirements on investments and purchase amounts. (c) The Company shall designate, from time to time upon issuance of Investment Notes, the term, maturity date, redemption provisions and interest rate of a series of Investment Notes and the term, maturity date, redemption provisions and interest rate of each Investment Note shall be indicated in the Transaction Statement. The Company, without affecting the terms of any Outstanding Investment Notes, reserves the right to vary the term, maturity date, redemption provisions and interest rate of Investment Notes subsequently issued to any such Outstanding Investment Notes. (d) An Investment Note shall be extended automatically for the same term, and shall be deemed to have been renewed by the Holder thereof as of the Maturity Date unless (i) within sixty (60) days prior to the Maturity Date of such Investment Note the Holder has demanded repayment of the Investment Note, (ii) the Company has noticed its intention to repay such Investment Note at least seven (7) days prior to the Maturity Date or (iii) the Company has previously exercised its right pursuant to Section 2.1(e) below to automatically extend the Maturity Date of the Investment Note for an additional one (1) year period. An Investment Note will continue to renew, as described herein, absent some permitted action by either the Holder or the Company. Interest shall continue to accrue from the first day of such renewed term. Such Investment Note, as renewed, will continue in all its provisions, including provisions relating to payment of interest and redemption, and shall retain the same interest and redemption rate fixed for its original term. The Company shall give each Holder (existing as of the applicable Maturity Record Date) a written notice at least sixty (60) days prior to the Maturity Date of the Investment Note held by such Holder reminding such Holder (i) of the pending maturity of the Investment Note and (ii) that the automatic extension provision described in the preceding paragraph will take effect unless the Holder requests payment or the Company elects to repay the Investment Note (as described in the preceding paragraph). If the Company gives notice to a Holder of the Company's intention to repay an Investment Note at maturity, no interest will accrue after the Maturity Date for such Investment Note. (e) Notwithstanding, the automatic renewal provision above and the election of a Holder to demand repayment of his or her Investment Note prior to the Maturity Date, the Company may elect, in its discretion, at any time prior to the Maturity Date of an Investment Note, to extend the Maturity Date of such Investment Note for an additional one (1) year period by providing the Holder written notice of such election within seven (7) days after the election has been made. The Company's right to automatically extend the Maturity Date of an Investment Note for an additional one (1) year period may be exercised only once, and after the Maturity Date of an Investment Note has been extended for an additional one (1) year period by the Company pursuant to this provision, such Investment Note shall not be subject to any additional extensions or renewals of its Maturity Date, including the automatic renewal provisions of Section 2.1(d) hereof. (f) At its option, the Company may redeem the Investment Notes in whole or in part, from and after the dates and at the fixed redemption prices specified in such Investment Note. Investment Notes with a remaining duration of greater than one (1) year are subject to early -10- repayment at the election (i) of the Holder upon the occurrence of a Total Permanent Disability of such Holder (or if such Investment Note is held jointly, upon the Total Permanent Disability of one of such record Holders), (ii) of a Holder's estate after a Holder's death or (iii) if such Investment Note is held jointly, of a Holder upon the death of the other joint Holder. Otherwise, Holders will have no right to demand early repayment. The Company may modify its policy on redemptions after death or Total Permanent Disability provided that any change in such policy shall not affect any Outstanding Investment Note. (g) The Investment Notes are junior in right of payment to the Company's existing and future Senior Indebtedness. (h) The Investment Notes are not guaranteed or secured by any lien on any of the Company's assets. The Company will not be required to contribute, as a means of repaying the investment Notes upon the Maturity Date, funds to a separate fund, such as a sinking fund. (i) The terms and provisions contained in the Investment Notes shall constitute, and are hereby expressly made, a part of this Indenture and to the extent applicable, the Company and the Trustee, by their execution and delivery of this Indenture, and the Holders by accepting the Investment Notes, expressly agree to such terms and provisions and to be bound thereby. In case of a conflict, the provisions of this Indenture shall control. SECTION 2.2 TRANSACTION STATEMENT. An Investment Note shall not be validly issued until a transaction statement (a "Transaction Statement") executed by a duly authorized officer of the Company is delivered to the purchaser or transferee thereof and an Account is established by the Company in the name of such purchaser or transferee. The Company, the Trustee and the Holders (by accepting the Investment Notes) hereby agree that, upon execution of a Transaction Statement, the Company may deliver the Transaction Statement to the Trustee who shall accept and hold such Transaction Statement on behalf of and for the benefit of the Holder. The Trustee agrees that it shall promptly deliver any Transaction Statement that it receives on behalf of a Holder to such Holder at the address contained in the Register. SECTION 2.3 REGISTRAR AND PAYING AGENT. The Company shall maintain (i) an office or agency where Investment Notes may be presented for registration of transfer or for exchange ("Registrar") and (ii) an office or agency where Investment Notes may be presented for payment ("Paying Agent"). The Registrar shall keep a register (the "Register") of the Investment Notes and of their transfer and exchange. The Register shall contain a list of all of the Accounts reflecting the beneficial ownership of the Investment Notes. The Company may appoint one or more co-registrars and one or more additional paying agents. The term "Registrar" includes any co-registrar, and the term "Paying Agent" includes any additional paying agent. The Company may change any Paying Agent or Registrar without prior notice to any Holder; provided that the Company shall promptly notify the Holders of the name and address of any Agent not a party to this Indenture. The Company may act as Paying Agent and/or Registrar. In the event the Company uses any Agent other than the Company or the Trustee, the Company shall enter into an appropriate agency agreement with such Agent, which agreement shall incorporate the provisions of the TIA. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee of the name and address of any such Agent. If the Company fails to maintain a Registrar or Paying Agent, or fails to give the foregoing notice, -11- the Trustee shall act as such, and shall be entitled to appropriate compensation in accordance with Section 6.7 hereof. The Company shall be the initial Registrar and Paying Agent. The Company initially appoints the Trustee as agent for service of notices and demands in connection with the Investment Notes. The Company shall act as Registrar and Paying Agent until such time as the Company gives the Trustee written notice to the Company. SECTION 2.4 TRANSFER AND EXCHANGE. (a) The Investment Notes are non-negotiable instruments and cannot be transferred without the prior written consent of the Company (which consent shall not be unreasonably withheld). Requests to the Company for the transfer of the Accounts maintained for the benefit of the Holders of the Investment Notes shall be: (i) duly executed by the current holder of the Account, as reflected on the Register as of the date of receipt of such transfer request, or his attorney duly authorized in writing; (ii) accompanied by the written consent of the Company to the transfer; and (iii) if requested by the Company, an opinion of Holder's counsel (which counsel shall be reasonably acceptable to the Company) that the transfer does not violate any applicable securities laws and/or a signature guarantee. Upon transfer of an Investment Note, the Company will provide the new registered owner of the Investment Note with a Transaction Statement which will evidence the transfer of the Account on the Company's records. (b) The Company may assess service charges to a Holder for any registration of transfer or exchange, and the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith. (c) The Company shall treat the individual or entity listed on each Account maintained by the Company as the absolute owner of the Investment Note represented thereby for purposes of receiving payments thereon and for all other purposes whatsoever. SECTION 2.5 PAYMENT OF INTEREST AND PRINCIPAL; INTEREST AND PRINCIPAL RIGHTS PRESERVED. (a) Each Investment Note shall bear interest from and commencing on its Interest Accrual Date at such rate of interest as the Company shall determine from time to time; provided, however, that the interest rate will be fixed for the term of the Investment Notes upon issuance and shall be specified in the relevant Transaction Statement. The Holder of an Investment Note may elect to have interest paid monthly, on the fifteenth day of each calendar month, quarterly, on January 15, April 15, July 15 and October 15, semi-annually, on January 15 and July 15, annually, on January 15, or upon maturity. To the extent any applicable interest payment date is not a Business Day, then interest shall be paid instead on the next succeeding Business Day. (b) Each Investment Note shall accrue interest at the rate specified for such Investment Note and such interest shall be payable on each Interest Payment Date following the Issue Date for such Investment Note, until the principal thereof becomes due and payable. Any installment of interest payable on an Investment Note that is caused to be punctually paid or duly provided for by -12- the Company on the applicable Payment Date shall be paid to the Holder in whose name such Investment Note is registered in the Register on the applicable Regular Record Date with respect to the Investment Notes outstanding, by check mailed to such Holder's address as it appears in the Register on such Regular Record Date. The payment of any interest payable in connection with the payment of any principal payable with respect to such Investment Note on a Maturity Date or Redemption Date shall be payable as provided below. Any installment of interest not punctually paid or duly provided for shall be payable in the manner and to the Holders specified in Section 2.6. (c) Each of the Investment Notes shall have a Maturity Date of principal as shall be indicated in each such Investment Note. The principal of each Investment Note shall be paid in full no later than the Maturity Date thereof unless the term of such Investment Note is extended pursuant to Section 2.1(d) or (e) hereof or such Investment Note becomes due and payable at an earlier date by acceleration, redemption or otherwise. (d) The principal payment made on any Investment Note on any Maturity Date (or the Redemption Price of any Investment Note required to be redeemed), and any accrued interest thereon, shall be payable on or after the Maturity Date or Redemption Date therefor at the office or agency of the Company maintained by it for such purpose or at the office of any Paying Agent for such Investment Note. (e) Notwithstanding any of the foregoing provisions with respect to payments of principal of and interest on the Investment Notes, if the Investment Notes have become or been declared due and payable following an Event of Default, then payments of principal of and interest on the Investment Notes shall be made in accordance with Article Five hereof. (f) All computations of interest due with respect to any Investment Note shall, unless otherwise specified in the Investment Note, be computed as simple interest on the basis of a 360-day year of twelve 30-day months. SECTION 2.6 DEFAULTED INTEREST. If the Company defaults in a payment of interest on any Investment Note, it shall pay the defaulted interest plus, to the extent lawful, any interest payable on the defaulted interest, to the Holder of such Investment Note on a subsequent Special Record Date, which date shall be at the earliest practicable date but in all events at least five (5) Business Days prior to the payment date, in each case at the rate provided in the Investment Note. The Company shall, with written notification to the Trustee, fix or cause to be fixed each such Special Record Date and payment date. At least fifteen (15) days before any such Special Record Date, the Company (or the Trustee, in the name of and at the expense of the Company) shall mail to Holders a notice that states (i) the Special Record Date, (ii) the related payment date and (iii) the amount of such interest to be paid. SECTION 2.7 BOOK-ENTRY REGISTRATION. (a) The Registrar shall maintain a book-entry registration and transfer system through the establishment of Accounts for the benefit of Holders of Investment Notes as the sole method of recording the ownership and transfer of ownership interests in such Investment Notes. The registered owners of the Accounts established by the Company in connection with the purchase or transfer of the Investment Notes shall be deemed to be the Holders of the Investment Notes outstanding for all purposes under this Indenture. The Company shall promptly notify the Registrar (if the Registrar is other than the Company) of the acceptance of a subscriber's order to purchase an Investment Note and the Company shall credit its book-entry registration and transfer system to the Account of each -13- Investment Note purchaser, the principal amount of such Investment Note owned of record by the purchaser. The total amount of any principal and/or interest due and payable to book-entry owners of the Accounts maintained by the Company as provided in this Indenture shall be credited to such Accounts by the Company within the time frames provided in this Indenture. The Company shall notify the Trustee no less frequently than monthly of the establishment of new Accounts and the transfer of existing Accounts. (b) Book-entry interest in the Accounts evidencing ownership of the Investment Notes are exchangeable for fully registered notes in definitive form in those names as the Company directs only if: (1) the Company, at its option, advises the Trustee in writing of the Company's election to terminate the book-entry system; or (2) after the occurrence of an Event of Default under the Indenture: (i) Holders aggregating more than a majority of the Outstanding amount of the Investment Notes advise the Trustee in writing that the continuation of a book-entry system is no longer in the best interests of such Holders of the Investment Notes and (ii) the Trustee notifies all Holders of the occurrence of any such Event of Default and the availability of definitive notes to Holders of these securities requesting such notes in definitive form. (c) Subject to the exception described above in Section 2.7(b) hereof, the book-entry interests in the Investment Notes shall not otherwise be exchangeable for fully registered notes in definitive form. SECTION 2.8 PERIODIC STATEMENTS. The Company shall send each Holder of an Investment Note via U.S. mail no later than the tenth (10) Business Day after each quarter end in which such Holder had an Outstanding balance in such Holder's Account, a statement which indicates as of the calendar month end preceding the mailing: (i) the balance of such Account of each Investment Note and (ii) any accrued interest. SECTION 2.9 MUTILATED, DESTROYED, LOST AND STOLEN INVESTMENT NOTES. (a) In the event that Investment Notes have been issued in definitive form pursuant to Section 2.7(b) hereof, and if (i) any mutilated Investment Note is surrendered to the Trustee, or if the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Investment Note, and (ii) there is delivered to the Company and the Trustee 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 Investment Note has been acquired by a bona fide purchaser, the Company shall execute and upon its request the Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Investment Note, a new Investment Note of like tenor and principal amount, bearing a number not contemporaneously outstanding. (b) In case any such mutilated, destroyed, lost or stolen Investment Note has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Investment Note, pay or authorize the payment of such Investment Note (without surrender thereof except in the case of a mutilated Investment Note) if the applicant for such payment shall furnish to the Company such security or indemnity as it may require to save it harmless and, in the case of -14- destruction, loss or theft, evidence to the satisfaction of the Company of the destruction, loss or theft of such Investment Note and of the ownership thereof. (c) Upon the issuance of any new Investment Note under this Section 2.9, 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. (d) The provisions of this Section 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 Investment Notes. SECTION 2.10 HOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Holders of the Investment Notes and shall otherwise comply with TIA ss.312(a). SECTION 2.11 CANCELLATION. At any time, the Company may notify the Trustee of the cancellation of Investment Notes and, in the event fully registered notes in definitive form have been issued pursuant to Section 2.7(b) hereof, the Company may deliver Investment Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Investment Notes in definitive form surrendered to them for registration of transfer, exchange or payment. The Trustee shall cancel all Investment Notes surrendered for transfer, exchange, payment, replacement or cancellation and shall destroy such canceled Investment Notes (subject to the record retention requirement of the Exchange Act) and deliver a certificate of such destruction to the Company, unless the Company otherwise directs. SECTION 2.12 EXECUTION, AUTHENTICATION AND DELIVERY. Investment Notes issued in definitive form pursuant to Section 2.7(b) hereof, 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 Investment Notes or did not hold such offices at the date of such Investment Notes. At any time and from time to time after the execution and delivery of this Indenture and subject to Section 2.7(b), the Company may deliver such notes executed by the Company to the Trustee for authentication, together with a Company Order of the authentication and delivery of such Investment Notes; and the Trustee shall authenticate and deliver such Investment Notes as in this Indenture provided and not otherwise. All Investment Notes shall be dated the date of their authentication. No Investment Note in definitive form shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Investment Note a certificate of authentication executed by the Trustee; and such certificate upon any Investment Note in definitive form shall be conclusive evidence, and the only evidence, that such has been duly authenticated and delivered hereunder. -15- ARTICLE III COVENANTS SECTION 3.1 PAYMENT OF PRINCIPAL AND INTEREST. The Company will duly and punctually pay the principal of and interest on the Investment Notes in accordance with the terms of the Investment Notes and this Indenture. SECTION 3.2 MAINTENANCE OF OFFICE OR AGENCY. The Company will maintain an office or agency in the Place of Payment where notices and demands to or upon the Company in respect of the Investment Notes and this Indenture may be served and where Investment Notes may be surrendered for payment and for registration of transfer or for exchange. The Company will give prompt written notice to the Trustee of the location, and of any change in the location, of such office or agency. If at any time the Company shall fail to maintain such office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, notices and demands may be made or served at the Principal Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such notices, demands, presentations and surrenders. SECTION 3.3 MONEY FOR INVESTMENT NOTE PAYMENTS TO BE HELD IN TRUST. If the Company shall at any time act as its own Paying Agent, it will, on or before each due date of the principal of or interest on any of the Investment Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal or 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 of its action or failure to so act. Whenever the Company shall have one or more Paying Agents, it will, prior to each due date of the principal of or interest on any of the Investment Notes, deposit with a Paying Agent a sum sufficient to pay the principal or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such sums, and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its action or failure so to act. The Company will cause each Paying Agent 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, that such Paying Agent will: (1) hold all sums held by it for the payment of principal of or interest on the Investment Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided; (2) give the Trustee notice of any default by the Company (or any other obligor upon the Investment Notes) in the making of any payment of principal or interest; and (3) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent. -16- 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 or interest on any Investment Note and remaining unclaimed for two (2) years after such principal or interest has become due and payable, shall be paid to the Company upon Company Request, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Investment Note 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, however, 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 an Authorized Newspaper in the Place of Payment, 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. The Trustee and the Paying Agent shall promptly pay to the Company upon Company Request any excess money or securities held by them at any time. SECTION 3.4 PAYMENT OF TAXES AND OTHER CLAIMS. The Company will pay or discharge or cause to be paid or discharged, before the same shall become delinquent, all material taxes, assessments and governmental charges levied or imposed upon it or upon its income, profits or property; provided, however, that the Company shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment or charge whose amount, applicability or validity is being contested in good faith by appropriate proceedings. SECTION 3.5 MAINTENANCE OF PROPERTIES. The Company will, in all material respects, cause all its properties and the properties of its Subsidiaries used or useful in the conduct of the business of the Company and its Subsidiaries to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section shall prevent the Company or a Subsidiary from discontinuing the operation and maintenance of any of its properties if such discontinuance is, in the judgment of the Company, desirable in the conduct of its business and is not disadvantageous in any material respect to the Holders. SECTION 3.6 STATEMENT AS TO COMPLIANCE. The Company will deliver to the Trustee, within one hundred twenty (120) days after the end of each fiscal year of the Company, a written statement signed by the President or a Vice President and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Controller or an Assistant Controller of the Company, stating, as to each signatory thereof, that: -17- (1) a review of the activities of the Company during such year and of performance under this Indenture has been made under his or her supervision, and (2) to the best of his or her knowledge, based on such review, the Company has performed and fulfilled all of its obligations under this Indenture throughout such year, or, if an Event of Default shall have occurred, specifying each such Event of Default known to the signatory and the nature and status thereof. The Company will, so long as any of the Investment Notes are Outstanding, deliver to the Trustee, forthwith upon becoming aware of any Event of Default, an Officer's Certificate specifying such Event of Default. SECTION 3.7 CORPORATE EXISTENCE. Subject to Article Eight, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect the corporate existence, rights (charter and statutory) and franchises of the Company and it Subsidiaries; provided, however, that the Company shall not be required to preserve any right or franchise of the Company or its Subsidiaries if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company or its Subsidiaries and that the loss thereof is not disadvantageous in any material respect to the Holders. SECTION 3.8 RESTRICTIONS ON DIVIDENDS, REDEMPTIONS AND OTHER PAYMENTS. The Company shall not declare or pay any dividends on, or purchase, redeem or otherwise acquire for value, any of its Capital Stock now or hereafter outstanding (other than redemption or repurchase of the Investment Notes in accordance with the terms of this Indenture) or return any capital to holders of its Capital Stock as such, or make any distribution of assets to holders of its Capital Stock as such, unless, on the date of any such dividend declaration (a "Declaration Date") or the date of any such purchase, redemption, payment or distribution specified above the Company is not in default in the payment of interest on the Investment Note and no Event of Default has occurred or is continuing. ARTICLE IV HOLDERS' LISTS AND REPORTS BY THE TRUSTEE AND THE COMPANY SECTION 4.1 COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS. The Company shall furnish or cause to be furnished to the Trustee, within ten (10) days after the end of each quarter during the term of this Indenture and as of such other times as the Trustee may request in writing, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders of Investment Notes and the aggregate principal amount outstanding as of such quarter end; provided, however, that the Company shall not be required to furnish the Trustee the names and addresses of the Holders of Investment Notes if the Trustee receives such names and addresses in its capacity as Registrar. The Company shall otherwise comply with TIA ss.312(a). SECTION 4.2 PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS. -18- (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders of Investment Notes contained in the most recent list furnished to the Trustee as provided in Section 4.1 and the names and addresses of Holders of Investment Notes received by the Trustee at any time that it is acting as Registrar (if so acting). The Trustee may destroy any list furnished to it as provided in Section 4.1 upon receipt of a new list so furnished. (b) The Trustee shall comply with Section 312(b) of the TIA. The Trustee, the Company, and any other Person shall have the protection of Section 312(c) of the TIA. SECTION 4.3 REPORTS BY TRUSTEE. (a) So long as the Investment Notes are Outstanding, within sixty (60) days after May 15 of each year (the "Reporting Date"), the Trustee shall, if required by Section 313(a) of the TIA, transmit by mail to the Company and all Holders, as their names and addresses appear in the Register, a brief report dated as of such Reporting Date that complies with Section 313(a) of the TIA. (b) A copy of each such report shall, at the time of such transmission to the Company and the Holders, be filed by the Trustee with each securities exchange upon which the Investment Notes are listed, and also with the Commission. The Company will notify the Trustee when the Investment Notes are listed on any securities exchange. SECTION 4.4 REPORTS BY COMPANY. The Company will: (1) file with the Trustee, within fifteen (15) days after the Company is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Company is not required to file information, documents or reports pursuant to either of said Sections, then it will file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; (2) file with the Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (3) transmit by mail to all Holders as their names and addresses appear in the Register, such summaries of any information, documents and reports required to be filed by the Company pursuant to paragraphs (1) and (2) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. -19- ARTICLE V REMEDIES SECTION 5.1 EVENTS OF DEFAULT. "Event of Default", wherever used herein means any one of the following events, continued for the period of time, if any, and after the giving of the notice, if any, therein designated, (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (1) default in the payment of any interest upon any Investment Note when it becomes due and payable, and continuance of such default for a period of thirty (30) days; or (2) default in the payment of the principal of any Investment Note at its Maturity Date; or (3) default in the performance, or breach, of any material covenant or warranty of the Company in this Indenture (other than a covenant or warranty a default in the performance or the breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of sixty (60) days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Investment Notes then Outstanding, 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 (4) the entry of a decree or order by a court having jurisdiction in the premises 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 the Federal Bankruptcy Act or any other applicable Federal or State law, or appointing a 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 unstayed and in effect for a period of ninety (90) consecutive days; or (5) the institution by the Company 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 the Federal Bankruptcy Act or any other similar applicable Federal or State law, or the consent by it to the filing of any such petition or to the appointment of a 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, or the taking of corporate action by the Company in furtherance of any such action. -20- SECTION 5.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT. If an Event of Default described in paragraphs (1), (2), (4) or (5) of Section 5.1 occurs and is continuing, then and in every such case the Trustee or the Holders of not less than thirty percent (30%) in aggregate principal amount of the Investment Notes then Outstanding may declare the principal of all the Investment Notes to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by the Holders), and upon any such declaration, such principal shall become immediately due and payable. At any time after such a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter in this Article provided, the Holders of a majority in principal amount of the Investment Notes then Outstanding, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (1) the Company has paid or deposited with the Trustee a sum sufficient to pay: (a) all overdue interest on all Investment Notes; (b) the principal of any Investment Notes which have become due otherwise than by such declaration of acceleration and interest thereon at the rate borne by the Investment Notes; and (c) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and (2) all Events of Default, other than the non-payment of the principal of Investment Notes which have become due solely by such acceleration, have been cured or waived as provided in Section 5.13. No such rescission shall affect any subsequent default or impair any right consequent thereon. SECTION 5.3 SUITS FOR ENFORCEMENT BY TRUSTEE. If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders 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. SECTION 5.4 TRUSTEE MAY FILE PROOFS OF CLAIM. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company, or any other obligor upon the Investment Notes or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal of the Investment Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, -21- (1) to file and prove a claim for the whole amount of principal and interest owing and unpaid in respect of the Investment Notes and to file such other papers or documents as may be necessary or advisable in order to have the claim of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and (2) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any 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 pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 6.7. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Investment Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any in any such proceeding. SECTION 5.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF INVESTMENT NOTES. All rights of action and claims under this Indenture or the Investment Notes may be prosecuted and enforced by the Trustee. The Trustee will retain such enforcement rights without the possession of any of the Investment Notes or the production thereof in any proceeding relating thereto. 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, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Investment Notes in respect of which such judgment has been recovered. SECTION 5.6 APPLICATION OF MONEY COLLECTED. Any money collected by the Trustee pursuant to this Article shall, subject to Article Ten, be applied in the following order, at the date or dates fixed by the Trustee: First: To the Trustee for amounts due under Section 6.7; Second: To the Holders for amounts then due and unpaid upon the Investment Notes for principal and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Investment Notes for principal and interest, respectively; and Third: To the Company. SECTION 5.7 LIMITATION ON SUITS. No Holder of any Investment Note shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: -22- (1) such Holder has previously given written notice to the Trustee and the Company of a continuing Event of Default; (2) the Holders of not less than thirty percent (30%) in aggregate principal amount of the Outstanding Investment Notes 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; (3) 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; (4) the Trustee for sixty (60) days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceedings; and (5) 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 principal amount of the Outstanding Investment Notes; it being understood and intended that no one or more Holders of Investment Notes shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders or to obtain or to seek to obtain priority or preference over any other Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all the Holders of Investment Notes. SECTION 5.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL AND INTEREST. Notwithstanding any other provision in this Indenture, the Holder of any Investment Note shall have the right which is absolute and unconditional to receive payment of the principal of and interest on such Investment Note on the Maturity Date expressed in such Investment Note, as such Maturity Date may be extended or renewed in accordance with this Indenture, and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder. SECTION 5.9 RESTORATION OF RIGHTS AND REMEDIES. If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case the Company, the Trustee and the Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted. SECTION 5.10 RIGHTS AND REMEDIES CUMULATIVE. Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Investment Notes in Section 2.9 hereof, no right or remedy herein conferred upon or reserved to the Trustee or to 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 -23- 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. SECTION 5.11 DELAY OR OMISSION NOT A WAIVER. No delay or omission of the Trustee or of any Holder 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 or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. SECTION 5.12 CONTROL BY HOLDERS. The Holders of a majority in principal amount of the Outstanding Investment Notes 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: (1) such direction shall not be in conflict with any rule of law or with this Indenture; and (2) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. SECTION 5.13 WAIVER OF PAST DEFAULTS. The Holders of a majority in principal amount of the Outstanding Investment Notes may, on behalf of the Holders of all the Investment Notes, waive any past default hereunder and its consequences, except a default: (1) in the payment of the principal of or interest on any Investment Note; or (2) in respect of a covenant or provision hereof which under Article Seven cannot be modified or amended without the consent of the Holders of each Outstanding Investment Note affected. Upon any such waiver, such 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 default or impair any right consequent thereon. SECTION 5.14 UNDERTAKING FOR COSTS. All parties to this Indenture agree, and each Holder of any Investment Note by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, 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 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 principal amount of the Outstanding Investment Notes, or to any suit instituted by any Holder for the -24- enforcement of the payment of the principal of, or interest on, any Investment Note on or after the Maturity Date expressed in such Investment Note. SECTION 5.15 WAIVER OF 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 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. ARTICLE VI THE TRUSTEE SECTION 6.1 CERTAIN DUTIES AND RESPONSIBILITIES. (a) Except during the continuance of an Event of Default, (1) 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 (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture. (b) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (c) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct, except that: (1) this Subsection shall not be construed to limit the effect of Subsection (a) of this Section; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (3) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than -25- a majority in principal amount of the Outstanding Investment Notes relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee, under this Indenture; and (4) 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 liability is not reasonably assured to it. (d) 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. SECTION 6.2 NOTICE OF DEFAULTS. Within ninety (90) days after the occurrence of any default hereunder, the Trustee shall transmit by mail to all Holders, as their names and addresses appear in the Register, notice of such default hereunder known to the Trustee, unless such default shall have been cured or waived; provided, however, that, except in the case of any default of the character specified in Section 5.1(1) or (2), the Trustee shall be protected in withholding such notice if and so long as the board of directors, the executive committee or a trust committee of directors or Responsible Officers of the Trustee in good faith determine that the withholding of such notice is in the interests of the Holders; and provided, further, that in the case of any default of the character specified in Section 5.1(3), no such notice to Holders shall be given until at least sixty (60) days after the occurrence thereof. For the purpose of this Section, "default" means any event which is, or after notice or lapse of time or both would become, an Event of Default. SECTION 6.3 CERTAIN RIGHTS OF TRUSTEE. Except as otherwise provided in Section 6.1: (1) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, Transaction Statement, Investment 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; (2) any request or direction of the Company mentioned herein shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors shall be sufficiently evidenced by a Board Resolution; (3) 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, rely upon an Officers' Certificate; (4) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon; -26- (5) 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 pursuant to this Indenture, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; (6) 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, Transaction Statement, Investment Note or other paper or document but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney; (7) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder; and (8) the Trustee shall have no duty to inquire as to the performance of the Company's covenants in Article Three hereof. In addition, the Trustee shall not be deemed to have knowledge of any Event of Default except any Event of Default of which the Trustee shall have received written notification or obtained actual knowledge. SECTION 6.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF INVESTMENT NOTES. The recitals contained herein and in any Investment Notes issued in definitive form pursuant to Section 2.7(b) hereof, except the certificates of authentication, shall be taken as the statements of the Company, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture, the Transaction Statements or of the Investment Notes. The Trustee shall not be accountable for the use or application by the Company of Investment Notes or the proceeds thereof. SECTION 6.5 MAY HOLD INVESTMENT NOTES. The Trustee, any Paying Agent, Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Investment Notes and, subject to Sections 6.8 and 6.12, if operative, may otherwise deal with the Company with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent. SECTION 6.6 MONEY HELD IN TRUST. Money held by the Trustee in trust hereunder shall be held in a separate interest-bearing account and such funds shall at all times be segregated from all other funds and assets owned or held by the Trustee. Any interest on any money received by the Trustee hereunder shall be for the benefit of the Company and shall be paid to the Company upon Company Request. SECTION 6.7 COMPENSATION AND REIMBURSEMENT. The Company agrees: -27- (1) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (2) except as otherwise expressly provided herein, 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 or bad faith; and (3) to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. SECTION 6.8 CORPORATE TRUSTEE REQUIRED; ELIGIBILITY; DISQUALIFICATION. There shall at all times be a Trustee hereunder which shall be a corporation organized and doing business under the laws of the United States of America or of any State or Territory or of the District of Columbia or a corporation or other person permitted to act as Trustee by the Commission, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, and subject to supervision or examination by Federal or State, Territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, 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. Neither the Company nor any of its Affiliates shall serve as Trustee hereunder. The Trustee shall be subject to the provisions of Section 310(b) of the Trust Indenture Act. This Indenture shall always have a Trustee who satisfies the requirements of Section 310(a)(1) of the Trust Indenture Act. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. SECTION 6.9 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR. (a) No resignation or removal of the Trustee and no appointment of a successor trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee under Section 6.10. (b) The Trustee may resign at any time by giving written notice thereof to the Company. If an instrument of acceptance by a successor Trustee shall not have been delivered to the Trustee within thirty (30) days after the giving of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor Trustee. (c) The Trustee may be removed at any time by Act of the Holders of a majority in principal amount of the Outstanding Investment Notes, delivered to the Trustee and to the Company. (d) If at any time: -28- (1) the Trustee shall fail to comply with the provisions of Section 310(b) of the Trust Indenture Act after written request therefor by the Company or by any Holder who has been a bona fide Holder of an Investment Note or Investment Notes for at least six (6) months; or (2) the Trustee shall cease to be eligible under Section 310(a) of the Trust Indenture Act and shall fail to resign after written request therefor by the Company or by any such Holder; or (3) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation; then, in any such case, (i) the Company, by a Board Resolution, may remove the Trustee and appoint a successor trustee, or (ii) subject to the provisions of Section 5.14, any Holder who has been a bona fide Holder of an Investment Note for at least six (6) months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. (e) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any cause, the Company, by a Board Resolution, shall promptly appoint a successor Trustee. If, within one (1) year after such resignation, removal or incapability, or the occurrence of such vacancy, a successor Trustee shall be appointed by Act of the Holders of a majority in principal amount of the Outstanding Investment Notes delivered to the Company and the retiring Trustee, the successor Trustee so appointed shall, forthwith upon its acceptance of such appointment, become successor Trustee and supersede the successor Trustee appointed by the Company. If no successor Trustee shall have been so appointed by the Company or the Holders and accepted appointment in the manner hereinafter provided, any Holder who has been a bona fide Holder of an Investment Note for at least six (6) months may, on behalf of himself and all others similarly situated, petition any court of competent jurisdiction for the appointment of a successor Trustee. (f) The Company shall give notice of each resignation and each removal of the Trustee and each appointment of a successor Trustee by mailing written notice of such event by first-class mail, postage prepaid, to the Holders of Investment Notes as their names and addresses appear in the Register. Each notice shall indicate the name of the successor Trustee and the address of its Principal Corporate Trust Office. SECTION 6.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the registration 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 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, subject nevertheless to its lien, if any, provided for in Section 6.7. Upon request -29- 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 of such rights, power and trusts. 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 Six. SECTION 6.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS OF TRUSTEE. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Article Six, without the execution or filing of any paper or any further act on the part of any of the parties hereto. SECTION 6.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship listed in Section 311(b) of the Trust Indenture Act. A trustee who has resigned or been removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent indicated therein. ARTICLE VII SUPPLEMENTAL INDENTURES SECTION 7.1 SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS. Without the consent of the Holders of any Investment Notes, 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 satisfactory to the Trustee, for any of the following purposes: (1) to establish the form or terms of the Investment Notes not inconsistent with the terms of this Indenture; or (2) to evidence the succession of another corporation to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Investment Notes contained; or (3) to add to the covenants of the Company, for the benefit of the Holders of the Investment Notes, or to surrender any right or power herein conferred upon the Company; or (4) to cure any ambiguity, to correct or supplement any provision herein which may be inconsistent with any other provision herein, or to make any other provisions with respect to matters or questions arising under this Indenture which shall not be inconsistent with the provisions of this Indenture, provided such action shall not adversely affect the interests of the Holders of the Investment Notes; or -30- (5) to convey, transfer, assign, mortgage or pledge to or with the Trustee any property or assets which the Company may desire to convey, transfer, assign, mortgage or pledge; or (6) to add to or change any of the provisions of this Indenture to such extent as shall be necessary to permit or facilitate the issuance of Investment Notes in bearer form, registrable or not registrable as to principal, and with or without interest coupons. The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer, assignment, mortgage or pledge of any property thereunder, but the Trustee shall not be obligated to, but may in its discretion, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section 7.1 may be executed by the Company and the Trustee without the consent of the Holders of any of the Investment Notes at the time Outstanding, notwithstanding any of the provisions of Section 7.2. SECTION 7.2 SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS. With the consent of the Holders of not less than two-thirds in principal amount of the Outstanding Investment Notes, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may amend this Indenture or the Investment Notes and 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 the Investment Notes under this Indenture; provided, however, that no such amendment or supplemental indenture shall, without the consent of the Holders of each Outstanding Investment Note affected thereby: (1) change the Maturity Date of the principal of, or interest on, any Investment Note, or reduce the principal amount thereof or the rate of interest thereon or change any Place of Payment where, or the coin or currency in which, any Investment Notes or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the Maturity Date thereof; or (2) make any change in Section 5.8; or (3) reduce the percentage in principal amount of the Outstanding Investment Notes, the consent of whose Holders is required for any such supplemental indenture or the consent of whose Holders is required for any waiver (of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences) provided for in this Indenture; or (4) modify any of the provisions of this Section or Section 5.13, except to increase any such percentage or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Investment Note affected thereby. -31- It shall not be necessary for any Act of Holders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. After an amendment or waiver under this Section becomes effective, the Company shall mail to the Holders of each Investment Note affected thereby a notice briefly describing the amendment or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture or waiver. SECTION 7.3 EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or accepting the additional trusts created by, any supplemental indenture permitted by this Article or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. SECTION 7.4 EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the Holders of Investment Notes shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and such supplemental indenture shall form a part of this Indenture for any and all purposes; and every Holder of Investment Notes theretofore or thereafter issued and delivered thereunder shall be bound thereby. SECTION 7.5 CONFORMITY WITH TRUST INDENTURE ACT. Every supplemental indenture executed pursuant to this Article shall conform to the requirements of the TIA as then in effect. SECTION 7.6 NOTATION ON OR EXCHANGE OF INVESTMENT NOTES. The Company or the Trustee may place an appropriate notation about an amendment or waiver on any Investment Note, if certificated, or any Account statement. Failure to make any such notation or issue a new note shall not affect the validity and effect of such amendment or waiver. SECTION 7.7 SUBORDINATION UNIMPAIRED. No supplemental indenture executed pursuant to this Article shall affect the superior position of the holders of Senior Indebtedness with respect to such Investment Notes. -32- ARTICLE VIII CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 8.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The Company shall not consolidate with or merge into any other corporation or convey or transfer its property and assets substantially as an entirety to any Person, unless: (1) the corporation formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance or transfer the properties and assets of the Company substantially as an entirety shall be a corporation organized and existing under the laws of the United States of America or any State or the District of Columbia, and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of and interest on all the Investment Notes and the performance of every covenant of this Indenture on the part of the Company to be performed or observed; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and (3) the Company shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger, conveyance or transfer and such supplemental indenture comply with this Article Eight and that all conditions precedent herein provided for relating to such transaction have been complied with. SECTION 8.2 SUCCESSOR CORPORATION SUBSTITUTED. Upon any consolidation or merger of the Company into another entity, or any conveyance or transfer of the properties and assets of the Company substantially as an entirety in accordance with Section 8.1, the successor corporation formed by such consolidation or into which the Company is merged or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor corporation had been named as the Company herein. SECTION 8.3 LIMITATION ON LEASE OF PROPERTIES AS ENTIRETY. The Company shall not lease its properties and assets substantially as an entirety to any Person. ARTICLE IX DISCHARGE OF INDENTURE SECTION 9.1 TERMINATION OF COMPANY'S OBLIGATIONS. This Indenture shall cease to be of further effect (except that the Company's obligations under Section 6.7 and 9.4, and the Company's, Trustee's and Paying Agent's obligations under Section 9.3 shall survive) when all outstanding Investment Notes have been paid in full and the Company has -33- paid all sums payable by the Company hereunder. In addition, the Company may terminate all of its obligations under this Indenture if: (1) the Company irrevocably deposits in trust with the Trustee or at the option of the Trustee, with a trustee reasonably satisfactory to the Trustee and the Company under the terms of an irrevocable trust agreement in form and substance satisfactory to the Trustee, money or U.S. Government Obligations sufficient (as certified by an independent public accountant designated by the Company) to pay principal and interest and premium, if any, on the Investment Notes to maturity or redemption, as the case may be, and to pay all other sums payable by it hereunder, provided that (i) the trustee of the irrevocable trust shall have been irrevocably instructed to pay such money or the proceeds of such U.S. Government Obligations to the Trustee and (ii) the Trustee shall have been irrevocably instructed to apply such money or the proceeds of such U.S. Government Obligations to the payment of said principal and interest and premium, if any, with respect to the Investment Notes; (2) the Company delivers to the Trustee an Officers' Certificate stating that all conditions precedent to satisfaction and discharge of this Indenture have been complied with; (3) no Event of Default or event (including such deposit) which, with notice or lapse of time, or both, would become an Event of Default with respect to the Investment Notes shall have occurred and be continuing on the date of such deposit; and (4) the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that Holders of the Investment Notes will not recognize income, gain or loss for Federal income tax purposes as a result of the Company's exercise of its option under this Section 9.1 and will be subject to Federal income tax in the same amount, in the same manner and at the same times as would have been the case if such option had not been exercised. Then, this Indenture shall cease to be of further effect (except as provided in this paragraph), and the Trustee, on demand of the Company, shall execute proper instruments acknowledging confirmation of and discharge under this Indenture. The Company may make the deposit only if Article X hereof does not prohibit such payment. However, the Company's obligations in Sections 2.3, 2.4, 2.5, 2.10, 3.1, 3.2, 3.3, 6.7, 6.9, 9.3 and 9.4 and the Trustee's and Paying Agent's obligations in Section 9.3 shall survive until the Investment Notes are no longer outstanding. Thereafter, only the Company's obligations in Section 6.7 and 9.4 and the Company's, Trustee's and Paying Agent's obligations in Section 9.3 shall survive. After such irrevocable deposit made pursuant to this Section 9.1 and satisfaction of the other conditions set forth herein, the Trustee upon written request shall acknowledge in writing the discharge of the Company's obligations under this Indenture except for those surviving obligations specified above. In order to have money available on a payment date to pay principal or interest or premium, if any, on the Investment Notes, the U.S. Government Obligations shall be payable as to principal or interest at least one (1) Business Day before such payment date in such amounts as will provide the necessary money. U.S. Government Obligations shall not be callable at the issuer's option. -34- SECTION 9.2 APPLICATION OF TRUST MONEY. The Trustee or a trustee satisfactory to the Trustee and the Company shall hold in trust money or U.S. Government Obligations deposited with it pursuant to Section 9.1. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent and in accordance with this Indenture to the payment of principal and interest on the Investment Notes. SECTION 9.3 REPAYMENT TO COMPANY. The Trustee and the Paying Agent shall promptly pay to the Company upon written request any excess money or securities held by them at any time. The Trustee and the Paying Agent shall pay to the Company upon written request any money held by them for the payment of principal or interest or premium, if any, that remains unclaimed for two (2) years after the date upon which such payment shall have become due; provided, however, that the Company shall have either caused notice of such payment to be mailed to each Holder entitled thereto no less than thirty (30) days prior to such repayment or within such period shall have published such notice in an Authorized Newspaper. After payment to the Company, Holders entitled to the money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another Person, and all liability of the Trustee and such Paying Agent with respect to such money shall cease. SECTION 9.4 REINSTATEMENT. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 9.2 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Investment Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 9.1 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with Section 9.2; provided, however, that if the Company has made any payment of interest or premium, if any, on or principal of any Investment Note because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Investment Notes to receive such payment, as long as no money is owed to the Trustee by the Company, from the money or U.S. Government Obligations held by the Trustee or Paying Agent. ARTICLE X SUBORDINATION OF INVESTMENT NOTES SECTION 10.1 SUBORDINATION. The Company covenants and agrees, and each Holder of Investment Notes, by his acceptance thereof, likewise covenants and agrees, that the indebtedness represented by the Investment Notes and the payment of the principal of and interest on each and all of the Investment Notes is expressly subordinated, to the extent and in the manner hereinafter set forth, in right of payment to the prior payment in full of all Senior Indebtedness, and that the subordination is for the benefit of the holders of Senior Indebtedness. SECTION 10.2 DISTRIBUTION OF ASSETS, ETC. -35- No payment on account of principal of or interest or premium, if any, on the Investment Notes shall be made, and no Investment Notes shall be purchased or otherwise acquired, and no funds shall be set aside for the purchase of any Investment Notes, either directly or indirectly, by the Company, if a default in the payment of the principal of or premium, if any, or interest on any Senior Indebtedness shall have occurred and continued beyond any applicable period of grace so as to entitle the holder of such Senior Indebtedness to accelerate its maturity, unless and until such default shall have been cured or waived or shall have ceased to exist or moneys for the payment thereof shall have been duly set aside. In the event of any distribution of assets of the Company upon any dissolution, winding up, total or partial liquidation, or reorganization of the Company, whether in bankruptcy, insolvency or receivership proceedings, or upon any assignment for the benefit of creditors or any other marshaling of the assets and liabilities of the Company, or otherwise, (1) all of the principal of and premium, if any, and interest on all Senior Indebtedness shall first be paid in full or moneys for the full payment thereof shall have been duly set aside before any payment is made upon the principal of or interest or premium, if any, on any Investment Note, and (2) any payment or distribution of assets or securities of the Company of any kind or character, whether in cash, property or securities (other than securities of the Company as reorganized or readjusted, or securities of the Company or of any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated to the payment of all principal of and premium, if any, and interest on such Senior Indebtedness as may at the time be outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment, provided that the obligations represented by all notes or other evidences of Senior Indebtedness are assumed by the new corporation, if any, resulting from any such reorganization or readjustment and provided further that the rights of the holders of Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment), to which the Holders would be entitled except for the provisions of this Article, shall be paid by the liquidating trustee or agent or other Person making such payment or distribution, whether a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, to the holders of Senior Indebtedness (pro rata to each such holder on the basis of the respective amounts of Senior Indebtedness held by such holder) or their representatives, to the extent necessary to pay the principal of and premium, if any, and interest on all Senior Indebtedness in full, after giving effect to any concurrent payment or distribution to the holders of Senior Indebtedness, before any payment or distribution is made to the Holders or to the Trustee. If the payment of principal of and any interest on the Investment Notes is accelerated because of an Event of Default, no payment on account of principal of or interest on the Investment Notes shall be made until all of the principal of and premium, if any, and interest on all Senior Indebtedness has been paid in full or due provision has been made for such payment. In the event that, 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 as reorganized or readjusted, or securities of the Company or of any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated to the payment of all principal of and premium, if any, and interest on such Senior Indebtedness as may at the time be outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment provided that the obligations represented by all notes or other evidences of Senior Indebtedness are assumed by the new corporation, if any, resulting from any such reorganization or -36- readjustment and provided further that the rights of the holders of Senior Indebtedness are not, without the consent of such holders, altered by such reorganization or readjustment), shall be received by the Trustee or any Holder in contravention of any of the terms hereof, 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 Indebtedness at the time outstanding in accordance with priorities then existing among such holders for application to the payment of all Senior Indebtedness remaining unpaid, to the extent necessary to pay all such Senior Indebtedness in full. In the event of the failure of the Trustees or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Indebtedness is hereby irrevocably authorized to endorse or assign the same. SECTION 10.3 SUBROGATION. Subject to the payment in full of all Senior Indebtedness, the Holders shall be subrogated (equally and ratably with the holders of all indebtedness of the Company which, by its express terms, ranks on a parity with the Investment Notes and is entitled to like rights of subrogation) to the rights of the holders of Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company applicable to the Senior Indebtedness until all amounts owing on the Investment Notes shall be paid in full, and, as between the Company, its creditors other than holders of Senior Indebtedness, and the Holders, no such payment or distribution made to the holders of Senior Indebtedness by virtue of this Article which otherwise would have been made to the Holders, shall be deemed to be a payment by the Company on account of the Senior Indebtedness, it being understood that the provisions of this Article are and are intended solely for the purpose of defining the relative rights of the Holders, on the one hand, and the holders of the Senior Indebtedness, on the other hand. SECTION 10.4 OBLIGATION OF THE COMPANY UNCONDITIONAL. Nothing contained in this Article or elsewhere in this Indenture or in the Investment Notes is intended to or shall impair, as between the Company, its creditors other than the holders of Senior Indebtedness, and the Holders, the obligation of the Company, which is absolute and unconditional, to pay to the Holders the principal of and interest and premium, if any, on the Investment Notes as and when the same shall become due and payable in accordance with their terms, or affect the relative rights of the Holders and creditors of the Company other than the holders of Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or any Holder from exercising all remedies otherwise permitted by applicable law upon an Event of Default under this Indenture, subject to the rights, if any, under this Article of the holders of Senior Indebtedness in respect of cash, property or securities of the Company received upon the exercise of any such remedy. Upon any payment or distribution of assets of the Company referred to in this Article, the Trustee and the Holders shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which any such dissolution, winding up, liquidation or reorganization proceeding affecting the affairs of the Company is pending and the Trustee, subject to the provisions of Section 6.1, and the Holders shall be entitled to rely upon a certificate of the liquidating trustee or agent or other person making any payment or distribution to the Trustee or to the Holders for the purpose of ascertaining the persons entitled to participate in such payment or distribution, the holders of Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount paid or distributed thereon, and all other facts pertinent thereto or to this Article. SECTION 10.5 PAYMENTS ON INVESTMENT NOTES PERMITTED. -37- Nothing contained in this Article or elsewhere in this Indenture or in any of the Investment Notes shall affect the obligation of the Company to make, or prevent the Company from making, payment of the principal of or interest or premium, if any, on the Investment Notes in accordance with the provisions hereof, except as otherwise provided in this Article. SECTION 10.6 EFFECTUATION OF SUBORDINATION BY TRUSTEE. Each Holder of Investment Notes, by his acceptance thereof, authorizes and directs the Trustee in his behalf to take such action at the request of the Company as may be necessary or appropriate to effectuate the subordination provided in this Article and appoints the Trustee his attorney-in-fact for any and all such purposes. SECTION 10.7 KNOWLEDGE OF TRUSTEE. Notwithstanding the provisions of this Article or any other provisions of this Indenture, but subject to the provisions of Section 6.1, the Trustee shall not be charged with knowledge of the existence of any facts which would prohibit the making of any payment of moneys to or by the Trustee, or the taking of any other action by the Trustee under this Article Ten, unless and until the Trustee shall have received written notice thereof, in the manner required by Section 1.5, from the Company, any Holder, any Paying Agent, any Registrar or the holder or representative of any class of Senior Indebtedness. SECTION 10.8 TRUSTEE MAY HOLD SENIOR INDEBTEDNESS. The Trustee shall be entitled to all the rights set forth in this Article with respect to any Senior Indebtedness at the time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in Section 6.12 or elsewhere in this Indenture shall deprive the Trustee of any of its rights as such holder. SECTION 10.9 RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT IMPAIRED. No right of any present or future holder of any Senior Indebtedness to enforce the subordination herein shall at any time or in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any non-compliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof any such holders may have or be otherwise charged with. SECTION 10.10 ALTERATION OF SENIOR INDEBTEDNESS. The Holders of any Senior Indebtedness may extend, renew, modify or amend the terms of such Senior Indebtedness or any security therefor and may release, sell or exchange such security and otherwise deal freely with the Company, all without notice to or consent of the Holders and without affecting the liabilities and obligations of the Company, the Trustee or the Holders under this Indenture or the Investment Notes. SECTION 10.11 ARTICLE APPLICABLE TO PAYING AGENTS. In case 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 shall in such case (unless the context shall otherwise require) 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 -38- in this Article in addition to or in place of the Trustee, provided, however, that Sections 10.7, 10.8, and 10.10 shall not apply to the Company if it acts as Paying Agent. SECTION 10.12 TRUSTEE NOT FIDUCIARY FOR HOLDERS OF SENIOR INDEBTEDNESS. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if the Trustee shall in good faith mistakenly pay over or distribute to Holders of Investment Notes or to the Company or to any other person cash, property or securities to which any holders of Senior Indebtedness shall be entitled by virtue of this Article Ten or otherwise. ARTICLE XI REDEMPTION SECTION 11.1 REDEMPTION AT THE COMPANY'S OPTION. The Company may redeem, in whole or in part, any Investment Note prior to the scheduled Maturity Date of such Investment Note, in accordance with any notice requirement provided in Sections 11.2 and 11.4 hereof and at the Redemption Prices determined from time to time by the Company; provided that the Redemption Prices shall be fixed for an Investment Note upon issuance. The Redemption Price will be expressed as a percentage of the principal amount of such Investment Note. SECTION 11.2 NOTICES TO TRUSTEE. If the Company elects to redeem Investment Notes pursuant to Section 11.1 hereof, it shall furnish to the Trustee, at least thirty (30) days but not more than sixty (60) days before a redemption date, an Officers' Certificate setting forth the redemption date, the principal amount of Investment Notes to be redeemed and the redemption price. SECTION 11.3 SELECTION OF INVESTMENT NOTES TO BE REDEEMED. If less than all of the Investment Notes are to be redeemed, the Trustee shall select the Investment Notes to be redeemed among the Holders of the Investment Notes pro rata or in accordance with a method the Trustee considers fair and appropriate (and in such manner as complies with applicable legal and stock exchange requirements, if any). In the event of partial redemption by lot, the particular Investment Notes to be redeemed shall be selected, unless otherwise provided herein, not less than thirty (30) nor more than sixty (60) days prior to the redemption date by the Trustee from the outstanding Investment Notes not previously called for redemption. The Trustee shall promptly notify the Company in writing of the Investment Notes selected for redemption and, in the case of any Investment Note selected for partial redemption, the principal amount thereof to be redeemed. SECTION 11.4 NOTICE OF REDEMPTION. At least thirty (30) days but not more than sixty (60) days before a redemption date, the Company shall mail a notice of redemption to each Holder whose Investment Notes are to be redeemed. -39- The notice shall identify the Investment Notes to be redeemed and shall state: (1) the redemption date; (2) the redemption price; (3) if any Investment Note is being redeemed in part, the portion of the principal amount of such Investment Note to be redeemed and that, after the redemption date, an appropriate adjustment will be made to such Holder's Account or, if such Investment Note was in definitive form, upon surrender of such Investment Note, a new Investment Note or Investment Notes in principal amount equal to the unredeemed portion will be issued; (4) the name and address of the Paying Agent; (5) any Investment Notes in definitive form that were called for redemption must be surrendered to the Paying Agent to collect the redemption price; and (6) that interest on Investment Notes called for redemption ceases to accrue on and after the redemption date. At the Company's request, the Trustee shall give the notice of redemption in the Company's name and at its expense; PROVIDED, HOWEVER, that the Company shall deliver to the Trustee, at least thiry-five (35) days prior to the redemption date, an Officers' Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph. SECTION 11.5 EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed, Investment Notes called for redemption become due and payable on the redemption date at the redemption price. SECTION 11.6 DEPOSIT OF REDEMPTION PRICE. One (1) Business Date prior to the redemption date, the Company shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption price of and accrued interest on all Investment Notes to be redeemed on that date. The Trustee or the Paying Agent shall return to the Company any money not required for that purpose. If the Company complies with the preceding paragraph, interest on the Investment Notes to be redeemed will cease to accrue on the applicable redemption date. If any Investment Note called for redemption shall not be so paid upon surrender for redemption because of the failure of the Company to comply with the preceding paragraph, interest will be paid on the unpaid principal, from the redemption date until such principal is paid, and on any interest not paid on such unpaid principal, in each case at the rate provided in the Investment Notes and in Section 2.5 hereof. SECTION 11.7 INVESTMENT NOTES REDEEMED IN PART. An appropriate adjustment will be made to the Account of a Holder when an Investment Note was redeemed in part. In the case of definitive Investment Notes redeemed in part, upon surrender of such Investment Note, the Company shall issue and the Trustee shall authenticate for the Holder -40- at the expense of the Company a new Investment Note equal in principal amount to the unredeemed portion of the Investment Note surrendered. SECTION 11.8 REPURCHASING OF INVESTMENT NOTES. Nothing herein shall prohibit the Company from repurchasing from time to time all or any portion of the Investment Notes in privately negotiated transactions. SECTION 11.9 REDEMPTION AT THE ELECTION OF HOLDER UPON DEATH OR TOTAL PERMANENT DISABILITY. Except as set forth in this Section 11.9, a Holder shall have no right to cause the Company to redeem an Investment Note prior to the Maturity Date of such Investment Note. However, upon the death or Total Permanent Disability of a Holder of an Investment Note, the estate of such Holder (in the event of death), such Holder (in the event of Total Permanent Disability) or may require the Company to redeem, in whole and not in part, the Investment Note held by such Holder provided that such Investment Note has a remaining maturity of greater than twelve (12) months at the time of such death or disability by delivering to the Company an irrevocable election (a "Redemption Election") requiring the Company to make such redemption. In the event an Investment Note is held jointly by two or more Persons, such Investment Note shall be subject to the elective redemption provisions of this Article Eleven upon the death or Total Permanent Disability of either joint Holder. Upon receipt of a Redemption Election, the Company shall designate the redemption date for such Investment Note, which redemption date shall be no more than fifteen (15) days after the Company's receipt of the Redemption Election, and shall pay the Redemption Price to the estate of the Holder or the Holder, as the case may be. The Redemption Price payable with respect to a redemption pursuant to their Section 11.9 shall be the principal amount of such redeemed Investment Note plus the interest accrued but unpaid to the date of the redemption. No interest shall accrue on an Investment Note to be redeemed under this Article Eleven for any period of time after the redemption date for such Investment Note and after the Company has tendered the Redemption Price to the Estate of the Holder or to the Holder, as the case may be, and the Investment Note shall become due and payable on the redemption date. ARTICLE XII IMMUNITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS SECTION 12.1 EXEMPTION FROM INDIVIDUAL LIABILITY. No Affiliate, officer, director, employee or stockholder, as such, of the Company, or its Subsidiaries, shall have any liability for any obligations of the Company under the Investment Note or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. Each Holder by accepting an Investment Note hereby expressly waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Investment Notes. 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. -41- ARTICLE XIII INVESTMENT NOTES IN DEFINITIVE FORM SECTION 13.1 FORMS GENERALLY. The Investment notes are non-negotiable debt instruments and shall be issued only in book-entry form. However, in the event of an exchange of the Investment Notes for fully registered notes in definitive form pursuant to Section 2.7(b) hereof, the Investment Notes shall be in such form and contain the terms of such Investment Notes, including without limitation those terms set forth in Article Two hereof, and any other provisions as are required or permitted by this Indenture, and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon, as may be required to comply with the rules of any securities exchange, or as may, consistent herewith, be determined by the officers executing such Investment Notes, as evidenced by their execution of the Investment Notes. Any such Investment Notes in definitive form shall contain a certificate of authentication in such form as the Trustee and the Company shall determine. Any portion of the text of any Investment Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Investment Note. The definitive Investment Notes shall be printed, lithographed or engraved on steel engaged borders or may be produced in any other manner, all as determined by the officers executing such Investment Notes as evidenced by their execution of such Investment Notes. -42- EX-5 3 EXHIBIT 5 December , 1999 Mr. Alan B. Levan Chief Executive Officer BankAtlantic Bancorp, Inc. 1750 East Sunrise Boulevard Fort Lauderdale, Florida 33304 Re: BANKATLANTIC BANCORP, INC.-$150,000,000 OF SUBORDINATED INVESTMENT NOTES Dear Mr. Levan: We have acted as counsel for BankAtlantic Bancorp, Inc. (the "Company") in connection with the offer and sale by the Company of up to $150,000,000 in principal amount of subordinated investment notes (the "Investment Notes"). With respect to such offering of the Investment Notes, the Company has filed a Registration Statement on Form S-3 (the "Registration Statement") with the Securities and Exchange Commission (the "Commission"), under the Securities Act of 1933, as amended (the "Act"). The Investment Notes will be issued pursuant to an Indenture to be entered into between the Company and U.S. Bank Trust National Association, a national banking association, as trustee (the "Indenture"). In connection with this opinion, we have examined the executed originals or photostatic copies of (i) the Articles of Incorporation and Bylaws of the Company, (ii) the Registration Statement, including the prospectus contained therein (the "Prospectus"), (iii) the form of Indenture filed as an exhibit to the Registration Statement and (iv) such other reports, records, documents and proceedings as we have considered necessary to render this opinion. Mr. Alan B. Levan BankAtlantic Bancorp, Inc. December 20, 1999 Page 2 We have assumed, without independent investigation, the (i) authenticity of all documents submitted to us as originals, (ii) conformity to authentic original documents of all documents submitted to us as certified, conformed or photostatic copies and (iii) genuineness of all signatures. Further, with regard to questions of fact material to this opinion, we have relied upon certificates of public officials, corporate agents of the Company and such other certificates as we deemed relevant. We have also assumed that the Indenture will be in the form filed as an exhibit to the Registration Statement and will have been duly executed and delivered by the Company and U.S. Bank Trust National Association, as trustee. We are qualified to practice law only in the State of Florida and we do not purport to be experts on, or to express any opinion herein concerning, any law other than the law of the State of Florida and the federal law of the United States. This opinion is limited to the matters expressly stated herein, and no opinion is implied or may be inferred beyond the matters expressly stated herein. The opinions expressed herein may be affected by new developments in court decisions, changes in legislation or changes in facts, assumptions or other information upon which our opinion is based. Based upon and subject to the foregoing, we are of the opinion that the Investment Notes that are being offered and sold by the Company pursuant to the Registration Statement, when issued by the Company as contemplated by the Registration Statement and in accordance with the Indenture, will be binding obligations of the Company. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference of this firm under the heading "Legal Matters" in the Prospectus constituting part of the Registration Statement. Very truly yours, STEARNS WEAVER MILLER WEISSLER ALHADEFF & SITTERSON, P.A. EX-12 4 EXHIBIT 12 RATIO OF EARNINGS TO FIXED CHARGES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, FOR THE YEARS ENDED DECEMBER 31, --------------------- ----------------------------------------------------------- 1999 1998 1998 1997 1996 1995 1994 -------- -------- -------- -------- -------- -------- -------- (IN THOUSANDS) Earnings (loss) from continuing operations before income taxes and extraordinary items $ 42,313 $ 23,897 $ 16,712 $ 38,906 $ 29,019 $ 24,928 $ 25,233 Fixed interest charges ...................... 126,800 115,068 153,930 117,048 77,637 67,087 42,491 -------- -------- -------- -------- -------- -------- -------- Earnings (loss): Including fixed interest charges .......... 169,113 138,965 170,642 155,954 106,656 92,015 67,724 Excluding interest expense on deposits .... 111,468 89,285 103,928 87,723 52,010 45,369 36,078 Fixed interest charges excluding interest expense on deposits ....................... 69,155 65,388 87,216 48,817 22,991 20,441 10,845 Ratios: Earnings including fixed interest changes to fixed interest charges .................... 1.33 1.21 1.11 1.33 1.37 1.37 1.59 Earnings to fixed interest excluding interest on deposits ............................... 1.61 1.37 1.19 1.80 2.26 2.22 3.33 Dollar deficiency of earnings to fixed interest charges ......................... $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 ======== ======== ======== ======== ======== ======== ========
EX-23.2 5 Accountants' Consent The Board of Directors BankAtlantic Bancorp, Inc.: We consent to the use of our reports incorporated herein by reference herein and to the reference to our firm under the heading "Experts" in the prospectus. KPMG LLP Ft. Lauderdale, Florida December 20, 1999 EX-25.1 6 EXHIBT 25.1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM T-1 Statement of Eligibility Under the Trust Indenture Act of 1939 of a Corporation Designated to Act as Trustee U.S. BANK TRUST NATIONAL ASSOCIATION (Exact name of Trustee as specified in its charter) United States 41-0257700 (State of Incorporation) (I.R.S. Employer Identification No.) U.S. Bank Trust Center 180 East Fifth Street St. Paul, Minnesota 55101 (Address of Principal Executive Offices) (Zip Code) BANKATLANTIC BANCORP, INC. (Exact name of Registrant as specified in its charter) Florida 65-05070804 (State of Incorporation) (I.R.S. Employer Identification No.) 1750 East Sunrise Boulevard Fort Lauderdale, Florida 33304 (Address of Principal Executive Offices) (Zip Code) SUBORDINATED INVESTMENT NOTES (Title of the Indenture Securities) GENERAL 1. GENERAL INFORMATION Furnish the following information as to the Trustee. (a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency Washington, D.C. (b) Whether it is authorized to exercise corporate trust powers. Yes 2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS If the obligor or any underwriter for the obligor is an affiliate of the Trustee, describe each such affiliation. None See Note following Item 16. Items 3-15 are not applicable because to the best of the Trustee's knowledge the obligor is not in default under any Indenture for which the Trustee acts as Trustee. 16. LIST OF EXHIBITS List below all exhibits filed as a part of this statement of eligibility and qualification. 1. Copy of Articles of Association.* 2. Copy of Certificate of Authority to Commence Business.* 3. Authorization of the Trustee to exercise corporate trust powers (included in Exhibits 1 and 2; no separate instrument).* 4. Copy of existing By-Laws.* 5. Copy of each Indenture referred to in Item 4. N/A. 6. The consents of the Trustee required by Section 321(b) of the act. 7. Copy of the latest report of condition of the Trustee published pursuant to law or the requirements of its supervising or examining authority is incorporated by reference to Registration Number 333-70709. * Incorporated by reference to Registration Number 22-27000. NOTE The answers to this statement insofar as such answers relate to what persons have been underwriters for any securities of the obligors within three years prior to the date of filing this statement, or what persons are owners of 10% or more of the voting securities of the obligors, or affiliates, are based upon information furnished to the Trustee by the obligors. While the Trustee has no reason to doubt the accuracy of any such information, it cannot accept any responsibility therefor. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee, U.S. Bank Trust National Association, an Association organized and existing under the laws of the United States, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, and its seal to be hereunto affixed and attested, all in the City of Saint Paul and State of Minnesota on the 20th day of December, 1999. U.S. BANK TRUST NATIONAL ASSOCIATION /S/ LAURIE HOWARD Laurie Howard Vice President /S/ HARRY H. HALL, JR. Harry H. Hall, Jr. Assistant Secretary EXHIBIT 6 CONSENT In accordance with Section 321(b) of the Trust Indenture Act of 1939, the undersigned, U.S. BANK TRUST NATIONAL ASSOCITION hereby consents that reports of examination of the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Dated: December 20, 1999 U.S. BANK TRUST NATIONAL ASSOCIATION /s/ Laurie Howard ------------------------------------ Laurie Howard Vice President -----END PRIVACY-ENHANCED MESSAGE-----